Judge: Timothy Patrick Dillon, Case: 21STCV47579, Date: 2022-10-27 Tentative Ruling
Case Number: 21STCV47579 Hearing Date: October 27, 2022 Dept: 73
Fatameh Arbabarbabi and Robert Emami v. Sharon Towers Investment Company, LLC
Counsel for Defendant (Movant): Peter L. Steinman, Steven
S. Davis (Michelman & Robinson, LLP)
Counsel for Plaintiff (Opposition):
Edrin Shamtob (Shamtob Law)
DEMURRER TO PLAINTIFFS’ THIRD AMENDED
COMPLAINT
(filed 09/19/2022)
TENTATIVE
RULING
Defendant’s
Demurrer is SUSTAINED with 15 days leave
to amend.
I. Background
This
action arises out of alleged habitability and housing code violations of a
residential property unit (the “Unit”) that Plaintiffs Fatameh Arbabarbabi and
Robert Emami (“Plaintiffs”) leased from Defendant Sharon Towers Investment
Company, LLC (“Defendant”). According to Plaintiffs, Defendant rented a
storage unit from Defendant that was unfit for habitation. They further allege that Defendant, by and
through their agents, knowingly and falsely represented the storage unit as
habitable at the time Plaintiffs signed the lease on November 15, 2013, and
each time Plaintiffs renewed the lease on August 1, 2019, and May 15, 2020.
Plaintiffs
initiated this action on December 30, 2021, and have amended the Complaint on
three occasions. The First Amended
Complaint was filed following discussions with opposing counsel about defects
in the Complaint. The Second and Third
Amended Complaints were filed pursuant to joint stipulation and court order
granting leave to amend. On August 18,
2022, Plaintiffs filed the Third Amended Complaint (“TAC”) alleging nine causes of action: (1)
tortious breach of implied warranty of habitability based in negligence; (2)
breach of implied warranty of habitability based in contract; (3) breach of
implied covenant of quiet enjoyment; (4) violation of rent stabilization
ordinance LAMC § 151.04 – illegal collection of rent; (5) violation of rent
stabilization ordinance LAMC § 151.04 – excessive collection of rent; (6)
unfair and deceptive business practices in violation of Business and
Professions Code § 17200; (7) fraud; (8) negligent misrepresentation; and
(9) constructive eviction.
On
August 19, 2022, Defendant filed this Demurrer to the seventh cause of action
for fraud. Plaintiffs filed opposition
on October 14, 2022, and Defendant replied on October 20, 2022.
II.
Discussion
A. Legal Standard for Demurrer
A demurrer tests the sufficiency of
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—any
defects must be apparent on the face of the pleading. (Donabedian v. Mercury Ins. Co. (2004)
116 Cal.App.4th 968, 994.) “A demurrer
tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc.
Servs. (2007) 153 Cal.App.4th 1308, 1315.)
As such, the court assumes the truth of the complaint’s properly pleaded
or implied factual allegations. (Id.) The only issue a demurrer is concerned with
is whether the complaint, as it stands, states a cause of action. (Hahn, supra, 147 Cal.App.4th at p. 747.)
1.
Plaintiffs Fail to State a Claim for Fraud
Defendant
demurs to the seventh cause of action for fraud on the grounds that the TAC
fails to state a claim and because the TAC is uncertain.
The
elements of fraud are (i) a
misrepresentation,
such as a false representation, concealment, or nondisclosure; (ii) knowledge
of its falsity; (iii) intent to
induce reliance; (iv)
justifiable reliance; and (v) resulting
damage. (Hinesley v. Oakshade Town
Ctr. (2005) 135 Cal.App.4th 289, 294.)
The facts constituting the alleged fraud must be alleged factually and
specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily
be invoked. (Lazar v. Superior Court (1996) 12
Cal.4th 631, 645.) “This
particularity requirement necessitates pleading facts which show how, when,
where, to whom, and by what means the representations were tendered.” (Stansfield v. Starkey (1990) 220
Cal.App.3d 59, 72-73.) (Citations and quotation marks omitted.)
The Court finds that
Plaintiffs fail to state a claim for fraud.
The TAC alleges that the Defendant, “through
its agents and managers, including Mr. Gregory [Last Name Unknown] and Ms.
Easter [Last Name Unknown] represented both in writing and orally the Illegal
Dwelling was legal and in compliance with California law.” (TAC ¶ 109.) The TAC
continues by alleging that Defendant, “through
its agents and manages, including Mr. Gregory [Last Name Unknown] and Ms.
Easter [Last Name Unknown] further represented to Plaintiff in 2013, 2019, and
2020, at the time of the various lease executions, that the Illegal Dwelling
maintained a valid certificate of occupancy.”
(TAC ¶
110.) The TAC also alleges that Mr.
Gregory and Ms. Easter made an untrue and false representation “both in person and telephonically, that Plaintiffs were
required to temporarily be relocated because the Dwelling Unit required
painting services” when in actuality, Defendant was trying “to evade scrutiny during investigations and inspections by
LADBS and the LA City Housing Department.”
(TAC ¶
113.) These allegations, accepted as
true on demurrer, show how, when, and to whom the misrepresentations were
made. The allegations also show that
Defendant knowingly made the false representations about the Unit’s
compliance with the housing code by hiding Plaintiffs’
tenancy from inspectors through
temporary relocation. This is sufficient
to satisfy the misrepresentation and knowledge elements of a fraud claim.
The TAC also alleges facts sufficient to satisfy the
remaining elements of a fraud claim. The
TAC alleges that Plaintiffs believed to be true Defendant’s representations regarding the
legality of the Unit and justifiably relied on it, (TAC ¶¶ 110, 113, 114),
evidenced by Plaintiffs continued leasing of the Unit in 2019 and 2020, and
resulting in damages in the amount of no less than $400,000. (TAC ¶¶ 114, 115.)
However, Plaintiffs fail to state facts sufficient to show
how and when the fraud was discovered.
Under Civil Code of Procedure section 338 (d), an action for relief on
the ground of fraud or mistake is not deemed to have accrued until the
discovery, by the aggrieved party, of the facts constituting the fraud or
mistake. “[C]ourts
have read into [that] statute a duty to exercise diligence to discover the
facts. The rule is that the plaintiff
must plead and prove the facts showing: (a) Lack of knowledge. (b) Lack of means of obtaining knowledge (in
the exercise of reasonable diligence the facts could not have been discovered
at an earlier date). (c) How and when he
did actually discover the fraud or mistake.”
(Weir v. Snow (1962) 210 Cal.App.2d 283, 292.) On demurrer, the Court examines only the
sufficiency of the pleadings. The TAC,
here, sets forth facts sufficient to show that Plaintiffs lacked knowledge of
the misrepresentation. (See TAC ¶ 114.) But, the TAC does not allege facts showing
how Plaintiffs discovered the fraud and why they could not have discovered it
sooner. As such, the Court finds that
Plaintiffs fail to state a claim for fraud.
Accordingly, the Court SUSTAINS the Demurrer as to the
seventh cause of action.
B. Leave to
Amend
Leave to amend must be
allowed where there is a reasonable possibility of successful amendment. (See Goodman
v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer
without leave to amend if there is any reasonable possibility that the defect
can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment
Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be
sustained without leave to amend if the complaint, liberally construed, can
state a cause of action under any theory or if there is a reasonable
possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman
(1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a
complaint is capable of cure, the court should allow leave to amend.”].)
Sloughhouse there have
been prior amendments, because the complaint has not been amended in response
to a sustained demurrer, the Court GRANTS leave to amend the seventh cause of
action for fraud.
III. Disposition
The
Demurrer is sustained with 15 days leave to amend.
Moving
party to give notice.