Judge: Upinder S. Kalra, Case: 23STCV31162, Date: 2024-06-10 Tentative Ruling
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Case Number: 23STCV31162 Hearing Date: June 10, 2024 Dept: 51
Tentative Ruling
Judge Upinder S.
Kalra, Department 51
HEARING DATE: June
10, 2024
CASE NAME: Chol Enterprises, Inc. v. 740 South
Broadway Associates, LLC, et al.
CASE NO.: 23STCV31162
DEMURRER TO FIRST AMENDED COMPLAINT WITH MOTION TO STRIKE
MOVING PARTY: Defendant
740 South Broadway Associates, LLC
RESPONDING PARTY(S): Plaintiff Chol Enterprises, Inc.
REQUESTED RELIEF: Sustain demurrer to FAC and strike punitive
damages from the FAC.
TENTATIVE RULING:
Demurrer to the FAC is OVERRULED
Motion to strike punitive damages is GRANTED with leave to
amend.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff Chol Enterprises, Inc. filed the Complaint on
December 21, 2023 against Defendant 740 South Broadway Associates, LLC. The
operative pleading is the First Amended Complaint (“FAC”) filed on December 26,
2023 alleging breach of contract, trespass to chattels, conversion, and two
counts of unfair competition under Business and Professions (“Bus. &
Prof.”) Code section 17200. The FAC alleges in pertinent part as follows:
Plaintiff took possession of the Globe Theatre at 740 South
Broadway, Los Angeles, CA 90014 (“Premises”) in October 2012, spending two
years and $5 million to renovate it.
On November 11, 2023, Plaintiff received an eviction notice
for the Premises. On November 14, 2023, Plaintiff and Defendant’s manager
Houman Sarshar (“Sarshar”) orally agreed that Plaintiff had until December 13,
2023, to vacate Plaintiff’s belongings from the Premises. Despite this oral
agreement, Defendant changed the locks and brought a security guard with a dog
to the Premises on November 27, 2023, at 7:00 a.m. This kept Plaintiff from
performing its obligations under the oral agreement.
On December 4, 2023, between 11:00 a.m. and 12:00 p.m., the
parties met at the Premises to take inventory of Plaintiff’s belongings to be
removed. To cure Defendant’s decision to prevent Plaintiff from removing its belongings
by locking it out, the parties orally agreed that five HVAC compressors outside
the Premises would remain as substitute payment for any storage fees for the
rest of the belongings.
Despite this second agreement, at 6:49 p.m. that day, Defendant
sent Plaintiff a demand for $28,000 in storage fees, plus daily fees of $2,000,
effective December 16. Defendant also sought to keep all belongings nailed to
the wall, including Plaintiff’s equipment, and a Certificate of Insurance
listing Defendant as an additional insured.
Plaintiff seeks equitable relief granting access to remove
its belongings, compensatory damages, pre-judgment and post-judgment interest,
punitive damages, and attorney’s fees and costs.
On March 26, 2024, Plaintiff was granted permission to
personally retrieve its belongings from the Premises after a writ of possession
hearing in Department 85.
On April 2, 2024, Defendant filed the instant demurrer to
the FAC with motion to strike. On May 23, 2024, Plaintiff filed oppositions. On
May 28, 2024, Plaintiff filed a reply to the opposition to demurrer. No reply
has been filed for the motion to strike.
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.)
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.) Courts also consider exhibits
attached to the complaint and incorporated by reference. (See Frantz v. Blackwell (1987) 189
Cal.App.3d 91, 94 (Frantz).)
ANALYSIS:
Defendant demurs to the entire FAC on the basis that the
litigation privilege bars the claims, Plaintiff fails to state sufficient
facts, and the claims are unintelligible. Defendant also demurs to the first
cause of action on the basis that it violates the Statute of Frauds.
Defendant’s motion is founded on the assertion that all of
the causes of action are tethered to the Breach of Contract cause of action and
if that fails, all of the subsequent causes of action necessarily fail. To begin,
Defendant contends that the breach of contract claims are unintelligible and
uncertain. The Court disagrees. Significant litigation in the Writs and
Receiver Department makes it clear that the claims are entirely intelligible. Plaintiff contends that Defendant breach two
separate oral contracts. First, a November 14, 2023 oral agreement that
Plaintiff would have until December 13, 2023, to remove personal belongings to
the premises. (FAC ¶ 9.) Second, a December r4, 2023 verbal agreement to exchange
five HVAC compressors in exchange for waiving storage fees. (FAC ¶ 11.) The Court rejects the assertion that these
oral contracts were part of a lease so they are subject to the Statute of
Frauds. As the Honorable James Chalfant observed at the March 5, 2024 hearing
on Plaintiff’s Writ of Possession, it is not unusual for landlords and tenants
to make agreements subsequent to an unlawful detainer judgment regarding removal
of property. The court also rejects the
lack of consideration. While there is no explicit consideration for the first
contract, implicit is the cost for a landlord to dispose of property left behind.
As to the second agreement, there is explicit consideration—the HVAC
compressors were in exchange for storage fees. There is also no consideration alleged for the
agreement in the FAC. The Court also rejects the Res Judicate arguments. Judge
Chalfant made certain rulings in finding that Plaintiff had failed to meet
their burden, in part, at the Writ of Possession hearing. As Judge Chalfant
repeatedly stated, many of those arguments may be insufficient for purposes of
the writ proceedings, but did not bar Plaintiff for proving the allegations to
a jury.
Further, as to the litigation privilege argument, The
purpose of the litigation privilege is to ensure free access to the courts,
promote complete and truthful testimony, encourage zealous advocacy, give
finality to judgments, and avoid unending litigation. (E.g., Wentland, supra, 126
Cal.App.4th at 1492.) Plaintiff
argues that the litigation privilege should not apply because the oral
agreement and subsequent actions were not communications made as part of
achieving the litigation’s objectives but were independent agreements made
post-judgment. Thus, Plaintiff argues that applying the privilege would deny
Plaintiff’s access to courts, immunize Defendant, and undermine the principle
of zealous advocacy. The Court agrees
with Plaintiff.
As to the
remaining causes of action, Plaintiff has met their burden at the pleading
stage.
Motion to Strike
Defendant moves to strike the Prayer for Relief requesting
punitive damages.
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(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.) 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.” (Ibid.) Oppression is “despicable conduct that subjects a person to
cruel and unjust hardship in conscious disregard of that person's rights.” (Ibid.) 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.”¿(Ibid.)¿
As a threshold matter, Plaintiff’s First Cause of Action for
Breach of Contract does not warrant punitive damages. (Purcell v. Schweitzer (2014) 224 Cal.App.4th 969, 976 [no punitive
damages for breach of contract action.]) As to the remaining causes of action,
the Court agrees that Plaintiff has not alleged with particularity how the
conduct was malicious, oppressive, or fraudulent
Accordingly, the court GRANTS Defendant’s motion to
strike in full.
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, Plaintiff requested leave to
amend. Plaintiff may amend to add allegations supporting their claim for
punitive damages.
CONCLUSION:
For
the foregoing reasons, the Court decides the pending motion as follows:
Demurrer to the FAC is OVERRULED.
Motion to strike punitive damages
is GRANTED with leave to amend within 20 days of service of this order. If no
amended pleading is filed within that period, Defendant is to ANSER only within
30 days of this order.
.
Moving party is to give notice.
IT IS SO ORDERED.
Dated: June 10, 2024 __________________________________ Upinder
S. Kalra
Judge
of the Superior Court