Judge Teresa A. Beaudet, Case Number: 22STCV24084, Date: 2023-07-21 Tentative Ruling

On July 26, 2022, Plaintiff Houman Reyhanian (“Plaintiff”) filed this action against Defendants Joyce Moussouros (“Moussouros”) and Ares Management. The original Complaint asserted one cause of action for breach of contract.

On February 17, 2023, the Court issued an order sustaining Moussouros’s demurrer to the first cause of action of the original Complaint, with leave to amend.

On March 6, 2023, Plaintiff filed the operative First Amended Complaint (“FAC”) against Moussouros, Ares Management, and 1335 S. Los Angeles Street, LLC. The FAC asserts causes of action for (1) declaratory relief, and (2) breach of written contract.

Moussouros and 1331 S. Los Angeles Street, LLC, erroneously sued as 1335 S. Los Angeles Street, LLC (jointly, “Defendants”) now demur to both causes of action of the FAC. Plaintiff opposes.

In the FAC, Plaintiff alleges that as of November 21, 2019, Plaintiff and Moussouros entered into a written lease agreement pursuant to which Plaintiff leased premises located at 1335 S. Los Angeles Street, Los Angeles, California 90015 (the “Premises”) from Moussouros. (FAC, ¶¶ 1, 9.) Plaintiff operated his business at the Premises, which involved the manufacture and sale of women’s clothing. (FAC, ¶ 12.) In connection with the operation of his business, there was valuable inventory and other personal property at the Premises. (FAC, ¶ 12.)

On or about May 1, 2022, a fire erupted at the building next door to the Premises. (FAC, ¶ 11.) Plaintiff alleges that “[u]nknown third parties entered the Premises because the exterior walls were not repaired due to the fire damage, and stole Plaintiff s personal property, including inventory and other personal property.” (FAC, ¶ 14.) Plaintiff alleges that despite his notice to defendants of defendants’ obligation to repair the exterior walls, defendants failed to timely do so, which allowed the Premises to remain open, unsecured, and accessible to third parties. (FAC, ¶ 13.)

In support of the first cause of action for declaratory relief, Plaintiff alleges that “Plaintiff contends that pursuant to Section 7.2 of the lease, Defendants, as Lessors, have the obligations to keep in good order, condition and repair the exterior walls, that the exclusions to such obligations contained in Section 17 do not include Section 8.8 of the Lease, and therefore, Defendants, as Lessors, had the obligation to keep the damaged exterior walls in good order, condition and repair. Plaintiff further contends that pursuant to Section 38 of the Lease, Defendants were to repair the exterior walls in order to give Plaintiff quiet possession of the Premises.” (FAC, ¶ 17(A).) Plaintiff alleges that “Defendants contend that they did not have the obligation to keep in good order, condition and repair the exterior walls that were damaged as mentioned above, or that they were obligated to do so in order to provide Plaintiff with quiet possession of the Premises.” (FAC, ¶ 17(B).) Plaintiff alleges that accordingly, “[a]n actual controversy has arisen and now exists between the parties.” (FAC, ¶ 17.)

Plaintiff further alleges that “an actual controversy also exists because a reasonable interpretation of the Lease requires the obligations set forth in Paragraph 7.2 be given full force and effect and the failure to give this provision meaning by applying the waiver of liability contained in Paragraph 8.8 would make the obligations contained in Paragraph 7.2 illusory.” (FAC, ¶ 19.)

In the demurrer, Defendants cite to Zakk v. Diesel (2019) 33 Cal.App.5th 431, 456, where the Court of Appeal noted that “[f]ollowing an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court’s order…The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.” As set forth above, on February 17, 2023, the Court issued an Order sustaining Moussouros’s demurrer to the original Complaint’s first cause of action for breach of contract, with leave to amend. The Court’s February 17, 2023 Order did not expressly provide that Plaintiff may amend the Complaint to add a new cause of action for declaratory relief.

In the opposition, Plaintiff asserts that Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, cited by Defendants, supports Plaintiff adding the new cause of action for declaratory relief. Plaintiff notes that the Alacer Corp. Court held as follows:

“First, Alacer contends plaintiff could not add a new cause of action to the third

pleading to which the demurrer has been sustained”].) This rule is inapplicable here because the new cause of action directly responds to the court’s reason for sustaining the earlier demurrer. The court found plaintiff failed to allege she had standing as a beneficial shareholder of Alacer to bring shareholder derivative claims. The new declaratory relief cause of action supports her standing claim by seeking a declaration that she has a community property interest in Alacer—i.e., that she is a beneficial shareholder of Alacer. Plaintiff may not have been free to add any cause of action under the sun to her complaint, but the court should have allowed her to add this cause of action to establish her standing.” (Patrick v. Alacer Corp., supra, 167 Cal.App.4th at p. 1015 [emphasis in original].)

In its February 17, 2023 Order on Moussouros’s demurrer to the original Complaint, the Court found, inter alia, that “Moussouros has demonstrated that Plaintiff failed to state facts sufficient to constitute a cause of action for breach of contract based on Moussouros’s arguments pertaining to Paragraph 8.8 of the lease. Plaintiff requests that leave to amend be granted in the event the Court sustains the demurrer, ‘in order to set forth additional facts that the Court may believe lacking, including, but not limited to specifically referring to Paragraph 7.2…’” (Order at p. 5:11-16.) As set forth above, Plaintiff alleges in the new declaratory relief cause of action that “an actual controversy also exists because a reasonable interpretation of the Lease requires the obligations set forth in Paragraph 7.2 be given full force and effect and the failure to give this provision meaning by applying the waiver of liability contained in Paragraph 8. 8 would make the obligations contained in Paragraph 7.2 illusory.” (FAC, ¶ 19.) The Court finds that the declaratory relief cause of action in the FAC responds to the Court’s reason for sustaining Moussouros’s earlier demurrer to the original Complaint.

Defendants also assert that the declaratory relief cause of action is not ripe. “An action for declaratory relief is authorized by section 1060 of the Code of Civil Procedure which provides in part: ‘Any person . . . who desires a declaration of his rights or duties with respect to another . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action in the superior court . . . for a declaration of his rights and duties in the premises. . . .’ In short, the essence of an action for declaratory relief is an allegation showing that either an actual (present), or probable future, controversy exists relating to the legal rights and duties of the parties, coupled with a request that those rights and duties be adjudged by the court.” ((Sherwyn v. Department of Social Services (1985) 173 Cal.App.3d 52, 58.) In California Water & Telephone Co. v. County of Los Angeles (1967) 253 Cal.App.2d 16, 22, the Court of Appeal noted that “[a] controversy is ‘ripe’ when it has reached, but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.”

In the demurrer, Defendants argue that “the ‘actual controversy’ is not ripe for declaratory judgment. Plaintiff’s property/inventory was stolen from the Premises sometime before September 16, 2022[1] (the date Plaintiff filed its original Complaint in this action). Declaratory relief may have been appropriate before any alleged damage was suffered by Plaintiff if there was actual ambiguity in the Lease. However, because the declaratory relief requested in this case is reactionary in nature, the appropriate cause of action under the FAC is breach of lease.” (Demurrer at p. 11:1-6.)

Plaintiff counters that “[t]he fact that the fire damage has already taken place or that the Landlord did not take care of the damaged exterior walls which failure allowed access to third parties and which damaged Plaintiff, actually means that the facts have sufficiently congealed to permit and [sic] intelligent and useful decision to be made. This is not a case where there has been no fire, and Plaintiff argues that ‘if there is a fire in the future, and if the exterior walls get damaged, and if the landlord does not repair or maintain the exterior walls, then I (the Plaintiff) want a declaratory judgment that the Lease obligates the Landlord to do so.” (Opp’n at p. 7:8-17.) The Court finds that Plaintiff has the better argument. The Court does not find that Defendants have demonstrated that declaratory relief cause of action is not ripe.

Based on the foregoing, the Court overrules the demurrer to the first cause of action.

Defendants assert that the second cause of action for breach of written contract fails because the subject lease precludes Defendants from liability for the stolen property of Plaintiff.

A copy of the alleged lease agreement is attached as Exhibit 1 to the FAC. (FAC, ¶ 9, Ex. 1.) Defendants notes that Paragraph 8.8 of the lease provides as follows:

“8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC, or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury of Lessee’s business or for any loss of income or profit therefrom.” (FAC, ¶ 9, Ex. 1, ¶ 8.8, emphasis added.)

Like Moussouros argued in the demurrer to the original Complaint, Defendants argue here that “Section 8.8 of the Lease absolves Defendant of liability for any damage or injury resulting from any cause arising from conditions of the Premises or any other sources.” (Demurrer at p. 12:1-3, emphasis omitted.) In the opposition, Plaintiff notes that Paragraph 7.2 of the lease provides as follows:

“7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior

walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of the Lease.” (FAC, ¶ 9, Ex. 1, ¶ 7.2, emphasis added.)

In the breach of written contract cause of action, Plaintiff now alleges that “[o]n or about May 7, 2022, May 22, 2022 and May 27, 2022, Defendants breached the Lease by failing to perform their obligations to keep in good order, condition and repair the exterior walls of the Premises despite their obligation to do so pursuant to Section 7.2 of the Lease, and to provide Plaintiff with quiet possession of the Premises.” (FAC, ¶ 23.) Plaintiff also notes that Section 8.8 of the lease does not reference Section 7.2’s list of “Lessor’s Obligations.” (FAC, ¶ 9, Ex. 1, ¶ 8.8.)

In the demurrer, Defendants note that Section 7.2 provides that “nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises.” (FAC, ¶ 9, Ex. 1, ¶ 7.2.) Defendants argue that “[w]indows and doors are arguably the only two ways a person can access a property, and the Lease explicitly provides that the Landlord is not required to maintain these access points.” (Demurrer at p. 12:18-21.) The Court does not find that this argument is appropriate for demurrer. As noted in the Court’s February 17, 2023 Order, the purpose of a demurrer is to “test[] the legal sufficiency of the allegations in a complaint.” (¿Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388¿.) Plaintiff does not allege in the FAC that defendants failed to maintain windows, doors, or plate glass of the Premises, or that defendants had an obligation to do so.

Plaintiff also asserts that “[a]t a minimum, the two Sections [Section 7.2 and 8.8] are inconsistent and should be construed against the Defendant Landlord, who drafted the Lease.” (Opp’n at p. 10:11-13.) In the FAC, Plaintiff alleges that Moussouros drafted the lease, and that Moussouros required that Plaintiff sign the lease without any revisions. (FAC, ¶ 10.) In the demurrer, Defendants note that “[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” ((Civ. Code, § 1641.) In the opposition, Plaintiff counters that under Civil Code section 1654, “[i]n cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.”

In the demurrer, Defendants also note that Paragraph 8.2(a) of the lease provides in pertinent part:

“Carried by Lessee. Lessee shall obtain and keep in force a Commercial General

Liability policy of insurance protecting Lessee and Lessor as an additional insured

against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto.” (FAC, ¶ 9, Ex. 1, ¶ 8.2(a).)

In addition, Defendants note that Paragraph 8.4(a) of the lease provides in pertinent part:

“Property Damage. Lessee shall obtain and maintain insurance coverage on all of

Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall Provide Lessor with written evidence that such insurance is in force.” (FAC, ¶ 9, Ex. 1, ¶ 8.4(a).)

Defendants asserts (as Moussouros argued in the demurrer to the original Complaint) that pursuant to paragraphs 8.2 and 8.4 of the lease, Plaintiff was required to obtain and keep current

Defendants again argue that “to the extent that Plaintiff collected proceeds for the stolen property from the insurance policy Plaintiff was required to maintain, the damages sought against Defendant should be reduced by the amount of the collection.” (Demurrer at p. 15:3-5.) As discussed in the Court’s February 17, 2023 Order on Moussouros’s demurrer to the original Complaint, the Court finds that this is a factual argument that is not appropriate for demurrer. Again, the purpose of a demurrer is to “test[] the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc., supra, 235 Cal.App.4th at p. 388.)[2]

Based on the foregoing, the Court finds that Plaintiff’s second cause of action for breach of written contract is sufficiently alleged. The Court thus overrules the demurrer to the second cause of action.

Based on the foregoing, Defendants’ demurrer is overruled in its entirety. The Court orders Defendants to file and serve their answer(s) to the FAC within 10 days of the date of this order.¿

[1]The Court notes that Plaintiff’s action was filed on July 26, 2022.

[2]The Court also notes that Defendants reply contains arguments concerning the declaratory relief cause of action which were not included in the demurrer. “Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.¿” (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453¿.)

HOUMAN REYHANIAN, Plaintiff, vs. JOYCE MOUSSOUROS, et al., Defendants.	Case No.:	22STCV24084
	Hearing Date:	July 21, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: DEFENDANTS’ DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT

Superior Court of California

County of Los Angeles

Department 50