Judge: Peter A. Hernandez, Case: 24STCV15861, Date: 2025-02-21 Tentative Ruling

Case Number: 24STCV15861    Hearing Date: February 21, 2025    Dept: 34

 

1.     Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED in part as to the first through third, sixth and eighth causes of action; and OVERRULED in part as to the remaining causes of action.

 

2.     Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is GRANTED in part and DENIED in part.

 

Background

 

            On June 25, 2024, Plaintiff Brett Adam Faitlowicz (“Plaintiff”) filed a complaint against Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi arising from Plaintiff’s tenancy in the property located at 334 N. Oakhurst Drive, Beverly Hills, California 90210 alleging causes of action for:

 

1.                 Breach of Contract;

2.                 Breach of Implied Covenant of Quiet Enjoyment;

3.                 Breach of Warranty of Habitability;

4.                 Negligence;

5.                 Constructive Eviction;

6.                 Bad Faith Retention of Security Deposit (Civ. Code § 1950.5);

7.                 Nuisance;

8.                 Intentional Infliction of Emotional Distress; and

9.                 Negligent Infliction of Emotional Distress.

 

On November 1, 2024, Plaintiff filed a First Amended Complaint (“FAC”) against Defendants Capstone Real Estate Services Corp., Daniel S. Mizrahi, and 336 Oakhurst Owner LLC (“Defendants”) alleging the same causes of action.

 

On December 9, 2024, Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi (“Moving Defendants”) filed this Demurrer and Motion to Strike. On January 16, 2025, Plaintiff filed an opposition.

 

1.     Demurrer

 

Legal Standard

 

            “The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of” various grounds listed in statute. (Code Civ. Proc., § 430.10.)

 

            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 pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pled or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

 

            Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

 

Discussion

 

            Moving Defendants Capstone Real Estate Services Corp. (“Capstone”) and Daniel S. Mizrahi (“Mizrahi”) demur to the nine causes of action in Plaintiff’s FAC.

 

Request for Judicial Notice

           

            Moving Defendants’ request for judicial notice is granted. Judicial notice may be taken of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code §§ 452, subd. (c) and (h).)

 

1st, 2nd, and 3rd Causes of Action

           

            Moving Defendants argue that Plaintiff’s claims for breach of contract, breach of implied covenant of quiet enjoyment, and breach of implied warranty of habitability fail as Moving Defendants were not parties to the lease agreement at issue. (Demurrer, at p. 12.) Moving Defendants contend that the lease agreement attached to Plaintiff’s FAC identifies “336 Oakhurst Owner LLC c/o Capstone Real Estate” as the landlord. (Ibid.) Moving Defendants argue that the designation “c/o Capstone Real Estate” simply identifies the property management company as an agent for communications. (Ibid.) As such, Moving Defendants contend that as they were not parties to the lease, Moving Defendants cannot be held liable for breach of either express contractual obligations or implied covenants that arise from that contract. (Ibid.)

 

            In opposition, Plaintiff argues that California law does not shield property managers from liability for their direct role in breaching lease obligations. (Opp., at p. 3.) Plaintiff notes that the FAC alleges Mizrahi signed the lease agreement as the landlord on behalf of “336 Oakhurst Owner LLC c/o Capstone Real Estate”. (Id., at p. 4.) Plaintiff argues that as signatories, Moving Defendants assumed responsibilities under the lease and exercised substantial control over lease administration including handling maintenance and habitability issues. (Ibid.)

 

            Here, Capstone is alleged to be the landlord and/or manager of the leased property, Mizrahi is alleged to be the property manager of the premises, and Defendant 336 Oakhurst Owner LLC (“336 Oakhurst”) is alleged to be the owner of the property. (FAC, ¶¶ 2-3.) The lease attached to Plaintiff’s FAC provides that Moving Defendants entered into the agreement as an agent for 336 Oakhurst, its disclosed principal. “[A]n agent is ordinarily not liable on the contract when he acts on behalf of a disclosed principal.” (Dones v. Life Insurance Company of North America¿(2020) 55 Cal.App.5th 665, 689 (quoting Stoiber v. Honeychuck¿(1980) 101 Cal.App.3d 903, 929); see also 3 Witkin, Summary of California Law (11th ed.), at §¿207 (“Normally, the agent will not be liable on a written contract made in the name of the principal.”).)  

 

            Accordingly, the demurrer to the first through third causes of action is sustained.

 

4th, 5th, and 7th Causes of Action

 

            Moving Defendants argue that Plaintiff’s claims for negligence, constructive eviction, and nuisance fail as Plaintiff did not provide Defendants with a reasonable opportunity to cure. (Demurrer, at p. 13.) Moving Defendants note that testing of the premises was arranged after Plaintiff raised concerns about mold and upon receiving the results on January 19, 2024, Defendants scheduled remediation work . (Ibid.) Nevertheless, Moving Defendants argue that since Plaintiff vacated the premises before the remediation could begin, Plaintiff is barred from recovering on the tort-based claims. (Id., at p. 14.)

 

            In opposition, Plaintiff argues that the FAC sufficiently alleges that Defendants had knowledge of the hazardous condition found on the premises and had ample time to cure. (Opp., at p. 4.)

 

            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.) 

 

            Here, Plaintiff has pled a duty arising from Defendants’ ownership and management of the premises. (FAC, ¶ 61.) Plaintiff also alleged Defendants’ breach by allowing certain conditions to occur on the property and damages. (Id., ¶¶ 63-64.) As such, Plaintiff has properly pled a negligence cause of action.

 

            “A constructive eviction occurs when the acts or omissions to act of a landlord, or any disturbance or interference with the tenant’s possession by the landlord, renders the premises, or a substantial portion thereof, unfit for the purposes for which they were leased, or which has the effect of depriving the tenant for a substantial period of time of the beneficial, enjoyment or use of the premises.” (Groh v. Kover’s Bull Pen, Inc. (1963) 221 Cal.App.2d 611, 614.) “Any interference by the landlord by which the tenant is deprived of the beneficial enjoyment of the premises amounts to a constructive eviction if the tenant so elects and surrenders possession.” (Johnson v. Snyder (1950) 99 Cal.App.2d 86, 88.) 

 

            Here, Plaintiff alleges that Defendants constructively evicted him by failing to address the habitability issues raised by Plaintiff regarding the mold in the premises, thereby forcing Plaintiff to vacate the premises, and causing damages to Plaintiff. (FAC, ¶¶ 66-69.) As such, Plaintiff has properly pled a constructive eviction cause of action.

 

            To sufficiently allege a cause of action for private nuisance, plaintiff must demonstrate that defendant (1) interfered with plaintiff’s use and enjoyment of the Property, (2) the invasion of plaintiff’s use and enjoyment involves substantial actual damage, and (3) the interference is unreasonable as to the nature, duration, or amount. (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 938; Civ. Code, 3479; CACI 2021.) Nuisance includes omissions to perform duties, in addition to affirmative actions. (Birke v. Oakwood Worldwide (2009) 169 Cal.App.4th 1540, 1552.) 

 

            Here, Plaintiff’s private nuisance cause of action is based on the allegations that Defendants’ failure to remedy the mold found in the property impacted Plaintiff’s quality of life by causing significant health issues and interfered with Plaintiff’s comfortable enjoyment of the premises causing Plaintiff’s damages. (FAC, ¶¶ 78-85.) As such, Plaintiff has properly pled a nuisance cause of action.

 

            Moreover, the court finds that Plaintiff has properly pled that Defendants’ were given notice of the habitability issues and failed to timely respond and/or remediate the issues. (FAC, ¶¶ 24, 31-33, 40, 45, 54, 62, 66-67, 80, 86.) Whether the time Defendants’ had to address Plaintiff’s issues was reasonable is not an issue appropriate for a demurrer. As pled, Plaintiff has sufficient allegations to support his fourth, fifth, and seventh causes of action.

 

            Accordingly, the demurrer to the fourth, fifth, and seventh causes of action are overruled.

 

6th Cause of Action

 

            Moving Defendants argue that Plaintiff’s claim for bad faith retention of security deposit fails as Civil Code section 1950.5 imposes specific obligations regarding security deposits solely on a landlord. (Demurrer, at p. 15.) As such, Moving Defendants argue that the lease identifies “336 Oakhurst Owner LLC c/o Capstone Real Estate” as the landlord and only liability can be imposed as to them. (Ibid.)

 

            In opposition, Plaintiff cites Ganberry v. Islay Investments (1995) 9 Cal. 4th 738, 744 to argue that courts have held that agents who control the disposition of a tenant’s security deposit may be held liable under Civil Code section 1950.5. (Opp., at p. 6.)

 

            “Civil Code section 1950.5¿defines and regulates the use of security for a rental agreement for residential property…The section provides, as relevant, that security means any payment, fee, deposit or charge, including, but not limited to, an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following, and lists compensation for a tenant’s default, repair of damages to the premises, cleaning upon termination of the tenancy, and to remedy future defaults. The section limits the amount the landlord may demand as security, however denominated, in an amount or value in excess of an amount equal to two months’ rent, in the case of unfurnished residential property…The section specifies how the security may be used by the landlord, when the security must be refunded to the tenant, how the security may be transferred if the property is sold, the penalties for noncompliance with the section, and the manner of proving a security deposit.” (People v. Tannenbaum (1994) 23 Cal.App.4th Supp. 6, 9 [internal quotations and citations omitted].)   

 

            The court finds that Civil Code section 1950.5 solely applies to landlords from its plain language which the lease attached to Plaintiff’s FAC identifies as “336 Oakhurst Owner LLC c/o Capstone Real Estate”. (FAC, Exh. A.) The contents of the exhibit take precedence over Plaintiff’s allegations that Moving Defendants acted as landlords. (FAC, ¶¶ 2-3; Barnett v. Fireman's Fund Ins. Co.¿(2001) 90 Cal.App.4th 500, 505 (“[T]o the extent the factual allegations conflict with the content of the exhibits to the complaint, we rely on and accept as true the contents of the exhibits and treat as surplusage the pleader's allegations as to the legal effect of the exhibits.”).) The exhibit provides that Moving Defendants entered into the lease with Plaintiff as agents for the property owner, 336 Oakhurst, as such section 1950.5 cannot impose liability on Moving Defendants. Moreover, the court does not find that Ganberry provides authority to find that agents of a landlord can be held liable under section 1950.5

 

            Accordingly, the demurrer to the sixth cause of action is sustained.

 

8th and 9th Causes of Action

 

            Moving Defendants argue that Plaintiff fails to state claims for negligent and intentional infliction of emotional distress. (Demurrer, at p. 16.) As to the intentional infliction of emotional distress claim, Moving Defendants argue that Plaintiff failed to allege the type of “extreme and outrageous” conduct  necessary to support liability. (Id., at p. 17.) Moving Defendants also argue that Plaintiff fails to plead the requisite “severe emotional distress” suffered. (Ibid.) As to the negligent infliction of emotional distress claim, Moving Defendants argue that it is not an independent tort and Plaintiff’s attempt to plead it as a standalone cause of action is improper. (Ibid.) Moving Defendants also contend that Plaintiff fails to allege the essential elements to recover for emotional distress in a toxic exposure case without physical injury under Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 984. (Ibid.) Lastly, Moving Defendants argue that Plaintiff fails to plead facts establishing that Moving Defendants owed or breached any duty to prevent emotional distress as property managers owe no special duty regarding emotional distress to tenants apart from duties arising from the landlord-tenant relationship. (Ibid.)

 

            In opposition, Plaintiff argues that the FAC sufficiently alleged claims for intentional and negligent infliction of emotional distress. (Opp., at p. 6.) Plaintiff alleges that Defendants' malicious failure to correct uninhabitable conditions and reckless disregard for Plaintiff’s health and safety rightfully subjects Defendants to a claim for intentional infliction of emotional distress.(Id., at p. 7.) Lastly, Plaintiff argues that the FAC provides allegations detailing Defendants’ breach of their duty to maintain habitable premises and the foreseeable harm caused by their negligence. (Ibid.)

 

            “The elements of a prima facie case for the tort of intentional infliction of emotional distress are: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1009, citation and ellipses omitted.) 

 

            “Although emotional distress may consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation, embarrassment, anger,¿chagrin, disappointment or worry [citation], to make out a claim, the plaintiff must prove that emotional distress was severe and not trivial or transient.” (Wong v. Tai Jing (2010) 189 Cal. App. 4th 1354, 1376.) Such distress must be “of such substantial quality or enduring quality that no reasonable person in civilized society should be expected to endure it.” (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal. 4th 965, 1004.) 

 

            Here, Plaintiff alleges Defendants’ conduct caused Plaintiff to suffer severe mental and emotional distress, including but not limited to, stress and anxiety (FAC, ¶¶ 89-90.) However, the court finds that Plaintiff has not alleged sufficient facts to allege that Defendants’ conduct was “extreme and outrageous” and that such conduct was “intended” to cause emotional distress.

 

            “The law of negligent infliction of emotional distress in California is typically analyzed by reference to two theories of recovery: the ‘bystander’ theory and the ‘direct victim’ theory. The negligent causing of emotional distress is not an independent tort, but the tort of negligence. The traditional elements of duty, breach of duty, causation, and damages apply. Whether a defendant owes a duty of care is a question of law.” (Spates v. Dameron Hosp. Ass’n (2003) 114 Cal.App.4th 208, 213, ellipses, quotation marks, brackets, and paragraph breaks omitted.) 

 

            Moving Defendants are correct that the doctrine of negligent infliction of emotional distress is not a¿separate¿cause¿of¿action. It simply allows certain persons to recover damages for¿emotional¿distress¿only on a negligence¿cause¿of¿action¿even though they were not otherwise injured or harmed. (Marlene F. v. Affiliated Psychiatric Medical Clinic, Inc. (1989) 48 Cal.3d 583, 589.) The court finds that Plaintiff pled the elements of negligence necessary to sustain a claim for negligent infliction of emotional distress.

 

            Accordingly, the demurrer to the eighth is sustained and the ninth cause of action is overruled.

 

2. Motion to Strike

 

Legal Standard

 

Pursuant to Code of Civil Procedure section 436, “the court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) 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.” The grounds for a motion to strike must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437.)

 

Discussion

 

            Moving Defendants move to strike Plaintiff’s request for punitive damages, attorney’s fees, and allegations of agency and alter ego. (Motion, at p. 6.)

 

Punitive Damages

 

Punitive damages may be awarded in an action for the breach of an obligation not arising from contract upon clear and convincing evidence that a defendant has been guilty of oppression, fraud, or malice. (Civ. Code § 3294, subd. (a).)

 

“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).) “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. (c)(2).) “Fraud” is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code § 3294, subd. (c)(3).)

 

            Moving Defendants argue that Plaintiff’s allegations do not allege conduct warranting punitive damages and that Plaintiff’s allegations are stated without sufficient particularity. (Motion, at p. 8.)

 

            In opposition, Plaintiff argues that the FAC has pled sufficient facts to support a claim for punitive damages as Defendants knew of the mold issue throughout Plaintiff’s tenancy, Defendants covered up the extent of the toxic mold contamination, Defendants knew of the potential danger to Plaintiff’s health from exposure to severe mold, and Defendants refused to undertake remediation and prevention despite multiple requests. (Opp., at p. 3.; FAC, ¶¶ 19-24, 48, 58.) Plaintiff also argues that the FAC specifically differentiates Defendants’ roles which sufficiently establish each Defendant’s culpability, satisfying the standard for punitive damages. (Opp., at pp. 3-4.)

 

            The court finds Plaintiff has sufficiently alleged conduct by Defendants to warrant the request for punitive damages. Taking Plaintiff’s allegations as true, as the court must do on a motion to strike, they are indicative of conduct which is despicable.

 

            Moving Defendants cite Anschutz Entertainment Group, Inc. v. Snepp, where the California Court of Appeal held that general allegations were insufficient to support a claim for punitive damages. The court finds Anschutz to be both procedurally and factually inapposite to this case. First, Anschutz concerned a special motion to strike under California’s anti-SLAPP statute. (Anschutz Entertainment Group, Inc. v. Snepp¿(2009) 171 Cal.App.4th 598.) Second, the pleadings in Anschutz were conclusory in a way that Plaintiff’s allegations are not. Whereas the plaintiffs in Anschutz only generally alleged willful and malicious behavior, Plaintiff’s allegations here are specifically supported.  

 

            “When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].) Here, Plaintiff’s allegations that Defendants deliberately ignored the mold in the premises and Plaintiff’s concerns are sufficiently specific to provide adequate notice of the conduct charged.

 

            Accordingly, the motion to strike Plaintiff’s claim for punitive damages is denied.  

 

Attorney’s Fees

 

            Code of Civil Procedure section 1021 provides that “[e]xcept as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” (Code Civ. Pro., § 1021.)

 

            Moving Defendants argue that Plaintiff improperly seeks attorney’s fees under Civil Code section 3304. (Motion, at p. 9.)

 

            In opposition, Plaintiff argues that under Civil Code section 1942.4(b)(2), Plaintiff is allowed to recover his attorney’s fees in connection with Plaintiff's claim for breach of the implied warranty of habitability. (Opp., at p. 4.)

 

            The court finds that Moving Defendants do not move to strike Plaintiff’s request for punitive damages under section 1942.4. Instead, the court focuses on Moving Defendants’ section 3304 arguments.

 

            Civil Code section 3304 provides that “[t]he detriment caused by the breach of a covenant of “seizin,” of “right to convey,” of “warranty,” or of “quiet enjoyment,” in a grant of an estate in real property, is deemed to be: 

 

1. The price paid to the grantor; or, if the breach is partial only, such proportion of the price as the value of the property affected by the breach bore at the time of the grant to the value of the whole property; 

 

2. Interest thereon for the time during which the grantee derived no benefit from the property, not exceeding five years; 

 

3. Any expenses properly incurred by the covenantee in defending his possession.”.

 

(Civ. Code § 3304);

 

            The court finds that the right to recover attorney’s fees is a right usually explicitly provided for by the statute. Code of Civil Procedure section 1021 requires that the attorney’s fees be “specifically provided for by statute”. The court does not construe the language of section 3304 as specifically providing for attorney’s fees.  

 

            Accordingly, the portion of Plaintiff’s request for attorney’s fees which references Civil Code section 3304 is ordered stricken.  

 

Agency/Alter Ego Allegations

 

            Moving Defendants argue that Plaintiff makes conclusory agency and alter ego allegations subject to strike. (Motion, at p. 10.)

 

            Alter ego allegations may be pled generally and the principal factors for piercing the corporate veil may be alleged in conclusory terms and plaintiff may be given an opportunity to present evidence to support these allegations. (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 914-16.) Additionally, Plaintiff makes sufficient allegations regarding Moving Defendants’ agency on behalf of 336 Oakhurst. As such, Moving Defendants’ motion to strike is denied.

 

Conclusion

 

1.  Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED in part as to the first through third, sixth and eighth causes of action; and OVERRULED in part as to the remaining causes of action.

 

2.     Defendants Capstone Real Estate Services Corp. and Daniel S. Mizrahi’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is GRANTED in part and DENIED in part.