2013-00149839-CU-BC

Quail Park Folsom, LLC vs. The Healing Station, Inc.

Nature of Proceeding:  Hearing on Demurrer and Motion to Strike

Filed By: Bowman Jr., Robert C.

Defendants demur to the entire complaint, asserting it fails to state facts sufficient to
constitute a cause of action and is fatally uncertain.  They also move to strike the
request for punitive damages.  For the reasons outlined below, the demurrer is
overruled and the motion to strike is denied.

Facts Alleged in Complaint

As alleged in the complaint, the relevant facts are as follows.  In 2007, Defendant
Connie Chan entered into a five year commercial lease with Plaintiff.  (Compl. ¶ 5, Ex.
A.)  Chan was the lessee, and Plaintiff was the lessor/landlord.  (Id.)  The lease was
amended in 2008 to substitute Chan’s newly formed corporation, Defendant The
Healing Station, as the lessee.  (Id.)  Chan also personally guaranteed payment of The
Healing Station’s obligations under the lease.  (Id.)  In 2010, the lease was amended
two more times to reduce the monthly rent and extend the lease through June 30,
2016.  (Compl. ¶¶ 6, 7, Ex. A.)

As of June 2013, Defendants were delinquent in their lease payments by
approximately $41,000.  (Compl. ¶¶ 9, 11-13.)  Plaintiff requested they pay the amount
due, but they refused.  (Compl. ¶ 9.)  In June 2013, Defendants abandoned the
premises, destroying or damaging parts of it in the process, and removing and
converting for their own use and possession fixtures that belonged to Plaintiff,
including laminate flooring, cabinets, countertops, and sinks.  (Compl. ¶ 10.)  At the
time they abandoned the premises, there were approximately three years remaining  on the lease and approximately $147,000 in lease payments due.  (Compl. ¶ 17, Ex.
A.)

Based on these allegations, Plaintiff asserts the following four causes of action against
Defendants:  (1) recovery of unpaid rent pursuant to Civil Code section 1951.2
(essentially a breach of contract claim); (2) enforcement of Chan’s personal guarantee;
(3) waste and treble damages pursuant to Code of Civil Procedure section 732; and
(4) conversion.

Demurrer

The rules governing demurrers are well-known and oft-stated.  When ruling on a
demurrer, the court assumes the truth of all facts alleged in the complaint.  (SC
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Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4   68, 82.)  “It is not the
ordinary function of a demurrer to test the truth of the plaintiff’s allegations or the
accuracy with which he describes the defendant’s conduct. A demurrer tests only the
legal sufficiency of the pleading.”  (Committee on Children’s Television, Inc. v. General
Foods Corp. (1983) 35 Cal.3d 197, 213.)  The court may not sustain the demurrer
unless the complaint liberally construed fails to state a cause of action on any theory.  (
Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Although permissible, uncertainty is not a favored ground for a demurrer.  Indeed, a
demurrer for uncertainty will be sustained only where the complaint is so bad that the
defendant cannot reasonably determine what it is being charged with.  (Khoury v.
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Maly’s of Calif., Inc. (1993) 14 Cal.App.4   612, 616.)  Under California’s liberal
pleading rules, “where the complaint contains substantive factual allegations
sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for
uncertainty should be overruled.”  (Williams v. Beechnut Nutrition Corp. (1986) 185
Cal.App.3d 135, 139, fn2.)  In general, parties are expected “to clear up any
ambiguities through discovery, or stipulations, rather than by demurrer.”  (Weil &
Brown, Civil Procedure Before Trial (The Rutter Group 2011) ¶ 7.86, p. 7(I)-39; see
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also Khoury, supra, 14 Cal.App.4   at 616 [“ambiguities can be clarified under modern
discovery procedures”].)

Defendants argue the complaint fails to allege facts sufficient to constitute a cause of
action because the terms of the agreement are not adequately alleged.  This argument
is frivolous.  The lease agreement and all amendments thereto are attached to the
complaint and incorporated therein.  As for Defendants’ objection that the complaint
fails to identify “the specific applicable provisions” that give rise to liability, this can be
clarified through discovery.

Defendants also argue the complaint is “problematic” because it is not clear Plaintiff
has standing to sue or otherwise enforce the terms of the lease.  The lease documents
identify “Quail Folsom” as the landlord; Plaintiff, however, is “Quail Park Folsom.”
Plaintiff alleges in May 2013 it acquired ownership of the property from Quail Folsom
“and its secured creditors, 9-12 Fund LLC.”  (Compl. ¶ 8.)  Attached to the complaint is
a grant deed transferring the property from 9-12 Fund LLC to Plaintiff.  (Compl. Ex. B.)
This grant deed has apparently confused Defendants, because it suggests the
property was originally owned by 9-12 Fund LLC, rather than Quail Folsom.
Defendants claim the uncertainty over who owns the building renders the complaint
subject to demurrer.  The court finds nothing uncertain about the complaint – Plaintiff
alleges it acquired ownership of the property from Quail Folsom and its secured
creditors.  This is sufficient to survive a demurrer.  (See Moore v. Regents of University
of California (1990) 51 Cal.3d 120, 136 fn. 19 [ownership of property may be alleged
generally].)  Assuming any uncertainty over ownership exists, it is precisely the type
may be clarified through modern discovery procedures.

Defendants also complain the $147,750 in rent alleged to be remaining under the
lease “would be usury and uncertain at best.”  Defendants fail to explain how this
amount – which is established by reading the lease and performing a simple math task
– is either usurious, uncertain, or the basis for a demurrer.

Defendants also argue the complaint is vague and ambiguous as to the party
breaching the contract.  This argument is also frivolous.  The lessee is identified as
“Connie M. Chan, dba The Healing Station, Inc.”  Although the original lease identified
Chan as the lessee, the lease was amended to permit Chan to designate her newly
former corporation – The Healing Station – as the lessee.  (Compl. ¶ 5, Ex. A.)  Chan,
however, signed a personal guarantee.  (Id.)  Thus, even if it was The Healing Station
that breached the lease, Chan is liable for all amounts due under the lease.  Moreover,
even if there is some ambiguity as to the party in breach, this is, again, precisely the
type of ambiguity that may be clarified through discovery.

Defendants also argues the third cause of action for waste and fourth cause of action
for conversion are fatally uncertain because Plaintiff fails to specify what type of waste
was committed or what was converted.  The court disagrees.  Plaintiff alleges
Defendants removed and/or destroyed flooring, cabinetry, plumbing and other fixtures
that belonged to Plaintiff.  (Compl. ¶¶ 25, 27.)  Surely, if proven, this constitutes either
waste or conversion.  (See, e.g., Pavkovich v. Southern Pacific Railroad Co. (1906)
150 Cal. 39, 50 [removal or destruction of part of property constitutes waste]; Avidor v.
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Sutter’s Place, Inc. (2013) 212 Cal.App.4   1439, 1452 [“Conversion is the wrongful
exercise of dominion over the property of another.”].)

Finally, Defendants argue the third cause of action is subject to demurrer because
Plaintiff does not allege what type of tenants Defendants were.  The third cause of
action is brought under Code of Civil Procedure section 732, which provides, in full:  “If
a guardian, conservator, tenant for life or years, joint tenant, or tenant in common of
real property, commit waste thereon, any person aggrieved by the waste may bring
action against him therefore, in which action there may be judgment for treble
damages.”  Presumably, Defendants want Plaintiff to allege whether they were tenants
for life, tenants for years, joint tenants, or tenants in common.  Again, however, this is
precisely the type of ambiguity that may be cleared up during discovery.

The demurrer is thus overruled.

Motion to Strike

The complaint includes a prayer for punitive damages for Defendants’ “malicious and
oppressive” destruction of fixtures, flooring and other real property features.
Defendants move to strike the request for punitive damages, arguing the complaint
contains no factual allegations to warrant such a claim.

Punitive damages may only be awarded if Plaintiff can prove by clear and convincing
evidence that Defendants were guilty of oppression, fraud or malice.  (Civ. Code §
3294, subd. (a).)  If Plaintiff can make such a factual showing, it may indeed be entitled
to punitive damages.  (See, e.g, Brewer v. Premier Golf Properties, LP (2008) 168
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Cal.App.4   1243, 1255 fn. 11 [conversion may support award of punitive damages];
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Nippon  Credit Bank v. 1333 N. Cal. Blvd. (2001) 86 Cal.App.4   486, 501-503 [punitive
damages may be awarded for waste].)  Whether Defendants acted with the requisite
degree of oppression or malice is an issue that should be decided by the jury, not by a
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motion to strike.  (Nippon Credit Bank, supra, 86 Cal.App.4   at 501; see also Perkins
v. Superior Court (1981) 117 Cal. App. 3d 1, 6-7 [“not objectionable” to plead generally
that defendants are guilty of oppression, fraud, and malice].)

The motion to strike is thus denied.