Judge Melvin D. Sandvig, Case 22CHCV00670 2022-10-26 Tentative Ruling

Judge: Melvin D. Sandvig, Case: 22CHCV00670, Date: 2022-10-26 Tentative Ruling

Case Number: 22CHCV00670 Hearing Date: October 26, 2022 Dept: F47

Dept. F47

Date: 10/26/22

Case #22CHCV00670

DEMURRER TO THE ORIGINAL COMPLAINT

Demurrer filed on 9/9/22.

MOVING PARTY: Defendant Wonderland Studios, LLC

RESPONDING PARTY: Plaintiff Castaic Studios, LLC

NOTICE: ok

Demurrer is to the entire complaint:

1. Unlawful Detainer

RULING: The demurrer is sustained without leave to amend.

FACTUAL SUMMARY & RELEVANT PROCEDURAL HISTORY

This is a commercial unlawful detainer action.

In October 2021, Plaintiff Castaic Studios, LLC (Plaintiff) and Defendant Wonderland Studios, LLC (Defendant) entered a “License Agreement” (Agreement). (See Complaint, Ex.1). The Agreement provides that Defendant had “the non-possessory, but the exclusive right for the use” of certain “assigned” areas of the “Premises” described in paragraph 1 of the Complaint. (Complaint, Ex. 1, p.1¶4, p.2 ¶7). In exchange, Defendant agreed to pay certain monthly “use fees” throughout the term of the License. (Id. p.3 ¶10). The “Original Term” of the Agreement was for one month, but Defendant had 35 one-month consecutive options to extend the term, with the first option beginning on 10/27/21 and the last option to be exercised in September of 2025. (Id. ¶8).

The Agreement states: “LICENSE AGREEMENT. THIS AGREEMENT IS NOT A LEASE OR ANY OTHER INTEREST IN REAL PROPERTY. IT IS A CONTRACTUAL ARRANGEMENT THAT CREATES A REVOCABLE LICENSE.” (Complaint, Ex.1 License Agreement, Section 1 “Basic Provisions” p.1 ¶6 [bold and capitals in original]). Additionally, the Agreement provides that it “will be governed by the contracts laws and not by the landlord tenant laws.” (Id. at Section 2 “Basic Premises” p.25 ¶29). Further, the parties agreed “THAT THE TERMS OF THIS AGREEMENT SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS AGREEMENT.” (Id. at p.24 ¶24(c) [capitals in original]).

On 7/13/22, at 11:57 a.m., Plaintiff’s Managing Member, Fred Faramarzi sent Defendant an email which purported to provide Plaintiff a 3-day notice to cure an alleged breach of the terms of the Agreement for failure to pay the July 2022 use fee. (See Complaint, Ex.3, July 13 email). The July 13 email did not state the amount of the use fee that was due for July 2022 and also did not provide the name, telephone number, and address of the person to whom the payment was to be made. Id. Further, the July 13 email demanded that the purportedly late monthly use fee be paid by “the end of Friday, July 15th, 2022,” which was less than three days from the date the email was sent. Id.

On 7/19/22, Mr. Faramarzi sent Defendant another email notifying Defendant that Plaintiff deemed the Agreement “expired under its terms” due to Defendant’s alleged failure to pay in response to the July 13 email. (See Complaint, Ex.3, July 19 email). The July 19 email also did not state the amount of the payment that was allegedly due or provide the name, telephone number, and address of the person to whom the payment was to be made. Id. Instead, the July 19 email requested that Defendant: “Please advise [Mr. Faramarzi] if you are interested to enter into a new license agreement, which we would be happy to discuss.” Id. The July 19 email further stated: “If not, please make the necessary arrangements for a meeting with your representative at the property in order to return all the keys back.” Id.

On 7/25/22, Defendant, through its representative, Beni Atoori, emailed Mr. Faramarzi to inform Plaintiff that Defendant was “continuing and remaining the month of [A]ugust.” (See Complaint, Ex.3, July 25 email).

On 8/22/22, Plaintiff filed this action for unlawful detainer against Defendant.

After meet and confer efforts between counsel for the parties failed to resolve the issues raised by this demurrer, on 9/9/22, Defendant filed and served the instant demurrer to the complaint which was originally scheduled for hearing on 12/13/22. (See Johnson Decl.). Pursuant to Plaintiff’s ex parte application, the hearing on the demurrer was advanced to 10/26/22. (See 9/30/22 Minute Order). Plaintiff has opposed the demurrer.

ANALYSIS

A defendant in an unlawful detainer action may appear by demur. CCP 1170. A demurrer may be based on the ground that the complaint fails to allege sufficient facts to state a cause of action. CCP 430.10(e); CCP 1177.

To state a claim for unlawful detainer, a complaint must allege the existence of a relationship that legally supports the summary remedy of unlawful detainer as defined by statute. See Greene (1975) 51 CA3d 446, 450; Goetze (1968) 261 CA2d 615, 616. To determine whether the parties have a relationship to which the remedy of unlawful detainer applies, the Court must look at the agreement between the parties. Greene, supra at 450. Here, Plaintiff has attached the Agreement to the complaint and has incorporated it into the pleading. (See Complaint ¶6, Ex.1). As such, to the extent that any allegations in the complaint contradict the terms of the Agreement, the Agreement controls. See Barnett (2001) 90 CA4th 500, 504-505. In interpreting the Agreement, the Court must consider it as a whole and construe the language in context, rather than interpret provisions in isolation. See Starlight Ridge S. Homeowners Assn. (2009) 177 CA4th 440, 447; Civil Code 1641.

As noted above, the Agreement specifically provides that it “IS NOT A LEASE OR ANY OTHER INTEREST IN REAL PROPERTY,” but rather a “REVOCABLE LICENSE” that is to be governed by the contracts laws and not by the landlord tenant laws.” (emphasis in original) (See Complaint, Ex.1 p.1 ¶6, p.25 ¶29). The unlawful detainer statute arises out of and is part of California landlord-tenant laws. See Schulman (1980) 108 CA3d 552, 562-563; Birkenfeld (1976) 17 C3d 129, 149; Cavanaugh (1960) 182 CA2d 714, 716.

Plaintiff’s reliance on the “Cumulative Remedies” provision of the Agreement (which provides “No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.”) to support its unlawful detainer action is without merit. (See Complaint, Ex.1, Section 2 “Basic Premises,” p.25 ¶27). Paragraph 27 must be construed along with paragraphs 24(c) and 29 set forth above.

When the foregoing provisions are considered together, the Court finds that Plaintiff has waived its right to pursue the remedy of unlawful detainer against Defendant because the more specific provisions of paragraphs 24(c) and 29 control over the more general provision contained in paragraph 27. See Starlight Ridge, supra at 447. Additionally, nothing in the Agreement excludes the unlawful detainer statute, which arises out of and is part of landlord tenant laws, from the landlord tenant laws which the parties specifically agreed did NOT govern the Agreement. (See Complaint, Ex.1, p.25 ¶29); Schulman, supra; Birkenfeld, supra; Cavanaugh, supra. Further, when construing the Agreement in a manner which gives every provision force and effect, as required, ¶24(c) and ¶29 must be interpreted as waiving Plaintiff’s rights to pursue a remedy under the unlawful detainer statutes; otherwise, ¶27 of the Agreement would render ¶¶24(c) and 29 meaningless. See City of Atascadero (1998) 68 CA4th 445, 473.

Plaintiff’s argument that the parties’ performance under the Agreement created an implied landlord-tenant relationship is also without merit. An implied contract, which contradicts the terms of written contract, cannot be created. Malmstrom (1986) 187 CA3d 299, 316; Haggard (1995) 39 CA4th 508, 521; (See Complaint, Ex.1, p.1 ¶6, p.25 ¶29, p.27 ¶39, p.29 ¶47).

Based on the foregoing, Plaintiff has not alleged, and cannot allege, a relationship between it and Defendant that would allow Plaintiff to pursue an unlawful detainer action against Defendant.

Even if Plaintiff could state a claim against Defendant under the unlawful detainer statute, Plaintiff failed to comply with the notice requirements. When the basis for unlawful detainer is nonpayment of rent, the tenant must be served with a written notice and must be given three days to pay the rent or quit the premises. See CCP 1161(2). The statutory notice requirements for unlawful detainer actions are strictly construed, and a plaintiff that seeks the summary remedy of unlawful detainer must bring itself strictly within its terms. WDT-Winchester (1994) 27 CA4th 516, 526; Briggs (1975) 53 CA3d 900, 905.

A necessary element of the unlawful detainer statute’s notice requirement is that the amount of rent claimed to be due must be stated in the notice to pay rent or quit. CCP 1161(2). When a commercial lease is at issue, a landlord may state a reasonable estimate of the rent due. See CCP 1161.1. However, to invoke CCP 1161.1, the amount stated in the notice must be clearly identified as an estimate. WDT-Winchester, supra at 526. Here, Plaintiff’s notice to Defendant stated no amount of rent due. (See Complaint, Ex.3, July 13 email). Instead, the notice stated: “Licensor has not received your July 2022 monthly Use fee, you are hereby placed on notice to make full payment of Use fee for July 2022 within 3 days from the date of this notice by the end of Friday, July 15th, 2022.” Id. The foregoing fails to comply with CCP 1161(2) and 1161.1.

CCP 1161(2) also requires the notice to state “the name, telephone number, and address of the person to whom the rent payment shall be made.” See also Foster (2014) 229 CA4th Supp. 9, 16. Here, Plaintiff’s notice did not provide such details. (See Complaint, Ex.3, July 13 email).

Further, Plaintiff’s notice failed to comply with CCP 1161(2) because Defendant was given less than 3 days to pay the rent allegedly due. CCP 1161(2) strictly requires “three days’ notice, excluding Saturdays and Sundays and other judicial holidays.” Plaintiff’s notice, sent on July 13, 2022, at 11:57 a.m., demanded that Defendant pay by “the end of Friday, July 15th, 2022.” (Complaint, Ex. 3, July 13 email). Plaintiff even admits to its failure to comply with the notice requirements under the unlawful detainer statute. (Complaint ¶11).

While parties to a commercial lease may agree to notice procedures that differ from those provided in the statutory notice provisions which govern unlawful detainer, such an agreement must be clear. See Culver Center Partners East #1, L.P. (2010) 185 CA4th 744, 750; Folberg (1980) 104 CA3d 136, 140-141. As such, if the Court were to find that the parties did not waive their rights under the unlawful detainer statute through the Agreement, then the Court also must find that the parties did not agree to waive or modify those provisions of CCP 1161(2) regarding the form and contents, as opposed to the manner of service, of a notice to pay or quit.

The Agreement, the parties agreed to waive only the provisions of any statute that are inconsistent with the terms of the Agreement. (Complaint, Ex. 1, p.24 ¶24(c)). The notice requirements in the Agreement are only inconsistent with the notice provisions of the unlawful detainer statute with regard to the manner of service. Specifically, ¶23.2 of the Agreement provides that “[n]otices for failure to pay monthly License fee shall be given by e-mail only” and notices for other purposes (including default) may be served by a variety of means. (See Complaint, Ex.1 p.24 ¶¶23.1, 23.2). On the other hand, CCP 1162 requires notice under CCP 1161 to be served by personal or substitute service. Here, Plaintiff’s notice did not comply with the form and contents required by either CCP 1162 and/or the Agreement.

Paragraph 12.1 of the Agreement provides that “Licensee is in default under this Agreement if: (i) Licensee does not pay the required amount payable by Licensee hereunder on the designated payment date and after written notice of Licensee’s failure to pay, Licensee does not pay within 3 days after the date of such notice . . . .” (Complaint, Ex. 1, at p.4 ¶12.1). This provision is silent as to the form and contents of the “written notice” to be provided thereunder and, therefore, cannot be construed as evincing an intent by the parties to waive the form and contents requirements of CCP 1161(2). See Folberg, supra at 140-141. Further, ¶23.1 in the Agreement, which states in relevant part “[a]ll notices required or permitted by this Agreement or applicable law . . ., ” coupled by the waiver provisions of ¶24(c), indicates that the parties intended any statutory notice requirements not inconsistent with the terms of the Agreement to apply. (Complaint, Ex. 1, at p.24 ¶ 23.1).

Based on the foregoing, Plaintiff’s notice did not include all of the necessary information. Therefore, a claim for unlawful detainer based thereon fails.

CONCLUSION

Based on the foregoing, the demurrer is sustained. Since the defects in the complaint cannot be cured by amendment, the demurrer is sustained without leave to amend.