Judge: Margaret L. Oldendorf, Case: 22BBCV00019, Date: 2023-05-03 Tentative Ruling
Case Number: 22BBCV00019 Hearing Date: May 3, 2023 Dept: P
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
NORTHEAST DISTRICT
I.
INTRODUCTION
This litigation concerns a commercial lease. Plaintiffs
Diamond Dreams Production, Inc. (DDI) and Simin Hashemizadeh were tenants of
Defendants Raffi Paichuk and Silva Baghdasarian. The lease was for five years. In
December 2019, near the end of the term, there were discussions between
Hashemizadeh and Defendants which resulted in the parties agreeing to renew for
a second five-year term.
Shortly after renewal of the lease the Covid pandemic
hit. In the main action, Plaintiffs allege that in April 2020 and April 2021they
wrote to Defendants about the need for rent relief under protections afforded
to tenants in Los Angeles County. They allege that despite this, they discovered
in January 2022 that Defendants had wrongfully changed the locks and taken back
possession of the premises, upon which they had expensive personal property.
Both the complaint and cross-complaint contain claims for
breach of contract and fraud. In the main action, Plaintiffs allege that during
the lease renewal discussions, Baghdasarian told Hashemizadeh that he would
cooperate and sign an Application for Zoning Administration Decision so that
Plaintiffs could use the property for video production. Based on that
assurance, she agreed to a new five-year term. Plaintiffs allege that despite
numerous requests Defendants refused to sign the Application and consequently
Plaintiffs have been unable to conduct business. (Defendants’ demurrer to this
cause of action was recently overruled.)
The cross-complaint alleges that during lease renewal
discussions, Hashemizadeh told Paichuk that she would use the property for a
lawful purpose, and based upon that representation he agreed to the lease
renewal. The cross-complaint alleges the property was in fact used for an
illegal purpose.
Cross-Defendants DDI and Hashemizadeh (Tenants) demur to the
cross-complaint filed by Cross-Complainants Paichuk and Baghdasarian
(Landlords). Specifically, they challenge the First Cause of Action for “property
damage” and the Third Cause of Action for intentional misrepresentation. The demurrer
to the “property damage” cause of action is sustained. Property damage is not
itself a cause of action, but a form of damage. In this case, to the extent
Landlords can establish a tort against Tenants and can also establish they
suffered property damage, they will have alleged a basis for recovering such
damages. The demurrer to the fraud cause of action is overruled. Given the
contractual relationship between the parties, as in the main action, the fraud
alleged essentially consists of a claim of fraudulent inducement to contract.
II. LEGAL
STANDARD
Code
Civ. Proc. §430.10(e) permits a party to file a demurrer on the basis that a
complaint fails to state a cause of action. A demurrer admits, provisionally
for purposes of testing the pleading, all material facts properly pleaded. Tindell v. Murphy (2018) 22 Cal.App.5th
1239, 1247. Pleadings are to be broadly construed (Code Civ. Proc. §452) and
demurrers are to be overruled where the facts are sufficient to state any cause
of action. Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th
26, 38.
However,
fraud is subject to a heightened pleading standard:
“In
California, fraud must be pled specifically; general and conclusory allegations
do not suffice. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 74, 269
Cal.Rptr. 337; Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268, 258
Cal.Rptr. 787; 5 Witkin, Cal.Procedure (3d ed. 1985) Pleading, § 662, pp.
111–112.) ‘Thus “ ‘the policy of liberal construction of the pleadings ... will
not ordinarily be invoked to sustain a pleading defective in any material
respect.” ’ [Citation.] [¶] This particularity requirement necessitates
pleading facts which show how, when, where, to whom, and by what means the
representations were tendered.” (Stansfield, supra, 220
Cal.App.3d at p. 73, 269 Cal.Rptr. 337, italics in original.)” Lazar v.
Superior Court (1996) 12 Cal.4th 631, 645.
Code
Civ. Proc. §430.10(f) provides for a demurrer when a pleading is uncertain.
Only
when a pleading is so uncertain a defendant cannot determine what must be
admitted or denied is a demurrer for uncertainty appropriate. Khoury v. Maly’s of California (1993) 14
Cal.App.4th 612, 616.
III. ANALYSIS
A. Facts Alleged
The Cross-Complaint concerns a commercial lease of real
property located at 5535 Cahuenga Blvd. in North Hollywood. The original lease,
dated March 25, 2015 for a five-year term ending March 31, 2020, and lease
extension with new five-year term dated December 20, 2019, are attached as
Exhibits to the Cross-Complaint.
The Cross-Complaint is set forth on a Judicial Council
form for “Personal Injury, Property Damage and Wrongful Death.” On page 3,
paragraph 10 is checked, and the words “property damage” are typed in. No
factual allegations are specified. The box at paragraph 11 is also marked,
indicating that other causes of action are alleged in attachments. These
additional causes of action are listed as breach of contract, breach of
guaranty, and intentional misrepresentation.
The gist of the breach of contract cause of action is
that Tenants failed to pay rent for the period from April 2020 through March
2025, leaving Landlord with damages of $1,008,908.68, plus taxes and insurance.
In the intentional misrepresentation cause of action, Paichuk and Baghdasarian allege that Hashemizadeh, individually and as
a representative of DDI, represented to Paichuk that she intended to lease the
premises for a lawful purpose and that Paichuk, in reliance thereon and
justified by his prior relationship with the rent paying tenant, executed a
lease in Tenants’ favor. It is alleged that this representation was false and
that in fact Tenants intended to use the property for an illegal purpose and intended
to stop paying rent. Landlords allege that this illegal use of the property caused
damage to the premises and caused Landlords to suffer lost rent because they
were unable to rent the premises to rent-paying tenants. Landlords allege damage
to their property, loss of use of property, and loss of rental income. They
also pray for punitive damages.
B. Procedural Considerations
On January 6, 2023, Tenant’s attorney Sherri Shafizadeh
filed a declaration (CIV-141) stating that she had written to Landlords’
attorney Adam Apollo on January 4, 2023 that she intended to file a demurrer on
behalf of her clients; and that she articulated the basis for the demurrer. She
states that Mr. Apollo did not respond to her email. Pursuant to this form,
Tenants obtained an additional 30 days in which to file their demurrer.
However, Code Civ. Proc. §430.41(a)(3) requires that a
declaration must be filed with a demurrer setting forth either the means by
which the parties met and conferred, or that the party subject to the demurrer
failed to respond to a meet and confer request. No such declaration accompanies
this demurrer. This is not, however, grounds for overruling the demurrer. Code
Civ. Proc. §430.41(a)(4); Dumas v. Los Angeles County Bd. of Supervisors
(2020) 45 Cal.App.5th 348, 355-356.
C. Discussion
1. The First Cause of Action for “Property Damage”
Tenants raise both a general demurrer and a special
demurrer for uncertainty to this cause of action. They argue that the
Cross-Complaint fails to state what damages were allegedly caused to the
property and further, whether there is alleged to be damage to real or personal
property. If real property, Tenants
argue further that the pleading lacks any allegation of ownership, which is
needed for standing. As Tenants put it, “There are absolutely no facts
underlying what Cross Defendants did or failed to do. For example, what was
damaged, the cause of the damage, the monetary amount of the damages, and how
this caused damage to Cross-Complainants.” Memorandum of Points and Authorities
at 6:6-8.
In opposition, Landlords identify the places in the
Cross-Complaint where the words “property damage” are alleged. They point out,
for example, the allegation on page 3, ¶12, of “malicious damage to real
property.” Landlords also point to allegations on page 5 at ¶FR-2 (b), where
they allege damage to their “premises.” Landlords argue this allegation
demonstrates both that the claim involves real property and that they have
alleged ownership.
Landlords also urge that a claim for “property damage” is
proper, citing CACI 3903F. Landlords argue that this jury instruction does not contain
additional elements, and therefore the bare factual allegation of property
damage suffices. However, the very first “Instruction for Use” under CACI 3903F
is, “Give this instruction for damages to real property caused by trespass,
permanent nuisance, or other tortious conduct.” In other words, this jury
instruction is to be used where the plaintiff (or cross-complainant) has
asserted an adequate underlying wrong, and property damage is part of the
damages being sought. Landlords’ reliance on Civ. Code §3334(a) fails for the
same reason; this section simply provides for damages that may be awarded where
there has been a separately alleged cause of action, such as for the wrongful
occupation of real property.
If Landlords are able to allege wrongful occupation of
real property they will be entitled to whatever damages are appropriate,
including property damage pursuant to Civ. Code §3334(a). If, as alleged in
their fraud cause of action, the Tenants caused property damage, the Landlords
will be able to recover such damages. CACI 3903F. But merely alleging property
damage adds nothing to the cross-complaint; the allegation is superfluous as Landlords
have not shown that it is an independent cause of action. The demurrer is
therefore sustained as to this cause of action.
2. Intentional Misrepresentation
Tenants cite cases holding that where there is a
contract, a tort claim is permissible “only when it also violates an
independent duty arising from principles of tort law. Applied Equipment Corp. v. Litton Saudi
Arabia Ltd. (1994) 7 Cal.4th 503, 515; Erlich v. Menezes (1999) 21
Cal.4th 543, 552 [“the duty that gives rise to tort liability [must be] either
completely independent of the contract or arises from conduct which is both
intentional and intended to harm”]. Tenants argue that something more than mere
nonperformance is needed to prove an intent not to perform, citing Tenzer v.
Superscope, Inc. (1985) 39 Cal.3d 18, 30.
Landlords address only Tenzer in their opposition
brief. They correctly note that Tenzer involved a summary judgment motion
rather than a demurrer, and therefore the opinion does not necessarily govern
the analysis here. They also urge that they have alleged more than mere
non-performance because they allege Tenants did not simply stop paying rent,
but that they also held onto the premises and used it for an illegal purpose.
Whether use of the property for an illegal purpose
amounts to something more than a breach of contract is a close call; however,
it is a question better addressed at a later stage of the case. The Court concludes that something more than
mere breach is alleged here; the allegation of illegal use of the property is
considered an independent breach of duty for purposes of determining the
sufficiency of the Cross-Complaint.
It should be noted that both the Complaint and
Cross-Complaint contain this mix of contract and fraud claims. Neither pleading
uses the words “fraudulent inducement,” but that appears to be the gist of both
claims. In the main action, Tenants essentially allege that they were fraudulently induced to enter
into the lease extension based on a false promise by Landlords that they would
cooperate with Tenants’ zoning application. In the cross-action, Landlords
allege (in essence) that they were fraudulently induced to enter into the lease
extension based on a false promise by Tenants that they would use the property
for a lawful purpose. It may be that neither of these claims actually amounts
to fraud. Tenants allege Landlords had a duty under
Paragraph 6.1 to not unreasonably withhold consent to modification of the use.
Landlords allege that Tenants used the property illegally, but the lease
provides at ¶1.7 that the property will be used for “Storage and other
permissible related uses.” In other words, to the extent the parties have accused
each other of intentional or bad faith breaches, they may ultimately have only alleged
breach of contract. Nevertheless, the Court concludes that these types of
claims are sufficiently alleged.
Tenants also argue that Landlords have not alleged
justifiable reliance, and that the pleading does not meet the heightened
pleading standard for fraud. Landlords argue in opposition that the
Cross-Complaint alleges their reliance was reasonable because of the prior
history with Tenants. Further, they point out that they allege that Hashemizadeh,
individually and on behalf of DDI, represented to Paichuk that she intended to
lease the property for a lawful purpose. While the “when” allegation could have
been more specifically alleged, in the context of the other allegations of the
Cross-Complaint it is clear enough that this occurred during the time the lease
renewal was being discussed.
IV. CONCLUSION AND ORDER
The demurrer to the Cross-Complaint is sustained as to
the “Property Damage” cause of action on the ground that this is a form of
damage but not a standalone cause of action. Pleading it separately adds
nothing to the pleading because property damages as property damages will be
recoverable if Landlords prove up their breach of contract or fraud claim. If leave
to amend is requested and if Landlords can articulate specific way that the
pleading may be amended, leave to amend will be provided. Shaeffer v.
Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1145.
The demurrer is otherwise overruled, and the Tenants are
granted 10 days to answer.
Moving party is ordered to give notice of this ruling.
Dated: _______________________________
MARGARET L. OLDENDORF
JUDGE
OF THE SUPERIOR COURT