Judge: Mark A. Young, Case: 22SMCV00909, Date: 2023-03-08 Tentative Ruling
Case Number: 22SMCV00909 Hearing Date: March 8, 2023 Dept: M
CASE NAME: Rechnitz, et
al., v. Englanoff
CASE NO.: 22SMCV00909
MOTION: Demurrer
to the Complaint
HEARING DATE: 3/8/2023
Legal
Standard
A
demurrer for sufficiency tests whether the complaint states a cause of action.
(Hahn v. Mirda (2007)
147 Cal.App.4th 740, 747.) When considering demurrers, courts read the
allegations liberally and in context. In a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) 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. (CCP §§
430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate
facts sufficient to apprise the defendant of the factual basis for the claim
against him. (Semole v. Sansoucie
(1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit
contentions, deductions or conclusions of fact or law alleged in the pleading,
or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen
(1964) 226 Cal.App.2d 725, 732, internal citations omitted.)
A
special demurrer for uncertainty is disfavored and will only be sustained where
the pleading is so bad that defendant cannot reasonably respond—i.e., cannot
reasonably determine what issues must be admitted or denied, or what counts or
claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s
of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if
the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Ibid.)
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. (CCP § 435(b)(1); Cal. Rules of Court, Rule
3.1322(b).) The court may, upon a motion or at any time in its discretion and
upon terms it deems proper: (1) strike out any irrelevant, false, or improper
matter inserted in any pleading; or (2) strike out all or any part of any
pleading not drawn or filed in conformity with the laws of California, a court
rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a
pleading which is not essential to the claim is surplusage; probative facts are
surplusage and may be stricken out or disregarded”].)
“Liberality in permitting amendment
is the rule, if a fair opportunity to correct any defect has not been given.” (Angie
M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of
discretion for the court to deny leave to amend where there is any reasonable
possibility that plaintiff can state a good cause of action. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to
show in what manner plaintiff can amend the complaint,
and how that amendment will change the legal effect of the
pleading. (Id.)
Analysis
Defendant’s request for judicial notice is GRANTED. (Evid. Code §
452(d).)
Fraud Causes
Defendant demurs to the first through third causes of action, which are
all fraud based causes of action. The elements of
fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure);
(b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to
induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay
v. Cobert (2006) 145 Cal.App.4th 170, 184.)
Concealment is a species of fraud or deceit. (Blickman Turkus, LP v. MF
Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.) “[T]o establish fraud
through nondisclosure or concealment of facts, it is necessary to show the
defendant ‘was under a legal duty to disclose them.’” (OCM Principal Opportunities
Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 845.) Concealment
may constitute actionable fraud when: (1) there is a fiduciary relationship
between the parties; (2) the defendant had exclusive knowledge of material
facts not known to the plaintiff; (3) the defendant actively conceals a
material fact from the plaintiff; and (4) the defendant makes partial
representations but also suppresses some material facts. (Los Angeles
Memorial Coliseum Commission v. Insomniac, Inc. (2015) 233 Cal.App.4th 803,
831.)
Negligent misrepresentation requires the defendant to make false
statements believing them to be true, but without reasonable ground for such
belief. (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.) In California, fraud, including negligent
misrepresentation, must be pled with specificity. (Small v. Fritz Companies,
Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a
plaintiff plead facts which show how, when, where, to whom, and by what means
the representations were tendered.” (Cansino v. Bank of America (2014)
224 Cal.App.4th 1462, 1469.)
The Complaint fails to provide
sufficient facts to support the heightened pleading standard of fraud. The complaint alleges that on May 15,
2017, Plaintiffs and Defendant entered into a residential lease agreement for
the Premises (9533 Sawyer Street, Los Angeles, California 90035). (Compl., ¶6.)
Monthly rent was $17,000. On March 1, 2020, Plaintiffs and Defendant entered
into a lease addendum whereby Plaintiffs extended the residential lease until
May 14, 2021, with a monthly rent of $17,510. (¶ 8.)
As to the misrepresentations, the
Complaint alleges ambiguously that “before Tenants entered into the Lease,
Landlord orally represented to Tenants the 3 following false material facts
relating to the Premises: [¶] a. the Premises were in excellent condition and
not in need of any repair; and, [¶] b. Landlord knew the preceding facts to be
true arising out of his causing the Premises, including its systems to be
inspected before Tenants entered into the Lease[.]” (Compl., ¶ 10.) In reliance
on these representations, Tenants entered into the lease. (¶ 11.) From May 17,
2017, to the present, Tenants resided at the Premises. (¶ 12.) Tenants have
dutifully paid their rent to Landlord as required under the Lease and Addendum.
(¶ 13.) The ”Premises were and remain in poor condition and were and/are in
need of significant repairs, including those relating to the roof, plumbing
systems, sewer lines, gas lines, HVAC, and inoperable oven, among other things,
which rendered the Premises uninhabitable[.]” (¶ 15.) Further, Landlord refused
to make requested repairs, forcing Tenants to make them. (Id.) Due to these
poor conditions, the fair rental value of the Premises is significantly less
than the amounts required under the Lease. (¶ 16.)
These allegations do not establish
the misrepresentations with any detail. Plaintiffs only generally state the
nature of the affirmative misrepresentations. Moreover, Plaintiffs do
not allege how,
when, where, to whom, and by what means the representations were tendered. The
Complaint only states “before” the lease was entered. The Lease identifies the
Landlord as the Trust. (Compl., ¶ 2.) As this is not a person, the complaint
does not specifically plead who made the representations. Without
these details, the heightened pleading standard for fraud has not been met.
Accordingly, Defendant’s demurrer
is SUSTAINED with leave to amend as to these causes of action.
Breach of Contract Claims
Defendant demurs to the
contract-based claims (fourth and fifth causes of action) on the grounds that
Plaintiffs fail to attach the relevant contract, or plead their material terms. Indeed, 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. (McKell v. Washington Mutual, Inc. (2006) 142
Cal.App.4th 1457, 1489.) In order to plead a contract by its legal effect, a
plaintiff must “allege the substance of its relevant terms. This is more
difficult, for it requires a careful analysis of the instrument,
comprehensiveness in statement, and avoidance of legal conclusions.” (Id.)
Plaintiffs have failed to attach
the requisite copies of the lease agreements in question. Moreover, Plaintiffs
fail to offer the express terms of the respective agreements as required by their
legal effect. Plaintiffs further fail to set forth any particular provision of
the contract Defendant breached. Plaintiffs’
complaint is also ambiguous as to whether the complaint is oral or written. In
one portion of this Complaint, Plaintiffs allege that the agreement was
written. (Compl. ¶¶ 6-8.) Plaintiffs also allege that the agreement was part in
writing and part oral. (Compl. ¶ 38.) Plaintiffs do not attempt to plead which
terms were oral or written.
Accordingly, Defendants’ demurrer
is SUSTAINED with leave to amend.
Implied Warranty of Habitability
As this claim is inherently
contract-based, the demurrer is SUSTAINED for the same reasons as the
contract-based claims discussed above. As noted, Plaintiffs failed to provide,
attach, or allege the terms of the lease agreement.
Otherwise, Defendant demurs to the sixth cause of action on
the grounds that the complaint fails to allege facts that Plaintiffs
provided notice to Defendant of the alleged conditions, or that Defendant was
given a reasonable time to correct the alleged deficiencies. Defendant contends
that the complaint only makes conclusory allegations.
The warranty of habitability is implied by law in
residential leases in California.¿(Green v. Superior Court¿(1974) 10
Cal.3d 616, 635-37.) “This implied warranty of habitability does not require
that a landlord ensure that leased premises are in perfect, aesthetically
pleasing condition, but it does mean that ‘bare living requirements' must be
maintained.”¿(Id.)¿“In most cases substantial compliance with those
applicable building and housing code standards which materially affect health
and safety will suffice to meet the landlord's obligations under the common law
implied warranty of habitability... ‘(m)inor¿housing code violations standing alone which do not affect
habitability must be considered de minimis and will not entitle the tenant to
reduction in rent.’”¿(Id.,¿at 637-38.)¿
Through the covenant, a tenant can reasonably expect that the landlord will maintain the
property in a habitable condition by repairing promptly any conditions, of
which the landlord has actual or constructive notice, that arise during the
tenancy.¿(Peterson v. Superior Court¿(1995) 10 Cal.4th 1185, 1205-26.)¿A
tenant cannot reasonably expect that the landlord will eliminate defects
in a rented dwelling of which the landlord was unaware and which could not have been disclosed by reasonable
inspection. (Id.)¿Thus, the landlord’s actual or constructive
notice of the alleged uninhabitable condition is an essential prerequisite to
an actionable breach of habitability claim.¿(Id.)
A tenant may bring
suit against a landlord for damages resulting
from a landlord’s breach of the warranty of habitability. (Erlach, supra,
226 Cal.App.4th at 1297.) “The elements of such an affirmative claim are [1]
the existence of a material defective condition affecting the premises'
habitability; [2] notice to the landlord of the condition within a reasonable
time after the tenant's discovery of the condition; [3] the landlord was given
a reasonable time to correct the deficiency, and [4] resulting damages.” (Id.)
Relevantly, the complaint alleges that Landlord owed Tenants a
duty to maintain and keep the Premises habitable during the Tenancy Period. (¶
50.) At all relevant times, the Premises were not habitable. (¶ 51.) As such,
Landlord breached the implied covenant. (¶ 52.) The complaint generally pleads that the
premises was in “poor condition” and needed repairs, including conditions
“relating” to the roof, plumbing systems, sewer lines, gas lines, HVAC, and an inoperable
oven. (¶ 15.) The only specific condition pled here is an “inoperable oven.” Plaintiffs
do not plead that Defendant had notice of this condition, or a reasonable time
to correct this condition. Otherwise, the complaint does not plead what
unhabitable conditions existed that affected the roof, plumbing systems, sewer
lines, gas lines, or HVAC. Thus, the complaint requires more facts.
Accordingly, Defendant’s demurrer
is SUSTAINED with leave to amend.
Reformation
Defendant demurs to the seventh
cause of action for reformation. Reformation is
not a separate cause of action. (Landis v. Superior Court (1965)
232 Cal.App.2d 548, 555.) Instead, it is “merely one of several remedies for a
single wrong. Where a cause of action is based on failure to perform the
intended agreement, the plaintiff may seek reformation and, in addition,
damages for breach, specific performance, etc. [Citation.]” (Ibid.)
The Court therefore SUSTAINS the demurrer to
the seventh cause of action without leave to amend.
Business
and Professions Code § 17200
Defendant demurs to the eighth
cause of action on the grounds that this statute is intended to protect the
consumer – not parties to a lease agreement; the complaint fails to state that Defendant
engaged in any conduct that misled or deceived members of the public; and the
complaint fails to direct this cause at an ongoing scheme or practice.
Business
and Professions Code section 17200 prohibits “any unlawful, unfair or
fraudulent business act or practice.” (Bus. & Prof. Code § 17200.) “[T]he ‘practice’ requirement envisions
something more than a single transaction . . . ; it contemplates a ‘pattern of conduct’ [citation],
‘on-going . . . conduct’ [citation], ‘a pattern of behavior’ [citation], or ‘a
course of conduct’ . . . .” (Hewlett v. Squaw Valley Ski Corp. (1997) 54
Cal.App.4th 499, 519.)
To establish a fraudulent practice, the plaintiff must show
that members of the public are likely to be deceived. (West v. JPMorgan
Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806.) “A fraudulent
business practice under section 17200 ‘is not based upon proof of the common
law tort of deceit or deception,
but is instead premised on whether the public
is likely to be deceived.’” (Pastoria v. Nationwide Ins. (2003) 112
Cal.App.4th 1490, 1498.) Stated another way, “In order to state a cause of
action under the fraud prong of [section 17200] a plaintiff need not show that
he or others were actually deceived or confused by the conduct or business
practice in question.” (Id.) Notably, the fraudulent prong of a UCL claim is less rigorous than
common law fraud as common law fraud requires allegations of actual falsity and
reasonable reliance while fraud under UCL does not. (Morgan v. AT&T
Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1256.)
Plaintiffs fail to plead sufficient
facts establishing a fraudulent business practice, or that Defendant’s conduct
is likely to deceive the public. The complaint alleges that the Landlord's
conduct constitutes “deceptive business practices,” including collecting
rent from Plaintiffs in excess of the Premises' fair rental value. (¶ 59,
emphasis added.) Plaintiffs pray that Defendant disgorges the rent overages
paid during the Tenancy in excess of the Premises' fair rental value. (¶ 60.) There
are no averments that Defendant’s conduct is likely to deceive the public.
Moreover, the complaint is unclear whether this is an ongoing business practice
as defined by section 17200.
Accordingly, Defendant’s demurrer
is SUSTAINED with leave to amend.
Plaintiff has ten days to file an
amended complaint consistent with this ruling.
Motion to Strike
The MTS is moot as to punitive
damages, given the leave to amend the fraud cause of action. As to the UCL damages, remedies for UCL
claims brought by private individuals are limited to injunctive relief and
restitution. (See, e.g., Prakashpalan v. Engstrom,
Lipscomb and Lack (2014)
223 Cal.App.4th 1105, 1133.) Plaintiffs concede
that this remedy is improper, as only restitution is allowable. Therefore, the
motion is GRANTED without leave as to the UCL claim.