Judge: Stephen P. Pfahler, Case: 22CHCV00674, Date: 2023-08-09 Tentative Ruling

Case Number: 22CHCV00674    Hearing Date: August 9, 2023    Dept: F49

 

MOVING PARTY: Defendants, Maurice and Karen Starrantino

RESPONDING PARTY: Plaintiffs, Triscenic Production Services

 

RELIEF REQUESTED

Demurrer to the First Amended Complaint

·         1st Cause of Action: Intentional Interference with Contractual Relations

·         2nd Cause of Action: Intentional Interference with Prospective Economic Relations

·         3rd Cause of Action: Negligent Interference with Prospective Economic Advantage

·         4th Cause of Action: Breach of Contract

·         5th Cause of Action: Breach of the Implied Covenant of Good Faith and Fair Dealing

 

SUMMARY OF ACTION

Plaintiff Triscenic Production Services, Inc. (Triscenic) alleges defendants Maurice and Karen Starrantino entered into a 36-month commercial lease with at a rental rate of $9,111/month on March 10, 2021, with an expiration date of March 31, 2024. On October 20, 2021, third party Rise, LLC (Rise) negotiated a separate agreement “specialty license agreement” to utilize an unspecified portion of Plaintiff’s premises for $13,500/month also with an end date of March 31, 2024.

 

Triscenic alleges the Starrantinos offered the premises to Rise (presumably for a lower rental price) and/or made “false or extremely minor complaints” about the condition of the premises in order to “convince Triscenic to vacate the premises.” On May 12, 2022, counsel for defendants presented a unilateral notice of cancellation of the lease.

 

On August 23, 2022, Plaintiff filed a complaint for Interference with contractual relations. On March 27, 2023, Plaintiff filed a first amended complaint for Intentional Interference with Contractual Relations, International Interference with Prospective Economic Relations, Negligent Interference with Prospective Economic Advantage, Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing.

 

RULING: Overruled.

Request for Judicial Notice: Granted.

The court takes judicial notice of the existence of the filed complaint identified by case number 22CHCV00458 and filed on June 22, 2022, but not for the truth of any allegations contained in the complaint.

 

Defendants Maurice and Karen Starrantino submit a demurrer to the entire first amended complaint on grounds that the operative complaint fails to state any causes of action, due to an admission of a breach of the lease agreement; the subject action constitutes an effective “sham” pleading given the previously filed a dismissed complaint; lack of independently wrongful conduct; and, a direct violation of the settlement agreement between the parties. Triscenic in opposition contends the demurer relies on improper, extrinsic evidence and inference; contends any factual disputes over contract interpretation are not subject to resolution on a demurrer; characterizes the agreement with third party Rise, as a “sublease” notwithstanding the allegations in the operative complaint and exhibit in reference identifying the agreement as a “Specialty License Agreement,” [First Amend. Comp., ¶ 12, Ex. 2]; a denial of any “sham” pleading; counter argument regarding independently wrongful conduct; denial of any breach of the settlement agreement; and, argument for a properly stated breach of implied covenant of good faith and fair dealing claim. The court electronic filing system shows no reply at the time of the tentative ruling publication cutoff.

 

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.]

 

The demurrer itself provides broader based arguments to the entire complaint with only select causes of action individually addressed.

 

Admission to Breach of the Lease Agreement

The Starrantinos contend the attached “special license agreement” between Triscenic and third party Rise constitutes a “sublease,” rather than a license. The Starrantinos rely on the request for judicial notice of the previously filed and dismissed complaint, whereby the “Special License Agreement” is purportedly identified as a lease. Said sublease violates sections 12.1 and 12.2 of the parties’ lease agreement entitled “Lessor’s Consent Required” and “Terms and Conditions Applicable to Assignment and Subletting.”  The Starrantinos seek to adjudicate the terms of the terms of the agreements as a matter of law in the subject demurrer, and also rely on a claim that the prior filed and dismissed complaint constitutes a “sham” pleading.

 

The argument for a “sham” pleading lacks any actual legal authority. “Where a party files an amended complaint and seeks to avoid the defects of a prior complaint either by omitting the facts that rendered the complaint defective or by pleading facts inconsistent with the allegations of prior pleadings” the pleading is considered a sham pleading. (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384; Berman v. Bromberg (1997) 56 Cal.App.4th 936, 946 [“A pleader may not attempt to breathe life into a complaint by omitting relevant facts which made his previous complaint defective”].) A pleader is entitled to explain any inconsistencies. (Ibid.) Nothing in the filing of a prior action and dismissal in a separate action invokes the sham pleading rule. The court declines to make the arguments for the parties.

 

The Starrantinos otherwise only provide a single Ninth Circuit reference regarding the ability of a court to determine the impacts of the parties’ agreements as a matter of law. “The proper interpretation of a contract is disputable if the contract is susceptible of more than one reasonable interpretation, that is, if the contract is ambiguous. An ambiguity may appear on the face of a contract, or extrinsic evidence may reveal a latent ambiguity.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114.) “A court ruling on a demurrer therefore cannot take judicial notice of the proper interpretation of a document submitted in support of the demurrer.” (Id. at p. 115.) The court finds the arguments seeking to declare the “special license agreement” as demonstrative of a violation of the parties lease terms, not determinable within the parameters of a demurrer. The conclusive argument relies on a factually disputed interpretation, which the court declines to consider at the demurrer stage.

 

Independently Wrongful Conduct

1st Cause of Action: Intentional Interference with Contractual Relations

2nd Cause of Action: Intentional Interference with Prospective Economic Relations

3rd Cause of Action: Negligent Interference with Prospective Economic Advantage

 

The demurrer challenges the lack of independently wrongful conduct, with only identification of the intentional and negligent interference with prospective economic relations causes of action. Notwithstanding, the court addresses all “interference” based causes of action.

 

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126; Ixchel Pharma, LLC v. Biogen, Inc., supra, 9 Cal.5th at p. 1141.)

 

Intentional Interference with prospective economic advantage is “stated as follows: ‘“(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.' [Citations.]”’” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153; Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th at p.1141.) A party alleging interference must allege conduct “‘wrongful by some legal measure other than the fact of interference itself.’” (Id. at p. 1154; Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393; Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th at pp.1141-1142.) “The tort of interference with prospective economic advantage protects the same interest in stable economic relationships as does the tort of interference with contract, though interference with prospective advantage does not require proof of a legally binding contract.” (Pacific Gas & Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d at p. 1126.)

 

“The tort of negligent interference with prospective economic advantage is established where a plaintiff demonstrates 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 benefits or advantage reasonably expected from the relationship.” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)

 

On the issue of separate and independently wrongful conduct, Defendants deny the gate modifications violate any applicable standard. “We conclude, therefore, that an 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., supra, 29 Cal.4th at p. 1159.) The complaint sufficiently states a claim based on modifications to the gate operation specifically limiting the frequency of vehicles passing through to once every 15 minutes, code changes without proper notice, as well as installation of a system not designed for commercial vehicle use, thereby regularly causing property damage. (Della Penna v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th at p. 393; San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544; Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1159 [“the requirement of pleading that a defendant has engaged in an act that was independently wrongful distinguishes lawful competitive behavior from tortious interference”].) Nothing in this alleged modification of the gate in any supports a finding of conduct intended to support the good faith requirements in the execution of the injunction, and instead demonstrates an effort to disrupt business operations with the intent of deterring future business. [Comp., ¶¶ 40-46, 48-53, 76-77.] This is not a competitive practice, but a separate troublemaking act with the intent of causing obstruction.

 

“We interpret Della Penna's directive that courts give greater solicitude to existing contractual relationships to mean that the requirement of wrongfulness apart from the interference itself does not apply to a cause of action for intentional interference with existing contractual relations; it applies only to a cause of action for intentional interference with prospective economic advantage.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 343.)

 

The argument relies entirely on a challenge to paragraph 22 of the first amended complaint which states: “Triscenic is informed and believes, and thereupon alleges, that Starrantino persuaded Rise to terminate its License Agreement with Triscenic, cooperate in Starrantino’s efforts to terminate Starrantino’s Lease with Triscenic so that Rise could enter into a lease agreement directly with Starrantino which would ultimately (i) lower Rise’s monthly lease/license payment while mutually (ii) increasing the monthly sum paid to Starrantino.”

 

The argument apparently relies on challenges over the interpretation of the agreement between the parties, which the court already rejected as beyond the scope of the demurrer. The citation to paragraph 22 of the operative complaint otherwise fails to establish any lack of independently wrongful conduct for purposes of challenging at the pleading stage. (Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1079 [Plaintiff need not allege willful conduct, but only that that “the defendant's conduct [] ‘fall outside the boundaries of fair competition”].) The court otherwise finds no legally or factually supported argument as to the contractual relations claim.

 

4th Cause of Action: Breach of Contract

5th Cause of Action: Breach of the Implied Covenant of Good Faith and Fair Dealing

The Starrantinos challenge the breach of contract and bad faith claims on grounds of a violation of the terms via the third party “special license agreement” with Rise.

 

“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; (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

 

The demurrer once again relies on argument extrinsic to the scope of the demurrer via improper contractual interpretation assumptions. The court otherwise finds no valid challenge to the breach of contract claim within the parameters of the operative complaint. To the extent The Starrantinos fail to successfully challenge the breach of contract cause of action, the court also finds a lack of support for the argument against a valid bad faith claim. (Racine & Laramie, Ltd. v. California Dept. of Parks & Rec. (1992) 11 Cal.App.4th 1026, 1031-1032; Carma Developers (Cal.), Inc. v. Marathon Dev. California, Inc., supra, 2 Cal.4th at p. 373.)

 

The demurrer is overruled. Defendant to answer in 10 days.

 

Given the complaint under case number 22CHCV00458 was filed on June 22, 2022, before the subject action was commenced on August 23, 2022, any party may file a notice of related cases with Department 47.

 

Defendants to give notice.