Justin Evergreen et al vs Susan Estelle Jansen

Case Number

24CV03062

Case Type

Hearing Date / Time

Fri, 02/21/2025 - 10:00

Nature of Proceedings

CMC; Motion to Strike

Tentative Ruling

For all reasons discussed herein, the motion of defendant to strike portions of plaintiffs’ first amended complaint seeking treble damages is granted, with leave to amend. The following matters are stricken from the first amended complaint: (1) paragraph 32; and (2) paragraph 2 of the “Prayer For Relief” on the first cause of action. Plaintiffs shall file and serve a second amended complaint, if any, on or before March 5, 2025.

Background:

On May 31, 2024, plaintiffs Justin Evergreen and Alicia Evergreen (collectively, the Evergreens) filed a complaint against defendant Susan Estelle Jansen (Jansen), individually and as Trustee of the Susan Estelle Jansen Separate Property Trust dated February 3, 2021, alleging four causes of action: (1) breach of statutory obligations (Civ. Code, § 1947.12, subd. (a)(1)); (2) declaratory relief (that rental agreement is illegal); (3) breach of implied warranty of habitability; and (4) declaratory relief (that premises are uninhabitable). The claims alleged in the complaint arise from the rental by the Evergreens of a residence located at 4160 Marina Drive in Santa Barbara, California (the premises), which is owned by Jansen. (Compl., ¶ 5.)

On July 5, 2024, Jansen filed a motion to strike (the first motion to strike) paragraph 23 and paragraph 2 of the prayer for relief appearing in the complaint, on the grounds that the Evergreens failed to allege facts sufficient to support a claim for treble damages under Civil Code section 1947.12. The motion was opposed by the Evergreens.

On October 4, 2024, the Court entered a Minute Order granting the first motion to strike and directing the Evergreens to, on or before October 18, 2024, file and serve a first amended complaint, if any.

On October 17, 2024, the Evergreens filed a first amended complaint (the FAC) alleging the same four causes of action against Jansen. As alleged in the operative FAC:

On July 27, 2020, the Evergreens and Jansen entered into a lease for the premises (Lease 1), which was for a fixed two year term commencing on August 1, 2020, and ending on August 1, 2022. (FAC, ¶ 6 & Exh. 1.) The monthly rent for the premises was $10,500. (Ibid.) In connection with Lease 1, Jansen provided the Evergreens with a document titled “Rent Cap And Just Cause Addendum” (Addendum 1), in which Jansen represented that the premises is subject to the provisions of Civil Code section 1947.12, which imposes limitations on rental rate increases for residential real property. (Id. at ¶¶ 7-8 & Exh. 2.)

The Evergreens took possession of the premises on August 1, 2020. (FAC, ¶ 15.)

On May 25, 2022, the Evergreens and Jansen entered into a new lease for the premises (Lease 2) for an additional three year term to commence on August 1, 2022. (FAC, ¶ 9 & Exh. 3.) Under Lease 2, the monthly rental rate for the premises increased by the following amounts: $16,000 from August 1, 2022, through July 31, 2023; $18,000 from August 1, 2023, through July 31, 2024; and $20,000 from August 1, 2024, through July 31, 2025. (Id. at ¶¶ 10 & 20-22.) In connection with Lease 2, Jansen provided to the Evergreens a document titled “Rent Cap And Just Cause Addendum” (Addendum 2), in which Jansen again represented that the premises is subject to the limitations on rental rate increases imposed under Civil Code section 1947.12. (Id. at ¶¶ 11-12 & Exh. 4.)

The monthly rent increases for the premises set forth in Lease 2, which were paid by the Evergreens and accepted by Jansen, exceed the maximum amounts allowed under Civil Code section 1947.12, subdivision (a)(2). (FAC, ¶¶ 19-23.) Jansen contends that the representations made in Addendum 1 and Addendum 2 regarding whether the premises is subject to the limitations imposed under Civil Code section 1947.12, and any excess rent paid and collected for the premises, were a mistake. (FAC, ¶¶ 13 & 24.)

The Evergreens had no knowledge of the mistakes asserted by Jansen until March 6, 2024, when the Evergreens informed Jansen that the premises was subject to the limitations on rent increases set forth in Civil Code section 1947.12, and that Jansen had collected more in rent than permitted by law. (FAC, ¶¶ 24-26 & Exh. 5.) Though Jansen was notified of the improper rent increases, Jansen continued to retain the excess rent. (Id. at ¶¶ 29-32.)

The premises also lacked effective waterproofing and weather protection which caused water intrusion through walls and doors on three separate occasions. (FAC., ¶ 401(a) & (b).) In addition, the sewer line serving the premises was not maintained in good working order causing sewage to bubble up through the shower, toilet, and bathroom wall. (Id. at ¶ 40(c).) Jansen was notified of these conditions but failed to take corrective action, which caused the presence of elevated mold spores in the interior of the premises. (Id. at ¶ 40(a) & (c).) The Evergreens vacated the premises on March 25, 2024. (Id. at ¶ 15.)

On November 13, 2024, Jansen filed a motion to strike from the FAC paragraph 32 and paragraph 2 of the prayer for relief on the first cause of action, on the grounds that the Evergreens have failed to allege in the FAC facts sufficient to support a claim for treble damages under Civil Code section 1947.12. The motion is opposed by the Evergreens.

Analysis:

“Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof[.]” (Code Civ. Proc., § 435, subd. (b)(1).) Upon a motion to strike made under Code of Civil Procedure section 435, the court may “strike out any irrelevant, false, or improper matter inserted in any pleading” or “strike all or part of any pleading not filed in conformity with applicable law, court rules, or an order of the court.” (Code Civ. Proc., § 436(a) & (b).) The grounds for a motion to strike must appear on the face of the pleading or from matters which the court may take judicial notice. (Code Civ. Proc., § 437, subd. (a).)

As a preliminary matter, to support the arguments advanced in the motion, Jansen relies on the testimony of DeAnn Rochelle (Rochelle), and submits a copy of the transcript of Rochelle’s deposition. (Memorandum at pp. 9-12; Burns Decl., ¶ 1 & Exhs. A-B.) Jansen asserts, and the Evergreens do not appear to dispute, that Rochelle is a broker who advised the Evergreens regarding Lease 1 and Lease 2. (Memorandum at pp. 8-9.)

Jansen contends that Rochelle’s deposition testimony shows that the Evergreens were on “inquiry notice” that the premises was exempt from the limitations on rent increases set forth in Civil Code section 1947.12, and that Jansen and Rochelle made a mutual mistake by failing to check a box appearing in Addendum 1 and Addendum 2 notifying the Evergreens that the premises is exempt from the provisions of Civil Code section 1947.12. (Memorandum at pp. 11-12.) (Note: Undesignated code references herein shall be to the Civil Code unless otherwise indicated.) Citing the decision in Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369 (Joslin), Jansen contends that the Court must consider Rochelle’s testimony because it contains purported admissions and because Rochelle is the agent of the Evergreens. (Memorandum at pp. 10 & 13.)

Jansen may not rely on extrinsic evidence, such as the deposition testimony of a nonparty to the action, to show that the allegations of the FAC are false or a “sham” as Jansen contends. (Code Civ. Proc., § 437, subd. (a); CPF Agency Corp. v. R&S Towing (2005) 132 Cal.App.4th 1014, 1032.) In addition, the Rochelle deposition transcript is not part of the record in this action, and Jansen has not submitted a request for, or a notice of intention to request, judicial notice of the Rochelle deposition transcript. (Evid. Code, §§ 452, subd. (d)(1), & 455; Joslin, supra, 184 Cal.App.3d at pp. 373-374.) Even if Jansen submitted an appropriate request for judicial notice of the Rochelle deposition transcript, Jansen fails to show, with reasoned argument, why Rochelle’s deposition testimony is by itself a proper subject of judicial notice. (See, e.g., Evid. Code, §§ 451 & 452, subds. (g) & (h).)

Furthermore, even if the Rochelle deposition transcript was a proper subject of judicial notice, the Court is not required to accept the truth of Rochelle’s deposition testimony or any “particular interpretation of its meaning.” (Joslin, supra, 184 Cal.App.3d at p. 374.) For example, there is nothing in the Rochelle deposition transcript that could not be refuted by the Evergreens, who expressly allege that they were unaware of any mistake with respect to the contents of Addendum 1 and Addendum 2. (FAC, ¶ 13; see also Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134 [judicial notice in pleading matters is “dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed”].) For these and all reasons discussed above, the Court may not, and declines to, consider or rely on the Rochelle deposition transcript in ruling on the motion.

Under Civil Code section 1947.12, “an owner of residential real property shall not, over the course of any 12-month period, increase the gross rental rate for a dwelling or a unit more than 5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase.” (Civ. Code, § 1947.12, subds. (a)(1) & (g)(3)(A) [defining the terms “percentage change in the cost of living”].) “An owner who demands, accepts, receives, or retains any payment of rent in excess of the maximum rent allowed by this section shall be liable in a civil action to the tenant from whom those payments are demanded, accepted, received, or retained … [¶] … [¶] … [¶] … [¶] [u]pon a showing that the owner has acted willfully or with oppression, fraud, or malice, damages up to three times the amount by which any payment demanded, accepted, received, or retained exceeds the maximum allowable rent.” (Civ. Code, § 1947.12, subd. (k)(1)(D).)
 

Treble damages provisions in a statute “will be considered punitive when they apply to intentional misconduct or morally offensive behavior, and the Legislature has not clearly indicated an additional, compensatory purpose.” (X.M. v. Superior Court (2021) 68 Cal.App.5th 1014, 1024.) The statutory language at issue here, given its “plain, ordinary meaning”, demonstrates that treble damages are authorized under section 1947.12 in circumstances where an owner who demands, accepts, or retains payment of rent in excess of the maximum allowed by that section has engaged in intentional or “willful” conduct, or morally offensive behavior. (Ventura County Employees’ Retirement Assn. v. Criminal Justice Attorneys Assn. of Ventura County (2024) 98 Cal.App.5th 1119, 1127 [the court begins “by examining the statutory language”].)

In addition, the express language of section 1947.12 does not indicate that an award of treble damages is intended to serve a compensatory purpose with respect to rent paid in excess of the maximum allowed under that section. (See Civ. Code, § 1947.12, subd. (k)(1)(B) [owner is separately liable for “[d]amages  in the amount by which any payment demanded, accepted, received, or retained exceeds the maximum allowable rent”].) For this and all further reasons discussed above, the treble damages authorized under subdivision (k)(1)(D) of section 1947.12 “must be treated as penal and punitive.” (Swall v. Anderson (1943) 60 Cal.App.2d 825, 828; see also Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183, 190 [courts must follow the plain meaning of statutory language].)

Similarly, a party may recover punitive damages under section 3294 “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice …” (Civ. Code, § 3294, subd. (a).) As each statute authorizes damages which are punitive in nature and based on similar conduct, the treble damages authorized under section 1947.12 serve the same legislative objective as punitive damages authorized under section 3294, which are intended “ ‘to deter the sort of extreme disregard for the rights of others that “decent citizens should not have to tolerate.” [Citation.]’ [Citation.]” (Menefee v. Ostawari (1991) 228 Cal.App.3d 239, 244; see also Baker v. Ramirez (1987) 190 Cal.App.3d 1123, 1138 [statute providing for treble damages for “willful and malicious” trespass treated as “penal and punitive”].)

For present purposes, the Court assumes the truth of the FAC’s allegations. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) Absent from the FAC are facts sufficient to show that Jansen’s conduct in demanding or accepting rent in excess of the maximum amount allowed under section 1947.12 was “willful”, or that Jansen acted with “oppression, fraud, or malice”. For example, notwithstanding whether the allegations of the FAC are sufficient to show that Jansen intentionally imposed the rent increases set forth in Lease 1, the allegations are insufficient to show that Jansen knew that the rent increases violated the provisions of section 1947.12, or that Jansen recklessly disregarded the Evergreens’ statutory rights. (See, e.g., Meek v. Fowler (1935) 3 Cal.2d 420, 425-426 [general discussion of “willful misconduct”].) The allegations are also insufficient to show, either expressly or by inference, that Jansen acted with knowledge of any statutory violations or with a conscious or deliberate intent to injure the Evergreens. (McDonell v. American Trust Co. (1955) 130 Cal.App.2d 296, 299-300 (McDonell).)

Instead, the Evergreens expressly allege in the FAC that Jansen contends that she mistakenly represented to the Evergreens that the premises was subject to the rent increase limitations imposed under section 1947.12, and that Jansen collected any purportedly illegal rent increases by “mistake”. (See FAC, ¶¶ 14 & 24.) The Evergreens also expressly allege that the first time Jansen was informed of the purported statutory violations was on March 6, 2024, less than a month prior to the date the Evergreens allegedly vacated the premises. (FAC., ¶¶ 15 & 26.) It can also be inferred from these express allegations that Jansen did not act in a willful, malicious, oppressive, or fraudulent manner, but was instead mistaken in her representations and conduct. (McDonell, supra, 130 Cal.App.2d at p. 300; see also College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 [describing “despicable” conduct sufficient to demonstrate malice or oppression for purposes of punitive damages].)

For all reasons discussed above, the allegations of the FAC describe, at most, careless or ignorant conduct by Jansen, which is insufficient to support an award of treble damages under subdivision (k)(1)(D) of section 1947.12. (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.) The remaining allegations of the FAC are conclusory and do not by themselves support a claim for treble damages under section 1947.12. Therefore, the Court will grant the motion to strike paragraph 32 and prayer paragraph 2 as to the first cause of action.

The Evergreens request leave to amend to permit them to “address the grounds upon which any part of [the motion] is granted, through the provision of additional detail and a record of [Jansen’s] willful actions in the retention of rents.” (Opp. at p. 17, ll. 1-3.) The Evergreens offer no factual or legal argument to show in what manner the FAC can be amended, or how any amendment will change its legal effect. (Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636.)

In addition, and as more fully discussed in the Minute Order, the original complaint of the Evergreens contained the same or similar deficiencies with respect to the sufficiency of the claim for treble damages under section 1947.12. Though the Court granted plaintiffs leave to amend their original complaint, these deficiencies persist in the FAC. For this reason, the Court questions whether there exists a reasonable possibility that the defects addressed herein can be cured by further amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Though there exists some question as to whether or not the Evergreens can allege facts sufficient to support an award of statutory treble damages under section 1947.12, in the interests of justice, the Court will grant the Evergreens leave to amend to state their best case.