Judge: Michael P. Linfield, Case: 22STCV03223, Date: 2023-05-22 Tentative Ruling
Case Number: 22STCV03223 Hearing Date: May 22, 2023 Dept: 34
SUBJECT: Motion for
Judgment on the Pleadings
Moving Party: Defendant
CETTG Glendale LLC
Resp. Party: Plaintiff Carla Shaw Deheras
SUBJECT: Motion for
Judgment on the Pleadings
Moving Party: Defendant
Savills, Inc.
Resp. Party: Plaintiff Carla Shaw Deheras
Defendant CETTG Glendale LLC’s Motion for
Judgment on the Pleadings is DENIED.
Defendant Savills, Inc.’s Motion for Judgment
on the Pleadings is DENIED.
BACKGROUND:
On January
26, 2022, Plaintiff Carla Shaw Deheras filed her Complaint against Defendants
CETTG Glendale LLC; EB Arrow; Arrow Retail; Lance Taylor; Jack Marshal; Jones
Lang LaSalle Brokerage, Inc.; Jeff Pauche; Savills, Inc.; Cypress Properties
Group I, LLC; and Cypress Properties, LP. The causes of action arise from the
Parties’ business relationships and transactions.
On May 4,
2022, Defendant CETTG Glendale LLC filed its Answer.
On May 18,
2022, Defendant Savills, Inc. filed its Answer.
On April 26,
2023, Defendant CETTG Glendale LLC (“Defendant CETTG”) filed its Motion for
Judgment on the Pleadings (“CETTG Motion”). Defendant CETTG concurrently filed
its Request for Judicial Notice.
On April 26,
2023, Defendant Savills, Inc. (“Defendant Savills”) filed its Motion for
Judgment on the Pleadings (“Savills Motion”). Defendant Savills concurrently
filed: (1) Request for Judicial Notice; and (2) Proposed Order.
On May 12,
2023, Plaintiff filed a single Opposition to both the CETTG Motion and the
Savills Motion. Plaintiff filed her Request for Judicial Notice.
On May 15,
2023, Defendant CETTG filed its Reply to the CETTG Motion.
On May 15,
2023, Defendant Savills filed its Reply to the Savills Motion.
On May 16,
2023, the Court granted Plaintiff’s Ex Parte Application and allowed
late filing of the Opposition and the Replies.
ANALYSIS:
For clarity and ease of
analysis, the Court first considers the Requests for Judicial Notice
concurrently and then considers the CETTG Motion and Savills Motion
concurrently.
I.
Requests for
Judicial Notice
A. Defendant CETTG’s Request for Judicial Notice
Defendant CETTG requests that the Court take judicial notice of:
(1) a settlement agreement among various entities and Plaintiff; and
(2) a Grant Deed, recorded on January 3, 2022 in the official records
of the Office of the Los Angeles County Recorder.
The Court GRANTS
judicial notice to these items.
B. Defendant Savill’s Request for Judicial Notice
Defendant
Savill requests that the Court take judicial notice of various items. Item A is
the same settlement agreement discussed above. Items B, D, and G are items
filed in a bankruptcy case. Items C, E, and F are items filed with the Office
of the Secretary of State.
The
Court GRANTS judicial notice to Item A.
The
Court DENIES judicial notice to Items B, D, and G. “Although a court
may judicially notice a variety of matters (Evid. Code, §¿450 et seq.), only relevant
material may be noticed” (Am. Cemwood Corp. v. Am. Home Assurance Co. (2001)
87 Cal.App.4th 431, 441, fn. 7.)¿
The Court GRANTS judicial
notice to Items C, E, and F.
C. Plaintiff’s Request for Judicial Notice
Plaintiff
requests that the Court take judicial notice of:
(1) the Complaint filed in Case No. 19STCV29826 in the Los Angeles
Superior Court; and
(2) the Stipulated Judgment and Stipulation for Entry of Judgment in
Case No. 19STCV29826 in the Los Angeles Superior Court.
The Court
GRANTS judicial notice of these items.
II.
Legal
Standard
“A motion for
judgment on the pleadings performs the same function as a general demurrer, and
hence attacks only defects disclosed on the face of the pleadings or by matters
that can be judicially noticed.” (Burnett v. Chimney Sweep (2004) 123
Cal.App.4th 1057, 1064.) “In deciding or reviewing a judgment on the pleadings,
all properly pleaded material facts are deemed to be true, as well as all facts
that may be implied or inferred from those expressly alleged.” (Fire Ins.
Exch. v. Super. Ct. (2004) 116 Cal.App.4th 446, 452.) A motion for judgment
on the pleadings does not lie as to a portion of a cause of action. (Id.)
“In the case of either a demurrer or a motion for judgment on the pleadings,
leave to amend should be granted if there is any reasonable possibility that
the plaintiff can state a good cause of action.” (Gami v. Mullikin Med. Ctr.
(1993) 18 Cal.App.4th 870, 876.) A non-statutory motion for judgment on the
pleadings may be made any time before or during trial. (Stoops v. Abbassi
(2002) 100 Cal.App.4th 644, 650.)¿
¿
Because a motion
for judgment on the pleadings performs the same function as a general demurrer,
the procedures in responding to demurrers similarly apply to motions for
judgment on the pleadings. (See e.g., Evinger v. Moran (1910) 14
Cal.App. 328, 329.)¿¿
III.
Discussion
A. Brief Background
1. Background of the Allegations in the Complaint
The Court
briefly recounts the background of the allegations made in the Complaint due to
their complexity.
Among other
things, Plaintiff alleges:
(1) That in or about 2015, Francisco Lugo Abundis (“Abundis”)
established an entity named BFB Grill, LLC (“BFB”), which operated in Burbank
under the dba “Better Fresh Burger”;
(2) That in mid-2017, Plaintiff invested $300,000.00 in seed funds for
40% ownership of a new entity, GBBB Grill, LLC (“GBBB”), which would be an
entity co-owned by Abundis;
(3) That GBBB and BFB became commingled and were interchangeable alter
egos of each other and of Abundis;
(4) That this commingled and interchangeable alter ego was referred to
as “Grill”;
(5) That starting in 2017 and ending in 2018, a transaction occurred
involving the lease of Grill at a new location in Glendale: the Glendale
Marketplace, located at 118 South Brand Boulevard, Glendale, California 91204
(“the Glendale Marketplace”);
(6) That Defendant CETTG was involved in this transaction as the
landlord of the Glendale Marketplace;
(7) That Defendant CETTG hired Defendant Savills to lease the Glendale
Marketplace on behalf of Defendant CETTG, including engaging in negotiations of
the lease;
(8) That Defendant CETTG and the other defendants in this case
(including Defendant Savills) are alter egos of each other;
(9) That in the periods during and after the lease negotiations,
Defendants CETTG and Savills engaged in concealment and withholding of material
facts from Plaintiff and Grill regarding plans for construction at the Glendale
Marketplace;
(10) That on February 9, 2018, Defendant CETTG presented a written lease
agreement, which Abundis signed, naming BFB as the lessee;
(11) That on February 13, 2018, Abundis formed GBBB specifically for the
business location at the Glendale Marketplace;
(12) That on January 24, 2019, Defendant CETTG notified Plaintiff and
Grill that there would be construction at the Glendale Marketplace;
(13) That on February 21, 2019, construction commenced at the Glendale
Marketplace;
(14) That on or around October 31, 2019, Plaintiff entered into a
Settlement Agreement (officially titled “Settlement Agreement and Mutual
Release”) with Abundis, BFB, and GBBB (i.e., with Grill);
(15) That the Settlement Agreement assigned to Plaintiff, among other
things, the sole rights to pursue any claims against Defendant CETTG that Grill
may have had; and
(16) That Plaintiff thus has viable causes of action against Defendants
CETTG and Savill (as well as against other defendants) for breach of written
lease contract, breach of covenant of good faith and fair dealing, fraud via
misrepresentation, fraud via concealment, and negligent misrepresentation.
(Complaint, ¶¶ 2, 12, 25–27, 30–53,
60–61.)
2. Background of Case No. 19STCV29826
On August 22,
2019, Plaintiff sued Abundis, BFB, and GBBB on various causes of action.
Plaintiff filed her Complaint in the Los Angeles Superior Court, and the Court
listed her Complaint as Case No. 19STCV29826. That case was before the
Honorable Richard L. Fruin in Department 15.
On January 9,
2020, Judge Fruin entered the Stipulated Judgment in Case No. 19STCV29826.
Among other things, the Stipulated Judgment:
(1) entered judgment in favor of Plaintiff and against Abundis, BFB,
and GBBB, jointly and severally, in the sum of $501,247.61, plus interest at
the rate of 10% from November 1, 2019;
(2) ordered that Grill “shall immediately use diligent efforts to sell
both the BFB and GBBB businesses, with the vast bulk of the net proceeds going
to [Plaintiff]”; and
(3) ordered that Plaintiff “is entitled to equitable relief, including
a temporary and permanent injunction, disgorgement, restitution and a receiver,
at [Plaintiff’s] sole discretion, for the BFB and GBBB businesses, jointly and
severally against [Abundis], BFB and GBBB”; and
(4) ordered that the Stipulated Judgment “shall be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and assigns; and the obligations hereunder shall
survive the death, dissolution or winding down of any of the GRILL defendants.”
(Stipulated Judgment in Case No.
19STCV29826, ¶¶ 1.A., 1.C.(3), 1.D., 6.)
B. The Parties’ Arguments
Defendant
CETTG moves for judgment on the pleadings, arguing: (1) that Plaintiff is not
the real party in interest and lacks standing to prosecute all the claims in
the Complaint; and (2) that a landlord’s liability, if any, to a tenant is
limited to the landlord’s interest in the premises. (CETTG Motion, pp. 5:19–20,
7:18–19.)
Defendant
Savills also moves for judgment on the pleadings, arguing: (1) that Plaintiff
did not receive an assignment and has no standing to prosecute this action
against Defendant Savills; and (2) that Defendant Savills is not a party to the
lease agreement and therefore Plaintiff’s first and second causes of action
necessarily fail. (Savills Motion, pp. 16:16–17, 19:12–15.)
Plaintiff
opposes both motions, arguing: (1) that the motions are disguised motions for
summary judgment; (2) that the challenges to the assignment go to weight of the
claims made; (3) that the motions ask Department 34 (the department to which
the current case is assigned) to interpret what only Department 15 (the
department of Case No. 19STCV29826) may interpret; and (4) that the lease
language arguments are unavailing. (Opposition, pp. 2:5, 3:25, 10:8, 10:12.)
In its Reply,
Defendant CETTG argues: (1) that amendment of the Complaint would not cure the
standing defects and would contradict the current allegations; (2) that being a
40% beneficial owner of an entity does not give standing; and (3) that the
judicially-noticed documents demonstrate that Defendant CETTG no longer holds
an interest in the property and its liability is limited to the landlord’s
interest in the premises. (CETTG Reply, pp. 4:17–19, 5:15–17, 6:1–3.)
In its Reply,
Defendant Savills argues: (1) that Plaintiff’s allegations do not establish
Plaintiff’s claims were assigned to her, or that the settlement agreement or
pledge agreements convey an assignment; and (2) that Abundis, BFB, and GBBB did
not admit to liability. (Savills Reply, pp. 4:21–23, 8:21.)
C. Standing
1. Legal Standard
“[T]he question of standing to sue is different from that of
capacity.¿Incapacity is merely a legal disability, such as infancy or insanity,
which deprives a party of the right to come into court.¿The right to relief, on
the other hand, goes to the existence of a cause of action. . . . Where the
complaint states a cause of action in someone, but not in the plaintiff, a
general demurrer for failure to state a cause of action will be sustained.” (Parker
v. Bowron (1953) 40 Cal.2d 344, 351.)
2. Discussion
Among other things, Plaintiff has alleged: (1)
that BFB had a signed contract; (2) that, among other causes of action,
Defendants CETTG, Savills, and others are liable for breach of that contract;
and (3) that Plaintiff has been assigned the right to pursue any claims that
BFB had. Put differently, Plaintiff alleges that she has been assigned the
right to sue Defendants CETTG, Savills, and others for the alleged breach of a
contract against BFB.
The Court need not, and does not, make a
finding on whether Plaintiff actually has standing in this case. That is the
role of a trier of fact at trial. Further, the Court need not, and does not,
consider whether there is any evidence to support such a finding — that would
be the role of the Court if this were a motion for summary judgment, which this
is not.
This is a motion for judgment on the
pleadings. The Court must assume these allegations as true for the purpose of a
motion for judgment on the pleadings. Taken as true, these allegations are
sufficient for the Complaint to withstand an argument that Plaintiff does not
have standing. To the extent judicially-noticed materials are considered, they
support the allegations.
The Court DENIES the
CETTG Motion and the Savills Motion on the grounds that Plaintiff lacks
standing.
D.
Landlord Liability
Defendant CETTG argues that it can no longer
liable to Plaintiff because: (1) Defendant CETTG transferred its interest in
the Glendale Marketplace on January 3, 2022; and (2) the Section 19.02 of the
Lease limits liability. (CETTG Motion, p. 7:20–26.)
The Court disagrees with this argument.
Among other things, Plaintiff is suing
Defendant CETTG for causes of action based in fraud and negligent
misrepresentation. These are torts that cannot be excused or transferred simply
by a transfer of interest in property. Furthermore, the causes of action based
in contract allegedly accrued at the latest in 2018 — years prior to Defendant
CETTG’s transfer of interest in the property. That would make Defendant CETTG
liable, and Defendant CETTG does not point to any authority that would hold
otherwise.
The Court DENIES the
CETTG Motion on the grounds that Defendant CETTG is no longer the landlord.
E.
Alter Ego
1.
Legal Standard
“Ordinarily, a corporation is regarded as a
legal entity separate and distinct from its stockholders, officers and
directors. Under the alter ego doctrine, however, where a corporation is used
by an individual or individuals, or by another corporation, to perpetrate
fraud, circumvent a statute, or accomplish some other wrongful or inequitable
purpose, a court may disregard the corporate entity and treat the corporation's
acts as if they were done by the persons actually controlling the corporation.”
(Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980,
993.)
“The doctrine is applicable where some innocent party attacks
the corporate form as an injury to that party's interests.¿The issue is not so
much whether the corporate entity should be disregarded for all purposes or
whether its very purpose was to defraud the innocent party, as it is whether in
the particular case presented, justice and equity can best be accomplished and fraud and unfairness defeated by disregarding the
distinct entity of the corporate form.” (Id.)
"It therefore appears that the court have
followed a liberal policy of applying the alter ego doctrine where the equities
and justice of the situation appear to call for it rather than restricting it
to the technical niceties depending upon pleading and procedure." (First
W. Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 (emphasis omitted).)
“[W]hile it is
the better practice to allege the facts upon which a plaintiff seeks to hold a
defendant on the alter ego theory, still it is the law of California that that
issue may be raised by a simple allegation that the defendant sought to be
charged had made the contract involved.” (Los Angeles Cemetery Assoc. v.
Super. Ct. of Los Angeles County (1968) 268 Cal.App.2d 492, 494 (emphasis
omitted).)
2.
Discussion
Plaintiff alleges that Defendants CETTG and
Savills are alter egos of each other. For the purpose of a motion for judgment
on the pleadings, the Court assumes the allegation to be true.
Defendant Savills argues that it cannot be
liable for either breach of contract or breach of the covenant of good faith
and fair dealing because Defendant Savills is not a signatory to the lease.
However, the allegations are that Defendant CETTG did sign the lease and that
Defendant Savills is an alter ego of Defendant CETTG. This is sufficient for
these causes of action to survive against Defendant Savills.
The Court DENIES the Savills Motion on the
grounds that Defendant Savills is not a signatory to the contract.
IV.
Conclusion
Defendant CETTG Glendale LLC’s Motion for
Judgment on the Pleadings is DENIED.
Defendant Savills, Inc.’s Motion for Judgment
on the Pleadings is DENIED.