The Hardell Group, LLC v. Housing Authority of the City of Los Angeles, et al.

DEMURRER TO FIRST AMENDED COMPLAINT

 

MOVING PARTY: Defendant Housing Authority for the City of Los Angeles

RESPONDING PARTY(S): Plaintiff The Hardell Group, LLC

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff The Hardell Group, LLC, is the owner of subsidized housing occupied by tenant Defendant Herbert Bonwell pursuant to a written lease. Plaintiff also alleges it has a Housing Assistance Payments contract with the Housing Authority for the City of Los Angeles whereby the Housing Authority pays a portion of Defendant Bonwell’s rent each month. Plaintiff alleges that Defendant Housing authority has improperly withheld rent payments and then failed to communicate with Plaintiff. Plaintiff asserts causes of action against the Housing Authority for (1) rescission of contract, (2) breach of contract, and (3) declaratory relief. 

Defendant Housing Authority now demurrers to each cause of action in the FAC. Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Demurrer to the First Cause of Action is SUSTAINED WITHOUT LEAVE TO AMEND.

Defendant’s Demurrer to the Second Cause of Action is SUSTAINED WITH THIRTY DAYS LEAVE TO AMEND, consistent with this ruling.

Defendant’s Demurrer to the Third Cause of Action is OVERRULED.

Defendant is ordered to give notice, unless waived. 

DISCUSSION:

Demurrer

I. Meet and Confer

The demurring party has not included a declaration reflecting the parties met and conferred. However, in its Memorandum of Points and Authorities, Defendant states that “counsel for both parties have had ongoing and extensive good faith email and telephone communication regarding this matter and all facets of the pleadings including all of the arguments and citations contained in this Demurrer.” (Demurrer 2: 2-6.) 

On this representation, and without any objection from Plaintiff, the court considers the meet and confer obligation satisfied.

II. Legal 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.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.  (CCP § 430.30(a).)  A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.  (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.)  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.  (Id.)  The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.  (Hahn, 147 Cal.App.4th at 747.)  

III. Analysis

A. Demurrer to First Cause of Action for Rescission of Contract

First, Defendant argues that rescission is unavailable because Plaintiff has an adequate remedy at law—damages for breach of contract. 

Civil Code section 1689 provides for rescission in certain enumerated situations. Rescission is “an equitable remedy, with certain qualifications that limit its application.” (Hailey v. California Physicians' Serv. (2007) 158 Cal. App. 4th 452, 468.) “[E]quitable relief will not be granted if there is a plain, complete, speedy, and adequate remedy at law.” (Andal v. City of Stockton (2006) 137 Cal. App. 4th 86, 91.)

In opposition, Plaintiff contends it “cannot be compelled to make an election of remedies - as to whether he or she seeks rescission or damages - before or during the course of trial until the case is submitted to the judge or jury.” (Opp. 5: 11-14.) But Plaintiff cites no authority in support, much less any demonstrating that rescission is actually an available remedy under these facts.

Accordingly, Defendant’s Demurrer to the First Cause of Action is SUSTAINED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Here, Plaintiff has not requested leave to amend or demonstrated that the cause of action can be amended. Therefore, no leave to amend is given.

B. Demurrer to Second Cause of Action for Breach of Contract

Defendant next argues the Second Cause of Action fails because the conduct on which it is based—the alleged abatement of rent in 2022—was expressly permitted under the Contract.

Plaintiff alleges that in 2011, its predecessor in interest entered into a Housing Assistance Payments Contract with the Housing Authority. (FAC ¶ 14.) Under the Contract, the Housing Authority was to pay a portion of the tenant’s rent. (Id.) Plaintiff alleges that in June and July of 2022, the Housing Authority “abated” rent by “alleging that Plaintiff was obligated to provide Defendant Bonwell a working stove and refrigerator.” (Id. ¶ 17.) Plaintiff alleges that “Defendant remained non responsive to Plaintiffs inquires and attempts to communicate to resolve the issues concerning Defendant's ongoing refusal to pay rent.” (Id. ¶ 18.) Plaintiff further alleges that “Defendant's refusal to cooperate, communicate and to pay rent frustrated the fundamental purpose of the underlying HAP contract.” (Id.) As a result, “Plaintiff lost several thousands of dollars in unpaid rent.” (Id. ¶ 19.)

Plaintiff alleges that the Housing Authority “abated” rent again in October 2023 without providing any notice or basis for the abatement. (Id. ¶¶ 20, 22.) Plaintiff alleges this violated the portion of the HAP contract which provides that “[t]he PHA must notify the owner of any HQS defects shown by the inspection.” (Id. ¶ 21.)

 

Under the heading for the Second Cause of Action for breach of contract, Plaintiff alleges only that Defendant Housing Authority “breached the HAP contract in 2022 for ‘abating’ rent while refusing to communicate with Plaintiff to conform and comply with the terms of the HAP contract.” (Id. ¶ 69.) There is no mention of the alleged 2023 abatement. 

Defendant argues that by refusing to provide a stove and refrigerator, Plaintiff was in breach of the agreement, and Defendant was therefore authorized to abate rent. The Housing Assistance Payments Contract attached to the Complaint provides that the Owner “shall provide” a refrigerator and “range/microwave.” (See Compl., “Housing Assistance Payments Contract, ¶ 8.) The Agreement further provides that the violation of “the owner's obligation to maintain the unit in accordance with the HQS” is a “breach of the HAP contract.” (Id. ¶ 10(a)(1).) In the event of breach, “the PHA may exercise any of its rights and remedies under the HAP contract, or any other available rights and remedies for such breach. The PHA shall notify the owner of such determination, including a brief statement of the reasons for the determination. The notice by the PHA to the owner may require the owner to take corrective action, as verified or determined by the PHA, by a deadline prescribed in the notice.” (Id. ¶ 10(b).)

It is well-settled that “a party cannot commit a breach of contract by exercising a right secured to him by the contract.” (Chen v. PayPal, Inc. (2021) 61 Cal. App. 5th 559, 570.) Here, it appears that Defendant had the contractual right to abate rent in the event Plaintiff failed to provide a refrigerator or stove. And Plaintiff plainly alleges a dispute over whether Plaintiff “was obligated to provide Defendant Bonwell a working stove and refrigerator,” which reasonably suggests Plaintiff had not been providing them. (FAC ¶ 17.)(Emphasis added.)  [FN 1]

Therefore, Plaintiff’s allegations of breach fail as a matter of law, because Defendant had the contractual right to abate rent under the circumstances alleged.

Accordingly, Defendant’s Demurrer to the Second Cause of Action is SUSTAINED with leave to amend. When amending, Plaintiff should identify and/or clarify which portion(s) of the contract Defendant allegedly breached and address the issue raised here.

C. Demurrer to Third Cause of Action for Declaratory Relief

While Defendant’s Notice of Motion addresses the Third Cause of Action for declaratory relief, the Memorandum and Reply do not. Therefore, there is no argument as to why the cause of action should fail. Additionally, it is “the rule that a plaintiff in a declaratory relief action is entitled to a declaration of his rights, even if it be adverse. [Citations.] Strictly speaking, therefore, a demurrer is not the appropriate weapon with which to attack the merits of a claim for declaratory relief.”  (Siciliano v. Fireman's Fund Ins. Co. (1976) 62 Cal. App. 3d 745, 755 [Emphasis added].)

Accordingly, Defendant’s Demurrer to the Third Cause of Action is OVERRULED.

IT IS SO ORDERED.

Dated:   June 26, 2024 ___________________________________