Judge: Lynne M. Hobbs, Case: 24STCV32262, Date: 2025-04-21 Tentative Ruling
Case Number: 24STCV32262 Hearing Date: April 21, 2025 Dept: 61
MAERC, L.L.C. vs 2807 WEST SUNSET LLC, et al.
Tentative
Defendants Jami Burrows and Humming Byrd Consulting, LLC’s Demurrer to the Complaint is SUSTAINED with leave to amend, within 20 days of this Order.
Moving party to give notice.
Analysis
I. DEMURRER
A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”) “In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)
A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)
Defendants Jami Burrows and Humming Byrd Consulting, LLC (HBC, or collectively Defendants) demurrer to two aspects of Plaintiff Maerc, LLC’s (Plaintiff) Complaint: the second count of the first cause of action for declaratory relief, and the first count of the fourth cause of action for breach of the covenant of good faith and fair dealing. (Demurrer at pp. 7–12.) Both claims rest on allegations that Plaintiff possessed an option to purchase HBC by a certain date, but that Plaintiff has not exercised the option because Defendant 2807 West Sunset (Sunset) has failed to follow through on agreements to sell the premises where HBC’s business is operated, and Defendants have declined to extend the option or permit Plaintiff to secure its interest in the property before exercising the option. (Complaint ¶¶ 37–38.)
Defendants argue that the option — in an agreement attached to the Complaint as an exhibit — permits its exercise “[a]t any time during the Authorized Use Period or any extension thereof.” (Complaint Exh. B, § 6.5.) That “Authorized Use Period” lasts “from the date of execution of this Agreement [on April 17, 2024] for a period of ninety days,” unless Plaintiff provided notice of an option to extend for a further 90 days, or the parties otherwise agree. (Complaint Exh. B, § 6.) Defendants argue that per the terms, the option could only be exercised by July 17, 2024, unless otherwise extended. (Demurrer at pp. 8–9.)
Plaintiff’s first cause of action for declaratory relief against Defendants alleges as follows:
Defendants BURROWS and HUMMING BYRD contend that Plaintiff may not reasonably condition Plaintiff’s exercise of the purchase option set forth therein at Section 6.5 on a resolution as to the dispute concerning Plaintiff’s rights in the Properties as a tenant under the Lease and/or the buyer under the Purchase Agreements. Plaintiff contends that the principles of equity require that Plaintiff’s interests in the Properties be resolved as against Defendants SUNSET, PFMLLC, and PFMCA before Plaintiff’s rights to exercise the purchase option can be lost. (Complaint ¶ 48.)
Defendant argues that Plaintiff cannot claim an equitable extension of the option because Plaintiff’s allegations make clear that the failure to exercise the option was intentional, and neither the product of mistake or inadvertence on the part of Plaintiff nor any wrongful act on the part of Defendants. (Demurrer at p. 8–10.)
Defendant relies on the case Simons v. Young (1979) 33 Cal.App.3d 170, in which the court of appeal reversed a trial court’s ruling that equity warranted the extension of a contractual option period based on the mistake or inadvertence of the party who wished to exercise the option. That case involved a tenant of real property whose lease contained an option to extend, which the tenant plaintiff failed to timely exercise because he was out of the country when the option deadline passed. (Id. at pp. 174–176.) The trial court granted equitable relief to Plaintiff on principles relating to relief from forfeiture, reasoning that the tenant’s conduct was not grossly negligent, and that the defendant landlord had suffered no damages from the plaintiff’s belated exercise of the lease. (Id. at pp. 177–178.)
The court of appeal reversed, holding that, “while a court may grant relief on traditional grounds for equitable intervention such as fraud, accident or mistake, it may not grant equitable relief to extend an option period beyond that agreed to by the parties when, as here, the failure to timely exercise the option is due entirely to the inadvertence or neglect of the optionee to which the optionor in no way contributed.” (Simons v. Young (1979) 93 Cal.App.3d 170, 182.) The court cited with approval the Mississippi case of Koch v. H&S Development Co. (1964) 249 Miss. 590, in which the court stated: “The rule is well recognized that equity will not relieve against a forfeiture in case of default of performance due to inadvertence, neglect, or ignorance to which lessor in no way contributed. . . . Equity will not relieve against mere forgetfulness and will not intervene where there is no fraud, accident or mistake on account of which the lessee neglected to avail himself of the option.” (Simons, supra, 93 Cal.App.3d at p. 187, citing Kock, supra, 249 Miss. at p. 629.)
Defendants here argue that under the above authority, Plaintiff has stated no entitlement to equitable extension of the option because Plaintiff alleges that its failure to exercise the option was intentionally done in an attempt to preserve its interest in the real properties at issue in its purchase agreements with Sunset. Defendants, by contrast, were not parties to those agreements, had no role in the frustration of those agreements and engaged in no wrongful conduct other than the insistence upon abiding by the option’s written terms. (Demurrer at pp. 9–10.)
Plaintiff in opposition argues that Defendants’ arguments rely on factual allegations contained in their cross-complaint. (Opposition at p. 4.) But while the demurrer contains a summary of Defendants’ cross-claims, their argument does not rely upon them. Plaintiff next argues that the claim for declaratory relief is sufficiently pleaded because it alleges a contractual relationship and a dispute related to rights under the agreement, as required in Code of Civil Procedure § 1060. (Opposition at p. 5.) But Plaintiff presents no authority for the proposition that a demurrer to a declaratory relief cause of action must be overruled if a dispute is alleged, even if the facts supporting the plaintiff’s position demonstrate they are entitled to no relief.
Plaintiff argues that Defendant’s argument rests upon an allegation that Plaintiff breached the contract, which is not necessary for a declaratory relief cause of action. (Demurrer at pp. 5–6.) But again, this argument has no evident relation to the demurrer, which rests upon Plaintiff’s failure to allege facts that would support an equitable extension of the option period. Plaintiff finally attempts to distinguish Simons by arguing that it involved a decision following a bench trial, rather than a demurrer, and that its decision rested upon the application of Civil Code § 3275. (Opposition at p. 5, fn. 3.) But the argument as to Civil Code § 3275 is simply not true, as the Simons court discussed why equity could not extend the option under both that statute and the application of ordinary equitable principles. (Simons, supra, 93Cal.App.3d at pp. 185–186.) And the different procedural posture of Simons is no basis to distinguish it from our case, for much as the facts found by the trial court provide insufficient basis for equitable relief there, the facts alleged by Plaintiff, which indicate no wrongful conduct by Defendants save adherence to the option’s terms, offer no sufficient basis for equitable relief here.
Accordingly, the demurrer is SUSTAINED as to the second count of the first cause of action for declaratory relief.
The same argument also warrants dismissal of Plaintiff’s fourth cause of action against Defendants for breach of the covenant of good faith and fair dealing. “A plaintiff claiming breach must allege the defendant's wrongful conduct was contrary to the contract's purpose and the parties’ legitimate expectations.” (Cordoba Corp. v. City of Industry (2023) 87 Cal.App.5th 145, 156.) Here, Plaintiff alleges no wrongful conduct by Defendants, save their refusal to extend the period contractually provided for the option. As Defendants note in demurrer, “it is well settled the implied covenant does not extend so far as to impose enforceable duties that are beyond the scope of the contract, nor does the covenant prohibit actions that are expressly authorized by the contract's terms.” (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 525.) Plaintiff in opposition attempts to cite allegations in the Complaint addressing Defendants’ wrongful conduct, but the only allegation describing their conduct is one describing their “refus[al] to hold open Plaintiff’s purchase option.” (Opposition at p. 7, Complaint ¶ 82.) Defendants were not obliged under the contract to hold open the option, and Plaintiff’s allegations here attempt “to impose enforceable duties that are beyond the scope of the contract.” (Jenkins, supra, 216 Cal.App.4th at p. 525.)
The demurrer is therefore SUSTAINED with leave to amend.