Opinion
A149095
11-16-2018
384 FOSTER CITY BOULEVARD PARTNERS, Plaintiff and Respondent, v. APPLIED BIOSYSTEMS, LLC, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. CIV 496994)
A landlord, 384 Foster City Boulevard Partners (FCB Partners), sued its former tenant, Applied Biosystems, LLC (Applied Biosystems), for lost rent damages it incurred due to the inability to lease the premises after Applied Biosystems failed to repair and restore the leased premises at the end of the lease. In response to Applied Biosystems's demurrer to the third amended complaint, the trial court applied then-recently-enacted Code of Civil Procedure section 430.41 (which limits a plaintiff to three amendments to a complaint before the case is at issue (§ 430.41, subd. (e)(1)), sustained the demurrer without leave to amend, and entered judgment for Applied Biosystems. FCB Partners filed a motion for a new trial. The court reconsidered its position, concluded that its prior order was an error of law and granted FCB Partners's motion. Applied Biosystems appeals from the grant of the new trial motion. We affirm.
This is Applied Biosystem's second appeal. In November 2011, Applied Biosystems filed a cross-complaint seeking to rescind an agreement in which FCB Partners gave Applied Biosystems a limited release in exchange for receiving $345,000 to repair and restore the premises. Applied Biosystems claimed FCB Partners breached the limited release by filing its lawsuit. The trial court granted FCB Partners' motion to strike the cross-complaint as a strategic lawsuit against public participation (SLAPP) pursuant to Code of Civil Procedure section 425.16—commonly referred to as the anti-SLAPP statute. (All further statutory references are to the Code of Civil Procedure unless otherwise specified.) Applied Biosystems challenged the order granting the anti-SLAPP motion, arguing that it established a probability of prevailing on its cross-complaint. Applied Biosystems claimed it was entitled to rescission of its agreement with FCB Partners because the core allegations of the complaint filed by FCB Partners were false and in breach of the limited release. FCB Partners argued that the limited release covered only the costs of restoring the premises but did not extend to lost rent damages. We agreed with FCB Partners that the filing of its lawsuit for lost rent damages did not entitle Applied Biosystems to rescind the agreement, and affirmed the trial court's order.
We take much of the procedural and factual background from our earlier nonpublished opinion in this matter, Applied Biosystems, LLC v. 384 Foster City Boulevard Partners (Aug. 19, 2014, A135226) (Appeal).
FCB Partners filed a "protective" cross-appeal challenging the order sustaining the demurrer, recognizing that the issues raised by the cross-appeal need not be reached if the order is affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
FCB Partners is a general partnership that owns a commercial office building and parking lot located at 384 Foster City Boulevard in Foster City (premises). FCB Partners leased the premises to Applied Biosystems beginning in 1997. Three years into the lease, Applied Biosystems expanded the parking lot from the premises onto an adjacent property. As part of the project to expand the parking lot, the water and electrical services at the premises were connected to the neighboring property.
Applied Biosystems is the successor in interest to Applied Biosystems, Inc.,the original lessee of the premises. When referring to the parties to the lease, we use the names of the parties to this action instead of any predecessor or successor entities.
Applied Biosystems and its subtenant vacated the premises by February 8, 2008—the date the lease expired—without restoring the premises to the former condition as required by the lease. In January 2009, having not completed the restoration, Applied Biosystems agreed to pay FCB Partners $345,000 for the restoration. In exchange FCB Partners released Applied Biosystems and other related parties.
FCB Partners filed suit against Applied Biosystems in July 2010. The original complaint contained causes of action for breach of contract and conversion. FCB Partners alleged that at the lease's end Applied Biosystems failed to repair and to restore the premises despite its repeated demands. FCB Partners received $345,000 as a payment in lieu of the obligation to restore the interior, parking lot, and landscaping, but then discovered that Applied Biosystems "without notice or permission" had connected the water supply from the premises to the neighboring property to provide water for its use of the adjacent parking lot. FCB Partners alleged that, having failed to restore the premises, Applied Biosystems had been a holdover tenant since February 2008 and owed FCB Partners rent at the fair market value for the use of the premises. FCB Partners sought lost rent damages exceeding $1.9 million as well as $10,000 for the water used without permission to irrigate the neighboring property.
The named plaintiff in the original complaint was a successor in interest to FCB Partners, and the named defendant was Applied Biosystems's predecessor in interest. The parties later stipulated that the proper parties were FCB Partners as plaintiff and Applied Biosystems as defendant.
In a first amended complaint, FCB Partners clarified that Applied Biosystems was a tenant at sufferance for the period from February 2008 until at least January 2009. The first amended complaint referenced the partial release in exchange for the payment of $345,000 but alleged that the 2009 limited release "did not release any claims of rent during the tenancy by sufferance . . . ." The first amended complaint alleged that Applied Biosystems "without notice or permission" connected to the premises' electrical service to provide electricity to the neighboring property controlled by Applied Biosystems. FCB Partners sought damages totaling $980,000 as the reasonable value of the lost rent and the water and electricity supplied to the neighboring property, most of which was for lost rent.
The second amended complaint, filed in April 2011, added a cause of action for tenancy by sufferance. FCB Partners alleged that the 2009 limited release did not extend to claims unknown at the time of the agreement in the absence of any waiver of the provisions of Civil Code section 1542. FCB Partners further alleged that it was required to spend substantial sums to restore and repair "alterations, modifications, utility installations and other components of the Premises beyond those covered by [the 2009] Limited Release."
Civil Code section 1542 provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."
In November 2011, Applied Biosystems filed the first amended cross-complaint against FCB Partners, which was the subject of the appeal in which we affirmed the trial court order striking it as a SLAPP suit.
In November 2015, FCB Partners filed a third amended complaint alleging—with some technical clarifications—the same three causes of action and adding a fourth cause of action for interference with FCB Partners' potential economic relationship with prospective new tenants and a claim for punitive damages. Applied Biosystems demurred on essentially the same grounds raised previously. The trial court's initial tentative ruling sustained with leave to amend the demurrer to the first three causes of action and overruled as to the fourth. It issued another tentative ruling sustaining with leave to amend the demurrer to the fourth cause of action.
At the hearing Applied Biosystems raised as a bar to the third amended complaint recently-enacted section 430.41's provision limiting a plaintiff to three amendments to a complaint before the case is at issue. (§ 430.41, subd. (e)(1).) The section does not apply to amended pleadings after the case is at issue. (§ 430.41, subd. (e)(2).) After receiving letter briefs, based solely on section 430.41, the trial court sustained the demurrer to the third amended complaint without leave to amend. The court entered judgment for Applied Biosystems.
FCB Partners filed a timely motion for new trial on May 19, 2016 claiming: irregularity of the proceedings; accident or surprise; decision contrary to law and error in law. The trial court granted the motion agreeing that its demurrer ruling was contrary to law because it improperly applied section 430.41 and overruled the demurrer to all four causes of action. Applied Biosystems filed—but later withdrew—a motion for clarification of the new trial order, and filed an answer to the third amended complaint and a notice appealing the new trial order.
DISCUSSION
1. Standard of Review
Ordinarily, we would examine an order granting a new trial for abuse of discretion, but under these circumstances the Supreme Court directs: "any determination underlying any order is scrutinized under the test appropriate to such determination." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 859 (Aguilar).) In Aguilar the trial court granted summary judgment, but then—recognizing that it made an error in law—granted a new trial. (Ibid.) The Court of Appeal conducted an independent review of the order, and the Supreme Court agreed that was the applicable standard of review. (Ibid.)
Here, as in Aguilar, the court concluded that its incorrect application of section 430.41 was an error in law and granted the new trial pursuant to section 657, subdivision 7. We adopt the independent standard of review.
2. Motion for New Trial
A court may vacate a judgment and order a new trial where it finds an "error in law . . . excepted to by the party making the application." (§ 657, subd. 7.) The court sustained the demurrer to the third amended complaint without leave to amend and entered judgment for Applied Biosystems based on its reading that "section 430.41, subdivision (e)(1) . . . . bars more than three amended complaints absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action." "[T]he Court conclude[d] that no such facts exist, and no amendment is reasonably possible. The Demurrer to all causes of action is sustained without leave to amend."
The court acknowledged its error and granted the motion for a new trial concluding: "The Court finds that the rulings on demurrer to each cause of action were contrary to law and that Plaintiff excepted to the errors. Specifically, the Court concludes that under a liberal reading of all four causes of action, the Third Amended Complaint withstands demurrer. The Court also concludes that Code of Civil Procedure section 430.41 applies prospectively to an opposition filed while the statute was in effect. However, under the facts of this case as explained below, applying the statute against filing an amended complaint was an error of law. The motion for new trial is granted under Code of Civil Procedure section 657(7)." Explaining its revised understanding of section 430.41 the court stated: "The Court concludes that 'prior to the case being at issue' refers to the time before a Defendant files its initial Answer. Since this case was at issue several years before Defendant's demurrer to the 3rd Amended Complaint, the three-amendment restriction of section 430.41 does not apply to this demurrer."
The court also addressed and overruled each of the demurrer's claims to the four causes of action. The court ordered Applied Biosystems to answer the third amended complaint.
It is undisputed that—Applied Biosystems having filed an answer to the second amended complaint—the case was "at issue." Applied Biosystem's argument that the filing of the third amended complaint defeated its "at issue" status for purposes of section 430.41 was rejected by the trial court in the new trial order and is no more persuasive to us.
Having exercised our independent review and determined that the trial court's initial application of section 430.41 was an error in law that was remedied by the new trial order, we do not need to address Applied Biosystems's remaining arguments.
3. Cross Appeal as to the Demurrer to Third Amended Complaint
FCB Partners filed a protective cross-appeal to preserve its rights. (Cal. Rules of Court, rule 8.108, subd. (g).) Because we affirm the order granting the new trial, we dismiss the cross-appeal as moot. (Sandco American v. Notrica (1990) 216 Cal.App.3d 1495, 1498.)
DISPOSITION
The order granting new trial is affirmed. The cross-appeal is dismissed as moot. FCB Partners shall be entitled to recover its costs on appeal.
/s/_________
Ross, J. We concur: /s/_________
Siggins, P.J. /s/_________
Pollak, J.
Judge of the San Francisco Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------