Muniz v. CTC Inv'rs

ALBERTO MUNIZ et al., Plaintiffs and Appellants, v. CTC INVESTORS, LLC, Defendant and Respondent.

F079107

California Court of Appeals, Fifth District

September 30, 2021

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Merced County. No 16CV-01443 Brian L. McCabe, Judge.

Law Offices of Michael E. Adams and Michael E. Adams for Plaintiffs and Appellants.

Law Offices of Margot L. Roen and Margot L. Roen for Defendant and Respondent.

OPINION

LEVY Acting P.J.

Plaintiffs^[1] claim to have sustained damages as a result of their reliance on false representations made by an on-site manager at their mobilehome park to the effect that no governmental approvals would be needed to make improvements. Plaintiffs insist their claim not only sounds in fraud, but also fits within the rubric of a breach of contract cause of action-specifically a breach of the implied covenant of good faith and fair dealing. It is no abstract point, as plaintiffs' appeal stands or falls on this precise issue. The mobilehome park in question, known as Casa Mobile Home Park (the Park) in Los Banos, California, was owned and operated by defendant CTC Investors, LLC, who also employed the on-site manager.^[2] Plaintiffs each asserted a similar pattern of events led to their respective damages: Each entered into a written lease for the use of an individual space at the Park, and each also purchased from defendant the existing mobilehome that was situated on the particular space being leased. Contemporaneous with these transactions, plaintiffs approached the on-site manager about their intentions to make improvements or renovations to the existing mobilehomes. The on-site manager allegedly represented to plaintiffs that any improvements they wished to make to their mobilehomes would only need to be approved by her, and no other approval or permission would be needed since the Park was on private property. In reliance upon said representation(s), plaintiffs made substantial and costly improvements to their respective mobilehomes. Subsequently, state government inspectors from the California Department of Housing and Community Development (the HCD) inspected the mobilehomes and informed plaintiffs that their improvements were carried out without proper permits and were not in compliance with California standards. At that point, plaintiffs could not afford to make the required changes or modifications to bring their units into compliance with California law and they ultimately had to relinquish their mobilehomes.

Based on these events, plaintiffs filed their complaint against defendant for both fraud and breach of written contract. However, the trial court determined the fraud claims were barred by the three-year statute of limitations, and that ruling has not been challenged by plaintiffs. Plaintiffs' sole remaining cause of action was for breach of contract; more precisely, for breach of the implied covenant of good faith and fair dealing allegedly arising under the written lease agreements. This contractual cause of action was challenged by defendant via a motion for summary judgment. The trial court granted the motion, concluding under the undisputed facts that plaintiffs could not state a cause of action for breach of the implied covenant of good faith and fair dealing in this case. Plaintiffs now appeal from the resulting final judgment.

As more fully explained in this opinion, we agree with the trial court's conclusion that no cause of action existed in this case under the implied covenant of good faith and fair dealing. Although the allegations of false representations and detrimental reliance potentially indicated fraud, they cannot reasonably be stretched into a viable claim for breach of the lease agreements under the guise of the implied covenant of good faith and fair dealing. As the trial court correctly pointed out, the implied covenant is only recognized to protect the parties' rights or benefits embodied in their express contract. Here, there was no adequate connection between the rights or benefits provided in the lease agreements and the subject matter of the alleged false representations, and thus no cause of action for breach of the implied covenant was available. Accordingly, the judgment of the trial court is affirmed.

FACTS AND PROCEDURAL HISTORY

Plaintiffs' First Amended Complaint

On May 18, 2016, plaintiffs commenced the present action by filing their original complaint in the Merced County Superior Court. A first amended complaint was filed on August 25, 2016, which was the operative pleading in the proceedings before the trial court. According to the first amended complaint, from approximately 2009 to 2011, defendant's on-site manager at the Park, M. Martinez, ^[3] in response to plaintiffs' several inquiries about making modifications or improvements to the mobilehomes, informed them that only her approval was necessary for any modifications or improvements.

We briefly highlight the specific allegations as to the individual plaintiffs, consisting of three married couples under the first amended complaint. On January 26, 2010 plaintiffs Muniz and Hernandez went to the leasing office at the Park, where they met with the on-site manager, Martinez, to arrange to purchase from defendant a used single-wide mobilehome located in space No. 114 at the Park. Allegedly, “Muniz and Hernandez told Martinez that they would want to remodel the mobile home. Martinez replied that if they purchased the mobile home, they would have [defendant's] permission to remodel it as they wished, and that no other permission or approval was necessary for the remodeling because [the Park] was private property. Martinez stated that the purchase price would be $250.00 if they remodeled the mobile home as a single-wide, or $450.00 if they remodeled it into a double-wide. Muniz and Hernandez took the latter option, and accordingly paid $450.00 to Martinez for said purchase. Muniz and Hernandez thereupon moved into the mobile home and proceeded to make said improvements, expending in the vicinity of $60, 000.00 to do so.”

On November 12, 2009, plaintiffs Mendez and Fernandez went to the leasing office at the Park, where they met with on-site manager, Martinez to arrange to purchase from defendant a used single-wide mobilehome located in space No. 149. Allegedly, “Mendez and Fernandez told Martinez that they would want to remodel the mobile home, which was not then inhabitable, from a single-wide to a double-wide. Martinez replied that if they purchased the mobile home, they would have [defendant's] permission to remodel it, so long as they first provide Martinez with a sketch of the proposed improvements for her approval, and that no other permission or approval was necessary for the remodeling because [the Park] was private property. Martinez stated that the purchase price for the mobile home would be $250.00. Mendez and Fernandez agreed to the foregoing terms, and paid the $250.00 to Martinez. They then provided Martinez with a sketch of their proposed remodeling improvements, which included expanding the mobile home from single-wide to double-wide, and adding an exterior deck and a new roof, and Martinez approved the sketch. Mendez and Fernandez then built the improvements, expending approximately $20, 000.00 for materials, together with their own labor reasonably valued at $22, 000.00.”

On November 13, 2009, plaintiffs Gonzalez and Ortiz went to the leasing office at the Park, where they met with Martinez to arrange to purchase from defendant a used single-wide mobilehome located in space No. 156. Allegedly, “Gonzalez and Ortiz told Martinez that they would want to remodel the mobile home. Martinez replied that if they purchased the mobile home, they would have [defendant's] permission to remodel it, so long as they first provide Martinez with a sketch of the proposed improvements for her approval, and that no other permission or approval was necessary for the remodeling because [the Park] was private property. Martinez stated that the purchase price for the mobile home would be $250.00. [Gonzalez and Ortiz] agreed to the foregoing terms, and paid the $250.00 to Martinez. Shortly thereafter, they provided Martinez with a sketch of their proposed remodeling improvements, which included rebuilding the existing two bedrooms, expanding a storage room to be a third bedroom, replacing windows, and adding [a] covered exterior deck. Martinez approved the sketch.…” After a further issue of whether an additional fee should be paid was resolved, Gonzalez and Ortiz proceeded with the improvements, “expending approximately $14, 000.00 for materials, together with their own labor reasonably valued at approximately $12, 000.00.”

According to the first amended complaint, plaintiffs each justifiably relied on the above representations because plaintiffs were not aware of the requirements under California's mobilehome law and they reasonably believed that defendant, given its ownership and authority over the Park, was knowledgeable concerning the proper process for making improvements to the mobilehomes there.

Concurrently with the above purchase transactions, plaintiffs also entered into lease agreements to rent spaces in the Park from defendant-the same spaces on which the mobilehomes they purchased were situated. Although not attached to the first amended complaint, it is apparent from copies of the lease agreements contained elsewhere in the record that said lease agreements were entered into by plaintiffs on the same date (and presumably on the same occasion) that the above described purchases were made. The monthly rental for each of the spaces was $425 per month.

In August and September 2012, inspectors from the HCD allegedly visited the...