Case Number: BC543482    Hearing Date: July 29, 2014    Dept: J

Re: Equity AG Financial, Inc., et al. v. Mary Ann Quay, et al. (BC543482)

DEMURRER TO COMPLAINT

Moving Parties: Defendants Unionbancal Mortgage Corporation and Union Bank, N.A.

Respondents: Plaintiffs Equity AG Financial, Inc. and Glendora Courtyard, LLC

POS: Moving OK; Opposing OK

This action arises from Plaintiffs’ efforts to obtain funds from Defendant Route 66 CPAs, LLC (“Route 66”) to provide common area maintenance at a commercial complex commonly known as the “Glendora Courtyard.” Plaintiff Glendora Courtyard, LLC and Route 66 jointly own and occupy the Courtyard. The Complaint, filed on 4/22/14, asserts causes of action for:

1. Theft of Labor
2. Public Nuisance
3. Private Nuisance
4. Negligent Misrepresentation
5. Fraud
6. Interference with Prospective Economic Advantage
7. Business & Professions Code § 17200, et seq.
8. Account Stated
9. Common Counts

RELATED ACTION:

Route 66 CPAs v. Glendora Courtyard LLC (KC063544). Plaintiff and Defendant are owners of real property development called Glendora Courtyard. Defendant owns Parcels 1 and 2. Plaintiff owns Parcel 3. Under the CC&Rs, each owner is responsible for its proportionate share of the common area expenses. Plaintiff alleges that beginning in October 2011, Defendant has been threatening to make substantial capital improvements to the common area, i.e., landscaping, new security fence, resurfacing the parking lot, and exterior painting, without Plaintiff’s consent, and to pass those charges on to Plaintiff. Plaintiff opposes the improvements on grounds they are unnecessary and excessive, and claims that they will cause a substantial increase Plaintiff’s proportionate share of the monthly common area fees.

On 5/8/14, the court deemed the two matters related. The Case Management Conference is set for 7/30/14.

JUDICIAL NOTICE:

The court takes judicial notice of the Declaration of Covenants, Conditions and Restricitons for the Glendora Courtyard recorded on March 27, 2003 with the Los Angeles County Recorder’s Office, attached to Defendants’ request as Exhibit A. (Ev C § 452.)

DEMURRER:

Defendants UnionBanCal Mortgage Corporation and Union Bank, N.A. (collectively “Union Bank”) demur to the causes of action alleged against Union Bank in the Complaint of Plaintiffs Equity AG Financial, Inc. (“EAF”) and Glendora Courtyard, LLC (“Glendora”).

Specifically, Union Bank demurs to Plaintiffs’ second and third causes of action for public and private nuisance on the grounds that Union Bank does not owe Plaintiffs a duty of care and Union Bank did not cause the alleged maintenance and repair defaults at the subject property; and to Plaintiffs’ seventh cause of action for violation of Business & Professions Code § 17200 on the grounds that it is legally deficient because it is dependent upon Plaintiffs’ other legally insufficient causes of action, Plaintiffs had the ability to avoid their purported injury, Union Bank did not cause the alleged maintenance and repair defaults at the subject property, and Plaintiffs cannot obtain any remedy from Union Bank in connection with this claim.

SECOND CAUSE OF ACTION FOR PUBLIC NUISANCE AND THIRD CAUSE OF ACTION FOR PRIVATE NUISANCE:

A nuisance is statutorily defined as anything “injurious to health” or “indecent, or offensive to the senses, or an obstruction to the free use of property” that interferes “with comfortable enjoyment of life or property.” (CC § 3479.) Nuisances that affect the entire community or a considerable number of person are public nuisances (CC § 3480); all other nuisances are private nuisances (CC § 3481). The necessary elements for proof of a cause of action for public nuisance include the existence of a duty and causation. (In re Firearm Cases (2005) 126 Cal.App.4th 959, 988.)

The Complaint alleges that EAF was authorized and obligated to maintain the subject property (“Courtyard”) (Complaint ¶¶ 53-59); over the course of 2013, EAF performed specific maintenance functions at the Courtyard, exceeding $40,000 in value (Id. ¶ 67); in addition to the actual maintenance performed, EAF sought to perform additional work, which Defendants conspired to, and did, prevent EAF from performing (Id. ¶ 68); Defendants willfully and unjustifiably interfered with Courtyard maintenance (Id. ¶¶ 71-90); Union Bank knowingly, intentionally, and voluntarily agreed and acquiesced with Route 66’s scheme to gridlock the Courtyard (Complaint ¶ 91); CC&Rs provided Union Bank with authority to override a non-performing owner such as Route 66 (Id. ¶ 93); Glendora sought consent from Union Bank for the work proposals, including the proposed maintenance by EAF (Id. ¶ 94, Exh. A); Gary Riley, as the Union Bank’s agent for the Couryard, responded to Glendora’s request on April 3, 2012 (Id. ¶ 95, Exh. B); although this April 3 letter purports to be from Mr. Riley, and was sent under his signature, Mr. Riley admitted under oath that he did not write the letter, and did not understand its contents (Id. ¶ 96); instead, the letter was ghost written for him by counsel for Union Bank (Ibid.); the letter affirmatively denied any consent to the maintenance work (Id. ¶ 98); and that as such, Union Bank actively interfered with EAF’s performance, both by affirmatively rejecting consent, and failing to fulfill Union Bank’s override duty under the CC&Rs (Id. ¶ 99).

The Complaint also alleges that Defendants were at all times acting as the agent of each other, and were acting within the scope of their agency (Id. ¶¶ 43-44); Defendants, by failing to act and by actively colluding with Route 66, affirmatively interfered with EAF’s maintenance of the Courtyard and created a condition that was harmful to health (Id. ¶ 198); Defendants created a landscaping nuisance per se in violation of Glendora Municipal Code 9.36.010 (Id. ¶ 200); and that Defendants interfered with Plaintiffs’ use and enjoyment of the Courtyard (Id. ¶¶ 219-220).

The Complaint adequately alleges facts to support causes of action for public and private nuisance against Union Bank.

Union Bank, in the demurrer, contends that it did not owe a duty of care to Plaintiffs in connection with the exercise of its rights under the CC&Rs and that Union Bank’s conduct did not cause the allegedly dilapidated condition of the common areas at the Courtyard. However, such contentions are contrary to the allegations in the Complaint, e.g., agency and conspiracy. “[T]he existence of an agency relationship is the ‘essential fact,’ and where alleged must be accepted as true.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.)

Further, based on the contentions made in the moving and opposing papers, it appears that Union Bank’s relationship with Route 66 and the role it played in connection with the alleged nuisance cannot be resolved by a demurrer. The parties appear to seek a determination as to Union Bank’s duty under the CC&Rs. However, the Complaint alleges adequate facts, e.g., agency, conspiracy, etc., to support the causes of action against Union Bank; and it appears that such issue should be resolved by a motion for summary judgment and/or summary adjudication. Thus, the demurrers to the second and third causes of action are overruled.

SEVENTH CAUSE OF ACTION FOR VIOLATION OF BUS & PROF C § 17200:

In order to properly assert a claim for Unfair Business Practices, Bus & Prof C. § 17200, the complaint must allege a business practice that is unfair, unlawful or fraudulent, and an authorized remedy. (Bus & Prof C § 17200.)

The Complaint adequately asserts causes of action for public and private nuisance against Union Bank. While Union Bank contends that Plaintiffs have failed to plead facts showing that their claims against Union Bank can be judicially remedied, the Complaint seeks to enjoin Defendants from further interfering with Plaintiffs’ efforts to maintain the Courtyard. (Complaint ¶¶ 264-265.) Again, the issue of Union Bank’s involvement in creating and/or maintaining the alleged nuisance cannot be resolved by a demurrer. Thus, the demurrer to the seventh cause of action is overruled.

The moving defendants have 10 days to answer.