Judge: Ralph C. Hofer, Case: 24NNCV04192, Date: 2025-04-17 Tentative Ruling

Case Number: 24NNCV04192    Hearing Date: April 17, 2025    Dept: D

TENTATIVE RULING

Calendar:    8
Date:          04/18/2025 
Case No: 24 NNCV04192 Trial Date: None Set 
Case Name: Pasadena Strength and Conditioning Co. v. Chan Family Trust, et al.

DEMURRER
MOTION TO STRIKE
 
Moving Party:            Defendants Edward Chan, Howard Chan and Edward Chan as Trustee of
 the Chan Family Trust      
Responding Party: Plaintiff Pasadena Strength and Conditioning Co.      

 
RELIEF REQUESTED:
Sustain demurrer to first, second and sixth causes of action of First Amended Complaint 
Strike punitive damages   

CAUSES OF ACTION: from First Amended Complaint  
1) Breach of Contract 
2) Fraud 
3) Negligent Misrepresentation 
4) Quantum Meruit
5) Recission of Contract 
6) Intentional Interference with Prospective Economic Relations 
7) Unfair Business Practices 

SUMMARY OF FACTS:
Plaintiff Pasadena Strength and Conditioning Co. alleges that in September of 2019 plaintiff entered into a written Commercial Lease Agreement with Robert and Elaine Chan for premises on Sierra Madre Boulevard to lease the premises for a term of ten years, and later entered a written Lease Addendum.  Plaintiff alleges that it hired Patrick Chiu, an architecture planning developer who had been recommended by defendant Howard Chan, who was later discovered to be Chan’s personal friend.  Plaintiff alleges that plaintiff proceeded to attempt to prepare the premises to open a business there, but defendants Chan Family Trust, Howard Chan, and Edward Chan delayed in getting the premises rent ready, and in November of 2020, after plaintiff had expressed a desire to change or end the relationship, the parties entered into an oral agreement that if plaintiff got the premises ready, cleaned out, and up to code/permit for the Chans, the Chans would not seek rent until the premises were ready, and would make rent credits to compensate plaintiff for the work and costs of improving and getting the premises rent ready.  The Chans also agreed that once the premises were ready, the Chans would paint the premises to plaintiff’s liking. 

The Amended Complaint (which will be referred to as the “First Amended Complaint” (FAC)) alleges that in June of 2024, plaintiff received a surprising call from the Chans’ attorney asking plaintiff to vacate the premises, and stating that if plaintiff did not immediately vacate, the Chans would seek eviction.  The attorney also stated the Chans were no longer recognizing the Lease or any other agreement.   Plaintiffs allege that the Chans have refused to communicate with plaintiff since the attempted eviction, continuing to demand that plaintiff vacate the premises without holding up defendants’ agreement to compensate plaintiff for its work. 
  
ANALYSIS:
Procedural
Meet and Confer
The opposition papers argue that the meet and confer efforts mentioned in the moving papers did not occur, but that the only communications plaintiff has received from defendants’ counsel were some emails in early February 2025, when defendants’ counsel asked for and was provided the exhibits A and B to the FAC.  

The meet and confer declaration submitted in support of the demurrer states:
“3. I met and conferred several times by phone and by email with James Howard, the attorney for Pasadena Strength and Conditioning Co., regarding defects in the original Complaint and in the Amended Complaint and ultimately about defendants’ plans to demur to the first, second, and sixth causes of action of the Amended Complaint and the reasons why. 

4. We were unable to reach an agreement resolving all of plaintiff’s and defendants’ concerns and the intervention of the court is necessary to resolve the issues presented by this demurrer and the motion to strike punitive damages filed concurrently.”
[Campbell Decl., paras. 3, 4].   

The declaration is more vague than is usually submitted and does not attach any emails or specify what issues were discussed or how defendants identified with legal support the basis of any purported deficiencies in the pleading.

The opposition argues that any communications regarding the sufficiency of the FAC were limited to the failure to attach the exhibits, but this argument is not supported by a declaration of counsel for plaintiff concerning any lack of further meet and confer efforts, or by submission of the emails which counsel for plaintiff indicates were in fact received.  However, the argument appears credible given further arguments in the oppositions that certain issues raised in the moving papers could have been resolved had there been a meet and confer on those issues.  It appears that a failure to meet and confer in good faith on at least some issues has resulted in the consumption of this court’s time to evaluate those issues and permit leave to amend.  

The court will discuss at the hearing whether reasonable and good faith meet and confer sessions took place here, as the court takes very seriously the meet and confer obligations imposed by statute. 

Specifically, CCP § 430.41 requires:
“(a) Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. If an amended complaint, cross-complaint, or answer is filed, the responding party shall meet and confer again with the party who filed the amended pleading before filing a demurrer to the amended pleading.

 (1) As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency….

(3) The demurring party shall file and serve with the demurrer a declaration stating either of the following:

   (A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer.

   (B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.

 (4) Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.”

Similar provisions applying to motions to strike are set forth in CCP § 435.5.

The court will discuss the parties’ compliance with these requirements, and expects a more detailed meet and confer declaration in connection with any future motion in this litigation with a meet and confer requirement.  However, to the extent the opposition papers argue that the demurrer should be overruled and the motion to strike denied for failure to appropriately meet and confer, this is not permitted under the statute, which, as set forth above, expressly states, “Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.”  See also CCP § 435.5.

The court is within its discretion to continue the matter and require the parties to meet and confer. The court requires that the parties meet and confer and submit a further declaration concerning those efforts on or before the hearing date, before the matter will be heard.   

Substantive 
First Cause of Action—Breach of Contract 
The notice of motion indicates the demurrer to this cause of action is brought only by defendant Edward Chan as Trustee of the Chan Family Trust.  

The memorandum argues initially however, evidently on behalf of all defendants, that the FAC is uncertain because Exhibits A and B, referenced in the pleading, are not attached to the pleading.  The referenced Exhibits are also not attached to the copy of the pleading which was filed with the court. 

Plaintiff in opposition acknowledges this error, and argues that this is precisely the type of matter that could have been easily fixed if there had been a proper meet and confer.  Plaintiff indicates that this matter of attaching documents can be easily addressed via amended complaint or an errata.  The demurrer sustains with leave to amend to permit plaintiff to attach the referenced documents.  

Defendant Edward Chan on behalf of the Trust argues that without the exhibits, the Trust is unable to know the contents of the Lease Agreement and Addendum under which the Trust is being sued and is unable to point out discrepancies between the allegations of the FAC and the actual Lease and Addendum.  This uncertainty should be resolved by the filing of the Exhibits, and plaintiff on amendment may clarify the allegations in connection with those written documents.  

The Trust also argues that the FAC fails to state a cause of action as to the oral agreement alleged because the statute of frauds requires that the modification of a lease agreement must be in writing, and the Lease Agreement attached to the original complaint expressly requires that the Lease Agreement, “may be modified only in writing, signed by the Parties in interest at the time of the modification.”   This language does not appear from the face of the pleading, as the Exhibit is not attached, and there is no request for judicial notice. 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…."  

Moreover, it does not appear that the oral agreement, which is alleged to be an agreement to compensate plaintiff for work done to the premises, would in any case fall within the statute of frauds.  [FAC, para. 40].  

Defendant cites to Civil Code section 1624 (a), without setting forth the statutory language.  That section provides, in pertinent part:
(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent:…
(3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein…
 
As argued in the opposition, the alleged agreement is not alleged as does not appear to be one with respect to the lease, but “to compensate Plaintiff for the work and costs of improving and getting the Premises rent-ready…” because defendants “lacked the skills to complete the work themselves.”  [FAC, para. 40].   

The claim based on the oral agreements does not appear from the face of the pleading barred by the statute of frauds. The demurrer on this ground is overruled. 

Second Cause of Action—Fraud 
The demurrer to this cause of action is brought by Edward Chan as Trustee of the Trust, Howard Chan, and Edward Chan, individually.

To state a cause of action for fraud, plaintiff must plead the following elements: A false representation, actual or implied, or concealment of a matter of fact material to the transaction which defendant had a duty to disclose, or defendant’s promise made without intention to perform; defendant’s knowledge of the falsity; defendant’s intent to deceive; plaintiff’s justifiable reliance thereon; and resulting damage to plaintiff.  Pearson v. Norton (1964) 230 Cal.App.2d 1; Witkin §668 et seq.; Judicial Council Form 982.1 (23).

Generally, in a fraud cause of action, a plaintiff must allege specifically how, what, where, to whom and by what means a defendant made a misrepresentation.  Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. 

Defendant Edward Chan, individually, argues that nothing specific is alleged against this defendant.  

The FAC alleges specific facts, including dates and places, with respect to representations and alleged false promises made by defendant Howard Chan.  [FAC, paras. 26-29, 45-46, 48, 49].  The FAC does not allege any details with respect to any representations made by defendant Edward, but alleges that at all times, “Edward was active in, took part, and endorsed all statements made by himself and Howard acting on his and the Trust’s behalf.”  [FAC, para. 47].  This showing does not meet the heightened pleading standard for a fraud claim against Edward individually. Hence, the demurrer is sustained on this ground. 

The demurrer with respect to Howard Chan, which is based on arguments that the allegations of misrepresentations and false promises make no sense, and are not true, which is an improper speaking demurrer.  For the purpose of testing the sufficiency of a cause of action, a demurrer admits the truth of all material facts properly pleaded.   Serrano v. Priest (1971) 5 Cal.3d 584, 591.  No matter how improbable, plaintiff’s allegations must be accepted as true for the purpose of ruling on a demurrer.   Del E. Webb Corp. v.  Structural Materials Co. (1981, 2nd Dist.) 123 Cal.App.3d 593, 604 (“As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be.”)  The demurrer as brought by defendant Howard Chan is overruled. 

There is no clear argument with respect to the Trust, when it is alleged that Howard’s conduct was on behalf of himself and the trust.  [FAC, para. 47].  The demurrer by the Trust is overruled. 

Sixth Cause of Action—Intentional Interference with Prospective Economic Relations 
The demurrer to this cause of action is brought by Edward Chan as Trustee of the Trust, Howard Chan, and Edward Chan, individually.

Defendants appear to argue jointly that the cause of action is insufficient because plaintiff does not allege all elements of such a claim.

With respect to a claim for intentional interference with prospective economic advantage:
“Intentional interference with prospective economic advantage has five elements: (1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant's action.
Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512, citation omitted.   

Defendants argue that the FAC fails to allege an existing economic relationship between plaintiff and a third party that is reasonably likely to produce economic advantage, as required under Youst v. Longo, (1987) 43 Cal.3d 64, 71.  

Plaintiff in opposition seems to concede that the FAC fails to allege existing economic relationships, but argues that had defendants’ counsel engaged in appropriate meet and confer counsel would have learned that plaintiff had existing economic relationships with many persons and entities, including trainers, clients seeking fitness, and equipment managers.  The demurrer on this ground accordingly is sustained with leave to amend to allege such relationships. 

Defendants also argue that the cause of action is barred by the statute of limitations.  The argument is that the cause of action is subject to a two-year statute of limitations for tort claims under CCP section 339(1), and that the FAC alleges that since the time of the agreement of February 2021 plaintiff worked to get the premises rent-ready.  [FAC, para. 33].  The argument is that the complaint in this matter was filed on September 11, 2024, three and a half years later, so was untimely.   The allegations here are that there were continuing efforts to prepare the premises for operation of the business, and there is no date appearing from the face of the complaint which would suggest when the cause of action accrued for purposes of the running of the statute of limitations.  A demurrer on the ground a cause of action is barred by the statute of limitations should be sustained only where the facts alleged on the face of the complaint “clearly and affirmatively” show that the cause of action is barred.   It is not enough that the complaint might be barred.   Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.  
It is held that if a complaint alleges wrongful conduct commencing at a time barred by the statute of limitations, but continuing until a date not barred, there is no bar based on the statute of limitations.   See Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 786.   The argument here does not meet these standards. 

 The demurrer to the cause of action on this ground also is overruled.  

Motion to Strike 
The motion to strike is brought by defendants Edward Chan, Howard Chan, and Edward Chan as Trustee of the Chan Family Trust.

The motion argues that the FAC improperly seeks punitive damages in this action arising from a breach of contract.

Civil Code section 3294 provides, in pertinent part:
“(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

As argued in the opposition, this is not merely an action for breach of contract, but includes allegations of intentional torts, including for fraud.  In this case, with respect to the fraud cause of action, punitive damages are appropriately stated against the defendants against whom fraud is properly stated.  A properly pleaded fraud claim will itself support recovery of punitive damages; no allegations of malice or intent to injure are required.   Stevens v. Superior Court (1986, 2nd Dist.) 180 Cal.App.3d 605, 610-611.   

The motion to strike punitive damages accordingly is denied as to defendants Howard Chan and the Trust.  

The motion is granted, or deemed moot, as to defendant Edward Chan, as the demurrer to the cause of action for fraud against that defendant has been sustained with leave to amend.  

RULING:
Demurrer of Defendants Edward Chan, Howard Chan and Edward Chan as Trustee of the Chan Family Trust to Plaintiff’s Amended Complaint:

The opposition argues that the parties did not in fact meet and confer concerning the Amended Complaint prior to the filing and service of the demurrer and motion to strike. 
The parties are ordered to engage in the required meet and confer before the matter will be called for hearing. Defendants are ordered to prepare a declaration in conformity with the Code reporting the outcome of the meet and confer and file it on eCourt before the matter will be called for hearing.  

Demurrer to the first cause of action is SUSTAINED WITH LEAVE TO AMEND on the ground the Exhibits purporting to be copies of the two written contracts alleged in the Amended Complaint are not in fact attached to the pleading.  The Court notes that this error could have been easily remedied through a reasonable good faith meet and confer discussion.  Demurrer on all other grounds is OVERRULED. 

Demurrer to the second cause of action for fraud is SUSTAINED WITH LEAVE TO AMEND only as to defendant Edward Chan on the ground the cause of action is not alleged with sufficient specificity.  See Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 (plaintiff must allege specifically how, what, where, to whom and by what means a defendant made a misrepresentation).  Demurrer by all other parties and on all other grounds is OVERRULED 

Demurrer to the sixth cause of action for intentional interference with prospective economic relations is SUSTAINED WITH LEAVE TO AMEND on the ground the pleading fails to sufficiently allege a prospective economic relationship.   Demurrer on all other grounds is OVERRULED. 

Ten days leave to amend.  Any amended pleading must be titled the “Second Amended Complaint.”  

Motion to Strike punitive damages allegations is GRANTED WITH LEAVE TO AMEND only as to defendant Edward Chan.  Motion to strike all other allegations and as to all other moving parties is DENIED.  

Ten days leave to amend. 

The parties are ordered to meet and confer in full compliance with CCP §§ 430.41 and 435.5 before any further demurrer or motion to strike may be filed.  



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