Judge Ralph C. Hofer, Case Number: 24NNCV02888, Date: 2024-12-13 Tentative Ruling

Plaintiff Omega Management Properties alleges that in November 2018 plaintiff leased to defendants Nima Etemadian and Elavate Pasadena, LLC premises on Colorado Blvd. in Pasadena pursuant to a written lease. The complaint alleges that plaintiff has performed all conditions of the lease to be performed on its part in accordance with the terms of the lease, except for any such performance which are excused by the acts of defendants.

The complaint alleges that defendants entered into possession of the premises, and occupied them until October of 2023. Plaintiff alleges that by the terms of the lease, defendants were required to pay plaintiff the base rent for the premises payable in advance and, as more particularly set out in the lease, with annual increases and a monthly operating expense fee. The complaint alleges that during the time frame from April 2020 to March 2022, defendants paid partial rent accruing a balance of unpaid rent in the amount of $59,923, and that when defendants vacated the premises on October 4, 2023, there was owing and unpaid the sum of $59,923 for rent under the lease, along with late charges and interest.

The complaint further alleges that defendants left the premises in serious need of repair, in that there was construction work begun but left unfinished, unauthorized alterations were made in the plumbing and other systems, including illegal electrical wiring, locksmith, paint, miscellaneous repairs and removal of a sign, which has resulted in damages to plaintiff.

Defendants Nima Etemadian and Elavate Pasadena argue that the single cause of action alleged in the complaint for breach of contract fails to state a cause of action, is uncertain, admits to an accord and satisfaction of a new agreement to pay lowered monthly rent, and is barred under the applicable statute of limitations.

As argued in the opposition, this is a very straightforward case alleging the breach of a commercial lease, and the complaint alleges each element, including that the parties entered into a written lease contract, and describing and attaching a copy of the written lease contract. [Complaint , para. 7, Ex. A]. It is also alleged that plaintiff has performed except for as excused by the acts of defendants. [Complaint, para. 7]. It is alleged that the terms of the lease required the payment by defendants of rent, with certain increases and a monthly operating expense fee, and alleges that this term was breached when defendants paid only partial rent, causing unpaid rent to accrue which was due to defendant. [Complaint, paras. -14]. It is further alleged that defendants breached the lease by leaving the premises in a poor condition, which proximately caused further damages. [Complaint, para. 15].

Defendants seem to primarily argue that plaintiff has not sufficiently alleged a cause of action because there is in fact no breach by defendants, as plaintiff admits that “Defendants paid partial rent” and that plaintiff cashed the checks. The complaint does allege that “Defendants paid partial rent accruing a balance of unpaid rent in the amount of $59,923.00.” [Complaint, para. 11]. There is no allegation in the complaint that defendants cashed checks or agreed to accept any payments as payment for the full amount of the debt.

Defendants concede that for the principle of accord and satisfaction to apply, there must be a bona fide dispute between the parties, and satisfaction to extinguish the original obligation. Kelly v. David D. Bohannon Organization (1953) 119 Cal.App.2d 787, 792 (“an accord and satisfaction must be predicated upon a bona fide dispute, a real dispute”); Moving Picture etc. Union v. Glasgow Theaters, Inc. (1970) 6 Cal.App.3d 395, 402-403 (“It is…necessary to show satisfaction as well as an accord since an accord without satisfaction does not extinguish the original obligation”).

Defendants also concede that a general demurrer is proper only where the complaint clearly discloses some defense or bar to recovery. Defendants rely on CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal. App.4th 631, 635, in which the Second District observed:

“Here, the demurrer was based upon an affirmative defense (unclean hands). In such a case, the affirmative defense must clearly appear on the face of the complaint in order to support a demurrer. A demurrer based on an affirmative defense cannot properly be sustained where the action might be barred by the defense, but is not necessarily barred. (See, e.g., Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403 [44 Cal.Rptr.2d 339] [statute of limitations defense].) Nor is a demurrer the appropriate procedure for determining the truth of disputed facts or what inferences should be drawn where competing inferences are possible. Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.”

Here, it is not clear from the pleading that an accord and satisfaction was agreed to, or was satisfied, so that such a defense necessarily would bar the breach of contract cause of action.

The complaint does not suggest that there was any bona fide dispute as to the amount owed. Rather the complaint suggests that it was understood the payments made were partially payments, and that unpaid rent was accruing.

There are no facts alleged in the complaint which would suggest, for example, that the matter falls within general statutory provisions normally invoked in an accord in satisfaction argument.

“a) If a person against whom a claim is asserted proves that (1) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (2) the amount of the claim was unliquidated or subject to a bona fide dispute, and (3) the claimant obtained payment of the instrument, the following subdivisions apply.

(b) Unless subdivision (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.”

Defendants instead rely on the declaration of defendant Nima Etemadian, who confirms entering the lease and indicates the intended use of the lease was specified for a Fitness Studio and Health Spa or Similar. [Etemadian Decl., para. 2].

“Tenants offered to pay Landlord what we could, to suffice for the full rent. Landlord accepted and cashed the lowered agreed payments as the full rent, and we maintained the lowered agreed payments for the agreed full rent. The agreement was satisfied.”

As noted above, none of this is in the pleading. In addition, there is no indication in the declaration that the checks, even if accepted, included any language suggesting an accord and satisfaction could be established under statute.

Under CCP § 430.30(a), an objection to a pleading may be taken by a demurrer "[w]hen any ground for objection to a complaint...appears on the face thereof, or from any matter of which the court is required to or may take judicial notice…"

As argued in the opposition, this is a demurrer and is not a proceeding to determine and weigh facts and their ultimate legal significance. As conceded by defendants in their papers, “[a] demurrer based on an affirmative defense cannot properly be sustained where the action might be barred by the defense, but is not necessarily barred,” and “[n]or is a demurrer the appropriate procedure for determining the truth of disputed facts or what inferences should be drawn where competing inferences are possible.” CrossTalk Productions, at 635, italics in the original, citations omitted.

In fact, it is specifically held that with respect to accord and satisfaction, the intent of the parties to make a final settlement via accord and satisfaction is a question of fact, which the party urging the operation of the doctrine has the burden of proving. Conderback v. Standard Oil Co. (1966) 239 Cal.App.2d 664, 682.

Defendants argue the pleading is uncertain, arguing that although the lease specifies one rental amount, with annual increases, the pleading, while recognizing this, applies a higher rental charge than in the lease. [Comp., para. 10]. It is also argued that to the extent plaintiff seeks late charges and interest, it is not specified how the charges or interest are being charged; the complaint just offers figures.

There is no pleading requirement cited which requires specificity in a breach of contract action such as this one with respect to the exact amount of damages claimed or the method of calculation. The pleading sets forth each element, as set forth above, and sufficiently alleges and pleads facts that support the elements that defendants breached the contract, causing damages, in the form of unpaid rent, late charges, and lost interest, in addition to damages caused by defendants leaving the premises in need of repair, which damages are not even addressed in the demurrer. [Complaint, paras. 11-14, 15].

Permitting demurrer for uncertainty is based on the policy which favors parties having notice of the liability alleged, and the pleading must be sufficiently certain to apprise the defendant of the basis upon which the plaintiff is seeking relief. Perkins v. Superior Court (1981, 2nd Dist.) 117 Cal.App.3d 1, 6.

As argued in the opposition, the demurrer itself makes it clear that defendants understand the factual and legal basis of defendants’ claim. There is no uncertainty here to justify sustaining a demurrer on this ground. The demurrer on this ground is overruled.

The demurrer in the introduction argues that the claims of months of unpaid rent and damages are barred by the applicable statute of limitations. This argument is not further referenced, or supported by legal argument or authority, in the body of the memorandum of points and authorities, and it is deemed abandoned. In addition, as pointed out in the opposition, such an argument, even if considered, would not apply in any case to a great portion of the time period at issue, so would not dispose of the entire cause of action of the complaint, as required on a demurrer. The demurrer on this ground will be overruled.

Defendants seem to argue that certain statements concerning the amount of rent due during certain periods are false, based on review of the attached lease, Exhibit A to the complaint, and that certain language is not drawn in conformity with the law as stating claims barred by the applicable statute of limitations.

It would have been helpful if the language sought to be stricken had been provided in the notice or memorandum. It is not clear what particular words could be stricken to limit the claims to not include the limited two-month period which falls outside the four-year period urged. The action was filed on July 12, 2024, leaving only a two-month period in March and April of 2020 which would fall outside the period.

In any case, defendants in opposition argue that the complaint alleges facts which would support an argument that defendants would be estopped from asserting any statute of limitations defense, as the complaint alleges that the lease required the completion of prelitigation mediation, which plaintiff demanded on May 23, 2023, and was completed on April 2, 2024. [Complaint, para. 16]. This potential estoppel argument is sufficiently raised by the pleading and supports damages the motion seeks to strike.

Defendants also argue that the statute of limitations was tolled by the Covid-19 Tenant Relief Act, set forth at CCP section 1179.01 through 1179.07, which deferred unpaid rental obligations until October 1, 2021. See CCP section 1179.03.5. Defendants argue that this action was filed within four years after that moratorium ended. This fact would further support that the damage claims are not necessarily barred here.

As noted above in connection with affirmative defense of accord and satisfaction, the statute of limitations as an affirmative defense is specifically held to not support a challenge to the pleading where the action might be barred by the defense, but is not necessarily barred. Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403. Defendants here have failed to show that the claims or allegations necessarily would be barred in this case. Hence, the motion to strike is denied.

Defendants also seek to strike claims for improper alleged unpaid rent, interest and damages which are contrary to what is in the lease. The argument seems to be based in part on allegations that two sections of the complaint are “contradictory” as to each other, so the motion seeks to strike them both. There is no proper basis for striking all the claims, as some are partially accurate, and inconsistency between two allegations does not warrant striking both of them, rather than one or the other.

It is also argued that plaintiff fails to allege how late fees or interest are being charged, and, which charges are barred by the statute of limitations. As discussed above, such calculations are not required at the pleading stage. Also, the pleading alleges facts supporting specific defenses to the bar of the statute of limitations, including estoppel and tolling. The motion to strike accordingly is denied in its entirety.

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