Judge Richard Y. Lee, Case 30-2021-01232738 2022-12-01 Tentative Ruling

Judge: Richard Y. Lee, Case: 30-2021-01232738, Date: 2022-12-01 Tentative Ruling

Defendants Gregory Ira Reed and Carolyn Marie Reed (“Defendants”) demur to the First Amended Complaint (“FAC”) of Plaintiff Ghassem Azadian and Ghassem Azadian, Trustee of the Ghassem Azadian Living Trust, created March 6, 2012 (“Plaintiff”) on the grounds the first cause of action for fraud and fourth cause of action for public nuisance fail to state sufficient facts and the fourth cause of action fails due to Plaintiff’s failure to join indispensable parties.

Request for Judicial Notice

Defendants request judicial notice of the following documents:

(A) City of Newport Beach City Council Resolution No. 2019-80;

(B) Chapter 15.80 and Chapter 20.64 of the Newport Beach Municipal Code; and

The Request for Judicial Notice is GRANTED as to Exhibits A and B. (Evid. Code, § 452(b), (c).) The Request for Judicial Notice is DENIED as to Exhibit C, as the material therein is not relevant to the determination of the issues raised here. (State Compensation Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 442-443.)

First Cause of Action for Fraud

Defendants argue this cause of action fails because the elements of justifiable reliance and causation are inadequately pled. They contend that Plaintiff cannot show that he was deprived of the ability to oppose Defendants’ requested variance or retract his approval of the same and Plaintiff’s claimed damages are speculative because the request for a variance was approved both by the Planning Commission and then by the City Council despite Plaintiff’s later opposition. They further contend that Plaintiff admits that he reviewed the architectural model for the proposed development and therefore Plaintiff cannot claim ignorance of the size and scope thereof at the time he was allegedly induced to execute the letter in support of the requested variance.

The “elements of a cause of action for fraud are: (1) a misrepresentation, which includes a concealment or nondisclosure; (2) knowledge of the falsity of the misrepresentation i.e., scienter; (3) intent to induce reliance on the misrepresentation; (4) justifiable reliance; and (5) resulting damages.” (Cadlo v. Ownes-Illinois, Inc. (2005) 125 Cal.App.4th 513. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Facts supporting each element must be pleaded with particularity sufficient to show how, when, where, to whom, and by what means the representations were tendered. (Ibid.)

Plaintiff resides at 1121 Kings Road, Newport Beach, California. (FAC, ¶ 1.) Defendants reside at 1113 Kings Road, Newport Beach, California. (FAC, ¶ 3.) There is a sewer easement on Plaintiff’s lot and directly behind it, and the sewer line services and starts at Defendants’ property. (FAC, ¶ 17.) The line services Defendants’ property, Plaintiff’s property, and two other properties located at 1201 and 1211 Kings Road. (FAC, ¶ 19.) The sewer line is old, corroded, and was designed at a time when homes being serviced had no more than 2-3 bathrooms. (FAC, ¶ 19.) The sewer line has repeatedly backed up into 1211, 1201, and 1121 Kings Road, causing extensive property damage and health risks. (FAC, ¶ 20.)

On May 19, 2019, Defendants went to Plaintiff’s home to discuss their proposed development. (FAC, ¶ 77.) They represented that the project would retain the original footprint of the existing home and would not impact Plaintiff’s views. (FAC, ¶ 77.) They also promised that they would attach their sewer connection directly to the main line under Kings Road rather than to the easement sewer line that ran across Plaintiff’s property. (FAC, ¶ 78.) Plaintiff relied on these representations and executed a letter of support prepared by Gregory Reed for submittal to the Planning Commission, which caused Defendants’ project to be approved. (FAC, ¶ 81.) The approval was appealed to the City Council and Plaintiff supported the appeal after learning that Defendants had misrepresented the footprint of the proposed development. (FAC, ¶ 82.) However, by that time, the City Council was merely reviewing the record supporting the Planning Commission’s decision for abuse of discretion and the damage had already been done. (FAC, ¶ 82.) Plaintiff also learned in November 2021 that Defendants intended to connect to the easement sewer line instead of connecting to the main line as promised. (FAC, ¶ 83.) Plaintiff alleges he has been harmed as a result, as the view from his home has been impacted and he faces the continued threat of the sewer line backing up and causing damage to his property. (FAC, ¶ 84.)

Defendants contend that because Plaintiff was able to oppose the project when it was appealed to the City Council, this cause of action fails. However, Plaintiff alleges that by the time the City Council was considering the project, it was too late for Plaintiff’s objection to have any effect because the City Council was only reviewing the decision for abuse of discretion. The Court must treat these material facts and all those which arise by reasonable implication as true for the purposes of this Demurrer. (Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 200.) Taken as true, these allegations are sufficient to establish causation.

Defendants also argue that Plaintiff’s alleged damages are too speculative and remote because Plaintiff’s support of or opposition to Defendant’s request was of no consequence to the City’s exercise of discretion. Defendants point to the City of Newport Beach City Council Resolution No. 2019-80 (attached to the RJN as Exhibit A), which states that the City Council public hearing was conducted “de novo” and the City Council considered all evidence and testimony anew. They argue that this shows Plaintiff’s allegations fail to demonstrate any causation between the alleged misrepresentations and any damages.

Generally, “courts ‘will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts that are judicially noticed.’ ” (Hoffmann v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400.) However, the Court has granted judicial notice only of the existence of the City Council’s Resolution, not the facts contained therein. The assertion that the City Council conducted a de novo review is not a fact or proposition that is not reasonably subject to dispute and is not judicially noticeable. The Court must accept Plaintiff’s allegation that the Planning Commission granted the request, at least in part, due to Plaintiff’s support and, by the time the request reached the City Council, no amount of opposition from Plaintiff could have changed the outcome. With these allegations accepted as true, the Court finds that Plaintiff’s claimed damages are not too speculative or remote.

Lastly, Defendants argue that Plaintiff had actual notice of the details of the project through the Ralph M. Brown Act and Plaintiff admits in the signed letter of support that he reviewed the architectural model for the proposed development, which shows that he cannot establish any justifiable reliance.

It is Plaintiff’s allegation that he was induced to sign the letter of support by Defendants’ misrepresentations. The fact that Plaintiff perhaps received notice of the actual footprint and other details of the proposed development at a later time, such as before the appeal to the City Council, does not negate a finding of justifiable reliance by Plaintiff. Nor is such a fact apparent on the face of the FAC or the judicially noticed documents. Further, Plaintiff alleges, and Defendants do not dispute, that Defendants drafted the letter suggesting that Plaintiff reviewed the architectural model. Nothing on the face of the FAC nor the judicially noticed documents demonstrate that Plaintiff did, in fact, review the architectural model. Thus, the Court finds this argument to be unavailing.

In light of the above, the Demurrer to the first cause of action for fraud is OVERRULED.

Fourth Cause of Action for Public Nuisance

Defendants argue this cause of action fails because the alleged nuisance does not threaten to impact a substantial number of people, Plaintiff consented to Defendants’ use of the sewer when he purchased his property with notice of the easement over his property, Plaintiff is engaging in exactly the same “nuisance” activity as Defendants, Defendants’ proposed remodel to increase the number of bathrooms from 6.5 to 9 is not alleged to materially change the nature of the existing use, and the claim is derivative of Plaintiff’s time-barred writ of mandate cause of action against the City.

Civil Code section 3480 states: “A public nuisance is one which affects at the same time an entire community or neighborhood, or any considerable number of persons, although the extent of the annoyance or damage inflicted upon individuals may be unequal.” The elements of a public nuisance cause of action are: (1) an interference with the comfortable enjoyment of life or property; (2) a substantial number of people affected; (3) an ordinary person would be unreasonably annoyed or disturbed by the interference; (4) the seriousness of the harm outweighs its social utility; (5) plaintiff did not consent to the interference; (6) plaintiff suffered harm as a result; and (7) the interference was a substantial factor in causing plaintiff’s harm. (Department of Fish & Game v. Superior Court (2011) 197 Cal.App.4th 1323, 1352.)

The FAC alleges that allowing Defendants to attach to the easement sewer line creates a nuisance to all persons who are attached to the line downstream because the line has already overflowed and damaged downstream homes. (FAC, ¶¶ 110-112.) Plaintiff alleges that his property is the first home downstream from Defendants and will likely be the first one to suffer from a sewage backup. (FAC, ¶ 117.) He further alleges that he did not consent to this conduct, the seriousness of the harm outweighs the social utility as Defendants could easily attach to the main sewer line under Kings Road, and an ordinary person would be reasonably annoyed or disturbed by this condition. (FAC, ¶¶ 112, 115-116.)

Defendants cite no authority demonstrating that alleged nuisance to the three downstream homes on the easement sewer cannot is insufficient as a matter of law. Moreover, the allegations of the FAC do not preclude the possibility that additional properties not referenced or listed in the FAC are serviced by the easement sewer line. Thus, on the face of the FAC, the Court cannot conclude that Plaintiff has failed to allege the second element.

As to consent, Plaintiff has adequately alleged that it is Defendants’ increase in the number of bathrooms from 6.5 to 9 that will cause additional issues with the easement sewer line. The Court finds that Plaintiff could not have consented to this development at the time he purchased his home, and Defendants cite to no authority to the contrary. Moreover, Plaintiff’s allegations show that Plaintiff is downstream from Defendants and the easement sewer line starts at Defendants’ home. Thus, Defendants’ argument that Plaintiff is engaging in the same nuisance activity by attaching to the line lacks merit. It is Defendants’ proposed development and increase in number of bathrooms, and the fact that the sewer line starts at Defendants’ property, that causes the nuisance downstream, rather than Defendants’ mere attachment to the line.

The Court also rejects Defendants’ argument that Plaintiff’s cause of action is a veiled attempt to get around the fact that a writ of mandate cause of action against the City is now time-barred. Any writ of mandate cause of action against the City for its decision to grant Defendants a variance is independent of and has no relation to Plaintiff’s claim of nuisance against Defendants. Again, Defendants cite no authority supporting a finding that a public nuisance claim must be barred when the plaintiff asserting the cause of action failed to appeal or seek a writ of mandate with respect to the underlying approval for construction or development.

In light of the above, the Court OVERRULES the Demurrer to the fourth cause of action to the extent it is based on the failure to state facts sufficient to constitute a cause of action.

Joinder of Indispensable Parties

Lastly, as to joinder of the other two downstream property owners, Defendants argue that Plaintiff is asking the Court to issue an order that would require them to redirect their sewer systems to tie directly into a different sewer line and, therefore, they are indispensable parties to this action.

Code of Civil Procedure section 389 defines an indispensable party as one that “(1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.”

Here, Plaintiff seeks to have the easement sewer line abandoned and all affected homes having their sewer systems redirected to tie directly into the main sewer line under Kings Road. (FAC, ¶ 125.) The allegations of the FAC make clear that 1201 and 1211 Kings Road are included in the downstream homes and, if Plaintiff’s requested relief is granted, those properties would lose their easement rights and have to redirect their sewer lines to the main line. This relief would unquestionably impact the interests of the owners of 1201 and 1211 Kings Road. Disposition of this action without the participation of those owners may impair or impede their ability to protect their easement interests.

Thus, the Court SUSTAINS the Demurrer to the fourth cause of action for nonjoinder with 20 days’ leave to amend.

Plaintiff to give notice.