Case Number: BC653959 Hearing Date: May 23, 2018 Dept: 47

Cesar Yanez v. Maheshchandra Surti, et al.

MOTION FOR JUDGMENT ON THE PLEADINGS (COMPLAINT)

MOVING PARTY: Defendants Maheshchandra Surti and Prabha Surti

RESPONDING PARTY(S): Plaintiff Cesar Yanez

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff alleges that Defendant landlords failed to address leaks in the rented home’s foundation and mold problem. Plaintiff was forced to spend his own money on this problem, Defendants failed to reimburse Plaintiff, and Defendants evicted Plaintiff when he withheld rent for his costs of repair.

Defendants Maheshchandra Surti and Prabha Surti move for judgment on the pleadings.

TENTATIVE RULING:

Defendants Maheshchandra Surti and Prabha Surti’s motion for judgment on the pleadings as to the Complaint is GRANTED. Whether leave to amend is allowed to any of the causes of action in the complaint will depend as to whether Plaintiff demonstrates a reasonable probability of successful amendment, consistent with this ruling.

DISCUSSION:

Motion For Judgment On The Pleadings

Meet and Confer

The (untimely) Declaration of John A. Perry reflects that the meet and confer requirement set forth in CCP § 439 was satisfied.

Request For Judicial Notice

Defendants request that the Court take judicial notice of the following: (1) Complaint for Unlawful Detainer filed November 21, 2016 in Surti v. Yanez, LASC 16 UR2923; (2) Answer filed in UD case; (3) January 30, 2017 minutes in UD case; (4) January 30, 2017 UD Judgment; (5) Voluntary Petition for Individuals Filing Bankruptcy filed December 20, 2016 in bankruptcy case, In re Yanez, Case No. 2:16-bk-26561, U.S. Bankruptcy Court for the Central District of California. Requests Nos. 1 – 5 are GRANTED per Evid. Code § 452(d)(court records).

Analysis

1. First Cause of Action (Retaliatory Eviction—Civil Code § 1942.5).

A. Re: Plaintiff Was Delinquent In His Rent.

Plaintiff expressly brought this cause of action pursuant to Civil Code § 1942.5, not as a common law cause of action.

Civil Code § 1942.5 is only available if the lessee is not in default as to the payment of rent:

(a) If the lessor retaliates against the lessee because of the exercise by the lessee of his or her rights under this chapter or because of his complaint to an appropriate agency as to tenantability of a dwelling, and if the lessee of a dwelling is not in default as to the payment of his or her rent, the lessor may not recover possession of a dwelling in any action or proceeding, cause the lessee to quit involuntarily, increase the rent, or decrease any services within 180 days of any of the following: . . .

(Bold emphasis and underlining added.)

We therefore hold that under Civil Code section 1942.5, a tenant, who is not in default in the payment of rent, may invoke the defense of retaliatory eviction, upon proof that he has made an oral complaint to the landlord regarding the tenantability of the premises. Of course, to prevail, he must also show, by a preponderance of the evidence, that the lessor’s conduct in attempting to cause the tenant to pay additional rent, or to involuntarily leave the premises, was in fact retaliatory.

Kemp v. Schultz (1981) 121 Cal.App.3d Supp. 13, 18 (bold emphasis added).

As discussed below, the doctrine of collateral estoppel applies to bar Plaintiff from litigating whether he was in default in the payment of rent, because the unlawful detainer judgment in this case necessarily included a finding that Plaintiff was in default in the payment of rent, and that his defense of “retaliatory eviction” was not proven by the Plaintiff.

B. Re: Collateral Estoppel.

Plaintiff alleges that he was evicted for complaining about the conditions of the property. Complaint, ¶ 73.

“Collateral estoppel bars a party to an action, or one in privity, from subsequently relitigating issues actually litigated and finally decided against it in the earlier action. [Citations.] A corollary of the rule that collateral estoppel is confined to issues ‘actually litigated’ is the requirement that the issue decided previously be ‘identical’ with the one sought to be precluded. [Citations.] Thus, a nonparty may invoke collateral estoppel against a party to a prior action only if three conditions are met: (1) the issue necessarily decided in the prior action is identical to the issue sought to be relitigated in the current action; (2) there was a final judgment on the merits in the previous action; and (3) the party against whom collateral estoppel is asserted was a party, or in privity with a party, to the previous suit. [Citations.]” (United States Golf Assn. v. Arroyo Software Corp. (1999) 69 Cal.App.4th 607, 615–616 [81 Cal. Rptr. 2d 708], italics omitted.)

“‘If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged.’” (Warga v. Cooper (1996) 44 Cal.App.4th 371, 377–378 [51 Cal. Rptr. 2d 684], quoting Sutphin v. Speik (1940) 15 Cal.2d 195, 202 [99 P.2d 652].) A party cannot “‘by negligence or design withhold issues and litigate them in consecutive actions’” (Warga v. Cooper, supra, at p. 378), or “escape the bar of the prior decision[] by asserting that … [it has] other evidence which was not introduced in the earlier proceedings.” (MIB, Inc. v. Superior Court (1980) 106 Cal.App.3d 228, 235 [164 Cal. Rptr. 828].)

Direct Shopping Network, LLC v. James (2012) 206 Cal.App.4th 1551, 1559 (bold emphasis and underlining added).

Here, the Court has taken judicial notice of the Complaint, Answer, January 30, 2017 Minute Order, and Judgment entered in the unlawful detainer action. RJN, Exhs. 1 – 4. The Complaint alleged that the Yanez Plaintiffs/tenants were in default on the rent, and sought to recover possession of the premises. RJN, Exh. 1. Yanez, in the answer, denied the rent default and asserted only the affirmative defense of retaliatory eviction. RJN 2.[1] During trial, the Court considered the testimony of the Yanez tenants, and also considered text messages, a letter, and “DOCUMENT TITLED SAME DAY TESTING, INC. DATED 11/5/16). RJN Exh. 3 (bold emphasis added). Thus, the judicial officer trying the unlawful detainer action necessarily considered the Yanez tenants’ proof of mold testing, yet still found that the Surti landlord was entitled to possession, thereby necessarily finding that the Yanez tenants were in default of their rent obligation and that their affirmative defense based upon the presence of mold was without merit. As such, the unlawful detainer judgment has collateral estoppel as to the issues of whether the Yanez tenants were in default of the rent obligation, and whether the Surti landlord evicted them in retaliation for complaining about the mold.

The res judicata effect of an unlawful detainer proceeding is narrow, but is not nonexistent. Generally speaking, an unlawful detainer judgment has limited res judicata force because it typically follows a summary proceeding focused only on deciding a party’s right to immediate possession of property. (Pelletier v. Alameda Yacht Harbor (1986) 188 Cal.App.3d 1551, 1557 [230 Cal. Rptr. 253].) But when litigants to an unlawful detainer proceeding fully try other issues besides the right of possession, the unlawful detainer judgment is conclusive as to those other litigated issues. (Citations omitted).

Gombiner v. Swartz (2008) 167 Cal. App. 4th 1365, 1371.

Accordingly, the motion for judgment on the pleadings as to the first cause of action is GRANTED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. Goodman v. Kennedy (1976) 18 Cal.3d 335, 348. In this instance, however, Plaintiff must demonstrate this possibility at the hearing, otherwise no leave to amend will be given.

2. Second Cause of Action (Housing Discrimination—Gov. Code § 12955).

A. Re: Complaining About Habitability Issues Does Not Fall Within Purview of FEHA.

At ¶ 62, Plaintiff alleges that Defendant Prabha Surti called Plaintiff and the contractor “Mexican pigs.” If true this would indicate a racial animosity toward Plaintiff and thus perhaps present an issue of fact outside the scope of the pleadings as to whether Defendant evicted Plaintiff due to race.

It shall be unlawful:

(a) For the owner of any housing accommodation to discriminate against or harass any person because of the race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information of that person.

Gov. Code, § 12955(a).

However, despite whatever racial animosity the Defendants may have toward people of Mexican heritage, the simple fact remains is that it is undisputed that the eviction was based solely upon a failure to pay rent – which is a non-discriminatory basis, no matter how racist a landlord may be. The color “green” typically trumps the colors of other types of ancestry or heritage.

The law requires that the plaintiff demonstrate that his race was a substantial factor as to why he was evicted. The allegation contained in ¶ 62, however offensive it may be, is simply insufficient and too isolated to state facts which could support a housing discrimination claim in view of the fact that the actual unlawful detainer was based upon a Three-Day Notice to Pay Rent or Quit.

As such, the motion for judgment on the pleadings as to the second cause of action is GRANTED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. Goodman v. Kennedy (1976) 18 Cal.3d 335, 348. In this instance, however, Plaintiff must demonstrate this possibility at the hearing, otherwise no leave to amend will be given.

3. Third Cause of Action (Breach of Contract—Civil Code § 1550, 3300).

A. Re: Failure To List Breach of Oral Contract Claim In Bankruptcy Schedule.

Plaintiff Cesar J. Yanez filed a Petition for Bankruptcy on December 20, 2016. RJN, Exh. 5. This is well after the date the alleged oral agreement for reimbursement as to plumbing repairs (Complaint, ¶¶ 107, 109) was entered into on March 3 and March 5, 2016 and the oral agreement for reimbursement as to flooring repairs (Complaint, ¶¶ 111, 113) on June 29 and October 27, 2016. Thus, by Plaintiff’s own admission in his Complaint, he knew about the alleged oral contracts for reimbursement as of the date he filed his Petition for Bankruptcy.

As noted by Defendants, in response to Item 33 of the Bankruptcy Petition and Schedules, requesting information about “Claims against third parties, whether or not you have filed a lawsuit or made a demand for payment,” Yanez listed “NO.” RJN, Exh. 5. Likewise as to Item 34 of the Bankruptcy Petition and Schedules, seeking information as to whether there were contingent or unliquidated claims against any third parties, including counterclaims and rights to set off claims. Id.

The foregoing gives rise to the doctrine of judicial estoppel as to assertion of the breach of oral contract claims which existed as claims against the Surti landlords at the time Yanez filed his bankruptcy petition, Defendant has not presented judicially-noticeable documents demonstrating that Yanez obtained a discharge in bankruptcy. Such a discharge would provide the element of successful assertion before a court of Yanez’s position that his total dollar amount of Financial Assets was $100.00. See RJN, Exh. 5 at ¶¶ 16 – 36.

The concept of judicial estoppel prevents a party from asserting a position in a judicial proceeding that is contrary or inconsistent with a position previously asserted in a prior proceeding. The purpose is to protect the integrity of the judicial process and not the parties of the lawsuit. (Jackson v. County of Los Angeles (1997) 60 Cal. App. 4th 171, 181 [70 Cal. Rptr. 2d 96].) ” ‘The doctrine of judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process. See 1B Moore’s Federal Practice P .405[8], at 238-42 (2d Ed. 1988). “The policies underlying preclusion of inconsistent positions are ‘general consideration[s] of the orderly administration of justice and regard for the dignity of judicial proceedings.’ ” Arizona v. Shamrock Foods Co., 729 F.2d 1208, 1215 (9th Cir.1984), cert. denied, 469 U.S. 1197, 105 S. Ct. 980, 83 L. Ed. 2d 982 (1985) (citations omitted). Judicial estoppel is “intended to protect against a litigant playing ‘fast and loose with the courts.’ ” Rockwell International Corp. v. Hanford Atomic Metal Trades Council, 851 F.2d 1208, 1210 (9th Cir. 1988) (citations omitted). Because it is intended to protect the integrity of the judicial process, it is an equitable doctrine invoked by a court at its discretion. . . . Judicial estoppel is most commonly applied to bar a party from making a factual assertion in a legal proceeding which directly contradicts an earlier assertion made in the same proceeding or a prior one. [Citations.]’ ” ( Russell v. Rolfs (9th Cir. 1990) 893 F.2d 1033, 1037, citing Religious Tech. Ctr., Ch. of Scientology v. Scott (9th Cir. 1989) 869 F.2d 1306, 1311 (dis. opn. of Hall, J.).)

California courts have utilized the concept of judicial estoppel and have followed the rule laid down in Oneida Motor Freight, Inc. v. United Jersey Bank (3d Cir. 1988) 848 F.2d 414. In that case, the federal court held that where a debtor in bankruptcy violates its statutory and fiduciary duty to disclose a current claim during a bankruptcy proceeding, equitable and judicial estoppel operate as a bar to further litigation by the debtor. (Conrad v. Bank of America (1996) 45 Cal. App. 4th 133, 137-138 [53 Cal. Rptr. 2d 336].) In explaining the difference between equitable and judicial estoppel, the court in Oneida Motor Freight stated that judicial estoppel “applies to preclude a party from assuming a position in a legal proceeding inconsistent with one previously asserted. Judicial estoppel looks to the connection between the litigant and the judicial system while equitable estoppel focuses on the relationship between the parties to the prior litigation.” (Oneida Motor Freight, Inc. v. United Jersey Bank, supra, 848 F.2d at p. 419.) “Consequently, judicial estoppel is especially appropriate where a party has taken inconsistent positions in separate proceedings.” (Jackson v. County of Los Angeles, supra, 60 Cal. App. 4th at p. 181.)

As the primary purpose of the doctrine of judicial estoppel is not to protect the litigants but to protect the integrity of the judiciary, the doctrine does not require reliance or prejudice before it may be invoked. (Billmeyer v. Plaza Bank of Commerce, supra, 42 Cal. App. 4th at p. 1092.)

Judicial estoppel is an equitable doctrine with some vagueness in its application. (Coleman v. Southern Pacific Co. (1956) 141 Cal. App. 2d 121, 128 [296 P.2d 386].) It is a doctrine invoked by courts in their discretion. (Yanez v. U.S. (9th Cir. 1993) 989 F.2d 323, 326.) However, “. . . THE DOCTRINE SHOULD APPLY WHEN: (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. [Citations.]” (Jackson v. County of Los Angeles, supra, 60 Cal. App. 4th at p. 183.)

Applying the above principles to the facts of this case, it is important to start out by commenting on the prior judicial proceeding at issue in this case–appellant company’s bankruptcy case. It is a long-standing tenet of bankruptcy law that one seeking the benefits of protection under the bankruptcy law has a concomitant duty to disclose to the creditors all of the debtor’s interests and property rights without limitation. (Oneida Motor Freight, Inc. v. United Jersey Bank, supra, 848 F.2d at p. 416.) Pursuant to 11 United States Code section 521(1) of the Bankruptcy Code, the debtor is required to “file . . . a schedule of assets and liabilities . . . and a statement of the debtor’s financial affairs[.]” The information must be adequate and that “means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor . . . that would enable a hypothetical reasonable investor . . . to make an informed judgment about the plan [of reorganization].” (11 U.S.C. § 1125(a)(1).) Included in the information subject to mandatory disclosure is the possibility of any litigation likely to arise in a nonbankruptcy context. (Hay v. First Interstate Bank of Kalispell, N.A. (9th Cir. 1992) 978 F.2d 555, 557; Oneida Motor Freight, Inc. v. United Jersey Bank, supra, 848 F.2d at p. 417.)

. . .

The problem with appellants’ arguments are that they fail to fully appreciate the purpose of the doctrine of judicial estoppel. The doctrine is intended to protect the orderly administration of justice and the integrity of all judicial proceedings. (Prilliman v. United Air Lines, Inc. (1997) 53 Cal. App. 4th 935, 937 [62 Cal. Rptr. 2d 142]; Rissetto v. Plumbers and Steamfitters Local 343 (9th Cir. 1996) 94 F.3d 597, 601.) While it is equitable in nature, it seeks to protect the soundness of proceedings in a wide range of cases beyond just bankruptcy. ( Law Offices of Ian Herzog v. Law Offices of Joseph M. Fredrics (1998) 61 Cal. App. 4th 672, 678-679 [71 Cal. Rptr. 2d 771] [arbitration matters]; Jackson v. County of Los Angeles, supra, 60 Cal. App. 4th 171, [workers’ compensation claim]; In re Marriage of Dekker (1993) 17 Cal. App. 4th 842 [21 Cal. Rptr. 2d 642] [dissolution of marriage]; Alexander v. Hammarberg (1951) 103 Cal. App. 2d 872 [230 P.2d 399] [tort action]; Russell v. Rolfs, supra, 893 F.2d 1033 [habeas corpus petition].)

Under appellants’ theory, litigants in another proceeding can be less than accurate in their representations if done to facilitate settlement. Furthermore, according to appellants, they should not be subject to imposition of the doctrine of judicial estoppel if their actions were not taken with an evil motive or were of no consequence to the underlying proceeding. We cannot agree. Full, truthful disclosures in judicial or administrative proceedings are important in and of themselves. Regardless of whether the motive was pure or the effects of the falsehood inconsequential, we must expect honesty and frankness in all judicial and administrative proceedings from parties that choose to bring lawsuits in our courts.

It is not the part of the state courts to act as guarantors of honesty and full disclosure in every sister court or administrative proceedings. However, where parties to an action pending in our courts have been properly shown to have been less than sufficiently forthcoming in another tribunal, the doctrine of judicial estoppel is available to maintain the integrity of our judicial system. While the exercise of that equitable power should be done with great circumspection, it is a powerful tool to encourage litigants to be mindful of the need to employ the full and complete truth regardless of transitory needs of a particular proceeding.

International Engine Parts, Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 350-54 (bold emphasis and underlining added).

In Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, the Second District held that a borrower’s failure to disclose in earlier bankruptcy proceedings that existence of his breach of contract and fraud claims against the lender bars a claim by the borrower against the lender. Id. at 1609.

On August 12, 2008, several months after plaintiffs stopped making the payments scheduled in the forbearance agreement, plaintiff Henry Hamilton filed a voluntary petition in United States Bankruptcy Court (ch. 13). Plaintiff filed schedules showing Greenwich Investors held a secured claim for approximately $688,000. On plaintiff’s personal property schedule, which asks the debtor to describe and estimate the value of “[o]ther contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and rights to setoff claims,” plaintiff did not list any claim against or any right to a setoff against Greenwich Investors.

. . .

[D]efendants demurred to the second amended complaint, asserting that because plaintiffs failed to disclose the existence of their claims against defendants in plaintiff Henry Hamilton’s earlier bankruptcy proceeding, the claims were barred by the doctrines of res judicata and estoppel, and otherwise failed to state a claim on which relief could be granted. The trial court took judicial notice of the bankruptcy court documents and sustained defendants’ demurrer without leave to amend. Judgment was entered, and the Hamiltons filed this appeal.

Hamilton, supra, 195 Cal.App.4th at 1606-08 (bold emphasis and underlining added).

In sum, this case is not like Ryan Operations, Cloud, or Gottlieb. Here, plaintiff Henry Hamilton declared under penalty of perjury that the schedules he filed were true and correct, and he failed to list his claim against the bank, one of his principal creditors, in answer to an express question about counterclaims and setoffs. The complaint shows the events on which plaintiffs base their fraud and breach of contract claims against the bank occurred many months before plaintiff filed his bankruptcy proceeding, so he must have known of the facts allegedly justifying the claim, yet he failed to disclose the claim. Unlike Ryan Operations and Cloud, this is a lender liability case, like Oneida Motor Freight. The application of estoppel and res judicata principles will not, as in Cloud, bestow a windfall on a noncreditor defendant. There is nothing here to take the case outside the Oneida Motor Freight rule, reiterated in Gottlieb, that “in completing bankruptcy schedules, a debtor should list any legal claims against a creditor whose wrongful conduct caused the bankruptcy; otherwise, an action on the claim is barred.” (Gottlieb, supra, 141 Cal.App.4th at p. 136.)

Hamilton, supra, 195 Cal.App.4th at 1614 (bold emphasis and underlining added).

We conclude the demurrer was properly sustained on the estoppel ground established in Oneida Motor Freight, Inc. v. United Jersey Bank (3d Cir. 1988) 848 F.2d 414 (Oneida Motor Freight). There, the court applied doctrines of equitable and judicial estoppel to find a debtor’s failure to disclose a lender liability claim in chapter 11 bankruptcy proceedings precluded the debtor from later litigating the claim.

The Oneida Motor Freight court observed that one seeking benefits under bankruptcy law must “satisfy a companion duty to schedule, for the benefit of creditors, all his interests and property rights.” (Oneida Motor Freight, supra, 848 F.2d at p. 416.) “The result of a failure to disclose [any litigation likely to arise in a nonbankruptcy context] triggers application of the doctrine of equitable estoppel, operating against a subsequent attempt to prosecute the actions.” (Id. at p. 417.) Judicial estoppel, which “applies to preclude a party from assuming a position in a legal proceeding inconsistent with one previously asserted,” also barred the plaintiff’s lender liability claim. The debtor’s “failure to list its claim against the bank worked in opposition to preservation of the integrity of the system which the doctrine of judicial estoppel seeks to protect”; the debtor’s later lawsuit “speaks to a position clearly contrary to its Chapter 11 treatment of the bank’s claim as undisputed.” (Id. at p. 419.)

The Oneida Motor Freight rule has been applied by California courts. In Billmeyer v. Plaza Bank of Commerce (1995) 42 Cal.App.4th 1086 [50 Cal. Rptr. 2d 119] (Billmeyer), the court, while noting that the issue preclusion terminology used in the case precedents is variable, stated that “ ‘courts that have considered the effect of a debtor’s failure to disclose a potential lender-liability lawsuit in a bankruptcy proceeding have universally held that the debtor is equitably estopped, judicially estopped or barred by res judicata from bringing the action after confirmation of the bankruptcy reorganization plan.’ ” (Id. at p. 1091, fn. omitted; see also Conrad v. Bank of America (1996) 45 Cal.App.4th 133, 160 [53 Cal. Rptr. 2d 336] (Conrad) [“we find the rule expressed in Oneida Motor Freight and its progeny to be a bar to plaintiffs’ claim for fraud since they failed to list or otherwise identify the claim in their bankruptcy proceedings up to and through the time the bankruptcy court issued orders confirming their reorganization plans”].)

Hamilton, supra, 195 Cal.App.4th at 1609-10 (bold emphasis added).

Thus, Plaintiff is judicially estopped from asserting the breach of contract claim in this lawsuit

The motion for judgment on the pleadings as to the third cause of action is GRANTED without leave to amend, unless Plaintiff demonstrates a reasonable possibility of successful amendment.

Moving Party to give notice, unless waived.

IT IS SO ORDERED.

Dated: May 23, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court