BENKE, Acting P. J.—
Plaintiffs and proposed class representatives Jeffrey Schermer, David Moravee, Tom Fisher, Janice Wenhold, Karen Vielma, Gloria Carruthers and George Rivera (collectively plaintiffs) appeal from an
Plaintiffs brought a class action on behalf of residents who live in the 18 mobilehome parks. Plaintiffs alleged they were subjected to uniform unconscionable lease agreements and leasing practices by defendants. Plaintiffs' 48-page operative complaint (excluding voluminous exhibits) alleged among others causes of action (1) unfair business practices; (2) breach of the covenant of quiet enjoyment; (3) breach of duty of good faith and fair dealing; and (4) fraud and deceit.
On appeal, plaintiffs contend that the trial court prematurely dismissed their class allegations because their operative complaint adequately pleaded "a community of interest with typical class representatives and predominately common questions of law and fact" with respect to their four causes of action, and that in so doing, the court improperly assessed its action "on the merits and failed to properly credit [p]laintiffs' unambiguous allegations, which were supported by the actual form lease agreements attached to the [SAC]."
As we explain, we independently conclude the court properly sustained without leave to amend the demurrer to the class allegations in each of the four causes of action at issue, when it found there was no reasonable possibility plaintiffs could satisfy the community of interest requirement for class certification. Affirmed.
Plaintiffs filed their original class action complaint in January 2014. That complaint alleged a putative class consisting of every person "who had an ownership interest in a mobilehome in one of the Mobile Home Parks at any time since January 14, 2010 (the `Class')," which included a "`Senior Citizen Sub-Class'" in which all class members were over 65 years old and a "`Non-English Speaking Sub-Class'" in which all class members primarily communicated in Spanish, Chinese, Tagalog, Vietnamese, or Korean. In response to the demurrer of defendants, plaintiffs filed their first amended complaint (FAC) in April 2014.
Plaintiffs' FAC also set forth about 11 "factors" that plaintiffs alleged showed procedural unconscionability between plaintiffs and the putative class, on the one hand, and defendants, on the other. Such factors included among others "residents' poor socio-economic background" and defendants' "knowledge of residents' vulnerability to oppression." Plaintiffs also listed about 17 examples of substantive unconscionability in their FAC in connection with defendants' use of the standardized lease agreement in the 18 mobilehome parks. As before, plaintiffs' class action allegations included any person who had an ownership interest in a mobilehome in any of the 18 parks, and a senior citizen and non-English-speaking subclass.
Defendants demurred to plaintiffs' FAC. At the demurrer hearing, plaintiffs' counsel agreed with the court that plaintiffs' FAC was "a mess" and counsel admitted they "did a horrible job in succinctly and systematically putting forth facts that show what the [FAC] — what the case is about and how it shows a pattern of conduct that is deserving of being treated in a class action." The record shows the court next offered plaintiffs a "couple observations" regarding the FAC, including that the case was "complex" because defendants "have many mobile home parks"; that plaintiffs "only have a couple class representatives," "[n]one of whom are in any of the other parks"; that the case involved "individual contracts" between the parties; and that plaintiffs were "going to have a real difficult time ... naming and identifying a class" because plaintiffs needed separate representatives for each of the separate mobilehome parks.
In its subsequent order sustaining with leave to amend defendants' demurrer to the class allegations in the FAC, the court ruled in part as follows:
The SAC named seven class representatives from five of the 18 named mobilehome parks. The seven class representatives were identified as representatives of both the class and of five distinct park subclasses where they reside or resided. The SAC did not identify representatives for either the remaining 13 mobilehome park subclasses or the lease subclasses.
Plaintiffs in their SAC alleged that Tatum and Kaplan were general partners; that as partners, Tatum and Kaplan owned "directly or indirectly" each of the 18 mobilehome parks at issue; that each park was managed by the same management company, MCM; and that MCM used "standardized lease forms at each of the parks — changing only the name of the park on the form — meaning the lease provisions across the parks are highly uniform." Plaintiffs further alleged the preprinted form lease agreements used by MCM contained verbatim or virtually verbatim "material provisions that escalate[d] rent to unconscionable levels far above fair market rent"; violated the MRL; and "fraudulently misrepresent[ed] the nature and terms of the lease."
Plaintiffs also alleged in the SAC that Tatum and Kaplan, through MCM, implemented a "uniform, procedurally unconscionable procedure to dupe" plaintiffs and the class members into signing the alleged unconscionable lease agreements; and that in "each and every lease transaction with [p]laintiffs and [c]lass members, [d]efendants implement[ed] the following policy and procedure" to "trap" plaintiffs and the putative class members:
Plaintiffs further alleged in their SAC that because MCM allegedly used preprinted, standardized forms, the "lease agreements treat all residents alike regardless of which park they reside in"; that the rental increase provisions in the standardized lease resulted in unconscionable yearly rent increases; and
Defendants demurred to the class action allegations in the SAC on the grounds that such allegations did not include properly alleged facts showing a community of interest in the elements of the class claims and a typicality of the alleged claims by the putative class representatives against all of the multiple defendants. Specifically, defendants contended that even if they had standardized procedures and/or lease agreements, the claims of the putative class necessarily revolved around the individual application or use of such procedures and/or agreements, noting: "not only are there eighteen different properties, Lease Agreements, and (likely) damages calculations at issue, but the causes of action relate largely to how each individual Class member interacted with Defendants. Each Lease, even if identical, was individually negotiated and executed. The manner of the negotiation, the documents provided, the verbal representations made, the language used in the negotiation... these are all unique interactions. The only common thread in the SAC is that the Lease Agreements themselves may contain the same allegedly unconscionable terms."
Defendants in their demurrer further contended that the measure of damages would be unique to each park. In response to the allegations in the SAC that plaintiffs and the putative class members "paid excess rents for their spaces," defendants noted that because there were 18 parks located in 16 different cities, within seven different counties, in California, and because eight such mobilehome parks were in cities that contained rent control ordinances, the alleged damages suffered by each plaintiff and putative class member would be "unique — based upon the alleged excess rent paid on each space, which requires a factual showing of what the fair market value for rents would be in a particular area at a particular time, and a park-by-park damages appraisal." (Boldface & italics omitted.)
Defendants in their demurrer also contended that their alleged "unconscionable policies and/or procedures" (see fn. 1, ante) that were the primary basis of plaintiffs' first cause of action for unfair business practices "turn[ed] on the personal interactions between each park operator and the individual [p]laintiff, and whether [c]lass members received certain information, asked certain questions leading up to and during the execution of each [l]ease [a]greement, and were actually under duress when they agreed to specific changes to their [l]ease [a]greements," were all "factual issues" that varied from plaintiff to plaintiff. As such, even if the lease agreements turned out to be "functionally identical," defendants contended the "`tactics' employed by each [d]efendant entity against each [p]laintiff [would] constitute an individualized inquiry."
Finally, defendants contended the fourth cause of action for fraud was individualized because detrimental reliance was an inherently factual question and because plaintiffs contended in their alleged unlawful business practice allegations that defendants employed various "tactics" to "trap" and "dupe" plaintiffs and the putative class members, thus precluding detrimental reliance from being "inferred from the circumstances surrounding" the lease agreements.
Defendants also contended their demurrer to the class action allegations should be sustained without leave to amend because there was "no single ownership interest in the [d]efendant entities that would grant standing to all putative class members to sue all of the [d]efendants collectively." (Boldface & italics omitted.) As such, defendants contended the prerequisite that the claims of the representative party be typical of the putative class members could not be met.
Finally, defendants contended a class action lawsuit was unwarranted in this case because many of the putative class members were already involved in nearly identical litigation against some of the same defendants named in the instant case and because plaintiffs' system of 21 subclasses was overly complex and thus negated any benefit to maintaining a single class action. Defendants instead contended a park-by-park approach involving individual plaintiffs, as was the case in various actions that were then pending (as shown in connection with their request for judicial notice), made more sense for a variety of reasons.
In sustaining without leave to amend defendants' demurrer to the class action allegations, the court ruled the SAC failed to "allege facts sufficient to establish a community of interest in the elements of the class claims." Regarding the lack of commonality, the court noted the "problem in this case is that while defendants may have had standard procedures, products or policies in place, the claims of plaintiffs revolve around individual application or use of the policies. In this case, there are 18 different properties and lease agreements. The fact that the lease agreements may contain similar unconscionable terms, while significant for commonality, is not the end of the analysis. The causes of action relate largely to how each individual class member interacted with defendants. The leases were individually negotiated and executed.
After finding a lack of commonality with respect to each of the four causes of action at issue, the court next found "[a]nother significant problem with [the] class allegations in this case is multiple defendants. Pursuant to the Secretary of State business filings of which the Court has taken judicial notice, the ownership entity for each park is a separately owned, single-purpose limited partnership. (Exhibit 3[.]) This raises the problem of typicality of the representatives."
The court also found the class action was not the superior method of resolving the litigation. In making this finding, the court considered that many class members were then potentially involved in other litigation involving these same parks, thus supporting a finding that a park-by-park approach to such litigation was not only viable but more appropriate in light of the multiple issues created by joining the ligation across multiple parks. In addition, the court found sufficient individual issues made a class approach inefficient.
Because the court already had granted plaintiffs leave to amend to satisfy the commonality and superiority requirements for class action certification or to otherwise change the legal effect of their operative complaint, the court determined no basis existed for granting plaintiffs leave to file a third amended class action complaint.
"`On review from an order sustaining a demurrer, "we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]" [Citation.] We may also consider matters that have been judicially noticed. [Citations.]' [Citation.] `"[W]hen the allegations of the
"If a demurrer is sustained, we exercise our independent judgment on whether a cause of action has been stated as a matter of law, regardless of reasons stated by the trial court. [Citation.] We affirm if the trial court's decision was correct on any theory. [Citation.]" (Tucker, supra, 208 Cal.App.4th at pp. 210-211.)
When a demurrer is sustained without leave to amend, as in the instant case, "`we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.' [Citation.] Leave to amend should not be granted where amendment would be futile. [Citation.]" (Tucker, supra, 208 Cal.App.4th at p. 211.)
In sustaining defendants' demurrer to the class action allegations without leave to amend, the trial court in the instant case relied on Newell v. State Farm General Ins. Co. (2004) 118 Cal.App.4th 1094 [13 Cal.Rptr.3d 343] (Newell). In Newell, the plaintiffs were denied benefits by their homeowners insurance carriers after the Northridge earthquake. The complaint alleged the putative class consisted of insureds that had their claims denied because of one or more improper claims practices. The Newell court noted that "[e]ven if [the defendant insurers] adopted improper claims practices to adjust Northridge earthquake claims, each putative class member still could recover for breach of contract and bad faith only by proving his or her individual claim was wrongfully denied, in whole or in part, and the insurer's action in doing so was unreasonable. [Citation.] Thus, each putative class member's potential recovery would involve an individual assessment of his or her property, the damage sustained and the actual claims practices employed. [Citation.] In such cases, class treatment is unwarranted." (Id. at p. 1103.)
Second, that defendants Tatum and Kaplan, through MCM, may have used a lease agreement with similar clauses at each of the 18 different mobilehome parks named in the SAC does not establish that common questions of law or fact predominate over individual issues. (See Sav-On Drug Stores, supra, 34 Cal.4th at p. 332; Newell, supra, 118 Cal.App.4th at p. 1103.)
Instead, in light of the unconscionable policies and/or procedures (i.e., (a) through (h), fn. 1, ante) defendants allegedly engaged in, we conclude as a matter of law that individual issues predominate, inasmuch as (i) the alleged
Turning to the first cause of action for unfair business practices, plaintiffs in their SAC alleged defendants "engaged in unlawful and unfair business practices by utilizing the deceptive, oppressive and misleading tactics to trap [c]lass members into unconscionable leases without the ability to protect themselves, including but not limited to, conduct alleged in ¶¶ 49-50 [i.e., defendants' unconscionable policies and/or procedures as set forth in (a) through (h)]" in the SAC. In light of our conclusion ante that individual issues predominate with respect to the unconscionable policies and/or procedures alleged by plaintiffs, we independently find class treatment unwarranted in connection with plaintiffs' unfair business practices cause of action. (See Newell, supra, 118 Cal.App.4th at pp. 1103-1104.)
Indeed, plaintiffs in their SAC alleged that, as a result of defendants' unfair business practices and implementation of standardized unconscionable lease clauses, plaintiffs and the putative class members "suffered monetary losses and paid excess rent for their spaces." Plaintiffs thus sought restitution, repayment of the excess rental payments, and disgorgement of defendants' alleged improper profits.
However, because there are 18 mobilehome parks at issue in this case, 16 of which are located in different cities in California, and because eight of these parks are located in cities that contain rent control ordinances, we independently conclude recovery of any alleged excess rents paid by plaintiffs — and/or any disgorgement of ill-gotten profits obtained by defendants — would not only be unique as to each plaintiff and putative class member, but also as to each park. That is, determining excess rents and improper profits, if any, would depend in our view on a factual showing of what the fair market value for rents would have been in each park (and perhaps particular spaces within a given park), at any given time within the four-year class period. As such, for this separate and independent reason we independently conclude plaintiffs' first cause of action for unlawful business practices does not warrant class treatment.
We reach the same conclusion with respect to plaintiffs' second and third causes of action. In their second cause of action for breach of the covenant of quiet enjoyment, plaintiffs alleged in their SAC that defendants breached this covenant by "raising rents to unreasonable and unconscionable levels," "charging unlawful fees," and by subjecting plaintiffs and the putative class members to "illegal transfer" charges and/or fees that allegedly interfered with their ability to sell their mobilehomes.
As already noted, the issue of whether defendants Tatum and Kaplan, through MCM, charged unreasonable rents involves in our view substantial
Regarding "unlawful fees," we note that term is not defined in the SAC
Finally, we note the SAC dedicated a specific subclass to the illegal transfer fees allegedly imposed by defendants during the class period. Although defined (unlike the term "unlawful fees"), we nonetheless conclude individual issues predominate over common ones regarding the amount or amounts of such transfer fees, if any, paid by plaintiffs and the putative class members, and the amount of refunds, if any, of such transfer fees, at each of the 18 mobilehome parks named in the SAC. Our conclusion on this issue is buttressed by the fact that such transfer fees would not be paid by all plaintiffs or putative class members, but instead only by those class members who actually "transferred their interest in their mobilehome ... to another individual or entity" at each of the 18 parks.
In their third cause of action, plaintiffs alleged that they and the putative class members were in "an inherently unequal bargaining position" with defendants, thus making them "economic hostages," and that defendants breached the covenant of good faith and fair dealing "by engaging in the conduct alleged above, by charging unlawful fees and by raising rents to unreasonable and unconscionable levels." As before, we conclude such allegations necessarily involve individualized inquiries inasmuch as not all mobilehome owners are in the same economic position at even one of the 18 mobilehome parks, much less at all such parks located throughout California.
Moreover, in light of our conclusions ante that individual issues predominate over common ones with respect to the conduct at issue in the SAC, including the unconscionable policies and/or procedures defendants allegedly engaged in, and with respect to the alleged charging of unreasonable rents and "unlawful fees" by defendants across each of their 18 mobilehome parks,
Turning to the fourth cause of action for fraud and deceit, plaintiffs alleged that defendants "knowingly concealed, failed to disclose, and/or made false misrepresentations regarding material terms of the lease agreements." Plaintiffs further alleged in connection with this cause of action that defendants did so "with the intention of defrauding or inducing [p]laintiffs' and [c]lass members' reliance thereon"; and that plaintiffs and the putative class members "justifiably relied on [d]efendants' concealment, nondisclosure, and false misrepresentations, and as a proximate result were damaged."
Apart from reliance, plaintiffs' allegations that defendants "knowingly concealed, failed to disclose, and/or made false misrepresentations regarding material terms of the lease agreements" in our view would also require individual factual determinations regarding what each plaintiff and/or putative class member was told, or not told, as the case may be, by different defendants (and/or their agents) during the negotiation of each lease agreement at each of the 18 mobilehome parks during the proposed class period.
As noted ante, when, as here, a trial court sustains a demurrer without leave to amend, we review the decision not to allow further amendment under the abuse of discretion standard. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 889-890 [6 Cal.Rptr.2d 151] (Cantu).) We decide whether there is a reasonable possibility that the defect or defects in the complaint can be cured by an amendment; if so, the court has abused its discretion and we reverse. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865 [62 Cal.Rptr.3d 614, 161 P.3d 1168].)
"The burden of proving [a] reasonable possibility [of a curative amendment] is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].) "To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action. [Citations.] Absent such a showing, the appellate court cannot assess whether or not the trial court abused its discretion by denying leave to amend." (Cantu, supra, 4 Cal.App.4th at p. 890.)
Here, plaintiffs contend the trial court erred when it denied them leave to file a third amended class action complaint. They contend they could amend their complaint to clarify that their causes of action "are based only on the common terms and common leasing practices — not on terms and practices that varied from person to person." We disagree.
In light of the fact the proposed class included 18 mobilehome parks located throughout California and involved the negotiation of individual lease agreements by different defendants (and/or their agents) in each park, and in light of the fact the causes of action at issue involved the conduct of defendants with respect to the negotiation, execution, and/or enforcement of each such lease, we conclude there is no reasonable possibility that plaintiffs could amend their class action complaint yet again to assert causes of action that allegedly are based only on "common leasing practices" of defendants throughout all 18 parks.
In addition, we separately conclude there is no reasonable possibility plaintiffs, by further amendment, could cure their class action allegations with respect to the four causes of action at issue because, in our view, their attempts to recover excess rent, disgorgement of profits, and other damages and/or fees from defendants involve substantial and numerous factually
The order granting defendants' demurrer to the class action allegations in the four causes of action at issue is affirmed. Defendants to recover their costs of appeal.
Huffman, J., and Haller, J., concurred.
