Judge: William A. Crowfoot, Case: 22AHCV00668, Date: 2023-08-30 Tentative Ruling

Case Number: 22AHCV00668    Hearing Date: December 11, 2023    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I.       INTRODUCTION

          On September 8, 2022, plaintiff Café on Lemon, Inc. (“Plaintiff”) filed this action against Gina Fanara (“Fanara”), Kevin Tang (“Tang”), and Dilys Jones (“Jones”), as Trustee of the Louis C. Petrie Separate Property Trust (“LP Trust”) (erroneously sued as “Louis Petrie Separate Property Trust”). 

On May 15, 2023, Plaintiff filed the operative Second Amended Complaint (“SAC”).

On June 23, 2023, LP Trust filed this demurrer by co-opting Tang’s hearing reservation. LP Trust subsequently obtained its own hearing reservation and re-filed its moving papers with a notice of hearing on September 12, 2023.

Plaintiff filed an opposition brief on November 20, 2023.

As of December 8, 2023, the Court’s record does not reflect any reply brief.

II.      LEGAL STANDARDS

A demurrer tests the legal sufficiency of the pleadings and will be sustained only where the pleading is defective on its face. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.)  “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed. [Citation.]” (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Allegations are to be liberally construed. (Code Civ. Proc., § 452.) A demurrer may be brought if insufficient facts are stated to support the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e).) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

III.     FACTUAL ALLEGATIONS

On September 4, 2019, Plaintiff was assigned a lease agreement for the real property located at 120 E. Lemon Avenue, Unit B, Monrovia, California 91016 (the “Property”). The Property is owned by LP Trust. Plaintiff assumed the lease agreement as a new tenant and paid a $500 transfer fee. (SAC, ¶¶ 2, 8.) Plaintiff opened a restaurant named Café on Lemon (also referred to as the “Restaurant”) on February 11, 2020. (SAC, ¶ 9.) On March 15, 2020, Café on Lemon had to close for four months due to COVID-19 restrictions. (SAC, ¶ 10.) After reopening in August 2020, the Restaurant’s business had dropped significantly and Plaintiff alleges that it has not been able to regain its patronage and sales. (Ibid.)

In early May of 2022, Plaintiff listed the Restaurant for sale and received an offer to purchase on May 17, 2022, by Arman Arakelyan (“Arakelyan”) for $300,000. (SAC, ¶ 13.) On June 1, 2022, Plaintiff was informed by LP Trust that the Property was being sold and was asked to sign an estoppel certificate. (SAC, ¶ 11.) Plaintiff signed and returned the estoppel certificate. (Ibid.) On or about June 29, 2022, Plaintiff notified LP Trust that he intended to sell the Restaurant. (FAC, ¶ 14.) On August 1, 2022, Plaintiff requested a meeting with the Trust’s representative, Scott Holman (“Holman”). (SAC, ¶ 14.) On the same day, Holman, Fanara, and Tang allegedly emailed Plaintiff with a “low ball offer to purchase” through a letter of intent. (SAC, ¶ 15.) Plaintiff made a written demand to Defendants requesting a clear response either accepting or rejecting the proposed sale pursuant to Paragraph 36 of the lease agreement. (SAC, ¶ 16.) Plaintiff alleges that “Defendant” did not respond and on August 10, 2022, Arakelyan effectively cancelled the sale agreement with Plaintiff by cancelling escrow. (SAC, ¶¶ 17-18.)

IV.     DISCUSSION

LP Trust demurs to the First Cause of Action for breach of contract on the grounds that it is uncertain and fails to state facts sufficient to state a cause of action. Plaintiff alleges that LP Trust failed to respond to Plaintiff as required by Paragraph 36 of the lease, failed to provide any notice of acceptance or denial in writing, by unreasonably withholding its consent, by delaying any response, and by failing to cooperate and refusing to act in good faith. (SAC, ¶ 20.)  

LP Trust’s demurrer to the SAC is substantively identical to its demurrer to the original Complaint and First Amended Complaint. Again, LP Trust argues that the SAC is ambiguous and unintelligible because Plaintiff does not attach any copies of specific communications. LP Trust also argues that there is no breach of contract under a plain reading of Paragraph 36 because it had the right to impose conditions for its consent.  

For the third time, the Court rejects LP Trust’s arguments. As stated in its earlier orders, the lease agreement is attached to the Complaint, LP Trust is the alleged Lessor, and Plaintiff appropriately alleges that LP Trust breached paragraph 36 of the lease agreement. Furthermore, the facts on the face of the pleading are at issue. Therefore, questions about evidence, such as specific communications or a written demand, are irrelevant at this time. (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315 [“A demurrer tests the pleading alone, and not on the evidence or facts alleged.”])

Accordingly, LP Trust’s demurrer to the First Cause of Action is OVERRULED.

LP Trust also demurs to Plaintiff’s second and third causes of action for intentional and negligent interference with prospective economic advantage. The elements of a claim for interference with prospective economic advantage include “(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional or negligent acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404, citations, brackets, and quotation marks omitted.) Further, “the alleged interference must have been wrongful by some measure beyond the fact of the interference itself. For an act to be sufficiently independently wrongful, it must be unlawful, that is, it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Ibid., citation, ellipsis, and quotation marks omitted.) A “bare breach of contract, without more, is not tortious” and such a breach cannot constitute independently wrongful conduct capable of giving rise to the tort of intentional interference with a prospective economic advantage. (Drink Tank Ventures LLC v. Real Soda in Real Bottles, Ltd. (2021) 71 Cal.App.5th 528, 540 (Drink Tank Ventures).) A breach of contract “cannot be transmuted into tort liability by claiming that the breach detrimentally affected the promisee’s business.” (Arntz Contracting Co. v. St. Paul Fire & Martine Ins. Co. (1996) 47 Cal.App.4th 464, 478-479.)

Plaintiff alleges that LP Trust falsely represented that it was acting in good faith while colluding with Apex and Tang to negotiate a higher monthly rental with Arakelyan and its new business. (SAC, ¶¶ 29-31.) However, Plaintiff falls short of alleging that LP Trust violated a separate duty arising from tort because Plaintiff does not allege how it (or anyone else) relied on such statements to their detriment. (Drink Tank Ventures, supra, 71 Cal.App.5th at p. 539; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1163 [wrongful act need not be directed at plaintiff].) As only one example, Plaintiff does not allege that LP Trust’s misrepresentations caused it to forego negotiations with an alternate buyer.

Accordingly, LP Trust’s demurrer to the Second and Third Causes of Action is SUSTAINED with leave to amend. 

Last, LP Trust demurs to Plaintiff’s cause of action for declaratory relief on the grounds that the First through Third Causes of Action fail to state a claim. Because the Court overrules LP Trust’s demurrer to the First Cause of Action for breach of contract, the Court also overrules LP Trust’s demurrer to the cause of action for declaratory relief.

V.      CONCLUSION

LP Trust’s Demurrer is OVERRULED as to the First Cause of Action and SUSTAINED as to the Second and Third Causes of Action with 20 days’ leave to amend.

Moving party to give notice.

Dated this 11th day of December 2023

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.