Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of San Bernardino County No. RCV096870. Barry L. Plotkin and J. Michael Gunn, Judges.
Barnes, Crosby, Fitzgerald & Zeman, Larry S. Zeman and Eric P. Francisconi for Plaintiff and Appellant.
Wood, Smith, Henning & Berman, Jason C. Gless and Keith E. Smith for Defendant and Respondent.
OPINION
Gaut J.
Plaintiff LBA Realty Fund II – WBP III, LLC (landlord) appeals summary judgment entered in favor of defendant K. Hovnanian Forecast Homes, Inc. (tenant). Landlord’s predecessor in interest, Bedford Property Investors (Bedford) and tenant entered into a lease agreement concerning commercial property. On three occasions, tenant and Bedford amended the lease for the purpose of expanding the premises leased to tenant. Under the lease, Bedford also agreed to provide additional improvements to the rented premises on tenant’s behalf and tenant agreed in the second and third amendments to an increase in rent through 2008.
This action arises out of landlord and tenant’s disagreement over whether the lease terminated on August 31, 2006, as stated in the original lease, or one or two years later under the second and third lease amendments, and whether tenant was required to pay rent after August 31, 2006, even though tenant no longer occupied the premises.
Landlord filed a complaint against tenant, alleging tenant breached the lease, as amended, by failing to continue paying rent after August 31, 2006. Tenant asserted in his summary judgment motion that it was undisputed the lease terminated on August 31, 2006, and that he was not required to pay landlord any rent thereafter. The trial court agreed and granted tenant summary judgment.
Landlord on appeal argues that, based on language in the second and third lease amendments and parol evidence, which the trial court excluded, there are triable issues of fact as to whether tenant was required to pay rent after August 31, 2006. We agree and reverse summary judgment on the grounds there are triable issues of fact as to tenant’s obligation to pay rent and the trial court erred in excluding landlord’s parol evidence. Landlord’s other contentions concerning the trial court denying a continuance of the motion, refusing to treat the summary judgment motion as a motion for judgment on the pleadings, and granting tenant attorney’s fees need not be addressed due to this court reversing judgment.
1. Factual and Procedural Background
Landlord acquired the subject commercial property, known as the Jurupa Business Center in May 2006, and became an assignee of the original lease, dated May 1, 2003, and related amendments. Under the lease, tenant rented from Bedford the subject premises, which measured 5,872 square feet. Under sections 1.7 and 3.2 of the three-year lease, the lease expired on August 31, 2006.
Under section 4.1 of the lease, tenant was required to pay landlord the minimum monthly rent specified in section 1.8(A) “in advance on the first day of each month of the Term.”
Addendum No. one (addendum) to the lease contained an option provision allowing tenant to extend the lease term up to three years, with an increase in rent based on the fair market value, taking into consideration tenant improvements. The parties agree that it is undisputed the lease was not expressly extended under this option provision.
The Lease Amendments
In August 2003, tenant and Bedford executed a first amended lease agreement, expanding the square footage of the rental premises to 7,717 square feet. Bedford also agreed to provide tenant with additional property improvements. Under the amendment, tenant’s rent increased. The lease termination date of August 31, 2006, remained unaffected by the amendment.
In April 2004, tenant and Bedford executed a second amendment to the lease, increasing the square footage of the premises further, to 10,961 square feet. The second amendment increased the rent to be paid through August 31, 2007. Under the second lease amendment, Bedford expended $98,942 in tenant improvements on behalf of tenant.
Mark Yorita, vice president and regional manager of Bedford, handled all of the negotiations with tenant on the lease and amendments. Bruce Meyer negotiated on behalf of tenant the first and second amendments. Yorita drafted the second lease amendment.
In April 2005, tenant again sought expansion of its leased premises. Yorita, on behalf of Bedford, negotiated and drafted a third amendment to the lease. The third amendment was in the same form as the second amendment. The lease increased the square footage to 14,838 square feet, increased the rent to be paid through August 31, 2008, and provided for additional premises improvements. Bedford spent $140,000 in tenant improvements on tenant’s benefit.
In August 2005, tenant again informed Bedford that it wished to expand its leased space. Yorita told tenant that he would do what he could to accommodate tenant and reminded tenant that the lease as amended extended through August 31, 2008.
In March 2006, in anticipation of landlord purchasing the subject property, landlord’s lender, SunAmerica Life Insurance Company, required tenant and landlord to execute a subordination agreement. Tenant also signed an estoppel certificate. Landlord was not required to sign the estoppel certificate. The estoppel certificate stated that the lease expiration date was August 31, 2008. The subordination agreement did not mention any lease termination date.
Tenant signed and returned the estoppel certificate and subordination agreement to landlord, along with a brief cover letter merely stating the documents had been signed by tenant’s vice-president and regional controller, John Hadley. There was no mention made in the cover letter that tenant had modified the documents in anyway.
In May 2006, Steve Layton, manager and principal of landlord, signed the subordination agreement, assuming that there had been no modifications by tenant to the documents.
Landlord later discovered that tenant had changed the lease termination date of August 31, 2006, to August 31, 2008, and inserted into the subordination agreement a statement that the lease terminated on August 31, 2006. These modifications and additions were not readily noticeable because they were typed in without any indication that the original language had been changed.
In May 2006, landlord sent tenant a letter notifying tenant that landlord had become owner and landlord of the subject property. Shortly after receiving the letter, tenant informed landlord that the lease expired on August 31, 2006, as noted in the estoppel certificate. By letter dated June 9, 2006, landlord’s attorney, Larry Zeman, requested tenant to clarify its position and inquired as to whether tenant intended to remain on the premises after August 31, 2006, and pay rent thereafter. Zeman noted that tenant’s obligations under the lease, as amended, continued through August 31, 2008.
Tenant’s attorney, John Davis, responded by letter that the lease term ended on August 31, 2006, and was not changed by any of the lease amendments. Tenant vacated the premises on or before August 31, 2006.
Complaint
In July 2006, landlord filed a complaint against tenant, alleging causes of action for (1) breach of contract, (2) quantum meruit, (3) open book account, (4) declaratory relief seeking rent payments after August 31, 2006, under the second lease amendment, and (5) declaratory relief seeking rent payments after August 31, 2006, under the third lease amendment. Tenant answered the complaint in August 2006.
In April 2007, landlord filed a motion for summary adjudication of the two declaratory relief causes of actions, seeking a declaration that tenant was obligated to pay landlord rent after August 31, 2006, pursuant to the second and third lease amendments. Landlord also requested summary adjudication of tenant’s fourth and seventh affirmative defenses, claiming that the lease was terminated and therefore there was no breach of contract, and tenant did not owe any further rent to landlord after vacating the premises on or before August 31, 2006. Landlord argued that it was undisputed that, under the lease as amended, tenant was required to make rent payments after August 31, 2006, even if tenant no longer occupied the premises.
Tenant argued in its opposition to landlord’s summary adjudication motion that the lease terminated on August 31, 2006, and the lease amendments did not extend the term of the lease.
On July 2, 2007, the trial court heard and denied landlord’s motion for summary adjudication, finding that there were triable issues of material fact as to the termination date of the lease and as to tenant’s affirmative defenses.
Meanwhile, tenant filed a motion for summary judgment in May 2007. The motion essentially reasserted the arguments contained in tenant’s opposition to landlord’s motion for summary adjudication. Tenant argued that it was undisputed that the lease as amended terminated on August 31, 2006, when tenant vacated the premises, and therefore tenant was not obligated to pay landlord any rent thereafter. Tenant objected under the parol evidence rule to much of landlord’s evidence establishing the meaning of the lease amendments, i.e., that tenant was obligated to pay rent through August 31, 2008.
Landlord opposed tenant’s summary judgment motion, arguing that, at a minimum, there were triable issues as to whether the second and third lease amendments extended the lease term and required tenant to continue paying rent after August 31, 2006. Landlord also argued that the estoppel certificate and subordination agreement did not support tenant’s motion and that, alternatively, the trial court should permit landlord to add a reformation cause of action and continue the motion to allow additional discovery.
On July 23, 2007, the trial court heard and granted tenant’s motion for summary judgment, finding that it was undisputed that the lease as amended terminated on August 31, 2006, thus extinguishing any obligation by tenant to pay landlord rent thereafter. The court also denied tenant’s request to add a reformation cause of action, denied a continuance of the motion, and sustained defendant’s objections to landlord’s parol evidence.
Tenant moved to recover attorney’s fees and costs. Landlord opposed the motion on the grounds there was no existing corporate entity that had tenant’s name. The trial court nevertheless awarded tenant $62,747.78 in attorney’s fees and costs.
2. Summary Judgment Standard of Review
A motion for summary judgment is properly granted if the moving party has shown “that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) A moving defendant establishes that he or she is entitled to judgment as a matter of law by demonstrating “that the action has no merit . . . .” (Id. at subd. (a).) “A defendant . . . has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Id. at subd. (p)(2).)
Unless otherwise noted, all statutory references are to the Code of Civil Procedure.
“In reviewing an order granting summary judgment, we must assume the role of the trial court and redetermine the merits of the motion. In doing so, we must strictly scrutinize the moving party’s papers. [Citation.] The declarations of the party opposing summary judgment, however, are liberally construed to determine the existence of triable issues of fact. [Citation.] All doubts as to whether any material, triable issues of fact exist are to be resolved in favor of the party opposing summary judgment. [Citation.]” (Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 562.) Although we “must review a summary judgment motion by the same standards as the trial court, [we] must independently determine as a matter of law the construction and effect of the facts presented. [Citation.]” (Ibid.)
3. Whether the Amended Lease Language is Clear and Unambiguous
Landlord contends it cited evidence raising a triable issue as to whether under the lease as amended tenant was obligated to pay landlord rent after August 31, 2006. We agree there were triable issues requiring reversal of summary judgment.
We note that shortly before ruling on tenant’s motion for summary judgment, the trial court denied landlord’s motion for summary adjudication, finding there was a triable issue as to when the lease terminated. Landlord’s motion for summary adjudication was founded in part on the proposition that, even if the lease termination date was disputed, it was undisputed that tenant was obligated under the second and third lease amendments to pay landlord rent after August 31, 2006. The trial court disagreed, concluding there were triable issues as to the termination date of the lease.
Unfortunately, the trial court was persuaded otherwise when ruling on tenant’s subsequent motion for summary judgment, which was founded on the theory that the lease amendments did not change the original lease termination date of August 31, 2006, and therefore tenant was not obligated to pay any rent after that date. The trial court’s initial inclination was to deny summary judgment on the same grounds it had recently denied landlord’s summary adjudication motion, but was persuaded during oral argument to change its mind and grant summary judgment.
During the hearing on tenant’s motion for summary judgment, the trial court astutely asked tenant’s attorney, “If I were to grant your motion based on the argument in your reply and in your motion and adopt your reasoning and to sustain the objection which you made to the documents that seek to add to or vary the terms of the contract that are offered by the plaintiff, might not an appellate court say something akin to the following: How can the Court say that the language of this contract is clear and explicit without saying the court simply chooses to ignore the language in the second and third amendment that provides for additional lease payments in the case of the second amendment one year beyond the defendant’s claimed expiration date of the lease, and in the case of the second amendment, two years beyond the date of the claimed expiration of the lease[?] [¶] How do you respond to that? Is the court simply to ignore that language and say we’ll take that out and say everything else is clear and explicit?”
Tenant’s attorney, Jason Gless, responded that “there is a simple explanation for it.” Gless explained that section 4.1 of the lease contained the actual requirement for paying rent and that provision stated that rent was to be paid on the first of each month through the term of the lease. When the lease term expired, there was no longer any obligation to pay rent. Gless acknowledged that the second and third amendments amended section 1.8, which stated the minimum rent to be paid in 2007 and 2008, but there was no mention of amending section 4.1 and tenant never exercised the option to extend the lease beyond August 31, 2006, under the addendum lease extension option provision.
Gless thus asserted that it was clear that the language in section 1.8 concerning rent to be paid in 2007 and 2008 was conditional upon landlord exercising its option to extend the lease, which landlord did not do. Based on this reasoning and the tenant’s similar reasoning in the reply brief, the trial court granted summary judgment and excluded all parol evidence concerning the intent of tenant and Bedford when entering into the lease and lease amendments.
In reviewing this summary judgment motion de novo, we must determine whether the lease as amended clearly and unambiguously states that tenant was not obligated to pay landlord rent after August 31, 2006.
In construing the lease agreement and its amendments, “‘[t]he fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.’ [Citation.] ‘Such intent is to be inferred, if possible, solely from the written provisions of the contract.’ [Citation.] ‘If contractual language is clear and explicit, it governs.’ [Citation.]” (Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 868.) “It is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation.” (Titan Group, Inc. v. Sonoma Valley County Sanitation Dist. (1985) 164 Cal.App.3d 1122, 1127.)
Here, landlord contends the lease language is ambiguous, while tenant contends it is not. “The trial court’s determination of whether an ambiguity exists is a question of law, subject to independent review on appeal. [Citation.]” (WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702, 1710.)
The original lease clearly states the termination date is August 31, 2006.
Section 1.7 of the lease states:
“Term: (A) July 31, 2003 (the “Estimated Commencement Date”).
(B) Thirty-Six (36) months”
Section 1.8(A) of the lease specifies the minimum monthly rent for the 36-month lease term.
Section 3.2 of the lease states: “Term. The Term of this Lease shall start on the Commencement Date and shall be for the term specified in Section 1.7 (B) hereof, plus any partial month at the commencement of the Term.”
The term, “Commencement Date,” is defined in the lease as “the date the Parties anticipate that the Tenant Improvements will be Substantially Completed. On Landlord’s delivery of the Substantially Completed Premises to Tenant, Tenant shall execute a written acknowledgment of that date as the actual commencement date (the ‘Commencement Date’) in the form of Exhibit D.”
Exhibit D, signed by tenant on August 22, 2003, stated the commencement date was August 18, 2003, and accordingly the original term of the lease expired on August 31, 2006. It is undisputed that the lease term began in August 2003, and thus under the original lease, the lease terminated on August 31, 2006.
With respect to payment of rent, section 4.1 of the lease states in relevant part:
“Payment. Tenant shall pay to Landlord the Minimum Monthly Rent specified in Section 1.8 (A) . . . . Minimum Monthly Rent is payable in advance on the first day of each month of the Term at the Rent Payment Address or such other address specified by Landlord.” Under section 4.1 of the lease, entitled “Payment,” tenant was required to pay landlord the minimum monthly rent specified in section 1.8(A) “in advance on the first day of each month of the Term.”
The termination date is clear as to the original lease, as unamended: the original lease terminated on August 31, 2006, unless tenant exercised the option to extend the lease in writing.
Attached as addendum No. one to the lease is a document entitled, “Option to Extend the Term-Negotiated Rental – Three Arbitrators.”
A. Ambiguity Created by the Second and Third Amendments to the Lease
We next consider whether the lease amendments were also clear and unambiguous as to when the lease terminated and as to whether tenant was required to pay rent after August 31, 2006. It is undisputed the first lease amendment did not alter the termination date of the lease or require payment or rent after August 31, 2006. The key issue here is whether the second and third amendments were ambiguous in such regard.
The second amendment executed by Bedford and tenant in April 2004, stated that tenant wished to amend the lease to expand the leased premises upon the terms and conditions stated in the second amendment in relevant part as follows:
“1. Except as otherwise stated in this Amendment, the terms of the Lease remain in full force and effect and the Lease, as hereby amended shall bind and inure to the benefit of, the successors of the parties hereto.
“2. Effective September 1, 2004, the following sections of the Lease are hereby amended as follows: . . .”
The second amendment then listed sections 1.4, 1.8, and 1.12 of the lease. Section 1.4 was amended to increase the square footage of the premises. Section 1.8(A), as amended, specified minimum monthly rent amounts for the period of September 1, 2004, through August 31, 2007. The rent amount increased with each consecutive year. The amendment to section 1.12 is not pertinent to this appeal.
It was further agreed under the second amendment to the lease that Bedford would provide tenant with various improvements to the rental premises on tenant’s behalf. The parties to the second amended lease also agreed that, “In case of any conflict between any term or provision of this Amendment and the Lease, the term or provision of this Amendment shall govern.”
The third amendment executed by Bedford and tenant in April 2005, was essentially in the same format as the second amendment with similar terms. The third amendment amended sections 1.4, 1.8, and 1.12 of the lease. It also contained a provision in which Bedford agreed to provide tenant with additional improvements in connection with again expanding tenant’s rental space. In addition, once again the parties agreed that, “In case of any conflict between any term or provision of this Amendment and the Lease, the term or provision of this Amendment shall govern.”
Section 1.4 was amended to increase once again the square footage of the premises. Section 1.8(A), as amended, specified minimum monthly rent amounts for the period of September 1, 2005, through August 31, 2008, with the rent increasing in each consecutive year.
While it is undisputed tenant did not extend the lease under the lease extension option provision, this did not preclude the parties to the lease from doing so by amending the lease. The option provision merely provided the tenant with the right to unilaterally request one three-year extension of the lease. Since tenant did not exercise its right to extend the lease under the option provision, the option provision is irrelevant. Rather, we must look to the language of the second and third amendments to determine whether they clearly and unambiguously amended the lease to require payment of rent after August 31, 2006.
Tenant argues that the lease as amended did not require tenant to pay any rent after August 31, 2006, because the second and third amendments did not amend sections 1.7, 3.2, or 4.1 of the lease. Sections 1.7 and 3.2 of the original lease state the term of the lease and section 4.1 states when the rent shall be paid (“Payment. Tenant shall pay to Landlord the Minimum Monthly Rent specified in Section 1.8(A) . . . on the first day of each month . . . .”).
Nevertheless, we conclude the amended language in section 1.8(A) of the second and third amendments raises a triable issue of material fact as to whether the lease as amended terminated on August 31, 2006, and whether tenant was required to pay rent thereafter even if tenant no longer occupied the premises.
Section 1.8(A) as amended can be reasonably construed as requiring tenant to pay the minimum monthly rent through the period specified in the second and third amendments. The second amendment specified the amount of the minimum monthly rent to be paid through August 31, 2007, and the third amendment stated that the amount of minimum monthly rent to be paid through August 31, 2008.
If the amendments are construed as requiring tenant to pay the minimum monthly rent through 2007 and 2008, section 1.8(A) as amended conflicts with sections 1.7 and 3.2, which indicate the lease term expired on August 31, 2006. In addition, section 4.1 requires payment of the rent on the first day of each month of the rental term. If the lease terminated on August 31, 2006, payment thereafter arguably would conflict with section 4.1 since the lease amendments could be construed as requiring tenant to pay rent after expiration of the lease on August 31, 2006.
These conflicts between the language in the original lease and second and third amendments to the lease create ambiguity in the lease as amended. Tenant attempts to resolve such conflicts by arguing the language in section 1.8(A) merely applies conditionally, in the event tenant exercises its option to extend the lease, which never occurred. It is not clear from the face of the lease and amendments that this in fact was the intent and meaning of section 1.8(A) as amended.
There is no language stating that the specified minimum monthly rent after August 31, 2006, (through August 31, 2008), was not required if tenant did not exercise the option to extend the lease. There is no language in the amendments that the minimum monthly rent provisions for the later half of 2006 through August 2008 were conditional. It can reasonably be inferred that the parties would not have specified minimum monthly rent for the periods of September 1, 2006, through August 31, 2007, and September 1, 2007, through August 31, 2008, if the parties to the amendments did not intend to extend the lease and obligate tenant to pay the specified rent.
Because of the conflict in the lease terms and ambiguity created by the second and third amendments to the lease, we conclude triable issues of material fact exist as to when the lease expired and, more importantly, whether tenant was obligated to continue paying rent after August 31, 2006.
We further conclude that, because of such ambiguity and conflict between the lease and amendment provisions, the trial court erred in excluding parol evidence establishing the intent of the contracting parties and meaning of the amendment terms, particularly section 1.8(A).
A. Parol evidence rule
The trial court excluded landlord’s parol evidence upon finding the lease agreement was clear and unambiguous. But as discussed above, the lease as amended was not clear and unambiguous. Language in the second and third amendments created ambiguity, if not outright contradiction in the terms of the lease concerning the lease termination date and payment of rent after August 31, 2006. Parol evidence explaining the intent of the parties and meaning of the language in the amendments thus should not have been excluded.
Under the parol evidence rule (§ 1856), the court must exclude any extrinsic evidence, whether oral or written, that varies or contradicts the terms of an integrated written instrument such as the instant lease and amendments. (Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433.) An integrated agreement is a writing containing the final expression of the parties’ intent. (Ibid.) The writing supersedes any prior or contemporaneous negotiations. (Id. at p. 1434.) In California, the rule is embodied in section 1856. (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 13.) The rule is also reflected in Civil Code section 1625.
The parol evidence rule “is based upon the premise that the written instrument is the agreement of the parties. [Citation.] Its application involves a two-part analysis: 1) was the writing intended to be an integration, i.e., a complete and final expression of the parties’ agreement, precluding any evidence of collateral agreements [citation]; and 2) is the agreement susceptible of the meaning contended for by the party offering the evidence? [Citations.]” (Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358, 1364.) “‘If a writing is deemed integrated, extrinsic evidence is admissible only if it is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. [Citations.]’” (Banco Do Brasil, S. A. v. Latian, Inc. (1991) 234 Cal.App.3d 973, 1001.)
Here, it is undisputed the original lease as amended was intended to be an integrated agreement. The second and third lease amendments, however, are ambiguous, as discussed above, as to whether they extended the lease term and whether tenant was obligated to pay rent after August 31, 2006. Under such circumstances, the trial court erred in excluding parol evidence showing the meaning of the lease amendments and intent of the parties (landlord’s exhibit Nos. 4, 6-13, 15, 22-23, and 25).
The excluded parol evidence included the following: Yorita’s “Expansion Proposal,” dated April 27, 2004, submitted in connection with the drafting of the second lease amendment, which stated the term of the lease would be extended through August 31, 2007 (exh. 4); a statement by Bruce Meyer, who on behalf of tenant negotiated the first and second amendments, in which he stated, “We [tenant] will go ahead with the new lease per your proposal dated 4/27/04” (exh. 6); Yorita’s deposition testimony that when negotiating the second amendment, Meyer and Yorita discussed extending the lease through August 2007 (exh. 21), and when negotiating the third amendment, extending the lease through August 2008 (exh. 21); Bedford’s records reflecting an extension of the lease term as a result of the second amendment (exh. 7); Yorita’s “Expansion Proposal,” dated April 18, 2005, submitted in connection with the drafting of the third lease amendment, which stated the “[t]erm of lease would be extended through 8/31/08. The existing lease currently expires on 8/31/07” (exh. 9); Bedford’s records based on the third lease amendment reflecting the new lease expiration date of August 31, 2008 (exh. 12); payment of a commission calculated based on a rental stream through August 31, 2008 (exh. 13); and commercial rent rolls showing the lease as amended extending through August 31, 2008 (exh. 15). In addition, there was also evidence that in 2004, Bedford expended $98,942 in tenant improvements under the second amendment (exh. 7), and $140,000 in tenant improvements under the third amendment in 2005 (exh. 12). This admissible parol evidence supported landlord’s contention that, when Bedford agreed to the second and third amendments, it intended to recoup the cost of the premises improvements by requiring tenant to pay rent beyond August 31, 2006.
B. Estoppel Certificate and Subordination Agreement
Tenant argues that, regardless of whether landlord may have intended to extend the lease term beyond August 31, 2008, under the estoppel certificate and subordination agreement, landlord forfeited such contention by signing the subordination agreement and failing to object to the estoppel certificate, which stated the lease terminated on August 31, 2006.
We disagree. First, there was evidence indicating that tenant somewhat surreptitiously modified the two documents by slipping in language stating that the lease terminated on August 31, 2008, without informing landlord of the modifications. The modifications were not obvious and tenant did not bring them to landlord’s attention. As a consequence, landlord did not knowingly adopt tenant’s changes to the documents.
Landlord’s manager and principal, Steve Layton, stated in his declaration that he signed the subordination agreement assuming it was the same as when it was sent out to tenant for signature, since there was no notice of any changes made and no obvious alteration to the document. During the hearing on tenant’s summary judgment motion, the trial court noted when discussing the effect of the subordination agreement, that “I don’t doubt that LBA believe[d] that the lease term was intended to be extended. And that they believe[d] that it was extended by the lease amendment.” The court nevertheless concluded the subordination agreement precluded landlord from asserting that the lease was extended beyond August 31, 2006, because Layton signed the modified subordination agreement in which tenant changed the termination date from “2008” to “2006.”
Second, even if arguably landlord could have discovered the changes had landlord carefully reviewed the documents, the two documents are not dispositive. The estoppel certificate was not signed by landlord and thus was not binding on landlord as concerns the lease.
Although landlord signed the subordination agreement, this did not negate landlord’s contention that the parties to the second and third amendments intended that tenant was obligated to continue paying rent through August 31, 2008, to cover the cost of the premises improvements, regardless of whether the lease terminated and tenant vacated the premises on or before August 31, 2006.
We conclude there was ample admissible evidence raising triable issues of material fact as to whether tenant was obligated to pay landlord rent beyond August 31, 2006. Furthermore, the subordination agreement and estoppel certificate do not, as a matter of law, preclude landlord from asserting and prevailing on this claim.
4. Disposition
The judgment is reversed. Landlord is awarded its costs on appeal.
We concur: McKinster Acting P. J., Richli J.