Judge Teresa A. Beaudet, Case 18STCV06807 2023-04-25 Tentative Ruling

Plaintiff Brian Weiner, individually and derivatively on behalf of Onyx Tower Management, LLC (“Plaintiff”) filed this action on November 30, 2018 against a number of defendants. The operative Third Amended Complaint (“TAC”) was filed on October 22, 2020, asserting causes of action for breach of contract, breach of the covenant of good faith and fair dealing, constructive trust, accounting, declaratory relief, constructive fraud, fraud, and appointment of receiver.

On March 6, 2020, defendant Michael Hakim filed a Cross-Complaint against a number of cross-defendants. On January 19, 2021, a number of defendants filed a Cross-Complaint against Plaintiff.

On January 19, 2021, Defendants Onyx Tower Group, LLC, Sam Hakim, Julia Hakim, Tanya Hakim, Onyx Tower, LLC, Said Hakim, and Onyx Tower Holdings, LLC (collectively, “Defendants”) filed an answer to the TAC. Plaintiff moved for judgment on the pleadings as to Defendants’ answer to the TAC.

On January 30, 2023, the Court issued an order denying Plaintiff’s motion for judgment on the pleadings as to the first and fourteenth affirmative defenses and the general denial set forth in Defendants’ answer. Plaintiff’s motion for judgment on the pleadings was granted as to the third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-third, twenty-fourth, twenty-fifth, twenty-sixth, twenty-seventh, twenty-eighth, twenty-ninth, thirtieth, thirty-first, thirty-second, thirty-third, and thirty-fourth affirmative defenses, with leave to amend.

Plaintiff now demurs to certain affirmative defenses in Defendants’ amended answer to the TAC. Defendants oppose.[1]

“A party against whom an answer has been filed may object, by demurrer as provided in Section 430.30, to the answer upon any one or more of the following grounds: (a) The answer does not state facts sufficient to constitute a defense. (b) The answer is uncertain. As used in this subdivision, ‘uncertain’ includes ambiguous and unintelligible. (c) Where the answer pleads a contract, it cannot be ascertained from the answer whether the contract is written or oral.” ((Code Civ. Proc., § 430.20.) Every affirmative defense “shall be separately stated, and the several defenses shall refer to the causes of action which they are intended to answer, in a manner by which they may be intelligibly distinguished.” (Code Civ. Proc., § 431.30, subd. (g).)

Plaintiff contends that certain affirmative defenses alleged in Defendants’ amended answer to the TAC fail to state facts sufficient to constitute a defense.

As an initial matter, Defendants state in their opposition to the demurrer that they withdraw the fourth, fifteenth, seventeenth, twenty-first, twenty-second, twenty-third, twenty-fifth, thirty-second, thirty-third, and thirty-fourth affirmative defenses. Thus, Plaintiff’s demurrer to these affirmative defenses is moot.

In support of the second affirmative defense (off set), Defendants allege, inter alia, that “Plaintiffs’ recovery must be reduced or eliminated and subject to set off for failure to pay Plaintiffs’ proportional share of property taxes, property insurance, maintenance, and repairs on the subject real property. Plaintiff, Brian Weiner, never tendered any of the necessary monies required to participate in acquisition of the Onyx Tower Building; and Brian Weiner did not provide any material financial support with regard to his allegations in paragraph 29 of his TAC that he would be an equal owner of the Onyx Tower Building.” (Amended Answer, p. 13:15-21.)

Plaintiff asserts that “Defendants do not identify the source of any document or law imposing such duties and legal requirements upon Mr. Weiner.” (Demurrer at p. 3:14-17.) But Plaintiff does not cite to legal authority demonstrating that such allegations are necessary. The Court does not find that the second affirmative defense is in the form of a legal conclusion, and overrules the demurrer to this affirmative defense.

Defendants also assert that the fifth affirmative defense (failure to mitigate) is conclusory and fails to allege sufficient facts to constitute a defense. In support of this affirmative defense, Defendants allege that “Brian Weiner did not and has not attempted to mitigate any of his alleged damages with regard to his claims set forth in the TAC.” (Amended Answer at p. 5:26-27.) However, as Plaintiff notes, Defendants do not allege facts to support this assertion. Thus, the Court sustains the demurrer to the fifth affirmative defense.

In support of the sixth affirmative defense (laches), Defendants allege, inter alia, that “Plaintiff unreasonably delayed in filing this TAC, thus causing prejudice to the answering Defendants, and therefore, the TAC is barred by the equitable doctrine of laches.” (Amended Answer at p. 6:4-6.) Plaintiff notes that “[t]he defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.” ((Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 68.) Plaintiff notes that Defendants do not allege any facts in the sixth affirmative defense demonstrating how any delay in the filing of this action prejudiced them. In addition, it is unclear whether Defendants are alleging that Plaintiff acquiesced in the act(s) about which Plaintiff complains.

In support of the seventh affirmative defense (equitable estoppel), Defendants allege, inter alia, that “Plaintiffs are equitably estopped from asserting said causes of action by reason of Plaintiffs’ acts, statements, and/or representations that were relied upon by these answering Defendants to their prejudice and detriment.” (Amended Answer at p. 6:22-25.) Plaintiff notes that “[f]our elements must ordinarily be proved to establish an equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury.” ((Gaunt v. Prudential Ins. Co. (1967) 255 Cal.App.2d 18, 23.) As Plaintiff notes, Defendants did not plead facts in the seventh affirmative defense pertaining to the foregoing elements. Rather, Defendants allege in the seventh affirmative defense that Plaintiff’s claims are time-barred. Accordingly, the Court sustains the demurrer to the seventh affirmative defense.

In support of the eighth affirmative defense of waiver, Defendants allege, inter alia, that “[a]s an eighth and separate affirmative defense to each and every cause of action found in this TAC, these answering Defendants allege that Plaintiff is barred from asserting each and every cause of action by reason of Plaintiffs’ waiver.” (Amended Answer at p. 7:11-13.) Defendants note that “[a] waiver is the relinquishment of a known right. A waiver may occur (1) by an intentional relinquishment or (2) as the result of an act which, according to its natural import, is so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.” ((Ibid. [internal quotations omitted].) As Plaintiff notes, Defendants fail to allege what right(s) Plaintiff had and subsequently relinquished, nor do they explain how Plaintiff supposedly relinquished those rights, either intentionally or otherwise. Accordingly, the Court sustains the demurrer to the eighth affirmative defense.

As to the ninth affirmative defense of “Plaintiffs’ consent,” Plaintiff notes that “[c]onsent of the parties is essential to the existence of a contract. Consent must be free, mutual and [c]ommunicated by each to the other.” ((Roth v. Malson (1998) 67 Cal.App.4th 552, 557 [internal quotations and citations omitted].) In support of the ninth affirmative defense, Defendants allege that “Plaintiff consented to the modifications to the agreements between the parties.” (Amended Answer at p. 8:3-4.) Plaintiff notes that Defendants do not allege what contracts or agreements they are referring to, what modifications Plaintiff allegedly consented to, how or in what manner Plaintiff allegedly consented to any such modifications, or when such consent or ratification was given or approved. Accordingly, the Court sustains the demurrer to the ninth affirmative defense.

Defendants’ tenth affirmative defense is that “Plaintiff had full knowledge and approval.” (Amended Answer at p. 8:17.) However, the allegations of this affirmative defense do not appear to concern Plaintiff’s alleged “knowledge” or “approval” of anything. As Plaintiff notes, this affirmative defense appears to combine several other affirmative defenses. Based on the foregoing, the Court sustains the demurrer to the tenth affirmative defense.

In support of the eleventh affirmative defense of indemnification, Defendants allege that “Plaintiff has agreed to indemnification of these Defendants who are members on the entity for which Plaintiff brought a derivative action and lacks standing to bring this action through the operating and other agreements for said entity.” (Amended Answer at p. 9:21-23.) Plaintiff notes that “[t]he right to indemnity flows from payment of a joint legal obligation on another’s behalf. The elements of a cause of action for indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is contractually or equitably responsible.” ((Expressions at Rancho Niguel Assn. v. Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139 [internal citations and emphasis omitted].)

In the demurrer, Plaintiff notes Defendant refer to the “Onyx Tower Management agreement.” (Amended Answer at p. 9:25.) Plaintiff notes that the TAC in this action attaches an “OTM Operating Agreement.” (TAC, ¶ 188, Ex. 4.) Plaintiff asserts that “the TAC confirms that the Onyx Tower Management Operating Agreement (TAC, Ex. 4, ¶ 5.6.1. thereto) does not permit indemnity,” as it provides “no debt shall be incurred by the Members in order to provide a source of funds for any indemnity, and no Member shall have any personal liability (or liability to make any additional Capital Contributions) on account thereof.” (Demurrer at p. 8:17-20.) Plaintiff asserts that accordingly, Defendants have failed to plead facts sufficient to constitute a defense of indemnity.

In the opposition, Plaintiff asserts that the facts of the eleventh affirmative defense are “sufficient to establish that Brian Weiner’s failures to follow the terms of the contract(s) creates a scenario where he caused the Defendants damages. CACI 380, implied Contractual Indemnity is on point here.” (Opp’n at p. 7:13-16.) However, the eleventh affirmative defense does not allege facts demonstrating why implied contractual indemnity is purportedly applicable here. Thus, the Court sustains the demurrer to the eleventh affirmative defense.

Defendant’s twelfth affirmative defense is for “vagueness, uncertainty [and] incompleteness.” Defendant’s twenty-seventh affirmative defense is for “vague and ambiguous.”

Plaintiff asserts that these affirmative defenses are duplicative and are “essentially a repeat argument for failure to state a claim.” (Demurrer at pp. 9:1-2; 16:13-14.) Defendants concede in the opposition that the twenty-seventh affirmative defense is “a duplicate of the 12th Affirmative Defense.” (Opp’n at p. 13:19.) Plaintiff also asserts that the twelfth affirmative defense does not set forth new matter. “Under Code of Civil Procedure section 431.30, subdivision (b)(2), the answer to a complaint must include ‘[a] statement of any new matter constituting a defense.’ The phrase ‘new matter’ refers to something relied on by a defendant which is not put in issue by the plaintiff.” ((State Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228 Cal.App.3d 721, 725.) Defendants do not respond to this point in their opposition. Based on the foregoing, the Court sustains the demurrer to the twelfth and twenty-seventh affirmative defenses.

Defendants’ thirteenth affirmative defense is for anticipatory repudiation. In support of this affirmative defense, Defendants allege that “to the extent that these answering Defendants or third party and the Plaintiff are parties to any alleged contract on the terms alleged in the TAC, said Defendants or third party is entitled to terminate and/or rescind such contract on the grounds that Plaintiff actually and anticipatorily breached said contract and refused and failed to comply with his duties under said contract.” (Amended Answer at p. 11:13-17.) In the demurrer, Plaintiff cites to Taylor v. Johnston (1975) 15 Cal.3d 130, 137, where the California Supreme Court noted that “there may be a breach by anticipatory repudiation: [by] its very name an essential element of a true anticipatory breach of a contract is that the repudiation by the promisor occur before his performance is due under the contract.” (Internal quotations and emphasis omitted.) As Plaintiff notes, Defendants do not allege facts demonstrating how Plaintiff supposedly repudiated a contract prior to performance being due. Rather, Defendants allege that “Brian Weiner failed to fulfill his obligations, duties and/or required actions necessary to fulfill the terms and conditions of the Onyx Tower Management agreement…” (Amended Answer at p. 11:17-19.) Plaintiff also notes that Defendants do not specify what contract(s) they are referring to. Thus, the Court sustains the demurrer to the thirteenth affirmative defense.

In support of the sixteenth affirmative defense for lack of consideration, Defendants allege that “the TAC is barred on the grounds that any contract alleged in the TAC must fail for lack of consideration.” (Amended Answer at p. 14:20-21.) In the demurrer, Plaintiff asserts that Defendants fail to provide facts to support their contention that there is a lack of consideration. However, Defendants allege that “Brian Weiner alleges in his TAC that he was entitled to various monies, various performances and/or other benefits in the various contracts he claims were breached by Defendants, but he fails to provide a substantive preliminary factual basis as to what consideration that he tendered and was accepted by the Defendants to entitle him to the claimed benefits of the bargain as to each contract he alleges was breached by the Defendants. Brian Weiner never performed any substantial services or provided any substantial monies to the Defendants as required under the contracts which he alleges they breached.” (Amended Answer at p. 14:20-26.) The Court finds that the sixteenth affirmative defense is sufficiently alleged and overrules the demurrer to this affirmative defense.

In support of the eighteenth affirmative defense of “unclean hands,” Defendants allege that “Plaintiffs should be precluded from any recovery whatsoever against these answering Defendants on the ground that, by way of Brian Weiner’s actions and omissions, Plaintiff has unclean hands.” (Amended Answer at p. 17:4-6.) In the demurrer, Plaintiff notes that “[n]ot all wrongful conduct constitutes unclean hands. Only if the misconduct is directly related to the cause at issue can a defendant invoke the doctrine. The misconduct, however, need not be a crime or an actionable tort. Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine.” ((Aguayo v. Amaro (2013) 213 Cal.App.4th 1102, 1110 [internal quotations and citations omitted].) Plaintiff asserts that “Defendants fail to provide facts to support its contention that Plaintiffs’ alleged conduct has gone so far as to violate the conscience, good faith, or any other equitable principle.” (Demurrer at p. 11:24-25.) However, Defendants allege, inter alia, that “Brian Weiner misrepresented to the Defendants what he was going to do to fulfill his obligations under the contracts he alleges were breached by the Defendants. He did not provide substantive material support to the Defendants. He failed to fulfill his duties and obligations under the alleged contracts.” (Amended Answer at p. 17:6-9.) Thus, the Court overrules the demurrer to the eighteenth affirmative defense.

In support of the nineteenth affirmative defense for “Defendants’ performance was excused,” Defendants allege that “any alleged breach on the part of the answering Defendants resulted from the acts or omissions of Plaintiff, and therefore was excused.” (Amended Answer at p. 18:13-14.) As Plaintiff notes, “[t]his defense is devoid of facts explaining what conduct is at issue, which contract is at issue, when said conduct was excused, or under what circumstances the conduct was supposedly excused.” (Demurrer at p. 12:20-21.) Thus, the Court sustains the demurrer to the nineteenth affirmative defense.

In support of the twentieth affirmative defense, Defendants allege that “their actions with respect to Plaintiff were reasonable, justified, without malice, and were based upon the legitimate, economic interest of the answering Defendants and therefore were privileged.” (Amended Answer at p. 19:19-21.) In the demurrer, Plaintiff asserts that “Defendants do not state what actions of any specific Defendant was/were reasonable and justified, when these actions supposedly occurred, or how or why the actions were reasonable. Defendants fail to explain why or how their conduct was privileged whatsoever. This defense provides no relevant facts in support.” (Demurrer at p. 13:7-19.) The Court agrees that Defendants do not allege facts demonstrating why their actions were purportedly “reasonable and justified.” Rather, the twentieth affirmative defense concerns Plaintiff’s purported actions and omissions. Thus, the Court sustains the demurrer to the twentieth affirmative defense.

In support of the twenty-fourth affirmative defense for “breach of agreement by Plaintiff,” Defendants allege that “the TAC is barred on the grounds that Plaintiff has breached any agreement with these answering Defendants which is the subject of this litigation.” (Amended Answer at p. 22:25-26.) Plaintiff asserts that this affirmative defense is insufficient because “Defendants do not state what agreements were breached by Plaintiffs, nor do they establish, if any, services Plaintiffs were required to provide under the contracts. Defendants also do not allege facts to show how Plaintiffs’ alleged breach caused Defendants injury or harm.” (Demurrer at p. 14:23-26.) However, Plaintiff alleges, inter alia, that “Brian Weiner breached those contracts alleged in the TAC as he never performed any substantial services or provided any substantial monies to the Defendants as required under the contracts which he alleges they breached,” and that “Brian Weiner failed to fulfill his obligations, duties and/or required actions necessary to fulfill the terms and conditions of the Onyx Tower Management agreement by among others things not implementing any recognized system of management, failing to follow administrative practices, failing to be present at the Onyx Tower Building to fulfill his duties and obligations, attempting to shift his responsibilities under the OTM agreement to third parties, failing to participate in running and/or oversight of the management of the Onyx Tower building and engaging in other breaches of his duties and/or responsibilities with regard to the management of the Onyx Tower Building.” (Amended Answer at p. 23:3-16.) The Court finds that the allegations of the twenty-fourth affirmative defense are sufficient and thus overrules the demurrer to this affirmative defense.

In support of the twenty-sixth affirmative defense of estoppel, Defendants allege that “each and every cause of action contained in Plaintiffs’ TAC is barred in whole or in part by the doctrine of estoppel.” (Amended Answer at p. 25:12-13.) In the demurrer, Plaintiff cites to Lux v. Haggin (1886) 69 Cal. 255, 266, where the California Supreme Court noted that “[t]o constitute the estoppel the party claiming the benefit of it must be destitute of knowledge of his own legal rights and of the means of acquiring such knowledge. To constitute such an estoppel, it must also be shown that the person sought to be estopped has made an admission or done an act, with the intention of influencing the conduct of another, or that he had reason to believe would influence his conduct, inconsistent with the evidence he proposes to give or the title he proposes to set up; that the other party has acted upon or been influenced by such act or declaration; that the party so influenced will be prejudiced by allowing the truth of the admission to be disproved.” (Internal citations and emphasis omitted.) Plaintiff asserts that Defendants have not alleged facts to show that they lack knowledge of their rights, or that Plaintiff intended to improperly influence Defendants. The Court agrees, and sustains the demurrer to the twenty-sixth affirmative defense.

In support of the twenty-eighth affirmative defense for “delay,” Plaintiff alleges that “Plaintiff has waited an unreasonably long time to file this action…” (Amended Answer at p. 28:4.) In the demurrer, Plaintiff asserts that no prejudice is identified. However, Defendants allege that “Plaintiff has waited an unreasonably long time to file this action, and the Defendants ability to defend this lawsuit has been severely prejudiced due to this unreasonable delay by denying these answering Defendants an earlier opportunity to obtain documents, witnesses and other evidence in their defense of Plaintiffs’ allegations in the TAC.” (Amended Answer at p. 28:4-7.) The Court finds that the twenty-eighth affirmative defense is sufficiently alleged and overrules the demurrer to this affirmative defense.

In support of the twenty-ninth affirmative defense for “performance of duties or excused duties,” Defendants allege that they “performed all duties owed under the contract(s) other than any duties which were prevented or excused, and therefore never breached the agreement.” (Amended Answer at p. 29:22-23.) Plaintiff contends that “[s]ince a denial of a breach of contract is not new matter, it can never constitute an affirmative defense as a matter of law.” (Demurrer at p. 17:9-10.) In support of this assertion, Plaintiff cites to State Farm Mut. Auto. Ins. Co. v. Superior Court, supra, 228 Cal.App.3d at page 725, where the Court of Appeal noted that “[u]nder Code of Civil Procedure section 431.30, subdivision (b)(2), the answer to a complaint must include ‘[a] statement of any new matter constituting a defense.’ The phrase ‘new matter’ refers to something relied on by a defendant which is not put in issue by the plaintiff. Thus, where matters are not responsive to essential allegations of the complaint, they must be raised in the answer as ‘new matter.’ Where, however, the answer sets forth facts showing some essential allegation of the complaint is not true, such facts are not ‘new matter,’ but only a traverse.” (Internal citations omitted.) Defendants do not address this assertion in the opposition, which the Court treats as a concession of the merits of the argument. Thus, the Court sustains the demurrer to the twenty-ninth affirmative defense.

In support of the thirtieth affirmative defense of “failure to comply with terms of contract,” Defendants allege, inter alia, that “Plaintiff failed to comply with the terms of the contract(s) as prescribed therein as well as breaching the implied covenant of good faith and fair dealing by acting unreasonably, denying the benefits of the contract(s) to these answering Defendants.” (Amended Answer at p. 30:24-26.) Defendants contend that “[b]ecause no actual breach of contract has been actually articulated in this affirmative defense, as confirmed by the contracts incorporated and referenced by Defendants, Defendants have failed to state facts sufficient to constitute this affirmative defense.” (Demurrer at p. 17:19-22.) The Court finds that the allegations of the thirtieth affirmative defense are sufficient at the pleading stage. Defendants allege, inter alia, that “Brian Weiner failed to fulfill his obligations, duties and/or required actions necessary to fulfill the terms and conditions of the Onyx Tower Management agreement by among others things not implementing any recognized system of management, failing to follow administrative practices, failing to be present at the Onyx Tower Building to fulfill his duties and obligations, attempting to shift his responsibilities under the OTM agreement to third parties, failing to participate in running and/or oversight of the management of the Onyx Tower building and engaging in other breaches of his duties and/or responsibilities with regard to the management of the Onyx Tower Building.” (Amended Answer at p. 31:1-8.) Thus, the Court overrules the demurrer to the thirtieth affirmative defense.

In support of the thirty-first affirmative defense for “consent vitiated,” Defendants allege that “Plaintiff obtained the Defendants consent to the contract(s) through fraud, deceit or misrepresentations by the Plaintiff, and that as a result the contract(s) is invalid as to the Plaintiff.” (Amended Answer at p. 31:26-28.) Plaintiff contends that the thirty-first affirmative defense is insufficient because “Defendants have not set forth a single element of fraud in any manner, let alone with particularity.” (Demurrer at p. 18:9-10.) Indeed, Defendants do not allege facts demonstrating how Plaintiff obtained Defendants’ consent to the contract(s) at issue through fraud, deceit and/or misrepresentations by Plaintiff. Thus, the Court sustains the demurrer to the thirty-first affirmative defense.

Based on the foregoing, Plaintiff’s demurrer is sustained as to the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, nineteenth, twentieth, twenty-sixth, twenty-seventh, and thirty-first affirmative defenses, with leave to amend. The Court notes that its January 30, 2023 Order concerning Defendants’ original answer to the TAC does not address the specific arguments discussed in this Order.

Plaintiff’s demurrer is overruled as to the second, sixteenth, eighteenth, twenty-fourth, twenty-eighth, twenty-ninth, and thirtieth affirmative defenses. Plaintiff’s demurrer is moot as to the fourth, fifteenth, seventeenth, twenty-first, twenty-second, twenty-third, twenty-fifth, thirty-second, thirty-third, and thirty-fourth affirmative defenses.

The Court orders Defendants to file and serve an amended answer, if any, within 20 days of the date of service of this Order.

[1]As an initial matter, Defendants assert that Plaintiff failed to adequately meet and confer in advance of filing the instant demurrer. But Plaintiff’s counsel states in her declaration that she “called [Defendants’ counsel] and emailed him about…the demurrer,” and that Defendants’ counsel “took no action whatsoever to follow through on his promise to schedule a meet and confer session regarding the subject demurrer.” (Levine Decl., ¶¶ 2-3.) Defendants’ counsel does not provide any competent evidence demonstrating that Plaintiff’s counsel failed to adequately meet and confer or attempt to do so.

brian weiner, et al., Plaintiffs, vs. onyx tower group, llc, et al., Defendants.	Case No.:	18STCV06807
	Hearing Date:	April 25, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: DEMURRER TO DEFENDANTS’ AMENDED ANSWER
AND RELATED CROSS-ACTION

Superior Court of California

County of Los Angeles

Department 50