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
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
AI Brief
AI-generated · verify before citing
Holding. The court properly sustained a demurrer to class allegations without leave to amend because the plaintiffs failed to establish a community of interest, as the claims required individualized inquiries into lease negotiations, enforcement actions, and park-specific damages.
Issues
Whether the trial court properly sustained a demurrer to class allegations without leave to amend.
Whether the plaintiffs' operative complaint sufficiently pleaded a community of interest and predominant common questions of law and fact.
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“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.”
“The causes of action relate largely to how each individual class member interacted with defendants. The leases were individually negotiated and executed.”