Judge: Ronald F. Frank, Case: 22TRCV00174, Date: 2024-09-10 Tentative Ruling
Case Number: 22TRCV00174 Hearing Date: September 10, 2024 Dept: 8
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HEARING DATE: September 10, 2024
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CASE NUMBER: 22TRCV00174
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CASE NAME: Baltimore Apartments, LLC, et al. v. Republic Services,
Inc., et al.
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MOVING PARTY: Defendant Consolidated Disposal Services,
LLC
RESPONDING PARTY: Plaintiffs, Baltimore Apartments, LLC,
Maricopa Investments, LP, Newton Towers Investment, LP, The Palisades
Apartments, The Palm Apartments, Villa Del Sol Investment LO, Canyon Crest
Apartments, Woodglen Apts. LTD, Villa Van Nuys Investments, LLC, and Marina Terrace
Investments, LP
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TRIAL DATE: November
12, 2024
MOTION:¿ (1) Motion for Judgment on the Pleadings as to Penal Code Section
496 Claim
Tentative Rulings: (1) DENIED. The Complaint sufficiently alleges criminal
intent
I. BACKGROUND¿¿
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A. Factual¿¿
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On March 8, 2022, Plaintiffs,
Baltimore Apartments, LLC, Maricopa Investments, LP, Newton Towers Investment,
LP, The Palisades Apartments, The Palm Apartments, Villa Del Sol Investment LO,
Canyon Crest Apartments, Woodglen Apts. LTD, Villa Van Nuys Investments, LLC,
and Marina Terrace Investments, LP (collectively, “Plaintiffs”) filed a
complaint against Defendant, Republic Services, Inc., and DOES 1 through 100.
The complaint alleges causes of action for: (1) Breach of Contract; (2) Breach
of Covenant of Good Faith and Fair Dealing; (3) Account Stated; (4) Open Book
Account; (5) Violation of Business & Professions Code § 17200; (6)
Conversion; and (7) Penal Code section 496.
Now, Defendant Consolidated Disposal
Services, LLC (“CDS”), has filed a Motion for Judgment on the Pleadings on the
grounds that Plaintiffs’ seventh cause of action (erroneously referred to as
sixth cause of action cause of action) for violation of Penal Code section 496
fails to state facts sufficient to establish a violation of that statute.
B. Procedural¿¿
On July 26, 2024, Defendant CDS filed a Motion for
Judgment on the Pleadings. On June 26, 2024, Plaintiffs filed an opposition
brief. On September 3, 2024, Defendant CDS filed a reply brief.
II. ANALYSIS
A.
Legal Standard
The standard for ruling on a
motion for judgment on the pleadings is essentially the same as that applicable
to a general demurrer, that is, under the state of the pleadings, together with
matters that may be judicially noticed, it appears that a party is entitled to
judgment as a matter of law. (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322, citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.) Matters which are subject
to mandatory judicial notice may be treated as part of the complaint and may be
considered without notice to the parties. Matters which are subject to
permissive judicial notice must be specified in the notice of motion, the
supporting points and authorities, or as the court otherwise permits. (Id.)
The motion may not be supported by extrinsic evidence. (Barker v. Hull
(1987) 191 Cal.App.3d 221, 236.)
When the moving party is a defendant, he must demonstrate either
of the following exist:
(i)
The court has no jurisdiction of the subject of the cause of
action alleged in the complaint.
(ii)
The complaint does not state facts sufficient to constitute a
cause of action against that defendant. (Code Civ. Proc., § 438, subd.
(c)(a)(B)(i)-(ii).)
Additionally, a motion for judgment on the pleadings must be
accompanied by a meet and confer declaration demonstrating an attempt to meet
and confer in person or by telephone, at least five days before the date a
motion for judgment on the pleadings is filed. (Code Civ. Proc., § 439.)
B.
Discussion
Violation of Penal Code Section 496
CDS argues that it is entitled to
judgment on the pleadings on Plaintiffs’ claims under Penal Code section 496
because the complaint lacks any facts establishing that Defendants acted with
criminal intent, which the California Supreme Court has held is a necessary
element of establishing that Plaintiffs were injured by having their property
“stolen” or obtained by “theft” under Penal Code section 496.
Penal Code section 496 provides, in pertinent part:
“(a) Every person who buys or
receives any property that has been stolen or that has been obtained in any
manner constituting theft or extortion, knowing the property to be so stolen or
obtained, or who conceals, sells, withholds, or aids in concealing, selling, or
withholding any property from the owner, knowing the property to be so stolen
or obtained, shall be punished by imprisonment in a county jail for not more
than one year, or imprisonment pursuant to subdivision (h) of Section 1170.
However, if the value of the property does not exceed nine hundred fifty
dollars ($950), the offense shall be a misdemeanor, punishable only by
imprisonment in a county jail not exceeding one year, if such person has no
prior convictions for an offense specified in clause (iv) of subparagraph (C)
of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring
registration pursuant to subdivision (c) of Section 290.
…
(c) Any person who has been
injured by a violation of subdivision (a) or (b) may bring an action for three
times the amount of actual damages, if any, sustained by the plaintiff, costs
of suit, and reasonable attorney's fees.”
(Emphasis added.)
(Capitalization added.)
“Theft” is defined as follows: “Every person who
shall feloniously steal, take, carry, lead, or drive away the personal property
of another, or who shall fraudulently appropriate property which has been
entrusted or him or her, or who shall knowingly and designedly, by any false or
fraudulent representation or pretense, defraud any other person of money,
labor, or real or personal property,… is guilty of theft.” (Pen. Code, § 484,
subd. (a).) Moreover, a criminal conviction under Penal Code section 496,
subdivision (a), is not a prerequisite to recovery of treble damages under
subdivision (c). (Bell v. Feibush (2013) 212 Cal.App.4th 1041,
1043.)
Here, the parties dispute what is ultimately required to be alleged in a
claim for Violation of Penal Code section 496. Plaintiffs argue that criminal intent
is not an element of a civil cause of action under section 496, subdivision
(c). This Court notes that the parties’ dispute ultimately concerns the interpretation of the recent
opinion of the California Supreme Court in Siry
Investment, L.P. v. Farkhondehpour
(2022) 13 Cal.5th 333. CDS seizes on language in Siry stating, “[t]o
prove theft, a plaintiff must establish criminal intent on the part of the
defendant beyond ‘mere proof of nonperformance or actual falsity.’” (Id.
at 361-362 [quoting People v. Ashley (1954) 42 Cal.2d 246, 264].)
In
Siry, the parties formed a partnership to renovate and lease space in a
mixed-use building. Defendants then created a separate entity and
required the tenants to pay rent to that entity, improperly diverting rental
income away from the partnership. The first jury trial resulted in an
ambiguous verdict because it was unclear whether defendant was liable as a
trustee or individually. After the Court of Appeal remanded the case for
retrial, defendants failed to respond to discovery and the trial court issued
terminating sanctions. This resulted in a default judgment of over $12
million against the defendants. (Id. at pp. 340-341.) The
trial court awarded treble damages, but the Court of Appeal ordered this to be
stricken for the policy reasons that Defendants cite above. The Court of
Appeal held that the statutory language “ ‘sweeps more broadly than its intent’
” and that treble damages were unavailable for “ ‘torts not involving stolen
property.’ ” (Id. at p. 360.) In so holding, the court noted
that the current case “presents a situation in which perceived ‘legislative
intent’ (to maintain traditional remedies for torts involving fraud,
misrepresentation, or breach of fiduciary duty) ‘trump[s] [the] statute’s plain
language.’ ” (Id. at pp. 360-361.)
The
California Supreme Court disagreed with the reasoning of the Court of Appeal
and reversed as to the treble damages issue. In analyzing three different
appellate cases, the high court agreed that the statutory language of Penal
Code section 496(c)
is “unambiguous, and that read together with sections 496(a)
and 484 . . . must be understood as yielding the understanding attributed to it
in those decisions: A plaintiff may recover treble damages and attorney’s fees
under section 496(c)
when property has been obtained in any manner constituting theft.”
(Siry, supra, 13 Cal.5th at p. 361.) Such a manner includes
“fraudulent diversion of partnership funds.” (Id. at pp. 364-367.)
The
high court was mindful that a plaintiff must still “establish criminal intent
on the part of the defendant beyond ‘mere proof of nonperformance or actual
falsity.’ [Citation.]” (Id. at pp. 361-362.) However,
it recognized that these “policy issues have not been hidden from the
Legislature’s attention” and that it is the task of the Legislature, not the
courts, to address those concerns. (Id. at p. 367.) Siry also involved matters that were
post-judgment, not at the pleading stage.
The California Supreme Court in Siry
clearly
contemplated that claims where the requisite intent might be lacking should be
weeded out by the taking of evidence, not by way of pleadings challenges. (Id.
at 361-362.) Given that Plaintiff here makes
the allegation of criminal intent in the theft cause of action, a motion for judgment
on the pleadings must take the allegations as true so there is a valid cause of
action for the Penal Code section 496 claim here.
This Court notes that Siry did not
arise from a fact pattern during the pleading stage. Pointedly, the Court
refers the parties to the unpublished Second District Court of Appeal case of Wang
v. EOS Petro, Inc., 2023 WL 178372 (“Wang”). In Wang, as in Siry,
the appellate court decided the issue of whether the trial Court had properly
ruled on an amended default judgment, not a MJOP or Demurrer. The Court in Wang
held that because the plaintiffs did not allege that the defendants intended to
steal, but rather borrow money from plaintiffs, they failed to allege
sufficient facts to state a cause of action for violation of Penal Code section
496 as the absence to state essential factual allegations was fatal to the
judgment against defendant.
As noted above, “Theft” is
defined as follows: “Every person who shall feloniously steal, take, carry,
lead, or drive away the personal property of another, or who shall fraudulently
appropriate property which has been entrusted or him or her, or who shall
knowingly and designedly, by any false or fraudulent representation or
pretense, defraud any other person of money, labor, or real or personal
property,… is guilty of theft.” (Pen. Code, § 484, subd. (a).) Drawing
all reasonable inferences in Plaintiffs’ favor, the Court finds that in the
context of Plaintiffs’ allegations as a whole, the complaint sufficiently alleges
theft and criminal intent. Plaintiffs allege that Defendants took possession of
Plaintiffs' rightful interest in the wrongfully overcharged rate and fees and
withheld funds from Plaintiffs, converted it to Defendants’ own use, and
continue to withhold said funds from Plaintiffs to this day despite Plaintiffs'
requests to Defendants to return said funds to Plaintiffs. (Complaint, ¶ 61.) Moreover,
they allege that Defendants misappropriated Plaintiffs' personal property in a
manner constituting theft, knowing the property to be wrongfully obtained,
and/or concealed, withheld, or aided in concealing, or withholding said
property from Plaintiffs in violation of California Penal Code section 496(a).
(Complaint, ¶ 62.) Based on these facts, along with those incorporated by
reference into the sixth/seventh cause of action, the Court finds that such
allegations are sufficient to maintain Plaintiffs’ cause of action. The motion
is thus DENIED.
IV.
CONCLUSION¿¿
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For the foregoing reasons, CDS’
Motion for Judgment on the Pleadings is DENIED.
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