Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County No. SC093544, Patricia L. Collins, Judge. Reversed with directions.
Harold E. Griffin; and Rosario Perry for Plaintiffs and Appellants.
Frederick Barak for Defendants and Respondents.
Retired Associate Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
A real estate investment company and its principal appeal from a judgment of dismissal entered after the trial court sustained the former real estate property managers’ demurrers without leave to amend to causes of action for intentional interference with contractual relationships and conversion. We find no error in the trial court’s rulings in sustaining the demurrers but we reverse and remand with directions to allow plaintiff one more opportunity to amend its complaint.
BACKGROUND
For purposes of review, we assume the truth of the following allegations of the second amended complaint.
The trial court declined to take judicial notice of documents and deposition testimony attached as exhibits to the demurrers and included in the record on appeal. (See Evid. Code, § 452.) No party has requested judicial notice of these materials in this court and we decline to judicially notice these materials on our own motion. (See Evid. Code, § 459.)
On his death in 2005 Delbert L. Edelmann gave to four of his friends four contiguous properties at 944, 948, 952 and 958 12th Street in Santa Monica. Respondent Kristie Marinello received one of the properties. With the exception of one unit, Marinello had been the property manager of all the residential units on all four properties, as well as for other properties held by the Delbert L. Edelmann Family Trust.
Appellant, Andrew H. Enayati, invested in real estate in Santa Monica through his company appellant ENA9, LLC (collectively Enayati). In September and October 2006 Enayati purchased the eight-unit apartment complex at 944 12th Street and the three-unit property located at 952 12th Street. The sellers were two other recipients of Edelmann’s largess. Paragraph eight of both purchase contracts specified eight categories of documents the sellers were required to “disclose, make available or deliver, as applicable,” to the buyer, Enayati, in escrow. Regarding rental agreements, this paragraph of the contracts stated: “Seller shall make available to Buyer for inspection and review: (i) all current leases, rental agreements, service contracts, and other agreements pertaining to the operation of the Property; (ii) a rental statement including names of tenants, rental rates, period of rental, date of last rent increase, security deposits, rental concessions, rebates or other benefits, if any, and a list of delinquent rents and their duration. Seller represents that no tenant is entitled to any rebate, concession, or other benefit, except as set forth in these documents. Seller represents that the documents to be furnished are those maintained in the ordinary and normal course of business.”
As the property manager, Marinello was also the custodian of records for these residential properties. It was thus Marinello’s responsibility to produce before the close of escrow the documents called for in the sales contracts for the properties located at 944 and 952 12th Street.
Sale of the two buildings closed in September and October 2006 respectively. After title transferred, Enayati discovered irregularities in certain of the rental agreements. Enayati learned Marinello’s husband had a month-to-month rental agreement with Edelmann to use a storage facility annexed to a garage of a property Enayati had purchased. The monthly rent called for in the lease was $40 per month. Enayati did not recall reviewing this rental document prior to the close of escrow. Because Enayati believed this monthly rental amount was so far below market value he ordered Marinello’s husband to vacate the premises.
Before escrow closed Marinello asked permission for a tenant to adopt a cat which had belonged to another tenant who had just passed away. Enayati refused permission, and with the sellers’ concurrence, enforced the no pet policy in the rental units. After escrow closed, Enayati began eviction proceedings against the tenant who wanted to adopt the cat. During the eviction proceedings, Marinello produced a document indicating Edelman, as the original grantee, the sellers of the properties, and she, as the property manager, had all authorized the tenant to adopt the cat on his neighbor’s death. As part of the unlawful detainer action against the tenant, Enayati scheduled Marinello’s deposition and issued a subpoena requesting she bring all documents pertaining to all properties to her scheduled deposition. Instead, counsel for Enayati went to Marinello’s office and personally removed boxes of documents containing the records pertaining to the properties. Enayati’s examination of the business records in the boxes revealed additional inconsistencies: (1) Marinello had in the unlawful detainer action misrepresented that the tenant had been authorized to adopt his neighbor’s cat; (2) Marinello had altered rental documents without proper authorization; and (3) Marinello had not delivered all the business records she was required to produce in conjunction with the sale of the buildings. In addition, Marinello admitted in her deposition taken as part of the unlawful detainer action against the tenant that she had retained copies of certain unidentified documents in her office, which copies were not then present at her deposition.
When Enayati’s counsel declined to return the boxes of documents voluntarily, Marinello called the police and filed a police report. Compelled by court order, Enayati’s counsel later returned the boxes to Marinello. Shortly thereafter, Marinello was replaced as property manager and directed to turn over all documents pertaining to all properties to the new management company Enayati selected.
In July 2007 Enayati filed his first amended complaint against Marinello, her husband, Tom Marinello, and “Kristie’s Trust” as part of the Delbert L. Edelmann Family Trust (collectively Marinello). The first amended complaint alleged causes of action for intentional interference with contractual relationships, claim and delivery, “or in the alternative replevin or conversion”. Enayati attached copies of the two real estate purchase contracts to his complaint as exhibits. The crux of Enayati’s causes of actions was his claim of an absolute contract right to possession of all records pertaining to the buildings he purchased and his claim Marinello’s failure to deliver all such documents in escrow was an actionable breach of contract.
Marinello demurred to Enayati’s first amended complaint. At the hearing on the demurrer, the court noted there was no interference with the contracts to sell the properties as Enayati’s complaint on its face stated the sales had closed. Enayati countered by arguing performance under the contracts was incomplete because Marinello had interfered with full performance of those contracts by withholding records pertaining to the properties he had purchased. Enayati acknowledged he had subpoenaed all the business records and that records were produced. However, Enayati asserted, Marinello had not produced “all” of the records, and was thus liable for “failure to perform” under the sales contracts.
The trial court concluded Enayati did not, and could not, allege any interference with the sales contracts, because the allegations of the complaint showed the sales contracts had been fully executed. Accordingly, the trial court sustained Marinello’s demurrer to the cause of action for intentional interference with contractual relationships without leave to amend. The court also sustained without leave to amend Enayati’s purported causes of action for claim and delivery and replevin on the ground these were remedies rather than substantive causes of action. Finally, the court found the complaint failed to state facts sufficient to state a cause of action for conversion, noting the “conversion claim fail[ed] to allege specific identifiable items that were converted, and again, the complaint alleges that whatever documents were initially wrongfully retained have been produced.” The court nevertheless granted Enayati leave to amend his conversion claim.
The trial court also granted Marinello’s motion to strike Kristie’s Trust as a defendant on the ground the trust was not a party to the contracts alleged in the complaints, and, in addition, the trust itself, rather than its trustee, was not a proper party to a lawsuit. In his opposition to Marinello’s motion to strike, Enayati acknowledged he only included Kristie’s Trust as a defendant because it was part of the overall Delbert L. Edelmann Family Trust and “charged with actual knowledge of the contracts [allegedly interfered with].”
Enayati filed a second amended complaint for conversion. The allegations of the complaint did not identify any specific documents, nor any specific category of documents, Marinello had allegedly wrongfully withheld. The second amended complaint generally refers to the “subject documents” or to “business records” for “the subject properties.”
Marinello demurred to the second amended complaint. At the hearing on the demurrer Enayati acknowledged he had had an opportunity to review rental agreements and other relevant documents before escrow closed. On further questioning by the court, Enayati also agreed he had possession of all the documents pertaining to all the properties after his counsel personally retrieved boxes of documents directly from Marinello’s office in preparation for her deposition in the unlawful detainer action against the tenant who wished to adopt the deceased tenant’s cat. The court pointed out that in any event the sales contracts only obligated the sellers, and by extension Marinello, to make the documents available for “inspection and review,” and did not obligate either the sellers or Marinello to permanently give these documents to Enayati. In addition, the court found the second amended complaint still failed to identify any document which was required to be produced in escrow but which was not. The court sustained Marinello’s demurrer without leave to amend to the second amended complaint’s cause of action for conversion and dismissed the action. Enayati appeals from the ensuing judgment of dismissal.
The trial court entered a minute order on October 30, 2007 sustaining Marinello’s demurrer to the second amended complaint without leave to amend. Enayati filed a notice of appeal on November 7, 2007 which identified two orders from which he was appealing: (1) the August 14, 2007 order sustaining Marinello’s demurrer without leave to amend to his cause of action for intentional interference with contractual relationships and (2) the October 30, 2007 order sustaining Marinello’s demurrer without leave to amend to his cause of action for conversion. Subsequently, on November 27, 2007 the trial court entered a written order of dismissal. (Code Civ. Proc., § 581d [“All dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action and those orders when so filed shall constitute judgments of the court and be effective for all purposes”].) We treat Enayati’s notice of appeal as premature and construe it as an appeal from the November 27, 2007 judgment of dismissal. (Cal. Rules of Court, rule 8-104(e)(1) [“A notice of appeal filed after judgment is rendered but before it is entered is valid and is treated as filed immediately after entry of judgment”].)
DISCUSSION
Standard of Review
“On appeal from an order dismissing a complaint after the sustaining of a demurrer, we independently review the pleading to determine whether the facts alleged state a cause of action under any possible legal theory. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967; Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 998.) We give the complaint a reasonable interpretation, ‘treat[ing] the demurrer as admitting all material facts properly pleaded,’ but do not ‘assume the truth of contentions, deductions or conclusions of law. [Citation]’ (Aubry, at p. 967.) We liberally construe the pleading with a view to substantial justice between the parties. (§ 452; Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1120.)
“‘“Where the complaint is defective, ‘[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his [or her] complaint.”’” (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 970.) Leave to amend may be granted on appeal even in the absence of a request by the plaintiff to amend the complaint. (Id. at p. 971; see § 472c, subd. (a).) We determine whether the plaintiff has shown ‘in what manner he [or she] can amend [the] complaint and how that amendment will change the legal effect of [the] pleading.’ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) ‘[L]eave to amend should not be granted where . . . amendment would be futile.’ (Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685.)” (Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 414.)
Intentional Interference With Contractual Relationships
“‘The elements which a plaintiff must plead to state a cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’ (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.)” (Quelimane Co., Inc. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55; see also, Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1155.)
The only contractual relationships mentioned in Enayati’s first amended complaint are the purchase agreements for sale of the two properties at 944 and 952 12th Street in Santa Monica. Enayati attached copies of these contracts as exhibits to the complaints. The first amended complaint alleged the parties completed the purchase agreements and the sales closed in September and October 2006 respectively. The admission of a fact in a pleading is a judicial admission which has the effect of establishing the truth of the fact. (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1271.) The fact the sales closed indicates that during the escrow Marinello satisfactorily fulfilled the condition of making available for inspection and review the documents specified in the sales contracts relating to those properties.
If this was not true, either the sales would not have closed or Enayati would have had a claim against the sellers.
Enayati did not allege, and cannot allege, any “actual breach or disruption of” the only contractual relationships at issue in this case. Given Enayati’s factual concession the sales closed, leave to amend the cause of action for intentional interference with contractual relationships would be futile. (Davaloo v. State Farm Ins. Co., supra, 135 Cal.App.4th at p. 414.) Accordingly, the trial court properly sustained Marinello’s demurrer to this cause of action in Enayati’s first amended complaint without leave to amend.
Conversion
“‘Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion are the plaintiff’s ownership or right to possession of the property at the time of the conversion; the defendant’s conversion by a wrongful act or disposition of property rights; and damages. It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his [or her] own use. [Citations.] [Citation.]” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 451-452; see also, Moore v. Regents of the University of California (1990) 51 Cal.3d 120, 136 [“‘To establish a conversion, plaintiff must establish an actual interference with his ownership or right of possession’”].)
In his second amended complaint Enayati alleged that with his purchase of the properties, he now owned, and thus had the right to possession of, all business records in Marinello’s possession which related in any way to those properties, and that Marinello had wrongfully withheld those documents. By itself, that was sufficient to state a cause of action for conversion. But the second amended complaint contained further specific allegations regarding the matter.
Specifically, Enayati alleged in his second amended complaint, Marinello “wrongfully converted the subject documents for use in an office in a continuing refusal to produce at deposition and for the transparent purpose of establishing ownership rights along with their possession of the subject business records which are defined as personal property used in the operation of the subject buildings that were to be produced during escrow prior to the sale of the subject buildings and then under subpoena at a deposition. These business records were to be produced under the terms of the subject contracts and were not. These business records were to be produced at deposition in response to a deposition subpoena duces tecum and were not.” The pleading then contradicts itself when it alleges that counsel for plaintiff picked up the documents in question “and transport[ed] them to the deposition[.]” The complaint further alleges that “[e]xamination of the Boxes revealed” certain inconsistencies.
The contradictory allegations of the second amended complaint show Enayati both received and examined the boxes of documents relating to the properties he purchased. An admission of a fact in a pleading is a judicial admission, sufficient to establish the truth of the fact. (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at p. 1271.) Further, Enayati’s opposition to Marinello’s demurrer to the first amended complaint admitted all documents “were made available at deposition and [were also] present in Court for the morning of trial [of the unlawful detainer action].”
Given the contradictory allegations within the second amended complaint and in the record before the trial court, the trial court did not err in sustaining the demurrer to this cause of action.
Leave to Amend
The demurrer to the conversion cause of action was sustained without leave to amend. Given the contradictory nature of the pleading at issue and the flurry of improper materials thrown at the trial court in support of the demurrers, the nature of the claim being asserted was somewhat obfuscated. This became clear at oral argument when we were informed that the documents were in fact produced at Marinello’s deposition but they were later ordered returned to her by a judge in connection with another action and, it is asserted, they still haven’t been turned over to appellant. The second amended complaint did not make this clear.
In connection with their demurrers, respondents sought to have the court judicially notice various items for which judicial notice is not appropriate including two receipts purportedly for the documents at issue signed for by the new property manager when they were turned over by Marinello at the direction of Enayati. (See Evid. Code, §§ 450-452.)
Simply stated, the conversion cause of action is based upon appellant’s claim that the documents were part and parcel of the purchase of the properties and they have not yet been turned over despite directions by the prior owners to Marinello to do so. Whether they have or not is not currently before this court. We agree that appellant should have one last opportunity to simplify the pleading and allege a valid claim for conversion.
DISPOSITION
The judgment of dismissal is reversed. The matter is remanded to the trial court which shall allow appellant to file a third amended complaint. Each side to bear its own costs on appeal.
Given that we have concluded appellants should be allowed to amend, the motion to dismiss the appeal and the request for sanctions are denied.
We concur: MALLANO, P. J., ROTHSCHILD, J.
The trial court did not err in granting Marinello’s request to strike Kristie’s Trust as a defendant. In any litigation involving trust property, the trustee, rather than the trust, is the real party in interest. (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1132, fn. 3; Nicholson v. Fazeli (2003) 113 Cal.App.4th 1091, 1102; see also, Code Civ. Proc., § 436, subd. (b) [the court may in its discretion “(s)trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court”].)