Judge Robert S. Draper, Case 20STCV20587 2022-09-01 Tentative Ruling

Defendant Edwin Kendrick’s Motion for Sanctions and Dismissal of the Complaint is Denied.

Plaintiff 2120 Foothill Properties, LLC’s Request for Sanctions is DENIED.

This is an action for breach of a commercial lease. The Complaint alleges as follows. On August 29, 2014, Plaintiff 2120 Foothill Properties, LLC (“Foothill”) and Defendant Edwin Kendrick (“Kendrick”) entered into an agreement for Kendrick to lease office space (the “Premises”) until October 31, 2018. (Compl. ¶ 7.) The lease was extended twice, with a new expiration date of October 31, 2022. (Compl. ¶¶ 8-9.) On May 1, 2020, Kendrick informed Foothill that he was terminating the lease as of that day. (Compl. ¶ 10.) Kendrick and Defendant California Vein Vascular and Diagnostics, Inc. (“CVVD”) have continued to occupy the Premises after termination without a stated date to vacate or written lease. (Compl. ¶¶ 11-13.)

The operative Second Amended Cross-Complaint (“SAXC”) alleges as follows. On August 29, 2014, Cross-Complainant Kendrick and Cross-Defendant Foothill entered into a written commercial lease agreement for the premises. (FAXC ¶ 13.) The lease required that Foothill maintained the HVAC system in good working order. (SAXC ¶ 14.) Kendrick repeatedly informed Foothill that the HVAC was not in working order, but Foothill failed to remedy the defect. (SAXC ¶¶ 18-22.) In December 2019, the parties entered into a Second Amendment to the lease (the “Second Amendment”). (SAXC ¶ 22.) Kendrick altered the Second Amendment to require Foothill to provide additional HVAC to the lobby. (SAXC ¶ 22.)

On April 30, 2020, Cross-Defendant Russell Berney (“Berney”), a manager for Foothill, informed Kendrick that the HVAC worked as intended and that he would not abide by the Second Amendment. (SAXC ¶ 24.) On October 19, 2020, an HVAC expert informed Kendrick that the HVAC system in his unit was blown apart and blowing air into the attic, and that the installation for the ductwork was not performed correctly from the onset. (SAXC ¶ 25.)

On June 1, 2020, Plaintiff filed the Complaint asserting three causes of action:

On October 2, 2020, Kendrick filed a Substitution of Attorney replacing himself with Attorney Allan E. Perry.

On November 18, 2021, Kendrick filed a Substitution of Attorney replacing Perry with himself. Perry remained Counsel for Defendant CVVD.

On January 28, 2022, Kendrick filed the First Amended Cross-Complaint, pro per, asserting six causes of action:[1]

On March 28, 2022, Foothill filed a Demurrer to the First-Amended Cross-Complaint.

On June 16, 2022, Kendrick filed the operative Second Amended Cross-Complaint asserting four causes of action:

On June 29, 2022, Foothill filed an Opposition to Kendrick’s Motion for Sanctions.

Defendant Edwin Kendrick moves for Sanctions pursuant to Code of Civil Procedure section 128.7 against Plaintiff Foothill[2] and for Dismissal of the Complaint.

CCP section 128.7(b) provides that by signing and filing a pleading, an attorney “is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met: (1) [i]t is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation[;] (2) [t]he claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[;] (3) [t]he allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery[;] (4) [t]he denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.” (Code Civ. Proc., § 128.7(b).) CCP section 128.7 authorizes the court to impose appropriate sanctions upon attorneys or parties that have violated subsection (b). (Id., § 128.7(c).)

A claim can be factually frivolous or legally frivolous. (See Peake v. Underwood (2014) 227 Cal.App.4th 428, 440.) “A claim is factually frivolous if it is ‘not well grounded in fact’ and it is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’” (Id.) “In either case, to obtain sanctions, the moving party must show the party’s conduct in asserting the claim was objectively unreasonable.” (Id.) “A claim is objectively unreasonable if ‘any reasonable attorney would agree that [it] is totally and completely without merit.’” (Id.)

Furthermore, “the fact that a plaintiff fails to provide a sufficient showing to overcome a demurrer or to survive summary judgment is not, in itself, enough to warrant the imposition of sanctions.” (Peake, supra, 227 Cal.App.4th at 448.)

CCP section 128.7 provides a 21-day safe harbor provision whereby the offending party can avoid sanctions by withdrawing the improper pleading. (See Galleria Plus, Inc. v. Hanmi Bank (2009) 179 Cal.App.4th 535, 538.)

First, Kendrick argues that the Complaint alleges Kendrick unilaterally repudiated the Lease on May 1, 2020, when Foothill actually unilaterally repudiated the Lease on April 30, 2020. (Kendrick Decl. ¶ 6.)

In Opposition, Cross-Defendants attach an email from Kendrick dated May 1, 2020, in which Kendrick states that Foothill repeatedly breached the Lease without cure, and therefore Kendrick would “be terminating this Agreement, as Edwin N. Kendrick, III.” (Fidler Decl., Ex. A.)

Accordingly, there was a factual basis for Foothill to believe that Kendrick unilaterally repudiated the lease on May 1, 2020.

Next, Kendrick argues that Foothill did not resolve its own repudiation of the lease by providing a functioning HVAC system prior to filing the Complaint.

However, Foothill claims that Foothill was in the process of making improvements to the HVAC system when Kendrick unilaterally repudiated. (Fidler Decl., Ex. A.)

Accordingly, there was a factual basis for Foothill to believe that the operation of the HVAC system was not a basis for unilateral repudiation of the Lease.

Next, Kendrick argues that Foothill filed the Complaint arguing that Kendrick unilaterally repudiated the Lease when, in fact, Foothill had full knowledge that Air-Tro Incorporated confirmed to Foothill that the HVAC was not in working condition. Kendrick argues that Foothill has not provided the Air-Tro report to continue the deception.

Accordingly, there is factual dispute as to the contents of the report, and as noted above, there is factual dispute as to whether operation of the HVAC system constituted a unilateral breach.

Next, Kendrick argues that Cross-Defendants informed the Court that Kendrick failed to provide proof of insurance repeatedly as required by the Lease, but no such requests exist.

In Opposition, Foothill attaches correspondence by which it reminded Kendrick of the Lease’s insurance requirement and asked him for proof of such insurance coverage. (Berney Decl. ¶¶ 11-14; Ex. A.)

Accordingly, there is a factual dispute as to whether Kendrick obtained insurance as required by the lease.

Next, Kendrick argues that Foothill knew that it was not awaiting a final coverage decision from Nationwide Insurance as to whether Nationwide would represent Foothill when Foothill requested a trial continuance on that basis.

However, as this argument is relevant only to a Motion for Continuance which has been decided and is unable to be withdrawn, section 128.7 does not apply.

Finally, Kendrick argues that Foothill never had a basis to substantiate their claim for $75,000 in damages in the Complaint. Kendrick notes that in September 2021, Foothill informed the Court that Kendrick was substantially current on paying the rent.

However, the Complaint was filed in June, 2020 and was based on Kendrick’s explicit statement that he unilaterally repudiated the lease but planned to remain in possession of the property for six months. (Berney Decl. Ex. A.)

Accordingly, there was a factual basis at the time of the filing of the Complaint for Foothill to believe that damages could exceed $75,000. That Kendrick has mitigated these damages during the pendency of this action does not change that.

Accordingly, as Plaintiffs had a factual basis for filing their Complaint, the Court finds that the Complaint was not frivolous, and that sanctions are not warranted.

The Court notes that Plaintiffs also request sanctions as to Kendrick in response to the filing of the instant motion.

While the Court does note that the motion was highly unlikely to succeed, the deterrent effect of sanctions is minimal here as Kendrick filed the instant motion in propria persona but has since obtained the services of an attorney.

[1] There is no Third Cause of Action in the First Amended Cross-Complaint.

[2] It is not clear to the Court exactly which filings Kendrick argues warrant sanctions. The Motion appears to be directed at the Complaint; however, Kendrick makes reference to Informal Discovery Conferences without specifying which Informal Discovery Conferences are in question or why they were frivolous, and to Plaintiff’s October 26, 2021, Motion to Continue Trial. However, as Foothill notes in its Opposition, only the Complaint is subject to sanctions under section 128.7 as 128.7 does not apply to discovery disputes and does not apply to motions that have been completed such that the responding party cannot withdraw. Accordingly, the Court will consider sanctions as to the Complaint only.

¿ 2120 FOOTHILL PROPERTIES, LLC,¿ Plaintiff;¿ vs.¿ EDWIN KENDRICK, et al.,¿¿ Defendants.¿	Case No.:¿	20STCV20587¿
	Hearing Date:¿	September 1, 2022¿
		¿
	[TENTATIVE] RULING RE:¿¿¿ Defendant edwin Kendrick’s motion for sanctions and dismissal of the complaint.¿
EDWIN KENDRICK, MD,¿ Cross-Complainant;¿ vs.¿ 2120 FOOTHILL PROPERTIES, LLC, et al.,¿¿ Cross-Defendants.