Case Number: BC516569    Hearing Date: September 05, 2014    Dept: B

18. BC516569
7605 SAN FERNANDO ROAD #7 LLC vs. RED HAWK FIRE & SECURITY
Motion for Summary Judgment
Case Management Conference

The Plaintiff alleges that it suffered damages as a result of the Defendant breaching a lease agreement by failing to return the premises at the end of the term, by failing to surrender the premises in as good a condition as they were at the beginning of the term, by failing to maintain the property, and by removing property from the premises. There is one cause of action for breach of contract.

This hearing concerns the Plaintiff’s motion for summary judgment against the Defendant, Red Hawk Fire & Security, LLC.
Under CCP section 437c, a plaintiff may move for summary judgment on a complaint and has the burden of proof to offer evidence establishing each element of the causes of action in the complaint. A review of the Plaintiff’s complaint reveals that it contains a single cause of action for breach of contract. The cause of action is based on the lease agreement and includes the following essential elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

The Plaintiff provided the following evidence to establish each of these elements in the causes of action in the Plaintiff’s Separate Statement of Facts (“PSSF”):

1) the Plaintiff entered into a lease with Detection Logic Fire Protection, Inc. (PSSF 3);
2) Chubb Fire and Security, Inc. is the successor in interest and assignee of the rights and duties of Detection Logic Fire Protection, Inc. (PSSF 2); and
3) the Defendant, Red Hawk Fire & Security is the successor in interest and assignee of the rights and duties of Chubb Fire and Security, Inc. (PSSF 1).
These facts demonstrate that the Plaintiff has evidence to establish the element of the existence of a contract between the parties, i.e., the lease agreement.

4) the Plaintiff performed its obligations under the lease (PSSF 31);

5) on September 30, 2011, the Plaintiff gave a 180 days’ notice of termination to the Defendant and notice to have the premises delivered by March 31, 2012 (PSSF 6); and
5) the Defendant did not vacate the premises until April 27, 2012 and left the property damaged and in an unsafe conditions (PSSF 10);
These facts demonstrate that the Plaintiff has evidence to establish the element of the Defendant’s breach by failing to deliver the premises at the termination of the lease and the breach by failing to deliver the premises without damage and unsafe conditions.

6) the Plaintiff’s damages included $92,631.27 for repairs, $7,775 in legal fees for the repair claims, $8,460 in legal fees for the eviction, and $10,560 in attorney’s fees to settle the cost of repairs (PSSF 13 to 15);

7) in addition, the Plaintiff incurred costs of $23,756 for prep work on the exterior and interior walls (PSSF 20c); and

8) Further, the Plaintiff incurred $6,000 to repair the air conditioning unit (PSSF 23c).

These facts demonstrate that the Plaintiff has evidence to establish the element of the Plaintiff’s damages resulting from the breach. The total amount is $149,182.27.

These facts meet the Plaintiff’s burden of proof because they demonstrate that the Plaintiff has evidence to establish each element of the breach of contract cause of action. Under CCP section 437c, the burden of producing facts that demonstrate that there is a question of fact with one or more of these elements is shifted to the Defendant.

The Defendant meets its burden with facts showing that there is a dispute as to the existence of a contract and the Defendant’s breach. The Defendant produces its facts in the Defendant’s Separate Statement of Facts in Dispute (“DSSF”).
First, the Defendant produces facts indicating that there was no contractual relationship. On July 29, 2011, the Plaintiff entered into a purchase and sale agreement with Hartoonian Properties LLC to sell the premises. The Plaintiff assigned the lease to Hartoonian Properties LLC in September of 2011 and Hartoonian Properties LLC assumed all rights and obligations of the lessor (DSSF 1).
As noted above, the Plaintiff sent the notice of termination of the lease on September 30, 2011. However, when the Defendant sought an extension of the term of the lease, the Defendant sent the request to the new owner, Hartoonian Properties LLC (PSSF 8). Hartoonian Properties LLC sent a letter that it did not agree to an extension (PSSF 9).
These facts indicate that in September of 2011, the Plaintiff had sold the premises and assigned its rights under the lease agreement to Hartoonian Properties LLC. Further, when the Defendant sought to extend the term of the lease, the Defendant sent the request to the new owner, which did not agree to an extension. This creates a question of fact whether there was a contractual relationship between the Plaintiff and the Defendant in March 2012, when the Plaintiff claims that the Defendant breached the lease by failing to return these premises.
There is further a question whether Plaintiff has standing to bring this claim.

In its reply, the Plaintiff argues that it has standing under the doctrine of equitable subrogation. Under this doctrine, a person, not acting as a mere volunteer or intruder, who pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter, can bring a claim to recover the debt. Caito v. United California Bank (1978) 20 Cal. 3d 694, 704. The claim has the following elements:

1) payment must have been made by the subrogee to protect his own interest.
2) The subrogee must not have acted as a volunteer.
3) The debt paid must be one for which the subrogee was not primarily liable.
4) The entire debt must have been paid.
5) Subrogation must not work any injustice to the rights of others.
Id.

The Plaintiff did not raise this issue in its moving papers or in its Complaint. The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings. FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382. Since the pleadings delimit the issues, summary judgment cannot be granted or denied on grounds not raised by the pleadings. Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663.
Here, the Plaintiff did not plead this doctrine in its Complaint. Since the pleadings delimit the issue, summary judgment cannot be granted on the Plaintiff’s new claim of equitable subrogation.
Instead, as discussed above, the Plaintiff pleaded a claim for breach of a lease agreement between the Plaintiff and the Defendant. Since there are facts indicating that there was no lease agreement between the Plaintiff and the Defendant at the time of the breach, there is a question of fact regarding this element.
This is grounds to deny the motion for summary judgment.

Second, the Plaintiff provided facts to demonstrate that the date of the breach was in March of 2012, when the Defendant did not return the premises and the Defendant left the premises in an unsafe condition. The Defendant has provided facts that demonstrate that Hartoonian Properties LLC had assumed all rights and obligations of the Plaintiff in September of 2011. This indicates that the Defendant did not breach an agreement with the Plaintiff. Instead, these facts indicate that the Defendant’s alleged breach in March of 2012 was a breach of the lease agreement with Hartoonian Properties, LLC.
This is further grounds to deny the motion for summary judgment.

Third, the Defendant argues that the attorney’s fees sought by the Plaintiff cannot be recovered. Under section 24 of the lease agreement, if a suit is brought for damages arising from a failure to comply with the terms of the lease, to enforce payment of rent, or to recover possession of the premises, the prevailing party may recover reasonable costs and expenses (see copy of lease agreement in exhibit C to Nagler declaration in support of Plaintiff’s motion). The Plaintiff claims that the attorney’s fees incurred in the following three categories are damages resulting from the Defendant’s breach:

1) $8,460 for fees related to preparing for the eviction of the Defendant;
2) $10,560 for attorney’s fees incurred to negotiate and settle a dispute between the Plaintiff and the new owner, Hartoonian Properties, LLC, regarding the costs to repair the property; and
3) $7,775 for attorney’s fees incurred by Hartoonian Properties, LLC, in the dispute between the Plaintiff and Hartoonian Properties, LLC, and that the Plaintiff paid to Hartoonian Properties, LLC.

The first category of $8,460 may be recovered under the lease agreement because they were incurred to recover possession of the premises.
However, the second and third categories of attorney’s fees arose from a dispute between the Plaintiff and the new owner, Hartoonian Properties, LLC. This dispute was resolved by a settlement agreement between the Plaintiff and Hartoonian Properties LLC (see copy of settlement agreement in exhibit L to Nagler declaration). These attorney’s fees were not for the failure to comply with the terms of the lease, to enforce payment or rent, or to recover possession of the premises. Instead, they were incurred by the Plaintiff and the new owner, Hartoonian Properties, LLC, in the dispute the costs to repair the property. Accordingly, there is a dispute of fact whether the Plaintiff may recover $10,560 for attorney’s fees that it incurred in a separate legal controversy with Hartoonian Properties, LLC, or $7,775 incurred by Hartoonian Properties LLC in this separate dispute.

Therefore, the Court denies the Plaintiff’s motion because there is a dispute of fact regarding whether there was a lease agreement between the parties at the time of the alleged breach, whether the Defendant breached the lease agreement with the Plaintiff when it failed to deliver the premises in March of 2012, and whether the Plaintiff may recover the attorney’s fees that the Plaintiff and Hartoonian Properties, LLC, incurred in their separate legal dispute.