Judge: Michelle Williams Court, Case: 21STCV16935, Date: 2022-09-26 Tentative Ruling

Case Number: 21STCV16935    Hearing Date: September 26, 2022    Dept: 74

21STCV16935           AMBER AWNI vs LION REAL ESTATE GROUP LLC

Defendants Lion Real Estate Group, LLC, Lion Reseda, LLC, and Lion Terraces, LLC (1) Demurrer re: First Amended Complaint; (2) Motion to Strike re: First Amended Complaint

TENTATIVE RULINGS: Defendants Lion Real Estate Group, LLC; Lion Reseda, LLC; and Lion Terraces, LLC Demurrer to Plaintiffs’ First Amended Complaint is OVERRULED as to the fifth cause of action for trespass and SUSTAINED with 20 days leave to amend as to the sixth, seventh, and eighth causes of action.

Defendants Lion Real Estate Group, LLC; Lion Reseda, LLC; And Lion Terraces, LLC’s Motion to Strike Portions of Plaintiffs’ First Amended Complaint is MOOT as to paragraphs 61, 72, and 78, GRANTED without leave to amend as to paragraphs 25 and 28, and DENIED as to paragraphs 36, 44, and 50 as well as the prayer for punitive damages.

Plaintiffs shall have 20 days leave to amend.

Background

On May 5, 2021, Plaintiffs Amber Awni, Cairo Awni-Lopez, a minor by and through her Guardian Ad Litem, Amber Awni, and Conor Murphy filed this action against Defendants Lion Real Estate Group LLC, Lion Reseda LLC, and Lion Terraces LLC. The complaint alleged three causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing/breach of warranty of habitability, trespass, and (3) fraud, negligent misrepresentation, concealment.

On August 18, 2021, Defendants filed a demurrer to the second cause action for trespass and the third cause of action fraud, negligent misrepresentation, concealment. On September 20, 2021, the Court sustained Defendants’ demurrer with leave to amend.

On October 22, 2021, Plaintiffs filed the First Amended Complaint, which the Court deemed timely filed in its July 12, 2022 order. The First Amended Complaint asserts causes of action for: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing; (3) breach of warranty of habitability; (4) breach of warranty of quiet enjoyment; (5) trespass; (6) fraud; (7) negligent misrepresentation; and (8) concealment.

Demurrer and Motion to Strike

On August 10, 2022, Defendants Lion Real Estate Group, LLC, Lion Reseda, LLC, and Lion Terraces, LLC filed their demurrer and motion to strike directed to the First Amended Complaint. Defendants demur to the fifth through eighth causes of action.

Defendants also move to strike allegations related to punitive damages included in paragraphs 25, 28, 36, 44, 50, 61, 72, and 78 as well as the prayer for punitive and exemplary damages.

Opposition

In opposition, Plaintiffs contend each claim and punitive damages are adequately alleged and the claims are not barred by the statute of limitations.

Reply

In reply, Defendants reiterate their initial arguments that the FAC fails to allege sufficient facts to state the causes of action at issue or the claim for punitive damages. 

Meet and Confer

Defendant submitted the declaration of Jeffrey Halfen, which satisfies the requirements of Code of Civil Procedure sections 430.41 and 435.5.

Demurrer

Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A complaint need not allege evidentiary facts noting plaintiff’s proof. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

A special demurrer to a complaint is appropriate when the grounds of the pleading are uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10(f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191.) Courts typically disfavor demurrers based on uncertainty, which the court strictly construes even when the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

If the demurrer is sustained, plaintiff must prove the possibility of cure by amendment. (Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 173 (citing Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78-79).) Leave to amend must be allowed where there is a reasonable possibility of successfully stating a cause of action. (Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, 92.) 

Trespass – Fifth Cause of Action

“The elements of trespass are: (1) the plaintiff's ownership or control of the property; (2) the defendant's intentional, reckless, or negligent entry onto the property; (3) lack of permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant's conduct was a substantial factor in causing the harm.” (Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 262.) “The essence of the cause of action for trespass is an ‘unauthorized entry’ onto the land of another.” (Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 16.) “The cause of action for trespass affords protection for a possessory, not necessarily an ownership interest.” (Allen v. McMillion (1978) 82 Cal.App.3d 211, 218.)

Defendants contend the FAC fails to allege facts to support a claim for trespass. Unlike Plaintiffs’ fraud claims discussed below, the fifth cause of action need not be alleged with particularity. Defendants contend it “is unclear and ambiguous as to what exactly Plaintiffs allege constituted a ‘trespass.’” (Dem. at 3:25-26.) However, the FAC sufficiently identifies the trespass claimed. (FAC ¶ 46 (“On every date of Plaintiffs’ tenancy Defendants caused trespass by entry onto and contamination of the premises by one or more of the following: vermin, cockroaches, gas leaks, elevated carbon monoxide levels, mold, inadequate sanitation, criminal activity/paraphernalia, noise, alcohol and drug use in common areas, criminals who trespassed and threatened tenants, unhabitable and unsafe conditions.”).)

Defendants also argue the FAC does not allege “Defendants intentionally or recklessly caused said conditions” or “any facts that establish that a trespass caused Plaintiff any harm or damages.” (Dem. at 3:26-4:5.) “[T]he intent required as a basis for liability as a trespasser is simply an intent to be at the place on the land where the trespass allegedly occurred. The defendant is liable for an intentional entry although he has acted in good faith, under the mistaken belief, however reasonable, that he is committing no wrong.” (Miller v. National Broadcasting Co. (1986) 187 Cal.App.3d 1463, 1480–1481.) The FAC alleges Defendants “caused” the trespass, knew or should have known the trespasses were occurring, were deliberate in their conduct, and Plaintiffs suffered harm as a result. (FAC ¶¶ 46-50.)

Defendants have not demonstrated the allegations are insufficient to state a claim for trespass.

Defendants also argue the trespass cause of action is barred by the statute of limitations. (Dem. at 4:9-18; Reply at 2:19-23.) “In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred.” (McMahon v. Republic Van & Storage Co. (1963) 59 Cal.2d 871, 874.) A claim for trespass is governed by a three-year statute of limitations. (Code Civ. Procedure § 338(b).)

Though Plaintiffs failed to cite any authority, (Opp. at 4:16-5:2), they correctly note that the FAC alleges a continuing trespass. (FAC ¶ 46 (“Defendants caused trespasses onto Plaintiffs’ premises and other areas of the premises of which Plaintiff s were entitled to use, from the first day of their tenancy up to and including the last date of Plaintiffs’ tenancy.”).) Accordingly, the FAC does not reveal that the fifth cause of action is barred by the statute of limitations. (See e.g. Baugh v. Garl (2006) 137 Cal.App.4th 737, 747 (“Where, as here, a trespass is continuing, but not necessarily permanent, the statute does not bar an action until three years after the last act of trespass.”).)

The demurrer is OVERRULED as to the fifth cause of action for trespass.

Statute of Limitations – Fraud Claims

Defendants argue the sixth through eighth causes of action for fraud, negligent misrepresentation, and concealment are barred by the statute of limitations. These claims are also governed by a three-year statute of limitations. (Code Civ. Proc. § 338(d).)

Each of the fraud-based claims arise out of the allegation that “[o]n or about May 5, 2017, Defendants’ managing agent, Rochelle Johnson, represented to Plaintiff AWNI, who was disabled, that the premises was not substandard, was in good repair and was safe for her, her significant other, Plaintiff MURPHY, and for her young son, Plaintiff CAIRO.” (FAC ¶¶ 4, 55, 58, 66, 69, 74.) As argued by Defendants, Plaintiffs’ action was filed more than three-years after May 5, 2017, including any extensions provided by Emergency Rule 9 of the California Rules of Court.

“The date a complaining party learns, or at least is put on notice, that a representation was false is the date the statute starts running.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1123.) Unlike the trespass claim, the fraud-based claims are based upon a discrete misrepresentation and concealment for purposes of the statute of limitations. The FAC alleges Plaintiffs moved into the premises in reliance upon the May 5, 2017 representation. (FAC ¶¶ 4, 55, 59, 66, 70, 75.) In their opposition, Plaintiffs admit May 5, 2017 is “the date the rental contract commenced.” (Opp. at 4:19-20.) The FAC alleges “[a]fter Plaintiffs became tenants they discovered that the building was almost 50 years old, their unit was substandard . . .” (FAC ¶ 3.) If, as Plaintiffs allege, the substandard conditions existed “on every date of Plaintiffs’ tenancy,” (FAC ¶ 46), and Defendants were aware of the conditions in 2015, (FAC ¶ 3),  the facts alleged demonstrate Plaintiffs would have had at least a suspicion that the representation was false from the start of their tenancy, thereby commencing the statute of limitations.

Throughout the FAC, Plaintiffs make general references to their delayed ability to discover the falsity of the representation. (FAC ¶¶ 5, 53, 56, 57, 67, 68.) These general allegations are insufficient to rely upon the delayed discovery rule. “In order to rely on the discovery rule for delayed accrual of a cause of action, a plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to show diligence; conclusory allegations will not withstand demurrer. . . . In order to adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808-809.)

The demurrer is SUSTAINED as to the sixth, seventh, and eighth causes of action with 20 days leave to amend.

Fraud and Negligent Misrepresentation Claims – Sixth and Seventh Causes of Action

Defendants also argue the FAC fails to allege the requisite elements of the misrepresentation claims with specificity.

The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation; (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud must be pled with particularity which “necessitates pleading facts which 'show how, when, where, to whom, and by what means the representations were tendered.” (Id. at 645.) The burden of pleading fraud against a corporate entity is even greater as the plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Id.) “The same elements comprise a cause of action for negligent misrepresentation, except there is no requirement of intent to induce reliance.” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “Each element in a cause of action for fraud or negligent misrepresentation must be factually and specifically alleged.” (Id.)

As noted above, the FAC alleges “[o]n or about May 5, 2017, Defendants’ managing agent, Rochelle Johnson, represented to Plaintiff AWNI, who was disabled, that the premises was not substandard, was in good repair and was safe for her, her significant other, Plaintiff MURPHY, and for her young son, Plaintiff CAIRO.” (FAC ¶¶ 4, 55, 58, 66, 69, 74.) The FAC does not allege how, where, and by what means the representation was made as required. (Lazar, supra, 12 Cal.4th at 645.)

The FAC adequately alleges the other elements of a misrepresentation claim. Plaintiffs allege Defendants “knew that the building was almost 50 years old, substandard, needed substantial work, was in dangerous condition, needed substantial renovation, had unsafe electrical and gas services, vermin, cockroaches, gas leaks, elevated carbon monoxide levels, mold, inadequate sanitation, criminal activity, alcohol and drug use in common areas, criminals who trespassed and threatened tenants, unhabitable and unsafe conditions, all of which later affected Plaintiffs when they became tenants,” (FAC ¶¶ 3, 54, 65), which demonstrates either their knowledge of the falsity of the statement or the lack of a reasonable basis for it to be true. The FAC alleges Defendants intended to induce, and did induce, Plaintiffs to reside at the property, resulting in damage to Plaintiffs. (FAC ¶¶ 59, 70.)

Accordingly, the sixth and seventh causes of action are insufficiently alleged, in addition to appearing time-barred.

Concealment – Eighth Cause of Action

“The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

The specificity requirements of alleging “how, when, where, to whom, and by what means” the fraud was tendered by defendant does not apply to a fraudulent concealment claim. (Alfaro v. Community Housing Imp. System & Planning Ass'n, Inc. (2009) 171 Cal.App.4th 1356, 1384 (“This statement of the rule reveals that it is intended to apply to affirmative misrepresentations. . . . As plaintiffs accurately respond, it is harder to apply this rule to a case of simple nondisclosure. How does one show ‘how’ and ‘by what means' something didn't happen, or ‘when’ it never happened, or ‘where’ it never happened?”).) 

The concealment claim alleges “Defendants concealed and/or suppressed material facts, including, but not limited to the fact that the premises might present a dangerous and unhealthful condition, that it was permeated with mold throughout numerous apartments, that there would be no abatement or remediation, and/or that repair/remediation was required to prevent injury to tenants and make the premises habitable.” (FAC ¶ 76.) However, the remainder of the cause of action is based entirely upon the alleged misrepresentation. (FAC ¶¶ 74, 75, 77.) Accordingly, the FAC does not allege the elements of a separate concealment claim, including that Plaintiffs “would not have acted as [they] did if [they] had known of the concealed or suppressed fact[s]” alleged in paragraph 76, or how Plaintiffs were damaged as a result of the specific concealment alleged.

Accordingly, the eighth cause of action is insufficiently alleged, in addition to appearing time-barred.

Motion to Strike

Defendants separately move to strike paragraphs 25, 28, 36, 44, 50, 61, 72, and 78 as well as the prayer for punitive and exemplary damages.

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 of Civ. Proc. § 435(b)(1); Cal. Rules of Court, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (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(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)

“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. [Citations.] In ruling on a motion to strike, courts do not read allegations in isolation. [Citation.]” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) “Pleading in the language of the statute is not objectionable when sufficient facts are alleged to support the allegation.” (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6-7.)

Discussion

The motion is MOOT as to paragraphs 61, 72, and 78 based upon the Court’s ruling on the demurrer to the causes of action containing those allegations.

Defendants contend the FAC fails to allege facts to support punitive damages and fails to allege sufficient facts to assert punitive damages against a corporate entity.

Paragraphs 25 and 28 are included in the breach of the covenant of good faith and fair dealing cause of action, which is a contract claim that cannot support punitive damages. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1054 (“Since a party may not recover in tort for breach of the implied covenant of good faith and fair dealing, an award of punitive damages is not permitted on such a claim.”) (quotations omitted).) Accordingly, the motion is GRANTED without leave to amend as to paragraphs 25 and 28.

Paragraphs 36, 44, and 50 are contained in the habitability, quiet enjoyment, and trespass causes of action that are all based upon the known and unremediated defective conditions on the property. (FAC ¶¶ 3, 29, 30, 37, 39, 46.) Defendants’ alleged knowledge and failure to take corrective action is sufficient to support a claim for punitive damages. (Penner v. Falk (1984) 153 Cal.App.3d 858, 867 (“The pleadings sufficiently allege facts setting forth long existing physical conditions of the premises which portend danger for the tenants. The pleadings also set out that respondents knew of those conditions for up to two years, had power to make changes, but failed to take corrective and curative measures. If proven, these allegations would support an award of punitive damages.”).)

As to the corporate entities, Defendants do not cite any authority for their contention that “[a] complaint must also specify the officers or directors who approved or ratified those actions.” (Mot. at 6:27-28.) The only authority cited, Scannell v. County of Riverside (1984) 152 Cal.App.3d 596, 614, did not impose any such requirement or meaningfully address the issue. “There is no requirement that the evidence establish that a particular committee or officer of the corporation acted on a particular date with ‘malice.’ A corporate defendant cannot shield itself from liability through layers of management committees and the sheer size of the management structure. It is enough if the evidence permits a clear and convincing inference that within the corporate hierarchy authorized persons acted despicably in ‘willful and conscious disregard of the rights or safety of others.”  (Romo v. Ford Motor Co. (2002) 99 Cal.App.4th 1115, 1140–1141 judgment vacated and remanded on other grounds, 538 U.S. 1028, 123 S.Ct. 2072, 155 L.Ed.2d 1056 (2003). See Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1173 accepting Romo on these grounds).)

The motion is DENIED as to paragraphs 36, 44, and 50 as well as the prayer for punitive damages.