Judge: Michael C. Kelley, Case: 20STCV36418, Date: 2022-08-16 Tentative Ruling
Case Number: 20STCV36418 Hearing Date: August 16, 2022 Dept: A15
Background
This landlord-tenant dispute arises from an agreement to lease the residential property located at 38908 Carolside Avenue in the city of Palmdale (the “Property”). (Second Am. Compl. ¶ 1.) Plaintiff Stephanie Jackson Hutchinson entered into an agreement to lease the Property from Defendants Cobra 28 No. 5 LP and Pama Management, Inc. dba IE Rental Homes (collectively, “Defendants”) on October 15, 2017. (Id., ¶ 14.) Defendant Cobra 28 No. 5 LP owned the Property and Defendant Pama Management, Inc. dba IE Rental Homes managed it. (Defs.’ Joint Mot. Strike Second Am. Compl. at 3.)
Plaintiff initiated this action by filing her original complaint on September 23, 2020. However, the defendants demurred, and the Court sustained their demurrer to the entire complaint with leave to amend. (Min. Ord., dated Jan. 6, 2022.) Plaintiff therefore filed a First Amended Complaint on January 26, 2022. Defendants moved to strike the portions of the First Amended Complaint that either alleged or prayed for punitive damages. The Court granted this motion on the ground that Plaintiff failed to allege Defendants’ advance knowledge and conscious disregard of Defendants’ officers’ allegedly oppressive acts. (Min. Ord., Apr. 22, 2022.) The Court granted Plaintiff leave to amend.
Plaintiff therefore filed the operative Second Amended Complaint on May 20, 2022. She alleges ten causes of action for (1) illegal collection of rent in violation of Civil Code section 1942, (2) breach of implied warranty of habitability, (3) retaliatory eviction, (4) failure to relocate, (5) breach of covenant of quiet enjoyment, (6) nuisance, (7) unfair business practices, (8) negligence, (9) intentional infliction of emotional distress, and (10) negligent infliction of emotional distress.
On June 16, 2022, Defendants filed the instant Joint Motion to Strike Punitive Damages from Plaintiff’s Second Amended Complaint. They move to strike the references to “punitive” and “punish” in paragraphs 41, 48, and 81, as well as on pages 24 and 25 in the complaint’s prayer.
Plaintiff filed a timely opposition and Defendants filed a timely reply.
Analysis
Motion to Strike—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. (Code of Civ., Proc. § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322(b).) The motion may ask the court to (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. (Code Civ. Proc., § 436; Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)
The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code. Civ. Proc., § 437; Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 [“judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth”].)
“The motion to strike is widely used to challenge portions of causes of action seeking punitive damages.” (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683.) It may be used to test the “adequacy” of punitive damage allegations. (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 164.)
“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. [Citations.] In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)
A “conclusory characterization of defendant's conduct as intentional, wilful and fraudulent is a patently insufficient statement of 'oppression, fraud, or malice, express or implied,” within the meaning of section 3294.'” (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.)
Again, Defendants move to strike the references to punitive damages or “punishment.” They argue that Plaintiff has not alleged conduct entitling her to punitive damages because (1) she has not alleged Defendants, who are corporations, had advance knowledge of the alleged acts of oppression or malice, and (2) she has not alleged conduct that rises to the requisite level of egregiousness.
Punitive Damages--Civil Code section 3294 provides the standard for recovering punitive damages: “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).)
Here, Plaintiff alleges the following conduct in association with her first, second, and eighth causes of action warrants punitive damages: (1) Defendants served her with a 3-day notice to pay rent or quit, despite failing to keep the apartment sufficiently habitable; (2) Defendants failed to keep the apartment sufficiently habitable, despite having “actual and imported knowledge” of Plaintiff’s end stage renal disease; and (3) Defendants refused to relocate Plaintiff or return her rent, requiring Plaintiff to sleep in her car in the winter. (Second Am. Compl. ¶¶ 41, 48, 81.)
There is no doubt that Defendants served a notice to pay rent or quit. (Second Am. Compl. at Ex. N) There is no doubt that Plaintiff sufficiently alleges that Defendants allowed the apartment to fall into a state of uninhabitability: Plaintiff alleges she signed the lease on October 15, 2017, and that on October 25, 2017, the Building and Safety Department of the City of Palmdale gave Defendants a 24-hour notice to repair the electricity and sewer connections in the apartment. (Id., ¶¶ 14, 16.) Defendants canceled the City of Palmdale’s follow-up inspections twice; and, being unable to verify compliance, the City of Palmdale allegedly relinquished Defendants’ right to rent the Property. (Id., ¶¶ 16-17.)
Then, on October 2, 2018, the City of Palmdale informed Defendants of further habitability violations that needed to be corrected; and, on October 18, 2018, it “red-tagged” the Property, which immediately prohibited Defendants from renting the Property, and had the effect of forcing Plaintiff to vacate. (Second Am. Compl. ¶ 23.)
The questions, then, are whether Defendants either had advance knowledge of, or ratified this conduct, and whether the conduct Defendants knew of rose to the level of malice required for punitive damages.
Malice and Corporate Ratification--“Malice” is defined as “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “In order to justify an award of punitive damages on this basis, the plaintiff must establish that the defendant was aware of the probable dangerous consequences of his conduct, and that he wilfully and deliberately failed to avoid those consequences.” (Taylor v. Superior Court (1979) 24 Cal.3d 890, 895–896.)
“. . . ‘[I]ntent,’ in the law of torts, denotes not only those results the actor desires, but also those consequences which he knows are substantially certain to result from his conduct.” (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 922.) For example, the Court of Appeal held in Nolin v. Nat’l Convenience Stores, Inc. (1979) 95 Cal.App.3d 279 that a jury’s award of punitive damages was justified by evidence that the corporate defendant showed “a complete lack of concern regarding the harmful potential—the probability and likelihood of injury.” (Id., 288.) There was “considerable evidence, both direct and circumstantial, that a very dangerous condition existed around defendant's gas pumps[,]” and that said condition could lead to fire and slipping and falling. (Ibid.)
Additionally, when the defendant is a corporation, its officers, directors, or managing agents must possess the requisite intent; the intent requirement is not satisfied by a mere “low-level employee.” (Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 167.)
An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.
(Civ. Code, § 3294, subd. (b).)
An officer, director, or managing agent is one “whose intentions guide corporate conduct.” (Cruz v. HomeBase, supra, 83 Cal.App.4th at 167.) They must have “substantial authority over decisions that set these general principles and rules.” (Id.,168.)
In interpreting this provision of Civil Code section 3294, the Supreme Court held:
the Legislature intended that principal liability for punitive damages not depend on employees' managerial level, but on the extent to which they exercise substantial discretionary authority over decisions that ultimately determine corporate policy. Thus, supervisors who have broad discretionary powers and exercise substantial discretionary authority in the corporation could be managing agents. Conversely, supervisors who have no discretionary authority over decisions that ultimately determine corporate policy would not be considered managing agents even though they may have the ability to hire or fire other employees. In order to demonstrate that an employee is a true managing agent under section 3294, subdivision (b), a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation's business.
(White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 576–577.)
Here, the question is whether allowing the Property to fall into a state of uninhabitability, while continuing to charge Plaintiff rent, and subsequently serving Plaintiff with a 3-day notice to pay rent or quit when she did not pay said rent, is sufficiently malicious to warrant punitive damages; and whether Defendants’ officer or managing agent knew or ratified this.
The Court finds that, permitting the housing violations to accumulate, and failing to fix them for so long that the City of Palmdale found it necessary to “red-tag” the Property, is sufficiently malicious conduct in itself. A few violations could be brushed aside as the result of possible inadvertence and could arguably be benign; for example, the allegedly broken closet doors would not pose an obvious threat to a tenant’s safety, unless the door somehow fell on a person. (Second Am. Compl. at Ex. G.)
But twenty-four violations, as is alleged in the City of Palmdale’s notice, is an obvious cause for concern. The violations apparently included corroded water heater lines, leaking sewage, a broken window, an unworking shower, and a lack of working smoke and carbon monoxide detectors. (Second Am. Compl. at Ex. G.) The fact that, upon learning that Defendants failed to make the corrections in the time given to do so, the City of Palmdale “red-tagged” the Property and prohibited Plaintiff from entering it, indicates that these violations were a threat to a person’s safety. But even without municipal action, a factfinder could easily use common sense to conclude that a home with broken windows and lacking smoke detectors is not safe to live in.
If the uninhabitable, clearly dangerous state of the Property was known to Defendants’ employees, then those employees consciously disregarded Plaintiff’s health and safety by allowing the Property to exist in this state of disrepair for so long that the City had to “red-tag” it. This conscious disregard would be sufficient for punitive damages. The question, then, is whether evidence exists of knowledge on the part of a responsible corporate actor. Plaintiff identifies PAMA Management’s corporate officers, but it is not clear that any of them know of these violations. (Second Am. Compl. ¶ 6.)
Defendants were formally notified by the City of Palmdale that the Property was “substandard” and required corrections. (Second Am. Compl. at Ex. I.) Plaintiff has also alleged that Defendants’ employee, “Angela,” cancelled the re-inspection twice. (Second Am. Compl. ¶¶ 16-17.) Angela’s status is not clear, however. She may have been or be a receptionist, assistant property manager, or corporate officer.
Plaintiff further alleges that she “contacted PAMA/COBRA No. 5, in the presence of Vivian,” whom she identified as a “rental agent,” and told “PAMA/COBRA No. 5” that she needed immediate shelter. (Id., ¶ 23.) She has alleged that Defendants were unable to provide her with a habitable alternative, because the rental units they offered her were “not fit for occupation, lacking heat, electricity”; so she slept in her car for three weeks, to the detriment of her health. (Id., ¶¶ 23, 27.) Although Plaintiff identifies “Vivian”, she does not identify who it was she spoke with in Vivian’s presence. In fact, she does not even allege that she spoke with anyone at “PAMA/COBRA No. 5.” She merely alleges that she contacted them; she may have reached a voicemail.
As for Vivian herself, Plaintiff alleges she was a “rental agent.” (Second Am. Compl. ¶ 27.) Plaintiff alleges Vivian knew that Plaintiff “had no shelter.” (Ibid.) But she does not allege that Vivian was an officer, director, or managing agent. On the contrary, a rental agent presumably receives and processes potential tenants’ rental applications. Such a person has no authority over the creation of corporate policies. Vivian likely does not qualify as an officer, director, or managing agent whose knowledge could be imputed to Defendants. The same is true of “Ramone,” who is mentioned in Plaintiff’s handwritten note.
Finally, Plaintiff does not actually allege that Defendants knew she was sleeping in her car and missing her dialysis appointments. She appears to avoid alleging that she specifically told this to Defendants or their employees. Instead, she alleges that she “informed them that she was evacuated and had no place to go,” and that Defendants knew she was on a fixed income and that she had a disability. (Second Am. Compl. ¶¶ 2, 15, 28.) Putting aside the fact that Plaintiff again fails to allege exactly whom she said this to, this statement does not automatically equate to living in one’s car.
In short, Plaintiff alleges malicious conduct, but does not sufficiently allege that Defendants’ officers, directors, or corporate officers knew of or ratified this conduct. Therefore, she has not alleged an entitlement to punitive damages. The ambiguity of her allegations, and the fact that this is her second attempt at making these allegations, suggest she does not have the necessary facts at this time.
Conclusion
Defendants Cobra 28 No. 5, LP and Pama Management, Inc. dba IE Rental Homes’ Motion to Strike is GRANTED without leave to amend.