Case Number: SC119819 Hearing Date: May 21, 2014 Dept: P

TENTATIVE RULING – DEPT. P

MAY 21, 2014 CALENDAR No: 3

SC119819 — WESTWOOD MINI MART v. RAM INV., et al.

DEMURRER TO FIRST AMENDED COMPLAINT

Evidentiary matters

Defendants’ request for judicial notice is granted as to filing and existence only as to Exhibits 1 and 2, and in full as to Exhibit 3.

Merits

This is an action by a tenant of a commercial space against its former landlord and others, alleging fraud and related claims based on the undisclosed unsuitability of the premises for use as a mini-market (lack of parking and rodent infestation). All named defendants have demurred to all five claims in Plaintiff’s FAC for fraud, negligent misrepresentation, breach of contract, recission, and breach of fiduciary duty, on numerous grounds, the primary one being that the action is barred as res judicata by a judgment in the landlord’s favor against the plaintiff herein in a prior unlawful detainer action, RAM Investments v. Westwood MiniMart, LLC, LASC Case no. 13U00415 (“the UD Action”).

“Res judicata prohibits the relitigation of claims and issues which have already been adjudicated in an earlier proceeding. The doctrine has two components. In its primary aspect the doctrine of res judicata [or claim preclusion] operates as a bar to the maintenance of a second suit between the same parties on the same cause of action.” Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1335 (internal quotations and citation omitted). “The doctrine of res judicata … ‘rests upon the sound policy of limiting litigation by preventing a party who has had one fair adversary hearing on an issue from again drawing it into controversy and subjecting the other party to further expense in its reexamination.'” Vella v. Hudgins (1977) 20 Cal.3d 251, 257 (italics omitted).

The prerequisite elements of res judicata in its claim preclusion form are: (1) the claim in the present action must be identical to a claim litigated or that could have been litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privy with a party to the prior proceeding. Thibodeau v. Crum (1992) 4 Cal.App.4th 749, 755.

The burden of proving that the requirements for application of res judicata have been met is upon the party seeking to assert it as a bar or estoppel. Vella v. Hudgins, supra, at 257. Further, it is well-established that res judicata does not bar litigation of issues not recognized in a summary unlawful detainer proceeding. Indeed, as a leading treatise puts it: “Given the narrow scope of issues that may be litigated in a summary unlawful detainer proceeding, ‘claim preclusion’ effect from an unlawful detainer judgment is relatively uncommon. Rutter, Landlord-Tenant (2013), para. 9:410 ; see also, e.g., Vella, supra, at 257.

The motion unreasonably assumes that merely because Plaintiff asserted fraud as a defense in the UD Action, that defense was fully and fairly litigated or could have been fully and fairly litigated, and determined on the merits, in the UD Action. That assumption is insufficient given the nature of the prior proceeding and the absence of any record from the trial there. Accordingly, the Court rejects Defendants’ assertion of claim preclusion as a bar to all five causes of action.

While the FAC is not a model pleading, the fraud claims are sufficiently stated, if just barely so. Any ambiguities in the allegations can be clarified through the discovery process. While “[b]oth state and federal rules for pleading fraud require that fraud be alleged with specificity … neither requires the pleader to go into minute detail ….” Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1244, n. 16 (emphasis added).

Further, a number of the assertions posited in the moving brief pertain to issues of fact, such as reliance, and are not properly determined on demurrer based on the allegations of the FAC (which allegations are taken as true at this pleading stage). Indeed, in most cases, the issue of justifiable reliance is not even properly addressed on motion for summary judgment. E.g., Blankenheim v. E.F. Hutton & Co., Inc. (1990) 217 Cal.App.3d 1463, 1475 (“Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of fact”); Furla v. Jon Douglas Co. (1998) 65 Cal.App.4th 1069, 1077 -1079 (“Whether the buyer unreasonably failed to protect himself and unjustifiably failed to discover true conditions depends upon all the circumstances…. This presents an issue of fact for the trier of fact”).

Any argument posited in the moving and reply briefs and not specifically addressed herein, is rejected.

A matter not discussed by the parties but which bears discussion: Although the prayer of the FAC appears to state that punitive damages are sought in connection with all causes of action – including the claim for breach of contract – based on the allegations of the complaint, the Court concludes that Plaintiff is seeking punitive damages as to the first and fifth causes of action for fraud and breach of fiduciary only.

Demurrer is overruled; Defendants’ answer to is to be served and filed on or before June 2, 2014.

CASE MANAGEMENT CONFERENCE

Now set for June __ ,2014 at 8:30 a.m.

Other matters

Counsel should note that it is the better practice to refrain from fax-filing documents. Fax-filed documents are often less legible than documents filed in person or by mail, as was the case with Plaintiff’s opposition brief reviewed by the Court in connection with today’s hearing. There is the difficulty in losing pages either in transmission or once the document arrives. Faxed documents lack the exhibit tabs required by CRC 3.1110(f). Further, in light of the budget crisis, there is a significant delay in receiving fax filed documents in the courtroom. The parties have the option of over-night delivery, faxing to an attorney service with instructions to file the document (after attaching any required tabs) directly in the courtroom, or continuing to file by fax in the clerk’s office. Parties electing the last option need to understand that the court laid off 320+ persons 2 years ago and terminated approximately 540 more positions in June 2013. The result is an incredibly short-staffed clerk’s office; and documents faxed seem to get even less priority than documents personally filed. This situation is far from optimal.