Opinion
H035124 H035381
08-30-2011
ALBERT WITT, Plaintiff and Appellant, v. ROBERT YEN et al., Defendants and Respondents. ALBERT WITT, Plaintiff and Respondent, v. ROBERT YEN et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Santa Clara County Super. Ct. No. CV152451
Plaintiff Albert Witt appeals from the trial court's dismissal of his unlawful detainer action against defendants Robert Yen and Vivian Shen. He contends that the trial court erred when, after trial had commenced, it granted defendants' motion for judgment based on their claim that a three-day curable statutory notice Witt sent to defendants after the expiration of an earlier 30-day/10-day curable lease-compliant notice waived the earlier notice, leaving no lease-compliant notice upon which Witt could predicate his action. Yen and Shen appeal from the trial court's order denying them their attorney's fees. We conclude that the trial court erred in dismissing the action, and we reverse the judgment. We dismiss the attorney's fees appeal as moot.
I. Factual Background
Yen and Shen are the successors in interest to the original tenants of a 3.21-acre commercial parcel under a 65-year ground lease from Witt which commenced in 1978. They became the lessees in 1989. Under the lease, the rent includes both a fixed annual amount due in monthly installments and either two percent of "the Adjusted Gross Revenue of the Property" or 10 percent of the "Net Cash Flow of the Property" during each year of the lease.
The lease explicitly defines what constitutes a breach and delineates the landlord's remedies for a breach:
"13.1 Upon an 'Event of Default' (as defined herein), Landlord shall have the following remedies, in addition to all other rights and remedies provided by law or otherwise provided in this Lease, to which Landlord may resort cumulatively, or in the alternative: [¶] A. Landlord may, at Landlord's election, keep this Lease in effect and enforce all of its rights and remedies under the Lease, including the right to recover the rent and other sums as they become due by appropriate legal action. [¶] B. Landlord may, at Landlord's election, terminate this lease by giving Tenant written notice of termination. On the giving of the notice, in accordance with the terms of this Lease, all of Tenant's right in the Property shall terminate. Promptly after notice of termination, Tenant shall surrender and vacate the Property in broom-clean condition, and Landlord may re-enter and take possession of the Property . . . . This Lease may also be terminated by a judgment specifically providing for termination."
"13.2 A breach of this Lease shall exist if any of the following events (severally 'Event of Default' and collectively 'Events of Default') shall occur: [¶] A. Tenant shall have failed to pay rent or any other charge, [i]mposition or any obligation of Tenant requiring the payment of money under the terms of this Lease when due and after ten (10) days' written notice from Landlord that the same has become due; or [¶] B. Tenant shall have failed to perform any term, covenant, or condition of this Lease . . . to be performed by Tenant, except those requiring the payment of money, and Tenant shall have failed to cure same within thirty (30) days after written notice from Landlord, delivered in accordance with the provisions of this Lease, where such failure could reasonably be cured within said thirty (30) day period; provided, however, that where such failure could not reasonably be cured within said thirty (30) day period, that Tenant shall not be in default unless it has failed to promptly commence and thereafter be continuing to make diligent and reasonable efforts to cure such failure as soon as practicable." The lease also provides that "[a]ll remedies herein conferred upon Landlord or Tenant shall be deemed cumulative and no one remedy shall be exclusive of any other remedy herein conferred or created by law."
The lease contains an attorney's fees clause. "23.1 In the event either party shall bring any action, or arbitration proceeding or legal proceeding for damages for an alleged breach of any provision of this Lease, to recover rent, to terminate the tenancy of the Leased Premises, . . . the prevailing party shall be entitled to recover from the non-prevailing party . . . reasonable attorneys' fees and court costs as may be fixed by the court or jury."
On June 3, 2009, Witt served on Yen and Shen a notice of defaults. The defaults identified in the notice included both monetary and nonmonetary defaults. The June notice stated: "[Y]ou will be in breach of the Ground Lease should you fail to pay any amounts found to be due or surrender possessory rights to the premises and quit and deliver up possession of the premises to the landlord within ten (10) days of the date of service of this Notice upon you or should you fail to cure any of the other defaults enumerated above or surrender possessory rights to the premises and quit and deliver up possession of the premises to the landlord within thirty (30) days of the date of service of this Notice upon you (unless such other defaults cannot reasonably be cured within such thirty[-]day period, in which event you are required to provide Landlord within thirty (30) days of the date of service of this Notice upon you with written proof that you have commenced the required cure and thereafter demonstrate that you are continuing to make diligent and reasonable efforts to cure such default as soon as practicable.[)] [¶] . . . [¶] In the event of your failure to perform in accordance with the requirements of this Notice, . . . your Landlord elects to and does declare a forfeiture of the Ground Lease by which you hold possession of the above described premises and it is the landlord's intention in this event to commence litigation to terminate the Ground Lease and to recover possession of and possessory rights to the lease premises and all improvements thereon."
On July 29, 2009, Witt served on Yen and Shen a "NOTICE TO PERFORM COVENANT OF LEASE OR QUIT." This notice also identified numerous monetary and nonmonetary defaults. It stated: "Within three (3) days after service on you of this Notice you are hereby required to pay any amounts found to be due and cure any of the other defaults [that] cannot reasonably be cured within such three[-]day period, in which event you are required to provide Landlord within three (3) days of the date of service of this Notice upon you with written proof that you have commenced the required cure and thereafter demonstrate that you are continuing to make diligent and reasonable efforts to cure such default as soon as practicable. [¶] . . . [¶] In the event of your failure to perform in accordance with the requirements of this Notice, . . . your Landlord elects to and does declare a forfeiture of the Ground Lease by which you hold possession of the above described premises and it is the landlord's intention in this event to commence litigation to terminate the Ground Lease and to recover possession of any possessory rights to the leased premises and all improvements thereon."
II. Procedural Background
On September 17, 2009, Witt filed a complaint for unlawful detainer against Yen and Shen. The complaint alleged that Yen and Shen had violated the lease, that Witt had served the two notices on them, and that the rent remained unpaid and the defaults uncured. The lease and the two notices were attached to the complaint and incorporated by reference. Yen and Shen filed an answer on September 23 and demanded a jury trial. Trial was set for October 22.
All subsequent events occurred in 2009.
On October 20, the court considered and ruled on eight in limine motions filed by Yen and Shen. On October 22, the first day of trial, Yen and Shen filed a ninth motion in limine (the motion) seeking to exclude "all evidence related to the first 10-day/30-day notice served by [Witt] on June 3, 2009, because [Witt] waived any rights asserted pursuant to that first notice when he later served a superseding 3-day notice on July 29, 2009 . . . ." They asserted that Witt's service of the three-day notice "effectively reinstat[ed] the lease . . . ." Yen and Shen argued that Witt could serve both types of notices only if he did so simultaneously.
Before commencing jury selection on October 22, the court considered the motion. Witt's trial counsel complained that he had been given no opportunity to respond to the motion as it had just been filed that morning. Nevertheless, both parties argued the motion to the court. Witt's trial counsel continued to complain that "this is really in the 11th hour." The court made it clear that the motion needed to be resolved regardless of the timing of its filing: "If you can't proceed [with your action] I'm not going to have a trial if you're incorrect in your notice." "[If] it [the notice] was improper, then we shouldn't even have a trial. So I need to decide this issue before we call up a jury." Witt's trial counsel then sought time to respond to the motion. Because the panel of prospective jurors had already arrived, the court proposed that it would select a jury but postpone the actual trial until it decided the motion so that Witt's counsel would have time to file a response to the motion. Neither attorney objected to this procedure, and the court acknowledged that it was reserving ruling on the motion and that the motion could be raised at any time "even at the end" or as "a non suit" because "[i]t's a legal issue." The court said that it would take up the motion the following morning. The court proceeded to select a jury and excused the jury until the next morning. Witt's trial counsel then entered another objection to the timeliness of the motion, which he characterized as a "disguised either motion to strike the complaint or demurrer." He asserted that he had not been provided with adequate notice of this motion. The court overruled the timeliness objection. "The Court can entertain a judgment on the pleadings at any time, even the day of trial." "We aren't going through an entire trial for nothing." The court gave Witt's trial counsel until the following morning to respond to the motion.
Witt's trial counsel filed a brief in opposition to the motion. He asserted that (1) the motion was an untimely demurrer or motion to strike, and (2) the second notice did not waive Witt's rights under the first notice. Yen and Shen filed a supplemental brief in which they argued that the first notice was inadmissible and therefore the unlawful detainer action could not succeed as the second notice did not satisfy the lease's requirement that there be 10 days or 30 days of notice. They argued that the three-day notice "reinstates the lease" because it was a "curable" notice.
On October 23, the court concluded that there had been no waiver and denied the motion. The trial proceeded with opening statements and the beginning of Witt's testimony. At the end of the day, the trial was recessed until the following week.
On October 26, the following Monday, Yen and Shen filed a second supplemental brief renewing the motion. In this brief, they conceded that there was no California authority supporting their position, but they argued that a Colorado case, a Connecticut case, and a treatise supported their position. Witt's testimony continued on the morning of October 26. During a morning break, the court addressed the renewed motion. The court noted that this was "a late in limine motion" and that it would not rule on it until Witt's trial counsel had had an opportunity to respond to the renewed motion. Witt's trial counsel objected to the timing of the renewed motion. However, the court explained that this was a legal issue that was not waived by not being brought up earlier. The court gave Witt's trial counsel two days to respond to the renewed motion. Witt's testimony resumed and had not been completed at the end of the day when the jury was excused until the following week due to juror scheduling conflicts. On October 28, Witt filed a brief in opposition to the renewed motion. He argued that the Colorado and Connecticut cases were distinguishable.
On October 29, the court considered the renewed motion. This time it credited the arguments made by Yen and Shen. "[S]ince forfeiture is disfavored under California law, and because notice is so strict, then I think I have to side on the equity argument, and say that there was an ambiguity created. And that there was a waiver of the first notice, given the second three-day notice. And the three-day notice is insufficient under the terms of the lease. [¶] Therefore, there can be no unlawful detainer action, and I have to rule in favor of the Defendants. I understand that the Plaintiffs just need to file a new notice and they can carry out their lawsuit again. . . . They're not barred from re-filing the unlawful detainer action. And I think that's what equity calls for." At the end of the hearing, the court said: "I will give you [Witt's trial counsel] until Monday. If you find a case on point -- because the jury still has to come back. So I'll enter judgment on that day."
On November 2, Yen and Shen filed a third supplemental brief in support of the renewed motion. This brief relied on Vermont, New York, Minnesota, and Illinois cases. Witt's trial counsel also submitted a supplemental brief opposing the renewed motion.
On the morning of Monday, November 2, the court informed counsel that it had learned that one of the jurors was not a United States citizen and was therefore ineligible to serve as a juror. Since there were no alternates, the court would be forced to call a mistrial unless the parties waived a full jury. "I have your briefs [on the renewed motion]. I started reading your cases. If you're not going to waive I'd like to call the jurors up and we'll mistrial [sic]. And then I can go back and finish reading your cases and see if my ruling on Friday stands, or if there's something I need to consider." Trial counsel for Yen and Shen refused to waive a full jury. He asked the court "not to declare a mistrial on the record, but to discharge the jury. And then after reviewing the pleadings from this morning, either rule on the merits of that, or in the alternative, if that motion will not be granted, then and only then to declare a mistrial. [¶] I think if you do it in reverse order you'll lose jurisdiction to rule on [the renewed motion]." The court insisted that it would retain jurisdiction even if it declared a mistrial. Witt's trial counsel agreed with the court that it would retain jurisdiction even after declaring a mistrial. Nevertheless, the court decided to hold off on declaring a mistrial until after it had decided whether to reconsider its ruling on the renewed motion. The court proceeded to discharge the jury.
The court then heard argument regarding the renewed motion. At the conclusion of argument, the court decided that it would not be "changing my opinion of Friday. And therefore , I would grant Defendant's In Limine Motion Number 9. And because I'm granting his motion, then I have to grant judgment in favor of Mr. Yen and Ms. Shen." The court's ruling was explicitly based on its conclusions that the second notice "waived [the first notice] as a matter of law" and the second notice was "non-compliant" with the terms of the lease. Witt timely filed a notice of appeal from the judgment. The trial court subsequently denied a request by Yen and Shen for their attorney's fees. Yen and Shen timely filed a notice of appeal from the trial court's order denying their attorney's fees request.
III. Discussion
Witt challenges the trial court's judgment on both procedural and substantive grounds. As the trial court noted, the motion and the renewed motion were in the nature of a motion for judgment on the pleadings. The trial court did not lack jurisdiction to consider a motion for judgment on the pleadings. (Code Civ. Proc., § 438.) Since the trial court gave Witt multiple opportunities to submit briefs and argue in opposition to the motion, the court was not procedurally precluded from considering the motion or the renewed motion.
We turn to Witt's substantive challenge to the judgment. " 'A motion for judgment on the pleadings, like a general demurrer, challenges the sufficiency of the plaintiff's cause of action and raises the legal issue, regardless of the existence of triable issues of fact, of whether the complaint states a cause of action. [Citation.]' [Citation.] The standard of review for a motion for judgment on the pleadings is the same as that for a general demurrer. [Citation.] 'We treat the pleadings as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.' [Citation.] ' "We review the complaint de novo to determine whether [it] alleges facts sufficient to state a cause of action under any legal theory. [Citation.]" ' [Citation.] We review the disposition, not the court's reasons for that disposition." (Ellerbee v. County of Los Angeles (2010) 187 Cal.App.4th 1206, 1213-1214.) In sum, we exercise de novo review, and we assume the truth of the complaint's allegations. Here, since the complaint incorporated the lease and the two notices, these documents are part of our review.
We begin with the lease. The lease provided that Witt had certain remedies if an "Event of Default" occurred. Two types of defaults were defined in the lease. The first type of default was monetary. If a monetary payment was not made when due, the Landlord gave 10 days' written notice, and the payment still was not made, the tenants were in default. The second type of default was nonmonetary. If the tenants failed to perform any nonmonetary term of the lease and "failed to cure" or "commence" to cure this failure "within thirty (30) days after written notice from Landlord," the tenants were in default.
Witt alleged in his complaint that Yen and Shen were in default under both of these provisions. They had failed to make monetary payments when due, had been notified of these defaults, and had failed to make the payments within 10 days after notice from Witt. Yen and Shen had failed to perform nonmonetary terms of the lease and had failed to cure or commence to cure those failures within 30 days after notice from Witt. These allegations were sufficient to support an "Event of Default" by Yen and Shen.
The next question was whether Witt could properly pursue an unlawful detainer action against Yen and Shen based on these "Events of Default." The lease described two remedies "to which Landlord may resort cumulatively, or in the alternative" if there was an "Event of Default," and it specifically stated that these remedies were "in addition to all other rights and remedies provided by law or otherwise provided in this Lease." The two remedies described in the lease were (1) an election by Witt to "keep this Lease in effect," and (2) an election by Witt to "terminate this lease by giving Tenant written notice of termination." Witt's June notice elected termination of the lease. "In the event of your failure to perform in accordance with the requirements of this Notice, . . . your Landlord elects to and does declare a forfeiture of the Ground Lease by which you hold possession of the above described premises and it is the landlord's intention in this event to commence litigation to terminate the Ground Lease and to recover possession of and possessory rights to the leased premises and all improvements thereon." (Italics added.) It follows that, after the expiration of the June notice's notice periods, Witt had an accrued cause of action for unlawful detainer against Yen and Shen.
This brings us to the critical issue. Yen and Shen contend that Witt's service of the three-day notice "waived" his right to rely on the earlier lease-compliant 30-day/10-day notice. "Case law is clear that ' "[w]aiver is the intentional relinquishment of a known right after knowledge of the facts." [Citations.] The burden . . . is on the party claiming a waiver of a right to prove it by clear and convincing evidence that does not leave the matter to speculation, and "doubtful cases will be decided against a waiver" [citation].' " (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.)
Thus, Yen and Shen bore the burden of proving that Witt had intentionally relinquished his right to rely on the original lease-compliant notice by giving the three-day statutory notice. And they would have had to prove this based solely on the allegations of the complaint, the lease, and the notices. It was not possible for them to meet their burden of proof on such a record. Conflicting inferences could be drawn from Witt's service of both notices. Witt may have believed that he could not pursue an unlawful detainer action without serving a three-day statutory notice in addition to the lease-compliant notice. None of the allegations in the complaint and nothing in the notices themselves even suggests that Witt ever wavered in his desire to terminate the lease due to the breaches of the lease by Yen and Shen. Because Yen and Shen could not prove as a matter of law that Witt had intentionally relinquished his rights under the original lease-compliant notice by serving the three-day statutory notice, the trial court was precluded from finding waiver as a matter of law.
The unlawful detainer statute, which explicitly states that "unlawful detainer" occurs when the tenant fails to cure after "three days' notice," could lead a landlord to believe as much. (Code Civ. Proc., § 1161.)
Yen and Shen concede that there is no California authority on this issue, but they argue that cases from other states compel a conclusion that Witt's service of the three-day notice waived his right to proceed under the earlier lease-compliant notice. We find none of these cases persuasive.
In Duran v. Housing Authority of Denver (Colo. 1988) 761 P.2d 180 (Duran), the landlord served the tenant on November 7, 1985 with a 14-day notice to pay the November rent or quit. (Duran, at p. 181.) The lease required at least 14 days' notice. (Duran, at p. 181, fn. 2.) The notice stated that the landlord intended to terminate the lease if the tenant did not pay. The tenant did not respond to this notice. The lease also required the landlord to give a statutory three-day notice after the expiration of the 14-day notice. (Duran, at p. 181, fn. 3.) On November 25, 1985, the landlord posted a notice giving the tenant an additional three days to pay or quit. (Duran at p. 181.) The tenant did not respond to the three-day notice, and the landlord filed an unlawful detainer action. (Duran, at p. 181.) Nevertheless, on December 6, 1985, a few days after the landlord filed the unlawful detainer action, the landlord served on the tenant a 14-day notice to pay the November and December rents or quit. (Duran, at p. 182.) Before this 14-day period had expired, the tenant offered to pay the November and December rents to the landlord, but the landlord refused to accept the money. (Duran, at p. 182.) The landlord prevailed in the trial court in its unlawful detainer action. (Duran, at p. 182.)
The issue before the Colorado Supreme Court in Duran was whether the landlord had waived its right to terminate the lease by serving a new 14-day notice during the pendency of the unlawful detainer action. (Duran, supra, 761 P.2d at p. 182.) The Colorado Supreme Court noted that it had previously held that " 'any act done by a landlord with knowledge of an existing right of forfeiture, which recognizes the existence of the lease is a waiver of the right to enforce the forfeiture.' " (Duran, at p. 183.) The court viewed the issue before it as whether the landlord's "actions . . . demonstrate sufficient lack of consistency regarding its intentions as to constitute waiver." (Duran, at p. 184.) The Colorado Supreme Court concluded that the landlord's service of a 14-day notice during the pendency of the unlawful detainer action created an inconsistency that constituted waiver. (Duran, at p. 184.) "This second fourteen-day notice could reasonably be said to have led [the tenant] to believe that eviction would not really be carried out until the second notice period had expired." (Ibid.) "In other words, the final message from the [landlord] to the [tenant] suggested that the lease was still in effect and that [the tenant] still had an opportunity to preserve her tenancy." (Ibid.)
Duran is readily distinguishable. Here, Witt's second notice was not served after the filing of the unlawful detainer action. Thus, after the unlawful detainer action was filed, there was no inconsistency regarding Witt's intention to terminate the tenancy. Nor was there any inconsistency regarding his intent prior to the filing of the unlawful detainer action. Witt followed up a lease-compliant notice with a statutory notice, both of which stated his intent to terminate the lease. Yen and Shen made no attempt to cure during either of the notice periods. Notably, in Duran, the Colorado Supreme Court did not find any inconsistency between the landlord's 14-day curable notice and its three-day curable notice. Witt's "final message" to Yen and Shen was his filing of the unlawful detainer action, which, consistent with his notices, confirmed his intent to terminate the lease. Because there was no inconsistency as to Witt's intent to terminate the lease after the expiration of both notice periods and during the pendency of the unlawful detainer action, Duran does not support the trial court's ruling.
Windsor Properties, Inc. v. Great Atlantic and Pacific Tea Co. (Conn. Super. 1979) 35 Conn.Supp. 297 (Windsor)is also distinguishable on this same basis as it involved inconsistent actions by the landlord after the commencement of the unlawful detainer action. (Windsor, at pp. 302-303.)
Nor is there any merit in the reliance of Yen and Shen on Andrus v. Dunbar (2005) 178 Vt. 554 (Andrus). In Andrus, the landlord sent a notice to the tenant on May 1, 2003, which stated that the landlord was terminating the tenancy as of May 31 and suggested that the tenant contact the landlord to "work out a payment plan before this action has to be taken." (Andrus, at p. 554.) The applicable statute required 14 days' notice. (Andrus, at p. 555.) On June 12, the landlord sent another notice to the tenant stating that the tenancy was being terminated for nonpayment of rent as of July 5 and informing the tenant that he could prevent the termination of the tenancy by paying all rent due before that date. However, on June 17, the landlord filed an eviction action. (Andrus, at p. 554.) The tenant moved to dismiss the action on the ground that neither of the notices was valid. The trial court denied his motion. (Andrus, at p. 555.) The Vermont Supreme Court reversed. It concluded that, because the landlord's June 12 notice " 'unequivocally recognized the tenancy as existing,' " the tenancy had not been terminated when the eviction action was initiated so the motion to dismiss should have been granted. The court asserted that there was "confusion about landlord's intent," and the tenant was left to speculate about the meaning of the landlord's actions. (Andrus, at pp. 556-557.)
Unlike the situation in Andrus, here Witt's intent at the time he initiated the unlawful detainer action was unmistakably clear. Yen and Shen had been given two opportunities to cure their defaults, and both notice periods had expired without any action by them. It was only after those notice periods expired that Witt filed the unlawful detainer action. Andrus is not applicable to these facts.
Morgan v. Powers (1894) 31 N.Y.S. 954 (Morgan)is even more off point. Morgan was not an eviction or unlawful detainer action and did not involve curable notices. In Morgan, a landlord, who was required to give 30 days' notice, provided a notice that allowed only nine days for the tenant to vacate. More than 30 days later, the landlord, apparently having determined that the original notice was defective, provided a second notice that gave the tenant 32 days to vacate. However, the landlord retook the premises just nine days after the second notice. The court held that the second notice vitiated the first notice because it made apparent that the landlord was not relying on the first notice. Since the second notice period had not expired when the landlord retook the property, the landlord's retaking was improper. (Morgan at pp. 954-956.) Since Witt's three-day statutory notice did not demonstrate that he was not relying on his original lease-compliant notice, but instead suggested that he was trying to comply with both lease and statutory requirements, Morgan is irrelevant.
28 Mott Street Co. v. Summit Import Corp. (1970) 316 N.Y.S.2d 259 (Mott) merely cited Morgan for the proposition that a second notice after the expiration of a first notice waives the first notice. (Mott, at p. 263.) Mott did not directly involve this issue.
Arcade Inv. Co. v. Gieriet (1906) 99 Minn. 277 (Arcade)is also inapplicable. In Arcade, after giving notice to vacate to the tenant, the landlord agreed to allow the tenant to remain in possession of the property. (Arcade, at p. 278.) It was in this context that the Arcade court cited Morgan and stated that "a notice by the landlord to a tenant to quit may be waived by the landlord giving it, and that such notice is thenceforth inoperative." (Arcade, at p. 279, italics added.) While a notice may be waived by a landlord, Yen and Shen failed to establish proof as a matter of law in this case that Witt had in fact waived the original notice.
Yen and Shen did not establish as a matter of law that Witt had waived his rights under the original lease-compliant notice. Therefore, the trial court erred in granting the renewed motion. As the granting of that motion was the sole basis for the court's judgment, reversal is required. Since we reverse the judgment, the appeal by Yen and Shen from the trial court's denial of their attorney's fees request is moot.
IV. Disposition
The judgment is reversed. On remand, the trial court shall vacate its order granting the renewed motion and enter a new order denying the renewed motion. The appeal from the attorney's fees order is dismissed as moot. Witt shall recover his appellate costs.
Mihara, J. WE CONCUR:
Elia, Acting P. J.
Judge of the Superior Court of Monterey County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.