Tracie West v. City of Santa Barbara

Case Number

25CV00695

Case Type

Hearing Date / Time

Wed, 07/16/2025 - 10:00

Nature of Proceedings

City of Santa Barbara’s Notice of Demurrer and Demurrer to First Amended Complaint

Tentative Ruling

For Plaintiff Tracie West dba Friends by the Sea: Janet Lawson

For Defendant City of Santa Barbara: Tom R. Shapiro, Assistant City Attorney and Heather A. Minter, Deputy City Attorney

RULING

The demurrer of Defendant City of Santa Barbara is sustained as to the first and second causes of action with leave to amend. Plaintiff shall file and serve a second amended complaint on or before August 5, 2025.

Background

Plaintiff Tracie West dba Friends by the Sea filed her Complaint for breach of contract, fraud, and negligence on January 31, 2025. Plaintiff filed her first amended complaint (FAC) on April 11, 2025, asserting causes of action for

(1) violation of Business & Professions Code section 17200, and (2) violation of Business & Professions Code section 17500.  

According to the FAC:

Plaintiff is a sole proprietor who operates a day care center in Los Angeles. (FAC, ¶ 1.)

In July 2023, Defendant City of Santa Barbara (the City) offered Plaintiff a two-year lease for certain property located at 130 East Cota Street. (FAC, ¶¶ 6, 7.) On May 3, 2024, City employee Michelle McDonnell (who is also referenced in the FAC as “Michelle McDonald”) requested that Plaintiff sign the lease. (FAC, ¶¶ 8, 9.) Pursuant to the terms of the lease, Plaintiff was required to obtain insurance and name the City as an additional insured. (Id., ¶ 9.)

Plaintiff also, pursuant to the terms of the lease and at McDonnell’s request, paid rent to the City for nine months in the amount of $23,578.00. (FAC, ¶ 10.) In addition, she made substantial improvements to the property in order to make it suitable for a licensed day care facility for children. (Id., ¶ 11.) The cost of these improvements was $91,799.38, (Ibid.)

On August 6, 2024, the City denied occupancy to Plaintiff on the grounds that:

(1) the City wanted to use the subject property as an office for construction workers who were scheduled to build a new police department across the street; and (2) th City had deemed it unacceptable to have a day care center located across the street from the police department. (FAC, ¶ 12.)

At all times the City knew that it planned to construct a police department

across the street from the property. (FAC, ¶ 13.) The City warned Plaintiff that her two-year lease would not be renewed in light of the construction, and Plaintiff accepted that her lease would not be renewed. (Ibid.)

 

Plaintiff alleges in her first cause of action for violation of Business and Professions Code section 17200 (the unfair competition law [UCL]) that the City and McDonnell fraudulently and unfairly misrepresented to Plaintiff that she would reap the benefit of the two-year lease if she paid rent and obtained insurance. (FAC, ¶ 17.) Plaintiff further alleges that “[i]n reliance on these false untrue or misleading [sic] representations [she] made the improvements to the subject property . . . [and] also paid the rent and paid for the requested insurance.” (Ibid.) 

Plaintiff’s second cause of action for violation of Business and Professions Code section 17500 (the false advertising law [FAL]) does not set forth any factual allegations but instead simply incorporates the preceding paragraphs of the FAC and then quotes the text of section 17500. (FAC, ¶¶ 21, 22.)

In its demurrer to the FAC, the City first argues that it is immune from liability for the misrepresentations made by an employee (McDonnell) regardless of whether the misrepresentations are fraudulent or negligent. (Demurrer, p. 6.) Next, the City argues, neither the UCL nor the FAL serve as a statutory basis upon which the City may be sued, and Plaintiff has otherwise failed to allege a statutory basis for liability. (Demurrer, pp. 8-10.) Finally, the City contends that the Court should sustain the demurrer to the first and second causes of action without leave to amend “due to the uncertain sham nature of the FAC with omitted and conflicting material facts that cannot be cured by amendment.” (Demurrer, p. 11.)

Plaintiff has not filed an opposition to the demurrer.

Analysis

(1)       Standards on Demurrer

The Court’s task in ruling on a demurrer is to determine whether the complaint states a cause of action. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300.) A demurrer admits the truth of all material facts properly pleaded (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 966-967), no matter how unlikely or improbable they may be (Del E. Webb Corp. v. Structural Materials Co. (1981) 123

Cal.App.3d 593, 604), or how unlikely it will be that Plaintiff will be able to prove the claim. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.) The Court also assumes the truth of all reasonable inferences that may be drawn from the properly pleaded facts. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083.) The assumption of truth does not apply, however, to

contentions, deductions, or conclusions of law or fact. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters, and therefore lies only where the defects appear on the face of the pleading or are judicially noticed. (Bach v. McNelis (1989) 207 Cal.App.3d 852, 864.)

(2)       The City’s Demurrer

As indicated above, Plaintiff’s first and second causes of action are based upon alleged violations of Business and Professions Code sections 17200 and 17500, respectively. Plaintiff alleges that she made substantial improvements to the City’s property, and paid rent and insurance in reliance upon the misrepresentations which the City made to her. She claims to have suffered damages in the sum of $115,377.38 as a result. (FAC, p. 6.)

Plaintiff, however, fails to allege a statutory basis for liability against the City. “[I]n California, ‘all government tort liability must be based on statute.’ ” (Hoff v. Vacaville Unified School Dist. (1998) 19 Cal.4th 925, 932; see Gov. Code, § 815.) “[I]n the absence of some constitutional requirement, public entities may be liable only if a statute declares them to be liable.” (County of San Bernardino v. Superior Court (2022) 77 Cal.App.5th 1100, 1107-1108.)

Standing alone, sections 17200 and 17500 of the Business and Professions Code do not serve as a proper basis for statutory liability on the part of the City as they do not contain an express declaration for public entity liability. (Trinkle v. California State Lottery (1999) 71 Cal.App.4th 1198, 1202 [“Nowhere in the Unfair Competition Act . . . is there a provision imposing governmental liability for violations of the act. Because there is no statute making public entities liable under the UCA, the general rule of governmental immunity must prevail.”].)

In addition to having failed to allege a proper statutory basis for liability against the City, Plaintiff’s misrepresentation allegations which serve as the basis for her two causes of action are precluded under Government Code section 818.8. This statute provides, “A public entity is not liable for an injury caused by misrepresentation by an employee of the public entity, whether or not such misrepresentation be negligent or intentional.”

Thus, the City is immune from liability for any misrepresentations on the part of its employees, including McDonnell. “ ‘[M]isrepresentation’ as a tort distinct from the general milieu of negligent and intentional wrongs, applies to interferences with financial or economic interest. The Legislature designed section 818.8 to exempt the governmental entity from this type of liability.” (Johnson v. State of California (1968) 69 Cal.2d 782, 800.) Immunity will prevail where the governmental misrepresentation interfered with either a commercial or a financial interest. (Tokeshi v. State of California (1990) 217 Cal.App.3d 999, 1006.)

Plaintiff’s alleged losses here are financial in nature, and therefore the City is shielded from liability under section 818.8.

Lastly, the City argues that the FAC is a sham pleading with conflicting allegations of fact. (Demurrer, pp. 10-12.) Here, the City asserts that in the breach of contract cause of action which was set forth in Plaintiff’s original complaint, Plaintiff alleges that on or about July 2023, the City offered two leases to Plaintiff, a one-year lease and a two-year lease, both of which Plaintiff alleges she relied upon to make substantial improvements to the property, obtain insurance naming the City as an additional insured, and pay nine months’ rent as called for in the leases. (Demurrer, p. 11.) Meanwhile, the City argues, Plaintiff alleges in the FAC that the City offered Plaintiff a written two-year lease on the property and omits any mention of a one-year lease. (Ibid.) The City also asserts that unlike her original complaint where Plaintiff alleged only that the City made false representations to her concerning its intent to lease the property, the FAC alleges that it was City employee McDonnell who made the representations, including that Plaintiff would “reap the benefit” of a two-year lease if she paid rent and obtained insurance. (Ibid.)

The City requests that the Court “sustain the City’s demurrer to the first and second causes of action without leave to amend due to the uncertain sham nature of the FAC with omitted and conflicting material facts that cannot be cured by amendment.” (Demurrer, p. 12.)

Under the sham pleading doctrine, Plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment. (Hendy v. Losse (1991) 54 Cal.3d 723, 742–743 [affirming an order sustaining Defendants’ demurrer without leave to amend when the Plaintiff filed an amended complaint omitting harmful allegations from the original unverified complaint]; see also Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151 [“If a party files an amended complaint and attempts to avoid the defects of the original complaint by either omitting facts which made the previous complaint defective or by adding facts inconsistent with those of previous pleadings, the Court may take judicial notice of prior pleadings and may disregard any inconsistent allegations.”].)

The sham pleading doctrine cannot be mechanically applied. (Dones v. Life Insurance Company of North America (2020) 55 Cal.App.5th 665, 688.) The doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts. (Ibid.) Rather, the doctrine must be taken together with its purpose, which is to prevent an amended pleading which is only a sham, when it is apparent that no cause of action can truthfully be stated. (Ibid.)

The Court is not convinced that the sham pleading doctrine should be applied here. In each complaint, Plaintiff alleges that she relied upon the two-year lease (in addition to the one-year lease as was alleged only in the original complaint), and the two-year lease is attached as an exhibit to both complaints. Plaintiff’s omission of any reference to the one-year lease in the FAC does not in and of itself render the FAC a sham pleading.

Further, Plaintiff’s allegations in the FAC concerning McDonnell’s alleged misrepresentations, and Plaintiff’s reliance upon the same, do not necessarily contradict Plaintiff’s allegations in the original complaint. If anything, the allegations in the FAC concerning the alleged misrepresentations made by McDonnell serve to identify which specific individual made the subject misrepresentations to Plaintiff on behalf of the City.

Finally, that exhibit C to the FAC appears to indicate that the two-year lease was offered to Plaintiff in 2024, and not in 2023 as Plaintiff alleges in both the original complaint and the FAC, does not render the FAC a sham. Rather, this could be an honest mistake or error which Plaintiff can address in a further amended complaint.

Accordingly, the demurrer is sustained with leave to amend.