Motion-Secondary: San Francisco Pizza, Inc et al vs Vietnam Town Condominium Owners Association, Inc et al

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BERDING & WEIL LLP
29S Cao Bs Se 50
‘Walnu recy Caitas 386

170V318151
Santa Clara — Civil

Nicholas A. Rogers, California Bar No. 248900
Aaron D. Zimmerman, California Bar No. 278624
BERDING & WEIL LLP

2175 N. California Blvd, Suite 500

Walnut Creek, California 94596

Telephone: 925/838-2090

Facsimile: 925/820-5592
nrogers@berdingweil.com

Attorneys for Defendants
VIETNAM TOWN CONDOMINIUM OWNERS
ASSOCIATION, INC. and JOSEPH NGUYEN

A. Hwan

E-FILED

2/23/2018 5:37 PM
Clerk of Court

Superior Court of CA,
County of Santa Clara
170V318151

Reviewed By: A. Hwang
Envelope: 1251435

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF SANTA CLARA - UNLIMITED

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 Ithrough
50 inclusive,

Defendants.

No. 17CV318151

MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
DEMURRER TO COMPLAINT

Hearing Date: May 29, 2018
Time: 9:00 a.m.
Dept. 19

Hon. Judge Peter H. Kirwan

Action Filed:
Trial Date:

October 25, 2017
None

MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINTTABLE OF CONTENTS

2
3 L INTRODUCTION ...0..eeeeesesseeseseeseeesecseseenesesscsesesneeesensaesneassesussessecstsnsassnsucacansnsenaneeeeensene 1
4 I. DEFENDANTS COMPLIED WITH CODE OF CIVIL PROCEDURE § 430.41 ............ 2
5 Il. SUMMARY OF FACTUAL ALLEGATIONS 10.0... cessesesessesessesesessseeesseseenenseneneeeenensaneneee 2
6 Iv. PROCEDURAL DISPOSITION.
7 V. LAW GOVERNING GENERAL AND SPECIAL DEMURRERS .........sseeseseseeseeeerenene 4
VI. ALL CLAIMS ASSERTED ON BEHALF OF PLAINTIFF SF PIZZA ARE
8 SUBJECT TO GENERAL AND SPECIAL DEMURRER .........sessssssesesseseereneseseeeereneneeneee 4
9 |}vl. ALL CLAIMS ASSERTED AGAINST THE ASSOCIATION AND/OR MR.
10 NGUYEN ARE SUBJECT TO GENERAL AND SPECIAL DEMURRER....
A. The First and Second Causes of Action Are Subject to General and Special
11 Demurrer 6
B. The Third Cause of Action Is Subject to General and Special Demurrer . 8
12 Cc. The Fourth Cause of Action Is Subject to General and Special Demurrer 9
D. The Seventh Cause of Action Is Subject to General and Special Demurrer 12
13 E. The Fifth Cause of Action Is Subject to General and Special Demurrer .. 13
14 | vu. ALL CAUSES OF ACTION ASSERTED AGAINST MR. NGUYEN AND THE
15 ASSOCIATION SHOULD BE DISMISSED WITH PREJUDICE uo. cssescessessesseseesseerenee 14
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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINTTABLE OF AUTHORITIES
2 Page(s)
3 Cases
4
Alfaro v. Community Housing Imp. System & Planning Association, Inc.
5 (2009) 171 Cal. App.4th 1356....cccccscsescsessseesessseesseesseessesessseesssseesnseseesseesessseesseesseesneeseeeneesees 11
6 || Amid v. Hawthorne Comm. Med. Group
7 (1989) 212 Cal. App.3d 1383 .....ececesseesesesesssessessesssessesssesssesseesseesesseessesssesensssteseenessneesnes 12
8 Ball vy, FleetBoston Financial Corp.
(2008) 164 Cal.App.4th 794
° Banerian v. O'Malley
10 (1974) 42 Cal. App.3d 604... ceeceescesecsssssessesssessesstsssesssesnesssessesseessessessesssessessessssenesnessnesse 4
11 |} Beauchene v. Synanon Foundation, Inc.
b (1979) 88 Cal. App.3d 342.....ccccsescecseessesscsecsesseessecsseesssssessseessesseessscsnssseessessecsscsseesneeseeeseesneese 4
Blank v. Kirwan
13 (1985) 39 Cal.3d 31 Lecccsssscsssssssssessssssssssssssesssssssvesssesssssesssessssesssseseisesivesssiessueessieeee 4
14

Cantu v. Resolution Trust Corp.
15 (1992) 4 Cal.App.4th 857

16 |} Committee on Children’s Television, Inc.
(1983) 35 Cal.3d 197

. General Foods Corp.

17
Franklin v. Marie Antoinette Condominium Owners Association
18 (1993) 19 Cal. App.4th 824 .cscscsssscssssssssssssessssssssssessssessssssssssssssssssssussssssssseusensssssseussnsssssseee 9
19 Goodman vy. Kennedy
20 (1976) 18 Cal.3d 335 ...cccccccesssecsessseesessssessesecssesseesssssessssssessesssecseesssesnseseessesseesssssuessnseseeseesneese 4

21 || International Billing Servs., Inc. v. Emigh
(2000) 84 Cal.App.4th 1175

22
Jamotchian v. Slender

23 (2009) 170 Cal. App.4th 1384 ....csccsssscsssssscsssssssssssssususssssssssssscessesssesssssssissssuunusessssseeceeeeseessssea 7

24

Ketner Homeowners Association v. Superior Court
25 (2008) 166 Cal.App.4th 1055 .....cccccseesscsseeseseeseessessessessesesssesssseesssesssssseesesseeseessesssesenssessees 9

26 || Kisesky v. Carpenters’ Trust for So. Cal.
(1983) 144 Cal. App.3d 222 ....cccsescsecssssecsesesecsecseesseessesssssseessesssssseesnscssesecssesseesscssessnseseeeseesneese 4
27
Lee v. Hanley
28 (2015) 61 Cal.4th 1225.

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT

‘Walnu recy Caitas 386Martin v. Bridgeport Cmty. Ass’n, Inc.

1 (2009) 173 Cal.App.4th 1024.
2 Munger v. Moore
3 (1970) 11 Cal. App.3d Lo. eeeecessessecsesssssesesssssesssesssssnssssessessreserssesssssesssssssessessessseserasenesesenssessess 7
4 || Plummer v. Day/Eisenberg, LLP
(2010) 184 Cal. App.4th 38...cccccsccsssssccssssssssssssssssssesssesssesssessevessvessssssssssseserssesesesssessseveevesesesenss 7
5
Reeves v. Hanlon
6 (2004) 33 Cal. 4th 1140.0... cceeessesscsseseesessesseesssssssssssssessessesssesesssenssesssssessesesseeretasenesssersaessees 8
7 San Jose Construction, Inc. v. S.B.C.
8 (2007) 155 Cal.App.4th 1528.
9 |] Triscony v. Orr
(1875) 49 Cal. O12... cecsecessecseeseessesesssseeseessesesssenssnssssssssessessveserssesesssenssessvssessnssesseeserasenenssersaessees 7
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Statutes
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Dp Civ. Code, § 6856 (a) ..csseeecseessesesesseesesesesesesseensnesessseenenenessseenenenssesssensneassesesensneaesesecansenseesesenenenenee 5
B Civ. Code § 6856 ...cccscsceseseessesseseesseseesessssessessseseessssssssesssssssssssesssscssssssssesessssesssseesnessseeesssessessees 5
14. |] Civ. Code § 430.41. eecsccsseereecsessssnressssssneesesensssneesesensssneresesenssaneresesenssaneresetenssanerenetensnanerserenseas 2

15 || Civ. Code §§ 430.30

16 |] Civ. Code §§ 430.30 (€) ccessssssssssssssvesssssssseeeeesssessnsnsnsntnnnmmssssseeseeeeeeeeeseensnssnsnsnnnnmmmussssseseeeseeeeeeeeeeee 4
17 ]} Civ. Code §§ 430.10.....csssssssssssssssssmesssesessceeesssssssnsssunnsnnssesssseeseceeeeeeesessnnsnnnsnnnnnmmmnsstsesseeeeeeeeeeseses 7
18 |] Civ. Code §§ 430.10 () .cssesssssssessssssessssssssssssesssssssscsssussssssussssssseessstisecsssuescassecsesssesesss 7, 8,9, 12, 13
19 I Civ, Code §§ 430.10 (f).cssssssssssssssssssssssssssssessssssssssssesssssssssssissssssssusssssssssseussnesese 7, 8, 9, 12, 13
20 Other Authorities
21 CACT § 2100 csccssssssssssssssssssssssusssssssesssecesssssssssssssusunssssssessseceseeeseessssssnsssssusunuscssessseceseseesesssssssassssenees 7
22 CACT § 2101 oeccssscssssssssssssssssnsnsnsssssesseceessssssssssssnuuunmssssssseceeeeccecesssssnsssnanuumsnssesseeeeeeeeeeesssnsnsssnsneees 7
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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT1 Defendants VIETNAM TOWN CONDOMINIUM OWNERS ASSOCIATION, INC.

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(“Association”) and JOSEPH NGUYEN (collectively demurring defendants are referenced as

3 || “Defendants”) submit this Memorandum of Points and Authorities in support of their Demurrer to

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Plaintiffs SAN FRANCISCO PIZZA, INC. (“SF Pizza”), TAN NGUYEN, NGHIA NGUYEN,
5 jland KIM THUY HO’S (collectively “Plaintiffs”) verified complaint filed in the above entitled

6 |} Court on or about October 25, 2017 (“Verified Complaint”).
7 L INTRODUCTION
8 This dispute arises from Plaintiffs’ failure to secure prior Association approval to change

9 |i their retail condominium unit into a restaurant and secure gas utility service to the unit as required
10 || to operate a restaurant by relevant governmental agencies. Instead, Plaintiffs purchased their unit,
11 | began altering the unit (without association approval), constructed a gas line on the common area
12 |\roof and then tap into an as-built gas line designed to service a neighboring unit; all without
13 | Association approval. In response, the neighboring unit owners filed suit against Plaintiffs and the
14 | Association resulting in an enforceable settlement agreement that obligated the Association to
15 |] restore gas utility service to the as-built utility lines that provided gas service to the neighbor’s
16 |) restaurant unit.

17 In response, Plaintiffs filed the Verified Complaint that fails to assert a single sustainable
18 |] cause of action against Defendants. In doing so, Plaintiffs impermissibly plead contradictory and
19 || antagonistic facts in an attempt to sustain their futile claims. For instance, Plaintiffs contend the
20 || Association provided express permission to install their gas line to support certain intentional
21 |i torts, but then allege the Association abdicated all responsibility with respect to reviewing their
22 || application for purposes of their breach of contract claim.

23 Plaintiffs’ inability to assert a single viable cause of action is further demonstrated by their
24 |! failure to address, allege, describe, or incorporate any relevant servitudes in the Association’s
25 | “Declaration of Establishing a plan for Commercial Condominium Ownership dated November
26 115, 2010” (“CC&Rs”). Relevant provisions of the judicially noticeable CC&Rs completely
27 || contradict Plaintiffs’ verified allegations and defeat their claims. The verified allegations are also

28 | contradicted by Plaintiff Ho’s judicially noticeable sworn admissions provided to the Court

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‘Walnu recy Caitas 386during an evidentiary hearing before Judge Aaron Persky regarding Plaintiffs request for a

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preliminary injunction that was denied on November 8, 2017. Plaintiff Ho conclusively admitted

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neither the Association nor management ever approved a request to convert the unit into a

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restaurant or construct a common area gas line to service the unit for such purposes.

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Il. DEFENDANTS COMPLIED WITH CODE OF CIVIL PROCEDURE § 430.41

Defendants complied with the “meet and confer” requirements described by Code of Civil

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Procedure (“CCP”) § 430.41. (See Declaration of Nicholas A. Rogers Filed in Support of

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Defendants’ Demurrer (“Rogers Decl.”.)

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Til. SUMMARY OF FACTUAL ALLEGATIONS

10 The Association is a commercial condominium association located in San Jose, California
11 || (the “Development”) formed under California law pursuant to the “Declaration of Establishing a
12 | plan for Commercial Condominium Ownership dated November 15, 2010” (“CC&Rs”). (Verified
13 || Complaint, § 3.) Mr. Nguyen is a volunteer director and President of the Board of Directors for
14 || the Association. (Verified Complaint, J 5.)

15 Plaintiffs T. Nguyen, N. Nguyen, and Ho are the legal owners of real property commonly
16 |] known as Unit 9015 at 999 Story Road, San Jose, California (“Unit 9015”). (Verified Complaint,
17 ||q 1.) Plaintiff SF Pizza is Plaintiffs T. Ngyen, N. Nguyen, and Ho’s Unit 9015 tenant. (Verified
18 || Complaint, {| 2.) Unit 9015 is located in the Vietnam Town Condominium Project. (Verified
19 |] Complaint, ¥ 12.)

20 Plaintiffs’ contend they purchased Unit 9015 for $610,000 in reliance on representations
21 |)made by Defendant Michael Johnson. (Verified Complaint, {| 13.) Plaintiffs also allege that in
22 || reliance on representations from Defendant David Alvarado, “Plaintiff San Francisco Pizza, Inc.
23 |! has spent in excess of $500,000.00 in making tenant improvements to construct a pizza restaurant
24 |! in Unit 9015.” (Verified Complaint, {| 17.)

25 Plaintiffs then allege the Association delegated certain management and oversight
26 || responsibilities to Mr. Alvarado who approved Plaintiffs’ request to change Unit 9015 from retail
27 | to restaurant use; approved certain architectural changes to Unit 9015; approved construction of

28 |/ utility gas line over common area to service Unit 9015; granted Plaintiffs’ exclusive use of

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‘Walnu recy Caitas 386common area for purposes of constructing the new gas line; and approved alteration and

2 || connection of the new gas line into the existing as-built common area utility gas line servicing a
3 || neighboring unit. (Verified Complaint, § 14, 17-20; 33-45; 52-55.)
4 Plaintiffs’ claim once the restaurant was constructed and ready to open, the Association
5 | directed Defendant Aquatek to disconnect Plaintiffs’ gas line in order to settle a separate lawsuit
6 || with Plaintiffs’ neighboring unit owner thereby preventing Unit 9015 from operating as a
7 || restaurant resulting in damages “caused by the disconnection of their gas line and the cessation of
8 ||the business of San Francisco Pizza, Inc.” that are estimated to exceed “$5,050,000.00.”
9 | (Verified Complaint, § 19-20; 42; see also {J 22-23; 26; 31-32; 42; 45; 55.)

10 IV. PROCEDURAL DISPOSITION

11 The Verified Complaint was filed on October 25, 2017. The Verified Complaint asserts

12 || eight causes of action: (1) trespass; (2) conversion; (3) intentional interference with prospective
13 j}economic advantage; (4) breach of contract; (5) declaratory relief; (6) fraud; (7) negligent
14 || misrepresentation; and (8) civil extortion. The breach of contract, declaratory relief, fraud,
15 ||negligent misrepresentation, and civil extortion causes of action are not asserted against Mr.
16 || Nguyen. The fraud and civil extortion causes of action are not asserted against the Association.

17 On October 27, 2017, Plaintiffs filed papers in support of a requested temporary
18 || restraining order, or alternatively, for an order shortening time. Plaintiffs claimed they had a right
19 |) to operate Unit 9015 as a restaurant and Defendants violated those rights by disconnecting the gas
20 || line, which effectively prevented Plaintiff SF Pizza from operating a restaurant.

21 On November7, 2017, an evidentiary hearing lasting approximately three hours was
22 || before the Honorable Judge Aaron Perksy at which Plaintiff Ho and Mr. Nguyen testified and
23 |! documentary evidence was presented. On November 8, 2017, Judge Persky issued an Order

24 || denying Plaintiff's application for injunctive relief (“Order”), which stated in relevant part:

25 The Court also concludes that a preliminary injunction will not preserve the status
26 quo pending trial. Accordingly, Plaintiffs motion for a preliminary injunction is
DENIED. (Ex. A to Defendants’ Request for Judicial Notice (“RJN”), at p. 3.)

27 Lo: . . . . :
The parties, via their legal counsel, continued to discuss possible resolution of the matter.

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‘Walnu recy Caitas 386Mediation was held before Hon. Kevin McKenney (Ret.) of JAMS. Mediation lasted 12 hours,

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but certain Plaintiffs who departed mediation refused to sign a written settlement agreement.

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Following mediation and in the absence of Association approval, Plaintiffs dredged the common

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area parking lot to install a permanent gas line in further violation of the Association’s governing

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documents. It then became clear the matter could not and would not settle. Shortly thereafter,

Plaintiffs SF Pizza, T. Nguyen, and N. Nguyen obtained new legal counsel. Counsel for Plaintiff

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Ho filed a motion to be relieved as counsel. That motion is pending before the Court with a

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hearing scheduled for April 19, 2018.

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Vv. LAW GOVERNING GENERAL AND SPECIAL DEMURRERS

10 A demurrer tests the legal sufficiency of a pleading. (Beauchene v. Synanon Foundation,
11 jl Inc. (1979) 88 Cal.App.3d 342, 346.) A defendant may properly object by demurrer when a
12 || complaint is defective, in whole or in part, and the defects appear on the face of the complaint or
13 || from any matter of which the court must or may take judicial notice. (CCP, §§ 430.30; 430.70;
14 || Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Cantu v. Resolution Trust Corp. (1992) 4
15 || Cal.App.4th 857, 877.) Not only does a demurrer test the sufficiency of allegations in the
16 |}complaint, but it also tests whether those facts are pleaded with sufficient certainty and
17 || particularity. (CCP §§ 430.30 (e); 430.30 (f); Banerian v. O’Malley (1974) 42 Cal.App.3d 604.)
18 Plaintiffs have the burden of showing the facts pleaded are plead with sufficient certainty,
19 || particularity, and satisfy every element of each cause of action. (Martin v. Bridgeport Cmty.
20 || Ass'n, Inc. (2009) 173 Cal.App.4th 1024, 1031; Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)
21 |! Contentions, deductions or conclusions of fact or law alleged in the complaint are not considered
22 |!in evaluating the sufficiency of the pleading. (Kisesky v. Carpenters’ Trust for So. Cal. (1983)
23 || 144 Cal.App.3d 222, 228.)

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VI. ALL CLAIMS ASSERTED ON BEHALF OF PLAINTIFF SF PIZZA ARE
25 SUBJECT TO GENERAL AND SPECIAL DEMURRER
26 Plaintiff SF Pizza fails to allege facts sufficient to sustain any cause of action against

27 || Defendants and/or all such claims and allegations of resulting damage are impermissibly

28 || uncertain and subject to a motion to strike. The gravamen of Plaintiffs’ entire case arises from

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‘Walnu recy Caitas 386allegations that certain acts and omissions prevented Unit 9015 from operating as a restaurant

2 |lresulting in damages “caused by the disconnection of their gas line and the cessation of the
3 || business of San Francisco Pizza, Inc.” that are estimated to exceed “$5,050,000.00.” (Verified
4 || Complaint, § 42; see also {J 22-23; 26; 31-32; 42; 45; 55.)
5 Civil Code section 6856 empowers a commercial association and the owner of a separate
6 jl interest with reciprocal rights to enforce equitable servitudes in an enabling declaration (i.e.,
7 || CC&Rs) against one and other. (Civ. Code, § 6856 (a).) Indeed, servitudes reflected in the
8 || governing documents solely bind the Association and owners of separate interests in the
9 || development. (/d.)
10 Section 3.2 of the CC&Rs states in relevant part:
MN “The Owner of a Condominium shall automatically, upon becoming the Owner of
12 the Condominium, be a Member of the Association, and shall remain a Member
thereof until such time as the ownership cases for any reason, at which time the
13 membership in the Association shall automatically cease.” (Ex. B to RJN, at § 3.2
[pp. 11-12].)
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15 Section 1.32 of the CC&Rs defines “Member” as a person entitled to membership in the

16 || Association as provided in the CC&Rs. (Ex. B to RJN, at § 1.32 [p. 4].) And, an “Owner” is
17 || defined as the record holder or holders of title to a Condominium in the Development. (Ex. B to
18 | RIN, at § 1.38 [p. 5].)

19 Plaintiff SF Pizza is not an owner as defined by the CC&Rs because the corporation is a
20 | commercial tenant who leased use of Unit 9015 from their landlord: Plaintiffs T. Nguyen, N.
21 |/Nguyen, and Ho. (Verified Complaint, §] 2 [“Plaintiff San Francisco Pizza, Inc. is the tenant of
22 || Plaintiffs Tan Nguyen, Nghia Nguyen and Kim Thuy Ho of Unit 9015, having entered into a
23 || lease agreement with said Plaintiffs on or about October 4, 2016.”].) Plaintiff SF Pizza has no
24 |\ rights arising under the CC&Rs, has no possible claim to ownership of common area utility lines
25 || for purposes of Plaintiffs’ first three causes of action, and neither the Association nor Mr. Nguyen
26 || owe Plaintiff SF Pizza any common law or contractual duty arising from the CC&Rs. As such,
27 || Defendants are not liable to Plaintiff SF Pizza for any alleged damages asserted in the Verified

28 | Complaint, which are also subject to a motion to strike. Such claims for damage, if any, are

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‘Walnu recy Caitas 386between the corporation and its landlord; i.e., Plaintiffs T. Nguyen, N. Nguyen, and Ho.

2 And, the only fact allegations concerning purported damages in the entire Verified
3 |/Complaint state Defendant Johnson is liable for $610,000 damages arising from Plaintiffs’
4 | purchase of Unit 9015 and an additional $500,000 in damages against management. Plaintiffs
5 } further allege $500,000 in additional reliance damages from alleged representations that resulted
6 |} in the corporation “making tenant improvements to construct a pizza restaurant in Unit 9015.”
7 || (Verified Complaint, {| 13; 17.) Neither the Association nor Mr. Nguyen is liable for such
8 || damages. Accordingly, the Association and Mr. Nguyen respectfully request the Court sustain
9 |i their general and special demurrers with prejudice as to each and every cause of action asserted in

10 || the Verified Complaint on behalf of Plaintiff SF Pizza.

1 VII. ALL CLAIMS ASSERTED AGAINST THE ASSOCIATION AND/OR MR.
12 NGUYEN ARE SUBJECT TO GENERAL AND SPECIAL DEMURRER
13 The Verified Complaint fails to assert a single sustainable cause of action against the

14 | Association or Mr. Nguyen. Plaintiffs’ claims sounding in conversion and intentional interference
15 |] with prospective economic advantage are not sustainable as it is apparent from certified recorded
16 |] land-use instruments that Plaintiffs had no right to possess common area gas lines and the factual
17 |/ allegations asserted in support of such claims are uncertain; Plaintiffs’ breach of contract claim
18 | fails as a matter of law, is contradicted by terms and provisions of certified recorded land-use
19 |] instruments, and the factual allegations asserted in support of this claim are uncertain; Plaintiffs’
20 |! also failed to plead facts sufficient to support their negligent misrepresentation claim, the alleged
21 || facts asserted in support of such claims are uncertain, and the allegations are contradicted by
22 || Plaintiff Ho’s judicially noticeable admissions to the Court; and Plaintiffs’ declaratory relief
23 | action is wholly derivative of unsustainable causes of action and as a result fails as well. Under no
24 |! set of facts as alleged in the verified allegations can Plaintiffs allege theories of liability against
25 || Defendants. Accordingly, the Association and Mr. Nguyen respectfully request the Court sustain
26 || the instant demurrer, in its entirety, and dismiss the Verified Complaint and all claims asserted
27 | against Defendants therein with prejudice.

28 A. The First_and Second Causes of Action Are Subject to General_and_ Special

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‘Walnu recy Caitas 386Demurrer

Plaintiffs’ First and Second causes of action against Mr. Nguyen and the Association for

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trespass and conversion are deficient and subject to general and special demurrer because the

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Verified Complaint fails to state facts sufficient to state these causes of action and is uncertain.

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(CCP, §§ 430.10; (d); 430.10 (e); 430.10 (f).) Conversion is the wrongful exercise of dominion

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over the property of another.’ (CACI § 2100; Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.) And,

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a plaintiff must allege he or she is entitled to immediate possession of the property at the time of

conversion. (Plummer v. Day/Eisenberg, LLP (2010) 184 Cal.App.4th 38, 45.) Similarly, it is

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well settled that a person having neither possession nor the right to possession of personal chattels

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10 |] cannot maintain an action for trespass. (CACI § 2101; Triscony v. Orr (1875) 49 Cal. 612, 617;
11 |] See also Jamotchian v. Slender (2009) 170 Cal.App.4th 1384, 1400-1401 [trespass to chattels
12 || permits recovery for interference with possession of personal property].)

13 Plaintiffs allege that once a gas meter and line are connected to an individual
14 |/condominium unit and it is tested and in use, the gas line is no longer the property of the
15 |] Association or part of the common area. (Verified Complaint, §] 22; 26.) This allegation is
16 || unsupported as a matter of law and contradicted by the Association’s recorded CC&Rs, the
17 || felevant provisions of which Plaintiffs failed to attach to the Verified Complaint.

18 The Verified Complaint asserts no legal basis to support an inference of a right to
19 |] immediate possession, use, or control of the gas (utility) lines. Contrary to Plaintiffs’ unsupported
20 || conclusion of law, gas lines are defined as Utility Facilities in the CC&Rs and the Association has
21 || the exclusive right to maintain, repair, replace, restore, operate, and manage all common area
22, || utility facilities. (Ex. B to RIN, at §§ 6.1 [pp. 26-27]; 5.1 (A)(1) [p. 20].) And, in the absence of
23 || Association approval, a member has no right to alter Utility Facilities such as the gas lines. (Ex. B
24 || to RIN, at §§ 5.1 (A)(1) [p. 20]; 5.1 (A)(2)(a) [p. 21]; 6.3 [p. 27].)

25 Provisions of the CC&Rs expressly contradict the verified legal conclusion asserted by

26 || Plaintiffs in their futile effort to establish liability for the intentional torts of trespass and

27
"It is generally acknowledged that conversion is a tort that may be committed only with relation to personal property
28 || and not real property. (Munger v. Moore (1970) 11 Cal.App.3d 1, 7.)

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‘Walnu recy Caitas 386conversion. As such, Plaintiffs fail to allege facts sufficient to state a cause of action and/or

2 |) relevant provisions of the CC&Rs cited herein render such claims fatally uncertain. Accordingly,
3 || Defendants respectfully request the Court sustain their general and special demurrer as to the first
4 | and second causes of action with prejudice as any amendment thereto would be futile.

5 B. The Third Cause of Action Is Subject to General and Special Demurrer

6 Plaintiffs’ Third Cause of Action for intentional interference with prospective economic
7 || advantage against the Association and Mr. Nguyen is subject to general and special demurrer
g || because the Verified Complaint fails to state facts sufficient to state this cause of action and is
g || uncertain. (CCP, §§ 430.10 (e); 430.10 (f).) In order to allege a cause of action for intentional

10 |/interference with prospective economic advantage, Plaintiffs must allege facts sufficient to
11 |] establish the alleged acts were independently wrongful beyond the mere fact of interference itself.
12 || (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152 [act or omission must be wrongful]; San Jose
13 |] Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545 [act must be
14 || wrongful by some legal measure, not merely the product of improper but lawful purpose or
15 |] motive].)

16 Plaintiffs allege Plaintiff SF Pizza was in the final steps of opening a pizza restaurant to
17 || the public and would have done so but for defendants’ “wrongful interference” with the business
1g |] by “disconnecting their gas line and preventing Plaintiffs’ contractors from re-connecting it.”
19 |] (Verified Complaint, § 30.) This cause of action is wholly derivative of Plaintiffs’ trespass and
20 |) conversion claims and more specifically derivative of allegations that presuppose the Association
21 || did not have the exclusive right to maintain, repair, replace, restore, manage, operate, and control
22 || the common area utility lines at issue. The CC&Rs completely contradict Plaintiffs’ allegations.
23 || (Ex. B to RIN, at §§5.1 (A)(1) [p. 20]; 5.1 (A)(2)(a) [p. 21]; 6.1 [pp. 26-27], 6.3 [p. 27].) As such,
24 || the Verified Complaint fails to assert facts sufficient to constitute a cause of action and/or is
25 || fatally uncertain as the Association was entirely justified in disconnecting Plaintiffs’ unauthorized
26 || utility line to restore service to the as-built gas line that exclusively serviced their neighbor’s
27 || restaurant. A conclusion further supported by Judge Perskey’s Order which expressly concluded a
2g || preliminary injunction would “not preserve the status quo pending trial.” (Ex. A to RJN, at p. 3.)

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‘Walnu recy Caitas 3861 The Order and CC&Rs are subject to judicial notice; both of which support a conclusion

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that the Association and Mr. Nguyen’s alleged acts or omissions were not independently

3 || wrongful as required to plead a claim for intentional interference. Such acts and omissions were

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performed in good faith, consistent with the CC&Rs, and performed in accordance with an

5 jl executed settlement agreement that mitigated exposure to damages for unapproved alterations

6 || performed by Plaintiffs. Accordingly, Defendants respectfully request the Court sustain their
7 | general and special demurrer as to the third cause of action with prejudice as any amendment
8 || thereto would be futile.

9 C. The Fourth Cause of Action Is Subject to General and Special Demurrer
10 Plaintiffs’ Fourth cause of action for breach of contract against the Association is subject
u to general and special demurrer because the Verified Complaint fails to state facts sufficient to
LD state this cause of action and is uncertain. (CCP, §§ 430.10 (e); 430.10 (f).) An enabling
B declaration describes the rights and obligations of the association of each owner with respect to
4 property identified and encumbered by restrictions contained therein. The instrument is examined
5 and enforced by applying contracting principles, but the recorded land-use instrument is not an
16 enforceable contract between a member and their community or commercial association. The
u declaration is a unique instrument sounding in land use, enforceable covenants, and equitable
18 servitudes, but does not satisfy elements of contract formation and, therefore, Plaintiffs’ cause of
19

action for breach of contract fails as a matter of law. (see Franklin v. Marie Antoinette

Condominium Owners Association (1993) 19 Cal.App.4th 824, 828 [no appellate authority to

21 support claim that enabling declaration is an enforceable contract]; Treo @ Ketner Homeowners
22 Association v. Superior Court (2008) 166 Cal.App.4th 1055, 1066 [CC&Rs are construed as a
23 contract but are equitable servitudes; not a contract].)
a4 And, even if this cause of action did not fail as a matter of law, principles of contract
25 required Plaintiffs allege essential terms of the CC&Rs, or if done correctly, at the very least
26 allege the import of the terms. (/nternational Billing Servs., Inc. v. Emigh (2000) 84 Cal.App.4th
27 1175, 1187.) Typically, this is done by attaching a complete copy and incorporating it into the
28

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINTBERDING & WEIL LLP
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Co em YN DW BF YW NY

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complaint by reference. (/d.) The Verified Complaint only attached Exhibit D to the CC&Rs, (see
Ex. A to the Verified Complaint), but failed to attach any other provisions of the CC&Rs or
incorporate such provisions into the Verified Complaint to explain the meaning of the exhibit or
terms relevant thereto. It is apparent from a cursory review of the CC&Rs that Plaintiffs’ fourth
cause of action fails to allege facts sufficient to sustain a cause of action for breach of the CC&Rs
because the recorded CC&Rs:
e Required prior approval from the Board of Directors to construct gas lines, (Ex. B
to RIN, at §§5.1 (A)(1) [p. 20]; 5.1 (A)(2)(a) [p. 21]; 6.1 [pp. 26-27], 6.3 [p.27].);
« Separate approval from the membership to grant an exclusive use easement over
common area where a new gas line was constructed, (Ex. B to RJN, at § 5.2 (B) [p.
23);
e Precluded Plaintiffs from interfering with existing utility gas lines servicing
neighboring units (Ex. B to RJN, at § 7.11 [pp. 33-34]);?
« Required written approval to alter any structural elements inside their unit (Ex. B
to RJN, at § 7.11 [pp. 33-34]); and
¢ Prior approval to change use of a unit from retail to restaurant, (Ex. B to RJN, at §
7.2 (B) [p. 28]; see also Exhibit D.)°
Plaintiff does not plead facts sufficient to address these issues and instead asserts factual
contentions that completely contradict allegations asserted in support of their intentional tort
claims. For instance, in support of Plaintiffs first cause of action they assert verified allegation

that they connected a gas line with the “express permission and consent” of the Association.

? Section 7.11 of the CC&Rs states in relevant part: “[A]n Owner shall not (in the course of remodeling his Unit)
damage or interfere with utility lines or facilities which serve other Condominiums.” (Ex. B to RJN, at § 7.11 [p.
33].)

3 Section 7.2 (B) of the CC&Rs prohibits the preparation and/or sale of food for on-site consumption with any unit
not listed on Exhibit D to the CC&Rs. Unit 9015 is not listed on Exhibit D. All units listed on Exhibit D are corner
units in the development. Unit 9015 is not a corner unit. Section 7.2 (B) also reserves a right in the declarant or its
successor once all units are sold, i.e. the Association, to approve additional units for the sale of food and on-site
consumption. The Association never approved any change of use for Unit 9015.

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT(Verified Complaint, | 22; see also {] 26; 30.) Plaintiffs then contradict their own verified

2 |lallegations by claiming the Association failed to consider and approve or disapprove their
3 |} application. (Verified Complaint, 4 35.) While a plaintiff may plead inconsistent counts or causes
4 || of action in a verified complaint, this rule does not entitle a party to describe the same transaction
5 las including contradictory or antagonistic facts. (Alfaro v. Community Housing Imp. System &
6 || Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1381-1382; citing Faulkner v.
7 || California Toll Bridge Authority (1953) 40 Cal.2d 317, 328.) This is improper and subjects the
8 || pleading to general and special demurrer.

9 Further contradicting Plaintiffs’ verified allegations are Plaintiff Ho’s judicially noticeable

10 || admissions that she never had permission from the Association to operate a restaurant or install

11 }l gas lines:

2 Q. Did you ever receive anything in writing with permission from the HOA?
13
A. I did not. Nothing was ever written.
14
Q. When you say “nothing was ever written,” do you mean there was no written
15 permission from David Alvarado?
16 A. There is permission from David Alvarado, but not from the board.” (Ex. C to
17 RIN, at 82:28-83:7.)
18 When pressed, Plaintiff Ho then admitted Mr. Alvarado did not approve her request to
19 change the unit from retail to restaurant use or construct a gas line, but instead agreed to
20 “support” her request to the Board:
21 Q. I’m trying to just narrow down whether or not the e-mails say that I’m going
to—do they say something to the effect of I support you, or I recommend approval
22 or do they say you are approved?
23 A. I support you.
24
Q. Okay. And—
25
A. To my understanding, I would take that in, you know, I have approval—I have
26 been approved.
27 Q. Okay. So the e-mails and writings we’re discussing right now talk about
28 supporting you, but you interpreted that to mean approved?
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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINTA. Yes. (Ex. C to RJN at 86:19-87:2 see also at 83:3-7.)

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The cogent inference and conclusion from these admissions are as follows: (1) the

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Association never approved Plaintiffs’ project; (2) the Board never delegated authority to

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management for approval; (3) Plaintiffs understood management was not empowered to approve

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their request to change use of the unit from retail to restaurant or install gas lines; (4) Mr.

Alvarado never communicated approval; and (5) Plaintiffs had no right to change use or alter gas

a a

lines in the absence of approval from the Board of Directors. The combination of Plaintiffs’

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verified allegations, express provisions from the CC&Rs, and Plaintiff Ho’s sworn admissions in

°

Court result in the unmistakable conclusion that this cause of action is subject to both general and

10 special demurrer. And, any attempt to amend the fatally deficient Verified Complaint to assert

11 | additional contradictory factual allegations is futile and subject to challenge under the sham

12 pleading doctrine. (Amid v. Hawthorne Comm. Med. Group (1989) 212 Cal.App.3d 1383, 1390.)

13 Accordingly, Defendants respectfully request the Court sustain their general and special demurrer

14 | as to the fourth cause of action with prejudice as any amendment thereto would be futile.

15 D. The Seventh Cause of Action Is Subject to General and Special Demurrer

16 oe . . : oo, .
Plaintiffs’ Seventh cause of action for negligent misrepresentation is subject to general

17 : . . . .
and special demurrer because the Complaint fails to state facts sufficient to state this cause of

18 action and is uncertain. (CCP, §§ 430.10 (e); 430.10 (f).) Plaintiffs allege Plaintiff Ho spoke to

19 Joany Yuin, one of four volunteer directors, and asked who she needed to speak with to have her

20 unit approved for use as a restaurant. (Verified Complaint, at { 14.) Plaintiffs further allege Ms.

21 Yuin directed Plaintiff Ho to contact Mr. Alvarado “to obtain answers to her questions.” (Verified

22 Complaint, at { 14.) Plaintiffs then allege Plaintiff Ho contacted Mr. Alvarado and requested, in

23 ae coe woge . .
writing, to have the Board grant permission in a letter from the Association to install a gas line to

24 operate a pizza restaurant. (Verified Complaint, at § 14; see also Ex. C to RJN, at 82:10-83:7.)

25 Plaintiffs then contend Mr. Alvarado orally informed Plaintiffs that their unit was approved for

26 . we :
restaurant use and the gas lines were owned by the Association and could be connected to units

27 opening restaurants. (Verified Complaint, at ¥ 14.)

28

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT1 The Verified Complaint fails to allege a single fact attributing an affirmative statement to

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the Association regarding approval or delegation of Association approval to use Unit 9015 as a

3 || restaurant, to alter the unit, or to alter common area utility lines. In fact, the only express

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allegation attributed to a Board member indicates Ms. Yuin directed Plaintiff Ho to obtain

5 |] answers to her questions from Mr. Alvarado and Plaintiff Ho then requested Mr. Alvarado obtain

6 || the Association’s approval, in writing, for the requested changes and alterations from the Board.
7 || Plaintiffs then allege Mr. Alvarado reviewed a draft letter on or about August 14, 2017 that stated
8 || “Plaintiffs had followed all of the appropriate steps to obtain approval both by the VTCOA as

9 | well as by PG& E for the restaurant.” (Verified Complaint, 14.) This allegation does not allege
10 || a written or oral statement regarding approval. In fact, it creates a cogent inference that as late as

11 }| August 14, 2017, Plaintiffs still had not received approval for their project.

2 In the absence of specific factual allegations concerning the alleged statement, who
B published it, where it was published, and when it was published, there is no basis to support the
14 elements of duty, intent to induce reliance, reliance, causation or harm. (Committee on Children’s
5 Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 215-216 [negligent
16 misrepresentation requires specific factual allegations].) Actual factual allegations are of
M7 particular importance in this dispute in light of Plaintiff Ho’s sworn admissions that contradict her
18 verified allegations. (Ex. C to RJN at 86:19-87:2.) Accordingly, the Association respectfully
19

requests the Court sustain its general and special demurrers to the Seventh cause of action with

prejudice as any amendment thereto would be futile.

. E. The Fifth Cause of Action Is Subject to General and Special Demurrer

3 Plaintiffs’ Fifth cause of action for declaratory relief against the Association is subject to
24 general and special demurrer because the Complaint fails to state facts sufficient to state a cause
25 of action and is uncertain. (CCP, §§ 430.10 (e); 430.10 (f).) A declaratory relief claim is subject
%6 to general demurrer where it relates to a substantive claim that is invalid as a matter of law. For
17 example, when a plaintiff fails to state sufficient facts to support a statutory claim, a general
28 demurrer may be sustained both to the statutory claim and to a claim for declaratory relief that is

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT“wholly derivative” of the proposed statutory claim. (Ball v. FleetBoston Financial Corp. (2008)

2 || 164 Cal.App.4th 794, 800.)
3 Plaintiffs allege the present controversy arises from whether its conduct or that of Mr.
41 Alvarado approved the proposed change of use and installation of a gas line. (Verified Complaint,
5 4] 44.) However, Plaintiffs failed to allege facts sufficient to support any of their claims sounding
6 Vin tort or contract as Plaintiffs’ effectively plead:
7 « The Association provided express permission to install a gas line (i.e., for purposes
: of intentional torts);
10 e The Association took no action and abdicated all responsibility with respect to
ll their application (i.e., for purposes of their breach of contract claim);
12 * The Association delegated all decision making authority to management who
13 supported their applications (i.e., for purposes of their negligent misrepresentation
14 claim.)
Is And, then Plaintiff Ho admitted under oath in open Court that the Board never approved
16 use of Unit 9015 as a restaurant or construction of a gas line to serve the unit and that
7 management supported her request to the Board.’ As a result, Plaintiffs’ failed to plead a single
18 sustainable cause of action against the Association sounding in tort or contract and their wholly
19 derivative declaratory relief claim fails as well. Accordingly, Defendants respectfully request the
20 Court sustain its general and special demurrers to the Fifth cause of action with prejudice as any
21 amendment thereto would be futile.
22
3 VIII. ALL CAUSES OF ACTION ASSERTED AGAINST MR. NGUYEN AND THE
ASSOCIATION SHOULD BE DISMISSED WITH PREJUDICE
24 For all of the reasons discussed herein, the Complaint is subject to general and special
25
26

4 Consistent with Plaintiff Ho’s testimony concerning management “support,” it appears management supported the
27 || request and did what it could to facilitate Association approval for the requested project as reflected by allegations in

paragraph 14 of the Verified Complaint concerning a draft letter. Support and compliance with steps to obtain
28 || approval is, however, different than prior actual approval from the Board of Directors.

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINTdemurrer. Plaintiffs have not and cannot allege a sustainable conversion, trespass to chattel, or
intentional interference with prospective economic advantage claim because it is apparent from
the judicially noticeable CC&Rs that they have no right; let alone an immediate or exclusive right
to maintain, repair, replace, restore, operate, or manage common area gas lines. Similarly,
Plaintiffs breach of contract and negligent misrepresentation claims are unsustainable and fatally
uncertain in light of provisions identified herein from the CC&Rs that contradict allegations

asserted in the Verified Complaint and/or Plaintiff Ho’s admissions under oath in open Court.

Plaintiffs verified judicial admissions, admissions under oath, and CC&R provisions
render any attempt to amend the Verified Complaint futile as the factual allegations necessary to
sustain claims arising from these events in a future pleading are subject to the sham pleading
doctrine. It is apparent from Plaintiffs’ conflicting verified allegations, the judicially noticeable
CC&Rs, and Plaintiff Ho’s sworn admissions that Plaintiffs were on notice of the need for prior
Association approval to use Unit 9015 as a restaurant, to secure gas service, and were expressly
precluded from altering existing utilities in a manner that interfered with their neighbors.
Plaintiffs’ knowingly began and completed construction in the absence of such approval and went
so far as to construct a gas line over common area and tap into existing gas lines in violation of
the governing documents. And, their entire theory of damages arises from claims from a non-
member tenant who, if anything, has claims against their fellow Plaintiffs; not the Association or
Mr. Nguyen. The Verified Pleading fails to state a claim and Plaintiffs’ existing verified

allegations and sworn admissions render any further attempt to amend the pleadings futile.

Date: February 23, 2018 BERDING & WEIL

i¢holas A. Rog,
aron D. Zirhmerman
Attorneys for Defendants

Vietnam Town Condominium Owners
Association, Inc. and Joseph Nguyen

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MEMORANDUM IN SUPPORT OF DEMURRER TO COMPLAINT