Kelly v. Cubesmart

Background

Cynthia Renee Kelly’s case arose from the alleged auction sale of personal property stored in a CubeSmart unit. Kelly entered a rental agreement for the unit in December 2018. She alleged that her property was worth $15,000 and that she paid rent, late charges, and fees during the rental term. She alleged that, while she was out of state caring for her elderly mother, the defendants placed a lien on her property and intended to sell it at auction without sending the notices required by law.

Kelly also alleged that the defendants withheld personal identifying information belonging to her and her children and discriminated against her based on race and gender. Her amended complaint asserted claims under California’s Unruh Civil Rights Act, Bane Act, and Ralph Act; an unlawful-contract theory; negligent infliction of emotional distress; and punitive damages. She also repeatedly referred to the California Self-Service Storage Facility Act, breach of contract, and conversion of property.

Kelly initially filed the case in Alameda County Superior Court, and the CubeSmart defendants removed it to federal court. She later added Jessica Pliner, Johanna Templeton, and Lewis Brisbois Bisgaard & Smith LLP, identified in the opinion as the Lewis Brisbois defendants. Kelly represented herself.

Rulings on the Lewis Brisbois Defendants

The Lewis Brisbois defendants moved to strike the claims under California’s anti-SLAPP law. Anti-SLAPP is a law allowing a defendant to challenge claims arising from protected speech or petitioning activity. The court found that Kelly’s allegations against these defendants concerned their representation of CubeSmart in the litigation, including communications, settlement efforts, advice to their client, and statements in court filings.

The court also found that Kelly had not shown a reasonable probability of prevailing because the alleged conduct was covered by California’s litigation privilege, which generally protects qualifying communications made in judicial proceedings. The court granted the motion to strike and struck the allegations against the Lewis Brisbois defendants. In the conclusion, it dismissed Lewis Brisbois Bisgaard & Smith LLP, Jessica Pliner, and Johanna Templeton with prejudice and without leave to amend. The court did not reach the Lewis Brisbois defendants’ remaining dismissal arguments.

Rulings on the CubeSmart Defendants

The CubeSmart defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which addresses whether a complaint states a legally sufficient claim. They also moved under Rule 12(f) to strike Kelly’s request for punitive damages.

The court held that, liberally construed, Kelly’s allegations were sufficient at this stage to support claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and conversion. The court explained that whether CubeSmart actually complied with California’s storage-facility notice requirements was a factual question for a later stage of the case. The court therefore denied the motion to dismiss to the extent it challenged those claims.

The court also found Kelly’s allegations sufficient at this stage to support a claim for intentional infliction of emotional distress. The court treated her reference to negligent infliction of emotional distress as an intentional-infliction claim because she alleged intentional conduct. The court stated that whether she could ultimately prove the elements of that claim would be decided at trial or at the summary-judgment stage.

The court dismissed Kelly’s Unruh Act, Bane Act, and Ralph Act claims with leave to amend. It found that her discrimination allegations were conclusory and did not support a reasonable inference that race or sex motivated the defendants’ conduct. It also found that the Bane Act and Ralph Act claims lacked adequate allegations of violence or threats of violence.

The court dismissed the unlawful-contract claim with leave to amend because Kelly had not adequately alleged fraud or fraudulent inducement. To the extent she intended to assert breach of contract in that portion of the complaint, the court denied the motion to dismiss for the reasons stated elsewhere in the order.

The court denied the CubeSmart defendants’ request to strike the punitive-damages request. It held that Rule 12(f) was not the proper procedure for challenging the substantive sufficiency of Kelly’s punitive-damages allegations.

Kelly’s Other Motions

The court denied as moot Kelly’s motions to proceed without paying filing fees because the case had been removed from state court. It denied her motions for default judgment because the defendants had responded and were actively defending the case. It denied her motion to compel discovery because the parties had not shown that they had completed the required conference and efforts to resolve the dispute.

The court also denied Kelly’s administrative motions to strike filings, her motion to intervene because she was already a party, her motions concerning substitution of counsel, and her motion for recusal. The court stated that disagreements with the court’s rulings could be raised on an eventual appeal but did not establish a basis for recusal.

Disposition

Judge Haywood S. Gilliam, Jr. granted the Lewis Brisbois defendants’ motion to strike and dismissed those defendants with prejudice and without leave to amend. He granted in part and denied in part the CubeSmart defendants’ motion. The contract, good-faith-and-fair-dealing, conversion, intentional-emotional-distress, and punitive-damages matters could continue; the Unruh Act, Bane Act, Ralph Act, unlawful-contract, and negligent-emotional-distress claims were dismissed with leave to amend. Any amended complaint had to be filed within twenty-eight days of the order.