Leaser v. Prime Ascot, L.P. ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 NICHA LEASER, et al., individually, No. 2:20-CV-02502-DJC-AC and on behalf of others similarly 12 situated, 13 Plaintiffs, ORDER 14 v. 15 PRIME ASCOT, L.P, et al., 16 Defendants 17 18 Defendants Prime Ascot, L.P., Prime Ascot Acquisition, LLC, Prime/Park LaBrea 19 Titleholder, LLC, and Prime Administration, LLC (“Defendants”) bring the present 20 Motion to Strike seeking to strike all allegations related to a previously dismissed set 21 of defendants from the operative Second Amended Complaint (“SAC”). Defendants 22 also request, in the alternative, that the Court join the previously dismissed 23 defendants under Federal Rule of Civil Procedure 19. As discussed below, there is no 24 basis to strike the allegations in the SAC, and it is not feasible to join the previously 25 dismissed defendants. Accordingly, Defendants’ motion is DENIED. 26 //// 27 //// 28 //// 1 I. Background 2 A. Factual Background 3 Plaintiffs bring the present action against Defendants Prime Ascot, L.P., Prime 4 Ascot Acquisition, LLC, Prime/Park LaBrea Titleholder, LLC, and Prime Administration, 5 LLC, the owners and property managers of apartment buildings rented by the 6 Plaintiffs. (SAC (ECF No. 37) ¶¶ 1–3, 10–17.) Plaintiffs allege that Prime Administration 7 is the manager of all of the apartment complexes rented by Plaintiffs, and that each of 8 the other Defendants are alter egos of Prime Administration which ultimately controls 9 and operates each of the properties it manages. (Id. ¶¶ 18–21.) Plaintiffs allege that 10 Defendants collectively and systematically engaged in misrepresentation and unfair or 11 fraudulent practices which violated Plaintiffs’ rights, and breached various implied 12 warranties. (Id. ¶¶ 4–9.) These practices and policies are allegedly common and 13 shared among all properties operated and managed by Prime Administration. (Id. 14 ¶ 25.) 15 Plaintiffs Nicha Leaser, Atchara Wongsaroj, and Katina Magee specifically allege 16 that while they resided at Blue Rock Village under a lease agreement with Defendant 17 Prime Ascot, L.P., their apartments were infested with mice. (Id. ¶¶ 32–34, 52, 54.) 18 They allege that Defendants were aware of and failed to disclose or address the 19 infestation despite Plaintiffs’ repeated complaints to Defendants. (Id. ¶¶ 35–36, 52, 20 56–60.) The alleged infestation interfered with Plaintiffs Leaser and Wongsaroj’s 21 enjoyment of the leased property, caused property damaged, and caused physical 22 and emotional illness. (Id. ¶¶ 39–45, 54, 57.) Plaintiff Magee eventually began to 23 withhold rent on the basis that her apartment was not habitable, and Defendants 24 ultimately evicted her. (Id. ¶¶ 58, 61.) Plaintiffs believe the entire building was 25 similarly infested, and that all Blue Rock Village residents suffered similar harm. (Id. 26 ¶¶ 35, 42.) 27 Plaintiffs Leaser and Wongsaroj also allege that during their tenancy, they were 28 charged late fees for not paying sewer, water, and garbage charges on time. (Id. 1 ¶¶ 46–47.) However, they allege that those fees were routinely posted after their due 2 date, providing Plaintiffs no opportunity to pay them on time and thus avoid the late 3 penalty. (Id.) Plaintiff Magee was also assessed late fees for late rent payments after 4 she began withholding rent. (Id. ¶¶ 58–59.) Plaintiff Joyce Eisman, who rented an 5 apartment at Park LaBrea under a lease agreement with Defendant Prime/Park LaBrea 6 Titleholder, LLC, alleges that Defendants charged her late fees for late payment of 7 rent as well. (Id. ¶¶ 63, 68.) Plaintiffs allege that these late fees were all exorbitant, 8 unreasonable, and unjustified. (Id. ¶¶ 47, 62, 68.) 9 In addition, each Plaintiff alleges that when they moved out of their respective 10 apartments, Defendants failed to provide a full refund of their security deposits, failed 11 to provide an accurate itemized accounting of the charges withheld, and wrongfully 12 withheld funds. (Id. ¶¶ 49–51, 61–62, 65–67.) Plaintiffs also allege they were 13 improperly charges fees for defendant to unnecessarily repaint their apartments. (Id.) 14 B. Procedural Background 15 Plaintiffs brought the present suit as a putative class action against Defendants 16 on behalf of three classes of plaintiffs: (1) persons who experienced a mice infestation 17 at Blue Rock Village; (2) persons who were charged excessive fees by Defendants; and 18 (3) persons who had their security deposits wrongfully withheld and/or were not 19 provided proper accounting of the charges. (Id. ¶ 69.) This suit was originally filed in 20 California Superior Court, Solano County, and was removed to this Court on 21 December 17, 2020. (Not. of Removal (ECF No. 1).) 22 Defendants moved to dismiss the First Amended Complaint, which the Court 23 initially denied. (Order (ECF No. 26).) However, on reconsideration, the Court 24 determined that Plaintiffs did not have standing to sue the owners/landlords of 25 properties managed by Prime Administration, which no Plaintiff had resided in. 26 Specifically, the Court found that Plaintiffs had not adequately alleged that those 27 owners/landlords had aided and abetted either Prime Administration or the 28 owners/landlords of the properties Plaintiffs had resided in. (Order (ECF No. 34) at 9– 1 10.) The Court accordingly dismissed those owners/landlords, (id. at 11), and Plaintiffs 2 filed the operative Second Amended Complaint not naming them. (ECF No. 37.) 3 Defendants now move to strike the SAC, arguing that the owners/landlords the 4 Court previously dismissed (referred to as the “Absent Landlords”) are actually 5 required parties under Rule 19. Defendants request that the Court strike the portions 6 of the Complaint that reference the Absent Landlords, their properties and lease 7 provisions, and allegations related to Plaintiffs’ alter ego, aiding and abetting, and 8 conspiracy theories. In the alternative, Defendants request that the Court join the 9 Absent Landlords, and also require Plaintiffs to join additional plaintiffs. 10 This matter is hereby submitted upon the record and briefs of the Parties, 11 without oral argument, pursuant to Local Rule 230(g). 12 II. Legal Standard 13 Under Rule 12(f) “a court may strike from a pleading an insufficient defense or 14 any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). A 15 “motion to strike” materials that are not part of the pleadings may be regarded as an 16 “invitation” by the movant “to consider whether [proffered material] may properly be 17 relied upon.” United States v. Crisp, 190 F.R.D. 546, 551 (E.D. Cal. 1999) (quoting 18 Monroe v. Board of Educ., 65 F.R.D. 641, 645 (D. Conn. 1975). “Motions to strike are 19 disfavored and infrequently granted. Such motions should be granted only where it 20 can be shown that none of the evidence in support of an allegation is admissible.” 21 Nat. Res. Def. Council v. Kempthorne, 539 F. Supp. 2d 1155, 1162 (E.D. Cal. 2008) 22 (internal citations omitted). 23 Federal Rule of Civil Procedure 19 governs compulsory joinder of parties. 24 Under Rule 19, a party may move the court to join a “required” party to the action if 25 feasible. E.E.O.C. v. Peabody W. Coal Co., 610 F.3d 1070, 1078 (9th Cir. 2010). A 26 party is required to be joined, if, “in [a] person's absence, the court cannot accord 27 complete relief among existing parties,” or, if that person claims an interest in the 28 action such that their absence may impair their ability to protect their interest, or their 1 interest leaves an existing party subject to the risk of incurring additional or 2 inconsistent obligations. Fed. R. Civ. P. 19(a)(1). Even if the absent party is required, 3 the party may only be joined if feasible. If a required party cannot be joined, a 4 defendant may bring a motion to dismiss for failure to join the required party. 5 Diodem, LLC v. Lumenis Inc., No. CV-03-2142-GAF-RC, 2005 WL 6219898, at *11–*12 6 (C.D. Cal. Sept. 14, 2005) (discussing the different standards applied to a Rule 19 7 motion to join and a motion to dismiss under Rule 12(b)(7)); see also E.E.O.C. v. 8 Peabody W. Coal Co., 400 F.3d 774, 778 (9th Cir. 2005) (stating that “dismissal for 9 failure to join a party must be decided on a motion to dismiss” (citing Dredge Corp. v. 10 Penny, 338 F.2d 456, 463–64 (9th Cir. 1964)). 11 III. Discussion 12 A. Motion to Strike Allegations Related to Absent Landlords 13 Although Defendants have brought this motion as a Motion to Strike under Rule 14 12(f), they devote the majority of their Motion to discussing whether the “Absent 15 Landlords” — the owners of the properties managed by Prime Administration which 16 were dismissed under the Court’s prior order — are required under Rule 19. 17 Defendants’ main contention is that “all allegations relating to properties owned by 18 the Absent Landlords should be stricken from the SAC pursuant to Rule 19.” 19 However, striking allegations is not the remedy provided by Rule 19, and whether a 20 party is required under Rule 19 is irrelevant to whether allegations related to that 21 absent party are “redundant, immaterial, impertinent, or scandalous” under Rule 12(f). 22 The Court instead addresses Rule 19 in response to Defendants’ alternative request to 23 join the Absent Landlords in Section III.B, below. 24 Defendants request the Court strike the allegations in paragraphs 19 through 25 31 of the SAC which are related to “aiding and abetting, conspiracy[,] and alter ego” 26 and to strike allegations related to the “absent landlords, their properties, and their 27 lease provisions” because these allegations are “immaterial” or “impertinent.” 28 Defendant fails to point to specific allegations which relate to the absent landlords, 1 but the Court’s review of the Complaint has determined that any references related to 2 the absent landlords, their properties, or lease provisions also occur in paragraphs 19 3 through 31. 4 As an initial matter, Plaintiffs’ allegations that Prime Administration is the alter 5 ego of the Absent Landlords and ultimately responsible for the allegedly unlawful 6 conduct is a central factual allegation of the SAC. Although the Court previously 7 found that Plaintiffs did not have standing to directly sue the Absent Landlords 8 because they did not adequately allege how the Absent Landlords aided and abetted 9 Prime Administration, (see ECF No. 34 at 9–10), the Court did not determine that 10 Plaintiffs had failed to establish an alter ego theory of liability. Though a subsidiary 11 may not be liable for the acts of its parent, a parent company may be held liable 12 where “(1) [ ] the parent exercised so much control over the subsidiary so as to have 13 effectively assumed the subsidiary’s day-to-day operations in carrying out the policy, 14 and (2) [ ] an inequitable result would obtain in the absence of the Court applying this 15 standard.” Kundanmal v. Safeco, No. 2:17-CV-06339-SVW-JEM, 2017 WL 6942758, at 16 *2 (C.D. Cal. Dec. 13, 2017); see also Ruiz v. Gen. Ins. Co. of Am., No. 1:20-CV-00218- 17 AWI-EPG, 2020 WL 4018274, at *4 (E.D. Cal. July 15, 2020) (stating the first element as 18 “the parent must control ‘the subsidiary to such a degree as to render the latter the 19 mere instrumentality of the former’” (quoting Calvert v. Huckins, 875 F. Supp. 674, 678 20 (E.D. Cal. 1995))). 21 Here, Plaintiffs allege that the Absent Landlords are “merely instrumentalities of 22 Prime Administration, are all part of the same scheme, and are controlled and 23 managed collectively.” (SAC ¶ 21.) Plaintiffs further allege that the Absent Landlords, 24 “allow[ed] Prime Administration to implement and effectuate the unfair and unlawful 25 policies and practices.” (Id.) There are two sentence in the SAC directly alleging that 26 the Absent Landlords aided and abetted the named Defendants: the first states “to 27 the extent the nominal titleholders have any independent existence, they are co- 28 conspirators and aiders and abettors of Prime Administration in committing the 1 conduct described in this Complaint;” the second states “Defendants all knowingly 2 aided and abetted the violations of law described in this Complaint and knowingly 3 aided and abetted the conduct related to the scheme, agreed to commit the unlawful 4 and unfair conduct, and gave substantial assistance and encouragement in 5 committing the unlawful and unfair conduct . . . .” These sentences, though directed 6 at the dismissed aiding and abetting theory, are sufficiently related to whether Prime 7 Administration exercised control over the Absent Landlords. The first sentence 8 alleges that the Absent Landlords are not independent of Prime Administration, and 9 the second sentence can be read as alleging that Prime Administration orchestrated 10 the alleged scheme. Accordingly, the Court does not find that the allegations are 11 “immaterial” or “impertinent” such that striking them would be necessary. See 12 Kempthorne, 539 F. Supp. 2d at 1162. 13 Next, Plaintiffs reference the Absent Landlords’ properties and lease provisions 14 insofar as they allege that Defendant Prime Administration operated and managed 15 each of these properties, and “develop[ed], institut[ed], and enforc[ed] the same 16 unlawful policies against tenants of [the properties].” These allegations relate directly 17 to Plaintiffs’ Seventh and Eighth Causes of Action which allege that Prime 18 Administration engaged in unlawful practices in its management of all the properties. 19 In the Seventh Cause of Action, Plaintiff alleges that “Defendant Prime Administration, 20 LLC also, upon information and belief, sets the security deposit amounts, and sets and 21 effectuates policies related to charges to and deductions from security deposits for 22 every unit at every one of the Prime Properties in California.” (SAC ¶ 129.) Plaintiffs’ 23 Eighth Cause of Action alleges that Prime Administration’s policies and practices of 24 charging excessive fees and retaining security practices as to all of the properties it 25 manages are unfair and unlawful in violation of the UCL. (Id. ¶¶ 140–146.) Even 26 though Plaintiffs are not suing the Absent Landlords, their properties and lease 27 provisions are directly related to Plaintiffs’ allegations against Prime Administration 28 //// 1 related to Prime Administration’s management of those properties and alleged 2 control over the relevant lease provisions. 3 Further, as discussed above, the references to the Absent Landlords, their 4 properties, and lease provisions relate to Plaintiffs’ alter ego theory. Plaintiffs 5 reference the Absent Landlords’ properties and leases to the extent that it supports 6 their allegations “that all Prime Properties are primarily operated and managed 7 through the same Defendant, Prime Administration, LLC.” (SAC ¶ 19.) For example, 8 Plaintiffs assert that “control of the Prime Properties can also be discerned by 9 Defendants’ own lease agreements” because all the properties utilize “substantially 10 the same form.” (Id. ¶ 23.) 11 Defendants rely on Kempthorne to assert that Plaintiffs’ complaint can only 12 “address” those contracts between Defendants and Plaintiffs, not between other 13 contracting parties not party to the lawsuit. 539 F. Supp. 2d at 1184 (“This lawsuit can 14 address only those contracts between the Bureau and contracting entities that are 15 parties to this lawsuit, not other contracts between the Bureau and absent contracting 16 parties.”). This language from Kempthorne is taken out of context and inapposite to 17 Defendant’s motion. First, the Kempthorne court did not strike any of the plaintiff’s 18 allegations. Id. at 1166. Second, the quote is part of an unrelated Rule 19 discussion, 19 not a discussion about striking allegations. Compare id. at 1162–66 with id. at 1180– 20 84.1 Third, Plaintiffs’ claims differ from those in Kempthorne in that Plaintiffs here seek 21 to enjoin Prime Administration’s management practices, not to enjoin an absent 22 party’s contract. See id. at 1162.2 While Plaintiffs may not be able to enjoin an Absent 23 //// 24 1 In the section of Kempthorne quoted by Defendants, the court addressed whether the plaintiffs could 25 seek to “invalidate any water service contracts,” and whether they needed to join additional defendants to do so. Id. at 1180. The court determined that the plaintiffs could obtain relief as to the parties 26 already joined in the suit, but determined that the plaintiffs could not seek to enjoin the defendant from performing its obligations under contracts executed between the defendant and third-parties not 27 joined in the lawsuit. Id. at 1184. 2 Moreover, in this case Plaintiff alleges Prime Administration is the alter ego of any absent contracting 28 party, which, if proven, would mean that there are no absent contracting parties. 1 Landlord’s contracts under Kempthorne, that does not make the allegations which are 2 merely related to those contracts wholly irrelevant such that they should be stricken. 3 In sum, the allegations regarding Plaintiffs’ alter ego theory are both material 4 and pertinent to central claims in this case, and the references to the Absent 5 Landlords’ properties and lease provisions are both material and pertinent to Plaintiffs’ 6 Seventh and Eighth Causes of Action regarding Prime Administration’s management 7 policies and practices, and to Plaintiff’s alter ego theory. The Court accordingly 8 DENIES Defendants’ Motion to Strike these allegations. 9 B. Joinder Under Rule 19 10 Defendants also request, in the alternative, that the Court join the Absent 11 Landlords and order joinder of additional plaintiffs who have standing to sue those 12 Absent Landlords. Under Rule 19, “required” parties to the action must be joined if 13 feasible. Fed. R. Civ. P. 19(a)–(b). However, in response to the Defendants’ motion, 14 this Court has already ruled that the absent landlords cannot be joined because the 15 Plaintiffs lack standing to sue them, i.e., it is not feasible to join the Absent Landlords. 16 (ECF No. 34 at 9–10.) Despite this order, Defendants suggest that the Court may 17 make it feasible to join the Absent Landlords by ordering Plaintiffs to join unidentified 18 additional plaintiffs who do have standing to sue the Absent Landlords. Rule 19 is 19 concerned with whether the action may be equitably adjudicated as to the existing 20 parties. See Fed. R. Civ. P. 19(a)–(b) (asking whether the court can “accord complete 21 relief among existing parties”); Zeff v. Greystar Real Est. Partners, LLC, No. 20-CV- 22 07122-EMC, 2021 WL 632614, at *4 (N.D. Cal. Feb. 18, 2021) (“[N]onjoinder 23 precludes the court from effecting relief not in some overall sense, but between extant 24 parties. In other words, joinder is required only when the absentee's nonjoinder 25 precludes the court from rendering complete justice among those already joined . . . .” 26 (quoting Moore's Fed. Prac. – Civ. § 19.03[2][b][ii]) (emphasis in original)). The Court 27 //// 28 //// 1 | may not order parties to be joined who are otherwise not required under Rule 19 in 2 | order to make joinder feasible for required parties.* 3 If joinder of a required party is not feasible, the Court is limited to dismissing 4 | the action, or moving forward without the Rule 19 party. Fed. R. Civ. P. 19(b). 5 | Defendants have notably not requested that the Court dismiss this case or any claims. 6 | If Defendants wish to request such relief, a motion to dismiss for failure to join Rule 19 7 | parties is properly brought under Fed. R. Civ. P. 12(b)(7). Peabody W. Coal Co., 400 8 | F.3d at 778 (stating that “dismissal for failure to join a party must be decided ona 9 | motion to dismiss” (citing Dredge Corp., 338 F.2d at 463-64)); see, e.g., Zeff, 2021 WL 10 | 632614, at *1 (requesting dismissal under Rule 12(b)(7) for failure to join parties 11 | required under Rule 19). The alternative request to join parties under Rule 19 is 12 | therefore DENIED. 13 IV. Conclusion 14 For the above reasons, IT |S HEREBY ORDERED that Defendants’ Motion to Strike 15 | (ECF No. 38) is DENIED. 16 17 IT IS SO ORDERED. 18 | Dated: _February 21, 2024 “Daneel I Hon. Daniel alabretta 19 UNITED STATES DISTRICT JUDGE 20 21 22 | DJC2 —Leaser20cv02502.mtstrike 23 24 25 26 | □ 3 To be clear, a court may join a plaintiff under Rule 19, but only if that party is a required party. See 27 | Fed. R. Civ. P. 19(a\(2). Defendants have not discussed how the proposed plaintiffs are required parties, provided any facts for the court to make a determine about those parties, or even identified the 28 proposed plaintiffs. 10