Judge: Mark E. Windham, Case: 22STLC00652, Date: 2022-08-29 Tentative Ruling

Case Number: 22STLC00652    Hearing Date: August 29, 2022    Dept: 26

TENTATIVE RULING:

Defendant Bladimir Rivera dbd BRS Investment, LLC’s Demurrer to the Complaint is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

SERVICE OF MOTION: 

[X] Proof of Service Timely Filed (CRC 3.1300)      OK

[X] Correct Address (CCP 1013, 1013a)                   OK

[X] 16/21 Day Lapse (CCP 12c and 1005 (b))           OK

SUMMARY OF COMPLAINT: Action for breach of lease agreement.

REQUEST FOR RELIEF: Sustain demurrer to the Complaint for failure to allege facts sufficient to state a cause of action. The Complaint fails to allege the existence a written lease agreement signed by the parties and does not attach any such agreement. The lease was allegedly for a period of four years and must be in writing to satisfy the Statute of frauds.

OPPOSITION: The lease agreement is in writing as required by the Statute of frauds. Applicable case law holds that the lease need not be signed by Defendant. The cases cited by Defendant are inapposite to the facts of this case.  

REPLY: Reiterates the moving papers.

ANALYSIS:

On January 31, 2022, Plaintiff AP Billing, Inc. (“Plaintiff”) filed the Complaint in this action against Defendant Bladimir Rivera dba BRS Investment, LLC (“Defendant”). Defendant filed the instant Demurrer to the Complaint on July 13, 2022. Plaintiff filed its opposition on August 5, 2022 and Defendant replied on August 18, 2022.

Discussion

Allegations in the Complaint

The Complaint alleges a single cause of action for declaratory relief based on a commerical lease agreement. Defendant allegedly held the master lease for the real property located at 910 E. G Street, Wilmington, California. (Compl., ¶4.) Plaintiff sub-leased a portion of the Property from June 30, 2020 until June 30, 2021. (Id. at ¶5.) On June 30, 2021, Defendant provided Plaintiff with a new lease agreement and confirmed in writing the existence of the new lease agreement and the amount of rent due thereunder. (Id. at ¶¶6-7 and Exh. 1.) Plaintiff performed all its obligations under the new lease agreement. (Id. at ¶8.) Defendant has refused to provide Plaintiff with an executed copy of the new lease agreement and has demanded additional rent to remain in possession of the Property. (Id. at ¶¶9-10.) Plaintiff seeks a judicial determination of the rights and duties of the parties, and a declaration that the new lease is a valid and enforceable agreement. (Id. at ¶12.)

Demurrer to Complaint

The Demurrer is supported by a meet and confer declaration as required by Code of Civil Procedure section 430.41. (Meet and Confer Decl., filed 07/13/22.) Defendant demurs on the grounds that the Complaint fails to allege facts sufficient to state a cause of action. (Code Civ. Proc., §430.10, subd. (e).) Specifically, Defendant contends that the Complaint shows on its face that the claim for declaratory relief is barred by the statute of frauds because it admits that the new lease agreement is not signed by Defendant.

Under the statute of frauds, “[a]n agreement for the leasing for a longer period than one year, or for the sale of real property” is “invalid, unless [the agreement], or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent.” (Civ. Code, § 1624, subd. (a)(3).) Defendant points to Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, in which the Court of Appeals ruled that the cause of action for breach of loan modification agreement must allege that the loan modification agreement was in a writing and signed by the lender in order to satisfy the statute of frauds. (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1503.) Plaintiff’s opposition does not sufficiently distinguish the facts of Rossberg from the facts of this action. It simply contends that Rossberg involved a loan modification agreement and that the borrowers conceded there was no written agreement. This is does not change the explicit holding of the case that the loan modification agreement had to be signed.

Nor is Plaintiff’s reliance on Sterling v. Taylor (2007) 40 Cal.4th 757 helpful. In Sterling the issue was the difference between a contract and a memorandum, the latter of which is sufficient under the statute of frauds. In the instant action, however, the issue is whether the written note or memorandum is “subscribed” by Defendant. The parties in Sterling did not question whether the defendant’s signature was sufficient to meet the “subscription” requirement. (Sterling v. Taylor (2007) 40 Cal.4th 757, 772 n. 15.)

In Westside Estate Agency, Inc. v. Randall (2016) 6 Cal.App.5th 317, 330, the Court of Appeals equated subscription with signing. Plaintiff’s opposition points to no express allegations in the Complaint that demonstrate the new lease agreement was subscribed by Defendant. To the extent Plaintiff alleges Defendant confirmed the terms of the new lease agreement in writing, and suggests that this second writing operates to subscribe the new lease agreement, no explanation is provided regarding how the agreement was “confirmed,” nor is this written confirmation attached to the Complaint. (See Compl., ¶7.) Therefore, it cannot be determined from the allegations that this confirmation satisfies the statute of frauds.

Finally, Plaintiff argues that Defendant should be equitably estopped from raising the statute of frauds. In Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, the case upon which Plaintiff relies, the Court of Appeals set forth the requirements to plead equitable estoppel:

Generally, “four elements must be present in order to apply the doctrine of equitable estoppel: (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury.”

(Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1058 [Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 305].) Defendant opposes application of equitable estoppel on the grounds that no fraud (the fourth element) has been alleged. (Citing Chavez, supra, (2013) 219 Cal.App.4th at 1057-1058 [“Courts, however, ‘have the power to apply equitable principles to prevent a party from using the statute of frauds where such use would constitute fraud.’”].) The allegations in the Complaint, however, do not allege detrimental reliance, a necessary element of fraud. Detrimental reliance must go beyond the payment of money under the purportedly invalid agreement: “The payment of money is not ‘sufficient part performance to take an oral agreement out of the statute of frauds’ [citation], for the party paying money ‘under an invalid contract ... has an adequate remedy at law.’ [citations omitted].” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 555.)

In Chavez, the Court of Appeals found that the plaintiff had alleged detrimental reliance because she allegedly “incurred additional costs and fees in excess of the amounts she had been obligated to pay under her original loan agreement or the Trial Period Plan.” (Chavez, supra, (2013) 219 Cal.App.4th at 1061.) The Complaint in this action, however, does not allege anything beyond Plaintiff’s payment under the parties’ lease agreement. (Compl., ¶¶8-10.) Therefore, Defendant has shown that the Complaint is barred on its face by the statute of frauds and Plaintiff has not alleged facts estopping Defendant from making the statute of frauds argument.

Leave to Amend

The plaintiff has the burden of proving that there is a reasonable probability the defect in the Complaint can be cured by amendment. (Blank v Kirwan (1985) 39 Cal.3d 311, 318.) However, a demurrer to a complaint should be sustained without leave to amend only when there is no reasonable chance for the plaintiff to cure the deficiency. (See Smith v. Cimmet (2011) 199 Cal.App.4th 1381, 1394.) Here, given no prior opportunities to amend the Complaint, it is appropriate to grant Plaintiff leave to amend to allege additional facts regarding application of the statute of frauds. 

Conclusion

Defendant Bladimir Rivera dbd BRS Investment, LLC’s Demurrer to the Complaint is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

Moving party to give notice.