Judge Lynette Gridiron Winston, Case Number: 24PSCV01041, Date: 2024-07-11 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 24PSCV01041, Date: 2024-07-11 Tentative Ruling

Case Number: 24PSCV01041 Hearing Date: July 11, 2024 Dept: 6

CASE NAME: PVOM LLC v. LTG South Hills LLC, et al.

1 – Defendant LTG South Hills LLC’s Demurrer to Plaintiff’s Complaint;

2 – Defendant LTG South Hills LLC’s Motion to Strike Portions of Plaintiff’s Complaint; and

3 – Defendants LT Management Group and Shao Xing Max Yang’s Demurrer to Plaintiff’s Complaint

TENTATIVE RULING

The Court OVERRULES Defendant LTG South Hills LLC’s demurrer to the First and Second Causes of Action.

The Court DENIES Defendant LTG South Hills LLC’s motion to strike portions of the complaint.

The Court SUSTAINS Defendants LT Management Group and Shao Xing Max Yang’s demurrer to the First and Second Causes of Action of the complaint with 20 days leave to amend.

Defendants LT Management Group and Shao Xing Max Yang are ordered to give notice of the Court’s ruling within five calendar days of this order.

BACKGROUND

This is a breach of contract action. On April 2, 2024, plaintiff PVOM LLC (Plaintiff) filed this action against defendants LTG South Hills LLC (LTG), LT Management Group, Shao Xing Max Yang (Shao) (collectively, Defendants), and Does 1 through 50, alleging causes of action for breach of contract and specific performance.

On May 3, 2024, LTG filed a demurrer to and motion to strike portions of the complaint. On the same date, LT Management Group and Shao demurred to the complaint. On June 27, 2024, Plaintiff filed oppositions. On July 3, 2024, LTG filed replies. On the same date, LT Management Group and Shao filed a reply.

LEGAL STANDARD – Demurrer

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint). (Code Civ. Proc., § 422.10; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (Id.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian, supra, 116 Cal.App.4th at p. 994.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 862, disapproved on other grounds in Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287 [error to consider contents of release not part of court record].)

A demurrer can be utilized where the “face of the complaint” itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-972.) The “face of the complaint” includes material contained in attached exhibits that are incorporated by reference into the complaint, or in a superseded complaint in the same action. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94; see also Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [“[W]e rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”])

A demurrer can only be sustained when it disposes of an entire cause of action. (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046.)

DISCUSSION – Demurrer (LTG)

Meet and Confer

Per Code of Civil Procedure section 430.41, subdivision (a), LTG was required to meet and confer in person, by telephone, or by video conference before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) The Court finds LTG’s meet-and-confer efforts satisfactory. (Huang Decl., ¶ 2.)

First Cause of Action – Breach of Contract

“A cause of action for breach of contract requires pleading of a contract, plaintiff's performance or excuse for failure to perform, defendant's breach and damage to plaintiff resulting therefrom. [Citation.] A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

LTG demurs to the First Cause of Action for breach of contract on the grounds that it fails to state a cause of action. LTG contends the complaint lacks specificity and factual support for Plaintiff’s breach of contract claim. LTG contends Plaintiff has failed to identify the specific contractual provisions or terms that LTG allegedly breached and that even if the allegations are accepted as true, they fail to state a claim for breach of contract because Plaintiff has not articulated how LTG’s alleged conduct constitutes a breach or how LTG has suffered damages as a result. LTG further contends Plaintiff fails to show how, when, where, and by what means the alleged representations and warranties were allegedly false. LTG also contends Plaintiff failed to attach the agreement to the complaint or otherwise articulate specific facts regarding what LTG did or did not do.

In opposition, Plaintiff contends it is not required to satisfy a heightened pleading standard here because of modern discovery procedures. Plaintiff cites various paragraphs from the complaint to show that it pleaded sufficient facts to support its breach of contract claim, and notes that it need only plead the legal effect of the contract.

The Court finds the complaint alleges sufficient facts to state a cause of action for breach of contract. The complaint alleges that the parties entered into a written contract for the sale of certain commercial property, that Defendants were obligated to perform certain obligations thereunder, such as prorating expenses, providing original accounting records, and transferring tenant files and property plans. (Compl., ¶¶ 8-9.) The complaint further alleges Defendants failed to perform their respective obligations and that Defendants’ representations were false, resulting in damages to Plaintiff. (Compl., ¶¶ 10-14.) While the Court agrees the complaint could contain more specifics, particularly regarding the representations and warranties in the PSA, Plaintiff correctly contends that a breach of contract claim is not subject to a heightened pleading requirement. (See Code Civ. Proc., § 425.10, subd. (a)(1) [complaint need only allege facts constituting the cause of action in ordinary and concise language]; compare Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [heightened pleading requirements for fraud claims].) The Complaint alleges sufficient facts regarding the failure to accurately prorate expenses, provide original accounting records, and transfer tenant files and property plans.

Moreover, Plaintiff need not have attached the written contract to the complaint to state a cause of action for breach of contract. “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. [Citation.]” (Constr. Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.) As noted above, the complaint adequately alleges facts to apprise the parties of the contract at issue and what LTG allegedly did or failed to do in connection therewith. (See Medical Marijuana, Inc. v. ProjectCBD.com (2020) 46 Cal.App.5th 869, 886.)

Based on the foregoing, the Court OVERRULES the demurrer to the First Cause of Action.

Second Cause of Action – Specific Performance

“’[S]pecific performance and injunctive relief are equitable remedies and not causes of action for injuries. [Citations.]” (Mesa Shopping Ctr.-E., LLC v. O Hill (2014) 232 Cal.App.4th 890, 901.)

LTG demurs to the Second Cause of Action for specific performance on the grounds that it fails to state a cause of action. LTG contends specific performance is a remedy to a breach of contract, and not a cause of action in and of itself. LTG contends the complaint fails to adequately plead facts demonstrating the inadequacy of monetary damages, which is necessary for injunctive relief like specific performance. LTG contends Plaintiff has monetary damages as an available remedy when specific performance is impracticable or inequitable. LTG further contends the contract must be sufficiently certain to enable the Court to determine what action is required of the parties, and Plaintiff has not demonstrated the terms of the contract are sufficiently clear and enforceable to warrant specific performance. LTG also contends specific performance is an equitable remedy granted at the Court’s discretion, and that Plaintiff has not provided sufficient facts or legal arguments to warrant the Court’s exercise of discretion in Plaintiff’s favor.

In opposition, Plaintiff contends the Second Cause of Action is another count of a breach of contract which seeks the remedy of specific performance, and that LTG’s argument is one of form over substance. Plaintiff contends the complaint is properly pleaded here, and that certain allegations do not lend themselves to monetary damages, such as the obligation to provide original accounting records and transfer of tenant files and property plans. Plaintiff further contends the inadequacy of the legal remedy has been properly pleaded at paragraph 17 of the complaint and that it is self-evident here what contractual terms are sought to being enforced. Plaintiff then contends whether this equitable remedy is discretionary is beyond the scope of a demurrer.

The Court agrees that specific performance is a remedy for breach of contract, not a cause of action. (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 49; Miller v. Dyer (1942) 20 Cal.2d 526, 531; Tamarind Lithography Workshop, Inc. v. Sanders (1983) 143 Cal.App.3d 571, 575. A plaintiff seeking performance of a contract must demonstrate: "(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract." (Tamarind 143 Cal.App.3d at 575.) As such, the specific performance remedy must be tethered to a breach of contract.

As discussed above, Plaintiff adequately pled a cause of action for breach of contract. Plaintiff also adequately pled a claim for specific performance. (Compl., ¶¶ 7-17.) (See Collins v. Marvel Land Co. (1970) 13 Cal.App.3d 34, 40 (Court held trial court erred in sustaining a demurrer to cause of action for specific performance).)

Based on the foregoing, the Court OVERRULES the demurrer to the Second Cause of Action.

LEGAL STANDARD – Motion to Strike (LTG)

“Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof, but this time limitation shall not apply to motions specified in subdivision (e).” (Code Civ. Proc., § 435, subd. (b)(2).) “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Id., § 436.)

DISCUSSION – Motion to Strike (LTG)

Meet and Confer

Per Code of Civil Procedure section 435.5, subdivision (a), LTG was required to meet and confer in person, by telephone, or by video conference before bringing this motion to strike. (Code Civ. Proc., § 435.5, subd. (a).) The Court finds LTG’s meet-and-confer efforts satisfactory. (Huang Decl., ¶ 2.)

Paragraphs 11 and 12 of the Complaint

LTG contends paragraph 11 of the complaint is improper because it fails to specify the nature of the alleged failures regarding its obligations under the contract and lacks the necessary factual detail to support a claim for relief. LTG contends paragraph 12 of the complaint is also improper because it is speculative and fails to provide any factual basis or evidence to support the assertion of fraudulent misrepresentation or concealment, and such allegations require a higher standard of pleading. LTG also contends Plaintiff’s allegations of false representations is unfounded, improper, speculative, and lack any objective basis.

In opposition, Plaintiff contends paragraphs 11 and 12 of the complaint are properly pleaded. Plaintiff contends this is a cause of action for breach of contract, and that the allegations of misrepresentations simply form part of the basis of LTG’s alleged breach.

The Court does not find these allegations to be improper, but instead form part of the basis for Plaintiff’s breach of contract claim against LTG. Paragraph 11 specifically alleges what LTG failed to do under the contract, which is necessary for a breach of contract claim. (See Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) With respect to paragraph 12 of the complaint, the Court agrees that these allegations appear to be in the vein of a fraud claim rather than breach of contract. (See Vill. Northridge Homeowners Assn. v. State Farm Fire & Cas. Co. (2010) 50 Cal.4th 913, 921 [fraud in the inducement].) Nevertheless, the Court finds these allegations provide additional context and support for the breach of contract and are not irrelevant, false, or improper. (See Code Civ. Proc., § 436, subd. (a); Compl., ¶¶ 7-14.)

Based on the foregoing, the Court DENIES the motion to strike with respect to paragraphs 11 and 12 of the complaint.

Request for Pre-Judgment Interest at the Legal Rate

LTG contends Plaintiff has not pleaded sufficient facts to support its demand for prejudgment interest at legal rates. LTG cites Civil Code section 3287, subdivision (a), which provides for recovery of prejudgment interest based on damages capable of being made certain. LTG contends the complaint fails to state the exact amount of damages sought and lacks sufficient factual support to demonstrate that LTG knows the amount owed or could have calculated it based on readily available information. LTG contends prejudgment interest is not a matter of right but rather an equitable remedy that should be granted only when warranted by the circumstances, which Plaintiff has failed to demonstrate here.

In opposition, Plaintiff contends uncertainty or inappropriateness of prejudgment interest is not the standard, and that LTG’s argument on this point goes to the merits of the action, which is beyond the scope of this motion. Plaintiff contends that this is merely one of the remedies Plaintiff seeks here as supported by its claim, and that there is nothing irrelevant, false, or improper about Plaintiff’s prayer for relief.

The Court finds LTG’s arguments unpersuasive and unavailing. In Stein v. Southern Cal. Edison Co. (1992) 7 Cal.App.4th 565, 573, the Court held that "Where the amount of damages cannot be resolved except by account, verdict or judgment, interest prior to judgment is not allowable."

Civil Code section 3287 provides, in pertinent part: (a) A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state. (Civ. Code § 3287(a) (emphasis added).)

The plaintiff is entitled to seek an award of pre-judgment interest on his cause of action for breach of contract since, such claim is capable of being made certain by calculation, and his right to recover is vested upon him upon a particular day. He is entitled to recover interest thereon from that day. Nothing more is needed.

Moreover, Civil Code section 3287, subdivision (b), provides for recovery of prejudgment interest for unliquidated damage claims. (Civ. Code, § 3287, subd. (b).) The complaint does not need to specify the exact amount of damages sought in order to recover them. “A legal dispute concerning the defendant's liability or the proper measure of damages, however, does not render damages unascertainable. [Citations.]” (Collins v. City of Los Angeles, supra, 205 Cal.App.4th at p. 151.) While the exact amount Plaintiff may be entitled to could be disputed, the Court could potentially award prejudgment interest under Civil Code section 3287, subdivision (b). Accordingly, the lack of specified amount of damages in the complaint does not render the request for prejudgment interest improper or subject to a motion to strike.

Based on the foregoing, the Court DENIES the motion to strike with respect to Plaintiff’s request for prejudgment interest on page 4 of the complaint.

Request for Specific Performance

LTG contends Plaintiff has not pleaded sufficient facts to support a request for specific performance. LTG contends Plaintiff’s request for specific performance is insufficient because it fails to establish the elements necessary for equitable relief. LTG contends Plaintiff must demonstrate having satisfied all contractual requirements and that monetary damages are inadequate to remedy the breach, and that Plaintiff has failed to do so. LTG also contends the court must consider equitable factors in determining whether to grant such relief, and that specific performance is inequitable or impractical here. LTG further contends Plaintiff has failed to demonstrate that monetary damages would be inadequate here.

In opposition, Plaintiff contends these are the same arguments raised in LTG’s demurrer and that such arguments fail for the same reasons set forth in Plaintiff’s opposition to the demurrer. Plaintiff contends the complaint is properly pleaded here and that some of the alleged breaches do not lend themselves to monetary damages, such as the obligation to provide original accounting records and transfer of tenant files and property plans. Plaintiff further contends it is self-evident here what contractual terms are being sought to be enforced, and that there is nothing irrelevant, false, or improper about Plaintiff’s prayer for relief.

The Court finds the complaint alleges sufficient facts to support Plaintiff’s request for specific performance. As noted above, the Court finds the complaint alleges sufficient facts to state a cause of action for breach of contract. The subject contract allegedly required LTG to perform certain obligations, such as prorating expenses, providing original accounting records, and transferring tenant files and property plans, and that LTG failed to perform those obligations. (Compl., ¶¶ 9-11.) The complaint also alleges that Plaintiff needs those records from the Defendants for tax, accounting, and reconciliation purposes. (Compl., ¶¶ 16-17.) The court finds these allegations adequately demonstrate the inadequacy of a legal remedy for these items. (See Valley Crest Landscape Dev., Inc. v. Mission Pools of Escondido, Inc. (2015) 238 Cal.App.4th 468, 492 [party seeking specific performance must allege facts demonstrating inadequacy of legal remedy].)

Based on the foregoing, the Court DENIES the motion to strike as to the request for specific performance on page 5 of the complaint.

DISCUSSION – Demurrer (LT Management Group and Shao)

Meet and Confer

Per Code of Civil Procedure section 430.41, subdivision (a), LT Management Group and Shao were required to meet and confer in person, by telephone, or by video conference before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) The Court finds LT Management Group and Shao’s meet-and-confer efforts satisfactory. (Huang Decl., ¶ 2.)

First Cause of Action – Breach of Contract

LT Management Group and Shao (collectively, Moving Parties) demur to the First Cause of Action for breach of contract on the grounds that it fails to state a cause of action. Moving Parties contend this cause of action fails because it is clear that Moving Parties are not parties to the subject contract. Moving Parties contend the complaint lacks any specific factual allegations indicating their involvement in the contract or the subject property. Moving Parties contend there are no allegations that they were signatories to the contract or that they knew of or participated in the alleged breaches. Moving Parties also contend whether they made any misrepresentations are immaterial.

In opposition, Plaintiff contends Moving Parties are alleged in the complaint to be alter egos of LTG. Plaintiff contends the complaint alleges there is a unity of interest and ownership between the Defendants and that Shao is a principal of both LTG and LT Management Group.

The Court finds the complaint fails to allege sufficient facts to state a cause of action for breach of contract against Moving Parties. The Court notes that paragraph 8 alleges that “Plaintiff and Defendant” entered into a written agreement, while paragraphs 9 through 14 refers to “Defendants.” (Compl., ¶¶ 8-14.) Since Plaintiff alleges that only one Defendant entered into a written agreement and did not attach a copy of the agreement, there are no facts alleged to show the Plaintiff entered into any agreement with Moving Parties.

Moreover, the Complaint fails to allege sufficient specific factual allegations that support an alter ego theory of liability against Moving Parties.

Based on the foregoing, the Court SUSTAINS the demurrer to the First Cause of Action with leave to amend.

Second Cause of Action – Specific Performance

Moving Parties demur to the Second Cause of Action for specific performance on the grounds that it fails to state a cause of action. Moving Parties contend this cause of action is duplicative of Plaintiff’s claim for breach of contract. Moving Parties then reiterate their arguments that Plaintiff has not alleged sufficient facts to state a cause of action for breach of contract since there is no contractual relationship between Plaintiff and Moving Parties. Moving Parties also contend that specific performance is a remedy for breach of contract rather than a standalone claim.

Plaintiff’s opposition does not address these arguments.

Since the Court finds that Plaintiff fails to state a cause of action for breach of contract as to Moving Parties, the Court also finds that the Second Cause of Action fails because specific performance must be tethered to a breach of contract claim.

Based on the foregoing, the Court SUSTAINS the demurrer to the Second Cause of Action with leave to amend.

CONCLUSION

The Court OVERRULES Defendant LTG South Hills LLC’s demurrer to the First and Second Causes of Action.

The Court DENIES Defendant LTG South Hills LLC’s motion to strike portions of the complaint.

The Court SUSTAINS Defendants LT Management Group and Shao Xing Max Yang’s demurrer to the First and Second Causes of Action of the complaint with 20 days leave to amend.

Defendants LT Management Group and Shao Xing Max Yang are ordered to give notice of the Court’s ruling within five calendar days of this order.