Case Name: Lawrence Commercial Center, LLC v. Wong, et al.
Case No.: 2014-1-CV-273829
Defendants Cheng & Neiman and Ken Ping Cheng (?Cheng?) (collectively, ?Defendants?) demur to the fourth amended complaint (?4AC?) filed by plaintiff Lawrence Commercial Center, LLC (?Plaintiff?).
This is an action for quiet title and breach of contract, among other things.? Plaintiff is the owner of certain real property and improvements located at 510, 520 and 528 Lawrence Expressway in Sunnyvale (the ?Property?).? (4AC, ? 1 and Exhibit A.)? The Property was previously owned by defendants Chang & Neiman, a limited liability partnership in which defendant Cheng was the general partner. (Id., ? 3.)? Defendant Manton Wong is the owner of the adjacent property located at 500 Lawrence Expressway (the ?Neighboring Property?).? (Id., ? 2.)? In January 2013, Defendants listed the Property for sale using SRS Real Estate Partners (?SRS?) and defendant Alpha Investments and Property Management Company (?Alpha?) as the listing brokers.? (Id., ? 11.) ?As part of the sales process, SRS and Alpha prepared advertising materials which stated that there were 246 parking spaces on site and that there were an additional 41 spaces based on a cross-easement with the neighbor.? (Id., ? 12 and Exhibit C.)? Defendants sold the Property to Charles Tzeng (?Tzeng?), who subsequently assigned his interest to Plaintiff.? (Id., ?? 13-15.)
On August 19, 2013, SRS and Alpha forwarded disclosures, property information, and a ?Property Information Sheet? to Tzeng.? (4AC, ? 16 and Exhibits E, F and G.)? In these materials, Defendants did not disclose that the owner of the Neighboring Property or its tenants used the parking spots and indicated that there were no unrecorded matters that would affect title.? (Id.)? Upon reviewing the Property, Tzeng noticed that there were less than 246 parking spaces on the Property as compared to what was represented in the sales materials.? (Id., ? 17.)? Tzeng questioned Alpha and SRS regarding this discrepancy on September 27, 2013 and was told that there were 59 additional spots for use on the Neighboring Property and that he had an exclusive easement for their use.? (Id., ? 17 and Exhibit H.)? Plaintiff alleges that the easement is not in fact exclusive because the neighboring owner and/or his tenants are improperly using the additional parking spaces.? (Id., ? 24.)
On August 18, 2015, Plaintiff filed the third amended complaint (?TAC?) asserting the following causes of action: (1) quiet title (against Manton Wong); (2) breach of contract (against Defendants); (3) permanent injunction and damages (against Manton Wong); (4) negligence (against Alpha); (5) negligence (against Alpha, Albert Jun-Ren Wang, Robert Quigley and SRS); and (6) failure to disclose (against Defendants).
On December 1, 2015, the Court sustained Defendants? demurrer to the two claims asserted against them in the TAC for breach of contract and failure to disclose with leave to amend on the ground of failure to state facts sufficient to constitute a cause of action.? Defendants? demurrer to these claims on the ground of uncertainty was overruled.
On December 11, 2015, Plaintiff filed the 4AC asserting the exact same claims as set forth in the TAC.? On March 30, 2016, Defendants filed the instant demurrer to the claims asserted against them in the 4AC, i.e., the second and sixth for breach of contract and failure to disclose, respectively, on the grounds of failure to state facts sufficient to constitute a cause of action and uncertainty.? (Code Civ. Proc., ? 430.10, subds. (e) and (f).)? Plaintiff opposes the demurrer.
As a preliminary matter, Plaintiff?s request for judicial notice of various court records is GRANTED.? (Evid. Code, ? 452, subd. (d).)
Defendants? demurrer to the second and sixth causes of action on the ground of uncertainty is OVERRULED.? In demurring to these claims on this ground, Defendants contend that Plaintiff?s claims are uncertain with respect to certain elements, including Plaintiff?s standing to sue on the subject contract and its performance thereunder.? These contentions, however, demonstrate a misunderstanding on Defendants? part of the meaning of ?uncertainty? in the demurrer context.? As set forth in the Court?s prior order on Defendants? demurrer to the claims asserted against them in the TAC, a demurrer for uncertainty is disfavored, and will be sustained only where the allegations of the pleading are so unintelligible that the defendant cannot reasonably respond to them.? (See Khoury v. Maly?s of California, Inc. (1993) 14 Cal.App.4th 612, 616 [stating that ?a demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures?].)? The allegations of the 4AC can hardly be characterized as unintelligible for the purposes of the demurrer as they adequately apprise Defendants of the nature of Plaintiff?s claims against them.? Consequently, there is no basis to sustain Defendants? demurrer to the second and sixth causes of action on this ground.
In the second cause of action for breach of contract, Plaintiff alleges that a material term of the contract was an exclusive easement for 59 additional parking spots on the Neighboring Property and that Defendants breached the contract by failing to transfer exclusive use of the parking spaces to Plaintiff.? (4AC, ?? 32, 35.)? The Court previously sustained Defendants? demurrer to this cause of action in the TAC on the ground that Plaintiff was not a party to the agreement and therefore lacked to standing to assert a claim for its breach.? The Court also noted that pursuant to its express terms, neither Chang & Neiman nor Cheng were identified as parties to the agreement, and further, Plaintiff had not adequately pleaded the element of breach.
In demurring to the breach of contract claim in the 4AC, Defendants contend that this cause of action still suffers from the aforementioned deficiencies.? With regard to the issue of pleading the necessary elements, Defendants first assert that Plaintiff has not sufficiently pleaded this claim because there are no facts alleged which establish when the contract was purportedly breached by each defendant and how.? Because Plaintiff has not pleaded when the contract was breached, Defendants explain, they are unable to ascertain whether Plaintiff?s claim is subject to a statute of limitations defense.
In order to plead a cause of action for breach of contract, a plaintiff must plead facts establishing (1) the existence of the contract, (2) the plaintiff?s performance or excuse for nonperformance, (3) the defendant?s breach, and (4) damages to the plaintiff as a result of the breach.? (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.)?? Dates, however, are not essential to a cause of action and need not be pleaded in order to state a claim; consequently, Defendants? contention that the second cause of action is demurrable due to a lack of allegations setting forth exactly when the contract was breached is unavailing.? (See, e.g., Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15, 25.)
Defendants also contend that the demurrer to the second cause of action should be sustained for Plaintiff?s failure to list the amount of damages suffered as a result of the breach of contract, in violation of Code of Civil Procedure section 425.10, subdivision (a)(2).? This code section provides as follows:
- A complaint or cross-complaint shall contain ? (2) A demand for judgment for the relief to which the pleader claims to be entitled. If the recovery of money or damages is demanded, the amount demanded shall be stated.
Despite the foregoing language, and the absence of a specific amount of monetary damages in the 4AC, Defendants? argument is without merit because ?the specific dollar amount is necessary only when a default judgment is to be entered.? The purpose of such a requirement is to ensure that the defendant is sufficiently aware of the consequences of not answering the complaint. [Citation.]? However, in any other case, the court may grant the plaintiff any relief consistent with the case made by the complaint and embraced within the issue. (Code Civ. Proc., ? 580, subd. (a).)? Hence, the absence of a specific amount from the complaint is not necessarily fatal as long as the pleaded facts entitle the plaintiff to relief.?? (Furia v. Helm (2003) 111 Cal.App.4th 945, 957 [internal citations and quotations omitted].)? Consequently, Plaintiff need not plead a specific monetary amount of damages in order to state a breach of contract claim.
Defendants next assert, as they did previously, that the element of breach has not been adequately pleaded because they actually performed as required by deeding over the parking spaces to Tzeng, a fact that was pleaded in the TAC by Plaintiff but has now been omitted from the 4AC.? (See TAC, ? 23.)? Defendants contend that the omission of this allegation is sham pleading by Plaintiff.? Under the sham pleading doctrine, a plaintiff is precluded from amending a complaint to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers.?? (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.)? If the plaintiff fails to offer an explanation for the omission (or addition of inconsistent facts), the court may take judicial notice of prior pleadings and disregard any inconsistent allegations.? (Id.)
Here, while Plaintiff has omitted the allegation that Defendants executed a deed which showed that the parking spaces were part of the sales contract, the Court is not persuaded that this omission and the new allegations of the 4AC qualify as sham pleading.? With these new allegations, Plaintiff alleges that Defendants were aware of the fact, or should have known, that the owners of the Neighboring Property were using the parking spaces and thus could potentially assert claims on the purportedly exclusive easement.? (4AC, ? 34.)? Consequently, Plaintiff alleges, Defendants breached the sales contract by failing to transfer exclusive use of the parking spaces.? The Court finds that these allegations are not inconsistent with the allegations that Defendants executed a deed transferring the parking spots to Plaintiff in the TAC in that they merely expand on that allegation by asserting that the exclusive use of the spots, as promised by the agreement, was not transferred.? With this amendment, Plaintiff has sufficiently pleaded the element of breach.
Defendants? final argument with regards to the second cause of action is that neither of them are parties to the agreement upon which this claim is predicated and thus no claim for breach of contract can be stated against them.? The Court previously found this argument to be persuasive, noting that in the sales contract, attached to the TAC as Exhibit C, neither Chang & Neiman nor Cheng were named as ?sellers.?? Because allegations in a complaint must yield to contrary allegations contained in exhibits to a complaint (see Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946), the Court concluded that Plaintiff had failed to state a breach of contract claim against Defendants because they were not parties to the agreement.? Defendants insist that the same problem exists in the 4AC, to which the sales agreement is still attached as Exhibit D.
However, Plaintiff has sufficiently addressed this deficiency by alleging in the 4AC that ?C&N Associates? is incorrectly identified in the sales agreement as the seller, when in fact the true owner and seller of the property, and thus the actual party to the contract, was Chang & Neiman.? (4AC, ? 22.)? Moreover, Plaintiff additionally pleads that the sales contract (and deed) incorrectly identify Cheng as the ?managing partner? and ?general manager? instead of the general partner, allegations which address Defendants? contention that Cheng did not sign the contract in any individual capacity and thus is not a party to the agreement.? (Id., ? 23.)? As Plaintiff notes, except as otherwise provided by statute, ?all general partners are liable jointly and severally for all obligations of the limited partnership unless otherwise agreed by the claimant or provided by law.?? (Corp. Code, ? 15904.04.)? Accordingly, Defendants contention that they are not parties to the agreement is not well-taken.
As the Court finds that all of the arguments asserted by Defendants in connection with the second cause of action are without merit, their demurrer to this claim on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.
In the sixth cause of action for failure to disclose, Plaintiff alleges that Defendants had a duty to disclose all material aspects of the property and breached that duty when, despite their awareness that the owner of the Neighboring Property had been using and/or was making a claim to the parking spots, they failed to disclose that fact to Plaintiff and affirmatively represented to it that the parking spots were for the exclusive use of the owner of the Property.? (4AC, ?? 56-58.)? In demurring to this claim, Defendants first argue that this cause of action is not pleaded with sufficient specificity.
Though titled ?failure to disclose,? Plaintiff?s sixth cause of action contains allegations of both nondisclosure and affirmative misrepresentations.? The essential elements of a fraud claim are (1) misrepresentation (false representation, concealment, or nondisclosure), (2) knowledge of falsity (scienter), (3) intent to defraud (i.e., to induce reliance), (4) justifiable reliance, and (5) resulting damage.? (Anderson v. Deloitte & Touche (1997) 56 Cal.App.4th 1468, 1474.)? The necessary elements of a cause of action for fraud and deceit based on concealment, in particular, are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.? (Marketing West, Incv. V. Sanyo Fisher (USA) (1992) 6 Cal.App.4th 603, 612-613.)? Generally, fraud must be pleaded with specificity, which requires setting forth facts which show ?how, when, where, to whom, and by what means the representations were tendered.?? (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)
To the extent that this cause of action is based on the failure to disclose, Plaintiff fails to allege all of the requisite elements.? Though Plaintiff alleges that Defendants failed to disclose the material fact that the owner of the Neighboring Property had been using and/or was making a claim to the parking spaces such that the exclusiveness of the easement for their use had been called into question and Defendants were under a duty to disclose this material fact, Plaintiff fails to allege that Defendants suppressed this fact with the intent to defraud it and that it would not have acted as it did if it had known about the possible cloud on the exclusivity of the easement.
However, to the extent that this cause of action is based on affirmative misrepresentations, Plaintiff has sufficiently stated a claim for fraud in pleading that Defendants affirmatively represented to Plaintiff that the parking spaces were for the exclusive use of the Property.? (4AC, ? 58.)? Plaintiff has set forth when these misrepresentations were made, how they were made, and to whom.? (Id., ?? 58-65.)? Though fraud claims implicate a heightened pleading standard, this standard does not require the level of specificity demanded by Defendants in their supporting memorandum.? Elements like a defendant?s knowledge of the falsity of a representation and intent to deceive the plaintiff are facts and thus sufficiently pleaded by general averments.? (Crouch v. Wilson (1920) 183 Cal. 576, 579; Wennerholm v. Stanford University School of Medicine (1942) 20 Cal.2d 713, 716.)? Plaintiff need not identify all of the evidentiary support for this cause of action in order to sufficiently state a claim.
Lastly, Defendants unpersuasively argue that Plaintiff?s allegations are based on contract and do not properly allege fraud.? The authorities cited by Defendants in support of this proposition are distinguishable, and Plaintiff sufficiently pleads a claim for fraud in alleging that Defendants misrepresented the exclusive use status of the parking spaces on the Neighboring Property.
As the Court finds that all of the arguments asserted by Defendants in connection with the sixth cause of action are without merit, their demurrer to this claim on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.