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

MOTION FOR SUMMARY JUDGMENT OR ALTERNATIVE MOTION FOR SUMMARY ADJUDCIATION 

 

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) breach of contract and (2) declaratory relief. 

Defendant Housing Authority now moves for summary judgment. Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Motion for Summary Judgment or Alternative Motion for Summary Adjudication is DENIED.

Plaintiff is ordered to give notice, unless waived.

DISCUSSION:

Defendant’s Motion for Summary Judgment

I. Evidentiary Objections

There are no objections to evidence.

II. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

As to each claim as framed by the Complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520. Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389. A defendant has met its burden of showing that a cause of action has no merit if it demonstrates the absence of any single essential element of plaintiff’s case or a complete defense to plaintiff’s action.  Code Civ. Proc. § 437c(o)(2); Bacon v. Southern Cal. Edison Co. (1997) 53 Cal.App.4th 854, 858.  Once the defendant moving party has met the burden, the burden shifts to the plaintiff to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto.  § 437c(o)(2). 

III. Analysis

A. Allegations in the SAC

Defendant moves for summary judgment of the Second Amended Complaint. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

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.)

Plaintiff alleges it reached out to Defendant by phone call, email, and letter to determine why rent was not being paid. (Id. ¶¶ 24-26.) Defendant was “completely unresponsive.” (Id. ¶ 27.) Evidencing its bad faith, Defendant did, however, regularly communicate with the Tenant Herbert Bonwell. (Id. ¶ 29.) “Defendant has never to this date provided any notice of the basis of their abatement of rent” and “has never paid any of the abated rent improperly deducted from Plaintiffs account.” (Id. ¶ 28.) 

Plaintiff also alleges it is the “policy and procedure implemented by Defendant” to inappropriately suppress rent paid to Owners. (Id. ¶ 57.) “This Suppression is achieved by delay and non responsiveness to Owners request for annual rent increases.” (Id.)

 

B. Breach Based on 2022 Abatement of Rent and Lack of Notice

The burden begins with Defendant to negate an essential element of Plaintiff’s claim for breach of contract. To prevail on a breach of contract claim, Plaintiff must 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.” (D'Arrigo Bros. of California v. United Farmworkers of Am. (2014) 224 Cal. App. 4th 790, 800.)

Defendant argues Plaintiff cannot prevail on its breach of contract claim because Defendant was expressly permitted to abate rent based on Plaintiff’s failure to provide a working stove. 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.) 

Under the HAP Contract, the PHA “may inspect the contract unit and premises at such times as the PHA determines necessary, to ensure that the unit is in accordance with the [housing quality standards].” (HAP Contract, Part B, ¶ 3(e).) Additionally, “the PHA must notify the owner of any [housing quality standards] defects shown by the inspection.” (Id. ¶ 3(f).) The HAP contract permits Defendant to abate rent in the event Plaintiff failed to provide a refrigerator or stove. 

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).) And 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).)

Here, it cannot be disputed that the HAP contract expressly required Plaintiff to provide a “Range/Microwave.” (See HAP Contract, Part A, §8.) It is undisputed that Plaintiff did not provide a working stove or “range” from June 1 through August 8, 2022. (SSUMF 12.) Plaintiff admits that it received notice on June 7, 2022, of the failed inspection. (SSUMF 15.) On August 9, 2022, HACLA reinspected the unit and certified a working stove. (SSUMF 17, 18.) Thereafter, HACLA reinstated HAP payments. (Id. 18.) 

On these facts, there is no triable issue of material fact as to the 2022 abatement. Defendant did not breach the HAP contract in 2022 when it abated rent based on the lack of a working stove and provided notice of same.

C. Breach Based on 2023 Abatement of Rent and Lack of Notice

In opposition, Plaintiff asserts that the rent abatement due to lack of stove in 2022 is a “moot point” and “simply background information in Plaintiff’s complaint.” (Opp. 4: 4-5.) Plaintiff goes on to contend that “[t]he thrust of Plaintiff’s complaint is the 2023 rent abatement in the face of numerous multiple communications from Plaintiff all of which were ignored.” (Opp. 4: 5-6.) 

Preliminarily, this argument is somewhat inconsistent with the SAC itself. (See Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382 [“The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues.”].) Under the heading for the First 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. ¶ 61.) There is no mention of the alleged 2023 abatement under the First Cause of Action.  [FN 1] 

Be that as it may, earlier in the SAC, Plaintiff does raise Defendant’s alleged failure to pay “the October 2023 rent without providing any notice of the basis for the ‘abatement’ of rent.” (SAC ¶ 22, emphasis added.) Therefore, the court considers the alleged lack of notice during the October 2023 abatement to be a pleaded basis for the breach of contract cause of action. 

Turning to the 2023 abatement, Defendant presents evidence that Defendant conducted an inspection of the unit in August 2023 and found that the unit lacked a working smoke detector. (SSUMF 20.) As of September 1, 20223, it is undisputed that there was still no working smoke detector. (SSUMF 22.) Accordingly, HACLA suspended HAP payments effective September 1, 2023. (SSUMF 23.) HACLA reinstated payments effective October 1, 2023, after the smoke detector was replaced. (SSUMF 24.)

In opposition, in a declaration from Ethan Change, property manager at the Premises, Chang attests that Plaintiff “has not received any notice from Defendant as to why the October 2023 rent was abated nor has the Hardell Group received the October 2023 rent payment.” (Chang Decl. ¶ 9.) Chang details his attempts in October, January, and February to communicate with HACLA to no avail. (Id. ¶¶ 3-5.) 

Defendant does not address whether any notice was given prior to the 2023 abatement. As the moving party, it is Defendant’s burden to satisfy the initial burden of proof by presenting facts to negate an essential element. Defendant’s separate statement addresses the “failure to communicate” issue—e.g. the lack of notice—only for the 2022 abatement of rent. (See SSUMF 26-29.) However, it does not address whether and when any notice was given for the October 2023 abatement. (See SAC ¶ 22 [“alleging “Defendant HACLA failed to pay ("abated") the October 2023 rent without providing any notice of the basis for the ‘abatement’ of rent.”].) As already noted, the HAP contract requires that “the PHA must notify the owner of any HQS defects shown by the inspection.” (HAP Contract, Part B, ¶ 3(f).)Therefore, the moving party has not presented any evidence that it provided Plaintiff required notice of the failed smoke detector inspection in 2023 before abating rent.  As such, moving party has failed to meet its initial burden to demonstrate that there is no material triable issue of fact as to this cause of action.   

Hence, the burden never switches to the Plaintiff to demonstrate same.  In any case, even if the burden of proof had, in fact, shifted, Plaintiff has demonstrated that there remains a triable material issue as to whether Defendant breached the HAP contract by failing to provide notice of the failed inspection in 2023.  

Moreover, although Plaintiff appears not to have a viable claim as to any 2022 abatement, since there is a triable issue of fact as to the 2023 abatement, the entire First Cause of Action is not eliminated for summary adjudication purposes.  (Compare, CCP§ 437c(t).)

Accordingly, Defendant’s Motion for Summary Judgment is DENIED.

IT IS SO ORDERED.

Dated:   December 3, 2024 ___________________________________