Case Number: EC062040    Hearing Date: November 07, 2014    Dept: A

Orange Grove Service v Lai

MOTION TO STRIKE

Calendar: 13
Case No: EC062040
Date: 11/7/14

MP: Cross-Defendants, Orange Grove Service Inc. and Art Flores
RP: Cross-Complainant,

ALLEGATIONS IN CROSS-COMPLAINT:
The Cross-Complainant entered into a lease with the Cross-Defendants. The Cross-Defendants breached the lease by failing to provide a 3,000 square foot space as agreed in the lease.

CAUSES OF ACTION IN CROSS-COMPLAINT:
1) Breach of Contract
2) Misrepresentation
(there is no 3rd cause of action)
4) Negligence
5) Rescission and Restitution

RELIEF REQUESTED:
Strike claim for punitive damages.

DISCUSSION:
Trial is set for June 1, 2015.

This hearing concerns the Cross-Defendants’ motion to strike the claim for punitive damages from the Cross-Complaint.
A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages. Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255. A claim for punitive damages cannot be pleaded generally and allegations that a defendant acted “with oppression, fraud and malice” toward plaintiff are insufficient legal conclusions to show that the plaintiff is entitled to an award of punitive damages. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872. Specific factual allegations are required to support a claim for punitive damages. Id.
Under Civil Code section 3294, a plaintiff may recover an award of punitive damages on a showing that the defendant acted with malice, oppression, or fraud. Civil Code section 3294 defines these terms in the following manner. “Malice” means 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. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. “Fraud” means 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.

The Cross-Complaint includes a second cause of action is for misrepresentation. A review of the second cause of action reveals that it is based on allegations that the Cross-Complainant was induced to enter into the lease agreement by false representations about the size of the retail space.
A properly pleaded fraud claim will itself support recovery of punitive damages. Stevens v. Sup.Ct. (St. Francis Med. Ctr.) (1986) 180 Cal.App.3d 605, 610. The Cross-Defendants did not demur to the second cause of action. Since the second cause of action is therefore admittedly a properly plead fraud claim, it supports the request for punitive damages.
The Cross-Defendants argue that this case arises from a contract and that punitive damages cannot be sought for the breach of a contract. However, tort damages, such as punitive damages, are allowed in contract cases when the defendant’s conduct violates a duty independent of the contract arising from principles of tort law. Erlich v. Menezes (1999) 21 Cal. 4th 543, 551. Examples of cases permitting tort damages in contract cases are the following:

1) breaches of contractual duties that cause physical injuries;
2) breaches of the covenant of good faith and fair dealing in insurance contracts;
3) wrongful discharge in violation of public policy;
4) the fraudulent inducement of a contract.
Id. at 551-552.

The second cause of action is based on the claim that the Cross-Complainant was fraudulently induced into the lease agreement. Although the claim is based on a contract, the Cross-Complainant may seek punitive damages because the alleged conduct arises from principles of tort law, i.e., fraud.
Accordingly, there are no grounds to strike the claim for punitive damages.

However, paragraph 17 in the second cause of action and paragraph 3 of the prayer for relief seek an award of $350,000 in punitive damages. Under Civil Code section 3295(e), no claim for punitive damages shall state an amount. Accordingly, the amount sought of $350,000 will be striken from paragraph 17 of the second cause of action and paragraph 3 of the prayer for relief.

Therefore, the Court will deny the request to strike the claim for punitive damages and grant the request to strike the amount of $350,000.

RULINGS:
Deny request to strike claim for punitive damages.
Strike the phrase “in the amount of $350,000” from paragraph 17 of the second cause of action and the phrase “in the sum of $350,000” from paragraph 3 of the prayer for relief without leave to amend.