Judge: Michael Shultz, Case: 21CMCV00150, Date: 2022-10-04 Tentative Ruling

Case Number: 21CMCV00150    Hearing Date: October 4, 2022    Dept: A

21CMCV00150 Bertha Villegas, et al v. Ramon Rochel, Talace Corporation

Tuesday, October 4, 2022

[TENTATIVE] ORDER GRANTING PLAINTIFFS’ MOTION FOR AN ORDER PERMITTING DISCOVERY OF DEFENDANTS’ FINANCIAL CONDITION

I.        BACKGROUND

            The First Amended Complaint (“FAC”) filed on February 17, 2022, alleges that Plaintiffs rent residential real property from Defendants, Ramon Rochel (“Rochel”) and his alleged alter ego, Talace Corporation (“Talace”), pursuant to a written rental agreement. Plaintiffs allege that Defendants refused to abate uninhabitable living conditions and have unlawfully increased the rent in violation of the Los Angeles Rent Stabilization Ordinance. Plaintiffs allege that Defendants have engaged in a campaign of harassment and discrimination based on disability, race, and gender. Plaintiffs allege 17 causes of action for breach of the warranty of habitability and of quiet enjoyment and related statutory violations for discrimination and harassment.

ARGUMENTS
A.     Motion filed September 13, 2022

            Plaintiffs request an order permitting discovery relevant to Defendants’ financial condition. Plaintiffs contend that Defendants failed to abate substandard conditions despite 13 inspection reports issued by the Department of Public Health mandating abatement. Plaintiffs contend that Defendants discriminated against the disabled tenants and ignored their requests for reasonable accommodation. The court previously granted Plaintiffs’ request for a preliminary injunction and temporary restraining order against Defendants.

            Plaintiff further argues that Defendants engaged in malicious and oppressive conduct warranting the imposition of exemplary damages. The clear and convincing evidence establishes a substantial probability that Plaintiffs will prevail on their claim for such damages. 

B.     Opposition filed late September 30, 2022, which is two court days before the hearing. Oppositions are due nine court days before the hearing, in this case by September 20, 2022. Code Civ. Proc.,) § 1005 subd. (b).  

            Defendant, Ramon Rochel, argues that Plaintiffs do not have “clear and convincing” evidence that Defendant acted with malice or oppression. Without such evidence, Plaintiffs cannot show a probability of prevailing on the merits of their punitive damages claim. Failing to abate substandard conditions does not show a conscious disregard for a person’s rights.

            Defendant argues that Plaintiffs have not established that Defendant had notice of the conditions of which they allegedly complained. However, when Defendant received such notice, he investigated and remedied the issue. Plaintiffs have not submitted evidence that they are disabled or that Defendant failed to accommodate their request for accommodations. There is no evidence that Defendant acted with the required intent to injure.

            The court’s file does not reflect that Plaintiffs filed a reply brief; however, Defendants’ opposition was served after the deadline to file a reply (five court days before the hearing). Code Civ. Proc., § 1005 subd. (b).

II.      LEGAL STANDARDS

            Plaintiffs cannot conduct pretrial discovery of Defendants’ profits obtained through wrongful conduct or of Defendants’ financial condition unless the court enters an order permitting such discovery. Civ. Code, § 3295 subd. (c). The motion must be “supported by appropriate affidavits and after a hearing, if the court deems a hearing to be necessary” and may be granted if the court finds that the Plaintiffs have established a substantial probability of prevailing on the claim for exemplary damages. Id. An order permitting financial discovery is not a determination of the merits of the claim “and shall not be given in evidence or referred to at the trial." Civ. Code, § 3295 subd. (c).

            In addition to actual damages, Plaintiffs may recover on a claim for exemplary damages if  Plaintiffs establish “by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” Civ. Code, § 3294 subd. (a). The predicate acts to support a claim for punitive damages must be intended to cause injury or must constitute “malicious” or “oppressive” conduct as defined by statute. “Malice” is defined as “conduct which is intended by the defendant to cause injury to the plaintiff or 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); College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 ["malice involves awareness of dangerous consequences and a willful and deliberate failure to avoid them"]. "Oppression" is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” Civ. Code, § 3294 subd. (a) subd. (c)(2).

            Absent an intent to injure the plaintiff, the conduct must be “despicable” which is defined as “base, vile, or contemptible.” College Hospital Inc. at 725. Plaintiffs must demonstrate that “the defendant acted in such an outrageous and reprehensible manner that the jury could infer that he knowingly disregarded the substantial certainty of injury to others." Dawes v. Superior Court (1980) 111 Cal.App.3d 82, 90. Conduct constituting negligence, gross negligence or recklessness is insufficient to support a claim for punitive damages. Dawes at 87.

III.    DISCUSSION

            Plaintiffs have met their burden of establishing a substantial probability of prevailing on the merits of their claim for exemplary damages based on clear and convincing evidence. While the Hon. Thomas D. Long previously heard and granted Plaintiffs’ motion for a preliminary injunction on June 29, 2022, permitting financial discovery requires a higher standard of “clear and convincing evidence” and a substantial probability of prevailing on the merits. Civil Code section 3294 subd(a) and subd. (c). Plaintiffs have met that burden.

            The units at issue and the resident tenants are described below:

Both Lourdes and Lara are members of the Compton Tenants’ Union. FAC ¶¶ 6 and 12.

            Defendant Talace responded to special Interrogatories indicating that it served as property manager for the subject property. Plaintiffs’ Ex. 1 to the Declaration of Chetachinyere Okereke, .pdf page 18, lines 21-25. Rochel’s responses to Form Interrogatories states that he was an agent/employee of Talace Corporation. Okereke Declaration, Ex. 1, .pdf page 32, lines 2-3. In supplemental responses to the same question, Rochel indicated that he owns the real property at issue and used “the company name, ‘Talace Corporation’ in connection with management duties.” Ex. 1, .pdf page 32 line 26 through .pdf page 33, lines 8. However, he disclosed that he has not conducted business as Talace Corporation since 2018. Ex. 1, .pdf page 33, line 8.

            The evidence proffered by Plaintiff Lourdes supports retaliatory conduct by Defendants in response to Lourdes’ complaints. Plaintiff had been complaining to Rochel since 2018 about the substandard conditions. Villegas Declaration, Ex. A. On October 30, 2020, Rochel drilled through her front door to change the locks on her unit. Id., ¶ 17. She reported the incident to police. Id., Ex. K.

            Plaintiff reported the unabated conditions to the Department of Public Health, who issued a notice to Rochel on November 9, 2020, to abate the conditions consisting of cockroach infestation, lack of hot water in the entire unit because the water heater was “red-tagged,” a damaged toilet, ant infestation, holes in the walls, peeling paint, and a non-working light in the kitchen. Lourdes declaration, .pdf page 178, ¶ 6, Exhibit B. The Department conducted another inspection on December 27, 2020 and noted that the conditions were unabated. Id., Ex. R. The Department referred the complaint to the City Attorney’s office. Id. 

            On July 27, 2021, the Department of Public Works, Building and Safety, conducted an inspection of Lourdes’ unit and issued a notice to Defendant to take corrective action of multiple conditions, including incorrect installation of the gas line as well as the vent and pipe for the water heater. Id., ¶ 7. The property lacked plumbing permits, lacked an exhaust hood, lacked electrical permits and defects in the front door that prohibited it from closing properly. Id., ¶ 7, Ex. C.

            On August 25, 2021, the Department of Consumer and Business Affairs approved Plaintiff’s application for a rent reduction, because Defendant unlawfully increased the rent in January of 2019 and August of 2021 and failed to abate substandard conditions. The notice, addressed to the landlord, documented Plaintiff’s numerous complaints and required a payment to tenant of $12,779.80 for the overpayment as well as a reduction in rent. Id., Ex. S.

            Although Plaintiff was assigned a parking spot on her property pursuant to her lease agreement, Defendant commenced towing Plaintiff’s vehicle from the property on October 14, 2019. Id. Exs. I, J. This created a financial hardship for Plaintiff, who began parking on the street as a result. Id., ¶ 14. The street parking caused further distress for Plaintiff and her daughter, Natalie, who was wheelchair bound, as both were required to travel from the street to their unit. Id., ¶ 16. The towing ceased after Plaintiffs obtained a preliminary injunction on June 29, 2022. Id.

            Plaintiff requested reasonable accommodations for her daughter in late 2020 to require a stable parking spot and to permit Plaintiff to erect a canopy outside of her unit to facilitate Natalie’s physical therapy outdoors and avoid the severe roach infestation. Id., ¶ 11, Ex. G. Rochel did not respond to Plaintiff’s text messages. Id., ¶ 11.

            Defendant served a three-day notice to quit on Plaintiff on May 5, 2021, without giving Plaintiff any opportunity to cure the purported breaches. Id. Ex. E. 

            Plaintiff, Charles Supo-Orija, experienced the same substandard conditions which have continued unabated. Supo-Orija declaration, .pdf page 285, ¶ 2. Rochel also began towing Plaintiff’s car in 2019 despite being assigned a parking spot. Id., ¶ 4.  In 2021, Rochel attempted to tow his vehicle at least four times. Id. ¶ 5. Plaintiff requested that Rochel provide a parking spot to accommodate his wife, Amira Green, who requires a wheelchair. Rochel did not respond. Id., ¶ 11. Plaintiff gave Rochel notice of the Defendant’s harassing conduct on August 17, 2021, documenting Rochel’s conduct. Ex. 102.

            Plaintiff Alba Lara, also complained of the uninhabitable conditions beginning on September 1, 2020. Defendant began towing her vehicle during the period beginning November 2020 although Plaintiff was 6-7 months pregnant at the time. Lara declaration, .pdf ¶ 304, ¶ 6.

            Plaintiffs have established that there is substantial probability they can prove by Clear and convincing evidence that Defendant[s] have engaged in malicious, oppressive, and despicable conduct.  Accordingly, Plaintiffs’ Motion to Conduct Financial Discovery on Defendant[s] is GRANTED.