Judge Mark A. Young, Case Number: 23SMCV01466, Date: 2024-04-10 Tentative Ruling

Judge: Mark A. Young, Case: 23SMCV01466, Date: 2024-04-10 Tentative Ruling

Case Number: 23SMCV01466 Hearing Date: April 10, 2024 Dept: M

CASE NO.: 23SMCV01466

MOTION: Demurrer to the Complaint

HEARING DATE: 4/10/2024

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 Central Realty Advisors Inc. (CRA) demurs to all causes of action, and moves to strike punitive damages allegations contained in Plaintiff’s first amended complaint (FAC).

Demurrer

CRA argues that there are no specific and substantive allegations against CRA, such that all causes of action against it are uncertain/ambiguous. The FAC makes no specific allegations of wrongful acts by CRA directly. CRA notes that many of the causes are only viable against landlords, and it was not an alleged owner of the subject property. Instead, the FAC apparently seeks to impose liability against CRA as an alleged co-conspirator with the other co-defendants to harass and drive Plaintiff out of her rent-controlled apartment. (FAC ¶ 2.) Thus, to establish the pled causes of action against CRA, Plaintiff needs to establish sufficient facts to support conspiracy liability against CRA.

Conspiracy liability is a theory of co-equal liability under which certain defendants may be held liable for an independent civil wrong committed by others. (Navarette v. Meyer (2015) 237 Cal.App.4th 1276, 1277.) “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration . . . Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort. A civil conspiracy, however atrocious, does not per se give rise to a cause of action unless a civil wrong has been committed resulting in damage.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-11 [internal citations and quotations marks omitted].)

“To allege a conspiracy, a plaintiff must plead: ‘(1) formation and operation of the conspiracy and (2) damage resulting to plaintiff (3) from a wrongful act done in furtherance of the common design.’ [Citation.]” (Daniels v. Select Portfolio Servicing, Inc.¿(2016) 246 Cal.App.4th 1150, 1173.) “It is not enough that the [conspirators] knew of an intended wrongful act, they must agree—expressly or tacitly—to achieve it.” (AREI II Cases¿(2013) 216 Cal.App.4th 1004, 1022.) A conspirator’s agreement to the conspiracy “may be inferred from the character of the acts done, the relations of the parties, the interest of the alleged conspirators, and other circumstances.” (Id. at 1024.) “[A] complaint is sufficient if it apprises the defendant of the ‘character and type of facts and circumstances upon which she was relying to establish the conspiracy.’ [Citation.]” (Id. at 1022.)

Agents and employees of a corporation cannot be liable for conspiracy when acting in their official capacities on behalf of the corporation. (Applied, supra, 7 Cal.4th at 512 n.4.) “‘[I]t is basic in the law of conspiracy that you must have two persons or entities to have a conspiracy. A corporation cannot conspire with itself any more than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation . . ..’” (Black v. Bank of America (1994) 30 Cal.App.4th 1, 6, quoting Kerr v. Rose (1990) 216 Cal.App.3d 1551, 1564.) “To hold that a subordinate employee of a corporation can be liable for conspiring with the corporate principal would destroy what has heretofore been the settled rule that a corporation cannot conspire with itself.” (Id.)

The FAC fails to allege sufficiently the circumstances and facts upon which conspiracy liability is sought against CRA. The FAC alleges that all Defendants conspired and agreed to acquire several rent-controlled properties, including the subject property, with the common purpose of removing “rent-controlled” tenants and raising the rents to market rates. (FAC ¶ 40.) Each defendant alleged knew of the scheme and their acts and omissions alleged were in furtherance of this scheme. (¶ 41.) Defendant David Duel secured the services of a real estate brokerage, Kimberly Roberts Stepp, and her agency, R&LS Investments, Inc., to create the backdrop of a pending sale intended to be used as an artifice to begin the process of unlawfully removing Plaintiff prior to the sale. (¶ 42.) In May 2019, Plaintiff received several telephone calls from Defendant Terry Polesie, notifying her that the subject property was to be sold, and that Plaintiff was required by law to vacate her rent-controlled unit immediately. (¶ 47.) Starting at this time, Plaintiff was subjected to unannounced entries into her unit by unspecified defendants that were not related to repairs or services. (¶ 48.) After refusing to vacate, Plaintiff began receiving relentless harassment and threats from unspecified Defendants. (¶ 49.) In May 2019, Defendant Ilana Yamtoobian contacted Plaintiff and fraudulently held herself out as an “independent mediator” attempting to help Plaintiff negotiate a buyout which she represented would be of tremendous financial benefit to her. (¶ 50.) As a result of this harassment and pressure, Plaintiff involuntarily relinquished possession of her unit on June 4, 2019. (¶ 51.)

The FAC does not establish that Duel, Stepp, R&LS, Polesie or Yamtoobian were agents of CRA. The FAC only establishes that Defendant Rebecca Duel was the agent/principal of CRA. (FAC ¶ 17.) Thus, CRA’s liability is dependent on Ms. Duel’s acts in furtherance of the conspiracy. As to Ms. Duel, the FAC alleges she fraudulently misrepresented that Plaintiff was required by law to vacate her unit and demanded that Plaintiff immediately vacate the unit. (¶ 49.) While Ms. Duel allegedly made misrepresentations in furtherance of the conspiracy, the FAC fails to plead those misrepresentations with the increased specificity required to support liability on a fraud-based cause of action. The FAC does not allege the when, where and by what means of the misrepresentations. (See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469 [“The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.”]; Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 878 [for a corporate defendant, plaintiff must also allege the names of the persons who made the allegedly fraudulent representations and their authority to speak on behalf of the corporate defendant].) Without such allegations, the FAC does not establish CRA’s liability for conspiracy based on the fraud.

Accordingly, CRA’s demurrer is SUSTAINED. The motion to strike is moot per the ruling on demurrer. Leave to amend will be granted following consideration of the other demurrers/motions to strike on calendar. There are four other hearing dates for demurrers with motions to strike scheduled for May 7, 2024 (Terry Polesie and Surf Realty Corp.), May 15, 2024 (David Duel, Rebecca Duel, Ilana Yamtoobian, Raffi Shirinian, Urban Blox LLC, S Bonita One, IY EK Partners LLC, 27 Ozone LLC, Urban Developer LLC, Thornton Property One, Nourafshan Venice Properties LLC), May 21, 2024 (RIF Investments-2 LLC and David Nourafshan), and July 24, 2024 (Stepp Commercial and Kimberly Roberts Stepp). In the interest of judicial economy, the Court shall hear all four demurrers on May 7, 2024, at 8:30 a.m. In addition, the Court advances the Case Management Conference to May 7, 2024, at 8:30 a.m.