Court Opinion

ID: 3186942
Source: CourtListenerOpinion
Date Created: 2016-03-18 17:05:55.753134+00
Date Added: 2024-06-11T12:24:27.771583
License: Public Domain

Filed 3/18/16
                            CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                STATE OF CALIFORNIA

JEFFREY SCHERMER et al.,                        D067807

        Plaintiffs and Appellants,

        v.                                      (Super. Ct. No. 37-2014-00083369-
                                                CU-MC-CTL)
THOMAS T. TATUM et al.,

        Defendants and Respondents.

        APPEAL from an order of the Superior Court of San Diego County, Joel M.

Pressman, Judge. Affirmed.

        Robbins Arroyo, Brian J. Robbins, George C. Aguilar, Michael J. Nicoud, Leonid

Kandinov; Allen, Semelsberger & Kaelin, George H. Kaelin III, James C. Allen, David

Semelsberger, Jessica S. Taylor; Law Offices of George W. Cochran and George W.

Cochran for Plaintiffs and Appellants.

        Cooksey, Toolen, Gage, Duffy & Woog, Phil Woog and Matthew R. Pahl for

Defendants and Respondents.
       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 order sustaining a demurrer without leave to

amend to the class allegations in four of their causes of action in their second amended

complaint (SAC or operative complaint). Plaintiffs' SAC involves 18 mobilehome parks

allegedly owned and/or operated by defendants Thomas T. Tatum (Tatum) and Jeffrey A.

Kaplan (Kaplan), which plaintiffs allege were managed through defendant Mobile

Community Management Company (MCM). Also named as defendants are 18 "single-

purpose" business entities that plaintiffs allege each owned one mobilehome park in

California (Tatum, Kaplan, MCM and the 18 entities are sometimes collectively referred

to as defendants).

       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'

                                              2
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.

                                       OVERVIEW

       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.

       In the FAC, plaintiffs again alleged defendants Tatum and Kaplan, through MCM,

engaged in unlawful conduct at each of the 18 mobilehome parks. Specifically, they

alleged defendants "charg[ed] excessive rent, pursu[ed] arbitrary evictions, and

implement[ed] unreasonable polices." Plaintiffs further alleged in their FAC that

defendants Tatum and Kaplan took "advantage of vulnerable prospective and current

residents" including "non-[E]nglish speaking and elderly residents" who, plaintiffs

claimed, were "especially susceptible" to defendants' unlawful business practices.

Plaintiffs alleged defendants "most egregious practice" was the use of a "one-sided,

                                             3
standardized lease" agreement. Plaintiffs provided 32 examples of lease clauses that

allegedly violated California's Mobilehome Residency Law (Civ. Code, § 798 et seq.;

MRL).

        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 plaintiffs "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.

                                              4
       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:

       "Plaintiffs allege multiple causes of action, all of which related in some way to the

Lease Agreements utilized at the Defendants['] parks. Based upon the allegations in the

[FAC], it appears that some of the claims involved the alleged unconscionability of the

contracts themselves, while others involve each Defendant's alleged actions in executing

or enforcing the individual contracts as to individual Plaintiffs. [¶] The Court finds that

multiple factual allegations predominate. Plaintiffs['] measure of damages will be unique

to each park. The proposed class does not all reside at the same location or under the

same circumstances. Each putative class member is/was a resident at one of the eighteen

separate mobilehome parks located throughout the State of California, giving rise to

individualized factual questions related to causation, liability, and damages.

       "Example of the individualized issues include the remedy (determining excess

rents paid at each space requires a factual showing of fair market values for rents in a

particular area [at] a particular time and park-by[-]park appraisal). Further, there appear

to be multiple lease agreements. Although Plaintiffs allege Defendants used a

'standardized' Lease Agreement, they attach at least five different variations of the Lease

Agreement and/or Amendments to the Lease Agreement. (See Exhibits 'A,' 'B,' 'C,' 'D,'

and 'E,' attached to the [FAC].)

       "Further, the allegations involve more than unconscionability of common

provisions in the agreements, but include individual actions in execution and enforcement

of the lease. Plaintiffs allege that Defendants: (1) Did not allow tenants to see copies of

their leases until they committed to purchasing their homes; (2) misrepresented the terms

                                              5
of their leases to prospective tenants; (3) threatened actual and/or constructive eviction to

pressure them into signing long-term leases; (4) engaged in a 'homechurning' scheme

with regard to certain Plaintiffs; and (5) unfairly competed with home sales by charging

discriminatory 'transfer fees.' (See FAC paragraphs 76-79.) These claims will each turn

on the personal interactions between each park operator and the individual plaintiffs.

       "Many of the Plaintiffs would not have claims at all, particularly if they did not

sell or attempt to sell their homes. Specifically, with respect to the second, third, and

fourth causes of action, plaintiffs alleged that defendants took certain actions when

particular Plaintiffs attempted to sell their mobilehomes. [¶] . . . [¶]

       "Finally, there are separate ownership issues with the various defendants.

Pursuant to Judicially Noticeable Secretary of State business filings, the ownership entity

for each Park is a separately-owned, single-purpose limited partnership (or in one

instance, a limited liability company). (Exhibit '2,' Business Filings, attached to Req. for

Jud. Notice[.]) The various ownership interests create issues of whether the claims of the

representative party (whether the currently named representative or another party) would

be typical of the class."

       Plaintiffs in September 2014 filed their SAC, which is the subject of this appeal.

The class action allegations in the SAC provided the class consisted of "persons who: (1)

acquired an ownership interest in a mobilehome in one of the Mobilehome Parks at any

time since January 9, 2010, (2) were not previously residents at any Mobilehome Park

prior to acquiring such ownership interest, and (3) are subject to a lease agreement

containing the unconscionable provisions as set forth herein (the 'Class')." The SAC also

set forth 21 subclasses, including 18 subclasses for each of the 18 mobilehome parks at

                                               6
issue in the SAC; a subclass for "Transfer-Charge," in which the putative class members

during the class period (i.e., from January 9, 2010 to the present) transferred their

ownership interest in a mobilehome or assigned their space and thus incurred a transfer

fee charge; a subclass for "Notice of New Rental Rate," in which the putative class

members since the filing of the original complaint entered into an "Amendment to

Lease/Rental Agreement With Rent Adjustment" that barred such members from "any

participation or recovery in this lawsuit" in exchange for a rent reduction; and a subclass

referred to as "Prior Owner," in which all putative class members obtained an ownership

interest in a mobilehome in any of the 18 parks before the class period, but which

members also executed "any addendum or amendment to their original lease" during the

class period (the latter three subclasses are sometimes collectively referred to as the lease

subclasses).

       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

                                              7
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:

       "(a) No disclosure of standard form lease agreements to [p]laintiffs and [c]lass

members until after they financially commit to purchasing a mobilehome;

       "(b) Presenting standard form lease agreements to [p]laintiffs and [c]lass members

on a 'take it or leave it' basis with no opportunity to negotiate lease terms;

       "(c) Prohibiting [p]laintiffs and [c]lass members from taking a copy of the lease

agreement home to review prior to signing;

       "(d) Requiring execution of a standard lease agreement by [p]laintiffs and [c]lass

members at the time of presentment without the benefit of prior review of its terms;

       "(e) No offer of lease options to [p]laintiffs and [c]lass members as purported in

the standard form lease agreements [citation]. Any lease provision indicating that such

options were offered by [d]efendants and rejected by [p]laintiffs and [c]lass members

prior to execution of the lease agreements are false and illusory;

       "(f) Hiding material terms in a lengthy, protracted standard form lease agreement,

including, but not limited to, substantial rent escalation provisions and language

                                               8
permitting unlawful charges and pass-through of costs and expenses on a line-item basis,

regardless of the decrease in overall aggregate maintenance costs;

       "(g) Failing to provide all documents related to the lease until after expiration of

the statutory review period; and

       "(h) Obtaining [p]laintiffs and [c]lass members' signatures on Right of First

Refusal Addenda, Arbitration of Disputes Amendments, and Amendments to

Lease/Rental Agreements with Rent Adjustment under the threat of a substantial rent

increase, which results in execution of the same by [p]laintiffs and [c]lass members under

duress."1

       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 that such provisions contained

"blatant statutory violations" and failed to include statutorily-required information.

       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 resolved around the individual

application or use of such procedures and/or agreements, noting: "not only are there

1     For ease of reference, we sometimes will collectively refer to the practices in (a)
through (h) as defendants' alleged "unconscionable policies and/or procedures."
                                              9
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." (Emphasis

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

                                              10
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."

       With respect to the second and third contract-based causes of action for breach of

the covenant of quiet enjoyment and breach of duty of good faith and fair dealing,

respectively, defendants contended the gist of both causes of action related to what

defendants "did" and "not what the [l]ease [a]greements say." (Emphasis omitted.)

       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." (Emphasis 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

                                             11
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.

       "Lack of commonality is inevitable based on the fact that plaintiffs do not reside at

the same location, but reside at one of 18 mobile home parks, located in 16 different

cities throughout California. Individual issues predominate. Consider damages or

restitution based upon the allegation of 'excess rent' (SAC 132). Excess rent calculation

necessarily involves an analysis of fair market value in particular areas at particular

times, which is unique to location."

       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

                                              12
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.2

                                       DISCUSSION

       A. Standard of Review

       " '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

2      Plaintiffs' unopposed request for judicial notice of an April 24, 2015 hearing,
following the court's order sustaining the demurrer to the class allegations without leave
to amend, is granted.
                                             13
may also consider matters that have been judicially noticed. [Citations.]' [Citation.]

' "[W]hen the allegations of the complaint contradict or are inconsistent with such facts,

we accept the latter and reject the former. [Citations.]" [Citation.] We give the same

precedence to facts evident from exhibits attached to the pleading. [Citations.]'

[Citation.]" (Tucker v. Pacific Bell Mobile Services (2012) 208 Cal. App. 4th 201, 210

(Tucker).)

       "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.)

       It is beyond dispute that trial courts are permitted to decide the issue of class

certification on demurrer. (Tucker, supra, 208 Cal.App.4th at p. 212; see Linder v.

Thrifty Oil Co. (2000) 23 Cal. 4th 429, 440 [noting the issue is "settled" that courts are

authorized to "weed[] out" legally meritless class action suits prior to certification by

demurrer or pretrial motion].) A trial court may sustain a demurrer to class action

allegations where " 'it concludes as a matter of law that, assuming the truth of the factual

allegations in the complaint, there is no reasonable possibility that the requirements for

class certification will be satisfied. [Citations.]' [Citations.]" (Tucker, at p. 211, italics

added; see Canon U.S.A., Inc. v. Superior Court (1998) 68 Cal. App. 4th 1, 5 [noting that

when the "invalidity of the class allegations is revealed on the face of the complaint,

and/or by matters subject to judicial notice, the class issue may be properly disposed of

by demurrer or motion to strike," and noting that "[i]n such circumstances, there is no

need to incur the expense of an evidentiary hearing or class-related discovery"].)

                                               14
       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.)

       B. Class Action Requirements and Analysis

       Class actions are permitted "when the question is one of a common or general

interest, of many persons, or when the parties are numerous, and it is impracticable to

bring them all before the court . . . ." (Code Civ. Proc., § 382.) "Drawing on the

language of Code of Civil Procedure section 382 and federal precedent, we have

articulated clear requirements for the certification of a class. The party advocating class

treatment must demonstrate the existence of an ascertainable and sufficiently numerous

class, a well-defined community of interest, and substantial benefits from certification

that render proceeding as a class superior to the alternatives. [Citations.]" (Brinker

Restaurant Corp. v. Superior Court (2012) 53 Cal. 4th 1004, 1021.) " 'In turn, the

"community of interest requirement embodies three factors: (1) predominant common

questions of law or fact; (2) class representatives with claims or defenses typical of the

class; and (3) class representatives who can adequately represent the class." ' " (Ibid.)

Courts may also consider whether the class action procedure is "superior" to litigating

claims individually. (Sav–On Drug Stores, Inc. v. Superior Court (2004) 34 Cal. 4th 319,

332 (Sav-On Drug Stores).)

                                             15
       Here, the threshold question is whether the SAC adequately presents predominant

common questions of law or fact. "Commonality as a general rule depends on whether

the defendant's liability can be determined by issues common to all class members: ' "A

class may be certified when common questions of law and fact predominate over

individualized questions. As a general rule if the defendant's liability can be determined

by facts common to all members of the class, a class will be certified even if the members

must individually prove their damages. . . . [T]o determine whether common questions of

fact predominate the trial court must examine the issues framed by the pleadings and the

law applicable to the causes of action alleged." ' [Citations.] [¶] 'In examining whether

common issues of law or fact predominate, the court must consider the plaintiff's legal

theory of liability.' " (Knapp v. AT&T Wireless Services, Inc. (2011) 195 Cal. App. 4th
932, 941.)

       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 (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

                                            16
property, the damage sustained and the actual claims practices employed. [Citation.] In

such cases, class treatment is unwarranted." (Id. at p. 1103.)

       The Newell court further concluded that the plaintiffs' cause of action for unfair

competition "fare[d] no better" (Newell, supra, 118 Cal.App.4th at p. 1103), inasmuch as

that cause of action was "premised on the improper denial of policy benefits; and

plaintiffs ultimately seek restitution for the amount of benefits [the defendants] failed to

pay. Thus, the individualized assessments necessary for the breach of contract and bad

faith causes of action also are necessary to establish liability for unfair competition" (id.

at pp. 1103-1104).

       Turning to the instant case, we independently conclude there is no reasonable

possibility plaintiffs can satisfy the community of interest requirement for class

certification for each of its four causes of action at issue because common questions of

law and fact do not predominate.

       First, when analyzing the sufficiency of a cause of action for purposes of

demurrer, it is axiomatic that we consider the truth of all material facts properly pleaded

or all ultimate facts alleged, but not contentions, deductions, or factual conclusions.

(Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 966-967 (Aubry).) We conclude

plaintiffs' allegations in their SAC—which were noticeably absent from their original

complaint—that defendants implemented a uniform policy and procedure in each and

every lease transaction with plaintiffs and the putative class members over a four-year

period (i.e., the proposed class period), in each of the 18 mobilehome parks owned and/or

operated by Tatum and Kaplan, are not properly admitted for purposes of demurrer

because such allegations are not ultimate facts but rather merely contentions and/or

                                              17
improper factual conclusions. (See ibid.; see also Logan v. Southern Cal. Rapid Transit

Dist. (1982) 136 Cal. App. 3d 116, 126 [noting the plaintiff bus driver's allegation that he

was not afforded due process when he was discharged by the defendant rapid transit

district was insufficient to withstand demurrer because the plaintiff failed to present

"ultimate facts as to how his due process rights were violated"]; Lesperance v. North

American Aviation, Inc. (1963) 217 Cal. App. 2d 336, 343 [noting to withstand demurrer a

pleading " 'must allege facts and not conclusions' "].)

       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 unconscionable policies

and/or procedures at issue in this case primarily arose out of one-on-one interactions

between different defendants (and/or their agents) and each plaintiff and putative class

member in each of the 18 mobilehome parks; (ii) these one-on-one interactions allegedly

involved improper or unlawful conduct of defendants throughout the negotiation,

execution, and enforcement of each lease agreement; (iii) the unconscionable policies and

procedures alleged in the SAC involved at least eight different leasing practices

defendants purportedly used to "trap" plaintiffs and the putative class members in

connection with the negotiation, execution, and enforcement of each lease agreement;

                                             18
and (iv) several of the eight different leasing practices allegedly used by defendants to

"trap" plaintiffs and the putative class members involved facts particular to the individual

negotiation of the lease agreement, including, by way of example only, (a) whether

plaintiffs and the putative class members were presented with the lease agreement on a

"take it or leave it basis," (b) whether plaintiffs and the putative class members were

provided all documents related to the lease at the time of its execution, and (c) whether

plaintiffs and the putative class members signed the lease under duress. (Compare with

Prince v. CLS Transportation, Inc. (2004) 118 Cal. App. 4th 1320, 1323, 1329 [noting in

dictum that the plaintiffs' wage and hour class action should not have been decided at the

pleading stage because plaintiffs alleged "institutional practices by [the defendant] that

affected all of the members of the potential class in the same manner," namely that

defendant " 'paid its drivers only for the time they were on driving assignments rather

than for the full duration of their shifts' " (italics added)].)

       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.)

                                                19
       What's more, we further independently conclude that class treatment is

inappropriate with respect to plaintiffs' unfair business practices cause of action because

there are substantial and numerous factually unique questions to be resolved in

determining plaintiffs' and the putative class members' right to recovery, if any. (See

Acree v. General Motors Acceptance Corp. (2001) 92 Cal. App. 4th 385, 397 (Acree)

[stating the general rule that a "class action can be maintained even if each class member

must at some point individually show his or her eligibility for recovery or the amount of

his or her damages, so long as each class member would not be required to litigate

substantial and numerous factually unique questions to determine his or her individual

right to recover" (fn. omitted)]; see also Hicks v. Kaufman & Broad Home Corp. (2001)

89 Cal. App. 4th 908, 924 [denying motion for class certification for lack of commonality

based on need for "individualized proof" of each putative class member to "come forward

and prove specific damage to [his or] her home (e.g., uneven floors, insect infestation,

misaligned doors and windows)"]; Silva v. Block (1996) 49 Cal. App. 4th 345, 352

[denying certification on demurrer because, even if plaintiffs could prove allegation of

common improper policy, recovery of each putative class member is dependent on

individualized proof of constitutional injury].)

       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.

                                             20
       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 and numerous unique

factual questions that make class treatment unwarranted. (See Acree, supra, 92

Cal.App.4th at p. 397.)

                                             21
       Regarding "unlawful fees," we note that term is not defined in the SAC3 and, thus,

is merely a contention, deduction, or factual conclusion that is not properly admitted for

purposes of demurrer. (See Aubry, supra, 2 Cal. 4th 962 at pp. 966-967.) However even

if considered on demurrer, we conclude individual issues predominate regarding what

constitutes "unlawful fees" and the amount of refunds, if any, of such fees at each of the

18 mobilehome parks located throughout California.

       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

3       As noted, plaintiffs separately alleged defendants breached the covenant of quiet
enjoyment by charging plaintiffs and the putative class members a transfer or selling
"fee"/"charge[]" during the class period. As such, and to avoid rendering the "transfer"
fee allegation superfluous, it appears "unlawful fees" would not include a "transfer" fee.
(See, e.g., Carmel Development Co. v. RLI Ins. Co. (2005) 126 Cal. App. 4th 502, 511.)
                                              22
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, we further independently conclude plaintiffs'

third cause of action for breach of covenant of good faith and fair dealing does not

warrant class treatment.

       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."

       We also independently conclude that class treatment is unwarranted for plaintiffs'

fraud and deceit cause of action because plaintiffs must plead and prove actual reliance.

(See Mirkin v. Wasserman (1993) 5 Cal. 4th 1082, 1092 (Mirkin).) Under the facts of this

case, where different defendants (and/or their agents) individually negotiated the lease

                                             23
agreements in 18 separate mobilehome parks, the inquiry into the purported

misrepresentations is inherently individualized. (See Tucker, supra, 208 Cal.App.4th at

pp. 222, 224 [noting if the issue of reliance "would vary from consumer to consumer, the

issue is not subject to common proof, and the action is properly not certified as a class

action," and noting reliance was not established on a class-wide basis because the

"purported misrepresentations were communicated to class members through a variety of

written materials, through the mail, via the Internet, by telephone and in retail stores"];

compare, Vasquez v. Superior Court (1971) 4 Cal. 3d 800, 811-812 (Vasquez) [noting in a

consumer class action it was proper to infer that each member of a class had actually

relied on the defendant's misrepresentations because there plaintiffs asserted that "they

[could] demonstrate [that the] misrepresentations were in fact made to each class member

without individual testimony because the salesmen employed by [the defendant seller]

memorized a standard statement containing the representations (which in turn were based

on a printed narrative and sales manual) and that this statement was recited by rote to

every member of the class"], as cited and quoted in Mirkin, supra, 5 Cal.4th at p. 1094

[noting the reliance inferred in Vasquez was, "under the peculiar facts of the case, . . .

truly a common issue"].)

       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.

                                              24
As such, for this separate reason we independently conclude class treatment is

unwarranted in connection with plaintiffs' fraud and deceit cause of action.

        C. Leave to Amend

        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 (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.)

        "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.) "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

                                              25
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 involves

substantial and numerous factually unique assessments. Indeed, as already noted, to

recover excess rents would require among others an analysis of fair market values in

various locations throughout California during the proposed (four-year) class period.

Because recovery turns on individualized proof, for this separate and independent reason

we conclude the court did not err when it denied plaintiffs leave to file a third amended

class action complaint.4

4      In light of our conclusion, we deem it unnecessary to reach defendants' alternate
contentions including that the claims of the putative class members are not typical of the
class and that a class action is not the superior method of litigating this case.
                                             26
                                      DISPOSITION

       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.

                                                                      BENKE, Acting P. J.

WE CONCUR:

HUFFMAN, J.

HALLER, J.

                                            27