plaintiff bgs company case summary iso request for default judgment pu

Cal. Super. - 1st Dist.October 5, 2021

1 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Arlene C. Helfrich (SBN 096461) Law Offices of Arlene C. Helfrich 775 East Blithedale, No. 202 Mill Valley, CA 94941 Telephone: (415) 360-3042 Facsimile: (415) 276-4509 Email: ahelfrich@bfesf.com Attorney for Plaintiff BGS Partners SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION BGS COMPANY, a California Partnership, Plaintiff, v. JESSICA KANG, SHAMSHEER SHERGILL, and DOES 1 through 11, Defendants. Case No. CGC-18-572-094 PLAINTIFF BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 585(d) [CRC Rule 3.1800] Hon. Ethan P. Schulman A. Introduction Plaintiff BGS COMPANY is the owner of the real property commonly known as 2300 Pacific Avenue in San Francisco (the Property). In June 2009, defendant JESSICA KANG (Kang) entered a written residential lease for a one-year rental of Apartment 214 at the Property. The Lease provided that Kang was to be the only occupant of Apartment 214, and that Kang “shall not let or sublet ... nor assign” any portion of the leased premises. In May 2017, Kang gave notice to BGS of her intent to vacate Apartment 214. On May 10, 2017, Kang sent a letter to plaintiff’s agent indicating that she had allowed a “distant cousin” to use Apartment 214 for the prior year. The letter includes Kang’s acknowledgement that she had breached the lease and ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 06/15/2021 Clerk of the Court BY: MELANIA DE LUNA Deputy Clerk 2 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “betrayed the trust” of the Property owners, and states Kang was apologizing for being unable to have her “cousin”, defendant SHAMSHEER SHERGILL (Shergill), vacate Apartment 214. Also on May 10, 2017, plaintiff’s agent received an email from Shergill stating she had been subletting Apartment 214 for 1.5 years and offering to pay more rent than Kang was paying to have the lease transferred to Shergill. These two communications were the first notice BGS received that Shergill was residing at Apartment 214. After the exchange of multiple communications with Kang and Shergill, BGS understood that Kang acknowledged she had moved to Sacramento in early June 2017, that Shergill was not related to Kang, and that Shergill was refusing to pay a notice of rent increase that BGS had served on Shergill following notice that Kang had vacated the apartment. Two San Francisco Rent Board hearings followed, which resulted in rulings allowing BGS to raise Shergill’s rent. Shortly after the Rent Board ruling validating a notice imposing a significant rent increase to Shergill, Shergill vacated Apartment 214 without notice to BGS, without leaving any forwarding information, and owing approximately $13,000 in rents. The two defendants intentionally misrepresented their respective occupancies at Apartment 214 with the clear purpose of avoiding lease contract covenants and depriving plaintiff of the protections of local and state rent laws. Defendant Shergill abandoned the premises when the Rent Board decision went against her, well knowing she owed a large debt for unpaid rent. Based on these facts, BGS seeks a judgment against these defendants for breach of contract, fraud and related claims. B. Facts of Kang/Shergill Tenancy On approximately June 8, 2009, Kang entered a written residential lease (“Lease” - Exhibit A, see Briones Declaration at ¶ 2) with BGS’s agent, Ruth Briones, (“Briones”), the resident manager at the Property. The Lease was for a one-year rental of Apartment 214 at the Property. The Lease provided that Kang was the only occupant of Apartment 214, and that Kang “shall not let or sublet ... nor assign” any portion of the leased premises. (Exhibit A - “OCCUPANCY” and “ASSIGNMENT, SUBLETTING AND GUESTS”.) /// 3 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Kang never advised BGS of having sublet Apartment 214 to anyone. (Briones Declaration at ¶ 6.) On approximately May 7, 2017, Kang gave notice to Briones of her intent to vacate Apartment 214. On approximately May 10, 2017, Kang sent a letter to Briones indicating that she had allowed a “distant cousin” to use Apartment 214 for the prior year. The letter includes Kang’s acknowledgement that she had breached the lease and “betrayed the trust” of the Property owners, and states Kang was apologizing for being unable to have her “cousin”, defendant Shergill, vacate Apartment 214. (Exhibit B, see Briones Declaration at ¶¶ 4, 5.) On approximately May 10, 2017, plaintiff’s agent (Jennifer Chow at Chandler Properties) received an email from Shergill stating she had been subletting Apartment 214 for 1.5 years and offering to pay more rent than Kang was paying to have the lease transferred to Shergill. (Exhibit C, see Chow Declaration at ¶ 4.) Because Ms. Chow’s records indicated only Jessica Kang as an occupant of Apartment 214, she immediately notified BGS owner/manager Roberta Kimmel of the unknown person (Shergill) who was claiming to reside at the apartment as a subtenant. (Chow Decl. ¶¶ 3, 5.) May 10, 2017 was the first notice that BGS received that Shergill was residing at Apartment 214. (Kimmel Declaration ¶ 4; Briones Decl. ¶ 6; Chow Decl. ¶¶ 3, 4, 5.) BGS took steps to address the fact that Shergill was residing in Apartment 214 by serving her with a San Francisco Administrative Code Section 6.14 notice which under certain circumstances allows a landlord to raise rent beyond rent control limits once all original tenant/signatories on a lease vacate. A true copy of that letter and 6.14 notice sent to Shergill is attached as Exhibit D. (Helfrich Declaration ¶ 2.) After the exchange of multiple communications with Kang and Shergill, BGS understood that Kang had moved to Sacramento in early June 2017. Shergill was served with a notice increasing her rent based on original tenant Kang having vacated. Shergill refused to pay the rent increase. BGS therefore submitted a petition to the San Francisco Rent Board to obtain the Rent Board’s determination of the effectiveness of the BGS rent increase served on Shergill in June 2017. (Helfrich Declaration ¶ 3.) Following a hearing wherein Shergill appeared, representing 4 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 herself, the Rent Board’s March 2018 decision indicated that Shergill was subject to a rent increase under Civil Code Section 1054.53(d)(2), but that the June 2017 rent increase was defective because it was not also addressed to Kang. BGS then sent a new rent increase to Kang and Shergill on March 21, 2018, to be effective on June 1, 2018. (Exhibit E, see Helfrich Decl. ¶¶ 4, 5.) Shergill continued to tender rent payments in an amount that did not recognize the June 2018 rent increase and asserted that BGS’s acceptance of her prior rents waived its right to increase her rent. (Helfrich Decl. ¶ 6, and Exhibit L.) To avoid the possibility that BGS’s deposit of Shergill’s deficient rent tenders would be interpreted by the Rent Board as a waiver of BGS’s right to increase Shergill’s rent under the Civil Code and Rent Ordinance, BGS decided to hold Shergill’s tendered checks for June through October 2018 (which were at the monthly amount paid by Kang prior to the notice of increase), pending a second petition to the Rent Board to obtain the Rent Board’s determination of the effectiveness of the March 21, 2018 notice. (Helfrich Decl. ¶ 6.) On October 10, 2018, the Rent Board issued a decision indicating that BGS’s March 21, 2018 rent increase was effective, and that Shergill’s rent as of June 1, 2018 was $2,250/month. (Exhibit F, see Helfrich Decl. at ¶ 7.) BGS thereafter deposited Shergill’s rent checks tendered for June through October 2018, but all checks were returned for insufficient funds. (Kimmel Decl. ¶ 5.) In mid-October 2018, BGS, through its agent Briones, attempted to contact Shergill regarding the Rent Board’s decision, the bounced checks, and her continued tenancy. A 3-day notice to pay rent and a notice of belief of abandoned property were served, but no response was received from Shergill. (Briones Decl. ¶¶ 7, 8; Helfrich Decl. ¶ 9, Exhibits G, H.) Apartment 214 was abandoned without notice, and rents from June 1 to the return of possession on November 26, 2018 (the date of expiration of the Belief of Abandonment Notice under Civil Code Section 1951.3 - Exhibit H) were unpaid, leaving a balance of $13,200 in unpaid rent. (Kimmel Decl. ¶¶ 6, 7.) Efforts to contact Kang and Shergill were, and remain, unsuccessful. 5 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. Causes of Action/Authorities BGS has alleged breach of contract, intentional and negligent interference with prospective economic advantage and intentional and negligent misrepresentation against both defendants. 1. Breach of Contract To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186) Kang entered a written lease with BGS in June 2009, agreeing to abide by the lease terms, which included a complete prohibition of subletting. Kang admitted breaching the lease by subletting to Shergill. (Exhibit B.) As demonstrated by the Rent Board decision of March 2, 2018 (Exhibit J), in which the initial rent increase notice to Shergill was held invalid because it was not also addressed and served on Kang, Kang’s “tenancy” continued after she vacated the premises as a result of allowing Shergill to obtain and remain in possession. Thus Kang’s lease contract obligations and liability for contract related damage continued through the date that plaintiff recovered possession of Apartment 214. Shergill entered an oral contract with BGS by occupying Apartment 214 and tendering rent under the written BGS/Kang lease. An effective rent increase notice was served, effective June 1, 2018 (per Rent Board Decision of October 10, 2018, Exhibits E, F), setting the monthly rent for Apartment 214 at $2,250. BGS here provides testimony indicating Shergill continued in possession until the effective date of BGS’s Notice of Abandonment (Helfrich Decl. ¶ 10, Exhibit H) on November 26, 2018. BGS here provides testimony that rents are due and owing from June 1 through November 26, 2018, for a total rent due of $ 13,200. 2. Intentional and Negligent Interference With Business Advantage The five elements for intentional interference with prospective economic advantage are: (1) [a]n economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) 6 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn. 6.) Negligent interference is shown when a plaintiff demonstrates that (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.) Here plaintiff has presented evidence that defendant Shergill knew that plaintiff and defendant Kang had a landlord/tenant relationship which was economically beneficial to plaintiff under the provisions of both a written lease and local and state laws governing residential leaseholds. Defendant Shergill was aware that her failure to be forthcoming about her occupancy despite a lease term that prohibited subletting would cause plaintiff to lose part of the future economic benefit of its relationship with Kang. The testimony provides circumstantial evidence that Shergill intentionally kept her occupancy a secret from the resident manager and the plaintiffs so as not to trigger the “no subletting” clause of the Kang lease and gain the advantage of Kang’s rent-controlled apartment to the detriment of plaintiff. 3. Intentional and Negligent Misrepresentation The elements of fraud (intentional misrepresentation) that will give rise to a tort action are: “‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) The tort of negligent misrepresentation is similar to fraud, except that it does not require 7 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 scienter or an intent to defraud. ... [T]he same elements of intentional fraud also comprise a cause of action for negligent misrepresentation, with the exception that there is no requirement of intent to induce reliance . ...” (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 845.) The testimony presented shows evidence that both defendants intended to misrepresent their use of Kang’s rent-controlled apartment so as to take advantage of the lower rent-controlled rents due under Kang’s lease. Kang rented Apartment 214 in June 2009 at a rent of $1,400/month. Shergill revealed in her email (Exhibit C) that she’d been residing in Apartment 214 since approximately late 2015. Plaintiff partner Roberta Kimmel testifies (Kimmel Decl. at ¶ 8) that the fair market value of Apartment 214 in late 2015 was approximately $2,000/month, yet Kang was paying a rent controlled monthly rent of approximately $1,508.00. Had defendants not misrepresented the actual occupancy of the premises, i.e., had Kang vacated and plaintiff rented the empty apartment in late 2015 at a fair market rent of approximately $500/month above Kang’s rent controlled rent, plaintiff would have received $500 additional rent for the 1.5 years that Shergill lived in Apartment 214 under false pretenses. Thus, plaintiff lost $9,000 of rental income due to defendants’ misrepresentations. D. Attorney Fee Request The Tort of Another exception to the general rule that, absent statute or contract, each litigant bears their own attorney fees, has been defined by the California Supreme Court as: “A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred.” (Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 620). Typically, the ‘tort of another’ exception is used in real estate transaction cases. For example, in the Prentice case, an escrow holder’s negligence in closing a real property sale forced the plaintiffs to bring a quiet title action against third parties. The Supreme Court held it was proper for plaintiffs to recover attorney’s fees incurred in a quiet title action brought against the escrow holder. The Prentice court held that the usual rule that each party bears its own attorney fees absent agreement of 8 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 statute: “is not applicable to cases where a defendant has wrongfully made it necessary for a plaintiff to sue a third person. [Citations.] In this case we are not dealing with "the measure and mode of compensation of attorneys" but with damages wrongfully caused by defendant's improper actions.” (Id. at 621.) Here, plaintiff BGS has been forced to pursue an unauthorized occupant, third party defendant Shergill, to recover rents lawfully due based on defendant Kang’s admitted intentional misrepresentation of the occupancy status in Apartment 214. The tort of another doctrine allows BGS to recover its attorney fees pursuing Ms. Shergill from Ms. Kang as Ms. Kang’s fraud forced BGS to contend with Shergill’s unapproved occupancy. As stated in the Helfrich Declaration, BGS has incurred attorneys’ fees in excess of $ 20,000 in its effort to enforce its rights against Shergill. BGS asks this Court award these fees against defendant Kang. E. Conclusion The evidence submitted shows defendant Kang admittedly failed to abide by the terms of her written lease with plaintiff which prohibited subletting. In violation of the lease, she sublet her apartment to Shergill in late 2015. Both Kang and Shergill intentionally misrepresented the occupancy of Apartment 214 for a year and a half. Kang admits that she misrepresented the circumstances of her tenancy and regrets her breach of plaintiff’s trust. (Exhibit B.) Had Kang vacated the premises rather than breaching her lease, plaintiff could have collected an addition $9,000 in market rents. The clear evidence indicates Shergill abandoned the premises with full knowledge that she owed rent from June 1 through November 26, 2018, for a total of $ 13,200. Shergill not only intentionally hid her occupancy from plaintiff; she resisted the lawful rent increase, forcing two Rent Board arbitrations, then left without notice when she lost her effort to contest the rent increase. Plaintiff seeks pre-judgment interest on these contract damages totaling as set for in the Declaration of Calculation of Prejudgment Interest submitted with this request for judgment. (Per CCP § 3289 - 10% interest on contract breach). Under the tort of another doctrine, BGS seeks an award of attorney fees against defendant Kang in the sum of $20,000.00 /// /// 9 BGS COMPANY’S CASE SUMMARY IN SUPPORT OF REQUEST FOR DEFAULT JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff seeks reimbursement for costs of suit, including publication of summons in two newspapers, for total costs of $ 4,153. Respectfully submitted, Dated: June 9, 2021 _____ Arlene C. Helfrich Attorneys for Plaintiff BGS COMPANY