Judge: Stephen I. Goorvitch, Case: 22STCV37961, Date: 2023-04-13 Tentative Ruling

Case Number: 22STCV37961    Hearing Date: April 13, 2023    Dept: 39

10281 Pico, LLC v. T-Mobile West, LLC, et al.

Case No. 22STCV37961

Demurrer and Motion to Strike

BACKGROUND

            Plaintiff 10281 Pico, LLC (“Plaintiff”) filed this action against T-Mobile West, LLC (“T-Mobile West”) and T-Mobile USA, Inc. (“T-Mobile USA”) (collectively, “Defendants”) asserting the following causes of action:

            1.         Breach of written contract

            2.         Fraudulent concealment and misrepresentation

            3.         Declaratory relief

            4.         Conversion

            5.         Trespass

            6.         Private nuisance

Defendants demur to the first amended complaint and move to strike certain allegations, as well as the prayer for punitive damages.  The Court sustains the demurrer with respect to T-Mobile USA.  The Court sustains the demurrer to the second, fourth, fifth, and sixth causes of action and denies the motion to strike. 

PLAINTIFF’S ALLEGATIONS

Plaintiff acquired certain real property, located at 10281 West Pico Boulevard in Los Angeles, California on or about November 18, 2021.  (First Amended Complaint, ¶ 10.)  Defendants were tenants, and the parties’ relationship is governed by a lease.  (Id., ¶¶ 11, 38.)   Plaintiff alleges that Defendants have been using electricity without paying for it, in violation of the lease.  (Id., ¶ 32.)  The relevant portion of the lease states: “[Plaintiff] agrees to provide sufficient capacity on existing telephone riser cables to accommodate [Defendants’] requirements.  [Defendants] shall pay directly to the phone company all bills related to its services.  Additionally, [Plaintiff] shall provide [Defendants’] Facilities, at no cost to [Defendants], with all electrical requirements, including, but not limited to, access to [Plaintiff’s] emergency generator.  [Defendants] shall make all necessary additions or alterations to accommodate [Defendants’] use of such electrical facilities.”  (Id., Exh. #1, ¶ 6(e).)  Defendants argue that this provision means that Plaintiff must provide electricity at no cost.  Plaintiff argues that this provision means that it must provide the electrical infrastructure of the property at no cost.    

LEGAL STANDARD

A.        Demurrer

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.)  “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.”  (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.)  “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 p. 747.)  However, courts do not accept as true deductions, contentions, or conclusions of law or fact.  (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)  The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts.  (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.)  “[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.”  (Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.)  In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.”  (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)  Demurrers do not lie as to only parts of causes of action, where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)  

            B.        Motion to Strike

Courts may, upon a motion, or at any time in their discretion, and upon terms they deem proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) Courts may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).)  The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., §¿437.)  

DISCUSSION

            A.        T-Mobile USA           

            T-Mobile USA demurs, arguing that it is not a proper defendant because it is not the lessee under the contract.  The contract was executed by Pacific Bell Mobile Services, but Plaintiff alleges that T-Mobile West is the successor-in-interest to the contract.  (First Amended Complaint, ¶ 14.)  “Corporate entities are presumed to have separate existences, and the corporate form will be disregarded only when the ends of justice require this result.” (Laird v. Capital Cities/ABC, Inc. (1998) 68 Cal.App.4th 727, 737, overruled on other grounds by Reid v. Google, Inc. (1998) 68 Cal.App.4th 727.)  “[one] who seeks to hold a parent corporation liable for the acts or omissions of its subsidiary on the theory that the two corporate entities constitute a single employer has a heavy burden to meet under both California and federal law.” (Ibid.)  Common ownership or control is never enough to establish parent liability.  (Id., p. 738.)  Rather, Plaintiff must establish that there is an interrelation of operations, common management, centralized control of labor relations, and common ownership or financial control.  (Ibid.)  The first amended complaint contains only conclusory allegations on this issue.  Therefore, the Court sustains the demurrer with respect to T-Mobile USA with leave to amend.

B.        Second Cause of Action

            Plaintiff’s second cause of action is for fraudulent concealment and misrepresentation.  As discussed, Plaintiff alleges that Defendants used electricity without paying for it.  (Id., ¶ 40.) Defendants did so knowingly because they had installed a “smart sub-meter.”  (Id., ¶ 41.)  It was unaware of the electricity usage, and Defendants committed fraud because “Defendants were using Plaintiff’s electricity at the Premises; Defendants were not paying for their electricity usage at the premises; and Plaintiffs were paying for the electricity used by Defendants at the premises.”   (Id., ¶ 43.)  Defendants had a duty to disclose their electricity usage and their obligation to pay for it because “plaintiff did not know, and could not easily discover, Defendants’ electricity usage at the Premises and Defendants’ failure to pay for same.”  (Ibid.)  Defendants affirmative represented in a lease amendment that no amounts were due and that this representation was false because Defendants knew they were using Plaintiff’s electricity without paying for it.  (Id., ¶ 45.) 

            This is not a fraud claim.  As an initial matter, the contractual provision at issue is unclear.  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 Court cannot consider extrinsic evidence in ruling on a demurrer.  However, the mere fact that there is ambiguity in the contractual provision undermines Plaintiff’s allegations that Defendants knowingly and willfully used electricity without paying for it. 

            Putting that aside, the heart of Plaintiff’s claim is that Defendants used electricity without paying for it, in violation of the contract.  That is a claim for breach of contract, not fraud.  The mere failure to disclose does not transform this breach of contract into fraud, absent some duty independent of the contract, lest every breach of contract case would sound in fraud.  The Court agrees that if Defendants took affirmative steps to conceal their alleged theft of electricity, there may be a fraud claim.  But Plaintiff alleges only non-disclosure and does not allege any facts suggesting there was affirmative concealment. 

            Based upon the foregoing, the Court sustains the demurrer to the second cause of action with leave to amend.  In doing so, the Court rejects Defendants’ argument that the parol evidence rule bars this claim.  “The parol evidence rule protects the integrity of written contracts by making their terms the exclusive evidence of the parties' agreement. However, an established exception to the rule allows a party to present extrinsic evidence to show that the agreement was tainted by fraud.”  (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Ass'n  (2013) 55 Cal.4th 1169, 1171-1172.) 

            C.        Third Cause of Action

The third cause of action seeks declaratory relief.  Plaintiff is entitled to declaratory relief regarding the rights of Plaintiff and Defendants with respect to the contract.  (Code Civ. Proc., § 1060.)  “[D]emurrer is usually not an appropriate method for testing the merits of a declaratory relief action, because the plaintiff is entitled to a declaration of rights even if it is adverse to the plaintiff's interest.”  (Qualified Patients Ass'n v. City of Anaheim (2010) 187 Cal.App.4th 734, 751, internal quotations and citations omitted.)  Moreover, as discussed, the Court finds that this contractual provision is ambiguous and cannot resolve the merits of this issue at this stage.  Therefore, the demurrer to the third cause of action is overruled.

D.        Fourth Cause of Action

The fourth cause of action is for conversion.  Money cannot be the subject of a cause of action for conversion unless Plaintiff alleges that Defendants converted a specific, identifiable sum.  (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395, 397.)  Here, Plaintiff alleges that Defendants failed to pay plaintiff for electricity Defendants used.  (First Amended Complaint, ¶ 58.)  “[T]he simple failure to pay money owed does not constitute conversion.”  (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284.)  The Court sustains the demurrer to the fourth cause of action without leave to amend.

E.         Fifth Cause of Action

Plaintiff’s fifth cause of action is for trespass.  Plaintiff alleges that Defendants have “exceeded the scope of permissible entry onto the Premises by installing and operating their equipment in a manner which . . . damages the Premises, including the roof, which created safety hazards.”  (First Amended Complaint, ¶ 65.)  Plaintiff alleges that “Defendants’ installation and operation of their 5G equipment has resulted in the increased emission of electro-magnetic energy to levels which are dangerous to people.”  (Ibid.)  An intangible invasion to property is not a trespass unless it causes physical damage to land.  (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 936-937.)  Accordingly, the Court sustains the demurrer to the cause of action for trespass.  The Court grants leave to amend only to permit Plaintiff to allege that the equipment damaged the building or that the physical nature of the equipment (as district from the electro-magnetic omissions) prevented Plaintiff’s agents from accessing the roof. 

F.         Sixth Cause of Action

Plaintiff’s sixth cause of action is for private nuisance based upon Defendants’ installation of equipment that increased the electro-magnetic energy levels on the roof of the building.  In order to assert this claim, Plaintiff must allege facts demonstrating that the invasion was “substantial, i.e., that it caused the plaintiff to suffer ‘substantial actual damage.’”  (San Diego Gas & Electric, supra, 13 Cal.4th at p. 938.)  Plaintiff also must allege that the interference with the protected interest was not only substantial, but also unreasonable.  (Ibid.)  Plaintiff’s allegations do not satisfy these requirements.  Therefore, the Court sustains the demurrer to the sixth cause of action with leave to amend.

G.        Motion to Strike

Defendants argue that Plaintiff’s claims are barred by the statute of limitations.  Under the delayed discovery rule, a claim does not accrue until “a plaintiff knew or should have known of the wrongful conduct at issue.”  (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832.)  Plaintiff alleges that it did not discover the issue because it believed Defendants’ unpaid electricity charges were related to the general operation of the building.  (First Amended Complaint, ¶ 47.)  Plaintiff also alleges that Defendants did not inform its agents of the issue.  (Id., ¶¶ 43-45.) 

Defendants argue that Plaintiff cannot seek damages for alleged misconduct that predated its ownership of the building and assumption of the lease.  Plaintiff allege that it “was assigned all rights under the Communications Site Lease Agreement, as amended, including all claims for relief arising under or related to the Communications Site Lease Agreement, and as the successor-in-interest and assignee of the Lessor, Plaintiff stands in the shoes of its Predecessors-in-Interest for purposes of claims arising under or related to the Communications Site Lease Agreement.”  (First Amended Complaint, ¶ 15.)  This allegation is sufficient for pleading purposes.

Finally, Defendants move to strike the prayer for punitive damages.  The Court denies the motion to strike as moot, having sustained the demurrer with respect to every cause of action that might support a claim for punitive damages.

CONCLUSION AND ORDER

            Based upon the foregoing, the Court orders as follows:

            1.         The Court sustains the demurrer by T-Mobile USA in its entirety with leave to amend.

            2.         The Court sustains the demurrer to the second, fifth, and sixth causes of action with leave to amend. 

            3.         The Court sustains the demurrer to the fourth cause of action without leave to amend.

            4.         The Court denies the motion to strike.

            5.         Plaintiff shall file a first amended complaint within twenty (20) days.

            6.         Defendants shall provide notice and file proof of such with the Court.