Judge: Theodore R. Howard, Case: 23-1300292, Date: 2023-08-24 Tentative Ruling
A) Demurrer
Defendant Grand Avenue Plaza, LLC’s (“Defendant”) Demurrer to , plaintiff El Cangrejo Nice Restaurants, Inc.’s (“Plaintiff”) Complaint is SUSTAINED.
A demurrer challenges the defects appearing on the face of the pleading or from other matters properly subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The issue is the sufficiency of the pleading, not the truth of the facts alleged. Thus, no matter how unlikely or improbable, the allegations made must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corporation v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) Absent court orders or other items subject to judicial notice, or items attached as exhibits to the complaint, the court may not consider the contents of pleadings or other exhibits when ruling on a demurrer. (Day v. Sharp (1975) 50 Cal.3d 904, 914; Sosinsky v. Grant (1992) 6 Cal.App.4th 1746, 1749.)
“In our examination of the complaint we are guided by the well settled principles governing the testing of its sufficiency by demurrer: A demurrer admits all material and issuable facts properly pleaded. [Citations omitted.] However, it does not admit contentions, deductions or conclusions of fact or law alleged therein. [Citations omitted.]” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 666, 672.) “That plaintiff may not prove these allegations are not our concern; for, “plaintiff need only plead facts showing that he may be entitled to some relief ....” (Ibid.) “'[T]he allegations ... [are to] be liberally construed with a view to attaining substantial justice among the parties.”'” (Gonzales v. City of San Diego (1982) 130 Cal. App. 3d 882, 884.)
“ ‘[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.’ ” [Citations.] “ ‘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.’ ” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal. App. 5th 677, 695.)
Defendant demurs to all four causes of action (“COA”) on the bases that they fail to state sufficient facts to constitute a COA (Civ. Proc. Code § 430.10(e)) and they are uncertain (Civ. Proc. Code § 430.10(f)).
1) COA No. 1 – Fraud in the Inducement
To state a claim for fraudulent inducement, plaintiff must plead facts showing (1) concealment of a material fact; (2) which defendant had a duty to disclose; (3) that defendant intentionally concealed; (4) and for which plaintiff was innocently ignorant of; and (5) would not have made the purchase had he known. (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 775; Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1131; in accord, Dienes v. FCA US LLC, WL 1258118 at *1 (S.D. Cal. 2018).) ““[W]here material facts are known to one party and not to the other, failure to disclose them is not actionable fraud unless there is some relationship between the parties which gives rise to a duty to disclose such known facts.” [¶] As a matter of common sense, such a relationship can only come into being as a result of some sort of transaction between the parties.” [Emphasis in original.] (LiMandri v. Judkins (1997) 52 Cal. App. 4th 326, 337.) Additionally, “[t]he requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal. App. 4th 153, 157 (“Tarmann”).)
Plaintiff alleged that during negotiations for the lease, Defendant promised to renew the lease for an additional three years after the expiration of the term of the lease if Plaintiff paid for modifications/alterations which were needed on the property. (Complaint ¶ 11.) Plaintiff paid $86,000 in modifications and upgrades. (Complaint ¶ 12.) Defendant refused to renew the lease for the additional three year period as promised. (Complaint ¶ 13.) Plaintiff alleges Defendant never intended to offer Plaintiff a new lease, but instead made the false representation that it would renew the lease with the intent to induce Plaintiff into executing the Lease and making the modifications/alterations to the Property. (Complaint ¶¶ 14-15.) Plaintiff relied on those representations to enter into the Lease. (Complaint ¶ 16.) Plaintiff was ignorant the statements were misrepresentations and could not have reasonable discovered the falsity of the statements at the time, and would not have made $86,000 in modifications to the Property. (Complaint ¶¶ 17-18.) Plaintiff has suffered monetary damages. (Complaint ¶ 19.)
Plaintiff has largely pled sufficient facts against Defendant, however as Defendant is a corporate entity, Plaintiff is required to allege the names of the persons who made the alleged misrepresentations, their authority to speak on behalf of Defendant, whom they spoke with, and when the statements were made, which Plaintiff failed to do. (Tarmann, supra, 2 Cal. App. 4th at 157.)
Plaintiff’s opposition merely cites to the elements of a cause of action for fraud and claims that Complaint was sufficiently pled. However, as noted, the requirements for alleging fraud against a corporate entity have not been met.
The Demurrer is SUSTAINED with leave to amend as to this COA.
2) COA No. 2 – Breach of Contract
“To state a cause of action for breach of contract, a party must plead the existence of a contract, his or her performance of the contract or excuse for nonperformance, the defendant's breach and resulting damage. [Citation.] If the action is based on 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 agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal. App. 4th 299, 307.)
Plaintiff has alleged the existence of a contract (the Lease) and has attached a copy of the Lease. (Complaint ¶¶ 10, 22, Ex. 1.) This COA only states that Plaintiff performed all conditions, covenants, and promises of the agreement made in March 2020. (Complaint ¶ 22.) Defendant breached the Lease by refusing to renew the Lease for a new three-year period. (Complaint ¶¶ 11, 13, 23.) Plaintiff was damaged from Defendant’s alleged breach. (Complaint ¶¶ 14-15, 24.)
The only written agreement attached to the Complaint is the Lease, which does not state anything regarding the option to renew the lease for a three-year period. (Complaint, Ex. 1.) Plaintiff has not produced any written documents supporting the renewal agreement.
As noted by Defendant the contract states:
“This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.” (Complaint, Ex. 1, ¶ 22.)
Further:
“This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification.” (Complaint, Ex. 1, ¶ 46.)
The contract does not contain the promise to extend the lease, nor does the Complaint allege or have attached any other agreement between the parties that suggests a lease extension was promised. Plaintiff has alleged no other breach by Defendant of the contract.
Plaintiff argues an agreement does not necessarily need to be written and that it can be in part oral. Plaintiff also incorrectly attempts to argue the contract did not contain an integration clause or that the clause did not intend to integrate the full agreement between the parties. As noted, supra, the contract does contain a valid integration clause.
To the extent there may have been an oral agreement between the parties to extend the lease after the original lease term had ended, that oral agreement would be barred by the statute of frauds as it could not be performed within one year of the making and as the additional three-year lease term would not be permitted on an oral contract. (Civ. Code § 1624(a)(1) and (3).) The statute of frauds is a legal issue that may properly be decided on demurrer. (Parker v. Solomon (1959) 171 Cal. App. 2d 125, 136.)
The alleged oral agreement between Plaintiff and Defendant would require any such agreement to be performed within one-year, or otherwise to be written down. As the terms of the oral agreement were not capable of being completed within one-year, and as there is no written memorialization of such an agreement, the alleged oral agreement would be barred.
The Demurrer is SUSTAINED with leave to amend as to this COA.
3) COA No. 3 – Promissory Estoppel
“The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3)[the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’ [Citation.]” (Joffe v. City of Huntington Park (2011) 201 Cal. App. 4th 492, 513.)
Plaintiff alleges that during negotiations for the lease, Defendant made a promise to renew the lease for another three-years if Plaintiff made the required modifications to the Property. (Complaint ¶¶ 11, 26.) The promise was made to induce Plaintiff to incur such costs and expenses. (Complaint ¶ 27.) Plaintiff relied on the promise and incurred $86,000 in costs for the modifications. (Complaint ¶ 28.) Defendant refused to renew the Lease as promised. (Complaint ¶ 29.) Plaintiff seeks an order requiring Defendant to renew the lease for three-years, or requiring Defendant to offer a new lease. (Complaint ¶¶ 30-31.)
Defendant argues, “‘[e]stoppel cannot be established from ... preliminary discussions and negotiations.’ ” (Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal. App. 4th 411, 417 (“Granadino”.) However, in Granadino, the complaint alleged defendant told plaintiffs their application was under review for modification and a trustee sale was no longer scheduled. The court noted this wasn’t a promise, as it was not an assurance that someone would do something. (Id.) Instead, it was just a statement of fact that did not include a promise. Unlike Granadino, Defendant in this matter is alleged to have orally promised to extend the lease is Plaintiff covered the costs of the modifications to the Property. Defendant did not follow through with the alleged promise despite Plaintiff allegedly spending $86,000 on the modifications.
Defendant also argues that promissory estoppel cannot be invoked wherein the promisee’s reliance was bargained for and contends Plaintiff’ reliance was bargained for as part of the lease. “In other words, the Complaint makes it clear that Plaintiff entered into the Lease in exchange for Plaintiff making the alleged modifications.” (Demurrer, 8:5-7.) However. this is incorrect. The Complaint alleges Plaintiff made the modifications in exchange for Defendant agreeing to extend the lease by three-years. (Complaint ¶ 12.) In reliance on Defendant’s promise, Plaintiff spent $86,000 on modifications. Since Defendant failed to renew the lease as allegedly promised, Plaintiff was injured in the amount he expended in detrimental reliance on Defendant’s alleged statement.
Plaintiff has sufficiently pled this COA. However, as with the breach of contract COA, the issue of statute of frauds is still present. As such, the Demurrer is SUSTAINED with leave to amend as to this COA.
4) COA No. 4 – Declaratory Relief
“To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party's] rights or obligations.’ ”” (Jolley v. Chase Home Fin., LLC (2013) 213 Cal. App. 4th 872, 909.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs.” [Emphasis added.] Id. “A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a written instrument and requests that these rights and duties be adjudged by the court.” (Maguire v. Hibernia Sav. & Loan Soc. (1944) 23 Cal. 2d 719, 728.) “The purpose of a declaratory judgment is “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation.”’” (Id., at 729.)
Plaintiff alleges a controversy exists between the parties concerning the right to possession and quiet enjoyment of the Property, as well as Plaintiff’s entitlement to immediate repayment of monies incurred by way of alleged false promises made by Defendant. (Complaint ¶ 33.)
This COA is not properly alleged as the three-year extension is not part of any written contract. Additionally, it improperly seeks to redress past wrongs such as compensating Plaintiff for monies expended on the modifications to the Property. Neither of these are the proper subject of declaratory relief.
Plaintiff did not file any opposition to this COA. The demurrer is SUSTAINED with leave to amend as to this COA.
B) Motion to Strike
Defendant’s Motion to Strike (“MTS”) is MOOT in part, GRANTED in part, and DENIED in part.
Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. . .” (Civ. Proc. Code § 435(b)(1).)
“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (Civ. Proc. Code § 436(a).)
Defendant requests the court strike the following:
1. Paragraph 20, pg. 4, in its entirety.
2. Prayer at page 7, lines 8-10, which states: “5. For exemplary and punitive damages in an amount subject to the discretion of this Court, but no less than an amount which will punish the Defendants for their actions and omissions to act.”
3. Prayer at page 7, line 8, which states: “For attorneys fees and costs of litigation.”
The MTS is MOOT as to Complaint ¶ 20 as that falls under COA No. 1 – Fraud in the Inducement, which was successfully demurred to as noted above.
The request for punitive damages is GRANTED as the only paragraph that contained punitive damage language was Complaint ¶ 20, which was successfully demurred to. No other COA contain any punitive damage language and even if they did, Defendant successfully demurred to each of those COA.
As to the request for attorney fees Defendant contends Plaintiff cannot seek an award for attorney fees as Plaintiff is seeking damages based upon an oral contract and that without a specific provision granting attorney fees and costs, those cannot be awarded. However, the written contract does contain an attorney fee provision. (Complaint, Ex. 1 at § 31.) Under the terms of the written lease, the action only needs to be one involving the Property or to declare rights under the written contract. As the present lawsuit involves the Property, under the specific terms of the lease, attorney fees are available to the prevailing party.
The MTS is DENIED as to attorney fees.
Plaintiff is given leave to file an amended complaint within 15-days written notice of the court’s ruling.
Defendant to give notice.