Case Number: GC049424    Hearing Date: July 25, 2014    Dept: A

Unified Parking Service v Victory Property Management

MOTION FOR SUMMARY JUDGMENT

Calendar: 17
Case No: GC049424
Date: 7/25/14

MP: Defendants, Victory Property Management, LLC, Monopoly Properties Group, Michael Galam, Eli Galam, and Victor Galam
RP: Plaintiff, Unified Parking Service, Inc. and Michael Sabet

ALLEGATIONS IN FIRST AMENDED COMPLAINT:
The parties had duties and obligations under a lease agreement for a parking structure. The Defendants breached the lease by wrongfully evicting the Plaintiffs by force. The Defendants failed to return the security deposit of $10,000 and converted the money. Finally, Defendants, Michael Galam and Eli Galam, are liable because they use the Defendants, Victory Property Management and Monopoly Properties Group, as alter egos.

CAUSES OF ACTION IN FIRST AMENDED CROSS-COMPLAINT:
1) Breach of Written Lease
2) Return of Security Deposit
3) Forcible Entry and Detainer
4) Conversion
5) Alter Ego

RELIEF REQUESTED:
Summary Judgment on Complaint or, in the alternative, Summary Adjudication of each cause of action.

DISCUSSION:
Trial is set for September 2, 2014.

This hearing concerns the Defendants’ motion for summary judgment. Under CCP section 437c, the Defendants have the burden of demonstrating that each cause of action in the First Amended Complaint lacks merit with evidence that the Plaintiffs cannot establish an essential element in each cause of action.

1. First Cause of Action for Breach of Written Lease
The Defendants argue that the Plaintiffs cannot establish that the Plaintiffs performed their duties or that the Defendant breached the lease agreement because the Plaintiffs could not legally operate a parking lot at the premises. The essential elements of a cause of action for breach of contract are the following:

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 Defendants provide the following evidence to demonstrate that they did not breach the lease in their Separate Statement of Facts (“SSF”):

1) parties had rights and duties under a lease agreement for property at 1726 Cahuenga Blvd. (SSF 1);
2) the lease agreement stated in paragraphs 1.2 and 1.8 that the agreed use for the property was a parking lot (SSF 2);
3) the lease agreement stated in paragraphs 2.3 and 6.1 that it required compliance with building codes and applicable laws and that the lessee shall not use or permit the use of the premises in a manner that is unlawful (SSF 9 and 10);
4) the lease agreement defined default in paragraph 13.1 to include the lessee’s failure to comply with the terms of the lease (SSF 13);
5) the Los Angeles Police Commission revoked the Plaintiffs’ parking permit at 1726 Cahuenga for the failure to pay outstanding parking occupancy and business taxes in violation of Los Angeles Municipal Code sections 22.04.1, 21.15.7, 21.15.8, 21.03, and 21.05 (SSF 17 to 23);
6) without a valid permit, the Plaintiffs could not legally operate a parking lot at 1726 Cahuenga (SSF 38);
7) the Defendants sent a 10-day notice to perform conditions and covenants or quit (SSF 37);
8) the Plaintiffs failed to provide documentation indicating that they had a valid parking permit (SSF 41);
9) the Defendants sent a notice of termination of the lease on October 12, 2011 (SSF 42);
10) the Defendants sent another letter regarding the termination of the lease on December 10, 2011 and stated that the Plaintiffs had ten days to quit the parking lot (SSF 55);
11) the Plaintiffs sent a letter on December 21, 2011 agreeing to cease operating the parking lot, but stated that they would provide security and maintenance while they seeking a writ of mandate regarding the revocation of their permit (SSF 57); and
12) the Defendants requested that the Plaintiffs refrain from providing security and maintenance and to quit completely the premises (SSF 60 and 61).

These facts indicate that the Plaintiffs cannot establish the essential element of their own performance of the lease agreement because the facts show that the Plaintiffs did not have a permit to operate a parking lot on the premises. Further, the facts indicate that the Defendants did not breach the lease agreement when they terminated the lease because the Plaintiffs were in default for failing to comply with applicable laws, i.e., the Los Angeles Municipal Code.
Under CCP section 437c, the Defendants’ facts now shift the burden to the Plaintiffs. The Plaintiffs have the burden of offering facts demonstrating that there is a triable issue of fact regarding the essential elements of the Plaintiffs’ performance or the Defendants’ breach.
The Plaintiffs do not meet their burden. The Plaintiffs fail to offer any facts demonstrating that they had a permit to operate a parking lot on the premises. Although the Plaintiffs argue that they were making a timely payment of rent, this does not indicate that they were performing the duty of complying with applicable statutes and codes or that they were using the property to operate a parking lot.
Further, the Plaintiffs fail to offer any facts demonstrating that the Defendants breached the lease when the Defendants terminated it. The Plaintiffs argue that the Defendants breached the lease by forcibly escorting them from the premises. However, this is not evidence of a breach of the lease because the lease had been terminated. Since the lease had been terminated, the Plaintiffs had no right to possession and there was no breach of the lease by forcibly escorting the Plaintiffs from premises for which they had no right of possession.

Therefore, the undisputed facts demonstrate that the Plaintiffs’ first cause of action has no merit.

2. Second Cause of Action for Return of Security Deposit
The Defendants argue that the Plaintiffs cannot establish any damages because the unpaid rent exceeded the amount of the security deposit.
Civil Code section 1950.7 regulates security deposits for commercial property. Section 1950.7(c) provides that a security deposit can be applied to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy. 250 L.L.C. v. PhotoPoint Corp. (2005) 131 Cal. App. 4th 703, 710.
The Plaintiff alleges in paragraph 22 that it had deposited $10,000 for the security deposit.
The Defendants provide the following evidence:

1) the lease agreement states that in paragraph 26 that in the event the lessee holds over beyond the termination of the lease, the base rent is increased to 150% of the base rent applicable during the money immediately preceding the termination (SSF 16; N.B., the Defendants identified the paragraph as 23.6, which is a typographical error);
2) the Defendants sent a notice of termination of the lease on December 10, 2011 (SSF 54);
3) since the Plaintiff was a holdover tenant in January 2012 and February 2012, the holdover rent was 150% of the monthly rent paid in December 2011, i.e., $19,394.88 in January and $19,394.88 in February (SSF 69);
4) the Plaintiff paid $12,929.92 in January 2012 and $12,929.92 in February 2012 (SSF 70); and
5) the unpaid rent for January 2012 and February 2012 was $12,929.92 ($19,394.88 less $12,929.92 in each January and February).

As noted above, Civil Code section 1950.7(c) authorizes the landlord of commercial property to use the security deposit to pay unpaid rent. Here, when the security deposit of $10,000 is applied to the unpaid rent of $12,929.92, there is no positive balance remaining. This evidence indicates that the Defendants had no duty to return any amount of the security deposit to the Plaintiffs and that the Plaintiffs have no damages in their second cause of action.
Under CCP section 437c, the Defendants’ facts shift the burden to the Plaintiffs. The Plaintiffs have the burden of offering facts demonstrating that there is a triable issue of fact regarding the amount of security deposit that the Defendants had to return.
The Plaintiffs fail to meet their burden. The Plaintiffs fail to offer any facts demonstrating any dispute with the evidence that the unpaid rent exceeded the amount of the security deposit.

Therefore, the undisputed facts demonstrate that the Plaintiffs’ second cause of action has no merit.

3. Third Cause of Action for Forcible Entry and Detainer
The Defendants argue that the Plaintiffs cannot establish the essential element that the Plaintiffs had a right to possession.
The statutes defining forcible entry, CCP section 1159, and forcible detainer, CCP section 1160, reflect a policy, with deep roots in English law, barring the use of forceful self-help to enforce a right to possession of real property and requiring instead the use of judicial process to gain possession. Glass v. Najafi (2000) 78 Cal. App. 4th 45, 48-49. The statutes may be traced to an original forcible entry and detainer statute enacted in England in 1381. Id. The purpose of the statute was to preserve the peace by preventing disturbances that frequently accompanied struggles for the possession of land. Id.
CCP section 1159 defines forcible entry as either of the following:

1) breaking open doors, windows, or other parts of a house, or by any kind of violence or circumstance of terror enters upon or into any real property; or
2) after entering peaceably upon real property, turns out by force, threats, or menacing conduct, the party in possession.

CCP section 1160 defines forcible detainer as a person who:

1) uses force, menace, or threats of violence to unlawfully hold and keep the possession of any real property, whether the same was acquired peaceably or otherwise; or
2) unlawfully enters upon real property in the night-time or during the absence of the occupant of any lands, and, after demand made for the surrender thereof, for the period of five days, refuses to surrender the same to such former occupant.

The result of these statues and the underlying policy is that, absent a voluntary surrender of the premises by the tenant, a landlord may enforce his or her right of reentry only by judicial process, not by self-help. Jordan v. Talbot (1961) 55 Cal. 2d 597, 604. Regardless of who has the right to possession, orderly procedure and preservation of the peace require that the actual possession shall not be disturbed except by legal process. Id.
Forcible entry is not confined to instances of physical force or restraint or threats of physical harm, but the purpose of the concept is to obviate incidents of self-help without the tenant’s consent or resort to legal process. Lamey v. Masciotra (1969) 273 Cal. App. 2d 709, 714-715. It is a general principle that one who is or believes he is injured or deprived of what he is lawfully entitled to must apply to the state for help. Daluiso v. Boone (1969) 71 Cal. 2d 484, 500. Self-help is in conflict with the very idea of the social order. Id. It subjects the weaker to risk of the arbitrary will or mistaken belief of the stronger. Id. Hence the law in general forbids it. Id.
An eviction entitles a tenant to recover any damages he may have sustained. Saferian v. Baer (1930) 105 Cal. App. 238, 244-245. For example, in Saferian, the tenant had testified that the landlord had thrown away about fifty pounds of Turkish melon seeds, worth about $3 a pound, and ten pounds of other seeds worth about $1 a pound. Also, the tenant offered evidence that he spent $34 in searching for and locating horses turned loose by the landlord.

In the pending case, the Plaintiffs may seek damages for any losses resulting from the claimed forcible entry and detainer of the premises. Since the lease had been terminated, the damages will be limited to damages arising from the forcible entry, e.g., any losses or damages to personal property caused when the Defendants allegedly ousted the Plaintiffs.

The Defendants attempt to argue that when the tenant is not entitled to possession, there is no forcible entry or forcible detainer. None of these arguments are correct because, as discussed above, the tenant’s right to possession is irrelevant, i.e., it does not matter who has the right to possession. Instead, a landlord may enforce his or her of reentry only by judicial process, not by self-help. It is irrelevant that the contract is illegal, that the tenant is a holdover tenant, or that the tenant has failed to comply with a provision in the lease. If the landlord seeks to recover possession, the landlord must use judicial process.
The cases cited by the Defendants do not support their argument. For example, the Defendants cited to Salazar v. Mardeaga (1992) 10 Cal.App.4th Supp. 1. This was an appeal from an unlawful detainer action. The landlord did not use self-help to remove the tenant from an illegal garage unit. The Court of Appeal found that the tenant had an affirmative defense to continue in possession until paid relocation benefits, even though occupancy of the unit was unlawful under other laws. Accordingly, the principle in Salazar was that even when occupancy of the premises is illegal, the tenant has a right to continue in possession due to the requirement to pay relocation benefits. There is no principle holding that a landlord may use force to recover possession.
The Defendants also cite to Shusett, Inc. v. Home Sav. & Loan Asso. (1964) 231 Cal. App. 2d 146. In Shusett, the Court found that under CCP section 1172, an action for forcible entry requires an express allegation of “actual possession”. The Court found that the plaintiff had not alleged that it had “actual possession” of the property at the time of the alleged ouster. Further, the Court found that the pleadings indicated that the defendants had taken management of the property before the alleged ouster. This indicated that at the time of the “ouster”, the landlord had actual possession, not the tenant. Since the tenant did not have actual possession, the “ouster” had not been a forcible entry.
The Defendants offer no case law that held that a landlord may use force to remove a tenant in possession from the property. Instead, as cited above, a landlord may enforce his or her right of reentry only by judicial process.
Finally, the Defendants argue that the Plaintiffs had abandoned and quit the property. The Defendants offered no evidence that the Plaintiffs were no longer in possession when the Defendants took over the property.

The Plaintiff alleges in paragraph 28 of the third cause of action that on February 2, 2012, the Defendants forcibly entered and took possession of the premises by force, threats, and intimidation. The Defendants’ burden of proof is to demonstrate that it did not.

As noted above, the Defendants had sent a notice of termination of the lease and asked the Plaintiff to quit immediately the premises in a letter dated October 12, 2011 (SSF 42). The Defendants then sent a letter on December 10, 2011 to advise the Plaintiffs that the unlawful on the parking lot would not be tolerated and to quit within 10 days. The Plaintiffs sent a letter on December 20, 2011 to state that they would stop operating the parking lot, but would provide security and maintenance pending a determination of their writ of mandate regarding the revocation of their permit (SSF 57). The Defendants then took possession of the premises and leased it to a tenant with the permit to operate a parking lot in February 2012 (SSF 71).
These facts demonstrate that the Plaintiffs were in possession of the premises when the Defendants took possession. The Defendants offer no facts regarding the manner in which they took possession to demonstrate that it was not a forcible entry. This is insufficient to meet their burden of proof because it does not address the allegations in the third cause of action.

Further, the Plaintiff’s opposition papers contain evidence demonstrating that there is a question of fact. The Plaintiff’s employee, Hugo Chavez, stated the following in his declaration:

1) he opened the lot on February 2, 2012 at 8:00 am (paragraph 2);
2) at about 10:00 am, five individuals, three parking attendants, one supervisor, and a man who identified himself as the owner of Car Park, entered the parking lot (paragraph 3);
3) the owner said that it was his parking lot, that he needed to leave, and that Mike Galam was coming (paragraph 4);
4) Mr. Chavez called Mike Sabet, who instructed him not to leave (paragraph 5);
5) Mike Galam arrived and told Mr. Chavez he needed to go (paragraph 6);
6) Mr. Chavez’ supervisor, Davood Rezazedeh, arrived and showed a copy of the lease to Mike Galam (paragraph 7);
7) Mike Galam insisted that they had to leave and that the lease was terminated (paragraph 8);
8) Mr. Rezazedeh called the police (paragraph 9);
9) the police determined that Car Park had a valid permit and asked Mr. Chavez and Mr. Rezazedeh to leave (paragraph 11); and
10) Mr. Rezazedeh called Mike Sabet, who stated that they should leave (paragraph 12).

These facts indicate that the Defendants did not use legal process to remove the Plaintiffs. Instead, the Defendants sent a new tenant to the location. When the Plaintiffs’ employee did not leave, the Defendant, Mike Salam, came to the premises and told the Plaintiffs’ employee to leave. When the Plaintiffs brought a copy of the lease, the Defendant, Mike Salam, insisted that they had to leave and that the lease was terminated. Finally, the police were called.
This indicates that there is a question of fact whether the Defendants engaged in a forcible entry of the property leased by the Plaintiffs in order to remove the Plaintiffs.

Therefore, the Defendants have failed to meet their burden of proof with regards to the third cause of action.

4. Fourth Cause of Action for Conversion
This cause of action is based on the claim that the Defendants converted the Plaintiffs’ security deposit. The Defendants argue that the element of the Plaintiffs’ possession to the $10,000 cannot be established because, as discussed above, the unpaid rent exceeded the security deposit.
A claim for conversion has the following elements:

1) Plaintiff had the right of ownership and possession to the property converted;
2) Defendant unlawfully took the property, and
3) the value of the property converted.
Taylor v. S & M Lamp Co. (1961) 190 Cal. App. 2d 700, 705.

Here, the property at issue is the $10,000 security deposit. Civil Code section 1950.7 regulates security deposits and authorizes a landlord to apply the security deposit to remedy tenant defaults in the payment of rent. 250 L.L.C. v. PhotoPoint Corp. (2005) 131 Cal. App. 4th 703, 710. As discussed above in the analysis of the second cause of action, the amount of unpaid rent was $12,929.92. Since the evidence of the amount of unpaid rent indicates that it exceeded the $10,000 security deposit, the Defendants had no obligation to return any amount to the Plaintiff. This evidence indicates that the Plaintiff had no right of ownership or possession to the $10,000.

Under CCP section 437c, the Defendants’ facts shift the burden to the Plaintiffs. The Plaintiffs have the burden of offering facts demonstrating that there is a triable issue of fact regarding the amount of security deposit that the Defendants had to return.
The Plaintiffs fail to meet their burden. The Plaintiffs fail to offer any facts demonstrating any dispute with the evidence that the unpaid rent exceeded the amount of the security deposit. Since the Defendants had no obligation to return any amount of the security deposition to the Plaintiffs, the Plaintiffs cannot establish that they had any right of possession or ownership to any money.

Therefore, the undisputed facts demonstrate that the Plaintiffs’ fourth cause of action has no merit.

5. Fifth Cause of Action for Alter Ego
The Defendants argue that the alter ego cause of action fails because the other causes of action fail. However, as discussed above, the Defendants did not meet their burden of proof with regards to the third cause of action for forcible entry and detainer. Since the third cause of action will remain, the alter ego claim remains.
The Defendants offered no other argument in support of their motion with regards to the fifth cause of action for alter ego.

Therefore, the Defendants have not met their burden of proof with regards to the fifth cause of action.

6. Summary Adjudication
In the alternative to summary judgment, the Defendants sought summary adjudication of each cause of action. The analysis above indicates that the first, second, and fourth causes of action have no merit. Accordingly, the Defendants are entitled to summary adjudication of the first, second, and fourth causes of action.

Therefore, the Defendants are not entitled to summary judgment on the First Amended Complaint because they did not meet their burden of proof with regards to the third cause of action for forcible entry and detainer and the fifth cause of action for alter ego. However, the Defendants are entitled to summary adjudication of the first, second, and fourth causes of action because the undisputed facts demonstrate that the Plaintiffs cannot establish essential elements in these causes of action. The Defendants are not entitled to summary adjudication of the third and fifth causes of action because they did not meet their burden of proof.

RULING:
DENY motion for summary judgment of the First Amended Complaint.
GRANT motion for summary adjudication of the first, second, and fourth causes of action.
DENY motion for summary adjudication of the third and fifth causes of action.