Judge: Mark C. Kim, Case: 21LBCV00639, Date: 2023-02-28 Tentative Ruling
Case Number: 21LBCV00639 Hearing Date: February 28, 2023 Dept: S27
1. Background
Facts
Plaintiff, Palmcrest Grand Home
Assisted Living, LLC filed this action against Defendant, The Palms Real
Estate, LLC for breach of lease and declaratory relief. Defendant filed a demurrer to the complaint,
and Plaintiff filed the operative First Amended Complaint prior to the hearing.
The FAC also includes claims for breach of
lease and declaratory relief.
2. Motion
for Summary Judgment
a.
Parties’ Positions
Defendant moves for summary judgment/adjudication
on the First Amended Complaint (“FAC”) contending that there are no triable
issues of material fact because Plaintiff is unable to establish one or more
elements of the two causes of action in the FAC and that Plaintiff does not
possess nor will it reasonably obtain evidence needed to establish one or more
critical elements of its claim. In the
alternative, Defendant moves for summary adjudication of the issue of
contractual privity – that there is none between Defendant and Plaintiff and
hence Plaintiff cannot make demands upon Defendant to perform any obligation
under the Master Lease.
Plaintiff opposes the motion. It contends that it has a contractual right
to sue Defendant as master landlord directly for breach of lease despite the
lease characterizing Plaintiff as a subtenant because the sublease contains an
express provision allowing Plaintiff to pursue claims for breach of the master
lease directly against Defendant.
Defendant replies. It contends that there is nothing in the
agreement or amendments to the Master Lease which reflect that Defendant
understood and consented to a hybrid written agreement establishing a sublease
and an assignment of some but not all rights.
Defendant argues that Plaintiff’s assumption of the sublandlord’s obligations
does not mean it is now in privity of contract with the landlord. Defendant also argues that the court may not
consider course of dealing or other evidence to construe any term of the
sublease.
b.
Burdens on Summary Judgment
Summary judgment is proper “if all
the papers submitted show that there is no triable issue as to any material
fact and that the moving party is entitled to judgment as a matter of
law.” (Code Civ. Proc. §437c(c).) Where a defendant seeks summary judgment or
adjudication, he must show that either “one or more elements of the cause of
action, even if not separately pleaded, cannot be established, or that there is
a complete defense to that cause of action.”
(Id. at §437c(o)(2).) A
defendant may satisfy this burden by showing that the claim “cannot be
established” because of the lack of evidence on some essential element of the
claim. (Union Bank v. Superior Court
(1995) 31 Cal.App.4th 574, 590.) Once
the defendant meets this burden, the burden shifts to the plaintiff to show
that a “triable issue of one or more material facts exists as to that cause of
action or defense thereto.” (Ibid.)
The moving party bears the initial
burden of production to make a prima facie showing that there are no triable issues
of material fact. (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) A defendant moving for summary judgment must
show either (1) that one or more elements of the cause of action cannot be
established or (2) that there is a complete defense to that cause of
action. (Code Civ. Proc. §437c(p).) A defendant may discharge this burden by
furnishing either (1) affirmative evidence of the required facts or (2)
discovery responses conceding that the plaintiff lacks evidence to establish an
essential element of the plaintiff's case. If a defendant chooses the latter
option he or she must present evidence “and not simply point out that plaintiff
does not possess and cannot reasonably obtain needed evidence….” (Aguilar, supra, 25 Cal.4th at
865-66.)
“[A] defendant may simply show the
plaintiff cannot establish an essential element of the cause of action ‘by
showing that the plaintiff does not possess, and cannot reasonably obtain,
needed evidence.’” (Aguilar, supra,
25 Cal.4th at p. 854.) Thus, rather than
affirmatively disproving or negating an element (e.g., causation), a defendant
moving for summary judgment has the option of presenting evidence reflecting
the plaintiff does not possess evidence to prove that element. “The defendant may, but need not, present
evidence that conclusively negates an element of the plaintiff's cause of
action. The defendant may also present
evidence that the plaintiff does not possess, and cannot reasonably obtain,
needed evidence—as through admissions by the plaintiff following extensive
discovery to the effect that he has discovered nothing” to support an essential
element of his case. (Aguilar, supra,
at p. 855.) Under the latter approach, a
defendant's initial evidentiary showing may “consist of the deposition
testimony of the plaintiff's witnesses, the plaintiff's factually devoid
discovery responses, or admissions by the plaintiff in deposition or in
response to requests for admission that he or she has not discovered anything
that supports an essential element of the cause of action.” (Lona v. Citibank, N.A., supra,
202 Cal.App.4th at p. 110.) In other
words, a defendant may show the plaintiff does not possess evidence to support
an element of the cause of action by means of presenting the plaintiff's
factually devoid discovery responses from which an absence of evidence may be
reasonably inferred. (Scheiding v.
Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 83.)
Thus, a moving defendant has two
means by which to shift the burden of proof under the summary judgment statute:
“The defendant may rely upon factually insufficient discovery responses by the
plaintiff to show that the plaintiff cannot establish an essential element of
the cause of action sued upon. [Citation.] [Or a]lternatively, the defendant may utilize
the tried and true technique of negating (‘disproving’) an essential element of
the plaintiff's cause of action.” (Leyva
v. Garcia (2018) 20 Cal.App.51095, 1103.)
Until the moving defendant has
discharged its burden of proof, the opposing plaintiff has no burden to come
forward with any evidence. Once the
moving defendant has discharged its burden as to a particular cause of action,
however, the plaintiff may defeat the motion by producing evidence showing that
a triable issue of one or more material facts exists as to that cause of
action. (Code Civ. Proc. §437c(p)(2).) On a motion for summary judgment, the moving
party's supporting documents are strictly construed and those of his opponent
liberally construed, and doubts as to the propriety of summary judgment should
be resolved against granting the motion.
(D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 21.)
c. Requests
for Judicial Notice
Both parties submitted requests for
judicial notice with the moving and opposition papers. The
Court GRANTS Defendant’s request for judicial notice regarding the FAC filed in
this action and following exhibits therein, Plaintiff’s discovery responses,
and all other pleadings and papers under Evidence Code Section 452 (h).
The Court GRANTS Plaintiff’s
request for judicial notice regarding complaints between the parties and the
Court’s minute order on demurrer to the FAC under Evidence Code sections 452
(d) and (h).
d. Evidentiary
Objections
Defendant objects to Declaration of
Morris Streicher and Declaration of Gregory M. Bordo.
The Court OVERRULES Defendant’s
objections to Declaration of Morris Streicher as to Nos. 1-7, 9-13. The Court SUSTAINS Defendant’s objections to Declaration
of Morris Streicher as to No. 8.
The Court SUSTAINS Defendant’s
objections to Decalration of Gregory M. Bordo as to No. 1.
e. Breach
of Lease
Defendant argues that Plaintiff has
no basis to assert its breach of lease claim against Defendant because there is
no contract between the parties given that Plaintiff is not in privity with
Defendant. Defendant points to the fact
that Plaintiff is a subtenant and entered into a sublease such that Defendant
owes no contractual obligations to Plaintiff.
Defendant claims that the Court must construe the intent of the parties
who entered into the contract from the written agreement and not any statements
or conduct.
In opposition, Plaintiff argues
that whether an instrument constitutes a “sublease”, or an “assignment” depends
on its legal effect, not upon its title, and that there is no California law
providing that a sublease cannot also have attributes of an assignment. Plaintiff contends that the Sublease has
attributes of both a sublease and an assignment, and that importantly, the
contract allows Plaintiff to enforce the Master Lease directly against
Defendant. Plaintiff points to the
evidence which shows that: (1) The tenant under the Lease (Palmcrest House hereinafter
“Sublandlord”) has the right to enforce the Lease directly against Defendant
(SS No. 34); (2) Plaintiff and Sublandlord agreed that “[Plaintiff] shall have
each and every of the rights and privileges of [Sublandlord] under the Lease”
(SS No. 47); and (3) Defendant consented to the Sublease and agreed that
Plaintiff has the contractual right to enforce the Master Lease directly
against Defendant (SS No. 48-53.)
In reply, Defendant argues that
Plaintiff’s assumption of the master lease obligations did not make Plaintiff a
party to the master lease. Defendant
addresses the two cases which Plaintiff cite and argues that these cases do not
allow Plaintiff to directly sue Defendant.
In Vallely Investments, L.P. v.
BancAmerica Commercial Corp. (2001) 88 Cal.App.4th 816, the Court of Appeal
held that the master landlord had standing to sue the tenant regardless of
whether the tenant was an assignee or sublessee. (Vallely Investments, L.P. v. BancAmerica
Commercial Corp. (2001) 88 Cal.App.4th 816, 822-823 (Vallely).) “But even if we did view this as a sublease,
the outcome would be the same. A
subtenant who expressly assumes the obligations of the prime lease, with the
consent of the landlord, comes into privity of contract with the landlord, and
the latter can enforce the assumption agreement as a third party beneficiary. (Hartman Ranch Co. v. Associated Oil Co.,
supra, 10 Cal.2d at pp. 244-245, 73 P.2d 1163; Marchese v. Standard
Realty & Dev. Co., supra, 74 Cal.App.3d at p. 147, 141 Cal.Rptr.
370.) So while we view this as an
assignment, [the tenant] would not escape liability even as a sublessee.” (Id. at p. 823.) Defendant attempts to distinguish this case
from the case at hand by claiming that Vallely established that the
landlord is not a party to the contract but rather a third-party beneficiary. Also, Defendant claims that Vallely did
not establish that Plaintiff as a subtenant may sue Defendant as the master
landlord since Vallely only held that the master landlord had the right
to enforce the agreement. While the
Court sees some merit to this argument, Plaintiff’s next case authority
provides support for Plaintiff’s standing to sue.
In Marchese v. Standard Realty
& Dev. Co. (1977) 74 Cal.App.3d 142, the Court of Appeal held that the
subtenant had standing to sue the master landlord as a third-party beneficiary because
it had assumed the terms, conditions and covenants of the master lease with the
consent of the landlord. (Marchese v.
Standard Realty & Dev. Co. (1977) 74 Cal.App.3d 142 (Marchese).) “The reason for the general rule that a
sublessee may not sue the lessor for breach of covenant is that, as between an
original lessor and a sublessee, there is no privity of contract. The sublessee
is in privity only with his own sublessor. (Handleman v. Pickerill (1927) 84
Cal.App. 214, 218-219, 257 P. 890.) However,
if the sublessee has assumed the covenants of the original lease, lessor is a
third party beneficiary and has the right to go directly against the sublessee.
(Hartman Ranch Co. v. Associated Oil
Co. (1937) 10 Cal.2d 232, 244-245, 73 P.2d 1163; see generally 49
Am.Jur.2d, Landlord and Tenant, ss 508, 509, 510, pp. 287-490.) Similarly, it is concluded that if a lessor
has expressly agreed to a sublease, the sublessee is a third party beneficiary
to the implied covenant of quiet enjoyment in the original lease and has the
right to go directly against the lessor for its breach. This conclusion rests upon the nature of the
implied covenant of quiet enjoyment. The
promise implied from the lease is that the lessor will allow possession and
quiet enjoyment of the premises during the term contracted for and will not by
his own acts disturb the possession of the tenant. (Civ. Code, s 1927; see Petroleum Collections,
Inc. v. Swords (1975) 48 Cal.App.3d 841, 846, 122 Cal.Rptr. 114.) If a lessor has agreed to a sublease, it can
only be concluded that he intended to allow the sublessee to peacefully occupy
the property. When, as in the instant
case, the lease itself contains a provision that the property may be sublet to
a named party, in this case [the subtenant], it follows that [the subtenant] is
the beneficiary of lessor’s promise to allow [the subtenant] to occupy the
property.” (Id. at p. 147.)
Defendant attempts to distinguish Marchese
by arguing that this ruling was based on the unique nature of the implied
covenant of quiet enjoyment such that this case is only properly applied as
authority for a subtenant’s right to sue the master landlord when the claim is
one for breach of that covenant. The
Court disagrees. Here, Plaintiff assumed
all of the obligations of the sublandlord and original tenant under the Master
Lease, and Defendant, as landlord of the Master Lease. The subtenant in Marchese chose to bring
a claim for breach of covenant of quiet enjoyment, but there is nothing in that
case which suggests the subtenant was only limited to that claim. It is reasonable to infer that a subtenant who
assumes obligations under the Master Lease would be a third-party beneficiary
of the Master Lease and have the right to sue the master landlord directly for
breach of that Master Lease. Thus, the
Court finds that Plaintiff has standing to bring this action.
Plaintiff also brings other
meritorious points regarding the existence of triable issues of material fact
as to whether Defendant is estopped from claiming Plaintiff’s lack of standing
given Defendant’s express consent to Plaintiff’s assumption of all obligations
of tenant under the Master Lease. However,
given that the issue of standing is resolved, the Court will not discuss these
arguments at this time.
Defendant concedes that the factual
allegations underlying Plaintiff’s claims are in dispute and the only basis for
this instant motion is that Plaintiff has no standing to sue as a subtenant. However, as discussed above, the Court finds
that Plaintiff does have standing.
In light of the foregoing, the
Court finds that Plaintiff has standing to bring this action for breach of
contract against Defendant and DENIES Defendant’s motion for summary
judgment/adjudication for Plaintiff’s breach of lease claim.
f. Declaratory
Relief
Defendant contends that Plaintiff’s
declaratory relief claim fails for the same reasons for breach of lease. Since the Court finds that Plaintiff has
standing to sue, the Court DENIES Defendant’s motion for summary
judgment/adjudication for Plaintiff’s declaratory relief claim.
3. Conclusion
The motion for summary judgment/adjudication
is DENIED.
Parties who intend to submit
on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative
as directed by the instructions provided on the court website at www.lacourt.org. If the department
does not receive an email indicating the parties are submitting on the
tentative and there are no appearances at the hearing, the motion may be placed
off calendar. If a party submits on
the tentative, the party’s email must include the case number and must identify
the party submitting on the tentative.