Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIC762389, Kevin A. Enright, Judge.
HUFFMAN, Acting P. J.
Plaintiff/cross-defendant Del Taco, Inc. (Del Taco) appeals from a judgment entered against it and in favor of the defendant/cross-complainant 1033 Third Street Corporation (Third Street) after the trial court granted Third Street's motions for summary adjudication and summary judgment on Del Taco's first amended complaint alleging a breach of contract and seeking declaratory relief concerning its rights under a commercial ground lease agreement and the obligations to pay for the repairs of a sewer line. Del Taco essentially claimed that Third Street, as successor in interest of the original landlord University Real Estate Partnership V (University), breached the lease by failing and refusing to repair the sewer line that was part of the "common area," which was an obligation of Third Street under the lease to repair.
Third Street subsequently dismissed it cross-complaint seeking declaratory relief against Del Taco.
Del Taco contends the trial court erred in granting Third Street's summary judgment motion because it exceeded the scope of the two stipulated issues before it for cross-summary adjudication motions concerning Third Street's repair duties as Del Taco's landlord under their lease agreement. Del Taco also claims it raised sufficient triable issues of material facts to defeat Third Street's motion for summary adjudication concerning whether the sewer line was part of the common area when the lease was breached, and whether Third Street breached its duty under the implied covenant of good faith and fair dealing with regard to the sewer line required under the lease. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The genesis of this action began in February 2001, when Del Taco filed a complaint for declaratory relief against University and Third Street, seeking to hold them responsible, as landlord and successor landlord of commercial property in a shopping center known as Glasshouse Square in San Diego, for the over $80,000 in costs Del Taco had paid in June and July 2000 to repair the sewer line of its leased premises under the terms of the leases. (See Del Taco, Inc. v. University Real Estate Partnership V (2003) 111 Cal.App.4th 16, 19-20 (Del Taco, Inc.).) In October 2001, University's motion for summary judgment, on grounds there were no express or implied warranties concerning the sewer line which would obligate it to maintain or repair the line "after it [was] no longer in privity with [Del Taco]," and that University had installed and provided a "4 [inch] sanitary sewer lateral" as required under the lease, was granted. (Id. at pp. 20-21.)
On appeal, we affirmed the judgment entered in University's favor after interpreting the pertinent lease terms and finding that the express terms to maintain the common area during the term of the lease and to provide a four-inch capacity sewer line for Del Taco did not support the imposition "of an ongoing obligation to maintain and repair the sewer line, past the transfer of ownership of the property, which terminated the term of the lease insofar as University was concerned," or "support an interpretation that any certain warranty of quality or longevity was being made by the lessor" regarding the capacity of the sewer line. (Del Taco, Inc., supra, 111 Cal.App.4th at pp. 26-27.) We also found no merit in Del Taco's alternative theory that there were several implied covenants in the lease, arising solely from the language of the lease or its express promises, for which University should remain obligated after the transfer of the property to another landlord, in this case Third Street. (Id. at pp. 27-28.)
Third Street was not a party to the first summary judgment motion or appeal. (Del Taco, Inc., supra, 111 Cal.App.4th at p. 19.)
Thereafter, Del Taco filed a first amended complaint on February 20, 2004, alleging three causes of action: one cause against University for breach of warranty "in or about September, 1996, while it still owned Glasshouse Square and said premises, by failing to deliver said sewer line to [Del Taco] as expressly provided by Section 23(e)(ii) of, and Exhibit 'D' to, said lease, and the implied covenant of good faith imposed by law, in that said sewer line was so poorly constructed and installed. . . .;" and two causes of action against Third Street for declaratory relief and breach of contract. In the cause of action for declaratory relief, Del Taco alleged that Third Street had actual knowledge of emergency repairs that were needed and begun on the subject sewer line at about 2:00 a.m. on June 21, 2000, and that pursuant to section 36.1 of the lease, Third Street as successor landlord "shall maintain, manage, repair, light, clean and equip the Common Areas during the Term of the Lease in a manner that is consistent with a first class shopping center." In the breach of contract cause against Third Street, Del Taco alleged that Third Street had breached the lease "by failing and refusing to repair said sewer line, even though it was part of the 'Common Areas' referred to in Section 36.1 of said lease, or repay [Del Taco] for its costs for said repairs."
Sometime after filing an answer to the first amended complaint, Third Street and Del Taco, as the remaining parties to this action, stipulated "to simultaneously brief and argue special motions for summary adjudication as to the following legal issues only, based on the joint stipulation of facts being submitted herewith:
We presume from the representations in the briefing below and on appeal, that the cause of action against University in the first amended complaint was dismissed before the cross-summary adjudication motions were brought.
"1. Whether [Third Street], as successor-in-interest to the original lessor under the subject lease, was legally obligated under said lease and the implied covenant of good faith and fair dealing to correct and repair the sanitary sewer line serving the premises demised under said lease to Del Taco; and [¶] 2. Whether [Third Street], as successor-in-interest to the original lessor under the subject lease, was legally obligated under said lease to maintain and repair the sanitary sewer line because it is part of the Common Area, as defined in said lease."
The stipulated facts for the cross-motions showed that Del Taco as tenant and University as landlord entered into a real property ground lease (the lease) on June 3, 1996, which concerned the construction and operation by Del Taco of a fast food restaurant, including a drive-through lane, within the Glasshouse Square shopping center. Exhibits attached to the stipulated facts provided maps showing the boundaries of the demised premises, which included the drive-through lane, and the general layout and orientation of the premises to the rest of the shopping center. Pursuant to paragraphs 21, 23, 28 and Exhibit "D" of the lease, University had the duty to deliver a four-inch sanitary sewer line to Del Taco's designated points of connection and to make any reasonable corrections that might be necessary while Del Taco had the duty to inspect the sewer line upon delivery and to timely notify University of any corrections that may be required.
Paragraph 21 provides: "Warranties. Landlord warrants the following as of the execution date of this Lease: [¶](e) That the Property will be delivered in the condition required by paragraph 23(e) herein."
It is undisputed that University delivered the required four-inch sewer line to Del Taco's points of connection. (Del Taco, Inc., supra, 111 Cal.App.4th at pp. 20-21.) From the time of that delivery in 1996 or 1997, Del Taco has had exclusive use of the line, which was uninterrupted until the sewer line failure in June 2000 and is the subject of this action. Before that time, in February or March 1998, the sewer line had became clogged and backed up, requiring the line to be cleaned out and Del Taco being billed and paying for the work.
Although Del Taco agreed to the truth of these facts in paragraphs 9 and 10 of the stipulated facts for the cross-motions, it expressly denied they were relevant to the subject matter of the action and reserved the right to object to their admissibility. Del Taco, however, did not later specifically object to their admissibility when offered by Third Street in its motion for summary adjudication.
Third Street became the successor-in-interest of University under the lease on May 4, 1998, when it bought the shopping center from University. As successor landlord, Third Street was obligated by paragraph 36.1 of the Lease to maintain and repair the "common areas" as defined in paragraph 1.2 of the lease, to a first class shopping center standard. In return, Del Taco, as tenant, had the duty to repair and keep in first class condition and good repair its demised premises under paragraph 8.1 of the lease. On September 3, 1998, Del Taco executed an estoppel letter in which it certified, among other things that "2. The Lease is in full force and effect . . . [¶] 3. Neither [Del Taco] nor the Landlord is in default under the Lease . . . [¶] . . . [¶] 7. [Del Taco] has accepted possession, and taken occupancy of the premises; the term of the Lease has commenced; the undersigned has commenced the payment of rents for all space subject to the Lease. . . . [¶] 8. All work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by [Del Taco] and all reimbursements and allowances due to [Del Taco] under the Lease in connection with any work performed by Landlord or [Del Taco] have been paid in full."
Paragraph 36.1 of the lease provides: " Maintenance. The Landlord shall maintain, manage, repair, light, clean and equip the Common Areas during the Term of the Lease in a manner that is consistent with a first class shopping center."
Paragraph 8.1 of the lease states: " Repairs . Except as otherwise provided in Article 22 hereinafter set forth, Tenant, at its expense, shall make all repairs as shall be reasonably necessary to keep the Demised Premises in first-class condition and good repair during the term of this Lease and Tenant agrees, at the expiration of this Lease or upon the earlier termination hereof, to quit and surrender the Demised Premises in good condition and repair, uninsured causes beyond the control of Tenant, damage by act of God and reasonable wear excepted."
In April and June 2000, Del Taco's grease trap, which connected to the sewer line, filled with grease, and the sewer line became clogged and backed up on June 20, 2000. Del Taco gave its plumbing contractor authorization to excavate through and beneath the drive-through lane within Del Taco's demised premises at about 2:00 a.m. on June 20 or 21, 2000. Although Third Street's on-sight manager of the shopping center observed the work on Del Taco's leased property on June 21, 2000, and saw on June 27, 2000, that the excavation work had extended beyond the demised premises into the shopping center's parking lot, formal written notice of the work on the sewer line by Del Taco, advising that it was looking to Third Street for the costs of the repairs, was not given to Third Street until July 3, 2000. After the sewer repair was completed, Del Taco demanded payment of the approximately $80,000 from Third Street for the entire cost of the work. When Third Street refused, Del Taco filed this lawsuit.
Third Street's summary adjudication motion was brought on grounds Del Taco's action had no merit and that it (Third Street) did not owe a duty to Del Taco to repair or maintain Del Taco's sewer line because neither the express terms of the lease nor the covenant of good faith and fair dealing obligated it as successor landlord to correct or repair the sewer line after Del Taco accepted it and the lease commenced. Del Taco, on the other hand, brought its summary adjudication motion on grounds that it discovered during excavation of the sewer line that the cause of the sewer line problems was improper construction or repair of the line before Del Taco became a tenant for which it could not have expressly or impliedly accepted and that the line was located under the common area parking lot for which the landlord and successor landlord had a duty of continuing maintenance. Del Taco essentially argued that the implied duty of good faith and fair dealing inherent in the lease required Third Street, as successor-in-interest of University, to cover the costs of the repairs of the sewer line, which was not part of its demised premises but rather part of the common area of the shopping center, i.e., the sewer ran under the parking lot.
After considering the parties' motion papers, exhibits, and evidentiary objections, the trial court issued a tentative ruling granting Third Street's motion for summary adjudication on the two issues before it as to whether Third Street was legally obligated to maintain and repair the sewer line because it was part of the common area as defined in the lease or legally obligated under any express or implied covenant of the lease and good faith and fair dealing to do so, and denied Del Taco's cross-motion. In addition to ruling that Third Street's evidentiary objections to the job log proffered by Del Taco and a declaration were sustained on grounds of irrelevance "since they concern arguments the construction of the initial line was faulty" and on hearsay and lack of foundation grounds, the court found that Third Street had carried its initial burden of showing no material issues of fact existed and that it was entitled to judgment as a matter of law. In doing so, the court specifically stated:
"A review of the lease . . . reveals [Third Street] had no duty to correct, maintain or repair the sewer line in question. The original landlord, [University], was only required to supply a 4[ inch] lateral line and such was provided. There were no other specifications regarding the sewer line. Even if a question of improper construction [were] at issue (which it is not), Del Taco waived any objections by accepting the demised premises as delivered, allowing the time for objection to pass, and authoring an estoppel certificate. Contrary to [Del Taco's] argument, the estoppel certificate was not merely a 'recital of consideration', but was an affirmation of the lease's terms, conditions, and performance by the parties. It was signed by the same person who stipulated to the facts for these motions. . . . [¶] The implied covenant of good faith and fair dealing does not apply to create a duty of repair or maintenance by [Third Street]. While such a covenant exists in all leases, the covenant does not require correction, maintenance, or repair. It merely requires the parties engage in objectively reasonable conduct. Such a covenant is limited to assuring a party's compliance with the express terms of the contract. It cannot be extended to create obligations not contemplated by the contract. [Citation.] There is no continuing duty of repair on the landlord in the lease. [¶] [Third Street] had no duty to maintain or repair Del Taco's sewer line because it is not part of the 'common area'. The lease defines common area at [paragraph] 1.2 . . . . Del Taco is the only user of the sewer line. The sewer line is not subject to the rights of any tenant or ground lessee, let alone 'all tenants and other ground lessees'. The common area definition says nothing about underground facilities."
Following oral argument on January 7, 2005, the court confirmed its tentative as the final ruling and asked whether the parties were ready to proceed with trial which was set to go that day. After some discussion, the court set the matter for trial call on February 10, 2005, to allow the parties to discuss the effect of the resolution of the two legal issues adjudicated by the cross-motions on a trial on Del Taco's first amended complaint. Before that time, however, Third Street brought a summary judgment motion based upon the court's summary adjudication ruling, arguing that because the existence of duty on the part of Third Street was an essential element of the only two causes of action against it in the first amended complaint, and the court's ruling determined that Third Street essentially had no express or implied duty under the lease with Del Taco to correct, repair or maintain the sewer line that is the subject of this action, there was no remaining triable issue of material fact for the court to decide at trial. Third Street therefore claimed it was entitled to judgment on Del Taco's first amended complaint as a matter of law. Del Taco opposed the motion, conceding that under the court's earlier ruling it could not prevail at trial. Nonetheless, Del Taco argued that the court's earlier ruling was erroneous because it had exceeded the scope of the stipulated matter before it on the cross-summary adjudication motions by considering the estoppel letter which Del Taco argued was proof of an affirmative defense and not a matter properly before the court on the legal duty issues determined.
On February 17, 2005, the court issued a tentative ruling granting Third Street's summary judgment motion. In doing so, it reiterated its January 7, 2005 summary adjudication ruling, noting such left no issues for the court to decide at trial and that Third Street was entitled to summary judgment as a matter of law. At oral argument that same day, Del Taco noted it was "in respectful disagreement with the [court's] underlying ruling[, but agreed that] the court is correct in today's tentative." The tentative thereafter became the court's final ruling, and judgment in Third Street's favor was filed April 27, 2005. After notice of entry of that judgment was filed and Third Street dismissed its cross-complaint, this appeal followed.
DISCUSSION
Because Del Taco appeals from the judgment entered after the trial court granted Third Street's summary adjudication and summary judgment motions, we review the court's rulings on those motions de novo. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819.) In doing so we "apply the same rules and standards that govern a trial court's determination of a motion for summary judgment. [Citation.]" (Distefano v. Forester (2001) 85 Cal.App.4th 1249, 1258.) Summary judgment should be granted if "all the papers submitted show that there is no triable issue of material fact and . . . the moving party is entitled to judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).)
To satisfy this burden, a moving defendant is not required to "conclusively negate an element of the plaintiff's cause of action. . . . All that the defendant need do is to 'show [] that one or more elements of the cause of action . . . cannot be established' by the plaintiff. [Citation.]" (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853.) Once this defendant's burden is met, the "burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists. . . ." (Code Civ. Proc., § 437c, subd. (p)(2).) In opposing the motion, "[t]he plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists . . . ." (Ibid.; Brundage v. Hahn (1997) 57 Cal.App.4th 228, 234.)
In performing our de novo review, we view the evidence in the light most favorable to the plaintiff, liberally construing the plaintiff's submissions while strictly scrutinizing the defendant's showing, and resolving any evidentiary doubts or ambiguities in plaintiff's favor. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.) We are not bound by the trial court's stated reasons for its ruling on the motion, as we only review the ruling and not its rationale. (Muller v. Automobile Club of Southern California (1998) 61 Cal.App.4th 431, 438-439; disapproved on another point in Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019, 1031, fn. 6.) "Summary judgment will be upheld when, viewed in such a light, the evidentiary submissions conclusively negate a necessary element of plaintiff's cause of action, or show that under no hypothesis is there a material issue of fact requiring the process of a trial, thus defendant is entitled to judgment as a matter of law. [Citation.]" (Thompson v. Sacramento City Unified School Dist. (2003) 107 Cal.App.4th 1352, 1360-1361.)
Moreover, where an interpretation of a ground lease agreement is at issue, including an implied covenant of good faith and fair dealing, as in this case, such present questions of law which are also subject to our de novo review, absent conflicting evidence. (Ocean Services Corp v. Ventura Port Dist. (1993) 15 Cal.App.4th 1762, 1780.)
Here, Del Taco's position on appeal is essentially the same as below. It claims the court erred in exceeding the stipulated issues by considering the complaint as a whole and the estoppel letter, which was not intended to be part of the summary adjudication motions and that it raised sufficient triable facts to defeat Third Street's motion. Del Taco argues that because the landlord was obligated to, and warranted that it would, provide a sewer line "with capacities" for Del Taco's needs under the express language of the lease, Third Street breached the lease by not providing an adequate sewer line with such capacities as "evidenced by [the sewer line's] complete failure in June 2000, and the discovery in replacing the line that the failure was due to improper construction and installation, as shown by said job log."
Del Taco specifically claims the following facts were sufficient to raise triable facts for trial: "a. Said sewer line was not installed for Del Taco, but was in existence at the time said lease was entered into; [¶] b. Said sewer line, pursuant to the exhibits to said lease, is clearly part of the common area; [¶] c. Said sewer line was never adequate for Del Taco's needs; [¶] d. Scott Buck's declaration . . . did not become hearsay because it incorporated said job log . . . to corroborate what he (Mr. Buck), himself had observed; [¶] e. It is clear from said job log . . . that said sewer line was not properly constructed, and that was the reason it ultimately failed; [¶] f. Del Taco did not knowingly waive any rights by signing an estoppel certificate; [¶] g. The estoppel certificate signed by Del Taco was merely a recital of consideration; [¶] h. The improper construction of said sewer line was a latent defect and Del Taco could not have been [reasonably] expected to discover it, or even suspect it when it signed said lease; and [¶] i. The doctrine of 'the law of the case' was not applicable to this action."
In addition, Del Taco contends the trial court improperly found that the implied covenant of good faith and fair dealing inherent in the lease did not require Third Street to fulfill its duty of delivering a properly constructed and installed sewer line, which Del Taco asserts was breached "at the moment [Third Street] delivered said premises to Del Taco, even though not discovered until approximately a year after Del Taco took possession."
As we explain, the trial court correctly determined upon the competent evidence presented in this case and the law pertinent to the issues, which was established in Del Taco, Inc., supra, 111 Cal.App.4th 16, that Third Street was not legally obligated under the express language of the lease or under the implied covenant of good faith and fair dealing to correct and repair the sewer line, and had no legal obligation to maintain and repair the sewer line because it was not part of the common area as defined in the lease. Because such element of duty was essential to Del Taco prevailing on its causes of action against Third Street for breach of contract and declaratory relief, the trial court properly granted Third Street's summary adjudication and summary judgment motions.
I
THE SCOPE OF THE MOTIONS AND THIS APPEAL
Preliminarily, we note that Del Taco's assertion regarding the court exceeding the scope of the summary adjudication and summary judgment motions has no merit. Del Taco appears to base such contention on the fact the court considered the estoppel letter as evidence in support of its legal finding that Third Street, as successor-in-interest to University, had no legal duty under the lease or implied covenant of good faith and fair dealing to correct and repair the sewer line serving the premises under said lease to Del Taco. Del Taco also seems to claim that because the resolution of that legal issue was then considered in light of the first amended complaint as a whole, that somehow the notice requirements of Code of Civil Procedure section 437c, which require service of any supporting papers on all other parties at least 75 days before the hearing, was violated because only two specific legal issues were stipulated to in the agreed upon shortened 46-day time period for the cross-summary adjudication motions.
Although we fail to fully understand the logic in Del Taco's assertion regarding the scope of the stipulated cross-summary adjudication motions, we agree with Third Street that the underlying issues and arguments presented in Third Street's motion papers were necessary for the court's consideration and determination of the stipulated legal issues regarding Third Street's duty to correct, maintain and repair Del Taco's sewer line. Moreover, the estoppel letter was attached as an exhibit included in the stipulated facts for the motions, which Del Taco conceded at oral argument on the matter.
Further, while Del Taco argues on one hand that the issues of Third Street's "breach of said lease by not providing a properly functioning sewer line, the condition of said sewer line at the time said lease was entered into, the admissibility of Scott Buck's declaration and said job log . . ., and all related issues should have been denied failure to give adequate notice," it asserts on the other hand that such facts show summary adjudication should not have been granted because they raised triable issues of fact. As Third Street correctly points out concerning such conflicting positions, the trial court ruled that the Scott Buck declaration and the job log were inadmissible on grounds of relevance because Del Taco's allegations of faulty construction of the sewer line were not at issue for the summary adjudication and subsequent summary judgment motions, as well as being inadmissible on hearsay and lack of foundation grounds. Del Taco has not shown how the court's evidentiary ruling in this regard is wrong.
In addition, Del Taco dismissed its cause of action against University in the first amended complaint based on breach of warranty concerning the capacity of the sewer line originally delivered to Del Taco under the lease and has not alleged in the two causes of action against Third Street any similar claim for breach of warranty, or for faulty construction or latent construction defect in the sewer line delivered. Thus the scope of the motions before the trial court, as well as before us on review, necessarily is narrowly confined to whether Third Street had any legal duty to Del Taco as successor landlord under the express terms of the lease or under an implied covenant of good faith and fair dealing. Based on the lease interpretations and law established in Del Taco, Inc., supra, 111 Cal.App.4th 16, and the stipulated facts for the cross summary adjudication motions, we conclude the trial court correctly determined Third Street had no such obligation.
II
LAW OF THE CASE, STARE DECISIS AND BEYOND
"[W]here an appellate court states in its opinion a principle of law necessary to its decision, the principle becomes the law of the case for later proceedings, including appeals. [Citation.] The general rule is that the doctrine applies only to issues which were both presented and determined in a prior appeal. [Citation.] 'Where the particular point was essential to the decision, and the appellate judgment could not have been rendered without its determination, a necessary conclusion in support of the judgment is that it was determined. With respect to such a point, the appellate decision is law of the case even though the point was not raised by counsel or expressly mentioned.' [Citation.]" (Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal.App.3d 832, 841-842 (Bovard).) "The doctrine of law of the case, however, [generally only] governs later proceedings in the same case [citation] with regard to the rights of the same parties who were before the court in the prior appeal. [Citations.]" (In re Rosenkrantz (2002) 29 Cal.4th 616, 668 (Rosenkrantz).)
To determine whether the doctrine applies in a particular case, we thus look at the case and parties who were before the court to see if they were also involved in the present proceeding and if the subject issues were essential to a determination of the first appeal, such as whether the record contained sufficient information to decide those issues between the same parties at that time. (See Rosenkrantz, supra, 29 Cal.4th 616 at p. 668; Bovard, supra, 201 Cal.App.3d at p. 842.)
Moreover, the law of the case doctrine normally does not apply " 'when (1) there has been an intervening change in the law, or (2) the disputed issue was not presented or considered in the proceedings below, or (3) application of the doctrine would result in a manifest injustice. [Citation.]' " (Davidson v. Superior Court (1999) 70 Cal.App.4th 514, 530; Salazar v. Eastin (1995) 9 Cal.4th 836, 859.)
In applying the above rules of law here, we note that except for the fact that the earlier case and appeal involved University as the landlord in privity with Del Taco under the lease instead of Third Street as successor landlord in privity with Del Taco under that same lease, the dispute here is the same old dispute, i.e., whether the landlord under the lease has an express duty to maintain or repair the tenant's sewer line and whether such duty may be implied from the covenant of good faith and fair dealing inherent in that lease. There has been no intervening change in the law applicable to such dispute. Del Taco was fully able to present evidence and law on such subject issues about the interpretation of the ground lease and any duties the express covenants in the lease imposed upon the landlord, including the subject issue of the interpretation of the capacity of the sewer line transferred to Del Taco under the lease by the landlord on appeal, which was essential to the determination of the first appeal, because the record was dispositive of that issue at that time. (Bovard, supra, 201 Cal.App.3d at p. 842.) We therefore do not believe that the fact that Third Street was not a party to the earlier summary judgment and appeal represents any relevant change affecting the interpretation of the lease provisions at issue on this appeal because Third Street is in the same party position or capacity as University was due to it being University's successor-in-interest as landlord under the same lease.
Additionally, we do not think that the limited application of the doctrine to only apply the same legal interpretations of the same lease as between parties similarly situated as in the earlier determination would result in an unjust decision. Because no factual determination based on new evidence is at issue as to these points, we believe our earlier opinion "should stand as the law of the case" as to such limited legal interpretations and issues. (People v. Stanley (1995) 10 Cal.4th 764, 787.)
However, to the extent law of the case does not technically apply because Third Street is not the same party as University, the doctrine of stare decisis arguably applied to the trial court's decision on the applicable legal conclusions and interpretations of the lease provisions that we reached in resolving the issues in this case on the first appeal. Such doctrine "expresses a fundamental policy . . . that a rule once declared in an appellate decision constitutes a precedent that should normally be followed by certain other courts in cases involving the same problem. It is based on the assumption that certainty, predictability, and stability in the law are the major objectives of the legal system . . . . Another justification for the doctrine is convenience; lawyers and the courts are relieved of the necessity of continually reexamining matters settled by prior decisions." (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 917, pp. 953-954.) Under Auto Equity Sales v. Superior Court (1962) 57 Cal.2d 450 (Auto Equity), the trial court was thus required to follow those legal conclusions and interpretations that we reached in Del Taco, Inc., supra, 111 Cal.App.4th 16 concerning the same pertinent provisions in the lease regarding the condition of the sewer to be delivered to Del Taco and the allocation of the duties of the landlord and tenant as to maintenance and repair of the sewer line.
Although this court is not similarly bound under Auto Equity, supra, 57 Cal.2d 450, we have reviewed our earlier decision and continue to adhere to our legal conclusions and reasoning in Del Taco, Inc., supra, 111 Cal.App.4th 16. Del Taco has not shown that we failed in our earlier opinion to properly interpret the lease provisions regarding the express terms to maintain and repair the common area during the term of the lease, the implied covenant of fair dealing inherent in that lease, or the capacity of the sewer line to be delivered to the tenant by the landlord. All Del Taco has claimed is that it believes our prior opinion was wrongly decided. Accordingly, we reject Del Taco's argument that we misconstrued the plain language of the relevant lease provisions and Exhibit "D" to the lease regarding the capacity of the four inch sewer line delivered under the lease. Del Taco's arguments centering on whether the sewer line that was delivered to it under the lease was properly constructed are thus misdirected. As we earlier decided, "the lease language concerning sufficient capacity of the sewer line [does not] support an interpretation that any certain warranty of quality or longevity was being made by the lessor." (Del Taco, Inc., supra, 111 Cal.App.4th at p. 26.) We decline to revisit that issue already determined against Del Taco.
Nor need we address at any length Del Taco's arguments regarding the estoppel letter, which, as already noted in the factual background, was part of the stipulated facts proper for the trial court to consider for the cross-summary adjudication motions. Del Taco's continual attempts to raise issues of fact based on delivery of the sewer line in a properly constructed and satisfactory condition has not only been resolved by our earlier opinion, but also by the undisputed facts, including the estoppel letter, that the sewer line was delivered to and accepted by tenant according to express lease provisions. Del Taco's arguments that it did not waive any rights concerning the sewer line by its attorney's signing of the estoppel letter are likewise meritless. As the trial court correctly found, the estoppel letter on its face evidenced Del Taco's acceptance of the four-inch sewer line delivered by University before University sold the shopping center to Third Street and constituted a waiver of the condition of the sewer as delivered. Such affirmation of the lease's terms, conditions and performance by the parties essentially cut off Del Taco's right to claim that Third Street had violated the express terms of the lease to deliver a properly constructed sewer line.
Del Taco asserts it did not waive its right to receive a properly constructed and installed, fully functional sewer line by signing the estoppel letter and that the implied covenant of good faith and fair dealing in every commercial lease require that a properly constructed and installed sewer line had been delivered to it even though neither the lease nor Exhibit "D" expressly stated such condition for the sewer line.
III
REMAINING ISSUES
What remained in this case after our earlier decision in Del Taco, Inc., supra, 111 Cal.App.4th 16, was the question of legal duty on the part of Third Street as successor landlord to University under the express terms of the lease or under an implied covenant of good faith and fair dealing. As to these questions it was "undisputed that the sewer line ran [in part] under the common area parking lot [of the shopping center], but was connected at Del Taco's newly constructed leased premises, and had been used before by the previous tenant and operated without incident for the first year and one-half of Del Taco's lease period." (Id. at p. 26.)
As noted above, we believe several of Del Taco's arguments concerning Third Street's legal duty under the express terms of the lease or under an implied covenant of good faith and fair dealing have been resolved by our earlier legal holdings in Del Taco, Inc., supra, 111 Cal.App.4th 16 and the undisputed facts concerning the estoppel letter. Del Taco's remaining argument is that to the extent the sewer line is outside Del Taco's demised premises and under the common area parking lot, the express language of the lease and its exhibits make the sewer line part of the "common area" that is the continuing legal duty of the landlord (Third Street) to maintain and repair. Del Taco claims that a correct interpretation of the definition of the common area under the lease reveals that the phrase set off by the first comma, i.e., subject to the rights of all tenants and other ground lessees of the shopping center, modifies the preceding clause thus making the common area everything outside of the demised areas and is subject to the rights of all tenants. We disagree.
As noted earlier, paragraph 36.1 of the lease provided that "[t]he landlord shall maintain, manage, repair, light, clean and equip the Common Areas during the Term of the Lease in a manner that is consistent with a first class shopping center." Paragraph 1.2 of the lease defined common area "as all areas and facilities outside the Property and within the exterior boundaries of the shopping center, subject to the rights of all tenants and other ground lessees of the shopping center of which the Property is a part ("Shopping Center"), the Shopping Center within and outside of the buildings in the Shopping Center such as without limitation, pedestrian walkways, patios, landscaped areas, sidewalks, throughways, and parking areas which may be provided from time to time."
Reading paragraphs 1.2 and 36.1 together, the language is clear that the express duties of the landlord under the lease are to maintain and repair "all areas and facilities . . . subject to the rights of all tenants and other ground lessees of the shopping center. . . ." The lease definition of common area also only refers to providing above ground amenities and does not expressly mention underground facilities or utilities. Del Taco's interpretation of paragraph 1.2 defining common area based on the placement of the first comma in such definition renders an absurd result contrary to established rules of construction of contracts because it excludes those above ground areas specifically described in paragraph 1.2 as examples of common areas and creates an inherent inconsistency in the lease. (See Coalinga Pac. Oil & Gas Co. v. Associated Oil Co. (1911) 16 Cal.App. 361, 370; Owens v. Geary Drive-in Corp. (1963) 212 Cal.App.2d 936, 939.)
Moreover, not only did Del Taco stipulate to the fact that the parking lot, one of the examples of above ground areas in paragraph 1.2, was part of the common area under the lease agreement for purposes of the summary adjudication motions, it was undisputed that Del Taco and the landlord specifically contracted under the lease for underground facilities, including the subject sewer line, being provided to Del Taco, which was not used by any other tenant of the shopping center. Del Taco presented no evidence to show that the sewer line was subject to the rights of any other tenant or ground lessee, or subject to the rights of "all tenants and other ground lessees."
Under these circumstances and the express, clear language of the lease provisions, we agree with our earlier observation in Del Taco, Inc., supra, 111 Cal.App.4th 16, and interpret section 1.2 as defining "common areas" as above ground areas "including those parking areas and walkways that [are] subject to the rights of all tenants of the shopping center." (Id. at p. 19.) Consequently, we conclude, as did the trial court, that Third Street had no duty to maintain or repair Del Taco's sewer line that was not part of the common area subject to the rights of any or all tenants or ground lessees.
Furthermore, the implied covenant of good faith and fair dealing does not impose an affirmative continuing repair obligation on the commercial landlord in the absence of such duty in the lease. (Del Taco, Inc., supra, 111 Cal.App.4th at p. 28.)
In sum, contrary to Del Taco's assertions, our independent review shows that the trial court did not exceed the scope of the two stipulated issues before it for cross-summary judgment motions concerning Third Street's repair duties as Del Taco's landlord under the lease agreement and properly found based on undisputed facts and a correct interpretation of the lease provisions that the sewer line was not part of the common area for which Third Street had a duty to repair. Because there was no express duty under the lease for Third Street to repair Del Taco's sewer line, the implied covenant of good faith and fair dealing inherent in every lease does not independently create such a duty. (See Del Taco, Inc., supra, 111 Cal.App.4th at p. 28.) Because a duty on Third Street's part as landlord is a necessary element to support the alleged causes of action against it for breach of contract and for declaratory relief, the trial court properly granted Third Street's summary adjudication motion, the subsequent summary judgment motion and judgment in its favor.
As Third Street points out, because the matter was before the trial court on cross-summary adjudication motions based on undisputed facts, Del Taco's attempt to create triable issues of material fact to defeat the motion is inconsistent with its position below that there were no triable issues of material fact to prevent summary adjudication in its favor on the two issues before the court.
DISPOSITION
The judgment is affirmed. Costs are awarded to Third Street on appeal.
WE CONCUR: NARES, J. HALLER, J.
Paragraph 23 provides in pertinent part: " Additional Contingencies. It is understood and agreed by and between the parties hereto that this Lease and the commencement of rent are subject to the satisfaction of Tenant's waiver of the following contingencies and in the event said contingencies or any of them are not satisfied in the manner and/or within the time limits hereinafter specified, this Lease shall become null and void, and all rights and obligations hereunder of the parties hereto shall cease and be of no further force and effect; provided, however, Tenant may with written notice waive any of said contingencies prior to the expiration of the timeframe listed herein: [¶] (e) The delivery to Tenant by Landlord, at Landlord's sole cost and expense, within thirty (30) days from the earlier of (i) Tenant's receipt of the permits provided for in paragraph 23. (a) herein; or (ii) Landlord's receipt of Tenant's waiver of all contingencies as provided herein ("Landlord's Delivery"): [¶] (ii) all utilities with capacities sufficient for Tenant's intended use as outlined on Exhibit "D". . . .* (*Tenant acknowledges and agrees that all utility capacity and connection fees shall be at Tenant's sole cost and expense.)"
Paragraph 28 provides: "Construction of Improvements. Upon Landlord's Delivery, Tenant shall inspect the work completed by Landlord, within fifteen (15) days from receipt of written notice of such delivery. Landlord shall correct any and all reasonable corrections found through such inspections. Upon receipt of Tenant's permits and Landlord's Delivery, pursuant to its current standard plans and specification for a sixty (60) seat Del Taco restaurant facility, Tenant shall cause to be constructed any and all Improvements to be made to and upon the Property so that a restaurant facility (including any and all utility service thereto), may be operated on the Property. Tenant's general contractor shall supply Tenant and Landlord with Public Liability Insurance as provided in paragraph 9.2 herein showing Tenant and Landlord as additional insured. Within fifteen (15) days from the later to occur of (i) Landlord's Delivery, or (ii) Landlord's completion of any reasonable corrections to Landlord's work requested by Tenant, or (iii) Tenant's receipt of permits, Tenant shall forward Ten Thousand Dollars ($10,000.00) to Landlord representing Tenant's pro rata share of off site work in the center."
Exhibit "D" states in relevant part: "TENANT'S UTILITY REQUIREMENTS [¶] Utilities which Landlord, at Landlord's cost, will provide to Del Taco's designated points of connection, with capacities sufficient for Del Taco's intended use. [¶] SEWER: 4" Sanitary Sewer Lateral"
Lease paragraph 1.2 specifically states: "Common Area is defined as all areas and facilities outside the Property and within the exterior boundaries of the shopping center, subject to the rights of all tenants and other ground lessees of the shopping center of which the Property is a part ("Shopping Center"), the Shopping Center within and outside of the buildings in the Shopping Center such as without limitation, pedestrian walkways, patios, landscaped areas, sidewalks, through ways, and parking areas which may be provided from time to time."
The lease also provided the following paragraphs regarding any alterations to the leased premises: "8.2 Alterations . Tenant, at its sole cost and expense, without Landlord's consent, shall have the right to construct nonstructural upgrades, changes, modifications, remodels or alterations ("Alterations") to the interior of the Demised Premises. Tenant shall make no exterior Alterations, to the Demised Premises without Landlord's prior written consent. As a part of Landlord's consent, when required, Tenant shall provide to Landlord a copy of Tenant's plans and specifications for Landlord's review and approval. Tenant shall not make structural or exterior Alterations until complying with the following: [¶] A. Tenant shall provide Landlord with ten (10) days' written notice stating the date of the commencement of the Alterations to enable Landlord to post and record an appropriate notice of nonresponsibility. [¶] B. Tenant shall acquire the approval of all appropriate government agencies and, where applicable, receipt of all permits and authorizations. [¶] 8.3 Landlord's Consent . In the event Landlord's consent is required pursuant to Paragraph 8.2, Tenant shall submit, detailed plans, specifications, and calculations ("Alteration Plans") of any proposed exterior Alterations. Landlord shall in writing, within thirty (30) days after receipt of the Alteration Plans, either approve or disapprove Tenant's proposed structural Alterations. In the event Landlord has not notified Tenant in writing of its disapproval prior to the expiration of such thirty (30) day period, the proposed structural Alterations shall be deemed approved and Landlord's written consent is waived. Landlord's disapproval of the Alteration Plans shall be accompanied by a reasonably specific reason for such disapproval." (Emphasis in original.)