Judge: Serena R. Murillo, Case: 21STCV37073, Date: 2023-09-08 Tentative Ruling
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Case Number: 21STCV37073 Hearing Date: September 8, 2023 Dept: 31
TENTATIVE
Defendant’s demurrer is SUSTAINED with 20
days leave to amend. Defendant’s motion to strike is DENIED as MOOT.
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.) The court “treat[s] the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law
….” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525).) In a demurrer
proceeding, the defects must be apparent on the face of the pleading or via
proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994).)
A demurrer tests the pleadings alone and not the evidence or other extrinsic
matters; therefore, it lies only where the defects appear on the face of the
pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) 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,
supra, 147 Cal.App.4th at 747.)
Any
party, within the time allowed to respond to a pleading may serve and file a
notice of motion to strike the whole or any part thereof. (Code of Civ. Proc.,
§ 435(b)(1); Cal. Rules of Court (CRC), Rule 3.1322(b).) The court may, upon a
motion or at any time in its discretion and upon terms it deems proper: (1)
strike out any irrelevant, false, or improper matter inserted in any pleading;
or (2) strike out all or any part of any pleading not drawn or filed in
conformity with the laws of California, a court rule, or an order of the court.
(Code of Civ. Proc., § 436, subds. (a)-(b); Stafford v. Shultz (1954) 42
Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is
surplusage; probative facts are surplusage and may be stricken out or
disregarded”].)¿¿¿¿
Request for Judicial Notice
Defendant requests judicial notice
of the following items: (1) Third Amended Complaint filed by plaintiff in
Los Angeles County Superior Court, Case No. 20STCV48603; and (2) Settlement
Agreement and Mutual Release between Mah, Inc. and Capref Burbank,
LLC, dated March 1, 2023. These requests are unopposed.
The court may take judicial notice
of records of any court of this state. (Evid.
Code § 452(d).)
The Court cannot take judicial notice of the truth of matters
contained in judicially noticeable documents if those matters are reasonably
subject to dispute. (Intengan
v. BAC Home Loans Servicing LP (2013) 214 Cal. App. 4th 1047,
1057.) Although the existence of a document may be judicially noticeable, the
truth of statements contained in the document and its proper interpretation are
not subject to judicial notice if those matters are reasonably disputable. (StorMedia
Inc. v. Superior Court (1999) 20 Cal. 4th 449, 457, fn. 9.) Taking judicial
notice of a document is not, therefore, the same as the court accepting the
truth of the document’s contents or accepting a particular interpretation of
its meaning. (See Middlebrook-Anderson Co. v. Southwest Sav. & Loan
Assn. (1971) 18 Cal. App. 3d 1023, 1038; see also Bach v.
McNelis (1989) 207 Cal.App.3d 852, 865[“there exists a mistaken
notion that this means taking judicial notice of the existence of facts
asserted in every document of a court file, including pleadings and
affidavits.”].)
Evidence Code Section
452(h) provides that judicial notice may be taken for facts and propositions
that are “not reasonably subject to dispute and are capable of immediate and
accurate determination by resort to sources of reasonably indisputable
accuracy.” (Cal. Evid. Code § 452(h).)
The existence and
contents of a written agreement can be judicially noticed if there is no
factual dispute regarding the authenticity and accuracy of the document. (See Performance
Plastering v. Richmond American Homes of California, Inc. (2007) 153
Cal.App.4th 659, 666, fn. 2 [taking judicial notice of settlement agreements on
demurrer “as there is and can be no factual dispute concerning the contents of
the agreements”].)
Defendant’s request for
judicial notice as to item 1 is GRANTED pursuant to Evidence Code section 452(d)
as to item 1, however the Court does not take judicial notice of the truth of
the matters asserted.
The request for judicial notice
as to item 2 is GRANTED pursuant to Evidence Code section 452(h).
Plaintiff requests judicial notice of this
Court’s February 23, 2023 ruling on Defendant’s demurrer to the FAC.
Plaintiff’s request for
judicial notice is GRANTED pursuant to Evidence Code section 452(d).
Meet and Confer
The demurrer and motion to strike are
accompanied by the declaration of Robert Bailey which satisfies the
meet and confer requirements. (Code Civ. Proc. §§ 430.41; 435.5.)
Discussion
I.
Lack
of Standing to Pursue Contract Claims (First and Fifth Causes of Action)
Defendant first argues that Plaintiff has not established
standing to pursue the claims asserted, as Plaintiff is not a party to the
contract and is not an assignee of the contract.
Only a
real party in interest has standing to sue. (Cloud v. Northrop Grumman Corp.
(1998) 67 Cal.App.4th 995, 1004.) A real party in interest is one “having
an actual and substantial interest in the subject matter of the action and who
would be benefitted or injured by the judgment in the action.” (County of
Alameda v. State Bd. of Control (1993) 14 Cal.App.4th 1096, 1103.) “Someone
who is not a party to the contract has no standing to enforce the contract or
to recover extra-contract damages for wrongful withholding of benefits to the
contracting party.” (Hatchwell v. Blue Shield of California (1988) 198
Cal.App.3d 1027, 1034.)
Plaintiff’s claim to standing
stems from an Assignment and Assumption of Lease Agreement (the “Assignment”;
Exh. C). However, in that document PMFB purports to assign its interest in the
Lease to “Paseo, Inc.” Defendant contends that Plaintiff must overcome certain
hurdles if it intends to rely on the Assignment agreement to create standing.
First, Defendant argues the SAC
says PKG Franchisor and PMFB exercised their rights under the
Collateral Assignment of the Lease shortly after the Lease was executed. (SAC ¶
12.) Plaintiff
says that as a result of this exercise, the Lease was assigned to PKG
Franchisor without the
need for the Landlord’s consent. (Id.) Defendant argues this creates a
tremendous hurdle for Plaintiff’s reliance on the Assignment that is Exhibit
C to the SAC. That document entered on December 5, 2019, more than a year after the
Lease’s execution clearly came after the exercise of rights under the
Collateral Assignment of Lease. If, as Plaintiff alleges, PKG
Franchisor/MrFranchise exercised its rights under the Collateral Assignment and
took over the location, then PMFB did not have any rights to assign as of
December 5, 2019. Thus, the Assignment by it to Paseo, Inc. in December 2019
was a nullity
and failed to convey anything.
The Court agrees. The SAC alleges that: “In purchasing the
franchise back, PKG Franchisor and PMFB exercised their rights under the
Collateral Assignment of the Lease. Per the Consent Agreement Between Landlord
and Franchisor Regarding Collateral Assignment of the Lease, reciting in
pertinent part Section XVII of the Lease no consent of any assignment from
franchisee to franchisor was required but, and as stated on page 2 of 5
Consent and Agreement Between Landlord and Franchisor Regarding Collateral
Assignment of the Lease:
In the
event the Lease is assigned to Franchisor without Landlord's consent as set
forth above, Franchisor shall use commercially reasonable efforts to
identify another lessee with net worth, creditworthiness, and operational
experience equal to or greater than Tenant as of the date of execution of the
Lease to whom to further assign the Lease and operate the Premises as
required by the Lease. Franchisor may request Landlord's consent, pursuant
to Section XVII of the Lease, to further assign the Lease one (1) time during
the Lease Term to any such qualified substitute lessee, which request for
consent shall be subject to Landlord's approval in accordance with Section XVII
of the Lease.”
(Id.)
Therefore, by the very terms of
the Collateral Assignment Agreement, after PKG Franchisor and PMFB exercised
their rights under the Collateral Assignment Agreement, “Franchisor [had
to] use commercially reasonable efforts to identify another lessee… to whom
to further assign the Lease.” However, the SAC does not allege that PKG
Franchisor then assigned the lease to Plaintiff. This Court in its last ruling
of the demurrer to the first amended complaint noted this: “The FAC never
specifically alleges that Franchisor/Mr. Franchise Inc. executed or approved
the assignment. In fact, the Assignment and Assumption of the Lease Agreement
states that the assignment is between PMFB/Tenant and Paseo, Inc./Plaintiff.”
(2/3/23 Minute Order.) This defect has not been cured. The SAC alleges and the
Assignment agreement states that the assignment is between PMFB and “Paseo,
Inc.” (assuming this would pass as Plaintiff), and not between PKG Franchisor
and Plaintiff. Rather, the SAC alleges that PKG Franchisor and PMFB exercised
their rights under the Collateral Assignment Agreement and PMFB assigned the
lease to PKG Franchisor. Thus, PKG Franchiser as the new assignor, would have
had to assign the lease to Plaintiff, as Plaintiff would not have had any
rights to the lease after assigning it to PKG. Plaintiff has not resolved this
discrepancy. Plaintiff bears the burden of proving it was assigned rights and
what those rights were under the Lease. (Cockerell v. Title Ins. & Trust
Co. (1954) 42 Cal.2d 284, 292 [“The burden of proving an assignment falls
upon the party asserting rights thereunder.”].)
Second, even if the Assignment
agreement was valid, the Assignment attached to the SAC as Exhibit C is from
PMFB to an entity called “Paseo Inc.” (SAC, Ex. C.) As to this discrepancy
Plaintiff alleges in the SAC that, unfortunately when drafting and executing
the Assignment and Assumption of Lease Agreement, the parties inadvertently
omitted “SANTA” and simply identified the assignee as PASEO, Inc. However,
there is no allegation that Defendant was aware of any scrivener’s error,
or consented to the assignment to Santa Paseo, Inc. rather than Paseo, Inc.
The demurrer to the first cause of
action for breach of contract and fifth cause of action for breach of the
covenant of good faith and fair dealing, which depends on a contract is
therefore SUSTAINED on these grounds. Leave to amend will be permitted, but
this will be Plaintiff’s final opportunity to amend the complaint.
II.
Related
Settlement Agreement
Defendant next argues that Plaintiff’s
claims have been waived and released as a result of a settlement agreement in 20STCV48603,
between Plaintiff’s alleged affiliate Mah, Inc and Defendant’s affiliate,
CAPREF Burbank, LLC.
Defendant argues its demurrer to
the FAC included a showing that Plaintiff is affiliated Mah, Inc. (See RJN iso
Demurrer to FAC, Ex. 3. ¶ 2.) Defendant contends that Plaintiff and Mah are part
of the Panini Kabob Grill enterprise. (Id. and SAC, ¶ 11.) Defendant argues on
March 1, 2023, CAPREF Burbank, LLC and Mah, Inc. entered into a settlement agreement.
(RJN iso Demurrer to SAC, Ex. 2.) In that agreement, Mr. Rafipoor agreed
to a general release of CAPREF Burbank, LLC and its “corporate affiliates” of
on behalf of Mah as well as its “affiliated entities.” (Id. p. 2, Sec. 4.)
However, Defendant points to the first
amended complaint in 20STCV48603 for the assertion that Mah is Plaintiff’s
affiliate, but has not requested judicial notice with respect to this demurrer
of the first amended complaint in 20STCV48603. To the extent Defendant relies
on the allegations of the third amended complaint in 20STCV48603, which it has
requested judicial notice of, the Court has not taken judicial notice of the truth
of the contents of the third amended complaint in 20STCV48603. For
this reason, Defendant cannot show in this demurrer proceeding that Mah, the
plaintiff in 20STCV48603, is an affiliate of Plaintiff. The argument should be
brought via a motion for summary judgment. The demurrer is overruled on this
ground.
III.
Standing
to Bring Tort Causes of Action (Second, Third, Fourth, Sixth and Seventh Causes
of Action)
Defendant
also argues that Plaintiff
lacks standing to pursue tort claims because even if PMFB transferred its leasehold
interest, there is no indication it also assigned its tort claims.
“[T]he
assignment must describe the subject matter of the assignment with sufficient
particularity to identify the rights assigned.” (Mission Valley East,
Inc. v. County of Kern (1981) 120 Cal.App.3d 89, 97.)
The Court agrees.
In Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972,
990 the appellant was the assignee of a promissory note and filed suit against
the respondent executor of the note, alleging claims for fraud. (Id. at
980.) The Court of Appeal found that the assignment of the promissory note
included only a transfer of contract rights and not of tort rights, holding
that fraud claims are not automatically incidental to the transfer of a
promissory note as a matter of law. (Id. at 991.) The court specified
that while "incidental rights may include certain ancillary causes of
action", "the assignment agreement 'must describe the subject matter
of the assignment with sufficient particularity to identify the rights
assigned.'" (Ibid.) As the appellant did not explicitly show that
it was assigned fraud claims against the respondent, and as the assignment
agreement was silent as to any tort claim, the court found that the appellant
could not maintain its fraud causes of action on the
basis of
assignment. (Id. at 991-93.)
The same
circumstance exists here. Heritage provides that an assignment of fraud
claims requires express language to that effect. The SAC does not contain
allegations showing that the fraud claims were assigned to Plaintiff. Plaintiff
does not argue that the assignment or any language in the SAC evinces an
explicit transfer of tort claims. And, on review of the SAC, the Court finds no
language providing such a transfer of tort claims. The Court thus finds that
the SAC fails to show Plaintiff has standing to assert the fraud claims against
Defendant.
As such, the
demurrer to the second, third, fourth, sixth and seventh tort-based causes are
action is also SUSTAINED with leave to amend on this basis.
IV.
Failure to State Causes of Action of
Fraud-Based Claims for Lack of Specificity
Defendant additionally demurs to
the second cause of action for Promise Made Without Intent to Perform, the
third cause of action for Negligent Misrepresentation, and the fourth cause of
action for Fraudulent Concealment on the basis that these causes of action are
not pled with the requisite specificity.
“Fraud must be pleaded
with specificity rather than with ‘“‘general and conclusory allegations.’”’ (Small
v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity
requirement means a plaintiff must allege facts showing how, when, where, to
whom, and by what means the representations were made, and, in the case of a
corporate defendant, the plaintiff must allege the names of the persons who
made the representations, their authority to speak on behalf of the
corporation, to whom they spoke, what they said or wrote, and when the
representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631,
645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780,
793.)
“The
facts essential to the statement of a cause of action in fraud or deceit based
on a promise made without any intention of performing it are: (1) a promise
made regarding a material fact without any intention of performing it; (2) the
existence of the intent at the time of making the promise; (3) the promise was
made with intent to deceive or with intent to induce the party to whom it was
made to enter into the transaction; (4) the promise was relied on by the party
to whom it was made; (5) the party making the promise did not perform; (6) the
party to whom the promise was made was injured. (Regus v. Schartkoff
(1957) 156 Cal.App.2d 382, 389.)
“‘Promissory fraud’ is a
subspecies of the action for fraud and deceit. A promise to do something
necessarily implies the intention to perform; hence, where a promise is made
without such intention, there is an implied misrepresentation of fact that may
be actionable fraud.” (Lazar, supra, 12 Cal.4th at 638.) “Causes
of action for intentional and negligent misrepresentation sound in fraud and,
therefore, each element must be pleaded with specificity. (Daniels v. Select
Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.
“[T]he elements of an action for
fraud and deceit based on a concealment are: (1) the defendant must have
concealed or suppressed a material fact, (2) the defendant must have been under
a duty to disclose the fact to the plaintiff, (3) the defendant must have
intentionally concealed or suppressed the fact with the intent to defraud the
plaintiff, (4) the plaintiff must have been unaware of the fact and would not
have acted as he did if he had known of the concealed or suppressed fact, and
(5) as a result of the concealment or suppression of the fact, the plaintiff
must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011)
198 Cal.App.4th 230, 248.)
Plaintiff alleges that on or about
June 5, 2020, Plaintiff’s Chief Executive Office, Mike Rafippor, reached out to
various agents of Defendant including Lance Taylor and Michael de Leon. (SAC ¶
25.) Plaintiff does not state what representations were made or what the
concealed facts were. Plaintiff’s agent reached out again to Jeff Plauche and
Jack Marshal on August 10, 2020, but again fails to state what representations
or omissions occurred and by what means they were made. (SAC ¶ 25, 41.)
The SAC further alleges that
“PLAINTIFF notified various agents of DEFENDANTS, including but not limited to
Lance Taylor and Michael de Leon and then to Jeff Plauche and Jack Marshall of
this issue and the aforementioned agents of DEFENDANT continuously represented
to PLAINTIFF DEFENDANT would be able to obtain all the necessary permits to
convert the Premises to a restaurant as well as the ability to have an enclosed
patio for outdoor dining.” (SAC ¶ 39.) Plaintiff does not state when these
conversations took place and if they are the ones that occurred on August 10,
2020.
These defects were identified by
the Court in its last ruling and Plaintiff has failed to cure them.
As such, the demurrer to the
second, third, and fourth causes of action is also sustained on this basis.
V.
Failure to State Causes of Action for Intentional and Negligent Interference with
Prospective Economic Advantage
To state a claim for the tort of
intentional interference with prospective economic advantage (IIPEA), the
claimant must allege: (1) an economic relationship between the claimant and
some third party, with the probability of future economic benefit to the
claimant; (2) the defendant or cross-defendant’s knowledge of the relationship;
(3) intentional acts on the part of the defendant or cross-defendant designed
to disrupt the relationship; (4) actual disruption of the relationship; and (5)
economic harm to the claimant proximately caused by the acts of the defendant.
(Marsh v. Anesthesia Services Medical Group, Inc. (2011) 200 Cal.App.4th
480, 504.)
To state a claim for the tort of
negligent interference with prospective economic advantage (NIPEA), the
plaintiff must allege that: (1) an economic relationship existed between the plaintiff
and a third party which contained a reasonably probable future economic benefit
or advantage to plaintiff; (2) the defendant knew of the existence of the
relationship and was aware or should have been aware that if it did not act
with due care its actions would interfere with this relationship and cause
plaintiff to lose in whole or in part the probable future economic benefit or
advantage of the relationship; (3) the defendant was negligent; and (4) such
negligence caused damage to plaintiff in that the relationship was actually
interfered with or disrupted and plaintiff lost in whole or in part the
economic benefit or advantage reasonably expected from the relationship. (North
American Chemical Co. v. Sup. Ct. (1997) 59 Cal.App.4th 764, 788.)
For both IIPEA and NIPEA, the
interference must be wrongful by some legal measure other than the fact of the
interference itself. (Della Penna v. Toyota Motor Sales, U.S.A. (1995)
11 Cal.4th 376, 378. “[A]n act is independently wrongful if it is unlawful,
that is, if it is proscribed by some constitutional, statutory, regulatory,
common law, or other determinable legal standard.” (Korea Supply Co. v.
Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159.)
Since Plaintiff’s fraud-based
causes of action fail, Plaintiff cannot show that the interference with its
prospective economic advantage arose from an independent wrong. Moreover,
breach of contract is not wrongful conduct that is independent of a tort claim
for interference. “[A]s our Supreme Court has said time and again, an actor’s
breach of contract, without more, is not ‘wrongful conduct’ capable of
supporting a tort (Citations), including the tort of intentional interference
with a prospective economic advantage.” (Drink Tank Ventures LLC v. Real
Soda in Real Bottles, Ltd. (2021) 71 Cal.App.5th 528, 533.”
As such, the demurrer to the sixth
and seventh causes of actions is SUSTAINED with leave to amend.
IV. Motion to Strike
Defendant contends the SAC fails
provide any of the necessary details to support a punitive damages claim
against CAPREF or the specificity required to support its claim for special
damages.
As the demurrer is sustained in
its entirety, the motion to strike is moot.
Conclusion
Based on the foregoing, Defendant’s
demurrer is SUSTAINED with 20 days leave to amend. Defendant’s motion to strike
is DENIED as MOOT.
Moving party is
ordered to give notice.