Judge: Theresa M. Traber, Case: 23STCV07444, Date: 2025-02-28 Tentative Ruling

Case Number: 23STCV07444    Hearing Date: February 28, 2025    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     February 28, 2025                 TRIAL DATE: July 22, 2025

CASE:                         Nicole Management, LLC v. B-Side Group, LLC

CASE NO.:                 23STCV07444           

DEMURRER TO CROSS-COMPLAINT

MOVING PARTY:               Cross-Defendants Nicole Management, LLC, Masoud Omrany, and Ramin Omrany

RESPONDING PARTY(S): Cross-Complainants Gerald Aschoff, and Todd Hughes

CASE HISTORY:

·         04/03/23: Complaint filed.

·         07/16/24: Cross-Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for breach of a rental contract. Plaintiff alleges that Defendants failed to pay rent on a commercial lease agreement.

Cross-Defendants Nicole Management, LLC, Masoud Omrany, and Ramin Omrany demur to the cross-complaint.

TENTATIVE RULING:

            Cross-Defendants’ Demurrer to the Cross-Complaint is OVERRULED, except as to the Demurrer to the fourth cause of action for breach of the covenant of quiet enjoyment, which is SUSTAINED, without leave to amend.

            Cross-Defendants are directed to file and serve an Answer to the Cross-Complaint within 20 days of this order.

DISCUSSION:

            Cross-Defendants demur to the Cross-Complaint in its entirety.

Legal Standard

A demurrer tests whether the (cross-) 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 [cross-] 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 Cross-Defendant’s counsel asserts that he met with Cross-Complainants’ counsel via an unspecified method “periodically between November 3 to November 13, 2024 to resolve the issues regarding the demurrers,” but that the issues were not resolved. (Declaration of K. Tom Kohan ISO Dem. ¶ 2.)  This vague declaration does not satisfy Cross-Defendants’ meet-and-confer obligations. Nevertheless, the Court will consider the demurrer on its merits.

Analysis

            Cross-Defendants demur to the Cross-Complaint in its entirety on the grounds that the individual Cross-Complainants Gerald Aschoff and Todd Hughes do not have standing to assert the claims set forth in the Cross-Complaint because they are derivative claims on behalf of B-Side Group, LLC, rather than individual claims.

            Under well-settled precedent, “[a] stockholder may sue as an individual where he is directly and individually injured although the corporation may also have a cause of action for the same wrong.” (Sutter v. General Petroleum Corp. (1946) 28 Cal.2d 525, 530.) “The line between personal and derivative claims is drawn according to the injury inflicted: The claims are derivative where the injury alleged is one inflicted on the corporate entity or on the whole body of its stock. A personal claim, in contrast, asserts a right against the corporation which the shareholder possesses as an individual apart from the corporate entity: If the injury is not incidental to an injury to the corporation, an individual cause of action exists.” (Holistic Supplements, LLC v. Stark (2021) 61 Cal.App.5th 530, 542 [internal citations omitted].)

            Each of the seven causes of action alleged in the Cross-Complaint are grounded in alleged misrepresentations and misconduct by the Cross-Defendants against the Cross-Complainants during B-Side’s commercial lease agreement with the Cross-Defendants. (See Cross-Complaint ¶¶ 11-25.) Although Cross-Defendants assert that the allegations are purely derivative, they fail to address all the specific allegations in the pleadings, some of which plainly set forth misconduct that is directed at the Cross-complainants as individuals.  Thus, for example, Cross-Complainants assert in support of their First Cause of Action for Fraudulent Inducement that Cross-Defendants “promised they would not hold Cross-Complainants personally liable for any breach of the Lease or Amended Lease by B-Side.”  (Cross-Complaint, ¶ 27.)  This allegation clearly supports a direct fraudulent inducement claim for each Cross-Complainant, as well as a parallel cause of action for unfair business practices under Business and Professions Code §§ 17200, et seq. Similar allegations also support the second and third causes of action for breach of contract and breach of the covenant of good faith and fair dealing because Cross-Complainants allege that Cross-Defendants breached the agreements between the parties, inter alia, by “holding Cross-Complainants personal liability [sic] under the Contract.”  (Id., ¶40.)  In addition, Cross-Complainants’ sixth and seventh causes of action for conversion and unjust enrichment properly include allegations that they had personal property that was located on Cross-Defendants’ property which was lost when the latter took possession of that property in connection with the lease termination and refused to allow Cross-Complainants to retrieve the property. (Id., ¶¶ 60, 65.)  These allegations are sufficient to assert Cross-Complainants’ personal claims for the loss of their personal property. 

The Court reaches a different conclusion as to the fourth cause of action for breach of the covenant of quiet enjoyment.  “[E]very lease, including a commercial lease, includes an implied covenant of quiet enjoyment.”  (Multani v. Knight (2018) 23 Cal. App. 5th 837, 854 [Citations].)  This covenant “arises from a lease: ‘An agreement to let upon hire binds the letter to secure to the hirer the quiet possession of the thing hired during the term of the hiring.’ (Civ. Code, § 1927.) ‘Under this section, there is an implied covenant on the part of a landlord that a tenant shall have quiet enjoyment and possession of the premises during the continuation of the term.’”  (Id., at p. 855 [Citation omitted].)  Because the individual cross-defendants are not parties to the lease, but only signatories on behalf of B-side, they cannot bring individual actions to enforce the implied covenant.  

The Demurer to the Cross-Complaint must therefore be overruled, except as to the fourth cause of action for breach of the covenant of quiet enjoyment.

CONCLUSION:

            Accordingly, Cross-Defendants’ Demurrer to the Cross-Complaint is OVERRULED, except as to the Demurrer to the fourth cause of action for breach of the covenant of quiet enjoyment, which is SUSTAINED, without leave to amend.

            Cross-Defendants are directed to file and serve an Answer to the Cross-Complaint within 20 days of this order.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  February 28, 2025                              ___________________________________

                                                                                    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.