Soo Young Kim, et al. v. Harrigan Weidenmuller Company

Demurrer

A. Untimely Opposition and Reply

Oppositions must be filed by the ninth court day before the hearing. (Code of Civ. Pro., § 1005, subd. (b).) Replies must be filed and served at least five court days before the hearing. (Id.) Plaintiffs’ opposition was filed and electronically served on June 4, 2026, less than nine court days before the hearing. The court has discretion to consider an untimely opposition. (See Cal. Rules of Court, rule 3.1300(d); Slayton v. Sup. Ct. (2006) 146 Cal.App.4th 55, 58, n. 2; Kapitanski v. Von’s Grocery Co. (1983) 146 Cal.App.3d 29.) The substantive reply was also untimely, with Defendant waiving any defect or irregularity in the filing and service of the opposition. (See Carlton v. Quint (2000) 77 Cal.App.4th 690, 697.) The Court gives consideration to the untimely opposition and reply.

B. Standard

The function of a demurrer is to test the legal sufficiency of the challenged pleading. (Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497.) As a general rule, in testing a pleading against a demurrer, the facts alleged in the pleading are deemed to be true, however improbable they may be. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) The court gives the pleading a reasonable interpretation by reading it as a whole and all of its parts in their context. (Moore v. Regents of Univ. of Calif. (1990) 51 Cal.3d 120, 125.)

In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

If the complaint fails to state a cause of action, the court must grant the plaintiff leave to amend if there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 317.) “Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Sup. Ct. (1995) 37 Cal.App.4th 1217, 1227; Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.)

C. Merits

1. 1st Cause of Action – Breach of Contract (Unreasonable Refusal to Sublease or Assign Lease)

The elements of a breach of contract claim are: 1) the existence of a contract; 2) plaintiff’s performance or excuse for nonperformance; 3) breach; and 4) damages. (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.) A commercial landlord may withhold consent to an assignment only for a commercially reasonable objection connected to the property itself. (Kendall v. Ernest Pestana, Inc. (1985) 40 Cal.3d 488, 493.) Defendant argues that Plaintiffs’ claim fails at the threshold because Plaintiffs did not comply with Paragraph 12.2(e) of the lease, which requires a written request accompanied by specified financial and operational information about the

proposed assignee and a $500 review fee. Defendant further contends the lease’s anti-waiver clause at Paragraph 24(a) precludes any waiver theory.

The Court concludes the FAC adequately pleads breach of contract on waiver, estoppel, and excuseof-condition theories. Waiver requires clear and convincing evidence of intentional relinquishment or abandonment of a contractual right. (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 569.) The FAC alleges when Plaintiffs twice asked Defendant to consider assigning the Lease in 2019, Defendant gave the requests full consideration without requesting Plaintiffs submit them in writing nor demanding that Plaintiffs pay $500, or any other amount. (FAC, ¶ 29.) The pleading further alleges that during the 2022 assignment request, Muller flatly denied Kim’s request and instructed her to approach him again in ten days; he did not state that Defendant needed the request in writing, nor that Plaintiffs needed to pay $500. (FAC, at ¶ 32.)

When she called again in ten days, he cited again the purported uncertainty of the Post Office extension and Defendant's desire to redevelop or sell the building, and instructed Kim to call back in 30 days and again never mentioned wanting a request in writing or the $500. (Id.) This process repeated for over a year with Muller consistently saying that Defendant was unwilling to consider an assignment while the lease with the Post Office was uncertain, and actually declaring in January 2023, “I am not going to do anything that helps you.” (Id. at ¶ 32.)

These allegations plausibly allege waiver at the pleading stage by describing repeated substantive denials without invocation of the procedural prerequisites, plus alleged prior instances in which Defendant evaluated assignments without demanding the writing or fee. The anti-waiver clause at Paragraph 24(a) strengthens Defendant’s position but does not categorically defeat waiver as a matter of law on demurrer. California law does not treat such clauses as immune from waiver by subsequent conduct.

Estoppel is also sufficiently pleaded. Estoppel requires detrimental reliance. (Quach, supra, 16 Cal.5th at 569.) The FAC alleges after the lease was executed by Tim Muller on behalf of Defendant, Brian Muller emailed a highly illegible copy to Plaintiffs on June 14, 2014. (FAC, ¶ 9.) Plaintiffs allege Defendant repeatedly denied its responsibility or simply ignored pleas for remediation, and Plaintiffs began to request a legible copy of the Lease and continued to do so for over eight years, by email, text and phone. (Id. at ¶ 15.)

Defendant did not provide a legible copy until December 19, 2023, nine years after the first request and after the consent dispute had ended. (Id.) These allegations permit an inference that Plaintiffs were unaware of the detailed Paragraph 12.2(e) requirements because the lease copy they had was unreadable and Defendant withheld a legible one until after the assignment dispute concluded. The pleading also alleges a yearlong course of substantive denials that could have induced Plaintiffs to believe formal compliance was pointless.

The excuse-of-condition or anticipatory-breach theory is also adequately pleaded. California law permits excuse of a condition where the promisor’s repudiation makes performance futile or unnecessary. (Guerrieri v. Severini (1958) 51 Cal.2d 12, 23.) The FAC alleges that Plaintiffs informed Defendant the prospective buyer did not require a lease extension (FAC, ¶ 31), then alleges repeated categorical refusals culminating in the statement “I am not going to do anything that helps you.” (Id. at ¶ 32.) At the pleading stage, that is sufficient to allege a repudiation of any future evaluation process.

Defendant’s argument that the pleaded facts show a commercially reasonable justification also does not support demurrer. The FAC alleges Defendant cited negotiations with the Post Office regarding a 10-year extension of its lease, ultimately signed mid-2023, which would also give Defendant or any new owner the Lessor’s unilateral right to cancel (Id. at ¶ 31) and a desire to redevelop or sell. These allegations may ultimately bear on reasonableness, but the question is ordinarily factual, and the pleading does not conclusively establish a property-based justification as a matter of law. (Kendall, supra, 40 Cal.3d p. 493.)

The demurrer to the First Cause of Action is OVERRULED.

2. 2nd Cause of Action – Breach of Covenant of Good Faith and Fair Dealing (Unreasonable Refusal to Sublease or Assign Lease)

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement. The implied covenant applies where one party is vested with discretionary contractual power affecting another's rights, but it cannot override or contradict an express lease term. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349.)

The Second Cause of Action is adequately pleaded because breach of a specific express term is not always a prerequisite to a covenant claim where discretionary contractual power is exercised in bad faith. The same facts supporting the First Cause of Action support an allegation that Defendant exercised or purported to exercise its consent discretion categorically and for self-interested reasons disconnected from any good-faith evaluation of the proposed transaction. Yet, for over a year, Defendant, through its agent Tim Muller, unreasonably and arbitrarily refused to allow Plaintiffs to assign or sublet the Lease. (FAC, ¶ 28.)

In offering this late extension despite Plaintiffs asking only for an assignment, Defendant sought to lock in for another five years the same tenant who had since 2014 done virtually all the work in cleaning, maintaining and coordinating the repair of the Building. (Id. at ¶ 33.) The covenant claim overlaps substantially with the contract claim, but at this stage it is not wholly duplicative because it pleads bad-faith exercise of contractual discretion as an alternative theory. The FAC does not plead that Defendant simply exercised an unqualified express right; it pleads that Defendant refused to engage the consent process in good faith. (Carma Developers (California), Inc. v.

Marathon Development California, Inc. (1992) 2 Cal.4th 342.)

The demurrer to the Second Cause of Action is OVERRULED.

3. 3rd Cause of Action – Intentional Interference with Prospective Economic Advantage

To state a claim for intentional interference with prospective economic advantage, a plaintiff must plead an economic relationship with probable future benefit, the defendant's knowledge, intentional acts designed to disrupt, actual disruption, proximate economic harm, and independently wrongful conduct beyond the interference itself. (LiMandri v. Judkins (1997) 52 Cal. App.4th 326; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159.)

The FAC adequately pleads an economic relationship and knowledge. It alleges in May of 2022; a restaurant group's principal mistook a Craigslist posting for a different restaurant and contacted Kim about purchasing Plaintiffs' restaurant. (FAC, ¶ 30.) The buyer agreed to pay Plaintiffs $100,000 up front and pay Plaintiffs $4,700 per month in rent for the remaining term of the Lease. (Id.) Kim alleges she was scrupulous in informing Defendant that this buyer did not require an extension, calling Muller in late May 2022 to ask him to allow the assignment of the Lease for its remaining term. (Id.) Kim emphasized that the buyer was well aware that the Building was for sale and subject to being redeveloped on this and each of several more phone calls with Muller. (Id. at ¶ 31.)

Credited as true, these allegations are sufficient to plead knowledge of a prospective economic relationship even without the buyer's identity, written offer, or financial package. The FAC also pleads disruption and resulting loss. (Id. at ¶ 36.)

The defect lies in independent wrongfulness. After Korea Supply, wrongfulness must be supplied by a legal standard independent of the interference itself. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134.) The FAC identifies as wrongful that Defendant improperly and unreasonably withheld consent for the sublease or assignment of the lease at 115 San Anselmo Avenue, San Anselmo, California, knowing that doing so would prevent Plaintiffs from selling their restaurant to a

ready, willing, and able buyer. (FAC, ¶ 47.) That describes the alleged breach of the lease obligation itself. Although the Court has concluded that Plaintiffs adequately plead a lease-based claim under waiver, estoppel, and excuse theories, the independent-wrongfulness element for the tort requires a separate legal standard beyond the contractual duty. The FAC does not presently identify a statutory, regulatory, common law tort, or other noncontractual legal standard that Defendant violated. Because a more specific independently wrongful predicate might be alleged, there is a reasonable possibility of cure by amendment.

The demurrer to the Third Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

4. 4th Cause of Action - Negligent Interference with Prospective Economic Advantage

Negligent interference with prospective economic advantage requires a legal duty of care with respect to the plaintiff’s prospective economic relationship. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.) An ordinary commercial landlord-tenant relationship does not create a special duty to protect a tenant’s prospective sale transaction. (Girard v. Delta Towers Joint Venture (1993) 20 Cal.App.4th 1741, 1747.)

The FAC pleads no facts taking this dispute outside that rule. It alleges only a standard commercial lease relationship. Nothing pleaded suggests a professional-services undertaking or other special relationship that the law contemplates. (North American, supra, 59 Cal.App.4th 764.) Applying the Girard factors does not change the outcome, because although harm to Plaintiffs may have been foreseeable, the relationship remains purely contractual, and the claimed loss is purely economic. While it is doubtful that an amendment would convert this ordinary landlord consent dispute into a negligence-duty case, given this is the first challenge to the pleadings, the Court permits an opportunity to amend.

The demurrer to the Fourth Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

5. 5th Cause of Action – Breach of Contract (Failure to Reimburse Fire Sprinkler and Flooding Costs)

The FAC pursues two distinct reimbursement theories, fire sprinkler costs and flooding costs. Because a demurrer does not lie as to a part of a cause of action, the claim survives if either theory is sufficiently pleaded. (PHI II, Inc. v. Sup. Ct. (1995) 33 Cal.App.4th 1680, 1682.)

As to the sprinkler theory, the FAC alleges the property’s sprinkler system be in good operating condition and Lessor’s responsibility for their installation, maintenance, and operation. (FAC, ¶ 17.) It quotes Paragraph 7.2 of the lease: “Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems.” (Id.)

Despite the foregoing warranty, the fire sprinklers were not in good working order when Plaintiffs took possession and Defendant forced Plaintiffs to pay half the cost ($8,945) of putting the system in compliance with the Lease's warranty clause. (Id.) The FAC clearly alleges that the fire sprinkler system covered the entire building, including the 14,000 square foot basement. (Id.)

Reading Paragraphs 7.2 and 4.2 together, the plain meaning is not that every sprinkler expense is necessarily shifted to Plaintiffs; Paragraph 7.2 places the repair obligation on lessor, subject to whatever reimbursement Paragraph 4.2 may authorize. Contract language is read in its ordinary sense, and apparently inconsistent clauses must be reconciled, if possible, to give effect to the whole agreement. (Civ. Code, §§ 1644, 1652.) Defendant’s reliance on an email purportedly stating the system covered only Plaintiffs’ premises does not conclusively defeat the claim on demurrer; that email is extrinsic evidence, and even if referenced in the FAC it does not override the pleaded factual allegation about the system’s scope for purposes of this motion. Because the FAC alleges a building-

wide sprinkler system and a lease clause assigning the fire sprinkler system to lessor's obligations, the sprinkler theory is sufficiently pleaded.

The flooding theory is more doubtful. The FAC relies on Section 6.2(e) of the lease, which addresses “Lessor Indemnification” and provides that lessor shall “indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees.” (FAC, ¶ 27.)

The FAC alleges that Defendant’s gross negligence caused hundreds of thousands of gallons of raw sewage to damage Plaintiffs' property and cause Plaintiffs to incur expenses and that Defendant refused to reimburse Plaintiffs for their damages. (Id. at ¶¶ 23-27.) The clause is framed in environmental and hazardous-substance terms, and the FAC does not clearly plead why raw sewage falls within “environmental damages” or “Hazardous Substances” as defined in the lease, or why the clause reaches first-party attorney and contractor fees incurred by Plaintiffs in their own remediation efforts and related litigation. The word “reimburse” helps Plaintiffs, but the current allegations do not clearly bridge the rest of the contractual language.

Nonetheless, because the sprinkler theory adequately states a breach-of-contract claim, however, the Fifth Cause of Action as a whole survives. The Court does not sustain a demurrer to only part of a cause of action. The demurrer to the Fifth Cause of Action is OVERRULED.

6. 6th Cause of Action – Breach of Covenant of Good Faith and Fair Dealing ((Failure to Reimburse Fire Sprinkler and Flooding Costs)

A covenant claim tied to reimbursement obligations is legally viable in the abstract, but the FAC does not plead an independent covenant theory distinct from the Fifth Cause of Action. Unlike the consentsetting claims, the reimbursement dispute does not involve obviously discretionary contractual judgment; it is pleaded as a straight refusal to pay amounts allegedly due under the lease. The FAC therefore states a claim that is wholly derivative of the contract theory and adds no separate badfaith conduct beyond the alleged breach itself. (Carma Developers (California), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342.) Because Plaintiffs might amend to identify a distinct discretionary or bad-faith claims-handling theory if one exists under the lease and the facts, there is a reasonable possibility of cure.

The demurrer to the Sixth Cause of Action is SUSTAINED WITH LEAVE TO AMEND.

D. Uncertainty

Defendant’s passing reference to uncertainty under Code of Civil Procedure section 430.10, subdivision (f) is not developed. The demurrer presents failure-to-state theories but does not present a distinct uncertainty analysis. Uncertainty demurrers are strictly construed and are generally overruled where the facts alleged are sufficiently clear to allow a response. (Khoury v. Maly’s California, Inc. (1993) 14 Cal.App.4th 612, 616.) The uncertainty ground is OVERRULED as unsupported.

The demurrer to the First, Second and Fifth Causes of Action are OVERRULED. The demurrer to the Third. Fourth and Sixth Causes of Action are SUSTAINED WITH LEAVE TO AMEND. The demurrer on the uncertainty ground under Code of Civil Procedure section 430.10, subdivision (f), is OVERRULED.

Parties must comply with Marin County Superior Court Local Rules, Rule 2.10(A), (B), which provides that if a party wants to present oral argument, the party must contact the Court at (415) 444- 7046 and all opposing parties by 4:00 p.m. the court day preceding the scheduled hearing. Notice may be by telephone or in person to all other parties that argument is being requested (i.e., it is not necessary to speak with counsel or parties directly.) Unless the Court and all parties have been notified of a request to present oral argument, no oral argument will be permitted except by order of the Court. In the event no party requests oral argument in accordance with Rule 2.10(B), the tentative ruling shall become the order of the court.

IT IS ORDERED that evidentiary hearings shall be in-person in Department L. For routine appearances, the parties may access Department L for video conference via a link on the court website. Kindly turn your camera on when your case is called and make sure the party or lawyer making the appearance is properly identified on the screen.

FURTHER ORDERED that the parties are responsible for ensuring that they have a good connection and that they are available for the hearing while using the virtual remote courtroom. If the connection is inadequate, the Court may proceed with the hearing in the party’s absence. If it is determined that you are driving your car during the hearing, you will be removed from the virtual courtroom. (Yes, this happens).