Judge: Mark A. Young, Case: 24SMCV05744, Date: 2025-05-22 Tentative Ruling

Case Number: 24SMCV05744    Hearing Date: May 22, 2025    Dept: M

CASE NAME:             You, Me and Sciences, Inc., v. Center Street Lending VIII SPE, LLC

CASE NO.:                   24SMCV05744

MOTION:                     Motion to Strike Punitive Damages

HEARING DATE:   5/22/2025

LEGAL STANDARD 

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.) 

REQUEST FOR JUDICIAL NOTICE

Defendant’s request for judicial notice is GRANTED. (Evid. Code §452(c), (d).)

ANALYSIS 

Defendant Center Street Lending VIII SPE LLC moves to strike the request for punitive damages in Plaintiff You, Me and Sciences, Inc.’s complaint.

Reviewing the allegations, Plaintiff has not pled sufficient facts to support a claim of punitive damages under Civil Code section 3294. Section 3294 defines malice as conduct “intended by the defendant to cause injury to the plaintiff,” or “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. Despicable is a powerful term used to describe circumstances that are “base,” “vile,” or “contemptible.” (Coll. Hosp. v. Superior Ct. (1994) 9 Cal.4th 704, 726.) The statute “plainly indicates that absent an intent to injure the plaintiff, “malice” requires more than a “willful and conscious” disregard of the plaintiffs' interests. The additional component of “despicable conduct” must be found.” (Id.) 

The complaint alleges three causes of action for breach of Covenant of Good Faith and Fair Dealing, Breach of Contract, and violation of Bus. & Prof. Code § 17200. These causes arise from two construction loan secured by real property. (Compl. ¶¶ 10-14.) Defendant allegedly stalled reimbursement payments, underestimated completion percentages, delayed inspections and disbursed minimum payments in an attempt to delay the project which resulted in additional fees and the eventual demise of the project. (¶ 19.) Defendant is currently withholding $459,308.07 in construction funds for the Rindge Property and $806,022.54 in construction funds for the Manchester Property. (¶¶ 20, 31.) This prevented Plaintiff from remaining current on the monthly payments and resulted in default/foreclosure on the properties. (¶¶ 21-25.) Plaintiff timely submitted its monthly mortgage as required under the Note until Defendant’s own wrongful conduct made it impossible for Plaintiff to both fund the continued construction and meet the requirements of his Note. (¶ 34.) Defendant disregarded that Plaintiff had to absorb expenditures, and the consequences of time delays and insufficient disbursements. (¶ 35.) Plaintiff suffered harm including being charged late fees, a negative credit rating, and costs associated with funding construction on the Property. (¶ 45.) Defendant unreasonably withheld Plaintiff’s construction funds and limiting the release of funds, despite Plaintiff’s ongoing, substantial construction on the Property. (¶48.)

There are no charging allegations of malice or fraud as defined by section 3294. At best, Plaintiff alleges a mere conclusion that Defendant’s wrongful conduct is “oppressive” (Compl., ¶ 55.)  Further factual allegations are required to demonstrate Defendant subjected Plaintiff to “cruel and unjust hardship” in “conscious disregard” of Plaintiff’s rights. For example, further allegations are needed to show that Defendant’s “stalled reimbursement payments,” “underestimated completion payments,” and/or “delay” of inspections were despicable or intended to harm Plaintiff. (Compl., ¶ 19.)

Accordingly, the motion is GRANTED with leave to amend.

            In addition, as a corporation, Plaintiff must be represented by counsel.  At the Case Management Conference, the Court will set an OSC re: representation of Plaintiff.