Opinion
B316066
05-04-2023
BLAINE HOLDING & DEVELOPMENT, LLC, Plaintiff and Respondent, v. VIVERA PHARMACEUTICALS, INC., Defendant and Appellant.
De Novo Law Firm and Benjamin Yrungaray for Defendant and Appellant. The Duringer Law Group, Stephen C. Duringer, C. Tyler Greer and Edward L. Laird II for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. 19NWCV00820, Brian F. Gasdia, Judge.
De Novo Law Firm and Benjamin Yrungaray for Defendant and Appellant.
The Duringer Law Group, Stephen C. Duringer, C. Tyler Greer and Edward L. Laird II for Plaintiff and Respondent.
DAUM, J.[*]
INTRODUCTION
In this commercial unlawful detainer case, we affirm with modifications.
Appellant Vivera Pharmaceuticals (Vivera) leased a property from respondent Blaine Holding &Development, LLC (Blaine Holding) under a written lease agreement. Blaine Holding served Vivera with a notice to pay unpaid rent or quit the property. It also served Vivera with a separate notice to perform covenants beyond the rent, including paying a security deposit, utility bills, and property tax. After Vivera failed to comply with either notice, Blaine Holding brought this unlawful detainer action.
After a bench trial, the court found largely in favor of Blaine Holding-but not because of Vivera's failure to pay rent. The trial court found that Vivera was excused from paying rent because Blaine Holding had, during the term of the lease, evicted Vivera from a part of the property. But the trial court also found that the partial eviction did not excuse Vivera's independent non-rent obligations under the lease. Since Vivera had not met those independent non-rent obligations, the trial court found that Vivera had unlawfully detained the property. It awarded Blaine Holding possession of the property. It also made a monetary award of: (a) non-rent amounts that Blaine Holding had identified in its notice of breach of lease covenants (security deposit, utility, and tax payments) and (b) holdover damages (the reasonable rental value of the premises during the time Vivera unlawfully detained the property).
On appeal, Vivera argues that there was no legal basis in an unlawful detainer action for Blaine Holding to recover the first part of the monetary award-the security deposit, utility, and tax payments. It also argues that because of the partial eviction the trial court should have excused Vivera's obligation to make non-rent payments and should not have awarded holdover damages.
We agree with Vivera in part. The court had no power to make the first part of its monetary award, because in an unlawful detainer action the trial court had no power to award non-rent monetary damages that accrued before the unlawful detainer began. However, we find that Vivera has forfeited its remaining arguments on appeal. We therefore modify the judgment to strike the award of non-rent monetary damages and affirm the judgment as modified.
FACTUAL AND PROCEDURAL BACKGROUND
Blaine Holding and Vivera have a long-running business dispute. This is the third appeal we have decided as part of the overall dispute, and the second in the instant action. We limit our description of the facts to those necessary to explain our decision here.
Under a commercial lease agreement, Vivera leased a property in Santa Fe Springs from Blaine Holding. On October 2, 2019, Blaine Holding served on Vivera two notices to comply with lease terms or quit the premises. The first, captioned "Notice to Pay Rent or Quit" asserted that Vivera owed estimated unpaid rent of $397,746, pursuant to Code of Civil Procedure section 1161.1. The second, captioned "Notice to Perform Conditions and/or Covenants or Quit" asserted that Vivera had defaulted on the lease by failing to perform non-rent covenants. The second notice stated Vivera had breached non-rent covenants by: (1) failing to pay a deposit; (2) failing to pay late fees on unpaid rent; (3) failing to pay utility charges; (4) failing to pay prorated property taxes; (5) improperly subletting the property; (6) failing to maintain the property; (7) altering the property without prior consent of Blaine Holding and without permits, and (8) failing to maintain liability and property damage insurance coverage. Both notices gave Vivera 15 days to cure the asserted defaults or quit the premises.
On October 25, 2019, Blaine Holding filed an unlawful detainer complaint, based on Vivera's failure to comply with both notices. The form complaint sought possession of the premises, past-due rent, forfeiture of the lease, and holdover damages from the time of service of the notices. Blaine Holding also specially sought "past due charges of $131,390.13 and accruing charges incurred thereafter until date of entry of judgment."
Vivera brought an anti-SLAPP motion, which was denied, and we affirmed the denial on appeal. Following remittitur, a court trial on Blaine Holding's complaint was held on May 20 and 21, 2021. The record on appeal does not contain a reporter's transcript, settled statement, or other record of the trial proceedings.
The trial court provided a preliminary statement of decision on June 3, 2021, and a nearly-identical final statement of decision on August 18, 2021. In its final statement of decision, the trial court found that Blaine Holding had wrongfully completed a "partial eviction" of Vivera from a building on a portion of the property on February 4, 2019, when "the locks for that building were changed" and Vivera was not provided with new keys. The court further found that the partial eviction was from a "substantial portion" of the overall premises.
Blaine Holding filed an objection to the court's preliminary statement of decision on June 11, 2021, raising only a single issue as to an offset to damages. The court made Blaine Holding's requested change in its final statement of decision, but did not otherwise change its preliminary statement of decision. Vivera did not file objections to the preliminary statement of decision.
On these facts, the court found that Giraud v. Milovich (1938) 29 Cal.App.2d 543 (Giraud) "control[led]" the outcome of the case. The trial court read Giraud to mean that the partial eviction excused Vivera's obligation to pay rent in its entirety, without "apportionment." Because Vivera had no obligation to pay rent, the trial court found Vivera could not have unlawfully detained the property based on a failure to pay rent. The court found that the "notice of default for the failure to pay rent . . . is of no legal consequence," that "the $397,756 in rent claimed to be in default and due . . . is a nullity" and that "this action [for unlawful detainer based on failure to pay rent] should not be maintained."
However, the trial court also held, based on its reading of Giraud, that "when the tenant remains in possession of the balance of the premises [after a partial eviction], he has the continued obligation to perform the other covenants of the lease independent of the covenant to pay rent." Thus, despite the partial eviction, the court found that Vivera still had the obligation to comply with the covenants identified in Blaine Holding's notice to perform. It found these covenants existed independently of the obligation to pay rent. It further found that if Vivera was found to have violated the non-rent covenants, Blaine Holding could prevail on an unlawful detainer complaint, recover "possession," and obtain "damages."
Turning to that issue, the court found that Vivera was not liable for four of the eight alleged uncured violations identified in Blaine Holding's notice to perform: late fees on rent (since the rent obligation had been found excused), alleged improper subletting, the alleged failure to maintain the property, and the alleged improper alterations. However, the trial court also found that Vivera had failed to comply with the four remaining non-rent covenants: not paying a security deposit, not paying utility bills, not paying property taxes, and failing to maintain insurance.
Based on its finding of uncured violations of those four lease covenants, the court ruled in Blaine Holding's favor. It awarded Blaine Holding possession of the premises. It also made a monetary award, consisting of two main parts. First, it awarded monies based on Vivera's failure to cure the breaches of the non-rent covenants: $44,194 for Vivera's failure to cure the security deposit covenant, $1,512.67 for its failure to cure the utilities covenant, and $45,358.02 for the failure to cure the property taxes covenant. These were precisely the amounts that Blaine Holding had identified as already due and owing in the notice to perform covenants that Blaine Holding had served before commencement of the unlawful detainer case.
Second, the court awarded $367,288.62 in "holdover damages" based on the reasonable rental value of the property between October 24, 2019, and June 3, 2021. The court also awarded statutory damages of $600 after finding that Vivera's holding-over was malicious. Combining all of these categories, it made a total monetary award against Vivera of $458,953.31.
Judgment was entered on September 15, 2021. Vivera timely appealed.
DISCUSSION
A. The Court's Monetary Award Exceeded its Powers in an Unlawful Detainer Case
Vivera argues that a court in an unlawful detainer case has no power to award damages that accrued before the unlawful detainer, except for an inapplicable special statutory exception that allows for an award of back rent. Accordingly, argues Vivera, the court should not have awarded Blaine Holding $44,194 for Vivera's failure to comply with the security deposit covenant, $1,512.67 for its failure to comply with the utilities covenant, and $45,358.02 for its failure to comply with the property taxes covenant.
Vivera is correct, under well-settled law. "An unlawful detainer action is a summary proceeding, the primary purpose of which is to obtain the possession of real property in the situations specified by statute." (Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 746 (Vasey).) Because the unlawful detainer process is designed to quickly and summarily settle questions of the possession of property, "[i]t is well established in California that unlawful detainer actions are purely statutory, summary, and only damages authorized by statute as being incidental to recovery of the premises are recoverable in these proceedings." (Hudec v. Robertson (1989) 210 Cal.App.3d 1156, 1162, citations omitted (Hudec).) "Any statutory allowance of incidental relief [beyond the recovery of property] is strictly construed." (Id. at pp. 1162-1163.)
Code of Civil Procedure section 1174, part of the unlawful detainer statute, "provides the court's jurisdiction to enter judgment for possession and to award incidental rents and damages." (Hudec, supra, 210 Cal.App.3d at p. 1163.) Section 1174 contains a special provision allowing the court to "find the amount of any rent due, if the alleged unlawful detainer be after default in the payment of rent." (§ 1174, subd. (b).) Thus, assuming other statutory requirements are met, an award of back rent accrued before the unlawful detainer period begins may be allowable, so long as the unlawful detainer is based on the nonpayment of rent. (Saberi v. Bakhtiari (1985) 169 Cal.App.3d 509, 515.)
However, as the leading treatise explains, "[i]n any other unlawful detainer (not based on nonpayment of rent), the only 'damages' recoverable are those occasioned by defendant's wrongful holding over (CCP § 1174(b))-meaning the reasonable rental value of the premises from the time of termination of the tenancy through the time that the tenant unlawfully detained (up until entry of the unlawful detainer judgment)." (Friedman et al., Cal. Practice Guide: Landlord-Tenant (The Rutter Group 2022) ¶ 8:63.) Put differently, "[t]he statute does not authorize the recovery of any money the right to which accrued before the unlawful detention began, except arrears of rents." (Chase v. Peters (1918) 37 Cal.App. 358, 361.) Only damages that "result from the unlawful detention and accrue during that time" are proper. (Vasey, supra, 70 Cal.App.3d at p. 748.) "[T]he award of damages for breaches of the lease occurring before the unlawful detainer . . . are [sic] not permitted in unlawful detainer." (Hudec, supra, 210 Cal.App.3d at p. 1163.) Thus, the court in an unlawful detainer action has no power to make a tenant pay for breaches of lease covenants when (a) the money owed accrued before the unlawful detainer period began and (b) the money owed is not rent.
Here, the amounts the court awarded for Vivera's alleged breach of non-rent covenants-$44,194 for Vivera's failure to cure the security deposit covenant, $1,512.67 for its failure to cure the utilities covenant, and $45,358.02 for the failure to cure the property taxes covenant- were the specific and exact sums requested in Blaine Holding's October 2, 2019 notice. Blaine Holding's right to these sums necessarily accrued before the unlawful detainer began, since the unlawful detainer derived (in part) from Vivera's failure to pay these sums.
Nor, based on the undisputed record, were the security deposit, utilities, or tax payments "rent." Blaine Holding concedes that "[t]he subject monetary covenants are independent of the obligation to pay rent. They are not to be treated as rent just because they have a monetary consequence." Indeed, the entire premise of the trial court's judgment was that the security deposit, utility, and tax sums were not rent. Accordingly, these monies were not recoverable in an unlawful detainer action.
Blaine Holding does not cite any case holding that a landlord in an unlawful detainer action can recover a monetary award for violations of non-rent covenants. Blaine Holding suggests that it would be more efficient for it and other landlords if the security deposit, utility, and tax sums were recoverable here, since otherwise "[t]he landlord would have to file an independent action to recover funds that had already been adjudicated as due and owing." But this efficiency argument has long been rejected by California courts. (See, e.g., Vasey, supra, 70 Cal.App.3d at p. 748 ["Although a lessee guilty of unlawful detention may have also breached the terms of the lease contract, damages resulting therefrom are not necessarily damages resulting from the unlawful detention. As such, [a landlord] is precluded from litigating a cause of action for these breaches in unlawful detainer proceedings"].)
Blaine Holding's brief cites cases that hold only that an unlawful detainer can be based on a tenant's failure to comply with a lease covenant or condition other than an obligation to pay rent. (Silva v. Campbell (1890) 84 Cal. 420, 423; Kelly v. Teague (1883) 63 Cal. 68, 69; Knight v. Black (1912) 19 Cal.App. 518, 522; McCarty v. Raso (1951) 102 Cal.App.2d 909, 910.) These cases all involve a landlord obtaining the right to possession, not money. That a breach of a non-rent term might allow a landlord to take possession of a premises in an unlawful detainer action is well established, but that does not mean a landlord may recover a monetary award in an unlawful detainer action for such a breach. In addition, at oral argument, Blaine Holding discussed three additional cases it did not cite in its brief. These cases do not support Blaine Holding. Zucco v. Farullo (1918) 37 Cal.App. 562, 568 does not address a monetary award for a breach of a non-rent covenant; while "damages" were awarded in that case, the damages appear to have been holdover damages. In De la Cuesta v. Benham (2011) 193 Cal.App.4th 1287, 1291, the trial court "converted the [unlawful detainer] case to an ordinary civil action." And in Orozco v. Casimiro (2004) 121 Cal.App.4th Supp. 7, 10, the court held that certain late fees were void or unenforceable, meaning that no unlawful detainer action was proper. These cases do not address, at all, whether accrued monetary damages for breaches of non-rent covenants are available in an unlawful detainer proceeding. They certainly do not support Blaine Holding's position that such damages are available.
To be clear, we do not hold that the unlawful detainer proceeding is a "bar to a subsequent action for damages" for Blaine Holding on the security deposit, utilities, and tax sums, which Blaine Holding may pursue, if it is otherwise proper for it to do so, in a civil action. (Vasey, supra, 70 Cal.App.3d at p. 748 & fn. 2.)
Blaine Holding also argues that Vivera did not raise this issue before the trial court. Vivera admits as much. We certainly could, and ordinarily would, conclude that Vivera had therefore forfeited this argument on appeal (indeed, we explain below that Vivera forfeited other arguments). (Howitson v. Evans Hotels, LLC (2022) 81 Cal.App.5th 475, 489.) However, "[a] court of review has discretion to consider an issue not raised in the trial court to the extent it presents a pure question of law or involves undisputed facts." (Ibid.)
Here, the facts are clear and entirely undisputed. The issue of Blaine Holding's entitlement to this portion of the monetary award is purely one of law, as Blaine Holding expressly concedes in its appellate brief. And, as shown above, the issue is easily resolved on well-established law. Thus, we opt to decide the issue.
Accordingly, we modify the judgment to remove the $44,194 the trial court awarded based on the security deposit covenant, the $1,512.67 it awarded based on the utilities covenant, and the $45,358.02 it awarded based on the tax covenant, for a total reduction of $91,064.69.
B. Vivera Forfeited its Other Arguments by Failing to Raise Them Below
Vivera makes two additional arguments, which are closely related. Giraud held that where a tenant remains in possession of a substantial portion of the premises following a partial eviction, the tenant's rent obligation is excused in its entirety, but the tenant is not released "'from other obligations on his part independent of the covenant to pay rent, such as his covenant to repair.'" (Giraud, supra, 29 Cal.App.2d at p. 548.) Vivera contends the court erred in finding Vivera responsible for paying for property taxes, insurance, and utilities, because these obligations are more similar to "rent" than "repair." Vivera also argues that it should not have been required to pay holdover damages, since paying them would be contrary to the policy arguments that motivated Giraud. Vivera concedes that no case directly supports its arguments and does not contend that the trial court's actions in this area were contrary to existing law. Nevertheless, it asks us to make new law in this area and to create new distinctions from Giraud.
Vivera admits that it did not raise these arguments before the trial court. For that reason, we decline to consider them on appeal. Unlike Vivera's argument about non-rent monetary damages, Vivera's contentions concerning Giraud do not present a good occasion for us to exercise our discretion to consider forfeited arguments.
We do not believe that Vivera's arguments concerning Giraud raise issues of pure law based on undisputed facts. The resolution of these legal issues depends on factual specifics that the parties dispute- including the nature of the partial eviction, the similarity of the obligations at issue to the "repair" obligations described in Giraud, and the basis of the trial court's award of holdover damages. If Vivera had raised these arguments below, the trial court's factual and legal evaluation might have been different. So might Blaine Holding's presentation of evidence and argument. Fundamental considerations of fairness, therefore, prevent us from considering Vivera's arguments for the first time on appeal. (See Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 548 [rule that "'"theories not raised in the trial court cannot be asserted for the first time on appeal"'" "'"is based on fairness"'"].) In addition, we are reluctant to decide novel legal issues that were never presented to a trial court.
Beyond that, Vivera has not provided us with a reporter's transcript or other record of the oral proceedings before the trial court. We therefore lack an adequate record to consider how the trial court considered issues or resolved factual disputes that might bear on our analysis. We certainly cannot conclude that the trial court erred in its analysis. Absent a record of the oral proceedings below, we must assume that the trial court's reasoning was correct and that it had evidence before it sufficient to draw the conclusion that it made. (See Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 187 [in absence of reporter's transcript, it is extremely difficult for appellant to show error, since "'"if any matters could have been presented to the court below which would have authorized the order complained of, it will be presumed that such matters were presented"'"].)
For this same reason, we conclude that Vivera has failed to demonstrate any error in the trial court's calculation of the amount of holdover damages based on apportionment by square foot, an issue that Vivera raises in one paragraph of its appellate brief. Vivera has not provided us with a record sufficient to assess the trial court's weighing of the evidence or exercise of its discretion. We therefore must conclude that there was no error in the trial court's conclusions. (Rhule v. WaveFront Technology, Inc. (2017) 8 Cal.App.5th 1223, 1228-1229 [appellant cannot demonstrate abuse of discretion without record explaining trial court's reasoning or what occurred at hearing].)
Put simply, "we are not required to consider" Vivera's remaining arguments on appeal, and we decline to do so. (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 767.)
DISPOSITION
We modify the judgment to remove the $44,194 the trial court awarded based on the security deposit covenant, the $1,512.67 it awarded based on the utilities covenant, and the $45,358.02 it awarded based on the tax covenant, for a total reduction of $91,064.69 in the amount of judgment. The judgment is otherwise affirmed. The parties will bear their own costs on appeal.
WE CONCUR: CURREY, Acting P. J., COLLINS, J.
[*] Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.