Judge: Thomas D. Long, Case: 21STCV18058, Date: 2023-11-09 Tentative Ruling

Case Number: 21STCV18058    Hearing Date: November 9, 2023    Dept: 48

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

On May 13, 2021, Restaurant Design Studio Inc. (“RDS”) filed this action against Henry Aguila, Joseph Shabani, Kamyar D. Shabani, Mercury Bowl LLC, Green Rivera LLC, and Optimus Properties LLC.  The complaint alleged breach of contract by Aguila and tortious interference of contract by the other defendants.

On May 24, 2021, RDS dismissed Joseph Shabani, Kamyar D. Shabani, Mercury Bowl LLC, Green Rivera LLC, and Optimus Properties LLC with prejudice.

On September 23, 2021, Aguila filed a cross-complaint against Joseph Shabani, Kamyar D. Shabani, Mercury Bowl LLC, Green Rivera LLC, and Optimus Properties LLC.  On March 30, 2023, Aguila filed a first amended cross-complaint (“FACC”), alleging (1) tortious interference of contract; (2) equitable indemnity; and (3) declaratory relief.

On April 25, 2023, Joseph Shabani, Kamyar D. Shabani, and Optimus Properties LLC (collectively, “Cross-Defendants”) filed a demurrer to the FACC.  Cross-Defendants’ request for judicial notice with the Reply is granted.

On June 13, 2023, a stipulated judgment was entered in favor of RDS and against Aguila in the amount of $2,762,500.

A demurrer for sufficiency 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, accepting the alleged facts as true.  (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.)  “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.”  (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)

Cross-Defendants argue that the FACC does not state a claim for tortious interference with contract.  “Tortious interference with contractual relations requires ‘(1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’”  (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1141.)

The FACC alleges that Aguila, through his alter ego Thee Aguila Inc., owned the subject property.  (FACC ¶ 10.)  Aguila had previously entered into a contract with RDS for contracting services to improve the property.  (FACC ¶ 17; see Complaint ¶ 10 [“On July 20, 2016, RDS entered into a contract with AGUILA wherein RDS would perform general contractor work at AGUILA’s property . . .”].)  In March 2017, Aguila notified Joseph Shabani and Optimus that he would begin construction.  (FACC ¶ 12.)

In January 2018, during construction, a dispute arose between Aguila and the lender who held a first trust deed secured by the property.  (FACC ¶ 13.)  On October 2, 2019, Cross-Defendants purchased the property from the lender who acquired the property at a foreclosure sale.  (FACC ¶ 14.)

“[O]n or about August 5, 2020, for some inexplicable reason, other than spite, after more hostile e-mail banter between the parties concerning the void foreclosure sale, while the world was in the middle of a pandemic, Cross-Defendants demolished the building on the PROPERTY and destroyed all the work product and expenditures of Plaintiff and Cross-Complainant.”  (FACC ¶ 15.)  This interfered with the contractual relationship between Aguila RDS, and Cross-Defendants “acted with knowledge that demolishing and destroying the PROPERTY was certain or substantially certain to interfere with the contractual relationship between AGUILA and whoever was conducting those renovations, which was RDS.”  (FACC ¶ 18.)

There are several problems with the FACC’s allegations.

First, Aguila does not allege that Cross-Defendants knew of his contract with RDS.  Their knowledge that he “would commence construction pursuant to the approved plans” (FACC ¶ 12) does not allege knowledge of an existing contract.  Additionally, alleging that Cross-Defendants acted with knowledge that the demolition “was certain or substantially certain to interfere with the contractual relationship between AGUILA and whoever was conducting those renovations, which was RDS,” is also insufficient.  It too does not allege Cross-Defendants’ actual knowledge of the parties, the specific contract, or any terms.  (See Winchester Mystery House, LLC v. Global Asylum, Inc. (2012) 210 Cal.App.4th 579, 597.)

Second, Aguila did not own the property, so it is unclear how the owners’ demolition of their own property interfered with Aguila’s rights.  (See RJN, Ex. 5 [grant deed].)  Although Aguila alleges that there was a conspiracy and void foreclosure sale (FACC ¶ 14), the Court of Appeal recently made clear that the foreclosure sale was valid and did not violate the automatic bankruptcy stay.  (RJN, Ex. 1 at pp. 12-14.)  To the extent that Aguila alleges that he entered into a fifty-year lease for the property with Thee Aguila Inc., his alter ego (FACC ¶ 15), the Court of Appeal confirmed that, according to Aguila’s own declaration, this lease was one that Aguila granted to himself years after he lost the property to the foreclosure sale.  (RJN, Ex. 1 at pp. 2, 4.)

Third, Aguila does not allege how Cross-Defendants’ demolition in fact interfered with his contract with RDS.  In the original Complaint, RDS alleged that it performed all conditions, covenants, and promises required on its part, but on August 5, 2020, Aguila breached the contract by refusing to pay for work that had been completed prior to the property’s demolition.  (Complaint ¶¶ 14-15.)  It is not clear how Cross-Defendants’ demolition of the property caused the breakdown of Aguila’s contract with RDS.

Because the first cause of action for tortious interference with contract does not state a claim, the second and third causes of action for equitable indemnity and declaratory relief also do not state a claim.

The demurrer is SUSTAINED with 30 days’ leave to amend.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit.  If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

         Dated this 9th day of November 2023