Judge: Theresa M. Traber, Case: 22STCV18323, Date: 2023-08-31 Tentative Ruling
Case Number: 22STCV18323 Hearing Date: April 16, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: April 16, 2024 TRIAL
DATE: August 27, 2024
CASE: Jeff Shin v. James Lai, et al.
CASE NO.: 22STCV18323 
DEMURRER
TO SECOND AMENDED COMPLAINT; MOTION TO STRIKE PORTIONS OF SECOND AMENDED
COMPLAINT
MOVING PARTY: Defendants James Lai, Kevin Lai, and Broadway Hill
Investment Group, LLC.
RESPONDING PARTY(S): Plaintiff Jeff
Shin
CASE
HISTORY:
·
06/06/22: Complaint filed.
·
06/08/22: First Amended Complaint filed.
·
07/08/22: Cross-Complaint filed.
·
10/23/23: Second Amended Complaint filed.
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an action for fraud and breach of contract arising out of a
commercial lease dispute.
Defendants demur to the Second
Amended Complaint and move to strike portions of the Complaint.
TENTATIVE RULING:
Defendants’ Demurrer to the Second
Amended Complaint is OVERRULED.
Defendants’ Motion to Strike
Portions of the Second Amended Complaint is DENIED.
//
//
DISCUSSION:
Demurrer to Second Amended Complaint
Defendants demur to the Second
Amended Complaint in its entirety.
Legal Standard
A demurrer tests whether the
complaint states a cause of action. (Hahn v. Mirda (2007) 147
Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations
liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and
Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the
defects must be apparent on the face of the pleading or via proper judicial
notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968,
994.) “A demurrer tests the pleadings alone and not the evidence or other
extrinsic matters. Therefore, it lies only where the defects appear on the face
of the pleading or are judicially noticed.” (SKF Farms v. Superior Court
(1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing
is whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action.” (Hahn, supra, 147 Cal.App.4th at p. 747.) The
ultimate facts alleged in the complaint must be deemed true, as well as all
facts that may be implied or inferred from those expressly alleged. (Marshall
v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields
v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n
demurrer, pleadings are read liberally and allegations contained therein are
assumed to be true”].) “This rule of liberal construction means that the
reviewing court draws inferences favorable to the plaintiff, not the
defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th
1228, 1238.)
Meet and Confer
Before filing a demurrer, the
demurring party shall meet and confer in person or by telephone with the party
who has filed the pleading subject to the demurrer and file a declaration
detailing their meet and confer efforts. (Code Civ. Proc., § 430.41(a).)
However, an insufficient meet and confer process is not grounds
to overrule or sustain a demurrer. (Code Civ. Proc., §
430.41(a)(4).)
The
Declaration of Connor Inlow attached to the demurrer states that he attempted
to meet and confer with Plaintiff’s counsel via telephone and email on November
15 through 17, 2023 but received no response. (Declaration of Connor Inlow ISO
Dem. ¶¶ 2-3.) Defendants have satisfied their statutory meet-and-confer
obligations.
First Cause of Action: Breach of Contract
Defendants
contend that the first cause of action for breach of contract fails to state
facts sufficient to constitute a cause of action.
To state a cause of action for
breach of contract, a plaintiff must plead the contract, the plaintiff’s
performance of the contract or excuse for nonperformance, Defendant’s breach,
and finally the resulting damage. (Otworth v. Southern Pac. Transportation
Co. (1985) 166 Cal.App.3d 452, 458.) Further, the complaint must indicate
whether the contract is written, oral, or implied by conduct. (Code Civ.Proc. §
430.10(g).) General allegations stating that defendants violated a contract are
insufficient, and plaintiffs must state facts showing a breach. (Levy v.
State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5-6.) For
breach of a written contract, the essential terms must be set out verbatim in
the body of the complaint or a copy of the written instrument must be attached
and incorporated by reference. (Otworth v. Southern Pac. Transportation Co.,
supra, 166 Cal.App.3d at 459.)
Defendants
contend that Plaintiff has not adequately alleged a breach of contract. The
parties entered into a commercial lease for the property located at 1811 S.
Hill Street, Los Angeles, CA, 90015. (SAC ¶ 10; Exh. A. ¶ 1.) The contract
stated that the premises comprised the entirety of the rentable space at the
subject property and that Plaintiff leased the premises for $4,900 per month
for the term from December 2, 2021 to December 31, 2022, with two unreserved
parking spaces. (SAC ¶ 11, Exh. A.) The central allegation is that Defendants
only provided access to the premises from 10:00 a.m. to 1:30 p.m. daily, thereby
preventing Plaintiff from maintaining his regular 7:30 a.m. to 5:00 p.m.
business hours. (SAC ¶¶ 12-15.)
“When a
dispute arises over the meaning of contract language, the first question to be
decided is whether the language is ‘reasonably susceptible’ to the
interpretation urged by the party. If it is not, the case is over.” (S. Cal.
Edison Co. v. Super. Ct., (1995) 37 Cal.App.4th 839, 847-48.) “If the court decides the language is
reasonably susceptible to the interpretation urged, the court moves to the
second question: what did the parties intend the language to mean? ... Thus,
where contract language is clear and explicit and does not lead to absurd
results, we ascertain intent from the written terms and go no further. If the contract is capable of more than one reasonable
interpretation, it is ambiguous.” (Department
of Forestry & Fire Protection v. Lawrence Livermore National Security, LLC (2015)
239 Cal.App.4th 1060, 1066 [internal quotation marks, ellipses, and citations
omitted].) Interpretation of an ambiguous contract requires the consideration
of extrinsic evidence and is therefore not well-suited to resolution via
demurrer. (See Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432-33
[describing evidentiary considerations necessary for determination of the legal
question of the meaning of a contract via motion for summary judgment].)
Defendants
argue that nothing in the contract addresses the hours of access to the
property and none of the allegations in the pleadings demonstrate that the
hours of access were contemplated, negotiated, or agreed upon. Plaintiff, in
opposition, argues that this claim is adequately pled because the contract
states that the lease was for “100% of the rentable space.” The Court finds
Defendants’ view of the contract to be inappropriately constrained. “The
distinguishing characteristics of a leasehold estate are that the lease gives
the lessee the exclusive possession of the premises against all the world,
including the owner.” (Howard v. County of Amador (1990) 220 Cal.App.3d
962, 972, citing Von Goerlitz v. Turner (1944) 65 Cal.App.2d 425,
429.) Plaintiff alleges that Defendants limited the rights of Plaintiff to
access the property or to permit others to access the property despite
ostensibly granting Plaintiff possession by leasing the property. (SAC ¶¶ 11-15.)
Put differently, Plaintiff is alleging that Defendants breached a fundamental
term of the lease agreement. Nothing more is required to state a cause of
action for breach of contract.
Accordingly, Defendants’ Demurrer
to the first cause of action for breach of contract is OVERRULED.
Second Cause of Action: Breach of Implied Covenant of
Good Faith
Defendants
also demur to the second cause of action for breach of the implied covenant of
good faith and fair dealing.
“There is
an implied covenant of good faith and fair dealing in every contract that
neither party will do anything which will injure the right of the other to receive
the benefits of the agreement.” (Comunale v. Traders & General Ins. Co. (1958)
50 Cal.2d 654, 658 [internal citations omitted].) “The covenant of good faith
and fair dealing, implied by law in every contract, exists merely to prevent
one contracting party from unfairly frustrating the other party’s right to
receive the benefits of the agreement actually made. The covenant thus
cannot ‘“‘be endowed with an existence independent of its contractual
underpinnings.’”’ It cannot impose substantive duties or limits on the
contracting parties beyond those incorporated in the specific terms of their
agreement.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317,
349-350 [internal citations omitted, emphasis in original].)
Defendants
contend that this cause of action is without merit because the agreement
actually executed by the parties did not contemplate the window in which access
would be provided. For the reasons stated above with respect to the first cause
of action, the Court finds this argument unavailing.
Accordingly,
Defendants’ Demurrer to the second cause of action is OVERRULED.
Third Cause of Action: Fraudulent Concealment
Defendants
contend that the second cause of action for fraudulent concealment fails to
state facts sufficient to constitute a cause of action because it is not pled
with specificity.
The elements of fraudulent concealment are (1) concealment
or suppression of a material fact; (2) by a defendant with a duty to disclose
the fact to the plaintiff; (3) intent to defraud the plaintiff by intentionally
concealing or suppressing the fact; (4) the plaintiff was unaware of the fact
and would not have acted as he or she did if he or she had known of the
concealed or suppressed fact; and (5) the plaintiff sustained damage as a
result of the concealment or suppression of fact. (Hambridge v. Healthcare
Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)
Defendants
contend that the Complaint is defective because it does not allege with
specificity any misrepresentations made by Defendants. The Court previously
granted Defendants’ motion for judgment on the pleadings on the basis that the
First Amended Complaint, despite purporting to allege fraudulent concealment,
only offered conclusory allegations of intentional misrepresentation. (August
31, 2023 Minute Order.) Here, however, the Second Amended Complaint alleges that
Defendants did not disclose that access to the property would be limited to a
three-and-a-half hour period each day, with the intent to induce Plaintiff into
the contract by concealing that information, that Plaintiff would not have
entered into the contract had he known, and that he lost money as a result.
(SAC ¶¶ 33-38.) The Court finds these allegations to be sufficient to state a
cause of action for fraudulent concealment.
Accordingly,
Defendants’ Demurrer to the third cause of action is OVERRULED.
Conclusion
Accordingly,
Defendants’ Demurrer to the Second Amended Complaint is OVERRULED in its
entirety.
Motion to Strike Portions of Second Amended Complaint
Defendants
move to strike portions of the Second Amended Complaint pertaining to punitive
damages and attorney’s fees.
Legal Standard
The court may, upon a motion, or at
any time in its discretion, and upon terms it deems proper, strike any
irrelevant, false, or improper matter inserted in any pleading. Code Civ.
Proc., § 436(a). The court may also strike all or any part of any pleading not
drawn or filed in conformity with the laws of this state, a court rule, or an
order of the court. Id., § 436(b). The grounds for a motion to strike
are that the pleading has irrelevant, false or improper matter, or has not been
drawn or filed in conformity with laws. Id.§ 436. The grounds for moving to
strike must appear on the face of the pleading or by way of judicial notice. Id.§
437. “When the defect which justifies striking a complaint is capable of cure,
the court should allow leave to amend.” Vaccaro v. Kaiman (1998)
63 Cal.App.4th 761, 768. A motion to
strike can be used where the complaint or other pleading has not been drawn or
filed in conformity with applicable rules or court orders. Code Civ.
Proc., § 436(b). This provision is for "the striking of a pleading due to
improprieties in its form or in the procedures pursuant to which it
was filed." Ferraro v. Camarlinghi (2008) 161
Cal.App.4th 509, 528 (emphasis in original).
//
Meet and Confer
Before filing a motion to strike, the moving
party shall meet and confer in person or by telephone with the party who has
filed the pleading subject to the motion to strike and file a declaration
detailing their meet and confer efforts. (Code Civ. Proc., § 435.5(a).)
However, an insufficient meet-and-confer process is not grounds to grant or
deny a motion to strike. (Code Civ. Proc., § 435.5(a)(4).)
The
Declaration of Connor Inlow attached to the motion states that he attempted to
meet and confer with Plaintiff’s counsel via telephone and email on November 15
through 17, 2023 but received no response. (Declaration of Connor Inlow ISO
Mot. ¶¶ 2-3.) Defendants have satisfied their statutory meet-and-confer
obligations.
Punitive Damages
Defendants
move to strike paragraph 38 and prayer for relief number 3, which pertain to
punitive damages, from the Second Amended Complaint.
Civil Code section 3294
subdivision (a) provides:
In an action for the breach
of an obligation not arising from contract, where it is proven by clear and
convincing evidence that the defendant has been guilty of oppression, fraud, or
malice, the plaintiff, in addition to the actual damages, may recover damages
for the sake of example and by way of punishing the defendant.”
(Civ.
Code § 3294(a).) As the Court has overruled Defendants’ demurrer to the
third cause of action for fraudulent concealment, Plaintiff is entitled to seek
punitive damages.
Attorney’s Fees
Defendants
also move to strike paragraph 39 and prayer for relief number 4, which pertain
to attorney’s fees and costs pursuant to the contract. (Notice of Motion Nos.
2, 4.)
Attorneys’
fees are recoverable where provided for by contract, statute, or law. (Code
Civ. Proc. § 1033.5.) The commercial lease attached to the Second Amended
Complaint on which Plaintiff’s request for fees is based states that “[i]n any
action or proceeding arising out of this agreement, the prevailing party
between Landlord and Tenant shall be entitled to reasonable attorney fees and
costs from the non-prevailing Landlord or Tenant except as provided in
paragraph 35A.” (SAC Exh. A. ¶ 41.) Paragraph 35A of the contract states, in
relevant part, that “[i]f for any dispute or claim [arising between the
landlord and tenant out of the agreement], any party commences an action
without first attempting to resolve the matter through mediation, or refuses to
mediate after a request has been made, then that party shall not be entitled to
recover attorney fees, even if they would otherwise be available to that party
in any such action.” (Id. Exh. A. ¶ 35A.)
Defendants
argue that the fee request should be stricken from the Complaint because
Plaintiff did not attempt to mediate before bringing this action. Defendants do
not cite to any allegation in the Second Amended Complaint which gives rise to
such an inference. Defendants have thus failed to justify this request.
Conclusion
Accordingly,
Defendants’ Motion to Strike Portions of the Second Amended Complaint is
DENIED.
CONCLUSION:
Accordingly, Defendants’ Demurrer to the
Second Amended Complaint is OVERRULED.
Defendants’ Motion to Strike
Portions of the Second Amended Complaint is DENIED.
Moving Parties to give notice.
IT IS SO ORDERED.
Dated: April 16, 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.