Judge: Peter A. Hernandez, Case: 24STCV32255, Date: 2025-04-22 Tentative Ruling
Case Number: 24STCV32255 Hearing Date: April 22, 2025 Dept: 34
Defendants Julie Kang, SJPE
Associates, LLC, and Beverly Normandy Center, LLC’s Demurrer to Plaintiffs’
Complaint is OVERRULED.
Background
On December 6, 2024, Plaintiffs Ronald
Dettman and Jina Dettman (“Plaintiffs”) filed a complaint against Defendants
Julie Kang, SJPE Associates, LLC, and Beverly Normandy Center, LLC
(“Defendants”) arising from Plaintiffs’ tenancy in Defendants’ property located
at 1001 W. Beverly Blvd., Montebello, CA 90640 alleging causes of action for:
1. Breach of Contract;
2. Breach of Implied Covenant of Good
Faith and Fair Dealing;
3. Violation of CA Business &
Professional Code §17200, et seq.;
4. Fraud;
5. Intentional Misrepresentation;
6. Negligent Misrepresentation;
7. Intentional Interference with
Prospective Economic Advantage; and
8. Negligent Interference with
Prospective Economic Advantage.
On January
23, 2025, Defendants filed this Demurrer. On February 10, 2025, Plaintiffs
filed an opposition. On February 18, 2025, Defendants filed a reply. On
February 19, 2025, Plaintiffs filed a sur-reply.
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
Defendants demur, pursuant to Code of Civil Procedure section 430.10, to
all causes of action in Plaintiffs’ complaint.
1st Cause of
Action – Breach of Contract
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.)
Defendants note that Plaintiffs
allege the lease agreement between the parties conferred “all such furniture,
fixtures and equipment at the subject premises” but also that the escrow
documents for purchasing the restaurant from the previous tenant conferred such
items. (Demurer, at p. 3.) Thus, Defendants argue that Plaintiffs do not
sufficiently allege how the breach of a prior escrow agreement resulted in a
breach of the lease agreement. (Id., at p. 4.) Defendants also argue
that Plaintiffs merely allege that it was “understood” by the parties that Plaintiffs
obtained ownership of the “furniture, fixtures and equipment” but do not allege
that such understanding was codified in the lease agreement. (Ibid.) Defendants
take the position that if such agreement was reached between the parties,
Plaintiffs could have attached supporting documentation to the complaint but
failed to do so here. (Ibid.)
In opposition, Plaintiffs argue that
Defendants attempted to claim ownership over the restaurant assets when
Defendant Julie Kang (“Kang”) attempted to add an addendum provision into the
lease agreement to be signed by the buyer asserting that the restaurant assets constituted
fixtures belonging to Defendants and not Plaintiffs. (Opp., at pp. 7-10.)
The court finds that Plaintiffs have
sufficiently pled a breach of contract claim. 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 some circumstances, a plaintiff
may also “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.) Here, Plaintiffs allege the existence of
a lease agreement by pleading its legal effect of conferring a lease to the subject
property and recognizing that the restaurant assets belong to Plaintiffs due to
prior transactions. (Complaint, ¶¶ 5, 6.) Such allegations properly plead the
existence of a contract. Moreover, Plaintiffs allege that Kang’s actions of attempting
to assert ownership over the restaurant assets constituted a breach of the
lease agreement. (Id., ¶¶ 26-27.) Lastly, Plaintiffs claimed damages as
a result of the breach. (Id., ¶ 28.)
Accordingly,
Defendants’ demurrer is overruled as to Plaintiffs’ first cause of
action.
2nd Cause of
Action – Breach of Implied Covenant of Good Faith and Fair Dealing
The elements for breach of the implied covenant of good
faith and fair dealing are: (1) existence of a contract between plaintiff and
defendant; (2) plaintiff performed his contractual obligations or was excused
from performing them; (3) the conditions requiring defendant’s performance had
occurred; (4) the defendant unfairly interfered with the plaintiff’s right to
receive the benefits of the contract; and (5) the plaintiff was harmed by the
defendant’s conduct. (Merced Irr. Dist. V. County of Mariposa (E.D. Cal.
2013) 941 F.Supp.2d 1237, 1280 [discussing California law].)
Defendants argue that Plaintiffs’ claim for breach of the
implied covenant of good faith and fair dealing fails as there is no underlying
contract in breach. (Demurrer, at p. 4.) However, for the reasons stated above,
the court has found that Plaintiffs sufficiently allege the existence of a
contract and Defendants’ breach.
Accordingly,
Defendants’ demurrer is overruled as to Plaintiffs’ second cause of
action.
3rd Cause of
Action – Violation of CA Business & Professional Code §17200, et seq.
To set forth a claim for a violation of Business and
Professions Code section 17200 (“UCL”), plaintiff must establish defendant was
engaged in an “unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising” and certain specific acts.
(Bus. & Prof. Code, § 17200.) A cause of action for unfair competition “is
not an all-purpose substitute for a tort or contract action.” (Cortez v.
Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)
Defendants argue that Plaintiffs’ UCL claim is not
pleaded with sufficient particularity as Plaintiffs’ allegations are broad and
conclusory merely incorporating the allegations of the preceding claims.
(Demurer, at p. 5.)
In opposition, Plaintiffs argue that the complaint sufficiently
alleges Defendants’ conduct constituting unfair business practices which
interfered with the business purchase sales transaction between Plaintiffs and
the buyer. (Opp., at p. 11.)
The court finds that Plaintiffs sufficiently alleged a
UCL claim. Plaintiffs make clear allegations that Defendants engaged in unfair
business practices including “(1) tortious interference with Plaintiffs
purchase sales transactions of their restaurant business through their illicit
and improper claims of ownership to the restaurant equipment items and
non-permanent fixtures, (2) attempting to get the new buyer to sign off on a
lease addendum acknowledging as such, (3) attempting to hold Plaintiffs
responsible for additional business rent from November 1 through November 15,
2024.” (Complaint, ¶¶ 34.) Taking the allegations of the complaint as a whole, Plaintiffs
have alleged such unfair business practices with particularity.
Accordingly,
Defendants’ demurrer is overruled as to Plaintiffs’ third cause of action.
4th – 6th
Causes of Action – Fraud, Intentional Misrepresentation, and Negligent
Misrepresentation
The elements of fraud and intentional misrepresentation
are “(a) a misrepresentation (false representation, concealment, or
nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v.
Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294; see also 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. Superior Court (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.)
The
elements of a cause of action for negligent misrepresentation include
“[m]isrepresentation of a past or existing material fact, without reasonable
ground for believing it to be true, and with intent to induce another’s
reliance on the fact misrepresented; ignorance of the truth and justifiable
reliance on the misrepresentation by the party to whom it was directed; and
resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp
Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks
omitted.)
Defendants
argue that Plaintiffs allege Defendants committed fraud and misrepresentation by
“tortiously interfering” with the sale of Plaintiffs’ business without the
required specificity to sustain such claims. (Demurrer, at p. 6.)
The
court disagrees and finds that Plaintiffs have sufficiently alleged their fraud
and misrepresentation claims. First, Plaintiffs allege that Defendants,
specifically Kang, made the misrepresentation that Defendants had ownership over
Plaintiffs’ restaurant equipment and non-permanent fixtures at the subject
leased premises. (Complaint, ¶ 44, 50, 58.) Plaintiffs also alleged that
Defendants knew this to be false due to their previous understanding that the
restaurant assets belonged to Plaintiffs. (Id., ¶ 6.) Thus, such
misrepresentation induced reliance from the new restaurant buyer as intended by
Defendants when attempting to amend the lease agreement resulting in damage to
Plaintiffs. (Id., ¶¶ 44, 50, 58.)
Accordingly, Defendants’ demurrer is overruled as to Plaintiffs’
fourth through sixth causes of action.
7th – 8th
Causes of Action – Intentional and Negligent Interference with Prospective
Economic Advantage
The elements of a claim for intentional interference with prospective economic advantage
include “(1) an economic relationship between the plaintiff and some third
party, with the probability of future economic benefit to the plaintiff; (2)
the defendant’s knowledge of the relationship; (3) intentional or negligent
acts on the part of the defendant designed to disrupt the relationship; (4)
actual disruption of the relationship; and (5) economic harm to the plaintiff
proximately caused by the acts of the defendant.” (Crown Imports, LLC v.
Superior Court (2014) 223 Cal.App.4th 1395, 1404, citations, brackets, and
quotation marks omitted.)
“The elements of negligent interference with prospective economic advantage are (1) the existence of an
economic relationship between the plaintiff and a third party containing the
probability of future economic benefit to the plaintiff; (2) the defendant’s
knowledge of the relationship; (3) the defendant’s knowledge (actual or
construed) that the relationship would be disrupted if the defendant failed to
act with reasonable care; (4) the defendant’s failure to act with reasonable
care; (5) actual disruption of the relationship; and (6) economic harm
proximately caused by the defendant’s negligence.” (Redfearn v. Trader Joe’s
Co. (2018) 20 Cal.App.5th 989, 1005.)
Defendants contend that Plaintiffs fail to allege Defendants
would have leased the subject property to the prospective buyer when the new
lease agreement was still under negotiations and Defendants were under no
obligation to lease to the prospective buyers. (Demurrer, at p. 7.)
The court finds that Plaintiffs sufficiently pled their
interference with prospective economic advantage claims. The complaint alleges
that Plaintiffs reached an agreement with a buyer for the sake of their
restaurant business, including all restaurant assets, for a total price of
$32,500.00. (Complaint, ¶ 10.) Such economic relationship was known to
Defendants. (Id., ¶¶ 10-11.) Defendants, specifically Kang, made
informed Plaintiffs’ agent and the restaurant buyer that Defendants agreed to enter
into a new lease. (Ibid.) Subsequently, Defendants asserted ownership
over the restaurant assets when attempting to amend the lease agreement. (Id.,
¶ 13.) This caused the restaurant buyer to reduce the purchase price to
$15,000.00. (Id., ¶ 14.) Although Plaintiffs continued with the sale at
the reduced price, Defendants canceled the lease agreement with the restaurant
buyer following a dispute regarding the security deposit with Plaintiffs’
original lease. (Id., ¶¶ 15, 17.)
Accordingly, Defendants’ demurrer is overruled as to Plaintiffs’
seventh and eighth causes of action.
Conclusion
Defendants
Julie Kang, SJPE Associates, LLC, and Beverly Normandy Center, LLC’s Demurrer
to Plaintiffs’ Complaint is OVERRULED.