Ruling
Pacific Gas and Electric Company vs DKM, LLC, et al
Jul 26, 2024 |
24CV47310
24CV47310
PLAINTIFF’S MOTION FOR PRE-JUDGMENT
POSSESSION OF PROPERY
This is an action in eminent domain where Pacific Gas and Electric (“PG&E”) seeks to
take certain property (“Property”) located at 4150 Carson Street, in an unincorporated
area of Calaveras County, near Vallecito, California, also known as Calaveras County
Assessor's Parcel No. 066-025-04. DKM, LLC (“DKM”) is the fee simple interest holder
of the Property. Calaveras County Water District (“District”) and Northern California
Power Agency (“NCPA”) both hold easements on the Property.
PG&E seeks this property for the purpose of replacing and upgrading a tower and
transmission conductor as part of a larger scope of work that involves replacing
approximately 410 existing electrical transmission structures with new steel structures
(referred to as the Project). The Complaint states that the “new tower and conductor
replacement necessitates a wider span of easement to accommodate sway in the
electrical lines to ensure that PG&E's operations fall within its existing easements.”
(Complaint ¶ 6.)
PG&E seeks the following interests (the Easement Interests) in portions of the Property:
a. Plaintiff seeks to modify its existing electric transmission easement rights
in the Owner's real property described in EXHIBIT C, which modified
easement rights are described as STRIP on EXHIBIT and depicted on
EXHIBIT "A-l" and EXHIBIT "B", attached hereto and incorporated herein
as though set forth in full by this reference.
b. PG&E seeks to modify PG&E'S existing electric distribution pole line
easement rights in the Owner's real property described in EXHIBIT C,
which modified distribution easement rights are described in EXHIBIT "A"
and shown on EXHIBIT "A-2, attached hereto and incorporated herein as
though set forth in full by this reference, as STRIP ONE, STRIP TWO,
STRIP THREE, STRIP FOUR, STRIP FIVE, AND STRIP SIX.
c. The right to excavate for, construct, reconstruct, replace, remove,
maintain, inspect, use facilities and associated equipment for public utility
purposes, including but not limited to electric and communication facilities
over and across the lands described in EXHIBIT "C" and shown on
EXHIBIT "C-l" as PG&E shall from time to time deem to be reasonably
required for the transmission and distribution of electric energy, and for
communication purposes within the STRIPS of lands described in
EXHIBIT "A" and shown on EXHIBIT "A-l" EXHIBIT "A-Z".
d. The right of ingress to and egress from the STRIPS of lands as described
in EXHIBIT "A" and shown on EXHIBIT "A-l" EXHIBIT "A-2" over and
across the lands described in EXHIBIT "C" and shown on EXHIBIT "C-l"
by means of roads and lanes thereon, if such there be, otherwise by such
route or routes as shall occasion the least practicable damage and
inconvenience, provided, that such right of ingress and egress shall not
extend to any portion of the lands which is isolated from said STRIPS of
lands by any public road or highway, now crossing or hereafter crossing
said lands.
e. The right from time to time to enlarge, improve, reconstruct, relocate and
replace any facilities constructed with any other number or type of facilities
either in the original location or at any alternate location or locations within
the STRIPS of lands as described in EXHIBIT "A" and shown on EXHIBIT
"A-l" EXHIBIT "A-2".
f. The right, from time to time, to trim or to cut down, without PG&E paying
compensation, any and all trees and brush now or hereafter within the
STRIPS of lands as described in EXHIBIT "A" and shown on EXHIBIT "A-
l" EXHIBIT "A-2", and shall have the further right, from time to time, to trim
and cut down trees and brush along each side of said STRIPS of lands
which now or hereafter in the opinion of PG&E may interfere with or be
hazard to PG&E facilities, or as PG&E deems necessary to comply with
applicable state or federal regulations.
g. The right to use such portion of said said lands contiguous to the STRIPS
of lands as described in EXHIBIT "A" and shown on EXHIBIT "A-l"
EXHIBIT "A-2" as may be reasonably necessary in connection with the
excavation, construction, reconstruction, replacement, removal,
maintenance and inspection of PG&E facilities.
h. The right to install, maintain and use gates in all fences which now cross
or shall hereafter cross the STRIPS of lands as described in EXHIBIT "A"
and shown on EXHIBIT "A-l" EXHIBIT "A-2". I. The right to mark the
location of the STRIPS of lands as described in EXHIBIT "A" and shown
on EXHIBIT "A-l" EXHIBIT "A-2" by suitable markers set in the ground.
Plaintiff also seeks the enjoin the owner from:
a. Placing or constructing any building or other structures, storing flammable
substances, drill or operate any well, constructing any reservoir or other
obstruction, diminishing or substantially adding to the ground level within
the STRIPS of lands as described in EXHIBIT "A" and shown on EXHIBIT
"A-l" EXHIBIT "A-2", or construct any fences that will interfere with the
maintenance and operation of PG&E facilities.
b. Depositing or allowing to be deposited, earth, rubbish, debris or any other
substance or material whether combustible or noncombustible within the
STRIPS of lands as described in EXHIBIT "A" and shown on EXHIBIT "A-
l" EXHIBIT "A-2", which not or hereafter in the opinion of PG&E may
interfere with or be hazard to the PG&E facilities installed.
Now before the Court is PG&E’s motion for prejudgment possession of the Property.
NCPA has filed a timely opposition to the motion. On July 9, 2024, DKM filed a notice of
joinder in NCPA’s opposition. The notice of joinder was filed more than thirty days after
PG&E’s notice of its intent to seek prejudgment possession. Pursuant to Code of Civil
Procedure (“CCP”) § 1255.410(d), all defendants needed to oppose the motion within
30 days of April 4, 2024. As DKM’s notice of joinder was untimely, NCPA’s opposition is
the only one that will be considered by the Court.
I. Legal Standard and Analysis
Under Code of Civil Procedure section 1255.410, a moving party may seek immediate
possession of the property to be taken or condemned. Where the motion for immediate
possession is opposed, as in this case, the Court may order prejudgment possession
after a hearing on the motion if the Court finds each of the following: 1) The plaintiff is
entitled to take the property by eminent domain; 2) The plaintiff has deposited an
amount that satisfies the legal requirements; 3) There is an overriding need for the
plaintiff to possess the property prior to the issuance of final judgment in the case, and
the plaintiff will suffer a substantial hardship if the application for possession is denied or
limited and 4) The hardship that the plaintiff will suffer if possession is denied or limited
outweighs any hardship on the defendant or occupant that would be caused by the
granting of the order of possession. (Code Civ. Proc. §1255.410(d)(2).)
Plaintiff claims all four necessary elements for prejudgment possession are satisfied.
A. Entitled to Take Property By Eminent Domain
Generally, to establish entitlement to take property for a project, a plaintiff must
establish, all of the following: (a) the public interest and necessity require the project, (b)
the project is planned or located in the manner that will be most compatible with the
greatest public good and the least private injury; and (c) the property sought to be
acquired is necessary for the project.” (Code of Civil Procedure section 1240.030.)
In support of its claim that it is entitled to take the property by eminent domain, PG&E
provides the declaration of Sanjeev S. Bhatawadekar, who is a Senior Consulting
Project Manager for PG&E. (Declaration of Sanjeev S. Bhatawadekar (“SB Decl.” ¶ 4.)
Mr. Bhatawadekar oversees the implementation of complex transmission system
projects. (Ibid.) According to Mr. Bhatawadekar, the Project is part of PG&E’s goal of
improving and enhancing the safety of its operations and the reliability of utility service
because they are upgrading and replacing hundreds of transmission structures. (Id. ¶
8.) The Project is necessary in order for PG&E to continue providing safe and reliable
electric service the public. (Id. ¶10.) Mr. Bhatawadekar further states that there is little
risk of private injury because there are no residences within the easement area and any
risk to grazing livestock will be mitigated. (Id. ¶ 13.) Finally, Mr. Bhatawadekar states
that the location has been chosen because PG&E already has existing structures in that
area. (Id. ¶ 9.) The Project only needs “a wider span of easement to accommodate
overhead sway in the electrical lines to ensure PG&E's operations fall within its existing
easements.”(Ibid.).
In opposition, Defendants argue that PG&E has failed to meet this first required element
because Plaintiff has not made a showing that it is entitled to take the property by
eminent domain as a compatible use with the Defendants’ existing public use. (Code
Civ. Proc. §1240.520). Pursuant to section 1240.510:
Any person authorized to acquire property for a particular use by eminent
domain may exercise the power of eminent domain to acquire for that use
property appropriated to public use if the proposed use will not
unreasonably interfere with or impair the continuance of the public use as
it then exists or may reasonably be expected to exist in the future.
Pursuant to section 1240.520, if it is established that the property is appropriated to
public use, the Plaintiff has the burden of proof that its proposed use satisfies the
requirements of Section 1240.510. Defendants argue PG&E acknowledges that the
Property is already appropriated to public use and that Plaintiff has failed to bear its
burden of showing that it the proposed use will not “unreasonably interfere with or
impair the continuance” of the Defendants’ current public use. Defendants argue that
Mr. Bhatawadekar’s conclusory statement that “PG&E has no evidence or reason to
believe that early possession will unreasonably displace or affect anyone in lawful
possession of the Property” (SB Decl. ¶ 13) is insufficient.
In support of its opposition, NCPA submits the declaration of Jake Eymann who is
employed by NCPA as the Hydroelectric Manager. (Declaration of Jake Eymann
(“Eymann Decl.”) ¶ 1.) NCPA acquired the generation tie line at issue in this case in
1988. (Id. ¶ 3.) Mr. Eymann declares:
NCPA operates the Collierville & Spicer Meadow Transmission Line
Project (Federal Energy Regulatory Commission [FERC] No. 11197,
"Collierville TL Project"). NCPA's rights are "project property" under
NCPA's FERC license for the Collierville TL Project, which comprises the
primary transmission lines that connect CCWD's North Fork Stanislaus
River Hydroelectric Project (FERC No. 2409) to the California Independent
System Operator (CAISO) controlled grid. NCPA must protect its rights,
use, and ability to operate and maintain the Collierville TL Project to
ensure compliance with its FERC license and to ensure its line remains
safe and operational.
Mr. Eymann further submits photos that show that PG&E’s and NCPA’s lines are near
each other on the Property. (Eymann Decl. ¶ 4, Ex. A.). Finally, Mr. Eymann avers that
based on the information provided by PG&E, “I am unable to conclude that PG&E's
Project and proposed easement will not interfere with or impact NCPA's operation and
maintenance of the Collierville TL Project.” (Id. ¶ 5.) NCPA argues that until PG&E can
establish compatibility with NCPA’s uses, the motion for prejudgment possession must
be denied. However, Mr. Eymann does not state any specific concerns about how
PG&E’s proposed Project would impact NCPA’s existing public use nor how it could
impact its FERC compliance.
In Reply, PG&E details the extensive communication between itself and NCPA
regarding the Project. In April of 2021, PG&E and NCPA entered into confidential,
nondisclosure agreements (NDA) to provide free and full disclosure of information by
PG&E to NCPA and NCPA's technical representatives about the Project. (Declaration of
Randy Kihara (“Kihara Decl.”) ¶ 5.) Over the ensuing months and years, PG&E provided
NCPA with specific information and drawings of the Project for NCPA’s review. (Id. ¶ 6.)
In April of 2024, PG&E and NCPA entered into another NDA to allow NCPA to “review
all technical engineering and electrical transmission aspects of the project.” (Id. ¶ ¶ 7,
9.) When NCPA raised concerns about whether there were sufficient clearances
between the varying structures, PG&E provided information which it believed had been
accepted as sufficient to show there would be no interference with NCPA’s lines. (Id. ¶ ¶
10-11.) Specifically, PG&E’s lines after the Project “will not extend beyond the boundary
of PG&E’s existing easement at rest conditions (no wind). Even with maximum
calculated sway conditions, PG&E’s lines will not come into physical contact with
NCPA’s lines.” (Id. ¶ 14.)
NCPA also argues NCPA is federally mandated to protect the property rights of a
FERC-licensed project. (Opposition p. 4.) NCPA states that NCPA is thus required to
seek prior FERC approval of any transfer of “project property” via condemnation. NCPA
further argues that FERC would not likely transfer its property rights to PG&E and even
if the Court ordered such transfer, FERC would condemn the rights back from PG&E
pursuant to its federal eminent domain powers. Accordingly, NCPA argues that this
would be an ultimate waste of judicial resources.
In Reply, PG&E points out that over the months and years of discussing this Project,
NCPA has never raised any concerns about its FERC-license. Further, it is unclear how
the Project would impact FERC’s property interests. PG&E already has a concurrent
easement on the Property. (Declaration of Trevor R. LaTurner (“LaTurner Decl.”) ¶ 5,
Ex. 1.) This easement preceded NCPA’s easement. (Id. ¶ 7, Ex. 3.) PG&E’s easement
specifically states that it has authority to enter the property to maintain, operate, repair
or reconstruct the transmission lines. (Id., Ex. 1.)
PG&E has sufficiently met it’s burden to show that its proposed use will not
unreasonably interfere with or impair the continuance NCPA’s use as it then exists or
may reasonably be expected to exist in the future. Accordingly, PG&E has
demonstrated that it is entitled to take the property by eminent domain.
B. Plaintiff’s Deposit
Under Section 1255.010(a), PG&E is required to deposit “the probable amount of
compensation, based on an appraisal, that will be awarded in the proceeding.” Here,
PG&E states that it has deposited with the State Condemnation Deposit Fund “probable
just compensation for the easement rights being acquired.” (SB Decl. ¶ 10.) According
to the declaration of appraiser Michelle Patton, the just compensation for the Property is
$12,300.00. (Declaration of Michelle Patton ¶ 6, Ex. A.)
NCPA does not object to the amount of the deposit.
C. Whether Plaintiff has demonstrated overriding need and substantial
hardship.
PG&E argues it has an overriding need to take the Property immediately and begin its
Project because it is a “priority project” for PG&E. (BS Decl. ¶ 11.) PG&E argues that
construction at this location and other Project locations “must be planned, coordinated
and implemented (as to materials, workers, equipment, securing necessary permit(s),
etc.) in an orderly fashion.” (Id. ¶ 11.) PG&E further argues that any delay in obtaining
possession of the Property “may result in major delays with completion of this part of the
Project and other segments of the Project.” (Id. ¶12.)
NCPA does not address PG&E’s arguments about overriding need and substantial
hardship. The Court finds the PG&E has demonstrated an overriding need to begin the
Project.
D. Balancing of the hardships between Plaintiff and Defendants.
PG&E argues that NCPA will not suffer any hardships if the motion is granted because
prejudgment possession will not “displace or unreasonably affect any person in actual
and lawful possession of the subject property interests being acquired.” (MPA p. 6.) In
contrast, PG&E states that without prejudgment possession it cannot plan and finalize
contracts, materials, and personnel and the delayed project could cause “great expense
and potential harm to PG&E and the public at large.” (Ibid.)
The Court finds that PG&E has demonstrated that its hardships will outweigh any
hardships to others.
The Motion for Prejudgment Possession is GRANTED. The parties are ordered to
come to the hearing prepared to discuss whether they can reach an agreement on
the terms and conditions pursuant to CCP section 1240.530 or whether the Court
will need to fix the terms and conditions.
Ruling
KEVIN SOUTHERLAND VS MAUREEN DONOHUE
Jul 25, 2024 |
24SMCV00796
Case Number:
24SMCV00796
Hearing Date:
July 25, 2024
Dept:
207 TENTATIVE RULING
DEPARTMENT
207 HEARING DATE
July 25, 2024 CASE NUMBER
24SMCV00796 MOTIONS
Demurrer and Motion to Strike Portions of Cross-Complaint MOVING PARTY
Cross-Defendant Kevin Southerland OPPOSING PARTY
Cross-Complainant Maureen Donohue
MOTIONS
On February 21, 2024, Plaintiff and Cross-Defendant Kevin Southerland (Plaintiff) brought suit against Defendant and Cross-Complainant Maureen Donohue (Defendant) for partition and an accounting.
On April 25, Defendant filed a Cross-Complaint against Plaintiff, alleging six causes of action for (1) promissory estoppel; (2) unjust enrichment; (3) negligent misrepresentation; (4) intentional misrepresentation; (5) breach of contract; and (6) intentional infliction of emotional distress.
Plaintiff now demurs to causes of action 1-4 and 6 of Cross-Complaint on the grounds that it fails to state facts sufficient to constitute causes of action pursuant to Code of Civil Procedure section 430.10, subdivision (e) and Plaintiff demurs to the fifth cause of action for breach of contract on the grounds that it cannot be ascertained from the pleading whether the contract is written, oral, or implied by conduct, pursuant to Code of Civil Procedure section 430.10, subdivision (g).
Plaintiff also moves to strike requests for punitive damages from the Cross-Complaint. Defendant opposes both motions.
ANALYSIS
1.
DEMURRER
It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint. (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts [a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context. (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [in considering the merits of a demurrer, however, the facts alleged in the pleading are deemed to be true, however improbable they may be].)
Further, in ruling on a demurrer, a court must liberally construe the allegations of the complaint with a view to substantial justice between the parties. (See Code Civ. Proc., § 452.) This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)
In summary, [d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged. (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)
A.
FAILURE TO STATE A CAUSE OF ACTION
i.
First Cause of Action Promissory Estoppel
The elements of a promissory estoppel claim are (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance. (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945.)
The Cross-Complaint alleges:
19. When the parties decided to purchase the Subject Property, SOUTHERLAND made the following promises to DONOHUE: he would agree to enact the Ellis Act (which was a deciding factor in DONOHUEs willingness to purchase the property); promised to pay half of the maintenance and repairs related to the property; also promised that he would agree to obtaining a HELOC so that the parties could pay for the renovations of the property. Since the HELOC was taking longer to obtain due to SOUTHERLANDs high DTI and low income, SOUTHERLAND promised that the HELOC funds could be used to repay the money DONOHUE was forced to pay out of her savings, retirement, and loans to cover the renovations.
20. SOUTHERLAND intended that DONOHUE rely on these promises.
21. DONOHUE relied on this promise and moved from Santa Clarita to Los Angeles.
22. SOUTHERLAND did not intend to perform the promise when he made it, since he refused to proceed with the Ellis Act unless DONOHUE agreed to give him the two-bedroom. He was also unable to pay half of the maintenance expenses and repairs, which DONOHUE had to pay for 100%.
23. SOUTHERLAND failed to act on all of his promises.
24. DONOHUE reasonably relied on the promises, and was harmed as a result. The harm consists of financial harm and the loss of the agreed-upon housing plans.
25. DONOHUEs reliance on SOUTHERLANDs promise was a substantial factor in causing her harm.
(Cross-Complaint at ¶¶ 19-25.)
Plaintiff demurs to the first cause of action for promissory estoppel on the grounds that an enforceable contract exists, and therefore the breach of contract analysis governs. However, plaintiffs are permitted to plead in the alternative and make inconsistent allegations. (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1388.) Therefore, the Court overrules Plaintiffs demurrer to the first cause of action.
ii.
Second Cause of Action Unjust Enrichment
Plaintiff demurs to the second cause of action for unjust enrichment on the grounds that (1) there is no such cause of action for unjust enrichment; and (2) like promissory estoppel, no cause of action for unjust enrichment lies where there is a binding and enforceable agreement.
Several courts have recognized unjust enrichment as a valid cause of action. (See, e.g., Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726 [explaining the elements of an unjust enrichment claim are receipt of a benefit and unjust retention of the benefit at the expense of another]; Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769 [same].)
Further, courts that do not recognize unjust enrichment as a cause of action have nonetheless held that it is synonymous with restitution, and construed it as such. (See, e.g., Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.)
In analyzing pleadings, Courts elevate substance over form. (See Plumlee v. Poag (1984) 150 Cal.App.3d 541, 546 [Courts under the reformed system of procedure look to the substance of things rather than to form].) Thus, regardless of whether unjust enrichment is a valid cause of action in its own right, or if it must be construed as a cause of action for restitution, the Court declines to sustain Plaintiffs demurrer, which would improperly elevate form over substance.
Regarding Plaintiffs second argument, as discussed above in connection with the first cause of action for promissory estoppel, because Defendant is permitted to plead inconsistent allegations in the alternative, the Court similarly declines to sustain the demurrer on the grounds that a contract has also been alleged.
Therefore, the Court overrules Plaintiffs demurrer to the second cause of action.
iii.
Third and Fourth Causes of Action Negligent and Intentional Misrepresentation
The elements for fraudulent misrepresentation are (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff. (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 605606.)
The essential elements of a count for negligent misrepresentation are the same [as intentional misrepresentation] except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231 (hereafter Chapman).) Like intentional misrepresentation, causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity. (Ibid.)
In California, fraud must be pled specifically; general and conclusory allegations do not suffice. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. (Ibid.) Causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity. (Chapman, supra, 220 Cal.App.4th at pp. 230-231.)
One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) As such, less specificity is required when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy[.] (Ibid.) Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party. (Ibid.)
Defendant alleges:
7. DONOHUE and SOUTHERLAND (PARTIES) were formally in a romantic relationship.
8. On or about June 2nd, 2022, the parties purchased the SUBJECT PROPERTY, which consists of a multifamily unit with two one-bedroom and one two-bedroom units. One of the one-bedroom units was, and is currently still, occupied by tenants.
9. The PARTIES initially purchased the SUBJECT PROPERTY with the intent to enact the Ellis Act, which would allow the parties to Ellis (sic) the tenants in the larger one-bedroom unit. DONOHUE has three daughters. The original plan was that the two-bedroom and the unoccupied unit would be renovated, and the two-bedroom occupied by DONOHUE and SOUTHERLAND and one of DONOHUEs daughters, and the other one-bedroom occupied by another of DONOHUEs daughters. The plan was for the tenants to move out and one of DONOHUEs daughters would occupy their unit when SOUTHERLANDs daughter returned from college, 15 months after the property purchsase (sic). Following the end of the personal relationship, the new plan was to Ellis (sic) the tenants and renovate the unit they occupy. The renovation would take two months. After renovation, DONOHUE would occupy the tenants larger one-bedroom unit with one of her daughters. Her second daughter would occupy the smaller one-bedroom unit. The parties planned to give the tenants in the larger one-bedroom unit the required 120-day notice. After the tenants vacated, the one-bedroom unit would be renovated, which was expected to take approximately two months. The second, larger one-bedroom unit was to be occupied by SOUTHERLAND. Based on this agreement, DONOHUE moved her family from her home in Ventura, California.
10. The PARTIES anticipated that it would cost approximately $200,000 to renovate all three units, and planned to complete the work within a short period of time. The agreement was that the parties would obtain a HELOC loan to pay for the renovations. Since SOUTHERLAND paid the down payment, DONOHUE was to pay the monthly payments on the HELOC. Outside of the renovation expenses that were anticipated at the time of purchase, the parties were to equally share the expenses for maintenance and repairs for new damages incurred on the Property. The mortgage amount each party would pay was apportioned based on the unit each party was occupying at that time. The PARTIES were to equally share the expenses related to the rented unit, including utilities, until the tenants vacated since the PARTIES were prohibited from charging the tenants any utilities under Santa Monica rent control. DONOHUE paid for the renovation of the two-bedroom unit and the unoccupied one-bedroom. Once the tenants moved out, DONOHUE would pay for the renovations for that unit prior to her occupancy.
11. Approximately four months after the Property was purchased, the parties terminated their romantic relationship. SOUTHERLAND insisted that he would only continue to proceed with the Ellis Act process if DONOHUE agreed to allow SOUTHERLAND to occupy the two-bedroom so that his daughter could live with him when she returned from college. DONOHUE reluctantly agreed. One of her daughters moved out and DONOHUE was left with the smaller 450 sq foot one bedroom unit. The understanding was that the parties would evict the tenants, renovate the unit, and DONOHUE would move into that unit. Her daughter was to occupy the smaller one-bedroom once she returned from her summer internship in mid-August 2023.
12. The plan to file an Ellis Action was agreed by the parties prior to the purchase of the property. The parties were subsequently advised by their attorney to seek an exemption from rent control and raise the tenants rent to full market value, which they did. The process took a year. The City of Santa Monica rent control board modified the way they had been interpreting the law for decades, and in response, threatened to sue the parties for harassing their tenants. The parties then agreed to pursue an Ellis action again.
13. Due to the delays regarding the eviction of the tenants and the Ellis Act, the tenants did not vacate as planned. The unit was not available prior to the date that DONOHUEs daughter returned home. As such, DONOHUE had nowhere to live since the tenants had not vacated the unit since August 15, 2023. This has caused a significant strain on DONOHUEs life as her plans for housing were swayed by SOUTHERLANDs actions.
14. Outside of the renovations, there were several unexpected legal costs and repairs on the Property. Obtaining the HELOC became challenging, since the parties were required to increase income to qualify jointly for the loan due to SOUTHERLAND's high debt-to-income ratio and low income.
15. SOUTHERLAND, who makes approximately $60,000 a year working as a parttime architect and also receives funds from his familys trust, was unable to maintain his half of maintenance and repairs for new damages incurred on the Property, which caused DONOHUE to cover 100% of those costs, causing DONOHUE to drain her investments, savings, borrow money from third parties, and take early disbursements from her 401K, which triggered early penalties, and retire ten years early, incurring a 40% cut in her pension. Once the HELOC was obtained, some of the funds from that loan were to be used to repay the debt DONOHUE had to incur to complete the renovations.
16. In August 2022, a loan was provided by SYLVIA SOUTHERLAND, Trustee of the SOUTHERLAND FAMILY TRUST AGREEMENT to KEVIN LEE SOUTHERLAND in the amount of $62,000. The payments on this loan were paid by DONOHUE.
17. After almost a year and a half of back-and-forth with the City of Santa Monica, the Parties had an appointment with the City to enact the Ellis Act. However, several days before the appointment, SOUTHERLAND demanded that DONOHUE sign a partnership agreement and agree to unfavorable terms that were never previously agreed upon or discussed. Since DONOHUE did not agree to this agreement, SOUTHERLAND decided that he no longer wanted to continue with the Ellis Act or the planned HELOC. This caused a significant inconvenience to DONOHUE since the plan was for her to reside in the tenant-occupied unit. This decision caused DONOHUE to be without a firm plan for housing indefinitely and separated her family.
(Cross-Complaint ¶¶ 7-17.) Regarding Negligent Misrepresentation, specifically, Defendant alleges:
32. SOUTHERLAND represented that the following were true: SOUTHERLAND agreed to enact the Ellis Act (which significantly increases property value in Santa Monica rent-controlled properties),was a deciding factor in DONOHUEs willingness to purchase the property); agreed to pay half of the maintenance expenses and repairs related to the property; agreed that DONOHUE and her daughter could occupy the larger one-bedroom while her second daughter occupied the smaller one-bedroom; agreed that the parties would obtain a HELOC for the renovations. Once this was proving difficult, it was agreed that the HELOC could be used to recoup the penalties for DONOHUE having to drain her savings, take loans, and take funds out early from her retirement account.
33. SOUTHERLAND represented that these facts were true. There was no condition that these items would only be agreed-upon if the parties remained in a relationship.
34. Although SOUTHERLAND may have honestly believed that the representations were true, SOUTHERLAND had no reasonable grounds for believing the representation was true when he made them. Hiss (sic) representations were not true, since he refused to execute the above-mentioned agreements once the parties terminated their relationship.
35. SOUTHERLAND intended that DONOHUE rely on these representations.
36. DONOHUE relied on these representations to her detriment.
37. DONOHUE was harmed because of these representations.
38. DONOHUEs reliance on SOUTHERLANDs representations were a substantial factor in her harm.
39. DONOHUE is entitled to actual damages in an amount to be determined at trial, and punitive damages.
(Cross-Complaint at ¶¶ 32-39.) For Intentional Misrepresentation, Defendant alleges:
40. Cross-Complainant hereby realleges and incorporates herein by reference, paragraph 1 through paragraph 39, inclusive, of this Cross-Complaint as if set forth in full.
41. DONOHUE claims that SOUTHERLAND made a false representation that harmed her.
42. SOUTHERLAND represented to DONOHUE that the following facts were true: SOUTHERLAND agreed to enact the Ellis Act (which was a deciding factor in DONOHUEs willingness to purchase the property); agreed to pay half of the maintenance expenses and repairs related to the property; agreed that DONOHUE and her daughter could occupy the larger one-bedroom while her second daughter occupied the smaller one-bedroom; agreed that he would agree to obtaining a HELOC so that the parties could pay for the renovations, and later agreed that DONOHUE could use the HELOC to pay off the debt she incurred in prompt renovations.
43. SOUTHERLANDs representations were false.
44. SOUTHERLAND knew that the representation were false when he made it, and that he made the representation recklessly and without regard for its truth.
45. SOUTHERLAND intended that DONOHUE rely on the representations.
46. DONOHUE reasonably relied on SOUTHERLANDs representations.
47. DONOHUE was harmed.
48. DONOHUEs reliance on SOUTHERLANDs representations was a substantial factor in causing her harm.
49. DONOHUE is entitled to actual damages in an amount to be determined at trial, and punitive damages.
(Cross-Complaint at ¶¶ 40-49.)
Plaintiff argues that Defendant fails to state a cause of action for negligent misrepresentation because Defendant does not establish that Plaintiff owed Defendant a duty of care and representations about future events are not actionable.
In support of the first argument, Plaintiff cites to Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864, which explained, As is true of negligence, responsibility for negligent misrepresentation rests upon the existence of a legal duty, imposed by contract, statute or otherwise, owed by a defendant to the injured person. However, Eddy goes on to explain, One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated, & facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances would reasonably expect a disclosure of those facts. (Ibid.) Therefore, Plaintiff owed Defendant a duty of reasonable care not to misrepresent basic facts about their joint purchase and renovation of the subject property.
Regarding Plaintiffs second argument, however, the Court agrees that speculative opinions about future events are generally not actionable. (See, e.g., Cohen v. S & S Construction Co. (151 Cal.App.3d 941, 946.)
Here, Defendant alleges Plaintiff promised (1) to evict the existing tenants pursuant to the Ellis Act; (2) to pay half the maintenance and repair expenses; (3) to allow Defendant and her daughter to occupy the property; and (4) to obtain a HELOC to pay for the renovations and to repay Defendant for the debt she incurred for renovations. (Cross-Complaint ¶¶ 32, 42.) However, the remainder of the allegations make clear that evicting the tenants was more complicated than the parties had anticipated, and was delayed by a year due to going back and forth with the City of Santa Monica. (Id. at ¶¶ 12, 17.) As a result, renovations were delayed, preventing Defendant and her daughter from moving into the property. (Id. at ¶ 13.) The parties also faced several unexpected legal costs and repairs on the Property and ran into difficulties obtaining a HELOC. (Id. at ¶ 14.)
Thus, in context, all of the alleged false promises appear to be speculative opinions about future events that did not go according to the parties plans due to events outside their control. The Cross-Complaint therefore does not allege actionable misrepresentation, nor does it demonstrate that the promises were knowingly false when made.
Further, the third and fourth causes of action, as pled, do not satisfy the heightened pleading requirement of specificity. Namely, Defendant does not allege specifically when or how the alleged promises were made.
Therefore, the Court sustains Plaintiffs demurrer to the third and fourth causes of action.
iv.
Sixth Cause of Action Intentional Infliction of Emotional Distress
To prevail on the Intentional Infliction of Emotional Distress (IIED) cause of action, a plaintiff must prove: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiffs suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendants outrageous conduct. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051.) A defendants conduct is outrageous when it is so extreme as to exceed all bounds of that usually tolerated in a civilized community. (Ibid. [cleaned up].) Further, the defendants conduct must be intended to inflict injury or engaged in with the realization that injury will result. (Id. at p. 1051 [cleaned up].)
The Cross-Complaint alleges:
56. Cross-Complainants hereby reallege and incorporate herein by reference, paragraph 1 through paragraph 55 inclusive, of this Cross-Complaint as if set forth in full.
57. SOUTHERLAND was negligent when he made the above-mentioned agreements with DONOHUE.
58. SOUTHERLAND was negligent when he made these agreements, since he had no intent to perform on them.
59. As a result of SOUTHERLANDs negligence, DONOHUE suffered emotional distress as a result due to the loss of housing, which was directly due to SOUTHERLANDs behaviors.
60. As a result, DONOHUE is entitled to actual damages in an amount to be determined at trial.
(Cross-Complaint ¶¶ 56-60.)
Defendant does not allege any extreme and outrageous conduct or conduct done with the intention of causing or reckless disregard of the probability of causing emotional distress. Therefore, the Court sustains Plaintiffs demurrer to the sixth cause of action.
B.
WHETHER CONTRACT IS WRITTEN, ORAL, or IMPLIED BY CONDUCT
i.
Fifth Cause of Action Breach of Contract
To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)
The Cross-Complaint alleges:
51. In 2022, when the parties decided to purchase the Subject Property, they made the following agreement: SOUTHERLAND would pay the down payment on the property while DONOHUE paid for renovations. SOUTHERLAND agreed to enact the Ellis Act (which was a deciding factor in DONOHUEs willingness to purchase the property); agreed to pay half of the maintenance expenses and repairs related to the property; agreed that DONOHUE and her daughter could occupy the two-bedroom while her second daughter occupied the smaller one-bedroom; agreed that the parties would obtain a HELOC to cover the renovations, and later for DONOHUE to recoup her penalties and interest for having to pay the cost of renovations, 50% of maintenance expenses and repairs, and the share of expenses and renovations that SOUTHERLAND was unable to pay.
52. In August 2022, SOUTHERLAND breached the agreement to proceed with Ellis unless he was able to occupy the two-bedroom. SOUTHERLAND also breached the agreement between the parties when he was unable to pay his 50% of maintenance expenses and repairs. He also breached the agreement to enter into a HELOC to allow DONOHUE to pay the planned debt she incurred for renovations costs as well as recover the additional expenses and repairs she had to pay for since SOUTHERLAND did not have the funds.
53. SOUTHERLANDs breaches caused significant financial harm to DONOHUE, as she had to pay for the expenses SOUTHERLAND was obligated to pay, which caused DONOHUE to take out loans, incur interest, and take a 40% cut in her pension due to early retirement. The breaches also caused DONOHUE to not have a place to live, since SOUTHERLAND now refuses to enact the Ellis Act.
54. DONOHUE has maintained all of her obligations under the agreement.
55. As a result of the breach, DONOHUE is entitled to actual damages in an amount to be determined at trial, and punitive damages.
(Cross-Complaint ¶¶ 51-55.)
Plaintiff demurs on the grounds that it cannot be ascertained from the pleading whether the alleged contract is written, oral, or implied by conduct. The Court agrees. The Cross-Complaint does not specify whether the purported agreement is written, oral, or implied by conduct.
Therefore, the Court sustains Plaintiffs demurrer to the fifth cause of action.
2.
MOTION TO STRIKE
Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).) On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.) Here, Chan moves to strike from the complaint, references to and claims for punitive damages.
In ruling on a motion to strike punitive damages, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294. (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).) As set forth in the Civil Code,
(1) Malice means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (2) Oppression means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. (3) Fraud means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
(Civ. Code, § 3294, subd. (c)(1)-(3), emphasis added.)
Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice. To wit, there is a heightened pleading requirement regarding a claim for punitive damages. (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.) When nondeliberate injury is charged, allegations that the defendants conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him. (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].) In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs assertions related to their claim for punitive damages were insufficient to meet the specific pleading requirement. (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim].)
Here, as discussed above, Defendant has not alleged facts with requisite specificity to state the fraud-based causes of action for negligent or intentional misrepresentation against Plaintiff. As such, the Court finds that the allegations do not adequately support a claim for punitive damages against Plaintiff.
3.
LEAVE TO AMEND
A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend. (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)
Defendant indicates she can add facts (1) that the alleged agreement was initial an oral agreement and also partially memorialized in some writings; (2) that Plaintiff intended not to honor his promises when made; and (3) describing Plaintiffs allegedly extreme and outrageous conduct. (Opposition to Demurrer at p. 8.)
Regarding the fraud-based causes of action, if indeed, Defendant can add facts that Plaintiff knew the promises were false when made, then they could not, by definition, be speculative opinions. Similarly, if Defendant adds facts about when and how the allegedly false promises were made, the Court finds the identified deficiencies can all be cured by amendment.
Similarly, if Defendant can adequately allege the fraud-based causes of action, Defendant may also request punitive damages.
Therefore, the Court grants Defendant leave to amend the third, fourth, fifth, and sixth causes of action and to reallege the request for punitive damages.
CONCLUSION AND ORDER
For the reasons stated, the Court overrules Plaintiffs demurrer to the first and second causes of action, and sustains with leave to amend Plaintiffs demurrer to the third, fourth, fifth, and sixth causes of action.
Further, the Court grants Plaintiffs motion to strike with leave to amend and strikes from the Cross-Complaint the requested references to and requests for punitive damages.
Defendant may file and serve an amended cross-complaint in conformance with the Courts ruling on or before August 15, 2024.
Plaintiff shall provide notice of the Courts ruling and file the notice with a proof of service forthwith.
DATED: July 25, 2024
___________________________
Michael E. Whitaker
Judge of the Superior Court
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SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN BERNARDINO San Bernardino District 247 West 3rd St San Bernardino CA 92415 www.sb-court.org 909-708-8678 Simon Sanchez Morgan Chase Bank N.A. -v- J. P. et al Case Number NOTICE OF RETURN OF DOCUMENT(S) CIVSBZ1 18451 WRIGHT, FINLAY & ZAK, LLP 4665 MACARTHUR CT STE 280 NEWPORT BEACH CA 92660 Your document(s) are returned by the Court for the following reasons: Declaration of Fay Servicing: Per conversation with Jovete from law office, declaration is being returned. Please keep this notice attached when resubmitting. Thank you. Date: 9/28/2021 By: Jovanna Leandro, Deputy Clerk