Judge: Theresa M. Traber, Case: 22STCV13547, Date: 2024-12-03 Tentative Ruling

Case Number: 22STCV13547    Hearing Date: December 3, 2024    Dept: 47

Tentative Ruling

 

Judge Theresa M. Traber, Department 47

 

 

HEARING DATE:     December 3, 2024                  TRIAL DATE: May 27, 2025

                                                          

CASE:                         17th Street Complex, LLC et al. v. Ohio Security Insurance Company, et al.

 

CASE NO.:                 22STCV13547           

 

MOTION FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION

 

MOVING PARTY:               Defendant Ohio Security Ins. Co.

 

RESPONDING PARTY(S): Plaintiffs 17th Street Complex, LLC and 17th Street, LLC

 

CASE HISTORY:

·         04/25/22: Complaint filed.

·         12/09/22: First Amended Complaint filed.

·         12/22/22: Cross-Complaint filed.

·         07/19/23: Demurrer sustained without leave to amend as to fourth cause of action in the First Amended Complaint.

 

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

           

            This is an action for breach of contract. Plaintiffs allege that Defendant Ohio Security Insurance Company has failed to pay all insurance owed on a claim pursuant to an insurance policy.

 

Defendant Ohio Security Insurance Co. moves for summary judgment, or, in the alternative, summary adjudication of all remaining causes of action and the claim for punitive damages.

 

TENTATIVE RULING:

 

            Defendant’s Motion for Summary Judgment is DENIED.

 

            Defendant’s Motion for Summary Adjudication is DENIED.

 

//

DISCUSSION:

 

Motion for Summary Judgment

 

            Defendant moves for summary judgment on the First Amended Complaint.

 

            As Defendant is not entitled to summary adjudication of all causes of action, Defendant’s Motion for Summary Judgment is DENIED.

 

Motion for Summary Adjudication

 

            Defendant Ohio Security Insurance Co. moves for summary adjudication of each of the three remaining causes of action and the claim for punitive damages.

 

Legal Standard

 

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and, if not, to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)  “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-82.)

 

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ Proc. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) The lack of opposition by a plaintiff is not grounds to grant a motion for summary judgment if a defendant cannot meet their initial burden of proof. (See Thatcher v. Lucy Stores, Inc. (2000) 79 Cal.App.4th 1081, 1087.)

 

            Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Requests for Judicial Notice

 

            Defendant requests that the Court take judicial notice of (1) the Articles of Organization for 17th Street Complex LLC filed with the California Secretary of State on June 25, 2012; (2) the Statement of Information for 17th Street Complex LLC filed with the California Secretary of State on July 27, 2022; (3) the Articles of Organization for 17th Street, LLC filed with the California Secretary of State on April 23, 2020; and (4) the Statement of Information for 17th Street, LLC filed with the Secretary of State on February 22, 2021. Defendant’s requests are GRANTED pursuant to Evidence Code section 452(c) (official acts).

 

Plaintiffs’ Untimely Opposition

 

            Code of Civil Procedure section 437c subdivision (b)(2) expressly states that any opposition to a motion for summary judgment or summary adjudication must be served and filed no later than 14 days before the date the motion is to be heard. (Code Civ. Proc. § 437c subd. (b)(2).) Plaintiffs’ opposition papers were filed with the Court on November 18, 2024, merely eight days before the scheduled November 26 hearing. Further, the included proof of service states that the papers were served on Defendant’s counsel by email on November 17, 2024, which is (1) a Sunday and (2) a mere nine days before the hearing.

 

            On November 26, 2024, the parties filed a joint stipulation in which Defendant waived any objection to the untimely filing and service of the opposition. (November 26, 2024 Stipulation No. 2.) The Court will therefore overlook the untimely filing and consider Plaintiffs’ opposition to the extent it bears on the Court’s ruling.

 

Defendant’s Improper Separate Statement

 

            Defendant’s Separate Statement of Undisputed Material Fact does not comply with the requirements of the California Rules of Court. Defendant’s Separate Statement sets forth each issue raised in the notice of motion, verbatim, and separately identifies each cause of action and claim for damages at issue, as required by the Rules of Court. (Rule 3.1350 (b), (d)(1)(A).) Rather than listing each supporting material fact separately as to each issue, as required by subdivision (d)(1)(B), Defendant has instead listed all 58 of its claimed material facts first, and then incorporated by reference only material facts numbered 1 through 31 as to each of the four issues raised on the motion. The parties’ November 26, 2024 stipulation clarifies that the Separate Statement contains a typographical error, erroneously identifying facts 1 through 31 instead of 1 through 58. In light of the parties’ stipulation, the Court finds this error to have caused no prejudice to Plaintiffs and will consider the Separate Statement on its merits.

 

Plaintiffs’ Evidentiary Objections

 

            Plaintiffs purport to object to portions of the evidence relied upon by Defendant in support of its motion. However, Plaintiffs’ objections do not (1) identify the name of the document in which the specific material objected to is located; (2) state the exhibit, title, page, and line number of the material objected to; (3) quote or set forth the objectionable material, and (4) stathe grounds for each objection in the format required by the Rules of Court. (Cal. Rules of Court Rule 3.1354(b).) The Court therefore declines to address Plaintiffs’ evidentiary objections as they have not been properly presented.

 

First Cause of Action: Breach of Contract

 

            Defendant moves for summary adjudication of the first cause of action for breach of contract on the grounds that Plaintiffs committed insurance fraud, thereby voiding the contract.

 

To prevail on a claim for breach of contract, a plaintiff must plead and prove (1) a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) resultant damage to the plaintiff. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

 

Under California law, an insurer may defend against a claim for breach of contract as to an insurance policy—and seek summary judgment thereon—on the grounds that the policy is voided by the plaintiff’s violation of a “fraud and concealment” provision. (Cummings v. Fire Ins. Exchange (1988) 202 Cal.App.3d 1407, 1415-16 quoting Claflin v. Commonwealth Ins. Co. (1884) 110 U.S. 81, 94-97.) “A false answer as to any matter of fact, material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent. . . . And if the matter were material and the statement false, to the knowledge of the party making it, and willfully made, the intention to deceive the insurer would be necessarily implied.” (Cummings, supra, 202 Cal.App.3d at 1416 quoting Claflin, supra, 110 U.S. 81 at 95.)

 

According to Defendant, Plaintiffs, 17th Street Complex, LLC and 17th Street, LLC, are separate entities sharing the same registered agent, manager, and chief executive officer, Pourang Nassi. (Separate Statement of Undisputed Material Fact Nos. 5-6.) Defendant asserts that 17th Street Complex, LLC, owned a parcel of real property at 722 E. 8th Street, Los Angeles, CA, 90021, but sets forth no material facts supporting this assertion. “This is the Golden Rule of Summary Adjudication: if it is not set forth in the separate statement, it does not exist.” (United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337 [italics in original].)

 

In any case, the evidence and material facts indicate that Defendant issued an insurance policy for the property at 722 E. 8th Street numbered BZS 600058362, naming 17th Street LLC as the Named Insured, and covering the period from July 3, 2020 to July 3, 2021. (SSUMF Nos. 1-2.) On October 14, 2020, Defendant received notice of a fire which had occurred on the property the day before. (SSUMF No. 4.) On October 14, 2020, Defendant’s representative contacted Pourang Nassi and requested a complete copy of any lease agreements, a detailed description of tenant improvements made by Crown Fabrics, Inc., and a rent ledger and profit and loss statement for 2020. (SSUMF No. 7.) Plaintiffs’ public adjuster, Glenn Nahmias, responded on Plaintiffs’ behalf and produced two leases on October 27, 2020. These lease agreements consisted of (1) a lease from Pourang Nassi to Massoud Nassi and Crown Fabric Co. for 722 E. 8th Street (SSUMF Nos. 9-10) and (2) a lease from Pourang Nassi to Jesus Cristain Valle Cruz for 722 E. 8th Street Unit B. (SSUMF Nos. 11-12.) The lease to Mr. Cruz stated that rent on the property was $7,490 per month for a term from March 1, 2018 to February 28, 2023, with a 5% annual increase in rent. (SSUMF Nos. 13-15.)

 

On October 28, 2020, Plaintiffs’ agent requested an advance payment on the claim of $250,000 for loss of the building and $50,000 for loss of income. (SSUMF No. 16.) Defendant requested further documentation, including a rent ledger and a Sworn Statement for Advance Payment. (SSUMF Nos. 17-18.) Plaintiffs produced a Sworn Statement for Advance Payment executed by Pourang Nassi on November 6, 2020. (SSUMF No. 19.) The advance payment was issued on November 9, 2020. (No. 20.) Plaintiffs subsequently produced a summary of the Rent Roll with supporting documentation on January 26, 2021, which showed that Mr. Cruz paid $7,864.50 per month for rent in January and February 2020 and $8,257.72 per month from March through October. (SSUMF Nos. 22-23.) In April 2021, Pourang’s father, Massoud Nassi, stated that he collected Mr. Cruz’s rent each month at the direction of Pourang, and that Mr. Cruz paid approximately $4,000 of rent by check and the remainder by cash, but that the exact amount would vary from month to month. (SSUMF Nos. 29-30.) Pourang Nassi corroborated his father’s statements. (SSUMF Nos. 33-35.) On June 10, 2021, counsel for Plaintiffs produced copies of checks from Mr. Cruz to Massoud Nassi’s business, Crown Fabric, which purport to be rent payments for amounts ranging from $4,575 and $4,809. (SSUMF Nos. 36-37.) On July 8, 2021, Massoud Nassi reaffirmed his prior statements, and stated that he deposited Mr. Cruz’s rent checks into Crown Fabric’s bank account, but not the cash payments, which Massoud admitted he spent or used himself. (SSUMF Nos. 43-46.)

 

Defendant argues that Plaintiffs cannot pursue a claim for breach of contract under the policy because the policy is voided by the “fraud or concealment” provision in Paragraph C of Endorsement No. BP 01 55 02 20 attached to the policy. (See SSUMF No. 3.) This provision states:

 

We do not provide coverage to the insured who, whether before or after a loss, has committed fraud or intentionally concealed or misrepresented any material fact or circumstance concerning:

 

a.       This Policy;

 

b.      The Covered Property

 

c.       That insured’s interest in the Covered property; or

 

d.      A claim under this Policy.

 

(SSUMF No. 3.) Defendant’s argument attempts to rely on repeated statements, both orally and in writing, by Mr. Cruz that he only paid approximately $4,500 in rent, plus utilities, and did so exclusively by check. (SSUMF Nos. 24-25; 52-55.) Mr. Cruz also purportedly denied that he signed the document produced by Plaintiffs’ agent as his lease and stated that the document did not accurately reflect his rent. (SSUMF Nos. 56-57.) Defendant also claims that Mr. Cruz said on March 25, 2021 that Massoud Nassi had instructed Mr. Cruz not to cooperate with Defendant, and to sign paperwork verifying that he had paid higher rent than he had actually paid. (SSUMF Nos. 26-27.)  Thus, Defendant argues, Plaintiffs intentionally misrepresented the amount of rent collected from Mr. Cruz in order to defraud Defendant.

 

            Defendant’s argument is fatally defective because it is premised entirely on the out-of-court statements by Mr. Cruz regarding the rent he actually paid and the veracity of the lease documents to establish the falsity of Plaintiffs’ representations. Certainly, the records containing these statements might fairly be construed as business records in light of the evidence produced as to the time, sources, and methods of preparation of those records. (See Declaration of Jonathan Lawlee ISO Mot. ¶ 2; Evid. Code § 1271.) However, the statements by Mr. Cruz within those records are plainly barred by the rule against hearsay evidence. (Evid. Code § 1200.) What is more, the only affidavit signed by Mr. Cruz is in Spanish, and the purported translation is both unsigned and unaccompanied by an affidavit by the translator affirming the accuracy of the translation. (Defendant’s Exhs. 24-25.) (See Evid. Code § 751.) Mr. Cruz’s affidavit is therefore also inadmissible on this separate grounds. Further still, although Defendant claims that the signatures on the rent checks do not match Mr. Cruz’s signature, that contention is not set forth in the Separate Statement. “This is the Golden Rule of Summary Adjudication: if it is not set forth in the separate statement, it does not exist.” (United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337 [italics in original].)

 

            Because Defendant has offered no admissible evidence establishing the falsity of any representations made by Plaintiffs, Defendant has not demonstrated that the “fraud or concealment” provision voids the policy and defeats Plaintiff’s breach of contract claim. As Defendant has not carried its burden in this respect, the burden does not shift to Plaintiff to demonstrate a triable issue of fact, and Defendant is not entitled to summary adjudication of this cause of action.

 

            Accordingly, Defendant’s Motion for Summary Adjudication of the first cause of action for breach of contract is DENIED.

 

Second Cause of Action: Breach of Implied Covenant of Good Faith

 

            Defendant moves for summary adjudication of the second cause of action for breach of the implied covenant of good faith on the grounds that no policy benefits were due in light of Plaintiffs’ purported fraud, and, alternatively, that Defendant acted reasonably in denying coverage. As Defendant has offered no admissible evidence which tends to establish fraud, the Court is unmoved by these contentions.

 

            Accordingly, Defendant’s Motion for Summary Adjudication of the second cause of action is DENIED.

 

Third Cause of Action: Reformation

 

            Defendant moves for summary adjudication of the third cause of action for reformation of the contract on the grounds that “Plaintiffs have no evidence […] that Ohio Security agreed to issue a policy to 17th Street Complex, LLC.” (Motion p. 24:11-13.) This contention does not carry Defendant’s burden on summary adjudication, as Defendant must produce evidence, and not merely point out through argument, that Plaintiffs do not possess and cannot reasonably obtain needed evidence. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.) Defendant is therefore not entitled to summary adjudication of this cause of action.

 

            Accordingly, Defendant’s Motion for Summary Adjudication of the third cause of action is DENIED.

 

Punitive Damages

 

            Defendant also moves for summary adjudication of Plaintiffs’ claim for punitive damages on the grounds that Plaintiffs have no evidence that Defendant acted with fraud, oppression, or malice, as defined by Civil Code section 3294. Once again, it is not sufficient for Defendant to assert that Plaintiffs have no evidence: Defendant must produce evidence, and not merely point out through argument, that a Plaintiffs do not possess and cannot reasonably obtain needed evidence. (Aguilar v. Atlantic Richfield Co., supra, at p. 854.) Moreover, to the extent Defendant relies on the contention that it acted reasonably in denying coverage, that line of argument fails for the reasons stated above as to the first cause of action.

 

            Accordingly, Defendant’s Motion for Summary Adjudication of the claim for punitive damages is DENIED.

 

Conclusion

 

            For the reasons stated above, Defendant’s Motion for Summary Adjudication is DENIED in its entirety.

 

CONCLUSION:

 

            Accordingly, Defendant’s Motion for Summary Judgment is DENIED.

 

            Defendant’s Motion for Summary Adjudication is DENIED.

 

            Moving Party to give notice.

 

IT IS SO ORDERED.

 

Dated: December 3, 2024                               ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

 


            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.