Judge: Upinder S. Kalra, Case: 23STCV05890, Date: 2023-08-24 Tentative Ruling
Case Number: 23STCV05890 Hearing Date: December 19, 2023 Dept: 51
Tentative Ruling
Judge Upinder S.
Kalra, Department 51
HEARING DATE: December
19, 2023
CASE NAME: Amit Apel v. Allstate Investment Group,
et al.
CASE NO.: 23STCV05890
DEMURRER TO FIRST AMENDED COMPLAINT WITH MOTION TO STRIKE
MOVING PARTY: Defendants
Allstate Investment Group dba Allstate HOA Management, Malibu Zumierez View
Homeowners Association, Anthony Kors, Margaret Rando, and Bradley Cunningham
RESPONDING PARTY(S): None as of December 12, 2023
REQUESTED RELIEF:
1. Demurrer
to the entire First Amended Complaint for failure to state facts sufficient to
constitute a cause of action.
2. Motion
to Strike various portions of the First Amended Complaint pertaining to
punitive damages.
TENTATIVE RULING:
1. Demurrer
to the Third Cause of Action is SUSTAINED without leave to amend;
2. Demurrer
to the Fifth Cause of Action is OVERRULED;
3. Motion
to Strike is GRANTED.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
On March 16, 2023, Plaintiff Amit Apel (“Plaintiff”) filed a
complaint against Defendants Allstate Investment Group dba Allstate HOA
Management, Malibu Zumirez View Homeowners Association, Anthony Kohrs, Margaret
Rando, and Bradley Cunningham (“Defendants.”) The complaint alleged eight
causes of action: (1) Conversion, (2) Private Nuisance, (3) Intentional
Interference with Contractual Relations, (4) Intentional Interference with
Prospective Economic Relations, (5) Negligent Interference with Prospective Economic
Relations, (6) Negligence, (7) Breach of Fiduciary Duty, and (8) Declaratory
Relief.
The Complaint alleges that Plaintiff acquired title to the
Subject Unit located in the Malibu Zumirez View HOA. When Plaintiff acquired
title, the Covenants, Conditions, and Restrictions (CC&R) did not contain
any prohibition of operating a short-term rental. Plaintiff alleges that he
operated the Unit as a short-term rental. However, during his time owning the
unit, Defendants issued various meritless notices of violations, including not
allowing Plaintiff to park in front of his unit, notification to the board of
changes in residents, as well notices about Plaintiff’s cleaning team damaging
a sign at the property.
On June 12, 2023, Defendants Allstate Investment Group dba
Allstate HOA Management, Malibu Zumirez View Homeowners Association, Anthony
Kohrs, Margaret Rando, and Bradley Cunningham filed a Demurrer with a Motion to
Strike.
On August 24, 2023, the court SUSTAINED Defendants’ demurrer
with leave to amend as to the Third and Fifth Causes of Action, and OVERRULED
the Demurrer as to the First, Second, Fourth, Seventh, and Eighth Causes of
Action. The court GRANTED Defendants’ motion to strike.
On October 4, 2023, the parties stipulated to continue
Plaintiff’s deadline to file an amended complaint.
On October 16, 2023, Plaintiff filed a First Amended
Complaint (FAC) with seven causes of action for: (1) Conversion, (2) Private
Nuisance, (3) Intentional Interference with Contractual Relations; (4)
Intentional Interference with Prospective Economic Relations; (5) Negligent
Interference with Prospective Economic Relations; (6) Negligence; and (7)
Breach of Fiduciary Duty.
On November 16, 2023, Defendants filed the instant demurrer
and motions to strike. Oppositions were due on or before December 6, 2023. As
of December 12, 2023, Plaintiff has not filed oppositions.
LEGAL STANDARD:
Demurrer
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.¿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. …. 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¿147 Cal.App.4th at 747.)
Motion to Strike
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
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.)
Meet and Confer
Prior to filing a demurrer, the demurring party is required
to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. §430.41, and demonstrate that they so satisfied their meet and confer
obligation by submitting a declaration pursuant to Code of Civ. Proc.
§430.41(a)(2) & (3). According to the Declaration of Alan J. Carnegie, the
parties met and conferred via an email exchange on November 8, 2023, but were
unable to resolve the issues. (Carnegie Decl. ¶¶ 2, 3.)
ANALYSIS:
Demurrer
Business Judgment
Rule
Defendants contend that the entire FAC is barred by the
Business Judgment Rule. Plaintiff has not filed an opposition.
“A party demurring to a pleading that has been amended after
a demurrer to an earlier version of the pleading was sustained shall not demur
to any portion of the amended complaint . . . on grounds that could have been
raised by demurrer to the earlier version of the complaint.” (CCP § 430.41(b).)
Here, Defendants’ Business Judgment Rule argument could have
been raised by demurrer to the original complaint. Indeed, Defendants did so by
raising it in their reply for the first time. Accordingly, the court will not
entertain this argument as it could have been raised in Defendants’ demurrer to
the original complaint.
Third Cause of
Action
Defendants contend that this cause of action fails because
Plaintiff only states conclusory allegations. Plaintiff has not filed an
opposition.
To prevail on a cause of action for intentional interference
with contractual relations, a plaintiff must plead and prove (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.” (Reeves v. Hanlon (2004) 33
Cal.4th 1140, 1148.)
After
reviewing the FAC, Plaintiff has not sufficiently alleged a cause of action for
intentional interference with contractual relations. Here, the FAC states that
there were valid agreements between Plaintiff and other guests and potential
guests. (FAC ¶ 45.) Second, the Complaint states that Defendants knew of these
agreements. (FAC. ¶ 46.) However, the FAC only states conclusory allegations
about Defendants’ intent to disrupt the performance of these contracts. Indeed,
the allegations are identical to the original complaint.
Accordingly,
the court SUSTAINS the demurrer to the Third Cause of Action.
Fifth Cause of
Action
Defendants contend that this cause of action fails because
Plaintiff only states conclusory allegations. Plaintiff has not filed an
opposition.
“The elements of negligent interference with prospective
economic advantage are (1) the existence of an economic relationship between
the plaintiff and a third party containing the probability of future economic
benefit to the plaintiff; (2) the defendant's knowledge of the relationship;
(3) the defendant's knowledge (actual or construed) that the relationship would
be disrupted if the defendant failed to act with reasonable care; (4) the
defendant's failure to act with reasonable care; (5) actual disruption of the
relationship; and (6) economic harm proximately caused by the defendant's
negligence.” (Redfearn v. Trader Joe's Co.
(2018) 20 Cal.App.5th 989, 1005.)
Here, Plaintiff sufficiently alleged facts supporting this
cause of action. First, Plaintiff alleges economic relationships with “guests”
and “third-party rental listing agencies” from operating the unit as a short
term rental. (FAC ¶ 62.) Second, Plaintiff alleges that the Defendants knew
about these relationships because he advised them he was operating the unit as
a short term rental and listing it on AirBnB. (FAC ¶ 63.) Plaintiff also alleges
Defendants confirmed there was no prohibition in using the unit this way. (Ibid.) Third, reading the FAC as a whole
and in context, Plaintiff implicitly alleges that Defendants knew they would
disrupt this economic relationship if they failed to act reasonably. (FAC ¶¶
20, 63, 65.) Fourth, Plaintiff alleges various ways that the Defendants sought
to bar such use. (FAC ¶ 20.) Fifth, Plaintiff alleges he could not use the unit
for short term rentals and proceeded to sell it. (FAC ¶¶ 20, 21, 66.) Finally, Plaintiff
alleges economic harm. (FAC ¶ 67.)
Accordingly, the court OVERRULES the demurrer to the Fifth
Cause of Action.
Motion to Strike
Defendants move to strike various portions of the FAC
pertaining to punitive damages including:
1. Paragraph
33: The actions of the defendants, as alleged herein, were committed with
malice and oppression, with intent to cause financial injury to the Plaintiff.
The defendants’ conduct was also despicable and done with a willful and knowing
disregard of the property rights of Plaintiff, thus entitling Plaintiff to an
award of punitive damages.
2. Paragraph
43: The actions of the defendants, as alleged herein, were committed with
malice and oppression, with intent to cause financial injury to the Plaintiff.
The defendants’ conduct was also despicable and done with a willful and knowing
disregard of the property rights of Plaintiff, thus entitling Plaintiff to an
award of punitive damages.
3. Paragraph
51: The actions of the defendants, as alleged herein, were committed with
malice and oppression, with intent to cause financial injury to the Plaintiff.
The defendants’ conduct was also despicable and done with a willful and knowing
disregard of the property rights of Plaintiff, thus entitling Plaintiff to an
award of punitive damages.
4. Paragraph
60: The actions of the defendants, as alleged herein, were committed with
malice and oppression, with intent to cause financial injury to the Plaintiff.
The defendants’ conduct was also despicable and done with a willful and knowing
disregard of the property rights of Plaintiff, thus entitling Plaintiff to an
award of punitive damages.
5. Paragraph
82: The actions of the defendants, as alleged herein, were committed with
malice and oppression, with intent to cause financial injury to the Plaintiff.
The defendants’ conduct was also despicable and done with a willful and knowing
disregard of the property rights of Plaintiff, thus entitling Plaintiff to an
award of punitive damages.
6. Prayer:
For punitive damages, in an amount to be proven at trial.
To obtain punitive damages, a plaintiff must plead
sufficient facts in support of punitive damages.¿ (See¿Hilliard v. A.H. Robins Co.¿(1983)
148 Cal.App.3d 374, 391-92.)¿ In addition,¿punitive damages are allowed only
where “it is proven by clear and convincing evidence that the defendant has
been guilty of oppression, fraud, or malice.”¿ (Civ. Code, § 3294,¿subd. (a).)¿
Courts have viewed despicable conduct as conduct “so vile, base, contemptible,
miserable, wretched or loathsome that it would be looked down upon and despised
by ordinary decent people. (Scott v.
Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 715.)
Subsection (b) of Civil Code § 3294 states:
An employer shall not be liable for
damages pursuant to subdivision (a), based upon acts of an employee of the
employer, unless the employer had advance knowledge of the unfitness of the
employee and employed him or her with a conscious disregard of the rights or
safety of others or authorized or ratified the wrongful conduct for which the
damages are awarded or was personally guilty of oppression, fraud, or malice.
With respect to a corporate employer, the advance knowledge and conscious
disregard, authorization, ratification or act of oppression, fraud, or malice
must be on the part of an officer, director, or managing agent of the
corporation.
Further, Civil Code § 3294(c) provides the definition of
malice, oppression, and fraud. Malice is “conduct which is intended by the
defendant to cause injury to the plaintiff or despicable conduct which is
carried on by the defendant with a willful and conscious disregard of the
rights or safety of others.” Oppression is “despicable conduct that subjects a
person to cruel and unjust hardship in conscious disregard of that person's
rights.” Fraud is “an intentional misrepresentation, deceit, or concealment of
a material fact known to the defendant with the intention on the part of the
defendant of thereby depriving a person of property or legal rights or
otherwise causing injury.”
After a review of the FAC, Plaintiff did not sufficiently
allege facts warranting punitive damages. While the facts as alleged could be
viewed as very wrong, these facts do not rise to the type of conduct that would
“so vile, base contemptible, miserable, wretched or loathsome.” (Scott, supra, 175 Cal.App.4th at 715.) Moreover, the FAC does not allege
any sort of corporate ratification. The FAC only contains conclusory
allegations as ratification. (FAC ¶ 13.)
Accordingly, the court GRANTS Defendants’ motion to
strike in its entirety.
Leave to Amend
Leave to amend should be liberally granted if there is a
reasonable possibility an amendment could cure the defect. (County of Santa Clara v. Superior Court
(2022) 77 Cal.App.5th 1018,1035.) The Plaintiff has the burden of
demonstrating that leave to amend should be granted, and that the defects can
be cured by amendment. (“Plaintiff must show in what manner he can amend his
complaint and how that amendment will change the legal effect of his pleading.”
Goodman v. Kennedy (1976) 18 Cal.3d
335, 349).
Here, the court does not believe that Plaintiff can cure
these defects by amendment. First, Plaintiff made no changes to his Third Cause
of Action despite previously having leave to amend. Second, Plaintiff did not
allege new facts supporting his claim for punitive damages, despite having the
opportunity to amend. Third, Plaintiff did not file oppositions to these
motions.
Accordingly, the court DENIES leave to amend.
CONCLUSION:
For
the foregoing reasons, the Court decides the pending motion as follows:
1.Demurrer to the Third Cause of
Action is SUSTAINED without leave to amend;
2.Demurrer to the Fifth Cause of
Action is OVERRULED;
3.Motion to Strike is GRANTED.
Moving party is to give notice.
IT IS SO ORDERED.
Dated: December 19, 2023 __________________________________ Upinder
S. Kalra
Judge
of the Superior Court