2019-00249523-CU-PO

Teodora Rosa vs. THR Brokerage West, Inc.

Nature of Proceeding: Motion to Strike Punitive Damages

Filed By: Kilduff, Douglas M. (Gregory)

Effective September 23, 2019, official court reporters will not be available in Departments 53 and 54, with exceptions listed in the Court’s Policy Regarding Availability and Unavailability of Official Court Reporters. Additional information regarding this policy can be found on the Court’s website at www.saccourt.ca.gov.

Defendants THR Brokerage West Inc., 2017-1 1H Borrower L.P, and 2014-1 IH Borrower L.P.’s (collectively, “Defendants”) motion to strike punitive damages is ruled upon as follows.

This is a landlord/tenant case arising from an alleged rat infestation. Plaintiff filed the complaint on January 30, 2019, alleging the following four causes of action: (1) negligence; (2) breach of implied warranty of habitability; (3) negligent maintenance of premises; and (4) maintenance of a nuisance.

Plaintiff alleges Defendants owned, operated, maintained, and controlled the residence she rented until January 31, 2018. (Complaint ¶¶ 4-5.) Plaintiff alleges Defendants “allowed a serious rat infestation that in turn prevented the use of the heater, air conditioner, and washer; and electrical problems; among other things to be proven at the trial of this matter.” (Complaint ¶ 6.) Plaintiff alleges that she, “code enforcement, and others repeatedly notified Defendants both orally and in writing of the defective and dangerous conditions” and “requested that Defendants have them repaired but Defendants failed and refused to repair them … or if they did attempt to repair made grossly inadequate efforts .” (Complaint ¶¶ 13, 23, 30.)

With respect to her cause of action for nuisance, Plaintiff incorporates all of the prior allegations (Complaint ¶ 26) and alleges the following as to punitive damages: “In maintaining the nuisances defendants acted with full knowledge of the consequences thereof and of the damage being caused to plaintiff. Despite this knowledge, defendants failed to abate the nuisances by repairing the defective and dangerous conditions of the premises or causing them to be repaired. The failure to act was both oppressive and malicious within the meaning of Civil Code Section 3294 in that it subjected plaintiff to cruel and unjust hardship in willful and conscious disregard of plaintiffs rights and safety, thereby entitling plaintiff to an award of punitive damages Defendants’ failure to repair the defective and dangerous conditions or to have them repaired within a reasonable time after plaintiff notified them of them or at all, as alleged above, were oppressive and malicious within the meaning of Civil Code

Section 3294 in that they subjected plaintiff to cruel and unjust hardship in willful and conscious disregard of plaintiffs rights and safety, thereby entitling plaintiff to an award of punitive damages. Furthermore defendants themselves created the conditions requiring the repairs and were thus on notice of the need for correction.” (Complaint ¶ 30.)

Plaintiff prays “For punitive damages in an amount appropriate to punish defendants and deter others from engaging in similar misconduct.” (Prayer at 5.)

Defendants move to strike the punitive damages allegations in paragraph 30 and in the prayer for relief on the following grounds: (1) Plaintiff fails to allege a managing agent of Defendants authorized or ratified the wrongful acts; (2) Plaintiff’s allegations are insufficient to state a claim for punitive damages; and (3) the punitive damages allegations are not incorporated into the other causes of action and therefore do not support a prayer for punitive damages as to all causes of action.

A court tests the adequacy of a punitive damages allegation by way of a motion to strike. (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 164.) Under Code of Civil Procedure section 435, a defendant, within the time to respond to a complaint, may file a motion to strike the whole or any part of the pleading. (Code Civ. Proc. § 435, subd. (b)(1).) Under section 436, the court may “[s]trike out any irrelevant, false, or improper matter inserted in any pleading” as well as “all or part of any pleading not drawn or filed in conformity with the laws of this state.” (Code Civ. Proc, § 436, subds.

(a) and (b).)

In order to plead an entitlement to punitive damages a plaintiff must allege the defendant is guilty of “oppression, fraud, or malice.” (Civil Code § 3294(a).) “Malice” under Civil Code § 3294(c)(1) means conduct intended to injure the plaintiff or despicable conduct by the defendant with a willful and conscious disregard of others. Malice “based on a conscious disregard of the plaintiff’s rights, requires proof that the defendant’s conduct is ‘despicable’ and ‘willful.’” (Lackner v. North (2006) 135 Cal.App.4th 1188, 1211.) “‘[D]espicable’ connotes conduct that is ‘…so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.’” (Id. [citations omitted].) Despicable conduct includes “that which is in blatant violation of law or policy.” (American Airlines, Inc. v. Sheppard, Mullin, Richter, & Hampton (2002) 96 Cal.App.4th 1017, 1050.) Indeed, “[e] ven ‘nonintentional torts’ may form the basis for punitive damages when the conduct constitutes conscious disregard of the rights or safety of other. [citation omitted] ‘Nonintentional conduct comes within the definition of malicious acts punishable by the assessment of punitive damages when a party intentionally performs an act from which he knows, or should know, it is highly probable harm will result.’ [citation omitted].” (Skf Farms v. Superior Court (1984) 153 Cal.App.3d 902, 907.)

In opposition, Plaintiff relies on the case of Stoiber v. HoneyChuck (1980) 101 Cal.App.3d 903, a landlord/tenant case which discussed the availability of punitive damages in an action for intentional nuisance. In Stoiber, the court concluded that the plaintiff had pleaded sufficient facts to support her claim for exemplary damages where she alleged “that defendant had actual knowledge of defective conditions in the premises including leaking sewage, deteriorated flooring, falling ceiling, leaking roof, broken windows, and other unsafe and dangerous conditions…[and] also alleged that defendants ‘In maintaining said nuisance,…acted with full knowledge of the consequences thereof and the damage being caused to plaintiff, and their conduct was

willful, oppressive and malicious.'”

Here, Plaintiff’s allegations satisfy Stoiber. Plaintiff has alleged in connection with her nuisance claim that Defendants had actual knowledge of the rat infestation and maintained the nuisance with full knowledge of the consequences to Plaintiff. (Complaint ¶¶ 13, 23, 26, 30.) For pleading purposes, these allegations are sufficient to state a claim for punitive damages. Thus, the motion to strike on this ground is
OVERRULED.

Defendants also contend the claim fails on the ground that Plaintiff has failed to allege an officer, director, or managing agent of Defendants authorized or ratified the wrongful conduct as required by Civil Code § 3294(b). Section 3294(b) provides an employer shall not be liable for punitive damages based upon the acts of an employee “unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code § 3294(b); see White v. Ultramar (1999) 21 Cal. 4th 563.)

Indeed, “A corporation is not deemed to ratify misconduct, and thus become liable for punitive damages, unless its officer, director, or managing agent actually knew about the misconduct and its malicious character. A “managing agent” is an employee with authority to establish corporate policy, that is, the broad principles and rules of general application which govern corporate conduct.” (Cruz v. Homebase (2000) 83 Cal.App.4 th 160, 163.)

In White v. Ultramar, Inc., our Supreme Court held that “the Legislature intended the term ‘managing agent’ to include only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy. The scope of a corporate employee’s discretion and authority under our test is therefore a question of fact for decision on a case-by-case basis.” Whether an employee is a managing agent does not hinge solely on his level or position in the corporate hierarchy. (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 822.) “‘Rather, the critical inquiry is the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy.'” (Kelly-Zurian v. Wohl Shoe Co., (1994) 22 Cal.App.4th 397,421, quoting Egan, supra, at pp. 822-823.)

Plaintiff in opposition does not raise any argument in opposition, but contends she can amend the complaint to allege that “the proper corporate officers, directors and managing agents knew about the misconduct and its malicious character.” (Opposition at 3:16-18.) Accordingly, the motion to strike on this ground is SUSTAINED with leave to amend.

Lastly, Defendants contend the prayer for punitive damages improperly seeks punitive damages on all causes of action even though the complaint only has punitive damages allegations in the fourth cause of action for nuisance. While the prayer does not separately identify the specific damages it seeks as to each cause of action, and instead generally prays for damages and costs (including punitive damages), this is

not a basis upon which to strike the prayer for punitive damages. Accordingly, the motion to strike on this ground is OVERRULED.

Plaintiff may file and serve an amended complaint no later than October 14, 2019. Although not required by statute or court rule, Plaintiff is directed to present the clerk a copy of this ruling at the time of filing the amended complaint.

This minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.