Judge: Stephen P. Pfahler, Case: 22CHCV00178, Date: 2022-08-02 Tentative Ruling

Case Number: 22CHCV00178    Hearing Date: August 2, 2022    Dept: F49

Dept. F-49

Date: 8-2-22

Case #22CHCV00178

Trial Date: Not Set

 

DEMURRER

 

MOVING PARTY: Defendant, Quail Ranch Estates HOA, Inc.

RESPONDING PARTY: Plaintiff, Don Khalighi, et al.

 

RELIEF REQUESTED

Demurrer to the Complaint

·         1st Cause of Action: Breach of Contract

·         2nd Cause of Action: Negligence

·         6th Cause of Action: Declaratory Relief

 

SUMMARY OF ACTION

Plaintiffs Don and Armenouhi Khalighi are homeowners within a real estate development governed by Quail Ranch Estates HOA, Inc. (HOA). Pursuant to “Articles and Bylaws,” the HOA collected $150/month in assessments for the benefit of participating homeowners. Plaintiffs alleges the individual defendant officers comprising the HOA board violated “respective fiduciary duties,” due to their failure to pay annual fees to the State of California, thereby leading to the suspension of the HOA as a corporate entity; failed to hold required meetings; failed to inform homeowner members regarding “various contracts” for common area maintenance and landscaping; failed to provide adequate financial records upon demand of Plaintiffs; and, authorized improper expenditures and withdrawals without apparent board and/or homeowner approval.

 

On March 17, 2022, Plaintiffs filed their complaint for Breach of Contract, Negligence, Embezzlement, Fraud, Accounting and  Declaratory Relief. On July 11, 2022, Defendant Michael Morrell answered the complaint.

 

RULING: Sustained with Leave to Amend.

Request for Judicial Notice: Granted only to the filed documents, but not to the content of any of the items.

 

Defendant Quail Ranch Estates HOA, Inc. brings the subject demurrer to the breach of contract, negligence, and declaratory relief causes of action.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) 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 applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

 

1st Cause of Action, Breach of Contract: Sustained with Leave to Amend.

Defendants submit the subject demurrer on grounds that the complaint fails to sufficiently allege the actual basis and terms of the contract. Even if Plaintiffs present the terms of any contract, Plaintiffs cannot sue for breach of CC&Rs, but must seek an enforcement action. Plaintiffs in opposition contend breach of contract is stated due to the HOA’s failure to pay corporate taxes, which constitutes a violation of CC&Rs that Plaintiffs incorporated into the complaint by “reference.” Defendant in reply reiterates the deficiencies in the breach of contract claim. Defendant additionally cites to the terms of the CC&Rs, which are not actually part of the operative complaint, and therefore not considered.

 

“To state a cause of action for breach of contract, [a plaintiff] must plead the contract, his performance of the contract or excuse for nonperformance, [defendant’s] breach and the resulting damage. (Citation.) Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. (Citation.)” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458–59.) In examining a breach of contract claim, the court is required to examine the terms, or at least the legal effect of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318 [“we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context”]; Otworth v. Southern Pac. Transportation Co., supra, 166 Cal.App.3d at p. 459 [“If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference”]; Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199 [“In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language”].)

 

The complaint lacks any actual terms or incorporated copy of the CC&Rs. “Reference” to the existence of CC&Rs insufficiently meets the standard for pleading contractual terms. The court therefore sustains the demurrer to the complaint on this basis. The court finds insufficient support for the argument that a homeowner within a governing homeowner association remains barred from filing a breach of contract cause of action. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223.)

 

2nd Cause of Action, Negligence Sustained with Leave to Amend

Defendant challenges the subject cause of action on grounds that the claim constitutes a “re-purposed breach of contract claim[].” Defendant additionally alleges no independent basis of duty beyond the CC&Rs. Plaintiff in opposition contends the complaint alleges a general duty to all homeowners. Defendant in reply reiterates the lack of any basis of negligence liability.

“The elements of any negligence cause of action are duty, breach of duty, proximate cause, and damages. (Peredia v. HR Mobile Services, Inc. (2018) 25 Cal.App.5th 680, 687.) “‘It has been well established in this state that if the cause of action arises from a breach of a promise set forth in the contract, the action is ex contractu but if it arises from a breach of duty growing out of the contract it is ex delicto. [Citations.]’” (Wentland v. Wass (2005) 126 Cal.App.4th 1484, 1495; Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 175.) “[C]onduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551.)

 

Given the lack of a valid contract cause of action, the court considers the subject claim under a required finding of an independent duty of care. Plaintiff alleges a general duty by the HOA, but without sufficient underpinning support. The demurrer is therefore sustained with leave to amend.

 

6th Cause of Action, Declaratory Relief: Sustained with Leave to Amend

Defendant next challenges the claim for declaratory relief, due to the lack of a valid contract. Plaintiffs in opposition cite back to the general CC&R allegations in support of the instant cause of action. Defendant in reply challenges the lack of any articulated relief.

Declaratory relief arises under Code of Civil Procedure section 1060, which states in part:

 

“Any person interested under a written instrument … or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property … may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.”

 

“[U]nder California rules, an actual controversy that is currently active is required for such relief to be issued, and both standing and ripeness are appropriate criteria in that determination. (Citation.) One cannot analyze requested declaratory relief without evaluating the nature of the rights and duties that plaintiff is asserting, which must follow some recognized or cognizable legal theories, that are related to subjects and requests for relief that are properly before the court.”

 

(Otay Land Co.v. Royal Indemn. Co. (2008) 169 Cal.App.4th 556, 563.)

 

As addressed above, the court finds the relied upon CC&Rs insufficiently articulated. The court therefore finds the claim seeking an interpretation of rights regarding said agreement wanting. The demurrer is therefore sustained with leave to amend.

 

Conditions Precedent

Finally, Defendant contends Plaintiff failed to comply with pre-filing requirements regarding efforts to engage in alternative dispute resolution. Plaintiff in opposition contends efforts were made to engage the HOA, but plaintiffs were rebuffed. Defendant in reply asserts the arguments in opposition are “nonresponsive.”

 

The court cannot consider the argument to the extent it relies on extrinsic evidence and inference. The court can however consider the lack of any allegations regarding compliance with the requirement. The court therefore sustains the demurrer as to the causes of action named against the HOA only.

 

In summary, the demurrer is sustained with 30 days leave to amend. Plaintiff may not add new or different causes of action beyond the scope of the existing claims though the court grants Plaintiff leave to address the disparate fraud claims, if necessary. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

 

Demurrers of Tammy and Patrick Brooker, in pro per, set for August 24 and 31, 2022, respectively. If Plaintiff files an amended complaint prior to one or both hearing dates, the demurrer(s) will go off-calendar. The court will otherwise consider the remaining challenged causes of action, where applicable.

 

Defendant to give notice.