Demurrer & Motion to Strike (Judge Beth McGowen)


Case Name:??? Greentown US, Inc., et al. v. New Montgomery Associates, et al.

Case No.:??????? 2015-1-CV-288772

  • Demurrer to Plaintiffs? Complaint by Defendants J.T. Wakimoto Management, Inc. and Gizelle Lamb
  • Motion to Strike Portions of Plaintiff[s?] Complaint by Defendants J.T. Wakimoto Management, Inc. and Gizelle Lamb

On or about March 27, 2015, plaintiff Greentown US, Inc. (?Greentown?), as lessee, and defendant Tina Wong (?Wong?), as lessor, entered into a lease to operate a restaurant, Pop?s Pizza, at 1090 ? 1092 Kiely Boulevard in Santa Clara (?Property?) with a base rent of $4,235 plus NNN per month. (Complaint, Attachment FR-3, ?1 and Second Cause of Action, ?4.)? During the negotiations and at the time of signing the lease, defendants New Montgomery Associates, Wong, Denise M. Lupretta, Gizelle Lamb, and J.T. Wakimoto Management, Inc. concealed material facts from plaintiffs Greentown and Daniel Hwang aka Tony Hwang (?Hwang?). (Complaint, Attachment FR-3, ?1)? Had plaintiffs known of the material facts, they would not have signed the lease. (Id.)

Defendants concealed the fact that the Property, when leased together, put the Property in a different category for compliance (more expensive and time-consuming) with the California Fire Code. (Complaint, Attachment FR-3, ?3.)? Defendants concealed facts that the restaurant would not and could not comply with City of Santa Clara Parking Code in that parking for the restaurant would be inadequate. (Id.)

Defendants concealed the fact that 1092 Kiely Boulevard was not listed in the Santa Clara Planning Commission with a permit and that ABC would not issue an alcohol permit. (Complaint, Attachment FR-3, ?5.)? Defendants concealed the fact that 1090 Kiely Boulevard was not complaint with the Americans with Disabilities Act. (Complaint, Attachment FR-3, ?6.)? Defendants concealed the fact that plumbing in the floor at 1092 Kiely Boulevard was plugged with cement. (Complaint, Attachment FR-3, ?7.)

On December 7, 2015, plaintiffs Greentown and Hwang filed a Judicial Council form complaint against defendants asserting causes of action for (1) Fraud?Concealment; and (2) Rescission and Damages.

On February 29, 2016, defendants New Montgomery Associates and Wong filed an answer to the complaint and a cross-complaint against Greentown, Hwang, and Jennifer Lee (?Lee?) for Breach of Contract.? On April 6, 2016, Greentown, Hwang, and Lee filed an answer to the cross-complaint.

On April 25, 2016, defendants J.T. Wakimoto Management, Inc. (?Wakimoto?) and Gizelle Lamb (?Lamb?) filed the two motions now before the court, (1) a demurrer to the plaintiffs? complaint; and (2) a motion to strike portions of plaintiffs? complaint.

 

  1. Requests for judicial notice.

 

In support of their demurrer and motion to strike, defendants Wakimoto and Lamb request judicial notice of the cross-complaint filed by defendant New Montgomery Associates and Wong on February 29, 2016.? In particular, defendants Wakimoto and Lamb ask the court to take judicial notice of the lease attached as Exhibit A to the cross-complaint.? Two problems exist.? First, the cross-complaint filed by defendant New Montgomery Associates and Wong on February 29, 2016 in the court?s file does not include any exhibits.? Second, even if the cross-complaint included a copy of the purported lease, defendants are asking this court to take judicial notice of the truth of matters asserted therein to contradict allegations made by the plaintiffs in the complaint.? ?While we may take judicial notice of court records and official acts of state agencies (Evid. Code, ? 452, subds.(c), (d)), the truth of matters asserted in such documents is not subject to judicial notice. [Citation.]? (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)? ?Although the existence of a document may be judicially noticeable, the truth of statements contained in the document and its proper interpretation are not subject to judicial notice if those matters are reasonably disputable.? (Unruh-Haxton v. Regents of University of California (2008) 162 Cal. App. 4th 343, 364 (Unruh-Haxton).)? ?The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable. Judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.? (Unruh-Haxton, supra, 162 Cal.App.4th at p. 365.)

 

Accordingly, defendants Wakimoto and Lamb?s request for judicial notice is DENIED.

 

In opposition to the demurrer, plaintiffs request the court take judicial notice of documents filed with the California Secretary of State.? Plaintiffs? request is defective in that it fails to comply with California Rules of Court, rule 3.1113, subdivision (l) which states, ?Any request for judicial notice must be made in a separate document?.?? For that reason alone, the plaintiffs? request for judicial notice is DENIED.

 

  1. Defendants Wakimoto and Lamb?s demurrer to the complaint is SUSTAINED.

 

  1. First Cause of Action ? Fraud?Concealment

 

Defendants Wakimoto and Lamb demur to the first cause of action for fraud on the ground that plaintiffs have not alleged fraud with sufficient specificity.? ?The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ?scienter?); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.? (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar).)? ?Fraud actions are subject to strict requirements of particularity in pleading. ? Accordingly, the rule is everywhere followed that fraud must be specifically pleaded.?? (Committee on Children?s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.)? ?The pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.?? (Commonwealth Mortgage Assurance Co. v. Superior Court (1989) 211 Cal.App.3d 508, 518.)? The Lazar court did not comment on how these particular allegations met the requirement of pleading with specificity in a fraud action, but the court did say that ?this particularity requirement necessitates pleading facts which ?show how, when, where, to whom, and by what means the representations were tendered.? A plaintiff?s burden in asserting a claim against a corporate employer is even greater.? In such a case, the plaintiff must ?allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.? (Lazar, supra, 12 Cal.4th at p. 645.)

 

The complaint fails to include any specific allegations regarding Wakimoto and Lamb?s involvement.? In opposition, plaintiffs do not provide any further detail except to point to the allegation that ?Lamb, repeatedly pressured the plaintiffs to have the lease signed.?? This lone allegation fails to satisfy the specificity requirements of Lazar.

 

Accordingly, defendants Wakimoto and Lamb?s demurrer to the first cause of action in plaintiffs? complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., ?430.10, subd. (e)] for fraud?concealment is SUSTAINED with 10 days? leave to amend.

 

  1. Second Cause of Action ? Rescission

 

Defendants Wakimoto and Lamb also demur to plaintiffs? second cause of action for rescission.? ?Rescission is not a cause of action; it is a remedy.? (Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 70.)? ?The traditional equitable action to have the rescission of a contract adjudged was recognized in former Civil Code 3406.? [However,] the equitable action was abolished in 1961, and the remedy is now a legal action for restitution based on a completed unilateral rescission.?? (4 Witkin, California Procedure (4th ed. 1997) ?502, p. 590 ? 591.)? ?The following need to be alleged in an action for restitution after completed unilateral rescission: (1) the contract or other contractual instrument; (2) the grounds for rescission; (3) if the ground is breach of contract, plaintiff?s own performance.?? (4 Witkin, California Procedure (4th ed. 1997) ?503, p. 591; see also Runyan v. Pacific Air Industries, Inc. (1970) 2 Cal.3d 304.)

 

?A party to a contract may rescind the contract in the following cases: (1) If the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party.? (Civ. Code, ? 1689.)

 

Defendants Wakimoto and Lamb demur to the rescission cause of action on the basis that they are not parties to the lease agreement and, therefore, it is improper to seek rescission against them.? The complaint is ambiguous in this regard.? At paragraph 1 of Attachment FR-3, the complaint alleges plaintiff Greentown and defendant Wong entered into the lease.? Thereafter, at paragraph 4 of the second cause of action, the complaint alleges ?plaintiffs and defendants entered into a written contract.?? The allegations are in conflict and cannot both be correct.? Plaintiff fails to explain this discrepancy in opposition and do not address defendants? concern that they are not alleged to be parties to the lease agreement.

 

Accordingly, defendants Wakimoto and Lamb?s demurrer to the second cause of action in plaintiffs? complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., ?430.10, subd. (e)] for rescission is SUSTAINED with 10 days? leave to amend.

 

  • Defendants Wakimoto and Lamb?s motion to strike portions of plaintiffs? complaint is GRANTED.

 

Plaintiffs did not file any opposition to defendants Wakimoto and Lamb?s motion to strike.? There being no opposition, defendants Wakimoto and Lamb?s motion to strike portions of plaintiffs? complaint is GRANTED.