Case Name: Leon Wu et al. v. Chin-Hsi Chang, et al.

Case No.: 17CV316471

I. Background

This case brought by Leon Wu and Nancy Wei (“Plaintiffs”) against Chin-Shi Chang, Chiuchih Chang, Jack Wen Tsai Chang (“Jack Chang”), and Kerome Chang (collectively “Defendants”) arises from Defendants renting residential property to Plaintiffs.

According to the allegations of the Complaint, Plaintiffs and Defendants entered into a year-long lease. The lease required Plaintiffs to provide a security deposit and monthly rent. While still living in the property, Plaintiffs requested the return of a portion of the security deposit because the amount exceeded the maximum allowed under Civil Code section 1950.5, subdivision (c). Jack Chang refused Plaintiff’s request to return part of the deposit, arguing that the cited law did not apply. Jack Chang also asserted that the size of the security deposit was due to Plaintiffs’ familial status, credit history, place of employment, and national origin.

When Plaintiffs moved in they received a move-in checklist which described the current state of the property. The checklist stated several deficiencies, including that the range did not work, and there was a non-functioning electrical outlet in the kitchen. Plaintiffs requested that Defendants repair the malfunctioning range and electrical system. These deficiencies were not fixed while Plaintiffs resided at the property.

Plaintiffs resided in the property through the first lease, and a second year-long lease. Before moving out after two years, Plaintiffs, Chin-Shi Chang, and Chiuchih Chang scheduled a joint inspection inspected the property. On the date of the inspection, Chin-Shi Chang, and Chiuchih Chang entered the property prior to Plaintiffs’ arrival. Plaintiffs were not warned Chin-Shi Chang, and Chiuchih Chang would be entering the property without them. During the subsequent inspection the parties agreed no additional repairs or actions were needed by Plaintiffs besides trash disposal. At the time of the inspection, no list of damages or other basis for deductions from Plaintiffs’ deposit was identified. Plaintiffs spoke to Chin-Shi Chang, who indicated that he was in possession of Plaintiffs’ security deposit. Chin-Shi Chang agreed to return the deposit, but failed to do so. Instead, Plaintiffs received a list of deductions from the deposit which did not add up to the entire deposit. Defendants never returned any portion of the deposit.

Plaintiffs assert nine causes of action against Defendants for: (1) illegal security deposit; (2) wrongful retention of security deposit; (3) breach of contract; (4) discrimination (Unruh Civil Rights Act); (5) discrimination (Cal. Fair Employment and Housing Act); (6) trespass; (7) breach of the warranty of habitability; (8) negligent maintenance of the premises; and (9) unfair competition. The sixth cause of action is asserted against Chin-Shi Chang, and Chiuchih Chang only, the remaining eight are brought against all Defendants.

Currently before the Court is Defendants’ motion to strike the prayer for punitive damages and supporting allegations pursuant to Code of Civil Procedure sections 435 and 436. Defendants’ motion is made on the ground the prayer for relief and related allegations are improper matter and conclusions of law that are not supported by the facts.

II. Motion to Strike

On a motion to strike portions of a pleading under Code of Civil Procedure section 435, a court may strike out any irrelevant or improper matter inserted in the pleading. (Code Civ. Proc., § 436, subd. (a).) Irrelevant matter includes a request for relief not supported by the allegations of the Complaint. (Code of Civ. Proc., § 431.10, subds. (b), (c).) Punitive damages are often challenged through a motion to strike. (See PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683.) When ruling on a motion to strike a court reads the factual allegations in their context and assumes them to be true. (Turman v. Turning Point of Cent. California, Inc. (2010) 191 Cal.App.4th 53, 63.)

As a preliminary matter, Defendants raise two points that are, at best, tangentially related to their larger argument. The Court will first dispose of these unrelated arguments before moving on to the meat of Defendants’ motion.

A. Tangential Arguments

Defendants argue allegations of damages which are not recoverable should be stricken as surplusage. Defendants cite Newman v. Smith (1888) 77 Cal. 22 (“Newman”), which held damages for anxiety, worry, and harassment arising from the fraudulent conduct of the defendant, and for expenses in taking care of property, and could be stricken as surplusage where “it appears that by no possibility can [plaintiff] recover for these things.” (Ibid.)

Defendants do not pair this citation with argument as to why punitive damages are unavailable or why punitive damages would be surplusage here. The case does not mention punitive damages. Perhaps Defendants intended Newman to support the general proposition that requests for improper damages can be removed from a complaint at the pleading stage. (See Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 385 [motion to strike can be used to remove improper remedy].) Insomuch as that is Defendants’ argument, it is correct, but does not follow from Defendants’ citation. (See Ibid.)

Additionally, Defendants state “no facts are alleged that demonstrate malice or oppression by Defendant [sic] directed at Plaintiffs. Thus, the requirement of Code of Civil Procedure section 425.10, that a complaint must set forth ‘facts constituting a cause of action’ has not been met.” (Motion to Strike., pp. 3:28, 4:1-2, emphasis in original.) Defendants argue that as a result, “[a]ll references to recovery of punitive damages must therefore be stricken from the pleading.” (Id. at p. 4:2-3.)

Code of Civil Procedure section 425.10 requires a complaint include “[a] statement of the facts constituting the cause of action, in ordinary and concise language.” (Code Civ. Proc., § 425.10, subd. (a)(1).) Defendants do not explain how the quoted language in Code of Civil Procedure section 425.10 is relevant to a motion to strike allegations related to punitive damages. Code of Civil Procedure section 425.10 does mention punitive damages, but only in personal injury or wrongful death cases, which is irrelevant here. (See Code Civ. Proc., § 425.10, subd. (b).)

Insomuch as Defendants intend to argue Plaintiffs have not pleaded facts sufficient to state a cause of action, the proper procedure to make that argument is a demurrer, not a motion to strike. (See Code of Civ. Proc., § 430.10, subd. (a); see Pierson v. Sharp Memorial Hospital, Inc., 216 Cal. App. 3d 340, 341, 264 Cal. Rptr. 673 (4th Dist. 1989 [it is improper to use motion to strike in place of a demurrer for failure to allege sufficient facts].) Alternatively, insomuch as Defendants intend to argue Plaintiffs have not alleged facts supporting malice or oppression, such deficiency has no relation to Code of Civil Procedure section 425.10.

B. Allegations Supporting Malice, Oppression or Fraud

Defendants ultimately make two general arguments in support of their motion. First, Defendants argue the Complaint contains only legal conclusions in support of punitive damages. Second, Defendants assert Plaintiffs have not alleged facts showing malice, oppression or fraud. Defendants’ arguments are opposite sides of the same coin. In essence, Defendants argue Plaintiffs have alleged mere legal conclusions regarding punitive damages, without sufficient facts to support them, and thus punitive damages are not warranted.

To state a claim for punitive damages, a plaintiff must allege malice, oppression, or fraud. Simply pleading the terms malice, oppression or fraud is insufficient to support a claim for punitive damages. (Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 963.) Additionally, a plaintiff must allege sufficient facts supporting the existence of malice, oppression, or fraud. (Ibid.)

Malice, oppression, and fraud are defined by statute. (Civ. Code, § 3294, subd. (c).) Malice is defined as “conduct which is intended by the defendant to cause injury to plaintiff, or despicable conduct that is carried on by the defendant with a willful and conscious disregard for the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) Oppression is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294 subd. (c)(2).) Fraud is defined as “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.” (Civ. Code, § 3294, subd. (c)(3).) There is no indication that Plaintiffs are alleging fraud, rather they seek punitive damages based upon malice or oppression.

Defendants move to strike the prayer for punitive damages, and two related allegations. Defendants move to strike paragraph 120 of the Complaint, which states “failure of Defendant [sic] to put Premises into condition fit for human occupation at the time of renting them to plaintiff [sic] and failure of Defendant [sic] to repair the defective and dangerous conditions or to have them repaired within a reasonable time after plaintiff notified Defendant [sic] or at all, as alleged above, were oppressive and malicious within the meaning of Civil Code Section 3294 in that they subjected Plaintiff [sic] to cruel and unjust hardship in willful and conscious disregard of Plaintiff’s [sic] rights and safety, thereby entitling Plaintiff [sic] to an award of punitive damages. (Compl., ¶ 120.) Defendants also move to strike paragraph 74 of the Complaint, which states “Defendants willfully and maliciously refused to return the illegal excess security.” (Compl., ¶ 74.) The Court addresses each allegation in turn.

1. Health and Safety Risks Due to Condition of the Premises

Plaintiffs allege the presence of a malfunctioning electrical socket and gas range in the kitchen was a defective and dangerous condition. Plaintiffs also allege Defendants “so negligently owned, maintained, and repaired Premises as to cause them to be unfit for human occupation in that premises substantially failed to comply with those applicable building and housing code standards that materially affect the health and safety of the tenant.” (Compl., ¶ 115.) Plaintiffs do not offer other allegations supporting the conclusion the condition of the house injured Plaintiffs’ rights, or lessened their safety.

To allege punitive damages based upon malice, Plaintiffs must allege either Defendants intended to harm Plaintiffs, or Defendants engaged in despicable conduct. (Civ. Code, § 3294, subd. (c)(1).) Plaintiffs do not allege Defendants intended to cause injury to Plaintiffs. Thus, to plead malice Plaintiffs must allege “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) Plaintiffs must also allege Defendants engaged in despicable conduct to allege oppression. (See Civ. Code, § 3294 subd. (c)(2).) “‘Despicable conduct’ has been described as conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people. [Citation.] Such conduct has been described as ‘[having] the character of outrage frequently associated with crime.’” (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1050.) “The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages…. Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287, 31 Cal.Rptr.2d 433.)

The Court finds Defendants’ citation of McDonell v. American Trust Co. (1955) 130 Cal.App.2d 296, 299-300 (“McDonell”), instructive in distinguishing between allegations amounting to negligence and those showing despicable conduct. In McDonell a landlord was aware of a leaky pipe which caused water to flow into a commercial property. (Ibid.) Someone slipped and fell on the water, causing injury. (Id. at 298.) McDonell held that these facts were not sufficient to award punitive damages, despite the allegation the landlord was aware of the risk, had been warned of it repeatedly, and did nothing to remedy it. (See Id. at 300.) The opinion contrasted these facts with conduct supporting punitive damages, which would require a high degree of probability that substantial harm will result from a defendant’s conduct. (Id. at 300.) The McDonell court summarized its view of the landlord’s conduct as, “[a]t the very most, it sounds in negligence.” (Ibid.) Similarly here, Plaintiffs allege that Defendants were aware of a flawed electrical outlet in the same room as a malfunctioning range. This is alleged to be a potentially dangerous condition, which Defendants were aware of and chose not to fix. Such failure to repair a defect in a rental property is not per se such an outrage as to constitute malice or oppression. (See McDonell v. American Trust Co. supra, 130 Cal.App.2d at 299-300.)

The failure to repair a danger on the property does not impart the subjective outrage associated with vile, base and contemptable behavior similar to crime. (See American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, supra, 96 Cal.App.4th at 1050.) Something more than the mere commission of a tort is required for punitive damages, the Complaint lacks this “circumstances of aggravation or outrage.” (See Virtanen v. O’Connell (2006) 140 Cal.App.4th 688, 712.) One can imagine facts sufficiently vile to classify a landlord’s failure to make repairs as despicable conduct, but these are much more extreme than the facts alleged here. (See McNairy v. C.K. Realty (2007) 150 Cal.App.4th 1500, 1503 [awarding punitive damages against landlord where an apartment complex had many defects including cockroach infestation, pigeon infestation, floods, discolored water, undrinkable water, lack of hot or cold water, inoperable appliances, and inoperable electrical outlets, lack of ventilation, and mold that had been painted over but not removed].) Defendants plead the combination of a range and an electrical socket could have caused harm. The failure to repair these defects may be tortious, but they do not rise to the level of malice or oppression. (See McDonell v. American Trust Co. supra, 130 Cal.App.2d at 299-300.)

Plaintiffs attempt to distinguish McDonell on the basis that it involved a commercial tenant rather than a residential tenant. It is true that a commercial landlord has lesser implicit duties in terms of maintenance and upkeep than a residential landlord. (See Del Taco, Inc. v. University Real Estate Partnership V (2003) 111 Cal.App.4th 16, 26.) But this distinction has no bearing on the present motion. The Court is not aware of, and Plaintiffs do not cite, any authority holding the standard for punitive damages is different for residential and commercial tenants. McDonell shows that knowledge of a potentially dangerous condition that could potentially cause injury is not enough to qualify for punitive damages. (See McDonell, supra, 130 Cal.App.2d at 299-300.)

Plaintiffs argue Lackner v. North (2006) 135 Cal.App.4th 1188, 1213, should be read to provide punitive damages. This assertion based upon punitive damages being available whenever an act is “reprehensible, fraudulent, or in blatant violation of law or policy.” (Opp., p. 8:5-7.) Plaintiffs argue that a failure to maintain the property or to comply with laws regarding deposits is in violation of public policy against abusive landlords, and therefore punitive damages are warranted. Plaintiffs overlook the adjective “blatant.” (See Lackner v. North, supra, 135 Cal.App.4th at 1213.) Plaintiffs’ argument also sidesteps case law limiting punitive damages to torts of a particular gravity. (See Mason v. Mercury Cas. Co. (1976) 64 Cal.App.3d 471, 474 [“Every proved tort does not per se entitle the wronged person to punitive damages”].) By Plaintiff’s logic, any violation of landlord-tenant law by a landlord would provide the basis for punitive damages. Contrary to Plaintiffs’ argument, punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate. (See Tomaselli v. Transamerica Ins. Co., supra, 25 Cal.App.4th at 1287.)
Plaintiffs construe Defendants conduct as showing an extreme indifference to Plaintiffs’ rights in that “it forced them to reside in a dwelling with known gas and electrical issues.” (Opp., p. 8:10-12.) Plaintiffs’ argument exaggerates the allegations. There is no allegation that Defendants forced Plaintiffs to reside anywhere or remain anywhere. Much to the contrary, Plaintiffs allege that after living in the property for a year, being fully aware of the condition of the property, Plaintiffs chose to renew the lease for another year. The allegations are simply not consistent with Plaintiffs’ characterization, and their argument is therefore unavailing.

Plaintiffs do not allege facts showing the failure to maintain and repair the rental property was sufficiently egregious to qualify as despicable conduct. (See Civ. Code, § 3294, subd. (c).) Accordingly, Plaintiffs have not alleged facts supporting malice or oppression based upon the condition of the home. (Ibid.)

2. Failure to Return Excessive Security Deposit

Plaintiffs have alleged Defendants “willfully and maliciously” refused to return part of an illegally large deposit. (Compl., ¶ 74.) Defendants do not directly address this allegation in their motion to strike, but allude to conclusory allegations being insufficient. The issue is therefore whether Plaintiffs’ allegation that the refusal to return the security deposit was malicious is supported by facts that render it more than conclusory.

Plaintiffs argue punitive damages are appropriate because Defendants “refused to the deposit [sic] that they knew rightly and legally belonged to Plaintiffs. Defendants acknowledged they were ignoring these laws, but rationalized it based on personal discriminatory animus.” (Opp., p. 8:10-14.)

Although Plaintiffs do not cite to a particular allegation when making this argument, the allegation which most clearly shows discriminatory animus is paragraph 40. Paragraph 40 discusses comments made by Jack Chang at the time he refused to return a portion of the excessive deposit. Paragraph 40 states: “JACK CHANG further stated that Defendants required an illegal security deposit due to Plaintiffs’ familial status, credit history, place of employment, and national origin.” (Compl., ¶ 40.) Plaintiffs allege that Defendants admitted their decision making regarding the deposit was guided in part by considerations of Plaintiffs national origin.

If Defendants decision to retain Plaintiffs’ deposit was indeed based upon their national origin, such conduct would be despicable in that it would be vile, base and contemptable behavior in conscious disregard of Plaintiff’s rights. (See American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton, supra, 96 Cal.App.4th at 1050.) The Court must assume that the well pled allegations are true for purposes of ruling on a motion to strike. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) Thus, Plaintiffs have plead punitive damages with regard to Defendants refusal to return their deposit based upon their national origin.

III. Conclusion

In sum, Plaintiffs have not met the high standard for awarding punitive damages with regard to paragraph 120, but have met it with regard to paragraph 74. Accordingly, the motion GRANTED, with respect to paragraph 120, with 10 days leave to amend. However, the motion is DENIED with respect paragraph 74, and the prayer for relief.