Judge Thomas D. Long, Case Number: 24STCV03266, Date: 2024-09-03 Tentative Ruling

On February 7, 2024, Plaintiff Amidi Partners LLC filed this action against Defendant Hub Cities Consortium, A Joint Powers Agency formed under California Gov. Code Section 6500 et. seq. The Complaint alleges (1) breach of contract; (2) common count – open book account; (3) breach of implied covenant of good faith and fair dealing; (4) fraud; (5) negligence; and (6) declaratory relief.

On April 8, 2024, Defendant filed a demurrer. Defendant’s request for judicial notice is granted.

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.

Defendant argues that Plaintiff’s November 2, 2022, and December 7, 2022 letters were not valid claims and do not comply with the California Tort Claims Act requirements, making Plaintiff’s claims untimely.

Defendant “is a joint powers authority established in 1988 pursuant to a Joint Exercise of Powers Agreement . . . . In essence, HCC’s legal entity status is that of a public agency.” (Demurrer at p. 5; RJN, Ex. A.) Before bringing an action for damages against a public entity, a plaintiff must present the public entity with a written claim. (Gov. Code, § 945.4.) Claims other than those relating to injury to person or to personal property must be presented to the public entity within one year of accrual. (Gov. Code, § 911.2, subd. (a).)

“‘In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.’” (Geneva Towers Ltd. Partnership v. City of San Francisco (2003) 29 Cal.4th 769, 781.)

On November 2, 2022, Plaintiff delivered a letter demanding that Defendant pay $98,653.99 per month for the holdover period, plus updated invoices for August, September, and October of 2022, reflecting an owed amount totaling $ 150,095.50. (Complaint ¶ 33.) On December 7, 2022, Plaintiff delivered another letter with a demand for holdover rent of $269,199.60. (Complaint ¶ 35.) According to Defendant, these letters cannot be valid claims because they improperly include a dollar amount, in violation of Government Code section 910. (Demurrer at p. 5.) “[A] ‘claim’ is a notice which complies with sections 910 and 910.2,” and a claim may be defective when it fails to substantially comply with section 910. (Phillips v. Desert Hospital Dist. (1989) 49 Cal.3d 699, 707.) The Complaint does not attach the letters, so the Court cannot determine on demurrer whether Plaintiff’s letters substantially comply with the claim requirements.

Defendant also argues that it sent a February 17, 2023 Rejection of Claim, so Plaintiff was required to file its lawsuit no later than August 17, 2023. (Demurrer at pp. 6-7; see Complaint ¶ 39.) “With certain exceptions, an action against a public entity on a cause of action for which a claim must be presented must be commenced ‘not later than six months’ after written notice rejecting the claim is delivered to the claimant personally or deposited in the mail.” (County of Los Angeles v. Superior Court (2005) 127 Cal.App.4th 1263, 1267-1268; see Gov. Code, § 945.6, subd. (a).) However, Plaintiff also delivered a November 2,2023 notice after Defendant’s rejection. (Complaint ¶ 40.) The Court cannot determine on demurrer, without evidence, whether the later claim relates back and is barred. (See Demurrer at pp. 6-7.)

Defendant argues that Plaintiff cannot allege a fraud claim against it. (Demurrer at pp. 7-8.) “A public entity is not liable for an injury caused by misrepresentation by an employee of the public entity, whether or not such misrepresentation be negligent or intentional.” (Gov. Code, § 818.8.)

The Complaint alleges that during its holdover tenancy, Defendant made representations about being willing to enter into amendments to the lease and when its tenancy would end. (See Complaint ¶¶ 14, 16-28.) Defendant “repeatedly made false promises and misleading statements about the possibility and/or feasibility of their continued tenancy at the Subject property and about the duration of their desired tenancy.” (Complaint ¶ 43.) Defendant made misrepresentations “with the intent and purpose of cheating and defrauding [Plaintiff] and with the intent to wrongfully interfere with, hinder, delay, obstruct, and prevent [Plaintiff] from leasing the Subject Property to other tenants.” (Complaint ¶ 71; see Complaint ¶ 69 [Defendant “falsely and fraudulently, and with the intent to wrongfully interfere with and prevent [Plaintiff’s] ability to lease the Subject Property to other tenants.”].) As a result, Plaintiff “was induced to, and did, incur additional expense, loss, and damage in attempting to lease the Subject Property to other tenants.” (Complaint ¶ 74.) Plaintiff suffered “lost profits, the loss of the use and benefit in the Subject Property, incurred out of-pocket costs and expenses, and reputational harm.” (Complaint ¶ 75.)

Plaintiff argues that it “clearly indicated that [its] Fraud claim is a Contractual Fraud claim.” (Opposition at p. 8.) Because Defendant “misrepresented facts relating to a term and/or modification of a term within a valid, existing contractual agreement . . . Plaintiff’s Fraud claim should be interpreted as contractual rather than tortious in nature.” (Ibid.)

In Plaintiff’s cited case, the complaint alleged an action based on a contract because it sought “recission and restitution” due to a unilateral and concealed mistake that induced the plaintiff to enter into the contract. (Arthur L. Sachs, Inc. v. City of Oceanside (1984) 151 Cal.App.3d 315, 322.) The alleged fraud here arises from Defendant’s subsequent misrepresentations after and outside of the contract. As pleaded, this cause of action is based in fraud, not contract, and is barred by Government Code section 818.8.

Defendant argues that the cause of action for negligence “is an attempt to smuggle in a cause of action for negligent interference with economic relations, which cannot be asserted against a public agency,” and it is another attempt to allege fraud. (Demurrer at pp. 8-9.)

Plaintiff alleges that Defendant “breached their duty of reasonable care by, including but not limited to, making false promises and misrepresentations that [Defendant] reasonably knew or should have known were false, and for numerous acts, omissions, defaults and breaches as alleged throughout this Complaint.” (Complaint ¶ 79.) Plaintiff was damaged because it “has not received monies due to it under the Lease.” (Complaint ¶ 80.) The alleged negligence is in fact fraud: “making false promises and misrepresentations.” The other alleged negligence (“defaults and breaches”) appears to be an allegation of breach of contract.

The demurrer to the fourth and fifth causes of action is SUSTAINED with 30 days’ leave to amend.

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.

Hon. Thomas D. Long

Judge of the Superior Court