Case Name: Castillo, et al. v. Kang, et al.
Case No.: 16CV295614

Defendants Hee Duck Kang and Inja Kang (collectively, “Defendants”) demur to the First Amended Complaint (“FAC”) filed by plaintiffs Argelia Castillo, Hector Hernandez, Mayra Enciso, Cindy Castillo, Maribel Dimas, Luis Fernando Arroyo, Joshua Ayala, Alondra Ayala, Julio Ayala, Patricia Garcia, Andy Garcia, Daniel Garcia, Rachel Garcia, Antonio Lopez, Angel Gael Jiminez Lopez, Antonio Jiminez, Salvador Lopez, Amalia Pacheco, Veronica Martinez and Melanie Gutierrez (collectively, “Plaintiffs”) and move to strike portions contained therein.

I. Factual and Procedural Background

This is an action for breach of contract and breach of the implied warranty of habitability, among other things, between 20 residential tenants and their landlords. Plaintiffs, who are comprised of both adults and minors, reside in a 40 unit apartment complex located in San Jose. Plaintiffs allege that the property is “dilapidated,” “unsafe” and that Defendants failed to maintain the property in a habitable condition. Such substandard conditions include, but are not limited to, pest infestation, lack of heating, faulty outlets and appliances, mold and lack of clean water. Based on the foregoing, Plaintiffs filed the FAC on November 14, 2018, asserting claims for: (1) breach of contract; (2) breach of the implied covenant of quiet enjoyment; (3) tortious breach of the implied warranty of habitability; (4) violation of Civil Code § 1942.4; (5) violation of Business & Professions Code § 17200 et seq.; (6) negligence; (7) nuisance; (8) intentional infliction of emotional distress; (9) negligent infliction of emotional distress; and (10) negligent maintenance of premises.

On January 29, 2019, Defendants filed the instant demurrer to the first cause of action on the grounds of failure to state facts sufficient to constitute a cause of action, uncertainty and that it cannot be ascertained from the pleading whether the contract at issue is written, oral or implied by conduct. (Code Civ. Proc., § 430.10, subds. (e), (f) and (g).) Defendants also filed the instant motion to strike Plaintiffs’ various requests for punitive damages. Plaintiffs oppose both motions.

II. Demurrer

As articulated above, Defendants demur to only a single cause of action in the FAC- the first for breach of contract. In doing so, they maintain that the claim is uncertain and lacks sufficient facts because (1) Plaintiffs have not specifically set forth which of them are bringing the cause of action and (2) they fail to identify the specific terms of the contract which were allegedly breached by Defendants.

As a general matter, in order to state a claim for breach of contract, a plaintiff must plead the following: (1) the existence of a contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) damages to the plaintiff as a result of the breach. (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.) A special demurrer lies where it cannot be ascertained from the pleading whether the contract sued upon is written, oral, or is implied by conduct. (Code Civ. Proc., § 430.10, subd. (g).) If the action is based on the alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference. (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 459.) If the contract is oral, it may be pleaded generally as to its legal effect, as it is rarely possible to allege the exact words. (Khoury v. Maly’s of Calif. (1993) 14 Cal.App.4th 612, 616.)

Here, while it appears that the rental agreements being sued upon are written, the agreements attached to the FAC as “Exhibit J” only pertain to two of the 20 plaintiffs in this action- Argelia Castillo and Antonia Lopez. Thus, it is not clear from the allegations of the FAC whether additional rental agreements, whether written, oral or implied, exist between the remaining plaintiffs and Defendants such that they can state claims for breach of contract. For those agreements that are attached, Plaintiffs have not specified which provisions have been breached. In their opposing papers, Plaintiffs suggest that some of them maintained implied-in-fact rental agreements with Defendants, but this has not been pleaded. Additionally, while it appears that the first cause of action is being asserted by all named plaintiffs in this action, it is not certain, and Plaintiffs concede Defendants’ point that some of them are minors, rendering them unable to enter into a contract relating to real property or any interest therein. (See Fam. Code, § 6701, subd. (b).) In this vein, the first cause of action is uncertain. However, Plaintiffs contend that the minor parties are bringing a claim for breach of contract not as parties to the subject agreements, but as third party beneficiaries. To the extent that this is their intention though, they have not sufficiently pleaded their purported status.

A contract made expressly for the benefit of a third person may be enforced by him or her at any time before the parties thereto rescind it. (Civ. Code, § 1559.) Because “[t]hird party beneficiary status is a matter of contract interpretation” (California Emergency Physicians Medical Group v. PacifiCare of California (2003) 111 Cal.App.4th 1127, 1138), a party alleging a claim for breach of contract based on that status “must plead a contract which was made expressly for his benefit and one in which it clearly appears that he was a beneficiary” (Luis v. Orcutt Town Water Co. (1962) 204 Cal.App.2d 433, 441). As applied here, “express” is qualified, a person who claims to be a beneficiary need not be named individually but the contract must show that he or she is member of a class of persons for whose benefit it was made. (See Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1023.) Further, the status of a third party beneficiary does not require a written contract. (See, e.g., Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 606.) Plaintiffs, particularly the minor parties, have not pleaded a contract which was made expressly for their benefit and therefore have not stated claims for breach of contract.

Thus, for a variety of reasons, Plaintiffs have failed to sufficiently state a claim for breach of contract. Consequently, Defendants’ demurrer to the first cause of action on the grounds of failure to state facts sufficient to constitute a cause of action, uncertainty, and that it cannot be ascertained from the FAC whether the agreement(s) sued upon is written, oral or implied by conduct, is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

III. Motion to Strike

With the instant motion, Defendants move to strike Plaintiffs’ requests for punitive damages in connection with the their claims for breach of contract (first cause of action), implied covenant of quiet enjoyment (second cause of action), implied warranty of habitability (third cause of action), violation of Civil Code section 1942.2 (fourth cause of action), nuisance (seventh cause of action) and in the prayer for relief at the conclusion of the FAC. Defendants argues that Plaintiffs have failed to plead sufficient facts to support the recovery of such damages.

The right to recover punitive damages requires proof of “oppression, fraud, or malice” on the part of the defendant by “clear and convincing evidence.” (Civ. Code, § 3294, subd. (a).) For pleading purposes, in order to support a prayer for punitive or exemplary damages, the complaint must allege “ultimate facts of the defendant’s oppression, fraud or malice.” (Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-317.) Simply pleading the statutory terms “oppression, fraud or malice” is insufficient to adequately allege punitive damages, but only to the extent that the complaint pleads facts to support those allegations. (Blegen v. Superior Court (1986) 176 Cal.App.3d 503, 510-511.) Therefore, specific factual allegations demonstrating oppression, fraud or malice are required. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.) However, the complaint will be read as a whole so that even conclusory allegations may suffice when read in context with facts alleged as to the defendant’s wrongful conduct. (Perkins v. Super. Ct. (1981) 117 Cal.App.3d 1, 6-7; Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255).

Here, malice, fraud and oppression all serve as the foundation for Plaintiffs’ punitive damages requests. Under the punitive damages statute, Civil Code section 3294, “malice” is defined as 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.” (Civ. Code, § 3294, subd. (c)(1).) “Oppression” is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., § 3294, subd. (c)(2).) “Despicable conduct,” in turn, has been described as conduct that is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.) Finally, “fraud” is defined as “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.” (Civ. Code, § 3294, subd. (c)(3).)

Defendants first assert, and Plaintiff concedes, that a breach of contract claim cannot support a request for punitive damages. (Civ. Code, § 3294 [stating that exemplary damages are available “[i]n an action for the breach of an obligation not arising from a contract …”] [emphasis added].) Consequently, Plaintiffs’ request for such fees in the first cause of action is stricken.

As for the remaining claims, Defendants assert that the FAC fails to allege facts which support their purportedly conclusory allegations that Defendants acted with “oppression, fraud, or malice.” The Court does not find Defendants’ reading of the FAC in this regard to be persuasive. By alleging in factual detail the nature of the substandard conditions that they had to live in (including infestations and mold), Defendants’ awareness of those conditions and having been intimidated and threatened with eviction and increased rental costs as a result of their complaints to Defendants, Plaintiffs have sufficiently pleaded oppressive conduct on the part of Defendants within the meaning of the punitive damages statute. (FAC, ¶¶ 6- 35.)

In accordance with the foregoing, Defendants’ motion to strike is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to Plaintiffs’ request for punitive damages in connection with their breach of contract claim and otherwise DENIED.