Mohammad Farha vs. Michelson Marketplace Venture, LLC

Motion to Strike

Cal. Super. - 4th Dist.September 23, 2015

o e 1 S N n t B R W N - D D B N N N N N N e m e m e m - ® 2 S U E W N =~ 3 0 ® O a a R= o n o ZZ = SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership Including Professional Corporations MICHAEL D. STEWART, Cal. Bar No. 161909 mstewart@sheppardmullin.com 650 Town Center Drive, 4" Floor Costa Mesa, California 92626-1993 Telephone: 714.513.5100 Facsimile: 714.513.5130 Attorneys for Defendant MICHELSON MARKETPLACE VENTURE, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ORANGE, CENTRALJUSTICE CENTER MOHAMMAD FARHA,an individual, Case No. 30-2015-00811246-CU-BC-CIC Plaintiff, Judge: Hon. Martha Gooding Dept.: C-34 V. MICHELSON MARKETPLACE DEFENDANT’S NOTICE OF VENTURE LLC, a Delaware limited MOTION; MOTION TO STRIKE; liability company; and DOES 1 through AND MEMORANDUM OF POINTS 25,inclusive, AND AUTHORITIES Defendants. [Court Reservation No. 72340810] Hearing: Date: April 25, 2016 Time: 1:30 p.m. Dept.: C-34 Complaint Filed: September 23. 2015 SMRH:475985993.1 MOTION TO STRIKE O 0 0 O Y U t B W R e e I N N N N N O N e m e m ® 2 L E W D = 3 0 % ® d e a E S R = TABLE OF CONTENTS Page I. INTRODUCTIONceteraeee eater ea eae eee e eeeeeeeeeee3 II. TENANTS ALLEGATIONScoeeeeeee eeeeeeester,4 II. THE COURT MAY STRIKE A TENANT'S DAMAGE ALLEGATIONS ............. 6 IV. A MOTION TO STRIKE IS PROPER IF PLAINTIFF'S EXHIBITS UNDERMINE ITS ALLEGATIONSLooeeectseee,7 V. TENANT'S JUDICIAL ADMISSIONS BAR ITS DAMAGE ALLEGATIONSLoeeeeeee ee7 VI. THE LEASE BARS TENANT’S DAMAGE ALLEGATIONSooo7 VII. THE FRITTELLI COURT REJECTED THE SAME ALLEGATIONS AND EXCUSES ADVANCED BY TENANT IN HIS FAC........cccooeeeeeeeeceeceee9 VIII. REFORMATION FAILS BECAUSE TENANT FAILED TO OBTAIN SUCH RELIEF BEFORE LANDLORD PURCHASED THE SHOPPING CENTERii11 IX. TENANT'S FAC DOES NOT ALLEGE A PROPER BASIS FOR REFORMATION OF ANY PROVISION IN THE LEASEooo12 X. TENANT'S ALLEGATIONS THAT HE WAS “UNAWARE” OF CERTAIN LEASE TERMS DOES NOT NEGATE THE EXPRESS TERMS OF THE S 13 XI. TENANT'S ALLEGED LANGUAGE DIFFICULTY DOES NOT NEGATE THE EXPRESS TERMS OF THE LEASEooo14 XL. CONCLUSIONcoteeeeee eee eeeeee ee15 -i- SMRH:475985993.1 “MOTION TO STRIKE N O 0 3 N U R s W N ) 0 D 2 1 N N N N N N m m e m e m ® 9 3 G E O U R =~ 3S 0% ®» 9 5 a R O 0 3 TABLE OF AUTHORITIES Page(s) State Cases Barnett v. Fireman's Fund Ins. Co. (2001) 90 CalLAPP.Ath S00 ...ciieieiieectseeeetereee7 Bolanos v. Khalatian (1991) 231 CalLAPDP.3A T5806cei15 Frittelli, Inc. v. 350 North Canon Drive, LP (2011) 202 CalLAPP.Ath 35e e1,3,7.8.9,10, 13. 14 George v. Automobile Club ofSouthern Calif (2011) 201 CalLAPP.Ath 1112i i7 Oakland Bank ofCommerce v. Washington (1970) 6 CalLAPD.3A 793 eeeeeee13 Pacific Intermountain Express Co. v. Alexander (1962) 205 CalLAPP-2d 640eeveeees3,11, 12 Reichert v. General Ins. Co. (1968) 08 Cal.2d 822eeeeeeeee7 Saberiv. Bakhtiari (1985) 169 CalLAPP.3A S09ceieee6 Union Bank v. Ross (1976) 54 CalLAPDP.3A 291ceo13,15 State: Statutes, Rules, Regulations, Constitutional Provisions Civil Code § 3399...eeeeee11,12 Code of Civil Procedure §§ 435, €1 Sq. c.oovovvioviiiiiiiiieeeeeeeeeeeeeeeeeeeeeee ] -11- SMRH:475985993.1 MOTION TO STRIKE O e 3 N U B A W N 0 D B N N Y N N N N m m e m o e ® 2 d L E O N =~ 3 9% %® 4 9 a a R o o 3 NOTICE OF MOTION AND MOTION TO STRIKE TO THE ABOVE-CAPTIONED COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on April 25, 2016 at 1:30 p.m., or as soon thereafter as this matter can be heard, in Department C-34 located at 700 Civic Center Drive West, Santa Ana, California, defendant Michelson Marketplace Ventures, LLC (“Landlord”) will and hereby does bring on for hearing its motion to strike from plaintiff Mohammad Farha’s (“Tenant”) first amended complaint (“FAC”) any reference to monetary damage claims in Tenant's (1) first cause of action for Breach of Contract - Lease: (2) second cause of action for Breach of Contract - Quiet Possession; (3) third cause ofaction for Breach of the Covenant of Good Faith and Fair Dealing; and (4) prayerfor relief. This motion to strike is made pursuant to Code of Civil Procedure §§ 433, ef seq. and on the grounds that Tenant's monetary damage claims are precluded by (1) the exculpatory provision in the governing commercial lease; and (2) Tenant's judicial admissions in his FAC that: “based on the exculpatory provision in the I.case, monetary damages are not available” and “Section 8.8. of the Lease precludes any monetary recovery by Plaintifffor the loss of business that Plaintiff will incur as a result of being relocated to a space not contemplated by the parties.” (FAC, 446, 9:10-11; 952, 10:10-12; and see Frittelli, Inc. v. 350 North Canon Drive, LP (2011) 202 Cal.App.4th 35.) Accordingly, Landlord respectfully requests that the Court strike the following references in Tenant’s FAC: 1. With respect to the first cause of action for Breach of Contract - Lease, the phrase “As a proximate result of Defendant’s breach, Plaintiff has been damaged in a sum according to proofat trial,” in lines 19-20 in paragraph 28 on page six of the FAC. SMRH:4759859931 MOTION TO STRIKE S O X N n R e W N D O R N N N N N N ® N v E W ~~ 3 0 ® a a E S D = 2. With respectto the second cause ofaction for Breach of Contract - Quiet Possession, the phrase “and will suffer damages in amount to be proved at trial,” in line 12 in paragraph 33 on page seven of the FAC. 3. With respect to the third cause of action for Breach of the Covenant of Good Faith and Fair Dealing, the phrase “As a proximate result of Defendant’s breach. Plaintiff has been damaged in an amountto be proved at trial” in lines 10-11 in paragraph 40 on page eight of the FAC. 4. With respectto the prayer for relief, the phrases “1. For compensatory damages, in a sum according to proof at Trial” and “2. For damages for economic loss in a sum to be determined at Trial” in lines 22-23 on page ten of the FAC. This motion to strike is based upon this notice of motion and motion, the attached memorandum of points and authorities in support thereof, and all of the pleadings, records, and papers on file herein, as well as such other oral argument as may be presented at the hearing ofthis motion. Dated: March 17,2016 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP MICHAEL D. STEWART Attorneys for Defendants MICHELSON MARKETPLACE VENTURE, LL.C SMRH:475985993.1 MOTION TO STRIKE o R N n B s W N ) B D N N N N N N N N e m e e ® N d L E O N =~ 3S 8 » d a a R n D = I. INTRODUCTION As detailed in the notice of motion, defendant Michelson Marketplace Ventures, LLC (“Landlord”) movesto strike certain damage claims alleged in the first amended complaint (“FAC”) filed by plaintiff Mohammad Farha (“Tenant”). The case of Frittelli, Inc. v. 350 North Canon Drive, LP (2011) 202 Cal.App.4th 35 is truly dispositive. Frittelli dealt with the same lease terms - and in fact the same AIR commercial shopping center lease - at issue in this case. Like Tenant, the tenant in Frittelli argued that the lease’s damage limitations should not bar tenant’s monetary claims stemming from the landlord’s remodel of the shopping center. Like Tenant, the tenant in Frititelli sued its landlord for breach oflease, breach of the covenant of quiet enjoyment, and related causes of action. The Court of Appeal in Frittelli dismissed the tenant’s lawsuit, holding that (1) the lease clearly allowed the landlord to remodel the shopping center even if it caused the tenant to lose business; (2) the damage limitationsin the lease expressly barred tenant's damages; (3) the tenant was relegated to rent abatement and insurance recovery: (4) the lease’s damage limitations were sufficiently conspicuous; and (5) the fact that the tenant. who signed the lease and initialed each page, was not aware ofthe limitation provisions was legally irrelevant. This is Landlord’s section motion to strike Tenant's damages. Tenant evaded the first motion by arguing that its cause ofaction for reformation of the lease sought (or could be amended to seek) to reform the leases damage limitation provisions. The Court allowed Tenant to amend to include those allegations. However, Tenant's reformation cause of action cannot save Tenant’s damage claims because as Tenant admits in its FAC, Landlord is Tenant’s successor landlord and tenantfailed to reform the lease with his original landlord. See Pacific Intermountain Express Co. v. Alexander (1962) 205 Cal.App.2d 640, 643-644 (tenant “foreclosed from seeking to reform the lease to express the intent ofthe original parties” as against successor landlord). SMRH475985993 1 MOTION TO STRIKE © N O 0 N N N N n B W R ) e m D D N N N N N N e e ® 2 d G E W R N = 3S 0 ®» d o a R E D D = II. TENANT’S ALLEGATIONS The Lease In 2013, Tenant entered into lease for 545 square feet of restaurant space at the shopping center located at 2222 Michelson Drive, Irvine, California (the “Shopping Center”). (FAC, 99 6 and 7.) Tenant operates a restaurant known as Gourmet Burgers at the Premises. (/d., 9 10.) As Tenant notes,its lease is a “Standard Retail/Multi-Tenant Lease-Net” (the “Lease”). (/Id.,¥ 6.) Tenant incorporates the Lease as part of its allegations, stating: “A copy of the Lease is attached hereto as Exhibit “1° and incorporated herein.” (/d.) Landlord Is The Successor in Interest to The Lease Tenant alleges he and his prior landlord, Wilks Land Company. executed the Lease in 2013. (FAC, 996 and 11.) Tenant further alleges he and his prior landlord had a “mistake” justifying reformation ofthe Lease. To wit, Tenant and his predecessor landlord: “intended that [Tenant] would lease space in the food court arca of the Shopping Center” and could not be relocated outside ofthe food court area. (/d., § 49). Tenant further alleges “the above failure of the Lease to reflect the true intent of the parties resulted in a unilateral mistake of [Tenant] in not understanding that Wilks Land Company would transferits interest in the Lease, Premises and Shopping Center and that the successor lessor, Defendant, would attemptto relocate [Tenant]outside of the food court. (/d., 952.) Over a yearlater, Tenant alleges “in September 2014 that Wilks [Land Company, the lessor under the Lease, had sold its interest in the Michelson Marketplace to Defendant.” (FAC, 9 14.) As such, Tenant alleges Landlord “is the successor in interest to Wilks Land Company, having been assigned all rights,title and interests in and to the Lease, Premises and Shopping Center.” (/d.) Nowhere does Tenant allege he and his prior landlord entered into a reformed Lease to reflect the alleged deal they had struck; and of course had they done so, Tenant would not be suing its current landlord for reformation ofthe Lease. -4- SMRH:475985993.1 MOTION TO STRIKE S N D a N n n R A W Y - 0 D N D N N N N D N N r t ® N 9 3 G E O N =~ 3 0% ® 9 a 0 R o n = 3 The Relocation Notice Pursuant to paragraph 42 of the Lease (Exh. 1 to FAC), Landlord has the express right to relocate Tenant to a space that is the same or larger size and has “comparable visibility located elsewhere within any ofthe buildings within the Shopping Center.” In July 2015, Landlord sent Tenant a Relocation Notice “advising |Tenant] that [Landlord] was exercising its election under [paragraph] 42 of the Lease to relocate [Tenant] to another space in the Shopping Center.” (Id., 15.) Pursuant to paragraph 42. Landlord shall “construct improvements comparable to those currently in the Premises at [Landlord’s] sole cost and expense.” Tenant contests Landlord's right to relocate Tenant to the designated Relocation Space, and seeks damages for lost business due to the relocation. The Court Denies Tenant’s Requested Preliminary Injunction In Tenant’s fifth cause of action, entitled “Injunctive Relief,” Tenant sought to enjoin Landlord’s “conduct of relocating [Tenant] to space that is not of comparable visibility and in violation of the Lease” because such relocation would cause Tenant to “lose significant exposure and loss of business.” (FAC, 4 45.) On October 15, 2015, the court denied Tenant’s application for a preliminary injunction. Paragraph 42 of the Lease states, in part, “Lessor shall have the right at any time or times, upon giving Lessee not less than 60 days prior written notice, to provide and furnish Lessee with space of comparable visibility located elsewhere within any of the buildings within the Shopping Center and to move Lessee into such new space, provided that the usable area of such new space is not less than the usable area of the Premises and provided that all of Lessee’s reasonable out-of- pocket moving expenses (including but not limited to the cost of moving Lessee’s personal property, the cost of reprinting Lessee’s stationery or other business materials with the new address, and the cost to relocate and reinstall tenant improvements and Lessee’s telecommunications and computer equipment) shall be paid by Lessor, and provided further that Lessor shall construct at Lessor’s expense such improvements to such new space as shall be necessary to place it in a condition that is substantially comparable to the Premises.” (Exh. I to FAC.) SMRH:475985993.1 MOTION TO STRIKE S O X N n B s W N e s D N B R N N R D N e m m e ® N A U E W O N ~~ 3S 0% ®» a e a R n n ZZ 3 The Lease’s Damage Limitations Paragraph 2.12 of the Lease allows the Landlord to remodel the Shopping Center and states: “Lessee shall not be entitled to any damages” resulting from such remodel. but shall be entitled to a rent abatement. Paragraph 8.4(b) of the Lease, entitled “Business Interruption,” required Tenant to obtain business interruption insurance (“Lessee shall obtain and maintain loss of income and extra expense insurance”). As Tenant correctly notes in his FAC, paragraph “8.8 provides,in part, ‘[n]otwithstanding the negligence or breach ofthis Lease by Lessor orits agents, neither Lessor nor its agents shall be liable under any circumstances for . . . (3) injury to Lessee’s business or for any loss of income or profits therefrom.” (/d., 4 18.) Tenants admits he executed the Lease but alleges he was “was unaware of [paragraph] 8.8 ofthe [ease, entitled ‘Exemption of Lessor and its Agents from Liability.” (/d.) Tenant’s Judicial Admissions Tenant admits in his FAC that “based on the exculpatory provision in the Lease, monetary damages are not available.” (/d., § 46.) Tenant further admits that paragraph “8.8 of the Lease precludes any monetary recovery by [Tenant] for the loss of business that [Tenant] will incur as a result of being relocated to” the Relocation Space. (/d., 4 52.) Tenant’s Request For Damages Despite Tenant's repeated admissions that the Lease terms bar “any monetary recovery,” Tenant seeks damages “according to proofat trial” (id. 9 28. 33, 40) and “compensatory damages” for “economic loss” (id., Prayer). III. THE COURT MAY STRIKE A TENANT’S DAMAGE ALLEGATIONS A motion to strike may target improper damage allegations in a breach oflease case. Saberiv. Bakhtiari (1985) 169 Cal.App.3d 509, 517 (an objection to the request for pretermination rent may be raised by a motion to strike the allegations pertaining thereto™); PH II, Inc. v. Sup. Ct. (Ibershof) (1995) 33 Cal.App.4th 1680, 1682-1683. More generally, CCP § 436 provides that the Court may “[s]trike out any irrelevant, false, or improper matter inserted in any pleading.” Section 431.10(c) defines “irrelevant _6- SMRH:475985993.1 MOTION TO STRIKE O e N n B R W N R N N Y N N N O N m e m m e m e m e e pe e p e matter” as being synonymous with “immaterial allegation.” A motion to strike can properly challenge a “request[] [for] relief not supported by the allegations ofthe complaint or cross-complaint.” CCP § 431.10(b). IV. A MOTION TO STRIKE IS PROPER IF PLAINTIFF’S EXHIBITS UNDERMINE ITS ALLEGATIONS A motion to strike may be premised on exhibits to the complaint. Barnett v. Fireman's Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 (“we rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits”); George v. Automobile Club ofSouthern Calif: (2011) 201 Cal.App.4th 1112, 1130 (clear terms of contract in exhibit to complaint undermined plaintiff’s contrary allegations). Here, Landlord asks the Court to strike Tenant’s monetary claims because they arc barred by the Lease that Tenant attaches as an exhibit to, and incorporates into, his FAC. (FAC, 9 6; Exh. 1.) V. TENANT’S JUDICIAL ADMISSIONS BAR ITS DAMAGE ALLEGATIONS In his FAC, Tenant admits that “based on the exculpatory provision in the Lease, monetary damages are not available” and that “Section 8.8 ofthe Lease precludes any monetary recovery ...." (Id., 946, 52.) Tenant's judicial admissions are binding. Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 837. Furthermore, Tenant’s allegations are correct. The Lease does in fact bar Tenant from obtaining any monetary recovery. VI. THE LEASE BARS TENANT'S DAMAGE ALLEGATIONS As mentioned above, the case of Frittelli, Inc. v. 350 North Canon Drive, LP (2011) 202 Cal.App.4th 35 is dispositive and bars Tenant's damage claims. In Frittelli, the tenant “asserted claims for breach of lease, breach ofthe implied covenant of quiet enjoyment, negligence, and rescission, alleging that respondents’ renovation of a shopping center destroyed Frittelli’s business within the center.” (/d. at 39.) “The trial court granted summary judgment” because the tenant’s damage claims -7- SMRH:475985993.1 MOTION TO STRIKE S O 0 N N N U n B R W N B N N N R N O N N N N ) e e e e e m ® 9 OO U R W N =~ SS © ® 9a 8 U E D ZZ = were barred by the “exemptions for lessor liability within Frittelli’s lease.” (/d.) The Court of Appeal affirmed. The tenant in Frittelli was a party to a “a standard form agreement entitled “Standard Retail/Multi-Tenant Lease-Net.” (/d. at 39.) Here, Tenant correctly alleges that it too entered into a “Standard Retail/Multi-Tenant Lease-Net.” (FAC, 4 6; Exh. 1.) In Frittelli, paragraph 2.12 ofthe lease “granted the lessor authority to remodel the shopping center” provided that tenant’s rent would be abated. (/d.) Here, the Lease contains an identical paragraph 2.12 allowing Landlord to remodel the Shopping Center and limiting Tenantto rent abatement. (FAC, Exh. 1,p. 3:92.12.) In Frittelli, “Paragraph 8 ofthe lease contained provisions obliging the parties to maintain insurance and exempting the lessor from liability for damages.” (/d. at 40.) Specifically, the Frittelli Court pointed out that “Paragraph 8.8 provided that ‘[n]otwithstanding the negligence or breach of th[e] lease by Lessor or its agents,” the lessor was exempt from liability for...” injury to Lessee’s business or for any loss of income or profit therefrom.” (/d. at 30-40.) The Court further noted that “Paragraph 8.8 stated: "[I]t is intended that Lessee’s sole recourse in the event of such damages or injury [shall] be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuantto the provisions of paragraph 8.” (/d. at 40.) Here, Paragraph 8.8 of the Lease reflects the exact same provisions. In fact, Tenant admits in paragraph 18 of his FAC that: “Section 8.8 provides, in part, *[n]otwithstanding the negligence or breach ofthis Lease by Lessor or its agents, neither Lessor norits agents shall be liable under any circumstances for . . . (3) injury to Lessee’s business or for any loss of income or profits therefrom.” Here, as in Frittelli, paragraph 8.8 of the Lease reflects Tenant's agreement to look solely to insurance coverage, and Section 8.4(b) confirmed that “Lessee shall obtain and maintain loss of income and extra expense insurance.” The Frittelli case was based on the exact same lease provisions at issue in this case. The tenant sought the same type of lost income damages based on the landlords almost -8- SMRH:475985993.1 MOTION TO STRIKE S O e d N n t B s W N B N B R N N N N N N N ® N d G E O N =~ S 0 8 »®» d d a R o » 0 3 identical conduct - the remodeling of the shopping center. As explained above (and expanded upon below), the Frittelli Court affirmed the dismissal of the tenant’s entire case because it was barred by the exact same lease provisions at issue in this case. Landlord’s motion to strike should be granted. VII. THE FRITTELLI COURT REJECTED THE SAME ALLEGATIONS AND EXCUSES ADVANCED BY TENANT IN HIS FAC As explained below, the Court in Frittelli, Inc. v. 350 North Canon Drive, LP, supra, addressed and rejected the same allegations and excuses that Tenant makes in his FAC. The Court of Appeal began by explaining the rules of lease interpretation, stating: “To the extent the exemption in paragraph 8.8 purports to shield the lessor and its agents from liability for breaches of the covenants in the lease, it is well established that the tenant to a commercial lease may agree to limit the scope of the covenant ofquiet enjoyment, whether express or implied (Lee v. Placer Title Co. (1994) 28 Cal.App.4th 503, 512-513 (Lee )), as well as the implied covenant of fair dealing (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371-376). Courts have affirmed lease terms that exempted the landlord from liability arising from conduct by the landlord (Kushner v. Home Service Co. (1928) 91 Cal.App. 692, 696-698) and neighboring tenants (Conterno v. Brown (1968) 263 Cal.App.2d 135, 135-137), as well as lease terms that limited the tenant's remedies for breach of the covenant of quiet enjoyment (Lee, supra, 28 Cal.App.4th at pp. 512-513).” (202 Cal.App.4th at 43.) Here, Tenant alleges that even if the damage limitations in paragraph 8.8 apply to bar its damage claims, such terms are not enforceable because Tenant “was not familiar with the fifteen (15) page, small print” Lease, and that the damage exemptions are “concealed in provision & ofthe Lease.” (FAC, 49 17 and 18, emphasis added.) Tenant also alleges he was “was unaware of Section 8.8 of the Lease, entitled ‘Exemption of Lessor and its Agents from Liability.” (/d., § 18, emphasis added.) 9. SMRH:475985993.1 MOTION TO STRIKE S O X 0 O N W n B s W N e e I D N N N N N N N = e m © [ 3 U E S Q N = S D x J o E m o n D 3 As explained below, the Court of Appeal in Frittelli addressed those exact same arguments. The Court began by noting the tenant’s contention “that the general exemption in paragraph 8.8 is unenforceable because it is not sufficiently conspicuous within the lease as a whole.” (Id. at 50.) The tenant in Frittelli also argued “that the exemption is printed in the same font size as the other lease provisions and is located in the middle of the lcase:™ and “that she was unaware of the exemption when she executed the lease.” (/d.) In rejecting those arguments, the Frittelli Court noted that “Paragraph 8.8 is neither hidden nor disguised: although found in the middle of the lease, it is printed in the same size type as the other provisions, and is captioned in bold print. ‘Exemption of Lessor and its Agents from Liability.” (/d. at 51-52). Here, paragraph 8.8 of the [Lease contains the exact same language and caption in bold print. (FAC, Exh. 1, p. 7.) The Frittelli Court also noted that “above the signature lines on the lease page is the following provision, printed in block letters: ‘Lessor and lessee have carefully read and reviewed this lease and each term and provision contained herein, and by the execution of this lease show their informed and voluntary consent thereto.”” (Id. at 50.) Here. the Lease signature block contains the same admonition in fully capitalized block letters immediately above Tenant’s signature. (FAC, Exh. 1, p. 14.) The Frittelli Court also noted that the tenant “does not dispute that she executed the lease” and “her initials appear on each page ofthe lease, including the page containing paragraph 8.8.” (Id. at 52.) Here, Tenantinitialed each page ofthe Lease, and executed the signature page. (FAC, Exh. 1, pp. 1-15, see right hand cornerinitials - “MF".) Frittelli makes it clear that Tenant's allegations do not render the Lease provisions unenforceable. Furthermore, as Tenant admits in his FAC, the Lease bars Tenant's claims 2 “LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN ... THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE. (Exh. | to FAC, p. 14.) -10- SMRH:475985993.1 MOTION TO STRIKE S O 0 N N B R W N D o N N N N N N N ® N 9 0 U E U R N = 3 % %® 9 a a R n o ZZ 3 for lost income and other monetary damages. Landlord's motion to strike Tenant's monetary claims should be granted. VIII. REFORMATION FAILS BECAUSE TENANT FAILED TO OBTAIN SUCH RELIEF BEFORE LANDLORD PURCHASED THE SHOPPING CENTER In Tenant’s opposition to Landlord’s earlier motion to strike damages, Tenant argued his reformation cause of action precluded the motion to strike his damage claims. However, Tenants initial complaint did not seek to reform the Lease’s damage limitation provisions; it only sought to reform the Lease’s relocation provision. The Court allowed Tenantto file his FAC, which now seeks reformation of the damage limitation provisions in Section 8.8 of the Lease. However, Tenant’s reformation cause of action is fatally flawed because Tenant failed to obtain reformation before Landlord acquired the Shopping Center and became a party to the Lease. In Tenant's prior opposition, Tenant correctly referred to Civil Code Section 3399 as the basis for his reformation cause of action. Section 3399 provides: “When, through fraud or a mutual mistake ofthe parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.” (Emphasis added.) As explained in Pacific Intermountain Express Co. v. Alexander (1962) 205 Cal.App.2d 640, Section 3399 bars a tenant/lessee from reforming a lease against a successor landlord/lessor: “Since appellant did not commencethis action until the original lessor, Mar Monte, had sold its interest in the real property and the lease to respondent, appellant was effectively foreclosed from seeking to reform the lease to express the intent of the original parties. Pursuant to Civil Code, section -11- SMRH:475985993.1 MOTION TO STRIKE S S N O 0 3 O N w n B R W N ) e e B D B D N N N N N N e e ® N U E W O N ~~ S o »®» d a a r » 0 3 3399, reformation is available, upon a proper showing, only ‘so far asit can be done without prejudice to rights acquired by third persons, in good faith and for value.” (Citations omitted.) We must presume that respondent purchased Mar Monte’s interest inreliance upon the plain meaning ofthe written lease. In this circumstance, appellant was not entitled to show thatthe original parties hadactually intendedto make a contract far different from that embodied in the writing.” (/d. at 643-644, emphasis added.) Tenant alleges he and his prior landlord, Wilks Land Company, executed the Lease in May of 2013. (FAC, 496 and 11.) Tenant further alleges he and his prior landlord had a “mistake”justifying reformation of the Lease. Over a yearlater, Tenant alleges he learned “in September 2014 that Wilks Land Company, the lessor under the Lease, had sold its interest in the Michelson Marketplace to Defendant.” (FAC, 4 14.) As such, Tenant admits Landlord “is the successor in interest to Wilks Land Company, having been assigned all rights,title and interests in and to the Lease, Premises and Shopping Center.” (Id.) Pacific Intermountain completelyundermines Tenant's effort to reformthe Lease’s damage limitations in Section 8.8, by holding that a tenant is “foreclosed from seeking to reform the lease to express the intent of the original parties” once a successor landlord takes over the lease. (Id. at 643-644.) IX. TENANT’S FAC DOES NOT ALLEGE A PROPER BASIS FOR REFORMATION OF ANY PROVISION IN THE LEASE Tenant’s reformation cause of actionisalso flawed - and cannot rebut Landlord's motion to strike - because Tenant does not allege that his prior landlord, Wilks Land Company, knew that Tenant was unaware of any provision of the Lease. Civil Code Section 3399 only allows reformation where “through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties . . ..” -12- SMRH:475985993. 1 MOTION TO STRIKE S O O c o N N U n B W R e e N D N N N N N N ® 9 2 L E W R N =~ S 0 8 ®» 9 a a E o D 3 Tenant alleges he and his prior landlord, Wilks Land Company, executed the Lease in May of 2013. (FAC, 496 and 11.) Tenant does not allege his prior landlord defrauded him or misrepresented the terms of the Lease. Instead, Tenant and the prior owner allegedly “contemplated” or were mistaken about the fact “that Section 8.8 of the Lease would preclude any monetary recovery by Plaintiff.” (/d., 52.) Nowhere does Tenant allege that his prior landlord, Wilks Land Company, knew that Tenant was unaware of any provision of the Lease, much less the damage limitations in Section 8.8 of the Lease. Tenant's reformation cause of action is a red-herring, and an ill-pleaded one at that. X. TENANT'S ALLEGATIONS THAT HE WAS “UNAWARE” OF CERTAIN LEASE TERMS DOES NOT NEGATE THE EXPRESS TERMS OF THE LEASE Tenant does not expressly allege he did not read or understand the [.ease. However. Tenant alleges he was “unware” of certain provisions and that English is not his first language. (FAC, 49 17 and 18.) If the law allowed a contracting party to avoid its obligations by claiming not to have read the contract, the law of contract would be turned on its head. However, thatis not the law, and there is a duty to read the contract. While it is unclear from Tenant's FAC whetherhe truly claims he did not read the Lease, such an argument would have no merit.” Moreover, the Court in Frittelli, Inc. v. 350 North Canon Drive, LP, supra, addressed and rejected the same “unaware” excuse that Tenant makes in its FAC. The Frittelli Court began by rejecting the tenant’s contention “that the general exemption in paragraph 8.8 is unenforceable because it is not sufficiently conspicuous within the lease 3 See Union Bank v. Ross (1976) 54 Cal. App.3d 291, 296 (“Ross may not properly argue that he did not give an ‘understanding consent’ because he failed to read the contract. The bank herein was not responsible for Ross’ failure to read the contract”); Oakland Bank ofCommerce v. Washington (1970) 6 Cal.App.3d 793, 799 (“The failure of the two appellantsto read the contract [of guaranty| cannot be charged to respondent bank. Nor can [the] failure of the third, who read it carefully to comprehend its contents.”). -13- SMRH:475985993.1 MOTION TO STRIKE N O 1 N t B W RN ) e e I D B R N N N N N N ) e e e m e e as a whole.” (Id. at 50.) The Court then went on to reject the tenant’s argument “that she was unaware of the exemption when she executed the lease.” (/d.) In rejecting those arguments, the Frittelli Court noted that “Paragraph 8.8 is neither hidden nor disguised: although found in the middle of the lease,it is printed in the same size type as the other provisions, and is captioned in bold print, ‘Exemption of Lessor and its Agents from Liability.” (Id. at 51-52). The Frittelli Court also noted that “above the signature lines on the lease page is the following provision, printed in block letters: ‘Lessor and lessee have carefully read and reviewed this lease and each term and provision contained herein, and by the execution ofthis lease show their informed and voluntary consent thereto.”(Id. at 50.) The Frittelli Court also noted that the tenant “does not dispute that she executed the lease” and “her initials appear on each page ofthe lease, including the page containing paragraph 8.8.” (/d. at 52.) Here, Tenant initialed each page of the Lease, and executed the signature page. (FAC, Exh. 1, pp. 1-15, see right hand cornerinitials -"MF".) Frittelli makes it clear that Tenant's “unaware” allegations do not render Section 8.8 of the Lease unenforceable. XI. TENANT'S ALLEGED LANGUAGE DIFFICULTY DOES NOT NEGATE THE EXPRESS TERMS OF THE LEASE Tenant does not claim he was incapable of understanding English or the terms of the Lease. Instead, he alleges: “English is a second language to Plaintiff.” (FAC, § 17.) He does not say he did not, or could not, understand the Lease (nor would it matter). Furthermore, he does not state he even read the damage limitations in Section 8.8 of the Lease. In fact, Tenant plainly admits “Plaintiff was unaware of Section 8.8 of the Lease, entitled “Exemption of Lessor and its Agents from Liability.” (FAC, 18.) A contracting party cannot avoid its obligations by suggesting that English is not the signatory’s first language. If that was the law, it would cause the perverse result of reducing contracts with immigrants, because the other party would fear that the non-native -14- SMRH:475985993.1 MOTION TO STRIKE S S O w 3 N n B R W N e e BN D N N N N N N N N Y ® 2 d Lv BE O D SA S 0 8 » J a R r » 0 ZZ 3 English speaker could simply disavow the contract. However, as explained below, that is not the law. In Bolanos v. Khalatian (1991) 231 Cal.App.3d 1586, the court enforced an arbitration agreement even when the plaintiff claimed to not “read English at all.” The plaintiff submitted a declaration stating: “I have the equivalent of a fifth grade education. I don’t read English at all.” Id. at 1590. The plaintiff further stated: “My attorneys have read to me this declaration so I fully understand its meaning.” Id. Tenant admits he was completely unaware of Section 8.8. A party has a duty to read the contact and, having failed to do so, cannot argue he did not consent to its terms. See Union Bank v. Ross (1976) 54 Cal.App.3d 291, 296 (“Ross may not properly argue that he did not give an “understanding consent’ because he failed to read the contract™). The mere suggestion that English is not the party’s first language does not nullify the law of contract. XII. CONCLUSION For the foregoing reasons, Landlord respectfully requests that the Court strike from Tenant’s FAC the monetary claims and allegations listed in the attached notice of motion. Dated: March 17,2016 SHEPPARD, MULLIN,SEHAMPTON LLP A 7 /wl gsSe > Le NON MICHAEL D. STEWART Attorneys for Defendants MICHELSON MARKETPLACE VENTURE, L1.C -15- SMRH:475985993.1 MOTION TO STRIKE N O C e 1 O N w h B W B Y e e D D N N N N N D ® J XA U E D O R N 2 SS 0 ox 49 a a R o » 0 Z B PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF ORANGE: At the time of service, I was over 18 years of age and not a party to this action. | am employed in the County of Orange, State of California. My business address is 650 Town Center Drive, 4th Floor, Costa Mesa, CA 92626-1993. On March 17, 2016, I served true copies ofthe following document described as DEFENDANT’S NOTICE OF MOTION; MOTION TO STRIKE; AND MEMORANDUM OF POINTS AND AUTHORITIES on the interested parties in this action as follows: Barry M. Walker, Esq. Attorneysfor Plaintiff Larissa A. Branes, Esq. Walker Trial Lawyers, LLP Email: bmw@walkertriallawyers.com 31618 Railroad Canyon Road lab@walkertriallawyers.com Canvon Lake. California 92587 vickii@walkertriallawvers.com 0 BY MAIL: I enclosed the document(s) in a sealed envelope or package addressed to the persons at the addresses listed in the Service List and placed the envelope for collection and mailing, following our ordinary business practices. | am readily familiar with the firm's practice for collecting and processing correspondence for mailing. On the same day that the correspondence is placed for collection and mailing, it is deposited in the ordinary course ofbusiness with the United States Postal Service, in a sealed envelope with postage fully prepaid. Iam a resident or employed in the county where the mailing occurred. x BY E-MAIL OR ELECTRONIC TRANSMISSION: I caused a copy of the documentto be sent from e-mail address mmanns(@sheppardmullin.com to the persons at the e-mail addresses listed in the Service List. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. I declare under penalty of perjury under the laws ofthe State of California that the foregoing is true and correct. Executed on March 17, 2016, at Costa Mesa, California. MargaretN. Manns SMRH:475077918.1 -1- Maggie Manns From: Maggie Manns Sent: Thursday, March 17, 2016 1:44 PM To: ‘bmw@walkertriallawyers.com’; 'lab@walkertriallawyers.com’; ‘vicki@walkertriallawyers.com' Cc: Michael Stewart (MStewart@sheppardmullin.com) Subject: Farha v. Michelson Marketplace: Service Copy of Notice and Motion to Strike Counsel: Attached is the Service Copy of DEFENDANT'S NOTICE OF MOTION; MOTION TO STRIKE; AND MEMORANDUM OF POINTS AND AUTHORITIES. Maggie Manns Legal Secretary to Michael D. Stewart 714.424.2861 | direct MManns@sheppardmullin.com SheppardMullin Sheppard Mullin Richter & Hampton LLP 650 Town Center Drive, 4th Floor Costa Mesa, CA 92626-1993 714.513.5100 | main www.sheppardmullin.com