Judge Michael E. Whitaker, Case Number: 24SMCV06073, Date: 2025-05-08 Tentative Ruling

Judge: Michael E. Whitaker, Case: 24SMCV06073, Date: 2025-05-08 Tentative Ruling

On December 12, 2024, Plaintiff and landlord Soto Capital, L.P. (“Plaintiff”) filed suit against Defendant and tenant MD Hydration, Inc. (“Defendant”) for breach of lease.

On January 13, 2025, Defendant filed a cross-complaint against Plaintiff, alleging four causes of action for (1) breach of written contract; (2) breach of quiet enjoyment; (3) breach of implied covenant of good faith and fair dealing; and (4) private nuisance.

Plaintiff now demurs to Defendant’s cross-complaint for failure to state facts sufficient to constitute a cause of action and uncertainty, pursuant to Code of Civil Procedure section 430.10, subdivisions (e) and (f), respectively.

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“[D]emurrers for uncertainty are disfavored.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.) A demurrer for uncertainty will be sustained only where the pleading is so bad that the responding party cannot reasonably respond - i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what claims are directed against him or her. (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.) Where a demurrer is made upon the ground of uncertainty, the demurrer must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears by reference to page and line numbers. (See Fenton v. Groveland Comm. Services Dist. (1982) 135 Cal.App.3d 797, 809.)

Although Plaintiff purports to bring the demurrer based on uncertainty, the body of the memorandum of points and authorities does not raise any arguments about the cross-complaint being uncertain. As such, Plaintiff does not demonstrate that any portions of the cross-complaint are so bad that Plaintiff cannot reasonably determine what issues must be admitted or denied or what claims are directed against it. The Court thus declines to sustain Plaintiff’s demurrer based on uncertainty.

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Here, the cross-complaint alleges:

13. On or about October 23, 2019, MD Hydration and Soto Capital executed a “Standard Industrial/Commercial Multi-Tenant Lease – Net” (“Lease Agreement”) for the Subject Premises, attached hereto as Exhibit A. MD Hydration leased the Subject Premises to operate a business designed to provide intravenous (IV) hydration and vitamin therapy services for patients. On or about December 18, 2019, MD Hydration opened its doors for business.

14. Under Paragraph 7.2 of the Lease Agreement, Soto Capital was obligated to maintain and repair the “foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof.”

15. Under Paragraph 7.2 of the Lease Agreement, Soto Capital was also obligated to provide “the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2” of the Lease Agreement, which include the “operation, repair and maintenance, in neat, clean, good order and condition, and if necessary the replacement, of ... [t]he Common Areas and Common Area Improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems” as well as “[a]ll other areas and improvements that are within the boundaries of the Project but outside of the Premises and/or any space occupied by a tenant.”

16. Under Paragraph 9.2 of the Lease Agreement, in the event of partial damage to the Subject Premises that is an insured loss, Soto Capital was obligated to “repair such damage ... as soon as reasonably possible,” and if the damage was under $10,000.00, to either “make the repair of any damage or destruction” or “make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose.”

17. Pursuant to Paragraph 38 of the Lease, “Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.”

18. On or about March 25, 2021, MD Hydration and Soto Capital executed a “First Amendment to Standard Multi-Tenant Lease (“First Amendment”), attached hereto as Exhibit B. The Lease Agreement and First Amendment will collectively be referred to as the “Lease”. Pursuant to the First Amendment, MD Hydration’s base rent was reduced by a total amount of $12,000.

19. Within three months after MD Hydration opened its doors for business, a string of events ensued which cumulatively had the effect of rendering the Subject Premises unsafe for MD Hydration, its staff, and its patients to operate its business at the Subject Premises.

20. First, on or about March 30, 2020, the restaurant building adjacent to the Subject Premises flooded. The flooding spread, through the common areas under Soto Capital’s control, all the way into the Subject Premises causing damage to several counters and walls throughout the Subject Premises. Despite the flooding being caused by another tenant through the common areas into MD Hydration’s unit, Soto Capital refused to help with any remediation efforts thereby leaving MD Hydration to complete all remediation efforts on its own. Remediation of the Subject Premises included tearing out and replacing drywall inside of the Subject Premises. As a result of the flood damage, MD Hydration was forced to close its business for multiple days.

21. Second, on or about September 11, 2020, there was a leak in the ceiling of the Subject Premises, through common areas under Landlord’s control, which resulted in there being a mosquito infestation inside of the Subject Premises. Soto Capital again refused to help with any remediation efforts.

22. Third, on or about February 1, 2021, the Subject Premises was broken into and burglarized. MD Hydration’s video surveillance captured the assailant inside the Subject Premises rifling through MD Hydration’s desks, drawers, cabinets. Following the break-in, MD Hydration immediately notified Soto Capital that the Subject Premises had been burglarized and provided Soto Capital with the video surveillance of same. In response, Soto Capital did nothing to secure the common areas, ingress, egress, and Subject Property.

23. Fourth, on or about March 3, 2021, the Subject Premises was burglarized yet again. This time around, the assailant gained access inside the Subject Premises by gaining entry to the common area. The assailant then broke the glass window of a side door of the Subject Premises and gained access inside of the Subject Premises. Once again MD Hydration reported the break-in and burglary to Soto Capital and yet again, Soto Capital did not secure the Subject Property with security personnel or security measures.

24. Fifth, on or about September 13, 2021, a homeless person entered the Subject Premises yielding a knife and threatened to harm one of MD Hydration’s employees if the employee did not provide the assailant with an intravenous treatment. The attack was captured by MD Hydration’s security cameras and was provided to the police.

25. During the operation of its business, homeless individuals used the common areas and surrounding areas of the Subject Premises, including the areas in front of and around the Subject Premises, as a place to sleep and/or live. As a result of Soto Capital’s breaches of its obligations, MD Hydration’s employees had several dangerous encounters with homeless individuals loitering around the Subject Premises. On multiple occasions, MD Hydration’s employees were terrified victims who were forced to call the non-emergency Sheriff’s Department to have the homeless individuals removed.

26. The criminal activity that MD Hydration and its employees experienced was the result of Soto Capital failing to properly secure the common areas for which it is responsible. Specifically, there is a gate surrounding the common area which is to be locked and is intended to prevent trespassers from entering inside the common area and accessing the commercial buildings, including the Subject Premises. However, rather than securing these gates with a self-locking mechanism as required by law, Soto Capital “locks” the common area gates with a padlock, which must be manually locked. As a result of not providing a self-locking mechanism for the common area gates, the common area gate is often left unlocked and/or can easily be manipulated thereby creating an easy access point for criminals to use to gain access to tenant buildings, including the Subject Premises.

27. Following the string of burglaries, break-ins, the attacks on its employees, Soto Capital’s failures, and realizing that the Subject Premises was not a safe space to operate its business out of, on or about September 22, 2021, MD Hydration provided written notice to Soto Capital that as a result of the multiple robberies, safety incidents, and the business’s performance as a result, MD Hydration would be closing its doors at the Subject Premises.

35. By virtue of the acts above, Soto Capital has materially breached the Lease, copies are which are equally available to all parties.

36. MD Hydration has performed all obligations on its part to be performed, or was otherwise excused from performing, under the terms of the Lease.

37. As a result of Soto Capital’s failure to perform, and breach of its obligations under the Lease, MD Hydration has suffered compensatory damages.

Thus, Defendant alleges (1) the existence of a contract (Cross-Complaint ¶¶ 13-18); (2) Defendant’s performance or excused nonperformance (Id. at ¶¶ 19, 27, 36); (3) Plaintiff’s breach (Id. at ¶¶ 20-26, 35); and (4) Defendant’s damages (Id. at ¶¶ 20-21, 37.)

Plaintiff argues that Defendant alleges its own performance or excused nonperformance only in conclusory fashion. The Court disagrees. As a threshold matter, Defendant is only required to plead “ultimate facts” which Defendant has done by virtue of paragraph 36.[1] Moreover, Defendant has alleged Plaintiff’s specific breaches that would potentially excuse Plaintiff’s nonperformance under the agreement.

Plaintiff also argues Defendant’s first cause of action is barred by the Exculpation Clause contained in the lease agreement attached to the cross-complaint, which provides:

8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee’s business or for any loss of income or profit therefrom. Instead, it is intended that Lessee’s sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.

(Ex. A to Cross-Complaint at ¶ 8.8 [emphasis added].) Further, the Addendum to the Lease provides:

65. Security Measures. Lessor has informed Lessee that the Building is located in an urban area where criminal activities, breakins and robberies occur. Lessee hereby acknowledges that Lessor makes (and has heretofore made) no representations or warranties that the Building or the Premises will be secure from criminal activities, including without limitation, break-ins or robberies. Further, Lessee represents and warrants that Lessee and its consultants have inspected the Premises and Lessee has determined to its own satisfaction that the Premises are sufficiently secure, for Lessee’s intended use. Lessee hereby assumes full responsibility for the security and protection of Lessee’s business and its Premises. Lessee hereby agrees that Lessor shall not be liable for injury to Lessee’s business or any loss of income by Lessee; nor shall Lessor be liable for injury to the person or property of Lessee, Lessee’s employees, invitees, customers or any other person in or about the Premises resulting directly or indirectly from any third-party criminal act.”

But Defendant alleges damages for costs to remediate the water damage to the leased property itself, including the drywall and a mosquito infestation. (Cross-Complaint at ¶¶ 20-21.) Further, whether the leak was due to the act or neglect of another tenant is a factual question to be resolved at later stages of the litigation.

Therefore, the Court denies Plaintiff’s demurrer to Defendant’s first cause of action for breach of written contract.

Absent language to the contrary, “every lease includes a covenant of quiet possession and enjoyment.” (Erlach v. Sierra Asset Servicing, LLC (2014) 226 Cal.App.4th 1281, 1299-1300 [hereafter Erlach].) The covenant is binding on successors in interest. (Nativi v. Deutsche Bank Nat. Trust Co. (2014) 223 Cal.App.4th 261, 291.)

“To be actionable, the landlords (sic) act or omission must substantially interfere with a tenants right to use and enjoy the premises for the purposes contemplated by the tenancy.” (Andrews v. Mobile Aire Estates (2005) 125 Cal.App.4th 578, 589.) “The perpetrator of the interference with the tenants quiet enjoyment need not be the landlord personally. There may be an actionable breach where the interference is caused by a neighbor or tenant claiming under the landlord.” (Id. at p. 590.) “This covenant is breached upon actual or constructive eviction of the tenant.” (Erlach, supra, 226 Cal.App.4th at p. 1299.) “Any interference by the landlord that deprives the tenant of the beneficial enjoyment of the premises or renders the premises unfit for the purposes for which they are let amounts to a constructive eviction if the tenant so elects and vacates within a reasonable time.” (Id. at pp. 1299-1300.)

Plaintiff argues that the breach of quiet enjoyment is premised entirely upon the actions of third parties over which Defendant had no control, namely, break-ins, incidents with unhoused individuals, and a flood caused by the tenant next door. But as discussed above, a landlord can be liable for a breach of the covenant of quiet enjoyment even where the interference is caused by a neighbor or tenant.

As such, the Court cannot determine from the face of the pleadings that Defendant fails to state a cause of action as a matter of law. Whether Plaintiff is actually liable for a breach of quiet enjoyment, as alleged, is a factual question to be determined at later stages of the litigation.

iii. Third Cause of Action – Breach of Implied Covenant of Good Faith and Fair Dealing

“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683.) “Because the covenant is a contract term, however, compensation for its breach has almost always been limited to contract rather than tort remedies.” (Id. at p. 684.) “As a contract concept, breach of the duty led to imposition of contract damages determined by the nature of the breach and standard contract principles.” (Ibid.)

However, tort recovery for a breach of the implied covenant of good faith and fair dealing is generally only available in cases involving an insurance contract, where an independent duty arises from principles of tort law, or where there has been a bad faith denial of the existence of or liability under the breached contract. (Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102.) Otherwise, “a breach of the implied covenant of good faith is a breach of the contract” although “breach of a specific provision of the contract is not ... necessary” to a claim for breach of the implied covenant of good faith and fair dealing[.]” ( Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.)

44. The Lease contains an implied covenant of good faith and fair dealing with respect to Soto Capital’s and MD Hydration’s performance of the Lease.

45. By virtue of the acts above, Soto Capital has materially breached the implied covenant of good faith and fair dealing in the Lease causing damage to MD Hydration.

46. MD Hydration has performed all obligations on its part to be performed, or was otherwise excused from performing, under the terms of the Lease.

47. As a result of Soto Capital’s failure to perform, and breach of the implied covenant of good faith and fair dealing, MD Hydration has suffered compensatory damages.

Plaintiff demurs on the grounds that Defendant has not alleged a tortious breach of the implied covenant of good faith and fair dealing, and the allegations are entirely duplicative of Defendant’s first cause of action for breach of contract. The Court agrees. Defendant has not alleged a tortious breach of the implied covenant of good faith and fair dealing and because the third cause of action is based on Plaintiff’s alleged breach of the lease, the third cause of action is entirely duplicative of the first cause of action.

Therefore, the Court sustains Plaintiff’s demurrer to Defendant’s third cause of action.

A “nuisance” is “[a]nything which is injurious to health, including, but not limited to, the illegal sale of controlled substances, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property, or unlawfully obstructs the free passage or use, in the customary manner, of any navigable lake, or river, bay, stream, canal, or basin, or any public park, square, street, or highway, is a nuisance.” (Civ. Code, § 3479.)

A nuisance may be public, private, or both. (Koll-Irvine Center Property Owners Assn. v. County of Orange (1994) 24 Cal.App.4th 1036, 1041.) “Unlike public nuisance, which is an interference with the rights of the community at large, private nuisance is a civil wrong based on disturbance of rights in land.” (Ibid.) “So long as the interference is substantial and unreasonable, and such as would be offensive or inconvenient to the normal person, virtually any disturbance of the enjoyment of the property may amount to a nuisance.” (Ibid.)

Plaintiff argues that Defendant’s private nuisance claim is barred by the exculpation clauses above and Defendant fails to allege sufficiently “substantial” and “unreasonable” conduct. But as discussed above, the exculpation clauses do not necessarily bar Defendant’s claims.

Moreover, regarding the issues of “substantial” and “unreasonable” conduct, the Cross-Complaint alleges:

50. Soto Capital, by acting or failing to act, created a condition or permitted a condition to exist that was an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of property.

51. Soto Capital’s conduct in acting or failing to act was negligent and unreasonable.

52. This condition substantially interfered with MD Hydration’s use or enjoyment of the Subject Premises.

53. An ordinary person would reasonably be annoyed or disturbed by Soto Capital’s conduct.

56. Soto Capital’s conduct was a substantial factor in causing MD Hydration’s harm.

57. The seriousness of the harm outweighs the public benefit of Soto Capital’s conduct.

58. As a result of Soto Capital’s private nuisance, MD Hydration has suffered compensatory damages.

Defendant has adequately pleaded sufficient “ultimate facts” to withstand demurrer. Whether Plaintiff’s conduct actually created a substantial and/or unreasonable interference with Defendant’s property rights is a factual question to be decided at later stages of the litigation.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Defendant has not met that burden, as Defendant does not specify what facts could be added to the Cross-Complaint to cure the deficiency identified above.

For the reasons stated, the Court sustains Plaintiff’s Demurrer to the third cause of action without leave to amend, but overrules Plaintiff’s Demurrer to the first, second, and fourth causes of action.

Further, the Court orders Plaintiff to file an Answer to the Cross-Complaint on or before May 30, 2025.

Plaintiff shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

[1] Ultimate facts are those “constituting the cause of action” or those upon which liability depends, e.g., duty of care, breach of the duty and causation (damages). (See Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “[T]he term ultimate fact generally refers to a core fact, such as an essential element of a claim. Ultimate facts are distinguished from evidentiary facts and from legal conclusions.” (Central Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501, 513 [cleaned up]; see also Rodriguez v. Parivar, Inc. (2022) 83 Cal.App.5th 739, 750–751 [“The elements of a cause of action constitute the essential or ultimate facts in a civil case”].)

DEPARTMENT	207
HEARING DATE	May 8, 2025
CASE NUMBER	24SMCV06073
MOTION	Demurrer to Cross-Complaint
MOVING PARTY	Plaintiff and Cross-Defendant Soto Capital, L.P.
OPPOSING PARTY	Defendant and Cross-Complainant MD Hydration, Inc.