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GUY W. STILSON, SBN 142194
LOW, BALL & LYNCH
505 Montgomery Street, 7th Floor
San Francisco, California 94111
Telephone: (415) 981-6630
Facsimile: (415) 982-1634
gstilson@lowball.com
Attorney for Defendant
MATRIX REAL ESTATE SERVICES, INC.,
sued herein as MATRIX ASSOCIATION MANAGEMENT
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SANTA CLARA
SAN FRANCISCO PIZZA, INC., TAN
NGUYEN, NGHIA NGUYEN and KIM
THUY HO,
Plaintiffs,
vs.
VIETNAM TOWN CONDOMINIUM
OWNERS ASSOCIATION, INC.; MATRIX
ASSOCIATION MANAGEMENT; JOSEPH
NGUYEN, an individual; LAP T. TANG, an
individual; MICHAEL JOHNSON, an
individual; DAVID ALVARADO, an
individual; AQUATEK PLUMBING, INC., a
California corporation; and DOES 1 through
50 inclusive,
Defendants.
No. 17€V318151
(Unlimited Jurisdiction)
MEMORANDUM OF POINTS AND
AUTHORITIES SUPPORTING MATRIX’
DEMURRERS AND MOTION TO
STRIKE (COMBINED BRIEF)
Date: May 31, 2018
Time: 9:00 a.m.
Dept.: 19
Judge: Hon. Peter Kirwan
Complaint Filed: October 25, 2017
Trial Date: Not Yet Set
“in
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TABLE OF CONTENTS
INTRODUCTION/BACKGROUND .....scsssesssssssessesseseseesecsseseesnecsessessecssessscanscasecssecsneessecsaneennenss 1
PROCEDURAL HISTORY
JOINDER IN DEMURRERS/MOTION TO STRIKE FILED ON BEHALF OF DEFENDANTS
VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION AND JOSEPH NGUYEN .3
LEGAL DISCUSSION
A.
B.
Cc. Fact Pleading, Limitation Against Pleading Inconsistent Facts .........sscsessesessesesseeseesnees 5
D Plaintiffs’ Claims of Misrepresentation Against Matrix and Alvarado are Belied by
Plaintiffs’ Admissions in the Verified Complaint that the Alleged Representations
were True and were Authorized...
E. Plaintiffs’ Claims Of Misrepresentation Against Matrix And Alvarado Are Belied
By Facts In Plaintiffs’ Verified Complaint Which Show Plaintiffs Did Not
Reasonably Rely On Any Alleged Representation By Matrix Or Alvarado ...sscsserseevers 6
F. Plaintiffs’ Misrepresentation Claims are not Sufficiently Pleaded. oo... cscs 8
G. Plaintiffs’ Misrepresentation Claims are Uncertain. ......cccsscsessssseeseesecssseessesssenmeenssnensees 8
H. Plaintiffs’ Conspiracy Claims are not Sufficiently Pleaded...........ccsescessesssseesseeseeneesvees 10
lL Plaintiffs’ Claims of Trespass, Conversion, and Interference with Prospective
Economic Advantage are all Insufficiently Pleaded and are Uncertain.......cssessessesees 11
J. Plaintiffs’ Punitive Damages Claim is Insufficiently Pleaded. ..........ccssessesseseseeseensees 11
K. Plaintiffs’ Claim for Attorney Fees in Insufficiently Pleaded and is Uncertain. .......00 12
L. SF PIZZA is Differently Situated, has No Rights Under the CC&Rs, and was not a
Party to the Vu Litigation: Its Claims Must be Considered Separately ........0.ccseseeee 13
CONCLUSION..
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JA\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxTABLE OF AUTHORITIES
Page(s)
CASES
Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598 --
Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962 ------------+------2---e-n-nnnnnennnnnnnnnntnnnnnnnnnnnnne= 4
Blank v. Kirwan (1985) 39 Cal.3d 311 ------------------------------ enon een centre nnetenenenennnnennnnnnnnnnnnnns 4
Caliber Bodyworks, Inc. v. Superior Court (Herrera) (2005) 134 Cal.App.4th 365 ------------------------- 4
Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150-------------------------------2-0--= 5
Daniels v. Select Portfolio Servicing, Inc. [(2016) 246 Cal.App.4th 1150---------------------------------~ 10
Doe y. City of Los Angeles (2007) 42 Cal.4th 531 --
Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968 --------------------2---2-enesnnnrnnnnnnccnecnncne 4
Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 95] -----------------------2---eneecenncenencen= 7
Goonewardene v. ADP, LLC (2016) 5 Cal.App.Sth 154 ------------------2---2---2-nnn-nnn nnn nnnncnenenennenn 8
Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498--------------------——---n-----nnnnnnnnn ner 7
Grieves v. Superior Court (fox) (1984) 157 Cal App.3d 159------------------2-e-veeceeneneeennneenmnew enna 4
Hoffman v. 162 North Wolfe LLC (2014) 228 Cal. App.4th 1178 ---------------s-n--sn-neseneeseneeneeseeen= 7
In re Moreno (2012) 479 B.R. 553 -----------nnnnnnnnn ncn nnnnnnnnnnnenne 13
Manti v. Gunan (1970) 5 Cal. App.3d 442-~~--------------------------2------2nnennn nnn nnnn cence nennnnnnnnnnnnnns 5
Martin v. Bridgeport Community Ass’n, Inc. (2009) 174 Cal.App.4th 1034 ------------------------------- 13
PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4th 1680 -------------------------------------- 4,5
Serrano v. Priest (1971) 5 Cal.3d 584-.
Small v. Fritz Cos., Inc. (2016) 246 Cal.App.4th 1150 --------------------------------------00--0--nennnennecnen 8
Smith v. Superior Court (Bucher) (1992) 10 Cal.App.4th 1033 ---------~------------------------2---2--0--" 11
State of Calif. ex rel. Metz v. CCC Information services, Inc. (2007) 149 [Cal.App.4th] 402----------- 10
Venicer Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547--------------------------- 4
Vu, et al., v. Vietnam Town Condominium Owners Association, et al., being Santa Clara Superior
“iti
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TABLE OF AUTHORITIES
Page(s)
STATUTES
CCP § 3294 (>) —amnanamennnnnnnnnnnnnn anne neces tnnnnnnnnnnnnnsnnennenmenmennnt 12
CCP § 425.10
COP § 430.10 (€) -n--n-nn-nnnanannnnnnecenneennecneecmenccatcnecnscnscnscaseacnscanenatcnsnnecnseasconsconeasteamen 4
CCP § 430.30(a) -n--n-nnnaneenneonnnnnceecnecnnecn eno nennenmeenennenasoncarenrennecececrescerentnmenananmeenenan 4
CCP § 431.10(b)(3)=nn2-n2-n-nneensennnnneneeonsneneeeneenecneenecnnantnmennecnscncnccarenseeeronreerennacemnamanas 4
COOP § 43 6-n-nananannn anne nnn n ean nce rn nen cec ncn nen nnn nee nnn nnennnnenenntntennanenannanannnananenanenenemanan 4
CCP §430.10(f) -
CCP §435
Civil Code § 3294 (a) ---------------—----- nen nennnnn nance nnn nnnnn nec e nnn ccna nnn nanan 11
Civil Code § 3294(b) --------------------2-20ecnncnnncccnnnnenennnnnnnnneneenereweternennennmnnntatn nnn nnn ns 12
Civil Code § 5800-------------------ae were e nnnnn nnn nnn nnn anne anne tren rr 4
Civil Code § 6856----------+----------n0--0n-0neewnennnnnnnnnnnnnenernnwonwaneeeenteneas tereennmiemmnnnnnnnnnn -- 13
SECONDARY AUTHORITY.
Weil & Brown Civil Procedure Before Trial (The Rutter Group 2017) §§ 7:1827:186 --------------------- 4
Weil & Brown Civil Procedure Before Trial § 6:154 ---------------------nnencnnnnennnecnncennncnneennnneneenn 10
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Defendant MATRIX REAL ESTATE SERVICES, INC., sued herein as MATRIX
ASSOCIATION MANAGEMENT (“Matrix”), hereby respectfully files and serves this brief in support
of both Matrix’ demurs and motion to strike portions of Plaintiffs’ Verified Complaint for Trespass,
Conversion, Intentional Interference with Prospective Economic Advantage, Breach of Contract,
Declaratory Relief, Fraud, Negligent Misrepresentation and Civil Extortion (the “Complaint’”) as
follows:
Plaintiffs’ verified Complaint alleges as follows: Plaintiffs TAN NGUYEN, NGHIA NGUYEN
and KIM THUY HO (the “Owner Plaintiffs”) purchased a commercial condominium unit (Unit 9015)
in a project known as Vietnam Town in San Jose, and Plaintiff SAN FRANCISCO PIZZA INC. (“SF
Pizza’) rented the Unit from the Owner Plaintiffs. Although not originally designated for use as a
restaurant under the applicable CC&Rs, Plaintiffs claim Defendant DAVID ALVARADO, in the
course and scope of his duties as an employee of Matrix, the association manager for Vietnam Town,
was duly authorized and empowered to and did permit Plaintiffs to convert the designated use of the
Unit to restaurant use and to use one of the available gas lines for the Unit. Plaintiffs then claim all
defendants, in some sort of unexplained conspiracy, disconnected the gas line from Plaintiffs’ Unit.
Plaintiffs’ verified Complaint asks for injunctive relief in the form of a permanent restraining
order/injunction allowing Plaintiffs use of a gas line, over $5 million in compensatory damages, and
punitive damages and certain attorney fees and related costs.
Matrix demurs and moves to strike because, as to Matrix and Alvarado (Alvarado has not yet
been served with the Complaint) Plaintiffs’ verified Complaint and the causes purportedly set forth
therein are insufficient to constitute a cause of action. Plaintiffs’ verified Complaint states facts which
exonerate Matrix and Alvarado. A careful reading of the verified Complaint shows that it does not
allege that Alvarado made any misrepresentations and in fact admits Alvarado was authorized to make
the representations he allegedly made and that those representations were true. The verified Complaint
also admits facts showing any reliance by Plaintiffs was not reasonable. Accordingly, neither Matrix
nor Alvarado can be liable for misrepresentation.
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Plaintiffs’ verified Complaint is also uncertain in various regards and contains insufficient facts
and details to support Plaintiffs’ claims for trespass, conversion, and intentional interference with
prospective economic advantage. While the Complaint generally alleges that all defendants other than
MICHAEL JOHNSON! were involved in a conspiracy to disconnect the gas line from Plaintiffs’ Unit,
the Complaint specifies that it was Defendants LAP TANG, JOSEPH NGUYEN, and AQUATEK.
PLUMBING (“Aquatek”) who physically disconnected Plaintiffs’ gas line and that Defendant
VIETNAM TOWN CONDOMINIUM OWNERS ASOCIATION (“VTCOA”) ratified that conduct.
The Complaint is impermissibly uncertain and vague regarding any involvement whatsoever by Matrix
and/or Alvarado in disconnecting Plaintiffs’ gas line, failing even to hint at what possible motive
Matrix or Alvarado could have for being involved in such a deed or how either Matrix or Alvarado
could possibly profit from it.
Matrix respectfully requests this honorable court sustain Matrix’ demurrers to Plaintiffs’
verified Complaint and each of the causes of action purportedly alleged against Matrix and Alvarado
therein on the bases of failure to state a cause of action and uncertainty.
Matrix also respectfully requests this honorable court strike certain portions of Plaintiffs’
Complaint as specifically set out in the notice of Matrix’ motion to strike and more generally referred to
as Plaintiffs’ claims (1) that Matrix and/or Alvarado engaged in or was part of a conspiracy, (2) for
attorney fees and related costs, and (3) for punitive damages. Each of these matters is insufficiently
pleaded and is uncertain, irrelevant, false, improper, and not drawn in conformity with applicable law.
No sufficient factual basis for any of these claims is provided as to Matrix or Alvarado.
Il. PROCEDURAL HISTORY
Plaintiffs’ verified Complaint was filed on October 25, 2017.
On October 27, 2017, Plaintiffs filed papers supporting their request for a temporary restraining
order (TRO) and alternately for an order shortening time. Plaintiffs alleged that they had a right to use
' Johnson is alleged to have been Plaintiffs’ realtor. Plaintiffs allege Johnson made
misrepresentations in connection with Plaintiffs’ purchase of the Unit and that he tried to extort money
from Plaintiffs in exchange for getting them a gas line. There is no allegation that either Matrix or
Alvarado was involved in this conduct.
2
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tights by disconnecting Plaintiffs’ gas line, which effectively prevented them from operating their Unit
as a restaurant. The court denied the TRO request but granted the order shortening time and set an
evidentiary hearing for a preliminary injunction pending trial. Additional papers were filed and a
hearing lasting approximately three hours was held at which Plaintiff Ho and Defendant Nguyen both
testified and documentary evidence was presented. The court ultimately denied the application for
injunctive relief pending trial.
The parties, via their legal counsel, continued to discuss possible resolution of the matter. A
mediation was held before Hon. Kevin McKenney (Ret.) of JAMS. The mediation lasted 12 hours, at
the end of which a settlement document was executed by those parties who were present at the
mediation. Although Matrix and Alvarado were not physically present at the mediation, they agreed to
the terms of the agreement and their executed signature pages were forwarded to all counsel the next
day. Unfortunately, although counsel for Matrix and Alvarado (who was personally present at the
mediation) had understood that all Plaintiffs were in agreement with the settlement terms regardless of
whether they were physically present at the mediation, apparently he was mistaken: two of the Plaintiffs
declined to sign the proposed settlement agreement. Thereafter additional events occurred which need
not be detailed here and which did not involve Matrix or Alvarado, but which did great harm to the
relationship between VTCOA and Plaintiffs. Shortly thereafter, Plaintiffs obtained new legal counsel.
Matrix is aware of a “meet and confer” letter dated January 30, 2018 by attorney Nicholas A.
Rogers of the Berding Weil law firm, on behalf of Defendants VTCOA and Joseph Nguyen, pointing
out various deficiencies in the Complaint. On February 5, 2018, counsel for Matrix wrote a “meet and
confer” letter to Plaintiffs’ counsel, adopting nearly all of the content of Mr. Rogers’ letter and pointing
out additional issues pertaining particularly to the claims against Matrix and Alvarado. Plaintiffs have
not provided a substantive response or made any other effort to meet and confer on this matter.
I. JOINDER IN DEMURRERS/MOTION TO STRIKE FILED ON BEHALF OF
DEFENDANTS VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION AND
JOSEPH NGUYEN
Having reviewed the January 30, 2018 “meet and confer” letter written to Plaintiffs’ counsel on
behalf of Defendants VTCOA and Nguyen, and being in agreement with the arguments set forth
3.
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therein, Matrix hereby joins in the demurrers and motions to strike filed or to be filed on behalf of
VTCOA and/or Joseph Nguyen as set forth in that letter as though set forth verbatim herein, except:
1. Matrix does not join regarding the Breach of Contract cause of action, as that cause of action is
not alleged against Matrix or Alvarado; and
2. Matrix does not join regarding the defense of statutory immunity under Civil Code § 5800, as
that immunity does not apply to Matrix or Alvarado in this matter.
IV. LEGAL DISCUSSION
A. Nature of a Demurrer
A demurrer challenges defects appearing on the face of a pleading or from matters outside the
pleading which are judicially noticeable. CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311,
318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4" 968, 994. Grounds for demurrer include
failure to state facts sufficient to constitute a cause of action (CCP § 430.10(e)) and uncertainty (CCP
§430.10(f)). For the purpose of testing the challenged pleading, the demurrer admits the truth of all
material facts properly pleaded. Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4" 962, 966-967; Serrano v.
Priest (1971) 5 Cal.3d 584, 591.
B. Nature of a Motion to Strike
Motions to strike are permitted pursuant to CCP §435 et seq., and allow a party to ask the court
to strike out “any irrelevant, false, or improper matter inserted into any pleading” and “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.” CCP § 436. “Irrelevant matter” includes a demand for judgment “requesting relief not supported
by the allegations of the complaint.” CCP § 431.10(b)(3).
Motions to strike are typically used to eradicate unsupported damages allegations, including
insufficiently founded claims for attorney fees and punitive damages. Grieves v, Superior Court (Fox)
(1984) 157 Cal.App.3d 159, 163-164, fn 9; PH IL Inc. v. Superior Court (Ihershof) (1995) 33
Cal.App.4" 1680, 1682-1683; Venicer Town Council, Inc. v. City of Los Angeles (1996) 47
Cal.App.4" 1547, 1561-1562; Caliber Bodyworks, Inc. v. Superior Court (Herrera) (2005) 134
Cal.App.4" 365, 385. See also Weil & Brown Civil Procedure Before Trial (The Rutter Group 2017) §§
7:1827:186. A motion to strike is also the appropriate tool where there is a substantive defect affecting
4.
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only a portion of a claim. PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4" 1680, 1682-
1683; Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal-App.4” 1150, 1167.
c. Fact Pleading, Limitation Against Pleading Inconsistent Facts
A complaint must contain “a statement of the facts constituting the cause of action, in ordinary
and concise language.” CCP § 425.10. These are commonly referred to as “ultimate facts.” See Doe v.
City of Los Angeles (2007) 42 Cal.4 531, 550, Affirmative allegations of inconsistent facts are not
permitted: “a pleader cannot blow hot and cold as to the facts positively stated.” Manti v. Gunan (1970)
3 Cal.App.3d 442, 449 (emphasis in original). To the extent Plaintiffs allege ultimate facts which are
inconsistent with a purported cause of action against Matrix or Alvarado, Plaintiffs fail to state a cause
of action. Plaintiffs should not be permitted to amend their allegations to omit or modify their
admissions which favor Matrix and Alvarado absent a showing of good cause for the change.
D. Plaintiffs’ Claims of Misrepresentation Against Matrix and Alvarado are Belied by
Plaintiffs’ Admissions in the Verified Complaint that the Alleged Representations
were True and were Authorized,
The Complaint alleges no actions by Matrix other than through its employee, Alvarado. As to
Matrix and Alvarado, the gravamen of Plaintiffs’ Complaint falls into two essential claims: that
Alvarado made misrepresentations upon which Plaintiffs justifiably relied to their damage, and that
Matrix and Alvarado were somehow complicit in disconnecting the gas line that Plaintiffs had
connected to their Unit. Plaintiffs seek punitive damages against Matrix and Alvarado. Plaintiffs also
seek an award of attorney fees and expert costs relating to another case.
Plaintiffs claim Alvarado represented that Plaintiffs had followed all the appropriate steps to
obtain approval, that their Unit was approved for restaurant use, and that they could use one of the gas
lines. (Complaint at 4:12-21.) Plaintiffs also claim Alvarado was authorized to issue this approval.
(Complaint at 13:20-24.) These are the only representations attributed to Matrix and Alvarado
anywhere in the Complaint. Plaintiffs allege that it was in reasonable reliance upon these
representations that they incurred expenses building out the restaurant. (Complaint at 5:23-27 and
13:26-27.)
Plaintiffs’ misrepresentation-related claims against Matrix and Alvarado admit VTCOA
“ratif[ied] David Alvarado’s conduct and representations.” (Complaint at 12:11-12; see also Complaint
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at 12:15-16.) Plaintiffs admit the VTCOA ratified “all of the conduct of David Alvarado.” (Complaint
at 5:12-13.) Plaintiffs admit VTCOA imbued Alvarado with “all responsibility for the management and
operation of the condominium project” (Complaint at 10:21-22) and delegated “all [its] responsibilities
and duties to David Alvarado” (Complaint at 11:02). Plaintiffs further admit VTCOA advised all unit
owners that Alvarado “was the managing agent with full authority to act on behalf of the Board” and
“to do all acts required of the Board” in that Alvarado had “express, actual authority” or “ostensible
authority” because VTCOA lead “Plaintiffs and all other Unit owners to believe that David Alvarado
had actual authority to do all of the acts required of the Board.” (Complaint at 11:03-07; see also
Complaint at 11:11-12 and 13:20-24. )
In short, Plaintiffs allege that Alvarado was authorized to and did approve Plaintiffs’ Unit for
use as a restaurant and approved Plaintiffs’ use of a gas line, and that because Alvarado was so
authorized and empowered his approvals were effective and bound VTCOA and the other defendants.
Plaintiffs’ claim to entitlement to a permanent restraining order (and their requests for a TRO and
preliminary restraining order pending trial previously made in this action), all of Plaintiffs’ claims
against VICOA, Joseph Nguyen, and Aquatek and at least some of their claims against Tang and
Johnson, are based on Plaintiffs’ theory/admission that Alvarado’s alleged approvals were effective.
If Alvarado’s approvals were effective, his representations (which were the approvals he
allegedly issued) were not false or misleading: they did not constitute misrepresentations. Accordingly,
per Plaintiffs’ admissions in their verified Complaint, there is no basis for liability against Matrix or
Alvarado on a misrepresentation theory. Matrix’ demurrer to Plaintiffs’ seventh cause of action
(negligent misrepresentation) should be sustained on this ground. Further, Matrix’ demurrer should be
sustained without leave to amend, as Plaintiffs have alleged and sought relief, including injunctive
relief, based on ultimate facts which are inconsistent with a misrepresentation claim against Matric
and/or Alvarado.
E. Plaintiffs’ Claims Of Misrepresentation Against Matrix And Alvarado Are Belied
By Facts In Plaintiffs’ Verified Complaint Which Show Plaintiffs Did Not
Reasonably Rely On Any Alleged Representation By Matrix Or Alvarado
Plaintiffs’ verified Complaint admits their Unit is a part of Vietnam Town and that VICOA is a
commercial condominium association formed under California law pursuant to the “Declaration
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Establishing a Plan for Commercial Condominium Ownership” (the “CC&Rs”) dated November 15,
2010. (Complaint at 2:04-07 and 3:11-4:02.) Plaintiffs’ verified Complaint further admits that pursuant
to the CC&Rs, their Unit (Unit 9015) was not permitted to be used as a restaurant and that a change of
use would have to be approved by VICOA before their Unit could be used as a restaurant. (Complaint
at 4:05-12, 10:10-11:14, and Exhibit “A” to Plaintiffs’ verified Complaint (which is a copy of Exhibit
“D” to the CC&Rs).)
Section 8.4(A) of the CC&Rs makes clear that any change to the CC&Rs, which would include
re-designation of a unit so that it could be used as a restaurant, must be in writing. Section 8.15 of the
CC&Rs states that a failure by VTCOA to enforce the CC&Rs in any instance does not waive
VTCOA’s right to enforce the CC&Rs in any other instance. Accordingly, Plaintiffs were on actual
and/or constructive notice that for their Unit to be re-designated for use as a restaurant, that re-
designation would have to be in writing. (See also Complaint at 4:08-10 [where Plaintiffs allege that
they asked Alvarado to provide them with a writing allowing them to install a gas line] and 11:15-17
[where Plaintiffs ask that VTCOA be estopped from claiming written approval was required].)
Nowhere does the Complaint allege that the required approval was ever written down. Rather,
Plaintiffs’ Complaint alleges that the approval was merely “orally” provided. (Complaint at 4:12-16.)
Accordingly, Plaintiffs knew that in order to use their Unit as a restaurant and have use of a gas
line, they needed written approval. Plaintiffs also knew they did not have written approval. Absent
written approval, Plaintiffs’ alleged reliance (spending hundreds of thousands of dollars on a restaurant
build out, at a minimum) on Alvarado’s statements could not have been reasonable. Reasonable
reliance is a required element of a misrepresentation claim. Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4" 951, 974; Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4"" 1178, 1194;
Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498, 503; see also, CACI 1900 (element #5), CACI
1903 (element #5), and CACI 1908 [“It also is not reasonable for anyone to rely on a
[misrepresentation/concealment/false promise] if facts are within [his/her] observation that show that it
is obviously false”’]. Because facts stated in Plaintiffs’ verified Complaint and facts subject to judicial
notice show written approval was needed yet Plaintiffs relied on unwritten approval, Plaintiffs’ reliance
was unreasonable and a cause of action for misrepresentation is not stated.
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F. Plaintiffs’ Misrepresentation Claims are not Sufficiently Pleaded.
Plaintiffs’ misrepresentation claims are subject to heightened pleading requirements: “each
element [ of a misrepresentation cause of action] must be pleaded with specificity.” Small v. Fritz Cos..
Inc. (2016) 246 Cal.App.4" 1150, 1166; see also Goonewardene v. ADP, LLC (2016) 5 Cal.App.5"
154, 178.
As discussed above, admissions in Plaintiffs’ verified Complaint establish that Matrix and
Alvarado did not make any misrepresentations. If Plaintiffs wish to pursue a misrepresentation claim
against Matrix and/or Alvarado, they must specify how that claim is not belied by the facts they have
admitted or the claim will be insufficient to state a cause of action. Similarly, they must allege facts
showing their reliance was reasonable, particularly in light of facts showing they were on notice that
only written approval could be effective.
Further, Plaintiffs have not actually alleged that Matrix or Alvarado misrepresented anything.
Plaintiffs allege that Alvarado made representations about his ability to allow Plaintiffs to use their Unit
as a restaurant and to use a gas line. Nowhere do Plaintiffs allege that these representations were false.
Plaintiffs clearly take the position that these representations were true, as their claims against other
defendants are dependent on the truth of the allegations Plaintiffs attribute to Alvarado and Matrix and,
more importantly, Plaintiffs have twice proceeded in this action on claims seeking an injunction
requiring a gas line to be connected to their Unit. Those requests were necessarily based upon an
assertion that Plaintiffs had a right to have a gas line connected to their Unit, which claim is necessarily
based on the truth of Alvarado’s alleged representations. The existence of a misrepresentation by the
defendant is obviously an essential element of a cause of action for misrepresentation. That essential
element is missing from Plaintiffs’ claims against Matrix and Alvarado. Accordingly, Plaintiffs’
verified Complaint fails to state a cause of action for misrepresentation against Matrix and Alvarado.
G. Plaintiffs’ Misrepresentation Claims are Uncertain.
Even if Plaintiffs’ claim of misrepresentation by Matrix and Alvarado could somehow survive
the admissions in Plaintiffs’ verified Complaint and the fact that Plaintiffs fail to allege that Matrix or
Alvarado actually misrepresented anything, that claim is made uncertain by other allegations of
Plaintiffs’ verified Complaint.
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Paragraph 12 of the verified Complaint states, “Plaintiffs engaged defendant Michael Johnson to
represent them as their real estate agent to purchase Unit 9015 in the Vietnam Town Condominium
project. At the time they engaged Michael Johnson and prior to their purchase of Unit 9015, Plaintiffs
informed defendant Michael Johnson that they were interested in purchasing a Unit specifically for the
purpose of opening a restaurant in the Unit. Michael Johnson stated to Plaintiff Ho that he was
intimately familiar with the Units as he himself owned one and that there was no restriction on the use
of Unit 9015 to operate as a restaurant if they purchased the Unit. Prior to escrow closing on the Unit,
Plaintiffs retained the services of a licensed architect, Hau Ching Liao, who examined Unit 9015 in the
presence of Michael Johnson and a contractor, Tom Chau, and discussed the preliminary floor plan for
the Unit with Michael Johnson showing the layout of the restaurant and specifically discussed the use
of a gas line to supply gas for the kitchen appliances. ... Michael Johnson assured Plaintiffs, through
[Plaintiff] Kim Thuyh Ho, that if they purchased Unit 9015 and used Tom Chau as the contractor to
build the restaurant they would have a gas line made available for the restaurant.”
Plaintiffs also allege that they acquired title to the Unit on September 28, 2016 (Complaint at
1:25-27). Plaintiffs’ first alleged communication with Alvarado did not take place until May 15, 2017,
nearly eight months after they acquired title. (Complaint at 4:08-10.) While the Complaint is not
explicit, Paragraph 14 strongly suggests that contractor Tom Chau was retained and had begun to
provide services in connection with the restaurant build out well before May 15, 2017 — Paragraph 12
explicitly states that before close of escrow Plaintiffs hired an architect who prepared plans for the
restaurant and contractor Tom Chau visited the Unit and discussed the preliminary floor plan and use of
a gas line.
Given that Plaintiffs’ intent in purchasing the Unit was to operate a restaurant in it and Plaintiffs
hired an architect and a contractor to do the buildout, and that Plaintiffs were fully committed to and
engaged in the buildout well before May 15, 2017 — the day Plaintiffs first allege any contact with
Alvarado’ -- it is uncertain how Plaintiffs could have relied on any representation by Alvarado which
? That initial contact is alleged to have been in the form of an inquiry to Alvarado. The more
important date for purposes of Plaintiffs’ claims against Matrix and Alvarado is the date when Alvarado
allegedly informed Plaintiffs that their Unit was approved for use as a restaurant and for access to a gas
line. Plaintiffs do not allege this more important date.
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resulted in Plaintiffs “making the tenant improvements to construct a pizza restaurant in Unit 9015” as
alleged in Paragraph 17 of the Complaint: Plaintiffs had been working on the project for eight months+
and were no doubt substantially finished by the time Alvarado could have made a representation upon
which Plaintiffs relied. Clarification is required to dispel the uncertainty, especially as Plaintiffs seek
punitive damages.
H. Plaintiffs’ Conspiracy Claims are not Sufficiently Pleaded.
Plaintiffs claim Matrix and Alvarado “conspired and agreed [with other defendants] to trespass
upon Plaintiffs’ gas line...” Allegations that defendants engaged in a conspiracy are subject to stringent
pleading requirements. As pointed out in Weil & Brown Civil Procedure Before Trial § 6:154 (Rutter
Group 2017),
The conspiracy must be properly pleaded. Conclusory allegations of “conspiracy”
will not withstand demurrer. To allege a conspiracy, a Plaintiff must plead: 1)
formation and operation of the conspiracy and 2) damage resulting ic the Plaintiff,
3) from a wrongful act done in furtherance of the common design. [Daniels v.
Seles Portfolio Servicing, Inc. (2016) 246 Cal.App.4" 1150, 1173] ,,,; State of
Calif. ex rel. Metz v. CCC Information services, Inc. (2007) 149 [Cal.App.4"] 402,
419 ... -- allegation that “defendants conspired to conceal their improper loss
valuations” was bare legal conclusion]
Plaintiffs’ verified Complaint contains absolutely no allegations specifying anything Matrix or
Alvarado did in connection with the alleged conspiracy, or even that Matrix or Alvarado knew of the
conspiracy or its aims and goals. Indeed, at Paragraph 19, Plaintiffs’ Complaint strongly suggests that
the conspiracy was born during a mediation that related to a lawsuit known as Vu, et al., v. Vietnam
Town Condominium Owners Association, et al., being Santa Clara Superior Court Action No.
17CV315384 (the “Vu” action or matter), wherein the Vus claimed Plaintiffs here (who are all
defendants in the Vu action) has misappropriated a gas line in which the Vus had exclusive rights and
used the gas line for the benefit of Unit 9015 (see Vu complaint [RFJD Exhibit 1], ff 1-18). Regarding
that mediation in the Vu matter, Plaintiffs allege “Vu and the VTCOA excluded Plaintiffs herein from
the settlement discussions mid-way through the day the mediation took place, reaching a settlement that
was confidential and which Vu and the VTCOA refused to divulge to Plaintiffs herein.” (Complaint at
6:14-17,)
Neither Matrix nor Alvarado was a party to the Vu action. There is no allegation that Alvarado
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J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxor anyone associated with Matrix was present at or in any way involved in the mediation in the Vu
matter. Nothing in Plaintiffs’ Complaint even hints at what possible motive Matrix or Alvarado could
possibly have had for being involved in the alleged conspiracy or how either Matrix or Alvarado could
have profited or otherwise been advantaged by the conspiracy or by damaging any of the Plaintiffs
herein. The Complaint fails to allege facts showing the formation of a conspiracy involving Matrix or
Alvarado, the operation of a conspiracy involving Matrix or Alvarado, or a common design which
Matrix or Alvarado desired, had any reason to desire, or even knew of. The allegations are insufficient
to support a claim that Matrix or Alvarado were involved in a conspiracy against Plaintiffs.
I. Plaintiffs’ Claims of Trespass, Conversion, and_Interference with Prospective
Economic Advantage are all _Insufficiently Pleaded and are Uncertain.
As to Matrix and Alvarado, Plaintiffs’ claims of trespass, conversion, and interference with
prospective economic advantage are all based on the claim that Matrix and/or Alvarado are responsible
for disconnecting the gas line which had served Plaintiffs’ Unit. As discussed above, the Complaint
does not contain a single allegation specifying how Matrix or Alvarado was or even could have been
involved in disconnecting that gas line, other than a general and non-specific allegation that
“defendants” were involved in a conspiracy which involved disconnecting that gas line. As discussed
above, Plaintiffs’ allegations are insufficient to allege that Matrix or Alvarado was a member of a
conspiracy. Accordingly, the Complaint is insufficient to allege causes of action for trespass,
conversion, and interference with prospective economic advantage against Matrix and Alvarado.
J Plaintiffs’ Punitive Damages Claim is Insufficiently Pleaded.
Plaintiffs seek an award of punitive damages. In tort cases, punitive damages are potentially
available where a Plaintiff shows by “clear and convincing” evidence that the defendant is guilty of
“oppression, fraud or malice.” Civil Code § 3294(a). However, it is not sufficient to allege that
defendant acted with oppression, fraud, or malice. Rather, Plaintiff must allege specific facts showing
the defendant’s conduct was oppressive, fraudulent, or malicious. See Smith v. Superior Court (Bucher)
(1992) 10 Cal.App.4" 1033, 1041-1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171
Cal.App.4" 598, 643 [allegations that defendant’s conduct was intentional, willful, malicious,
performed with ill will toward Plaintiffs and in conscious disregard of Plaintiffs’ rights did not satisfy
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Specific pleading requirement]. Moreover, when the punitive damages target is an employer who is
sued for wrongful acts committed by its employees, punitive damages are available only if the
employer authorized or ratified the employee’s wrongful acts or knew in advance that the employee
was likely to commit such acts and employed him or her with conscious disregard of the rights or safety
of others, or was itself guilty of oppression, fraud, or malice. CCP § 3294(b). Furthermore, where the
employer is a corporation, Plaintiff must show that the authorization, ratification, advance knowledge,
malice, etc., was on the part of an officer, director, or managing agent of the corporation. Civil Code §
3294(b),
Plaintiffs’ Complaint fails to allege any facts showing that Matrix or Alvarado was guilty of
oppression, fraud, or malice. As to Matrix, there is not a single fact alleged showing Matrix authorized
or ratified any wrongful conduct, knew in advance that any wrongful conduct was likely to occur, or
that Matrix acted in conscious disregard of anyone’s rights or was itself guilty of oppression, fraud, or
malice. Further, as to Matrix, which is a corporation, there is no allegation regarding any officer,
director, or managing agent of the corporation. Plaintiffs’ Compliant is insufficient to allege punitive
damages as to Matrix and Alvarado.
K. laintiffs’ Claim for Attorn sufficiently Pleaded and is Uncertaii
Plaintiffs allege, “As a result of Defendants’ misrepresentations, Plaintiffs have suffered harm in
the form of attorneys’ fees, expert witness fees and costs incurred in defending the [Vu] lawsuit.”
(Complaint at 14:01-02.) The claim is illogical and uncertain.
The Vu litigation was initiated by the Vus and is based upon the Vus’ claim that Plaintiffs
herein misappropriated the Vus’ gas line. There is no explanation as to how an alleged representation
made by Matrix or Alvarado to Plaintiffs or any of them caused the Vus to file a lawsuit, especially as
the only representations Matrix or Alvarado are alleged to have made were to the effect that Plaintiffs
could operate a restaurant in their Unit and have use of a gas line. The only conceivable explanation is
that Plaintiffs are here alleging that the Vu lawsuit was meritorious and that they became defendants in
the lawsuit because they acted on a misrepresentation. However, that allegation is incompatible with
Plaintiffs’ admissions to the effect that Alvarado and Matrix were authorized by the VTCOA and the
VTCOA ratified the representations Alvarado allegedly made. These admissions are essential to
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Plaintiffs’ pursuit of a restraining order in this action, and with their causes of action for trespass,
conversion, interference with prospective economic advantage, and breach of contract. As the
misrepresentation claim alleges negligent misrepresentation, the claim for attorney fees and expenses
telating to the Vu action is also incompatible with Plaintiffs’ pursuit of punitive damages. Additionally,
if Plaintiffs never had a right to use a gas line, then their allowable damages do not include lost profits
anticipated from the operation of the pizza business because having a right to a gas line is necessary to
operate that business, according to Plaintiffs’ own verified complaint.
L. SF PIZZA is Differently Situated, has No Rights Under the CC&Rs, and was not a
Party to the Vu Litigation: Its Claims Must be Considered Separately
Plaintiffs’ theories expressed in the Complaint assume that each of the Plaintiffs is similarly
situated and has the same rights and claims as every other Plaintiff herein, and up to this point, Matrix
has herein treated Plaintiffs’ allegations in that light. However, the Complaint also discloses that SF
Pizza is in fact not situated similarly to the other Plaintiffs, and that its potentially actionable claims are
different and distinct from those of the other Plaintiffs.
SF Pizza is alleged to be a renter of the Unit, and not an owner of the Unit. (Complaint at 1:25-
2:03.) That distinction has important legal consequences. Here, for instance, Plaintiffs’ claims that they
are entitled to use Unit 9015 as a restaurant and to have a gas line connected to that Unit ultimately
derive from Plaintiffs’ interpretation of their rights under Vietnam Town’s CC&Rs. But SF Pizza has
no rights under the CC&Rs because it is not a member of the VTCOA.
Common interest developments, such as the Vietnam Town condominiums, are formed as the
result of the recording of a common interest development plan. The plan includes and is often referred
to as the “covenants, conditions, and restrictions” (CC&Rs) which provide internal regulation for the
development and set the rights of the owners of the property vis-a-vis each other. The CC&Rs are not
contractual limitations but are equitable servitudes enforceable as covenants running with the land. See
Civil Code § 6856 and In re Moreno (2012) 479 B.R. 553.
The right of enforcement of an equitable servitude is inextricable from ownership of real
property to which the equitable servitude applies. Martin v. Bridgeport Community Ags’n, Inc. (2009)
174 Cal.App.4" 1034. SF Pizza is a renter and not an owner. Accordingly, SF Pizza has no rights
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arising under the CC&Rs: SF Pizza’s rights arise out of its rental agreement with the Owner Plaintiffs,
the terms of which are not alleged. Further, SF Pizza is not in privity with Matrix, which is alleged to
have a contractual relationship not with SF Pizza, but with VTCOA. (Complaint at 2:08-12.)
As a result, SF Pizza has no right enforceable against Matrix or Alvarado to use the Unit as a
restaurant or to have a gas line connected to the Unit. SF Pizza’s trespass claim fails to state facts
sufficient to support a cause of action and is uncertain because (in addition to the problems discussed
above pertaining to the Plaintiffs as a group) the allegations do not show that SF Pizza has a right to the
use of a gas line. SF Pizza’s claims of conversion and intentional interference with prospective
economic advantage fail to state a cause of action and are uncertain for the same reason.
SF Pizza’s negligent misrepresentation claim is also affected by its status as a renter rather than
an owner. Because it is a renter it is not a member of the VTCOA and has no privity with Matrix or
Alvarado and “the application to have Unit 9015 approved as a restaurant” would have been made on
behalf of the Owner Plaintiffs and not SF Pizza. It is unclear whether the alleged representations were
made only to the Owner Plaintiffs or are alleged also to have been made to SF Pizza. If it is alleged that
representations were made to SF Pizza, because it was a renter and not an owner its reliance would have
been even less reasonable than that of the Owner Plaintiffs.
The Owner Plaintiffs’ damages claims are also rendered uncertain. Did they do the buildout for
SF Pizza, or did SF Pizza do its own buildout? The Owner Plaintiffs should not suffer a loss of income
so long as SF Pizza (or a successor tenant) pays the rent. The allegedly lost income from the operation
of the pizza restaurant would have inured to the benefit of SF Pizza and not the Owner Plaintiffs, unless
there was some sort of income or profit sharing agreement between SF Pizza and the Owner Plaintiffs
which has not been alleged.
SF Pizza’s status as a renter also affects its claim for punitive damages: it has no rights under
the CC&Rs, and therefore any basis for a punitive damages claim SF Pizza may wish to pursue is
reduced and is unclear.
Vv. CONCLUSION
Plaintiffs do not specify any alleged misrepresentation by Matrix or Alvarado. Plaintiffs allege
that Alvarado (and therefore Matrix) represented that Plaintiffs could use their Unit as a restaurant and
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J:\M089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxcould connect a gas line to it — Plaintiffs also unequivocally and repeatedly allege that those allegations
were true, and have sought injunctive relief thereon. Plaintiffs also base their claims against VTCOA
and Joseph Nguyen on the truth of those allegations. Plaintiffs fail to state a claim for misrepresentation
against Matrix and Alvarado, and Matrix’ demurrer to the misrepresentation claim should be sustained
without leave to amend.
Plaintiffs purport to allege that Matrix and Alvarado were part of a conspiracy. Conspiracy
claims are subject to enhanced pleading requirements — specific facts must be alleged. Plaintiffs fail to
allege facts showing Matrix or Alvarado were part of a conspiracy or even knew that one existed. In
fact, Plaintiffs’ allegations indicate the conspiracy was borne at a mediation at which Matrix and
Alvarado were not present, relating to litigation to which Matrix and Alvarado were not parties.
Plaintiffs’ conspiracy claim fails as to Matrix and Alvarado.
The remainder of Plaintiffs’ claims against Matrix and Alvarado are all based on the purported
conspiracy. As the purported conspiracy is insufficiently alleged, so are the claims supposedly arising
out of the conspiracy. Plaintiffs fail to state a cause of action against Matrix and Alvarado. What
Plaintiffs do manage to allege is uncertain. Matrix’ demurrers should be sustained.
Plaintiffs claim punitive damages but fail to allege specific facts as required to support such
claims against Matrix and Alvarado. Plaintiffs fail to make any allegations as to any Matrix corporate
officer. Plaintiffs’ punitive damages claims should be stricken as to Matrix and Alvarado.
Plaintiffs also claim entitlement to certain attorney fees and litigation costs, including expert
fees expended in the Vu action. Plaintiffs fail to allege a basis for an award of attorney fees against
Matrix or Alvarado in this action. Plaintiffs do not identify any agreement between themselves and
Matrix or Alvarado, and do not identify any statute that could support their claim for attorney fees as to
Matrix or Alvarado. Neither Matrix nor Alvarado were parties to the Vu litigation and plaintiffs do not
allege that Matrix or Alvarado caused Plaintiffs or any of them to be wrongfully named as defendants in
the Vu litigation. Plaintiffs’ claim for attorney fees, expert fees, and related costs should be stricken.
Finally, SF Pizza is a renter of Plaintiffs’ Unit and not an owner. SF Pizza has no right to
enforce the equitable servitudes created by the CC&Rs, and thus has no privity and no right vis-a-vis
any defendant in this action to use the Unit as a restaurant or to have access to a gas line.
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J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxFor the foregoing reasons, Matrix respectfully requests that this honorable court enter an order
sustaining Matrix’ demurrers and striking the portions of the Complaint which Matrix has requested be
stricken. If leave to amend is to be given, Matrix respectfully requests that no more than ten (10)
calendar days leave to amend be allowed — Plaintiffs have been aware that their Complaint contains
numerous defects and needs substantial revision, and this action is four months’ old at the time this
paper is submitted (and will likely be over seven months old by the time this matter is heard) and the
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odds of resolving the action within the timelin
Preview
wo wn nw 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GUY W. STILSON, SBN 142194 LOW, BALL & LYNCH 505 Montgomery Street, 7th Floor San Francisco, California 94111 Telephone: (415) 981-6630 Facsimile: (415) 982-1634 gstilson@lowball.com Attorney for Defendant MATRIX REAL ESTATE SERVICES, INC., sued herein as MATRIX ASSOCIATION MANAGEMENT IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA SAN FRANCISCO PIZZA, INC., TAN NGUYEN, NGHIA NGUYEN and KIM THUY HO, Plaintiffs, vs. VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION, INC.; MATRIX ASSOCIATION MANAGEMENT; JOSEPH NGUYEN, an individual; LAP T. TANG, an individual; MICHAEL JOHNSON, an individual; DAVID ALVARADO, an individual; AQUATEK PLUMBING, INC., a California corporation; and DOES 1 through 50 inclusive, Defendants. No. 17€V318151 (Unlimited Jurisdiction) MEMORANDUM OF POINTS AND AUTHORITIES SUPPORTING MATRIX’ DEMURRERS AND MOTION TO STRIKE (COMBINED BRIEF) Date: May 31, 2018 Time: 9:00 a.m. Dept.: 19 Judge: Hon. Peter Kirwan Complaint Filed: October 25, 2017 Trial Date: Not Yet Set “in BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JM 089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxOo eo YN DA UH BF WN Boe ese ee BR YW NY SF SO Se oe oe on nw 19 TABLE OF CONTENTS INTRODUCTION/BACKGROUND .....scsssesssssssessesseseseesecsseseesnecsessessecssessscanscasecssecsneessecsaneennenss 1 PROCEDURAL HISTORY JOINDER IN DEMURRERS/MOTION TO STRIKE FILED ON BEHALF OF DEFENDANTS VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION AND JOSEPH NGUYEN .3 LEGAL DISCUSSION A. B. Cc. Fact Pleading, Limitation Against Pleading Inconsistent Facts .........sscsessesessesesseeseesnees 5 D Plaintiffs’ Claims of Misrepresentation Against Matrix and Alvarado are Belied by Plaintiffs’ Admissions in the Verified Complaint that the Alleged Representations were True and were Authorized... E. Plaintiffs’ Claims Of Misrepresentation Against Matrix And Alvarado Are Belied By Facts In Plaintiffs’ Verified Complaint Which Show Plaintiffs Did Not Reasonably Rely On Any Alleged Representation By Matrix Or Alvarado ...sscsserseevers 6 F. Plaintiffs’ Misrepresentation Claims are not Sufficiently Pleaded. oo... cscs 8 G. Plaintiffs’ Misrepresentation Claims are Uncertain. ......cccsscsessssseeseesecssseessesssenmeenssnensees 8 H. Plaintiffs’ Conspiracy Claims are not Sufficiently Pleaded...........ccsescessesssseesseeseeneesvees 10 lL Plaintiffs’ Claims of Trespass, Conversion, and Interference with Prospective Economic Advantage are all Insufficiently Pleaded and are Uncertain.......cssessessesees 11 J. Plaintiffs’ Punitive Damages Claim is Insufficiently Pleaded. ..........ccssessesseseseeseensees 11 K. Plaintiffs’ Claim for Attorney Fees in Insufficiently Pleaded and is Uncertain. .......00 12 L. SF PIZZA is Differently Situated, has No Rights Under the CC&Rs, and was not a Party to the Vu Litigation: Its Claims Must be Considered Separately ........0.ccseseeee 13 CONCLUSION.. -ii- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JA\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxTABLE OF AUTHORITIES Page(s) CASES Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598 -- Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962 ------------+------2---e-n-nnnnnennnnnnnnnntnnnnnnnnnnnnne= 4 Blank v. Kirwan (1985) 39 Cal.3d 311 ------------------------------ enon een centre nnetenenenennnnennnnnnnnnnnnnns 4 Caliber Bodyworks, Inc. v. Superior Court (Herrera) (2005) 134 Cal.App.4th 365 ------------------------- 4 Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150-------------------------------2-0--= 5 Daniels v. Select Portfolio Servicing, Inc. [(2016) 246 Cal.App.4th 1150---------------------------------~ 10 Doe y. City of Los Angeles (2007) 42 Cal.4th 531 -- Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968 --------------------2---2-enesnnnrnnnnnnccnecnncne 4 Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 95] -----------------------2---eneecenncenencen= 7 Goonewardene v. ADP, LLC (2016) 5 Cal.App.Sth 154 ------------------2---2---2-nnn-nnn nnn nnnncnenenennenn 8 Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498--------------------——---n-----nnnnnnnnn ner 7 Grieves v. Superior Court (fox) (1984) 157 Cal App.3d 159------------------2-e-veeceeneneeennneenmnew enna 4 Hoffman v. 162 North Wolfe LLC (2014) 228 Cal. App.4th 1178 ---------------s-n--sn-neseneeseneeneeseeen= 7 In re Moreno (2012) 479 B.R. 553 -----------nnnnnnnnn ncn nnnnnnnnnnnenne 13 Manti v. Gunan (1970) 5 Cal. App.3d 442-~~--------------------------2------2nnennn nnn nnnn cence nennnnnnnnnnnnnns 5 Martin v. Bridgeport Community Ass’n, Inc. (2009) 174 Cal.App.4th 1034 ------------------------------- 13 PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4th 1680 -------------------------------------- 4,5 Serrano v. Priest (1971) 5 Cal.3d 584-. Small v. Fritz Cos., Inc. (2016) 246 Cal.App.4th 1150 --------------------------------------00--0--nennnennecnen 8 Smith v. Superior Court (Bucher) (1992) 10 Cal.App.4th 1033 ---------~------------------------2---2--0--" 11 State of Calif. ex rel. Metz v. CCC Information services, Inc. (2007) 149 [Cal.App.4th] 402----------- 10 Venicer Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547--------------------------- 4 Vu, et al., v. Vietnam Town Condominium Owners Association, et al., being Santa Clara Superior “iti BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:M089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxCem YN DH HM FF BN YN NY NY NN KR NK Be ee ewe we ewe ewe eB eI A A Fk BH F SF GC wH RAIA A RBH KF DS TABLE OF AUTHORITIES Page(s) STATUTES CCP § 3294 (>) —amnanamennnnnnnnnnnnnn anne neces tnnnnnnnnnnnnnsnnennenmenmennnt 12 CCP § 425.10 COP § 430.10 (€) -n--n-nn-nnnanannnnnnecenneennecneecmenccatcnecnscnscnscaseacnscanenatcnsnnecnseasconsconeasteamen 4 CCP § 430.30(a) -n--n-nnnaneenneonnnnnceecnecnnecn eno nennenmeenennenasoncarenrennecececrescerentnmenananmeenenan 4 CCP § 431.10(b)(3)=nn2-n2-n-nneensennnnneneeonsneneeeneenecneenecnnantnmennecnscncnccarenseeeronreerennacemnamanas 4 COOP § 43 6-n-nananannn anne nnn n ean nce rn nen cec ncn nen nnn nee nnn nnennnnenenntntennanenannanannnananenanenenemanan 4 CCP §430.10(f) - CCP §435 Civil Code § 3294 (a) ---------------—----- nen nennnnn nance nnn nnnnn nec e nnn ccna nnn nanan 11 Civil Code § 3294(b) --------------------2-20ecnncnnncccnnnnenennnnnnnnneneenereweternennennmnnntatn nnn nnn ns 12 Civil Code § 5800-------------------ae were e nnnnn nnn nnn nnn anne anne tren rr 4 Civil Code § 6856----------+----------n0--0n-0neewnennnnnnnnnnnnnenernnwonwaneeeenteneas tereennmiemmnnnnnnnnnn -- 13 SECONDARY AUTHORITY. Weil & Brown Civil Procedure Before Trial (The Rutter Group 2017) §§ 7:1827:186 --------------------- 4 Weil & Brown Civil Procedure Before Trial § 6:154 ---------------------nnencnnnnennnecnncennncnneennnneneenn 10 -iv- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:M089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxI. INTRODUCTION/BACKGROUND Defendant MATRIX REAL ESTATE SERVICES, INC., sued herein as MATRIX ASSOCIATION MANAGEMENT (“Matrix”), hereby respectfully files and serves this brief in support of both Matrix’ demurs and motion to strike portions of Plaintiffs’ Verified Complaint for Trespass, Conversion, Intentional Interference with Prospective Economic Advantage, Breach of Contract, Declaratory Relief, Fraud, Negligent Misrepresentation and Civil Extortion (the “Complaint’”) as follows: Plaintiffs’ verified Complaint alleges as follows: Plaintiffs TAN NGUYEN, NGHIA NGUYEN and KIM THUY HO (the “Owner Plaintiffs”) purchased a commercial condominium unit (Unit 9015) in a project known as Vietnam Town in San Jose, and Plaintiff SAN FRANCISCO PIZZA INC. (“SF Pizza’) rented the Unit from the Owner Plaintiffs. Although not originally designated for use as a restaurant under the applicable CC&Rs, Plaintiffs claim Defendant DAVID ALVARADO, in the course and scope of his duties as an employee of Matrix, the association manager for Vietnam Town, was duly authorized and empowered to and did permit Plaintiffs to convert the designated use of the Unit to restaurant use and to use one of the available gas lines for the Unit. Plaintiffs then claim all defendants, in some sort of unexplained conspiracy, disconnected the gas line from Plaintiffs’ Unit. Plaintiffs’ verified Complaint asks for injunctive relief in the form of a permanent restraining order/injunction allowing Plaintiffs use of a gas line, over $5 million in compensatory damages, and punitive damages and certain attorney fees and related costs. Matrix demurs and moves to strike because, as to Matrix and Alvarado (Alvarado has not yet been served with the Complaint) Plaintiffs’ verified Complaint and the causes purportedly set forth therein are insufficient to constitute a cause of action. Plaintiffs’ verified Complaint states facts which exonerate Matrix and Alvarado. A careful reading of the verified Complaint shows that it does not allege that Alvarado made any misrepresentations and in fact admits Alvarado was authorized to make the representations he allegedly made and that those representations were true. The verified Complaint also admits facts showing any reliance by Plaintiffs was not reasonable. Accordingly, neither Matrix nor Alvarado can be liable for misrepresentation. -l- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JA1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxOo Oe YN DH HW RB WN N NR YN YN NN NY ee ee ewe ewe ewe Be eB eo ND A BB NH F&F SGD eB ADH BF YW NY SF DS Plaintiffs’ verified Complaint is also uncertain in various regards and contains insufficient facts and details to support Plaintiffs’ claims for trespass, conversion, and intentional interference with prospective economic advantage. While the Complaint generally alleges that all defendants other than MICHAEL JOHNSON! were involved in a conspiracy to disconnect the gas line from Plaintiffs’ Unit, the Complaint specifies that it was Defendants LAP TANG, JOSEPH NGUYEN, and AQUATEK. PLUMBING (“Aquatek”) who physically disconnected Plaintiffs’ gas line and that Defendant VIETNAM TOWN CONDOMINIUM OWNERS ASOCIATION (“VTCOA”) ratified that conduct. The Complaint is impermissibly uncertain and vague regarding any involvement whatsoever by Matrix and/or Alvarado in disconnecting Plaintiffs’ gas line, failing even to hint at what possible motive Matrix or Alvarado could have for being involved in such a deed or how either Matrix or Alvarado could possibly profit from it. Matrix respectfully requests this honorable court sustain Matrix’ demurrers to Plaintiffs’ verified Complaint and each of the causes of action purportedly alleged against Matrix and Alvarado therein on the bases of failure to state a cause of action and uncertainty. Matrix also respectfully requests this honorable court strike certain portions of Plaintiffs’ Complaint as specifically set out in the notice of Matrix’ motion to strike and more generally referred to as Plaintiffs’ claims (1) that Matrix and/or Alvarado engaged in or was part of a conspiracy, (2) for attorney fees and related costs, and (3) for punitive damages. Each of these matters is insufficiently pleaded and is uncertain, irrelevant, false, improper, and not drawn in conformity with applicable law. No sufficient factual basis for any of these claims is provided as to Matrix or Alvarado. Il. PROCEDURAL HISTORY Plaintiffs’ verified Complaint was filed on October 25, 2017. On October 27, 2017, Plaintiffs filed papers supporting their request for a temporary restraining order (TRO) and alternately for an order shortening time. Plaintiffs alleged that they had a right to use ' Johnson is alleged to have been Plaintiffs’ realtor. Plaintiffs allege Johnson made misrepresentations in connection with Plaintiffs’ purchase of the Unit and that he tried to extort money from Plaintiffs in exchange for getting them a gas line. There is no allegation that either Matrix or Alvarado was involved in this conduct. 2 BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxtheir Unit as a restaurant and to have a gas line to serve their Unit, and that defendants violated those tights by disconnecting Plaintiffs’ gas line, which effectively prevented them from operating their Unit as a restaurant. The court denied the TRO request but granted the order shortening time and set an evidentiary hearing for a preliminary injunction pending trial. Additional papers were filed and a hearing lasting approximately three hours was held at which Plaintiff Ho and Defendant Nguyen both testified and documentary evidence was presented. The court ultimately denied the application for injunctive relief pending trial. The parties, via their legal counsel, continued to discuss possible resolution of the matter. A mediation was held before Hon. Kevin McKenney (Ret.) of JAMS. The mediation lasted 12 hours, at the end of which a settlement document was executed by those parties who were present at the mediation. Although Matrix and Alvarado were not physically present at the mediation, they agreed to the terms of the agreement and their executed signature pages were forwarded to all counsel the next day. Unfortunately, although counsel for Matrix and Alvarado (who was personally present at the mediation) had understood that all Plaintiffs were in agreement with the settlement terms regardless of whether they were physically present at the mediation, apparently he was mistaken: two of the Plaintiffs declined to sign the proposed settlement agreement. Thereafter additional events occurred which need not be detailed here and which did not involve Matrix or Alvarado, but which did great harm to the relationship between VTCOA and Plaintiffs. Shortly thereafter, Plaintiffs obtained new legal counsel. Matrix is aware of a “meet and confer” letter dated January 30, 2018 by attorney Nicholas A. Rogers of the Berding Weil law firm, on behalf of Defendants VTCOA and Joseph Nguyen, pointing out various deficiencies in the Complaint. On February 5, 2018, counsel for Matrix wrote a “meet and confer” letter to Plaintiffs’ counsel, adopting nearly all of the content of Mr. Rogers’ letter and pointing out additional issues pertaining particularly to the claims against Matrix and Alvarado. Plaintiffs have not provided a substantive response or made any other effort to meet and confer on this matter. I. JOINDER IN DEMURRERS/MOTION TO STRIKE FILED ON BEHALF OF DEFENDANTS VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION AND JOSEPH NGUYEN Having reviewed the January 30, 2018 “meet and confer” letter written to Plaintiffs’ counsel on behalf of Defendants VTCOA and Nguyen, and being in agreement with the arguments set forth 3. BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docx.YN Dw RF wBwN 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 therein, Matrix hereby joins in the demurrers and motions to strike filed or to be filed on behalf of VTCOA and/or Joseph Nguyen as set forth in that letter as though set forth verbatim herein, except: 1. Matrix does not join regarding the Breach of Contract cause of action, as that cause of action is not alleged against Matrix or Alvarado; and 2. Matrix does not join regarding the defense of statutory immunity under Civil Code § 5800, as that immunity does not apply to Matrix or Alvarado in this matter. IV. LEGAL DISCUSSION A. Nature of a Demurrer A demurrer challenges defects appearing on the face of a pleading or from matters outside the pleading which are judicially noticeable. CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4" 968, 994. Grounds for demurrer include failure to state facts sufficient to constitute a cause of action (CCP § 430.10(e)) and uncertainty (CCP §430.10(f)). For the purpose of testing the challenged pleading, the demurrer admits the truth of all material facts properly pleaded. Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4" 962, 966-967; Serrano v. Priest (1971) 5 Cal.3d 584, 591. B. Nature of a Motion to Strike Motions to strike are permitted pursuant to CCP §435 et seq., and allow a party to ask the court to strike out “any irrelevant, false, or improper matter inserted into any pleading” and “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.” CCP § 436. “Irrelevant matter” includes a demand for judgment “requesting relief not supported by the allegations of the complaint.” CCP § 431.10(b)(3). Motions to strike are typically used to eradicate unsupported damages allegations, including insufficiently founded claims for attorney fees and punitive damages. Grieves v, Superior Court (Fox) (1984) 157 Cal.App.3d 159, 163-164, fn 9; PH IL Inc. v. Superior Court (Ihershof) (1995) 33 Cal.App.4" 1680, 1682-1683; Venicer Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4" 1547, 1561-1562; Caliber Bodyworks, Inc. v. Superior Court (Herrera) (2005) 134 Cal.App.4" 365, 385. See also Weil & Brown Civil Procedure Before Trial (The Rutter Group 2017) §§ 7:1827:186. A motion to strike is also the appropriate tool where there is a substantive defect affecting 4. BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE, J\M089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxoO YN DH FB BW N NY N NY NY YH NY NN N Be ee ee eB Be eB Be oN A HW KF YB YN F&F SOD we ADH PF WHY KH SS only a portion of a claim. PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4" 1680, 1682- 1683; Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal-App.4” 1150, 1167. c. Fact Pleading, Limitation Against Pleading Inconsistent Facts A complaint must contain “a statement of the facts constituting the cause of action, in ordinary and concise language.” CCP § 425.10. These are commonly referred to as “ultimate facts.” See Doe v. City of Los Angeles (2007) 42 Cal.4 531, 550, Affirmative allegations of inconsistent facts are not permitted: “a pleader cannot blow hot and cold as to the facts positively stated.” Manti v. Gunan (1970) 3 Cal.App.3d 442, 449 (emphasis in original). To the extent Plaintiffs allege ultimate facts which are inconsistent with a purported cause of action against Matrix or Alvarado, Plaintiffs fail to state a cause of action. Plaintiffs should not be permitted to amend their allegations to omit or modify their admissions which favor Matrix and Alvarado absent a showing of good cause for the change. D. Plaintiffs’ Claims of Misrepresentation Against Matrix and Alvarado are Belied by Plaintiffs’ Admissions in the Verified Complaint that the Alleged Representations were True and were Authorized, The Complaint alleges no actions by Matrix other than through its employee, Alvarado. As to Matrix and Alvarado, the gravamen of Plaintiffs’ Complaint falls into two essential claims: that Alvarado made misrepresentations upon which Plaintiffs justifiably relied to their damage, and that Matrix and Alvarado were somehow complicit in disconnecting the gas line that Plaintiffs had connected to their Unit. Plaintiffs seek punitive damages against Matrix and Alvarado. Plaintiffs also seek an award of attorney fees and expert costs relating to another case. Plaintiffs claim Alvarado represented that Plaintiffs had followed all the appropriate steps to obtain approval, that their Unit was approved for restaurant use, and that they could use one of the gas lines. (Complaint at 4:12-21.) Plaintiffs also claim Alvarado was authorized to issue this approval. (Complaint at 13:20-24.) These are the only representations attributed to Matrix and Alvarado anywhere in the Complaint. Plaintiffs allege that it was in reasonable reliance upon these representations that they incurred expenses building out the restaurant. (Complaint at 5:23-27 and 13:26-27.) Plaintiffs’ misrepresentation-related claims against Matrix and Alvarado admit VTCOA “ratif[ied] David Alvarado’s conduct and representations.” (Complaint at 12:11-12; see also Complaint -5- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JALO8MSFO043\Pleadings\Demurrer Strike OOf\Demurres Strike Brief.docxCem ND Hh FF Bw NY RM NR YN YN NY NN NY Be ewe Be Be Be Be Be eB ce N DW KR YW NY F&F SGD we AY DH RF BH SF SS at 12:15-16.) Plaintiffs admit the VTCOA ratified “all of the conduct of David Alvarado.” (Complaint at 5:12-13.) Plaintiffs admit VTCOA imbued Alvarado with “all responsibility for the management and operation of the condominium project” (Complaint at 10:21-22) and delegated “all [its] responsibilities and duties to David Alvarado” (Complaint at 11:02). Plaintiffs further admit VTCOA advised all unit owners that Alvarado “was the managing agent with full authority to act on behalf of the Board” and “to do all acts required of the Board” in that Alvarado had “express, actual authority” or “ostensible authority” because VTCOA lead “Plaintiffs and all other Unit owners to believe that David Alvarado had actual authority to do all of the acts required of the Board.” (Complaint at 11:03-07; see also Complaint at 11:11-12 and 13:20-24. ) In short, Plaintiffs allege that Alvarado was authorized to and did approve Plaintiffs’ Unit for use as a restaurant and approved Plaintiffs’ use of a gas line, and that because Alvarado was so authorized and empowered his approvals were effective and bound VTCOA and the other defendants. Plaintiffs’ claim to entitlement to a permanent restraining order (and their requests for a TRO and preliminary restraining order pending trial previously made in this action), all of Plaintiffs’ claims against VICOA, Joseph Nguyen, and Aquatek and at least some of their claims against Tang and Johnson, are based on Plaintiffs’ theory/admission that Alvarado’s alleged approvals were effective. If Alvarado’s approvals were effective, his representations (which were the approvals he allegedly issued) were not false or misleading: they did not constitute misrepresentations. Accordingly, per Plaintiffs’ admissions in their verified Complaint, there is no basis for liability against Matrix or Alvarado on a misrepresentation theory. Matrix’ demurrer to Plaintiffs’ seventh cause of action (negligent misrepresentation) should be sustained on this ground. Further, Matrix’ demurrer should be sustained without leave to amend, as Plaintiffs have alleged and sought relief, including injunctive relief, based on ultimate facts which are inconsistent with a misrepresentation claim against Matric and/or Alvarado. E. Plaintiffs’ Claims Of Misrepresentation Against Matrix And Alvarado Are Belied By Facts In Plaintiffs’ Verified Complaint Which Show Plaintiffs Did Not Reasonably Rely On Any Alleged Representation By Matrix Or Alvarado Plaintiffs’ verified Complaint admits their Unit is a part of Vietnam Town and that VICOA is a commercial condominium association formed under California law pursuant to the “Declaration -6- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE ‘J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docx_ 0 ON DH FF WN Establishing a Plan for Commercial Condominium Ownership” (the “CC&Rs”) dated November 15, 2010. (Complaint at 2:04-07 and 3:11-4:02.) Plaintiffs’ verified Complaint further admits that pursuant to the CC&Rs, their Unit (Unit 9015) was not permitted to be used as a restaurant and that a change of use would have to be approved by VICOA before their Unit could be used as a restaurant. (Complaint at 4:05-12, 10:10-11:14, and Exhibit “A” to Plaintiffs’ verified Complaint (which is a copy of Exhibit “D” to the CC&Rs).) Section 8.4(A) of the CC&Rs makes clear that any change to the CC&Rs, which would include re-designation of a unit so that it could be used as a restaurant, must be in writing. Section 8.15 of the CC&Rs states that a failure by VTCOA to enforce the CC&Rs in any instance does not waive VTCOA’s right to enforce the CC&Rs in any other instance. Accordingly, Plaintiffs were on actual and/or constructive notice that for their Unit to be re-designated for use as a restaurant, that re- designation would have to be in writing. (See also Complaint at 4:08-10 [where Plaintiffs allege that they asked Alvarado to provide them with a writing allowing them to install a gas line] and 11:15-17 [where Plaintiffs ask that VTCOA be estopped from claiming written approval was required].) Nowhere does the Complaint allege that the required approval was ever written down. Rather, Plaintiffs’ Complaint alleges that the approval was merely “orally” provided. (Complaint at 4:12-16.) Accordingly, Plaintiffs knew that in order to use their Unit as a restaurant and have use of a gas line, they needed written approval. Plaintiffs also knew they did not have written approval. Absent written approval, Plaintiffs’ alleged reliance (spending hundreds of thousands of dollars on a restaurant build out, at a minimum) on Alvarado’s statements could not have been reasonable. Reasonable reliance is a required element of a misrepresentation claim. Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4" 951, 974; Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4"" 1178, 1194; Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498, 503; see also, CACI 1900 (element #5), CACI 1903 (element #5), and CACI 1908 [“It also is not reasonable for anyone to rely on a [misrepresentation/concealment/false promise] if facts are within [his/her] observation that show that it is obviously false”’]. Because facts stated in Plaintiffs’ verified Complaint and facts subject to judicial notice show written approval was needed yet Plaintiffs relied on unwritten approval, Plaintiffs’ reliance was unreasonable and a cause of action for misrepresentation is not stated. -T- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxoO ND HW BF WY NN NY NN N NN DY He Be ee ewe ewe we eB He oN DA A FB NH |= SD we IY DAH BF wWNH SF F. Plaintiffs’ Misrepresentation Claims are not Sufficiently Pleaded. Plaintiffs’ misrepresentation claims are subject to heightened pleading requirements: “each element [ of a misrepresentation cause of action] must be pleaded with specificity.” Small v. Fritz Cos.. Inc. (2016) 246 Cal.App.4" 1150, 1166; see also Goonewardene v. ADP, LLC (2016) 5 Cal.App.5" 154, 178. As discussed above, admissions in Plaintiffs’ verified Complaint establish that Matrix and Alvarado did not make any misrepresentations. If Plaintiffs wish to pursue a misrepresentation claim against Matrix and/or Alvarado, they must specify how that claim is not belied by the facts they have admitted or the claim will be insufficient to state a cause of action. Similarly, they must allege facts showing their reliance was reasonable, particularly in light of facts showing they were on notice that only written approval could be effective. Further, Plaintiffs have not actually alleged that Matrix or Alvarado misrepresented anything. Plaintiffs allege that Alvarado made representations about his ability to allow Plaintiffs to use their Unit as a restaurant and to use a gas line. Nowhere do Plaintiffs allege that these representations were false. Plaintiffs clearly take the position that these representations were true, as their claims against other defendants are dependent on the truth of the allegations Plaintiffs attribute to Alvarado and Matrix and, more importantly, Plaintiffs have twice proceeded in this action on claims seeking an injunction requiring a gas line to be connected to their Unit. Those requests were necessarily based upon an assertion that Plaintiffs had a right to have a gas line connected to their Unit, which claim is necessarily based on the truth of Alvarado’s alleged representations. The existence of a misrepresentation by the defendant is obviously an essential element of a cause of action for misrepresentation. That essential element is missing from Plaintiffs’ claims against Matrix and Alvarado. Accordingly, Plaintiffs’ verified Complaint fails to state a cause of action for misrepresentation against Matrix and Alvarado. G. Plaintiffs’ Misrepresentation Claims are Uncertain. Even if Plaintiffs’ claim of misrepresentation by Matrix and Alvarado could somehow survive the admissions in Plaintiffs’ verified Complaint and the fact that Plaintiffs fail to allege that Matrix or Alvarado actually misrepresented anything, that claim is made uncertain by other allegations of Plaintiffs’ verified Complaint. -8- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JA1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxRw oN oOo I DN 10 i 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 Paragraph 12 of the verified Complaint states, “Plaintiffs engaged defendant Michael Johnson to represent them as their real estate agent to purchase Unit 9015 in the Vietnam Town Condominium project. At the time they engaged Michael Johnson and prior to their purchase of Unit 9015, Plaintiffs informed defendant Michael Johnson that they were interested in purchasing a Unit specifically for the purpose of opening a restaurant in the Unit. Michael Johnson stated to Plaintiff Ho that he was intimately familiar with the Units as he himself owned one and that there was no restriction on the use of Unit 9015 to operate as a restaurant if they purchased the Unit. Prior to escrow closing on the Unit, Plaintiffs retained the services of a licensed architect, Hau Ching Liao, who examined Unit 9015 in the presence of Michael Johnson and a contractor, Tom Chau, and discussed the preliminary floor plan for the Unit with Michael Johnson showing the layout of the restaurant and specifically discussed the use of a gas line to supply gas for the kitchen appliances. ... Michael Johnson assured Plaintiffs, through [Plaintiff] Kim Thuyh Ho, that if they purchased Unit 9015 and used Tom Chau as the contractor to build the restaurant they would have a gas line made available for the restaurant.” Plaintiffs also allege that they acquired title to the Unit on September 28, 2016 (Complaint at 1:25-27). Plaintiffs’ first alleged communication with Alvarado did not take place until May 15, 2017, nearly eight months after they acquired title. (Complaint at 4:08-10.) While the Complaint is not explicit, Paragraph 14 strongly suggests that contractor Tom Chau was retained and had begun to provide services in connection with the restaurant build out well before May 15, 2017 — Paragraph 12 explicitly states that before close of escrow Plaintiffs hired an architect who prepared plans for the restaurant and contractor Tom Chau visited the Unit and discussed the preliminary floor plan and use of a gas line. Given that Plaintiffs’ intent in purchasing the Unit was to operate a restaurant in it and Plaintiffs hired an architect and a contractor to do the buildout, and that Plaintiffs were fully committed to and engaged in the buildout well before May 15, 2017 — the day Plaintiffs first allege any contact with Alvarado’ -- it is uncertain how Plaintiffs could have relied on any representation by Alvarado which ? That initial contact is alleged to have been in the form of an inquiry to Alvarado. The more important date for purposes of Plaintiffs’ claims against Matrix and Alvarado is the date when Alvarado allegedly informed Plaintiffs that their Unit was approved for use as a restaurant and for access to a gas line. Plaintiffs do not allege this more important date. -9- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurter Strike Brief.docx0 Oe YN DH BF BW N o resulted in Plaintiffs “making the tenant improvements to construct a pizza restaurant in Unit 9015” as alleged in Paragraph 17 of the Complaint: Plaintiffs had been working on the project for eight months+ and were no doubt substantially finished by the time Alvarado could have made a representation upon which Plaintiffs relied. Clarification is required to dispel the uncertainty, especially as Plaintiffs seek punitive damages. H. Plaintiffs’ Conspiracy Claims are not Sufficiently Pleaded. Plaintiffs claim Matrix and Alvarado “conspired and agreed [with other defendants] to trespass upon Plaintiffs’ gas line...” Allegations that defendants engaged in a conspiracy are subject to stringent pleading requirements. As pointed out in Weil & Brown Civil Procedure Before Trial § 6:154 (Rutter Group 2017), The conspiracy must be properly pleaded. Conclusory allegations of “conspiracy” will not withstand demurrer. To allege a conspiracy, a Plaintiff must plead: 1) formation and operation of the conspiracy and 2) damage resulting ic the Plaintiff, 3) from a wrongful act done in furtherance of the common design. [Daniels v. Seles Portfolio Servicing, Inc. (2016) 246 Cal.App.4" 1150, 1173] ,,,; State of Calif. ex rel. Metz v. CCC Information services, Inc. (2007) 149 [Cal.App.4"] 402, 419 ... -- allegation that “defendants conspired to conceal their improper loss valuations” was bare legal conclusion] Plaintiffs’ verified Complaint contains absolutely no allegations specifying anything Matrix or Alvarado did in connection with the alleged conspiracy, or even that Matrix or Alvarado knew of the conspiracy or its aims and goals. Indeed, at Paragraph 19, Plaintiffs’ Complaint strongly suggests that the conspiracy was born during a mediation that related to a lawsuit known as Vu, et al., v. Vietnam Town Condominium Owners Association, et al., being Santa Clara Superior Court Action No. 17CV315384 (the “Vu” action or matter), wherein the Vus claimed Plaintiffs here (who are all defendants in the Vu action) has misappropriated a gas line in which the Vus had exclusive rights and used the gas line for the benefit of Unit 9015 (see Vu complaint [RFJD Exhibit 1], ff 1-18). Regarding that mediation in the Vu matter, Plaintiffs allege “Vu and the VTCOA excluded Plaintiffs herein from the settlement discussions mid-way through the day the mediation took place, reaching a settlement that was confidential and which Vu and the VTCOA refused to divulge to Plaintiffs herein.” (Complaint at 6:14-17,) Neither Matrix nor Alvarado was a party to the Vu action. There is no allegation that Alvarado -10- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxor anyone associated with Matrix was present at or in any way involved in the mediation in the Vu matter. Nothing in Plaintiffs’ Complaint even hints at what possible motive Matrix or Alvarado could possibly have had for being involved in the alleged conspiracy or how either Matrix or Alvarado could have profited or otherwise been advantaged by the conspiracy or by damaging any of the Plaintiffs herein. The Complaint fails to allege facts showing the formation of a conspiracy involving Matrix or Alvarado, the operation of a conspiracy involving Matrix or Alvarado, or a common design which Matrix or Alvarado desired, had any reason to desire, or even knew of. The allegations are insufficient to support a claim that Matrix or Alvarado were involved in a conspiracy against Plaintiffs. I. Plaintiffs’ Claims of Trespass, Conversion, and_Interference with Prospective Economic Advantage are all _Insufficiently Pleaded and are Uncertain. As to Matrix and Alvarado, Plaintiffs’ claims of trespass, conversion, and interference with prospective economic advantage are all based on the claim that Matrix and/or Alvarado are responsible for disconnecting the gas line which had served Plaintiffs’ Unit. As discussed above, the Complaint does not contain a single allegation specifying how Matrix or Alvarado was or even could have been involved in disconnecting that gas line, other than a general and non-specific allegation that “defendants” were involved in a conspiracy which involved disconnecting that gas line. As discussed above, Plaintiffs’ allegations are insufficient to allege that Matrix or Alvarado was a member of a conspiracy. Accordingly, the Complaint is insufficient to allege causes of action for trespass, conversion, and interference with prospective economic advantage against Matrix and Alvarado. J Plaintiffs’ Punitive Damages Claim is Insufficiently Pleaded. Plaintiffs seek an award of punitive damages. In tort cases, punitive damages are potentially available where a Plaintiff shows by “clear and convincing” evidence that the defendant is guilty of “oppression, fraud or malice.” Civil Code § 3294(a). However, it is not sufficient to allege that defendant acted with oppression, fraud, or malice. Rather, Plaintiff must allege specific facts showing the defendant’s conduct was oppressive, fraudulent, or malicious. See Smith v. Superior Court (Bucher) (1992) 10 Cal.App.4" 1033, 1041-1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4" 598, 643 [allegations that defendant’s conduct was intentional, willful, malicious, performed with ill will toward Plaintiffs and in conscious disregard of Plaintiffs’ rights did not satisfy -1l- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docx0 Oo ND WH BF WN Nw NM NY NN NNN NY Se Be ee Be ewe we Be ee oN DAH BF BW YN |= SOD we KRU AH KR wD HH FS SS Specific pleading requirement]. Moreover, when the punitive damages target is an employer who is sued for wrongful acts committed by its employees, punitive damages are available only if the employer authorized or ratified the employee’s wrongful acts or knew in advance that the employee was likely to commit such acts and employed him or her with conscious disregard of the rights or safety of others, or was itself guilty of oppression, fraud, or malice. CCP § 3294(b). Furthermore, where the employer is a corporation, Plaintiff must show that the authorization, ratification, advance knowledge, malice, etc., was on the part of an officer, director, or managing agent of the corporation. Civil Code § 3294(b), Plaintiffs’ Complaint fails to allege any facts showing that Matrix or Alvarado was guilty of oppression, fraud, or malice. As to Matrix, there is not a single fact alleged showing Matrix authorized or ratified any wrongful conduct, knew in advance that any wrongful conduct was likely to occur, or that Matrix acted in conscious disregard of anyone’s rights or was itself guilty of oppression, fraud, or malice. Further, as to Matrix, which is a corporation, there is no allegation regarding any officer, director, or managing agent of the corporation. Plaintiffs’ Compliant is insufficient to allege punitive damages as to Matrix and Alvarado. K. laintiffs’ Claim for Attorn sufficiently Pleaded and is Uncertaii Plaintiffs allege, “As a result of Defendants’ misrepresentations, Plaintiffs have suffered harm in the form of attorneys’ fees, expert witness fees and costs incurred in defending the [Vu] lawsuit.” (Complaint at 14:01-02.) The claim is illogical and uncertain. The Vu litigation was initiated by the Vus and is based upon the Vus’ claim that Plaintiffs herein misappropriated the Vus’ gas line. There is no explanation as to how an alleged representation made by Matrix or Alvarado to Plaintiffs or any of them caused the Vus to file a lawsuit, especially as the only representations Matrix or Alvarado are alleged to have made were to the effect that Plaintiffs could operate a restaurant in their Unit and have use of a gas line. The only conceivable explanation is that Plaintiffs are here alleging that the Vu lawsuit was meritorious and that they became defendants in the lawsuit because they acted on a misrepresentation. However, that allegation is incompatible with Plaintiffs’ admissions to the effect that Alvarado and Matrix were authorized by the VTCOA and the VTCOA ratified the representations Alvarado allegedly made. These admissions are essential to -12- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE FAMOBASFO043Pleadings\Demurrer Strike OOI\Demurrer Strike Brief.docxoO em YN DH BF WN Ye NY N NY N NY N NR NY NY Bee ee ewe we we ee oN DW FB NHN KF So we A DAA KR wD NH BS Plaintiffs’ pursuit of a restraining order in this action, and with their causes of action for trespass, conversion, interference with prospective economic advantage, and breach of contract. As the misrepresentation claim alleges negligent misrepresentation, the claim for attorney fees and expenses telating to the Vu action is also incompatible with Plaintiffs’ pursuit of punitive damages. Additionally, if Plaintiffs never had a right to use a gas line, then their allowable damages do not include lost profits anticipated from the operation of the pizza business because having a right to a gas line is necessary to operate that business, according to Plaintiffs’ own verified complaint. L. SF PIZZA is Differently Situated, has No Rights Under the CC&Rs, and was not a Party to the Vu Litigation: Its Claims Must be Considered Separately Plaintiffs’ theories expressed in the Complaint assume that each of the Plaintiffs is similarly situated and has the same rights and claims as every other Plaintiff herein, and up to this point, Matrix has herein treated Plaintiffs’ allegations in that light. However, the Complaint also discloses that SF Pizza is in fact not situated similarly to the other Plaintiffs, and that its potentially actionable claims are different and distinct from those of the other Plaintiffs. SF Pizza is alleged to be a renter of the Unit, and not an owner of the Unit. (Complaint at 1:25- 2:03.) That distinction has important legal consequences. Here, for instance, Plaintiffs’ claims that they are entitled to use Unit 9015 as a restaurant and to have a gas line connected to that Unit ultimately derive from Plaintiffs’ interpretation of their rights under Vietnam Town’s CC&Rs. But SF Pizza has no rights under the CC&Rs because it is not a member of the VTCOA. Common interest developments, such as the Vietnam Town condominiums, are formed as the result of the recording of a common interest development plan. The plan includes and is often referred to as the “covenants, conditions, and restrictions” (CC&Rs) which provide internal regulation for the development and set the rights of the owners of the property vis-a-vis each other. The CC&Rs are not contractual limitations but are equitable servitudes enforceable as covenants running with the land. See Civil Code § 6856 and In re Moreno (2012) 479 B.R. 553. The right of enforcement of an equitable servitude is inextricable from ownership of real property to which the equitable servitude applies. Martin v. Bridgeport Community Ags’n, Inc. (2009) 174 Cal.App.4" 1034. SF Pizza is a renter and not an owner. Accordingly, SF Pizza has no rights -13- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE JM 089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxCeO IN DW BB BW HY NN NY N YN N NN Be Be we ewe ewe ewe Be we DR oy DU BB NH & So we AA A RF BONY BS arising under the CC&Rs: SF Pizza’s rights arise out of its rental agreement with the Owner Plaintiffs, the terms of which are not alleged. Further, SF Pizza is not in privity with Matrix, which is alleged to have a contractual relationship not with SF Pizza, but with VTCOA. (Complaint at 2:08-12.) As a result, SF Pizza has no right enforceable against Matrix or Alvarado to use the Unit as a restaurant or to have a gas line connected to the Unit. SF Pizza’s trespass claim fails to state facts sufficient to support a cause of action and is uncertain because (in addition to the problems discussed above pertaining to the Plaintiffs as a group) the allegations do not show that SF Pizza has a right to the use of a gas line. SF Pizza’s claims of conversion and intentional interference with prospective economic advantage fail to state a cause of action and are uncertain for the same reason. SF Pizza’s negligent misrepresentation claim is also affected by its status as a renter rather than an owner. Because it is a renter it is not a member of the VTCOA and has no privity with Matrix or Alvarado and “the application to have Unit 9015 approved as a restaurant” would have been made on behalf of the Owner Plaintiffs and not SF Pizza. It is unclear whether the alleged representations were made only to the Owner Plaintiffs or are alleged also to have been made to SF Pizza. If it is alleged that representations were made to SF Pizza, because it was a renter and not an owner its reliance would have been even less reasonable than that of the Owner Plaintiffs. The Owner Plaintiffs’ damages claims are also rendered uncertain. Did they do the buildout for SF Pizza, or did SF Pizza do its own buildout? The Owner Plaintiffs should not suffer a loss of income so long as SF Pizza (or a successor tenant) pays the rent. The allegedly lost income from the operation of the pizza restaurant would have inured to the benefit of SF Pizza and not the Owner Plaintiffs, unless there was some sort of income or profit sharing agreement between SF Pizza and the Owner Plaintiffs which has not been alleged. SF Pizza’s status as a renter also affects its claim for punitive damages: it has no rights under the CC&Rs, and therefore any basis for a punitive damages claim SF Pizza may wish to pursue is reduced and is unclear. Vv. CONCLUSION Plaintiffs do not specify any alleged misrepresentation by Matrix or Alvarado. Plaintiffs allege that Alvarado (and therefore Matrix) represented that Plaintiffs could use their Unit as a restaurant and ~14- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\M089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxcould connect a gas line to it — Plaintiffs also unequivocally and repeatedly allege that those allegations were true, and have sought injunctive relief thereon. Plaintiffs also base their claims against VTCOA and Joseph Nguyen on the truth of those allegations. Plaintiffs fail to state a claim for misrepresentation against Matrix and Alvarado, and Matrix’ demurrer to the misrepresentation claim should be sustained without leave to amend. Plaintiffs purport to allege that Matrix and Alvarado were part of a conspiracy. Conspiracy claims are subject to enhanced pleading requirements — specific facts must be alleged. Plaintiffs fail to allege facts showing Matrix or Alvarado were part of a conspiracy or even knew that one existed. In fact, Plaintiffs’ allegations indicate the conspiracy was borne at a mediation at which Matrix and Alvarado were not present, relating to litigation to which Matrix and Alvarado were not parties. Plaintiffs’ conspiracy claim fails as to Matrix and Alvarado. The remainder of Plaintiffs’ claims against Matrix and Alvarado are all based on the purported conspiracy. As the purported conspiracy is insufficiently alleged, so are the claims supposedly arising out of the conspiracy. Plaintiffs fail to state a cause of action against Matrix and Alvarado. What Plaintiffs do manage to allege is uncertain. Matrix’ demurrers should be sustained. Plaintiffs claim punitive damages but fail to allege specific facts as required to support such claims against Matrix and Alvarado. Plaintiffs fail to make any allegations as to any Matrix corporate officer. Plaintiffs’ punitive damages claims should be stricken as to Matrix and Alvarado. Plaintiffs also claim entitlement to certain attorney fees and litigation costs, including expert fees expended in the Vu action. Plaintiffs fail to allege a basis for an award of attorney fees against Matrix or Alvarado in this action. Plaintiffs do not identify any agreement between themselves and Matrix or Alvarado, and do not identify any statute that could support their claim for attorney fees as to Matrix or Alvarado. Neither Matrix nor Alvarado were parties to the Vu litigation and plaintiffs do not allege that Matrix or Alvarado caused Plaintiffs or any of them to be wrongfully named as defendants in the Vu litigation. Plaintiffs’ claim for attorney fees, expert fees, and related costs should be stricken. Finally, SF Pizza is a renter of Plaintiffs’ Unit and not an owner. SF Pizza has no right to enforce the equitable servitudes created by the CC&Rs, and thus has no privity and no right vis-a-vis any defendant in this action to use the Unit as a restaurant or to have access to a gas line. -15- BRIEF SUPPORTING DEFENDANT MATRIX’ DEMURRERS AND MOTION TO STRIKE J:\1089\SF0043\Pleadings\Demurrer Strike 001\Demurrer Strike Brief.docxFor the foregoing reasons, Matrix respectfully requests that this honorable court enter an order sustaining Matrix’ demurrers and striking the portions of the Complaint which Matrix has requested be stricken. If leave to amend is to be given, Matrix respectfully requests that no more than ten (10) calendar days leave to amend be allowed — Plaintiffs have been aware that their Complaint contains numerous defects and needs substantial revision, and this action is four months’ old at the time this paper is submitted (and will likely be over seven months old by the time this matter is heard) and the Ce ND HW F&F WN N N NY NY NY N N NY DO we Bee ee Re Re oN A WH RF YBN F&F SF 0D Oe NY DH BF BW NY KF SC odds of resolving the action within the timelin