Case Number: BC627070 Hearing Date: June 27, 2018 Dept: 37

CASE NAME: Brothen, et al. v. Goldman Property Group, et al.

CASE NO.: BC627070

HEARING DATE: 6/27/18

DEPARTMENT: 37

CALENDAR NO.: 8

FSC/TRIAL DATE: None

NOTICE: OK

SUBJECT: Demurrer to the Complaint; Motion to Strike

MOVING PARTY: Defendants Andrew Goldman, individually and dba Goldman Property Group; Daniel Goldman and Noah Goldman[1]

OPPOSING PARTY: Plaintiffs Lynn Brothen and Christopher Hobbs
COURT’S TENTATIVE RULING

The court OVERRULES the demurrer in its entirety. The court GRANTS the motion to strike in-part with respect to the allegations related to the attorney’s fees request with 20 days leave to amend. The motion is otherwise DENIED. Counsel for Plaintiffs to give notice.
STATEMENT OF THE CASE

This action arises from allegations that Defendants Goldman Property Group; Andrew Goldman; Daniel Goldman and Noah Goldman (collectively the “Goldmans”) maintained the real property at 530 S. Main Street, Burbank, California 91506 in uninhabitable conditions and harassed and retaliated against Plaintiffs Lynn Brothen (“Brothen”) and Christopher Hobbs (“Hobbs”) for raising complaints.

Plaintiffs filed the Complaint on July 22, 2016, alleging six causes of action for: (1) breach of express and implied contract; (2) breach of the covenant of good faith and fair dealing/breach of the implied warranty of habitability; (3) fraud; (4) premises liability; (5) violation of Business and Professions Code, § 17200 (the Unfair Competition Law, “UCL”) and (6) violation of the Consumer Legal Remedies Act (“CLRA”).

Defendants now generally demur to the first, second, third, fifth, and sixth causes of action for failure to state facts sufficient to constitute causes of action; and specially demur to these claims for uncertainty. Defendants also move to strike the requests for attorney’s fees and punitive damages in the Complaint. Plaintiffs oppose the demurrer and motion to strike.
DEMURRER
I. Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550 (Doe).) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)
II. Special Demurrer for Uncertainty

As an initial matter, Defendants specially demur to the first, second, third, fifth and sixth causes of action of the Complaint as uncertain. The court has reviewed the Complaint and does not find these causes of action to be “so incomprehensible that a defendant cannot reasonably respond.” (See Mahan, supra, 14 Cal.App.5th at p. 848, fn. 3.) Accordingly, the court OVERRULES the special demurrer in its entirety.
III. General Demurrer
A. First Cause of Action for Breach of Contract

A cause of action for breach of contract consists of the following elements: (1) the existence of a contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) A written contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect. (Bowden v. Robinson (1977) 67 Cal.App.3d 705, 718 (Bowden).)

Defendants demur to the first cause of action on the grounds that Plaintiffs have not pled the existence of a contract with Defendants Daniel and Noah Goldman. Plaintiffs respond that they have alleged the existence of a contract with all Defendants. (Dem. Opp. 3, citing Compl. ¶¶ 3, 5, 45, 52.) Plaintiffs further contend that they pled the legal effect of the contracts, namely that Defendants would “provide Plaintiffs with habitable premises, managed by competent personnel” in exchange for the monthly rent. (Compl. ¶¶ 5, 52.) At the pleading stage, a plaintiff need only allege ultimate facts of liability and not evidentiary facts. (See Doe, supra, 42 Cal.4th at p. 550.) While Plaintiffs will be required to prove their allegations at a later stage of the proceedings, for the purposes of the present demurrer, these allegations suffice.

Accordingly, the court OVERRULES the demurrer to the first cause of action.
B. Second Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing and Breach of the Implied Warranty of Habitability

The second cause of action alleges both a breach of the implied covenant of good faith and fair dealing and a breach of the implied warranty of habitability. “The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Spinks v. Equity Residential Briarwood Apts. (2009) 171 Cal.App.4th 1004, 1033, internal citations omitted.) “The implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.” (Ibid., internal citations omitted.)

Defendants first demur to both aspects of the second cause of action on the grounds that there was no contract between Plaintiffs and Defendants Daniel and Noah Goldman. As the court has overruled the demurrer to the first cause of action, Defendants’ first argument fails.

Defendants next demur on the grounds that the breach of the implied covenant of good faith and fair dealing only allows for tort recovery within the insurance context. (Dem. 4, citing Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102.) Freeman, however, does not support Defendants’ argument.

The Supreme Court recognized in Freeman that: “It is well settled that, in California, the law implies in every contract a covenant of good faith and fair dealing. [Citations.] Broadly stated, that covenant requires that neither party do anything which will deprive the other of the benefits of the agreement. [Citation.] [P] California courts have recognized the existence of this covenant, and enforced it, in cases involving a wide variety of contracts….” (Freeman, 11 Cal.4th at p. 91, emphasis in original.) Although the Freeman Court recognized that a cause of action for the breach of the implied covenant does not always give rise to tort damages, the question of whether Plaintiffs can seek tort damages or punitive damages based is a separate question from whether Plaintiffs are barred from pleading a cause of action for breach of the implied covenant of good faith and fair dealing with respect to the lease agreement. As recognized by the Supreme Court in Freeman, a covenant of good faith and fair dealing is implied in every contract in California and Plaintiffs are not barred from alleging its breach, as a matter of law.

Accordingly, the court OVERRULES the demurrer to the second cause of action.
C. Third Cause of Action for Fraud

The third cause of action for fraud consists of the following elements: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud—i.e., induce reliance; (4) justifiable reliance; and (5) resulting damage. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173.) Fraud must be pleaded with specificity, meaning facts showing how, when, where, to whom, and by what means the representations were made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 (Lazar).)

Defendants contend that the third cause of action is not pled with sufficient particularity to state a cause of action for fraud.

The Complaint alleges that Plaintiffs complained to Defendants on or around mid-2013 concerning the defects in their units, including their suspicions regarding asbestos and mold contamination. (Compl. ¶ 10.) According to Plaintiffs, Defendants promised to make necessary inspections and repairs but then proceeded to conduct illegal construction without notifying the appropriate state agencies or taking the necessary safety precautions. (Compl. ¶¶ 10-11; see also id. at ¶¶ 12-39.) Plaintiffs further allege that Defendants made the alleged misrepresentations knowing that they were false and with the intent to defraud Plaintiffs and induce them to continue to pay rent (despite rent increases) and to limit Defendants’ financial responsibility in this matter. (Compl. ¶¶ 66-68.) These allegations are sufficiently specific to meet the requirements to plead a cause of action for fraud.

For these reasons, the court OVERRULES the demurrer to the third cause of action.
D. Fifth Cause of Action for Violation of the UCL

The UCL proscribes “unfair competition,” which it defines as, among other things, “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code, § 17200.) By proscribing any “unlawful” business practice, the UCL “ ‘ “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.” (Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) To assert standing under the UCL, a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322, emphasis in original.)

Defendants first demur to the fifth cause of action on the grounds that Plaintiffs have not alleged the existence of an ongoing practice and have only pled a single private transaction between Plaintiffs and Defendants. (Dem. 8, citing Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1156.) In 1992, the Legislature amended section 17200 to expand the definition of unfair competition to include “any unlawful, unfair, or fraudulent business act or practice,” overruling former case law that had limited the statute’s application to practices involving more than a single transaction. (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 570, emphasis in original, superseded by Proposition 64 on unrelated grounds; see also Rufini v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 311 [recognizing that the year after Mangini was decided “the Legislature amended section 17200 to state that it applies to any unlawful ‘act or practice,’ presumably permitting invocation of the UCA based on a single instance of unfair conduct,” emphasis in original, internal quotation marks omitted].) Accordingly, Defendants’ first argument fails.

Second, Defendants contend that Plaintiffs do not have standing because they are no longer tenants. Defendants argue that violations of the UCL can only be remedied by equitable relief. (Dem. 8.) The court disagrees. The UCL expressly allows for restitution. (Bus & Prof. Code, § 17203; e.g. Bank of the West v. Sup. Ct. (1992) 2 Cal.4th 1254, 1260, fn. 3.) Although Defendants cite cases to further argue that there is no right to equitable relief or an equitable remedy where there is an adequate legal remedy (Dem. 9), Defendants’ cited cases do not relate to the UCL but instead involve causes of action for equitable relief. (See, e.g., Taliaferro v. Taliaferro (1956) 144 Cal.App.2d 109, 111 [finding that a cause of action for equitable relief does not lie where “a plain, speedy and adequate remedy is provided by statute”].) A cause of action for violation of the UCL is a statutory claim and distinct from a cause of action for equitable relief. Defendants do not cite any legal authority to support its proposition that a plaintiff can only assert a cause of action for the violation of the UCL if the plaintiff has no other legal remedy, and the court is not aware of any such legal authority. Accordingly, Defendants’ fail to demonstrate that the fifth cause of action is defective on the face of the pleadings.

For these reasons, the court OVERRULES the demurrer to the fifth cause of action.
E. Sixth Cause of Action for Violation of the CLRA

The Consumer Legal Remedies Act (CLRA), which is codified in the Civil Code (Civ. Code, §§ 1750-1784), protects individuals engaging in consumer transactions. It prohibits “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer.” (Civ. Code, § 1770, subd. (a).) It sets forth 27 different “unfair or deceptive acts or practices” that may constitute a violation of the act. (Ibid.) In assessing whether the representations made in the course of the consumer transaction violate the CLRA, courts use the reasonable consumer standard—i.e., whether a reasonable consumer would be misled by the representation. (Consumer Advocates v. Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1360.) To the extent an alleged violation is based on the defendant’s omission of a material fact, “to be actionable the omission must be contrary to a representation actually made by the defendant or an omission of a fact the defendant was obliged to disclose.” (Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 835.)

To bring an action under the Consumer Legal Remedies Act (“CLRA”), a consumer must first notify the defendant in writing of the alleged violation at least 30 days “prior to the commencement of an action for damages.” (Civ. Code, § 1782, subd. (a).) Courts require literal compliance with this code provision in order to give effect to the Legislature’s intent that there be at least a limited period of time in which the parties to a consumer action may attempt to settle the case. (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 40-41, emphasis added.)

Defendants demur to the sixth cause of action on the grounds that the Complaint does not allege that Plaintiffs timely notified Defendants of the alleged violations in writing as is required. (Dem. 9-10.) The Complaint alleges that notice was timely given. (Compl. ¶ 82.) However, Defendants contend that this statement is conclusory.

Plaintiffs counter that they are not required to plead that they provided proper CLRA notice in the Complaint and that the sufficiency of notice is a factual question to be addressed on summary judgment or at trial. (Opp. 7-8, citing Lafferty v. Wells Fargo Bank (2013) 213 Cal.App.4th 515, 566 (Lafferty).) In Lafferty, the Court of Appeal held that demurrer was not the proper procedural vehicle for challenging allegations of notice. Defendants do not address the Lafferty Court’s ruling in their reply or cite any California authority to support their argument that a defect of notice is sufficient grounds to sustain demurrer. Although Defendants cite Laster v. T-Mobile USA, Inc. (S.D.Cal. 2005) 407 F.Supp.2d 1181, 1196 and Davis v. Chase Bank U.S.A., N.A. (C.D.Cal. 2009) 650 F.Supp.2d 1073, 1088 to argue that non-compliance must result in dismissal with prejudice (Dem. 10), these cases are federal court cases regarding the applicable standards under the Federal Rules of Civil Procedure and are inapposite to the question of pleading standards under the Code of Civil Procedure and California law.

Thus, Defendants have not met their burden to demonstrate that the sixth cause of action is defective on the face of the pleading. The court therefore OVERRULES the demurrer to the sixth cause of action.
III. Conclusion

In sum, the court OVERRULES the demurrer in its entirety.
MOTION TO STRIKE
I. Legal Standard

Pursuant to Code of Civil Procedure, section 436, the court may: “(a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.)

Motions to strike are used to challenge defects in the pleadings not subject to demurrer. Any party may move to strike the whole or any part of a pleading within the time allotted to respond to the pleading. (Code Civ. Proc., § 435, subd. (b)(1).) The grounds for a motion to strike must appear on the face of the challenged pleading or from any matter of which the Court is required to take judicial notice. (Id., § 437, subd. (a).) A notice of motion to strike a portion of the pleading must quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, or defense. (Cal. Rules of Court, rule 3.1322.)
II. Analysis
A. Attorneys’ Fees

Code of Civil Procedure, section 1021 provides in relevant part: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties….” (Code Civ. Proc., § 1021.)

Defendants request the court strike the allegations related to Plaintiffs’ request for attorney’s fees on the grounds that Plaintiffs have not identified a legal basis for such fees. (Mot. 2.) First, Defendants argue that Plaintiff has not properly pled the existence of a contract between the parties that contains an attorney’s fees provision. (Mot. 2-3.) Plaintiffs do not address this argument in their opposition and instead argue that they have properly pled the existence of a contract between Plaintiffs and Defendants Daniel and Noah Goldman. (Mot. Opp. 4.) However, Plaintiffs do not point to any allegations in the Complaint that the contract between the parties contained an attorney’s fees provision, and Plaintiffs thus appear to concede Defendants’ argument.

Defendants next contend that the Complaint’s reference to Code of Civil Procedure, section 1021.5 cannot support their request for punitive damages. Section 1021.5 allows for an award of attorney’s fees in “any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.” (Code Civ. Proc., § 1021.5, emphasis added.) Defendants argue that section 1021.5 cannot support attorney’s fees for Plaintiffs’ private habitability claim.

Plaintiffs contend that section 1021.5 can support an award of attorney’s fees because Defendants own and operate numerous apartment complexes throughout Los Angeles. (Mot. Opp. 4.) Plaintiffs do not, however, offer any explanation for how Defendants’ ownership of multiple properties turns their habitability claims regarding a specific property unit into a claim for the “enforcement of an important right affecting the public interest,” nor how this action would confer a benefit on the “general public” or “a large class of persons.” (See ibid.; Code Civ. Proc., § 1021.5.) Plaintiffs likewise do not cite any legal authority to support the proposition that an individual set of plaintiffs may recover attorney’s fees under section 1021.5 for an alleged habitability violation with regard to one property unit. The court is not aware of any such legal authority.

For these reasons, the court GRANTS the motion in-part with respect to the allegations related to the request for attorney’s fees in the Complaint. The court grants Plaintiffs 20 days leave to amend to allow them to plead sufficient ultimate facts to support their request for attorney’s fees.
B. Punitive Damages

Civil Code, section 3294 provides, in relevant part, that a plaintiff may seek punitive damages “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice….” (Civ. Code, § 3294, subd. (a).) “Malice means conduct which is intended by the defendant to cause injury to the plaintiff or 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).) “Oppression’ means 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 means 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).)

To survive a motion to strike a request for punitive damages, “the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.” (Clauson, supra, 67 Cal.App.4th at p. 1255; accord, Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 963.) “Pleading in the language of the statute is not objectionable when sufficient facts are alleged to support the allegation.” (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6-7.) However, a “conclusory characterization of defendant’s conduct as intentional, willful and fraudulent is a patently insufficient statement of ‘oppression, fraud, or malice, express or implied,’ ” and inadequate to support punitive damages. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872 (Brousseau).)

Defendants contend that the Complaint fails to plead specific facts and circumstances that could give rise to punitive damages. Having overruled the demurrer as to the third cause of action for fraud, the court finds that Plaintiffs have sufficiently pled that Defendants engaged in fraudulent conduct sufficient to state a claim for punitive damages. While Plaintiffs will be required to prove their allegations at a later stage of the proceedings; at the pleadings stage these allegations suffice.

The court therefore DENIES the motion in-part as to the request for punitive damages.
III. Conclusion

The court GRANTS the motion in-part with respect to the allegations related to Plaintiffs’ request for attorney’s fees, with 20 days leave to amend. The motion is otherwise DENIED.

[1] Defendants submit the Declaration of Harry A. Safarian (“Safarian Declaration”) in support of the subject demurrer and motion to strike. Safarian attests that he sent Plaintiffs’ counsel a letter by fax on January 17, 2018 requesting a telephonic or in-person meet and confer to discuss the grounds for the demurrer. (Safarian Decl. ¶¶ 3-4.) Safarian states that he further sent follow-up correspondence on January 29, 2018, requesting a telephonic or in-person meeting. (Id. at ¶ 5.) According to Safarian, Plaintiffs’ counsel did not reply. (Id. at ¶¶ 5-6.) This declaration is sufficient to comply with the meet and confer requirements of Code of Civil Procedure, section 430.41. (See Code Civ. Proc., §§ 430.41, subd. (a).) Defendants’ counsel does not speak to his attempts to meet and confer as is required under section 435.5. (See Code Civ. Proc., §§ 430.41, subd. (a); 435.5, subd. (a).) However, as it appears that Defendants’ counsel sought to meet and confer with Plaintiffs’ counsel, the court finds that Defendants have substantially complied with the requirements of section 435.5 and will consider the demurrer and motion to strike on their merits.