Judge: Stephen I. Goorvitch, Case: 21STCV06718, Date: 2022-09-15 Tentative Ruling

Case Number: 21STCV06718    Hearing Date: September 15, 2022    Dept: 39

Nancy Truglio v. Chutter, Inc., et al.

Case No. 21STCV06718

Motion for Summary Judgment

[TENTATIVE] ORDER

NOTICE

            The Court posts this tentative order on Tuesday, September 13, 2022, in advance of the hearing on this motion.  Any party who does not appear shall waive the right to be heard and shall submit to any order on this motion. 

INTRODUCTION

            Plaintiff Nancy Truglio, Trustee of the Ralph Truglio Trust dated February 11, 1997, and Executor of the Estate of Ralph Truglio (“Plaintiff”) filed this action against Chutter, Inc., which does business as “Dan Tana’s Restaurant,” as well as Sonja Perencevic (collectively,  “Defendants”).  Plaintiff owns the premises located at 9071 Santa Monica Boulevard in Los Angeles, California.  Defendant Chutter is the lessee under a lease which originated in 1963.  The lease was amended multiple times, extending the lease for five years with an option to renew.  However, the most recent amendment, signed on October 21, 2017, extended the lease for 46 years, to 2063, and the amendment was signed by Perencevic and Ralph Truglio who, at the time, was 95 years old.  The parties dispute two key issues.  First, Plaintiff argues that Ralph Truglio was not competent to sign the agreement, which Defendants dispute.  Second, Plaintiff argues that the amendment contained no rent increases from 2033 to 2063, and Defendants argue that the parties agreed to increase the rent by $2,000 per month for each five-year time period.  Plaintiff asserts a cause of action for financial elder abuse.  Plaintiff seeks recission, per Civil Code section 1689, and limitation of the amendment to avoid an unconscionable result.  Plaintiffs also assert two causes of action for declaratory relief.  Now, Defendants move for summary judgment, which Plaintiff opposes.  The motion is granted. 

LEGAL STANDARD

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.]  There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)  “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.”  (Ibid.)  

EVIDENTIARY ISSUES

            The Court need not rule on Defendants’ objections to Plaintiff’s evidence, per Code of Civil Procedure section 437c(q).  The Court rules as follows on Plaintiff’s objections:

            Objection #1 – The Court need not rule on this objection, per section 437c(q). 

            Objection #2 – The Court need not rule on this objection, per section 437c(q). 

            Objection #3 – The Court need not rule on this objection, per section 437c(q). 

DISCUSSION

A.        Financial Elder Abuse

To prevail on a claim for financial elder abuse, Plaintiff must prove that Defendants took, secreted, appropriated, obtained, or retained real or personal property from an elder for a wrongful use, or with intent to defraud, or both, or “by undue influence.”  (See Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478.)  A taking is by “wrongful use” when the defendant knew or should have known that the conduct was likely to be harmful to the elderly adult.  (Id., pp. 478-479.)  In order to demonstrate “wrongful use,” Plaintiff must prove that Defendant acted “in subjective bad faith or unreasonably.”  (See Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 658.)  Undue influence is defined by Civil Code section 1575.  “Undue influence consists: [¶] 1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence of authority for the purpose of obtaining an unfair advantage over him; [¶] 2. In taking an unfair advantage of another’s weakness of mind; or [¶] 3. In taking a grossly oppressive and unfair advantage of another’s necessities or distress.”  (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478-479, citing Civil Code, § 1575.) 

B.        The Amendment was not Unconscionable

As an initial matter, Plaintiff’s claim for financial elder abuse relies on her argument that the amendment was unconscionable because it provided for no rent increases from 2033 to 2063.  Conversely, Defendant argues that the amendment provided for rent increases of $2,000 per month during each five-year period from 2033 to 2063.  The Court first must resolve this discrepancy.

The interpretation of a contract is a judicial function.  (Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1126, citation omitted.)  In engaging in this function, the trial court “give[s] effect to the mutual intention of the parties as it existed” at the time the contract was executed.  (Ibid., citing Civ. Code, § 1636.)  Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract’s terms.  (Ibid., citing Civ. Code, § 1639.)  However, extrinsic evidence is admissible to interpret an agreement when a material term is ambiguous.  (Ibid., citations omitted.)

The amendment extends the term of the lease until December 8, 2063, but it is silent on the issue of rent during the extension.  (Declaration of Eric George, Exh. V.)  The amendment states: “Except as otherwise provided, the Lease and all Amendments thereto shall remain in full force and effect . . . .”  (Ibid.)  The amendment states that the amendment supersedes the prior lease and prior amendments only if there is a conflict.  (Ibid.)  Therefore, the Court must look at the prior amendment to determine the rent. 

The prior amendment, dated October 5, 2010, does not clarify the issue.  The prior amendment expressly sets the rent until December 31, 2033.  (Id., Exh. U.)  It states that the monthly rent would be: (1) $8,000 from December 31, 2013, to December 31, 2018; (2) $9,000 from December 31, 2018, to December 31, 2023; (3) $11,000 from December 31, 2023, to December 31, 2028; and (4) $13,000 from December 31, 2028, to December 31, 2033.  (Declaration of Eric George, Exh. U.)  The prior amendment is silent as to the rent after December 31, 2033.  (Ibid.)  Therefore, the amendment at issue is ambiguous on the issue whether the rent is frozen at $13,000, until 2036, or whether the rent increases $2,000 per month during each five-year period. 

In light of this ambiguity, the Court must consider extrinsic evidence and may do so on a motion for summary judgment.  “When the facts are undisputed . . . the interpretation of a contract, including the resolution of any ambiguity, is a question of law.”  (Sprinkles v. Associated Indemnity Corp. (2010) 188 Cal.App.4th 69, 76.)  Even where uncontroverted evidence allows for conflicting inferences to be drawn, our Supreme Court treats interpretation of the written contract as solely a judicial function.”  (Scheenstra v. California Diaries, Inc. (2013) 213 Cal.App.4th 370, 390.)  This is true when extrinsic evidence is not in conflict, “even if the evidence is susceptible to multiple interpretations.”  (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266-1267.) 

Defendant relies on the testimony of the other contracting party: Sonja Perencevic.  Perencevic testified that “Mr. Truglio said, he will have increase in the rent every five years for $2,000 like it was before.”  (Declaration of Eric George, Exh. C, p. 253:5-8.)  This term is not in the amendment because “[Ralph Truglio] said, we don’t have to put anything about the rent because it’s going to be like it was until today in every amendment every five years increase for $2,000.”  (Id., Exh. C, p. 257:1-4.)  Perencevic testified that Ralph Truglio benefitted from the amendment: “He was receiving increase in the rent every five years for 2000, then increasing the property value because of renovating the kitchen, and he got tenant for another 30 years.”  (Id., pp. 260:24-261:2.)  Plaintiff advances no extrinsic evidence to resolve this ambiguity, so it is undisputed and the Court may rely upon it (especially since it is corroborated by the pattern of rent increases referenced in the amendment of 2010).   

Based upon the foregoing, the Court finds that the contract contemplated rent increases of $2,000 per month during each five-year period, from December 31, 2033, to December 31, 2063.  Plaintiff advances no evidence suggesting that this rent increase is unconscionable, as her case is predicated upon her argument that the contract provided for no rent increases.  Simply, Plaintiff cannot establish that Defendants received any unfair advantage or unconscionable benefit from Ralph Truglio in the negotiation and execution of the amendment.  Nor can Plaintiff establish that Perencevic intended to defraud Truglio or acted in subjective bad faith or unreasonably, as no fraud occurred.  The Court grants Defendant’s motion for summary adjudication of the first, second, third, and fourth causes of action on this basis alone. 

C.        There is Insufficient Evidence of “Wrongful Use” or “Intent to Defraud”

A claim for financial elder abuse may be predicated upon an intent to defraud.  Such a claim also may be predicated upon “wrongful use,” which requires evidence that the defendant acted “in subjective bad faith or unreasonably.”  (See Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 658.)  Plaintiff cannot prevail on these issues because there is no evidence that Perencevic was aware that Ralph Truglio had any cognitive issues when he signed the amendment. 

Ralph Truglio signed the amendment on or about October 21, 2017, before he suffered a heart attack on or about March 23, 2018.  (See Declaration of Eric George, Exh. A, p. 16:10-16; Exh. V.)  During the year before his heart attack, Ralph Truglio had “a pretty active life for a guy his age.”  (Id., Exh. A, p. 34:13-14.)  Specifically, during 2017: “One day he had cards from a group from his church.  One day he had a senior group from his church.  One day he had the Optimists Club . . . .  One day was NASCAR.”  (Id., Exh. A., p. 34:13-18.)  Ralph Truglio enjoyed reading.  (Id., Exh. A, p. 33:18-23.)  Ralph Truglio flew airplanes until January 2017, when he stopped due to physical—not mental—infirmities.  (Id., Exh. A, p. 33:8-12.)  “[H]e was still allowed to fly, but it was getting too hard for him to climb in and out of the airplane.”  (Id., Exh. A, p. 33:10-12.) 

Ralph Truglio lived independently and dined out regularly.  (Id., Exh. A, pp. 33:19-34:3, 37:22-38:12, 87:1-5.)  Perencevic testified that Ralph Truglio and his girlfriend dined at Dan Tana’s regularly between 2009 and 2019.  (Id., Exh. C, p. 17:2-24.)  Plaintiff observed a physical decline due to complications stemming from polio as a child.  (Id., Exh. A, p. 20:6-21:24.)  However, Plaintiff testified that she had no concerns with him living independently based upon his mental health.

Q:        Were you concerned with your dad living alone without any overnight assistance to take care of him in case something happened?

A:        He was still pretty okay as long as he didn’t try to do anything really rigorous.

(Id., Exh. A, p. 87:1-5.)  Plaintiff testified that Ralph Truglio’s home health aide was for assistance with physical, and not mental tasks.  (Id., Exh. A, p. 87:7-21.) 

            Q:        The home aides didn’t do things that required mental tasks, like banking or financial things, did they?

            A:        No.  No.

            Q:        They were there for physical purposes.

            A:        Yes.

(Id., Exh. A, p. 87:16-21.)  Plaintiff testified that she never advised him to use an attorney or real estate broker to negotiate any of the rental terms with either Dan Tana or his residential tenants.  (Id., Exh. A, pp. 77:11-78:9.)  Plaintiff conceded that at the time, “I always assumed he knew what he was doing.”  (Id., Exh. A, p. 78:8-9.)  Plaintiff never exhibits signs of mental health issues, and Plaintiff never sought to have him evaluated:

            Q:        Did you ever tell your dad that you would feel more comfortable if he say a neurologist?

            A:        No.

            Q:        Did you ever tell Mr. Truglio that before the time that he signed the trust agreement appointing you as his trustee that he should have his mental capacity evaluated?

            A:        No.

            Q:        Why not?

            A:        He wasn’t -- he wasn’t demonstrating any types of dementia or the serious kinds of things that would have made me think that.  I more or less felt at some point in time his physical problems would necessitate some other kind of living arrangement.

(Id., Exh. A, p. 98:2-18.) 

            The record contains additional evidence that Ralph Truglio was of sound mind after he signed the amendment to Dan Tana’s lease on or about October 21, 2017.  Ralph Truglio’s doctor examined him on December 19, 2017, and concluded: “Remains fully independent.  Drives.  Still teaching flying.”  (Id., Exh. D.)  Ralph Truglio loaned Plaintiff money between December 2017 and March 2018.  (Id., Exh. E.)  Finally, Plaintiff testified that Ralph Truglio “was of sound mind” when he executed trust documents in April 2018, naming her as the trustee of his trust.  (Id., Ex. A, pp. 98:20-99:6.)

            In sum, Defendants’ advance sufficient evidence to suggest that Ralph Truglio gave no  appearance of cognitive issues when he signed the amendment in 2017, which establishes that Perencevic did not act “in subjective bad faith or unreasonably.”  In other words, Defendants’ evidence establishes that Perencevic did not knowingly take advantage of someone suffering from cognitive impairment. 

            Plaintiff advances insufficient evidence to give rise to a triable issue on this point.  Plaintiff relies heavily upon the declaration of Dr. Sarah Mourra.  Putting aside Defendants’ various objections, there is one fundamental flaw in this declaration: It does not establish that Perencevic knew, or should have known, that Ralph Truglio suffered from any cognitive issues.  To the contrary:

            Mr. Truglio sought to be independent, lived a private life, kept information about himself to himself and did not readily involve others in his affairs.  An individual possessing this type of personality would be expected to keep deficits to himself.  It is typical for other people around such a person, including his daughter, to fail to notice that the person is seeking to conceal their deficits.  Those in closer proximity to the individual’s day-to-day management of affairs would be most likely to notice these deficits and attempts to conceal them.  Mr. Hagopian testified to noticing Mr. Truglio tried to conceal and repeatedly denied his deficits.   

(Declaration of Sarah Mourra, M.D., ¶ 20.)  None of Plaintiff’s other evidence suggests that Perencevic knew, or should have known, that Ralph Truglio could not sign the amendment.  Accordingly, there is no triable issue on Plaintiff’s claims for wrongful use and fraud.   

            D.        There is Insufficient Evidence of Undue Influence

            A claim for elder abuse may be predicated upon “undue influence,” and Plaintiff predicates this claim on the second and third prong of Civil Code section 1575, arguing that Perencevic took advantage of Ralph Truglio’s “weakness of mind” and “[mental] distress.”   Again, there is insufficient evidence that she “took advantage” of Ralph Truglio, because the amendment is not unconscionable, and there is insufficient evidence that she was aware he suffered from any cognitive issue.

            Putting those issues aside, Plaintiff still cannot prevail on a claim for undue influence, which requires “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in equity.  (Welf. & Inst. Code, § 15610.70(a).)  In determining whether “a result was produced by indue influence,” all of the following factors are relevant: (1) The vulnerability of the victim, (2) The influencer’s apparent authority, (3) The actions or tactics used by the influencer, and (4) The equity of the result.  (Ibid.)

            First, there is insufficient evidence that Ralph Truglio was “vulnerable.”  As discussed, the record suggests that he was not vulnerable.  Putting aside Defendant’s objections to Dr. Mourra’s declaration, there still is not a triable issue of vulnerability.  At best, it establishes that Ralph Truglio may have had cognitive issues, but there is insufficient evidence to give rise to a triable issue on vulnerability.  Plaintiff advances no evidence on the remaining factors.  There is no evidence that Perencevic had any authority over Ralph Truglio.  There is no evidence of any improper actions or tactics by Perencevic in securing the amendment.  And, as discussed, the amendment was not inequitable.  Accordingly, there is no triable issue on Plaintiff’s claim for undue influence.    

            E.         The Court Grants Summary Adjudication of the Remaining Claims

            The Court grants summary adjudication of the second, third, and fourth causes of action for the reasons stated.  The fifth cause of action seeks “declaratory relief re rent against Defendant Chutter,” alleging that Defendant has withheld payment of rent and unpaid rent accrued.  “Plaintiff requests a Declaration that it is entitled to payment of rent and that Defendant must pay back rent and interest thereon because its defense is invalid.”  (Complaint, ¶ 41.) 

            Plaintiff essentially raises a breach of contract claim in the form of a claim for declaratory relief.  This is problematic because Defendants have requested a jury trial.  By styling this dispute as one seeking a declaratory judgment, Plaintiff would deprive Defendants of their constitutional right to a jury trial.  This is improper:

            The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action.  The object of the statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.

(General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.)  Plaintiff should have raised this issue as a breach of contract claim, not one for declaratory relief.

            Putting that aside, there is no triable issue on this claim.  According to Sonja Perencevic, “In 2020, Dan Tana’s Restaurant was forced to experience unexpected shutdowns and other financial difficulties because of the COVID-19 pandemic.”  (Declaration of Sonja Perencevic, ¶ 3.)  According to Perencevic, Chutter, Inc. has paid all rent accrued from 2020 to the present.  (Id., ¶ 4.)  In their separate statement, Defendants state that “they repaid all late or unpaid rent incurred during the eviction moratorium, well before the July 31, 2022 repayment deadline,” and Plaintiff does not dispute that fact.  (See Plaintiff’s Response to Defendants’ Separate Statement, ¶ 62.) 

CONCLUSION AND ORDER

            Based upon the foregoing, the Court grants Defendants’ motion for summary judgment.  Defendants’ counsel shall provide notice and file proof of such with the Court.