Judge: Mark H. Epstein, Case: 22SMCV01937, Date: 2023-04-25 Tentative Ruling

Case Number: 22SMCV01937    Hearing Date: April 25, 2023    Dept: R

Plaintiff SimplePractice, LLC (“SP”) filed this breach of contract action against defendant Constant Contact, Inc. (“CC”).  CC then filed a cross-complaint against SP and another cross-defendant, Mississippi Creative Offices, LLC (“MCO”).  According to the operative cross-complaint, on or around May 15, 2018, SP and MCO entered into an office lease for the second floor of a building.  (Cross-Compl., ¶8.)  On or around August 16, 2021,  CC and SP entered into a sublease agreement for the premises and they agreed that the sublease was subordinate to the master lease.  (Id. at ¶9.)  The parties executed a document titled “Master Landlord Consent to Sublease.”  (Id. at ¶10.)

CC asserts it was entitled to occupy the premises in accordance with the covenant of quiet enjoyment under both the master lease and sublease.  (Cross-Compl., ¶11.)  CC claims it had the right to expect that the air conditioning would be operable and the building would be secure.  (Ibid.)  Both SP and MCO allegedly had a duty to maintain the air-conditioning system.  (Id. at ¶13(b).)  CC contends that the air-conditioning system failed and was inoperable for most of 2022.  (Id. at ¶14.)  In addition, despite CC’s complaints to SP, the front door of the building was not properly secured nor was there adequate security in the parking garage.  (Ibid.)  CC alleges multiple break-ins occurred at its premises.  (Ibid.)  Based on these problems, CC alleges that it was constructively evicted.  (Id. at ¶16.)  However, CC claims that not only was it deprived of the benefit of the lease, but SP has not recognized that the lease was terminated and is seeking damages for breach.

Currently before the court is SP’s demurrer to the cross-complaint.  CC opposes.

The demurrer to the declaratory relief claim is SUSTAINED WITH LEAVE TO AMEND.  It reads exactly like the breach of contract claim and does not provide prospective relief.  CC only seeks a judicial determination holding “that it was entitled to vacate the Premises and that it is entitled to its damages occasioned by being forced to move from the Premises as a result of the failures by MCO to honor the Master Lease and Simplepractice to honor the Sublease as set forth herein.”  (Cross-Compl., ¶19.)  “[D]eclaratory relief operates prospectively and there is no basis for declaratory relief where only past wrongs are involved.  (Baldwin v. Marina City Properties, Inc. (1978) 79 Cal.App.3d 393, 407.)”  (Moore v. Wells Fargo Bank, N.A. (2019) 39 Cal.App.5th 280, 295–296, parallel citations omitted.)  The court believes that issue will of necessity be resolved in the breach of contract cause of action.  Leave to amend is granted to allow plaintiff to articulate with greater clarity what declaration it seeks that will not be resolved through the second cause of action.

The demurrer to the breach of contract claim is OVERRULED.  Preliminarily, the court agrees that CC can state a claim for breach of contract predicated on whether SP communicated with MCO regarding MCO’s failure to fulfill its obligations (assuming that is what happened.)  The lease and sublease agreements assign the responsibilities of HVAC maintenance and safety to MCO.  However, SP was responsible for communicating to MCO.

Subtenant shall not in any event have any rights in respect of the Premises greater than Sublandlord's rights under the Prime Lease, and notwithstanding any provision to the contrary, as to obligations that pertain to the Premises and common areas of the Building, and are part of this Sublease by the incorporation by reference of provisions of the Prime Lease, Sublandlord shall not be required to make any payment or to perform any obligation, and Sublandlord shall have no liability to Subtenant for any matter whatsoever, except for Sublandlord's Obligations and to use reasonable good faith efforts, upon written request of Subtenant, to cause Landlord to observe and/or perform Landlord's obligations under the Prime Lease.  Except as specifically set forth herein, Sublandlord shall not be responsible for any failure or interruption, for any reason whatsoever, of the services or facilities that may be appurtenant to or supplied at the Building by Landlord.  Subtenant hereby expressly waives the provisions of any statute, ordinance or judicial decision, now or hereafter in effect, which would give Subtenant the right to make repairs at the expense of Sublandlord, or to claim any actual or constructive eviction by virtue interruption in access or services to, or failure to make repairs in or to, the Premises or the Building.  If Sublandlord does not use reasonable good faith efforts, upon written request of Subtenant, to cause Landlord to observe and/or perform Landlord's obligations under the Prime Lease, then at Subtenant's option, Sublandlord shall assign to Subtenant the right to enforce the agreements and obligations of Landlord under the Prime Lease.

(Cross-Compl., Exh. 2, p. 65.)

While there is no clear allegation indicating that SP’s alleged breach is due to that lack of communication, the court will so read the complaint.  At this stage, the court must liberally construe the pleading and, if there is any viable factual pattern consistent with the complaint that would state a cause of action, that is sufficient.  Such is the case here.

The breach of contract claim, as alleged now, claims that CC was constructively evicted due to the untenantable conditions.  “As a result of the breaches of the Master Lease and the Sublease as set forth herein, Cross-Complainant was forced to vacate the Premises, incurring cost and expense and damages in doing so.”  (Cross-Compl., ¶21.)  But the lease purports to waive any such claim. “Subtenant hereby expressly waives the provisions of any statute, ordinance or judicial decision, now or hereafter in effect, which would give Subtenant the right to make repairs at the expense of Sublandlord, or to claim any actual or constructive eviction by virtue interruption in access or services to, or failure to make repairs in or to, the Premises or the Building.”  In opposition, CC asserts that, while commercial leases can waive certain matters, this waiver is contrary to public policy.  “Except where it is otherwise declared, the provisions of the foregoing titles of this part, in respect to the rights and obligations of parties to contracts, are subordinate to the intention of the parties, when ascertained in the manner prescribed by the chapter on the interpretation of contracts; and the benefit thereof may be waived by any party entitled thereto, unless such waiver would be against public policy.”  (Civ. Code, § 3268.)  But CC never finishes the argument.  It never establishes that a contractual waiver of constructive eviction claims is against public policy.  While the court can imagine cases in the extreme where such a clause would be against public policy (for example, where the landlord engages in deliberate behavior to make the tenancy impossible, like affirmatively turning up the thermostat to 110º or something) that is not the situation here.  The court can readily interpret the clause as not applying to deliberate misconduct by the landlord designed to force the tenant to vacate and, as such, the clause does not seem to fly in the face of public policy.

However, that does not end the matter.  The cause of action is for breach of contract, not for constructive eviction.  While constructive eviction is alleged, and that aspect might or might not be viable, other breaches of the contract might well give rise to the cause of action.  Thus, for example, if SP failed to take steps to cause MCO to fix the HVAC, that is a breach and a suit for damages would lie.  The same could be true of the alleged failure to secure the building.  The court understands that the cross-complaint asserts that the damages were incurred because CC was forced to vacate, but the measure of damages is not the same as disposing of the cause of action.  Because a demurrer must dispose of an entire cause of action, and because at least some of this cause of action will survive, the demurrer must be OVERRULED.