Judge Michael P. Linfield, Case 22STCV32029 2023-03-24 Tentative Ruling

Judge: Michael P. Linfield, Case: 22STCV32029, Date: 2023-03-24 Tentative Ruling

Case Number: 22STCV32029 Hearing Date: March 24, 2023 Dept: 34

SUBJECT: Demurrer to Plaintiffs’ First Amended Complaint and Motion to Strike Portions of Plaintiffs’ First Amended Complaint

Moving Party: Defendant Kevin Dillon

Resp. Party: Plaintiffs Jacob Lauing and Ivana Carbajal

SUBJECT: Demurrer to First Amended Complaint

Moving Party: Defendant Commercial Brokers International, Inc.

Resp. Party: Plaintiffs Jacob Lauing and Ivana Carbajal

The CBII Demurrer is OVERRULED.

The Dillon Demurrer is OVERRULED.

The Motion to Strike is DENIED.

BACKGROUND:

On September 30, 2022, Plaintiffs Mazelle Jacobs, Aaron Jacobs, Jacob Lauing, and Ivana Carbajal filed their Complaint against Defendants Kevin Dillon, Westside Property Management, Inc., and Commercial Brokers International, Inc. on causes of action arising from Plaintiffs’ leases with Defendants.

On January 20, 2023, Plaintiffs filed their First Amended Complaint.

On February 17, 2023, Defendant Westside Property Management, Inc. filed its Answer.

On February 21, 2023, Defendant Kevin Dillon filed his Demurrer to First Amended Complaint (“Dillon Demurrer”) and Motion to Strike Portions of Plaintiffs’ First Amended Complaint (“Motion to Strike”).

On February 22, 2023, Defendant Commercial Brokers International, Inc. (CBII) filed their Demurrer to Plaintiffs’ First Amended Complaint (“CBII Demurrer”). Defendant CBII concurrently filed: (1) Declaration of Ramy Galal; and (2) Proposed Order.

On March 10, 2023, Plaintiffs filed oppositions to both Demurrers and the Motion to Strike.

On March 16, 2023, Defendant CBII filed its Reply to the CBII Demurrer.

On March 17, 2023, Defendant Dillon filed his Reply to the Dillon Demurrer and his Reply to the Motion to Strike.

ANALYSIS:

For clarity and ease of analysis, the Court first discusses Commercial Brokers International, Inc’s Demurrer and Dillon Demurrer before discussing the Motion to Strike.

I. CBII’s Demurrer

A. Legal Standard

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on its face or from which judicial notice may be taken), and section 430.50(a) (can be taken to the entire complaint or any cause of action within).

A demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision (f)), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Id.)

B. Discussion

Defendant CBII demurs to the first, third, and fifth causes of action in the First Amended Complaint (FAC).

1. First Cause of Action for Breach of Contract

a. Legal Standard

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.)

b. Discussion

Defendant CBII argues that the first cause of action for breach of contract fails because: (1) the FAC does not clearly identify who is the landlord bound by contract; (2) there are no facts to support the breach of contract count; (3) substantial interference is required to establish breach of quiet enjoyment; and (4) Plaintiffs failed to allege facts showing that Mr. and Mrs. Jacobs’ damages were a result of Defendant CBII’s alleged conduct. (CBII Demurrer, pp. 10:5, 10:11, 11:10, 11:24–25, 13:12–14.)

Plaintiffs disagree, arguing: (1) that the FAC clearly identifies Defendant CBII as the landlord in the lease agreement; (2) that the FAC clearly identifies which terms of the lease agreement Defendant CBII breached as a landlord, and it provides allegations to support each breach; and (3) that the FAC clearly identifies Mr. and Mrs. Jacobs’ resulting damages from Defendant CBII’s breaches of duty as a landlord. (Opposition to CBII Demurrer, pp. 8:5–6, 8:11, 9:1–2, 10:14–15.)

Defendant CBII reiterates its arguments in its Reply.

Among other things, Plaintiffs allege in their Complaint: (1) that Defendants CBII and Dillon, and Plaintiffs Aaron Jacobs and Mazelle Jacobs, entered into a written lease agreement, by which Defendants CBII and Dillon rented the property to Plaintiffs Aaron Jacobs and Mazelle Jacobs; (2) that at all times during their possession and occupation of the property, Plaintiffs Aaron Jacobs and Mazelle Jacobs duly performed all of the conditions of the written lease agreement that were required of them; (3) Defendants failed to perform various terms required by the lease agreement, including providing quiet enjoyment of the property, exercising reasonable care in the ownership, management, and control of the property, providing safe, fit, and habitable housing, and complying with applicable state and municipal laws governing housing standards and tenants’ rights; and (4) that Plaintiffs Aaron Jacobs and Mazelle Jacobs were harmed by these failures. (FAC, ¶¶ 68, 69, 71, 73.) These items are supported by a litany of additional allegations made earlier in the FAC.

Assuming these allegations are true for the purpose of a demurrer, these allegations are sufficient to constitute a cause of action for breach of contract.

The Court OVERRULES the CBII Demurrer to the first cause of action for breach of contract.

2. Third Cause of Action for Negligence

a. Legal Standard

In order to state a claim for negligence, Plaintiff must allege the elements of (1) “the existence of a legal duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.)¿

b. Discussion

Defendant CBII argues that the third cause of action for negligence fails because: (1) the economic loss rule bars the negligence count, including tort claims by parties in privity; and (2) the negligence cause of action is not cognizable because the legal duty is not established, breach of that duty is not established, and causation of damages is not established. (CBII Demurrer, pp. 14:13, 14:18, 16:3, 16:11, 17:9–10, 18:3.)

Plaintiffs disagree, arguing: (1) that the economic loss rule does not apply here because Mr. and Mrs. Jacobs have suffered from severe emotional distress due to Defendant CBII’s negligent behavior; and (2) that the negligence cause of action is sufficiently stated because Plaintiffs have clearly alleged the legal duty owed by Defendant CBII, that Defendant CBII breached its legal duties, and that Defendant CBII caused damages. (Opposition to CBII Demurrer, pp. 11:16, 11:21, 12:2–3, 12:26–27.)

Defendant CBII reiterates its arguments in its Reply, including an extensive discussion of recent case law regarding the economic loss rule. (Reply to CBII Demurrer, pp. 9–12.)

i. The Economic Loss Rule

The Court disagrees with Defendant CBII’s characterization of the economic loss rule. CBII basis most of its reply on the recent California Supreme Court decision in Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905. (See Reply, pp. 9-10.) But Sheen does not help CBII’s argument.

“We begin with a review of the contours of the economic loss rule. The rule itself is deceptively easy to state: in general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damages.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, citations omitted.) The Supreme Court went on to hold “that when a borrow requests a loan modification, a lender owes no tort duty sounding in general negligence principles to ‘process, review and response carefully and completely to’ the borrower’s application.” (Id. at 948.)

The situation here is inapposite to that discussed in Sheen. Here, Plaintiffs have alleged, among other things, that Defendants are liable for the tort of negligence on allegations that Defendants breached their legal duties to Plaintiffs when a co-tenant was allowed to commit a hit-and-run in the apartment driveway, slash Plaintiffs’ car tires, carve a swastika on certain Plaintiffs’ front door (noting that these Plaintiffs are Jewish), leave a threatening note on a mailbox, and so on. (FAC, ¶¶ 17, 32, 33.) Simply put, the allegations go far beyond basic contract issues in which no tort duty would arise because there are purely economic losses. The allegations are that there have been property damages and tort-level emotional damages. Moreover, just because the Parties are in privity does not mean tort claims cannot arise.

The Court further notes that Sheen is also inapplicable because the relationship between a landlord and their tenant is distinguishable from a relationship between a lender and a borrower.

The Court OVERRULES the CBII Demurrer to third cause of action on the grounds of the economic loss rule.

ii. Sufficient Allegations for the Cause of Action

Plaintiffs allege: (1) that Defendants, as landlords and property managers, owed various legal duties to Plaintiffs, including the duty to exercise reasonable care in ownership and management, the duty to provide quiet enjoyment of the property, the duty to provide safe housing, and the duty to comply with all applicable state and municipal laws; (2) that Defendants breached their duties by allowing the ongoing disturbances and criminal activity that occurred on the property; and (3) that Defendants’ breach harmed Plaintiffs, which caused Plaintiffs damages. (FAC, ¶¶ 86–90.)

Assuming these allegations are true for the purpose of a demurrer, these allegations are sufficient to constitute a cause of action for negligence.

The Court OVERRULES the CBII Demurrer to the third cause of action for negligence.

3. Fifth Cause of Action for Constructive Eviction

a. Legal Standard

“The implied covenant of quiet enjoyment or possession may be breached in multiple ways. The claim has often been inextricably tied to breach of the covenant by eviction, which disturbs the tenant's right to undisturbed possession of the leased premises. If the landlord ousts the tenant, there is an actual eviction. If the landlord's acts or omissions affect the tenant's use of the property and compel the tenant to vacate, there is a constructive eviction. In either case, the tenant must vacate. Many courts have accordingly repeated the general premise that ‘the covenant of quiet enjoyment is not broken until there has been an actual or constructive eviction . . . .’” (Ginsberg v. Gamson (2012) 205 Cal.App.4th 873, 897–98, quoting Petroleum Collections Inc. v. Swords (1975) 48 Cal.App.3d 841, 847, other citations omitted.)

b. Discussion

Defendant CBII argues that the fifth cause of action for constructive eviction fails because: (1) Mr. and Mrs. Jacobs were not actually evicted; and (2) Mr. and Mrs. Jacobs did not vacate the property. (CBII Demurrer, pp. 18:27, 19:8.)

Plaintiffs disagree, arguing that Mr. and Mrs. Jacobs did vacate the property, that they had no choice but to terminate their lease and vacate property, and that this occurred because of Defendant CBII’s breach of its contractual and legal duties. (Opposition to CBII Demurrer, p. 13:14–24.)

Defendant CBII clarifies its arguments in its Reply. Specifically, Defendant CBII argues that the constructive eviction claim fails on the merits because Mr. and Mrs. Jacobs did not vacate the premises within a reasonable time after the wrongful acts of Defendant CBII. (Reply to CBII Demurrer, p. 13:5-20.) This is because Defendant CBII stopped managing the property around June 2020 while Plaintiffs vacated the property around June 30, 2022. (Id.)

The Court disagrees with Defendant CBII’s initial arguments. First, almost by definition, there need not be an actual eviction for there to be a constructive eviction. Second, Plaintiffs allege that Mr. and Mrs. Jacobs fled the property on June 23, 2022, and that they terminated the lease and vacated the property on or around June 30, 2022. (FAC, ¶¶ 35, 38.) This is sufficient for an allegation of constructive eviction.

Further, the question of whether the amount of time Mr. and Mrs. Jacobs took to vacate the property was reasonable is a question for the trier of fact, not a question of law suitable for the Court to resolve when considering a demurrer.

The Court OVERRULES the CBII Demurrer to the fifth cause of action for constructive eviction.

C. Conclusion

The CBII Demurrer is OVERRULED.

II. Dillon Demurrer

A. Legal Standard

B. Discussion

Defendant Dillon demurs to the seventh cause of action in the FAC.

1. Legal Standard for Intentional Misrepresentation

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)¿¿

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)¿¿

To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

2. Discussion

Defendant Dillon argues that the FAC fails to state a cause of action for intentional misrepresentation because: (1) the claim is merely a restatement of the allegations underlying the other causes of action and devoid of specific facts supporting such intentional misconduct; (2) it is unclear what affirmative misrepresentations Defendant Dillon made; and (3) Plaintiffs have not alleged all of the required elements or alleged those elements with the factual specificity required to state a claim. (Dillon Demurrer, pp. 3:4, 4:4–17, 5:2–5.)

Plaintiffs disagree, arguing each element of the cause of action. (Opposition to Dillon Demurrer, pp. 9:9–11, 9:25–26, 10:10–13, 12:2–4, 12:22–23, 13:10–14, 14:5–7.)

In his Reply, Defendant Dillon argues: (1) that Plaintiffs’ Opposition should be disregarded because it relies on allegations unrelated to the intentional misrepresentation claim; (2) that there is no duty to disclose the opinions of other tenants, as opposed to the duty to disclose facts about the property; and (3) that no actual misrepresentations have been alleged, nor were any facts or opinions withheld by Defendant Dillon in renting the unit. (Reply to Dillon Demurrer, pp. 2:24–25, 3:15–16, 4:22–23.)

Among other things, Plaintiffs allege: (1) that “Mr. Lauing and Ms. Carbajal were harmed because Defendant [Westside Property Management] and Defendant Dillon intentionally failed to disclose that there were ongoing disturbances and criminal activity at the [properties]”; (2) that “[t]hese facts were known only by [these Defendants] and could not have been discovered by Mr. Lauing and Ms. Carbajal”; (3) that Plaintiffs would not have signed the lease agreement had they been informed of the ongoing issues at the properties; and (4) that Plaintiffs have suffered damages as a direct and proximate result of the misrepresentation. (FAC, ¶¶ 116–120.)

Taken as true for the purposes of a demurrer, these allegations are sufficient to constitute the cause of action for intentional misrepresentation. Landlords that know of ongoing disturbances that affect their property have an affirmative duty to disclose such issues as they are in a position of superior knowledge. (See O’Hara v. W. Seven Trees Corp. (1977) 75 Cal.App.3d 798, 802–06.)

The Court OVERRULES the Dillon Demurrer to the seventh cause of action for intentional misrepresentation.

C. Conclusion

The Dillon Demurrer is OVERRULED.

III. Motion to Strike

A. Legal Standard

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 Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)¿¿¿¿

¿¿

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)¿¿¿¿

B. Discussion

Defendant Dillon moves the Court to strike the following portions of the FAC:

(1) Page 22, paragraph 116, lines 6–10;

(2) Pages 22 to 23, paragraph 120; and

(3) Page 24, paragraph 2.

(Motion to Strike, p. 2:4–22.)

The first two items regard allegations that would provide support for a punitive damages remedy. The third item is the request for punitive damages.

Defendant Dillon argues that striking these portions of the FAC is appropriate because the FAC fails to adequately and factually allege misconduct sufficient to support Plaintiffs’ request for punitive damages against Defendant Dillon. (Motion to Strike, p. 6:11–12.)

Plaintiffs disagree, arguing that there are sufficient and particular factual allegations to support punitive damages. (Opposition to Motion to Strike, p. 10:2–4.)

Defendant Dillon reiterates his argument in his Reply.

The Court disagrees with Defendant Dillon’s argument. Plaintiffs are entitled to allege that Defendant acted with oppression, fraud, or malice, and for the purposes of a demurrer, the Court must assume that it is true. It will ultimately be Plaintiffs’ burden to prove that they are entitled to the relief they seek.

The Court DENIES the Motion to Strike.

C. Conclusion

The Motion to Strike is DENIED.

IV. Conclusion

CBII’s Demurrer is OVERRULED. Dillon’s Demurrer is OVERRULED and his Motion to Strike is DENIED. CBII and Dillon are to file and serve their answers within 7 days.