Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. SC095564, Lisa H. Cole, Judge.
Greene, Fidler, Chaplan & Hicks and Gary D. Fidler for Plaintiff and Appellant.
Dawson Tilem & Gole, and Gary M. Gole for Defendant and Respondent.
RUBIN, ACTING P. J.
Landlord 8800 Melrose LLC (Melrose) appeals from a judgment in favor of its tenant, John Varvatos of California Inc. (Varvatos), in an unlawful detainer action. Melrose contends the trial court erred by adjudicating before all other issues the sufficiency of statutory notice under Code of Civil Procedure section 1161. The trial court found that the notice was defective. We affirm.
All further statutory references are to the Code of Civil Procedure.
FACTS AND PROCEDURAL HISTORY
On February 1, 2002, Melrose entered into a lease agreement with Varvatos for commercial retail space. The lease’s original term was 10 years and 11 months with a monthly rent of $20,670. Before taking possession, Varvatos spent approximately $1.8 or $1.9 million to renovate the premises. Payment of rent began on August 20, 2002. ~ (CT 140-41.) ~
Paragraph 56 of an addendum to the lease required Varvatos to deposit $72,253 as a security deposit with Melrose on August 20, 2007, the fifth anniversary of Varvatos’s first rent payment. The security deposit would replace the original lease guaranty, which would terminate at that time. Varvatos did not tender the security deposit.
On September 12, 2007, Lawrence Kuppin, Melrose’s managing agent, sent Varvatos a letter partly entitled “Notice of Default.” It stated:
“Thank you for the rent check for September 2007. However, I did not find included with this check any compliance with Paragraph 56 of the Addendum to the Lease. Accordingly, Lessee is in default of the Lease. Pursuant to the terms and conditions of the Lease please timely comply with the provisions thereof in accordance with Paragraph 13.1 of the Lease. [¶] This letter is not intended to be a complete statement of all the facts pertaining to this matter and the undersigned reserves all rights and remedies, including the right to proceed with all available remedies.”
Paragraph 13.1 of the lease defines “default” and “breach.” A “default” is a “failure by the Lessee to comply with or perform any of the terms, covenants, conditions or rules under this lease.” A “breach” is a “failure of Lessee to cure such default within any applicable written notice and grace period.” Paragraph 13.1 specifically provides that a default in payment of the security deposit results in a breach if not cured within five business days following written notice to the lessee. The lease addendum also added provisions to Section 13, namely, that “[l]essee shall have a fifteen (15) day grace period after receiving written notice of any monetary default...,” and that a nonmaterial breach will not be cause for termination of the lease.
The September letter was not managing agent Kuppin’s first writing to Varvatos about the security deposit. Kuppin had sent prior letters to Varvatos because Kuppin had miscalculated the date of the fifth anniversary of rent commencement. In March 2007, Kuppin notified Varvatos of its failure to make the $72,235.53 payment. And in April 2007, Kuppin sent Varvatos another letter stating (1) Varvatos had still failed to render the security deposit payment and (2) had failed to pay the premise’s property taxes as required under the lease. The April letter further stated that if Varvatos did not cure its failure to make payment within 15 days, Melrose intended to proceed with all available remedies. It then directed Varvatos’s attention to Section 13.2 of the Lease entitled “Remedies,” which reserved Melrose’s right to terminate Varvatos’s right to possession by any lawful means in the event of breach.
In the 15-day grace period following the September letter, the parties discussed the matter of the untendered security deposit. On September 27, 2007, one day before the grace period was to end, Varvatos e-mailed Kuppin a proposed amendment to the lease and an amended Guaranty of the Lease to extend its existing coverage. The next day, Kuppin rejected the proposal and sent a letter to Varvatos stating, “I received your e-mail and two attachments yesterday afternoon. I have forwarded them to my attorney for his review and comment. However, these proposed attachments are not in compliance with Lessee’s obligations under the Lease terms, including Paragraph 56 of the Lease Addendum. As a result, Lessee is in material default of the Lease.” No further notices were served on Varvatos. On October 9, 2007, Melrose filed its unlawful detainer complaint against Varvatos.
On October 18, Varvatos filed a motion to quash service of summons in order to test the validity of the statutory notice. The court denied the motion. A nonjury trial was set for March 10, 2008. On the morning of trial, Varvatos filed a motion for judgment on the pleadings, again asserting the notice was defective. The court denied the motion, but then proceeded to hold a “legal hearing on the issue of notice.” After hearing arguments and reviewing exhibits, the court found the September 12, 2007 notice was defective because it did not comply with the statutory requirements for unlawful detainer actions. Judgment was entered in favor of Varvatos. Melrose filed a timely notice of appeal.
DISCUSSION
Melrose contends that the court erred in two respects: (1) by trying the issue of notice before considering the other issues raised by appellant’s claim, and (2) in determining that the notice was defective under section 1161. We take each argument in turn.
A. Bifurcation of Issues and Order of Proof
Although the court did not formally bifurcate issues relating to notice from the other issues in the case, there is no doubt that is what occurred. We need look no further than the court’s statement that it would hear the notice issue first. We review the court’s decision to bifurcate a trial under the abuse of discretion standard. We will disturb discretionary trial court rulings only upon a showing of a “clear case of abuse” or “miscarriage of justice.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 331; see also Martindale v. Superior Court (1970) 2 Cal.3d 568, 574.) “Discretion is abused whenever... the court exceeds the bounds of reason.” (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.) We conclude the court did not abuse its discretion.
The court has broad discretion on its own motion to try issues in any order that will promote efficiency of litigation. (Buran Equipment Co. v. H. & C. Investment Co. (1983) 142 Cal.App.3d 338, 343; Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 503.) Section 598 provides in part that “the court may [at any time on its own motion] when... the economy and efficiency of handling the litigation would be promoted thereby... make an order... that the trial of any issue or any part thereof shall precede the trial of any other issue or any part thereof in the case....” Similarly, section 1048, subdivision (b) provides in part that “the court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action,... or of any separate issue....” Finally, Evidence Code section 320 provides that “except as otherwise provided by law, the court in its discretion shall regulate the order of proof.” Under these provisions, the trial court had ample authority to try the notice issue first. (Buran Equipment Co. v. H. & C. Investment Co., supra, at p. 343; Grappo v. Coventry Financial Corp., supra, at p. 503.)
Here, the court chose to try the issue of notice before any other presumably because “[s]trict compliance with the specifically prescribed notice conditions is a prerequisite to invoking the summary procedures of unlawful detainer.” (Parsons v. Superior Court (2007) 149 Cal.App.4th Supp. 1, 6.) The fairest reading of the court’s statement that it would handle the “legal threshold issue before we begin the trial,” is that it would try the issue of notice first because if it concluded that the notice was defective, the court would not have to address the merits of the unlawful detainer claim. Melrose’s counsel himself stated that “[i]f the notice is defective, I don’t see how [Melrose] can prevail.” The trial court acted within its discretion to “orde[r] that this issue be tried first and a decision reached upon it since, if it had been correctly decided, trial would not have been required of any other issues.” (Buran Equipment Co. v. H. & C. Investment Co., supra, 142 Cal.App.3d at p. 343.) This was nothing more than a bifurcation of issues in order to simplify the trial. We reject Melrose’s contention that what occurred was a de facto summary judgment motion, as there is no support for this in the record.
When the court announced its decision to handle the issue of notice first, Melrose had the opportunity to present all of its evidence relevant to determining the notice’s legal sufficiency. The court received the evidence and heard arguments from both parties. Melrose does not on appeal identify any additional evidence relevant to statutory notice that it would have offered but for the court’s implied order to bifurcate. Consequently, the court’s decision to bifurcate, even if not expressly framed as a bifurcation order, did not prejudice Melrose. We conclude that the trial court thus did not abuse its discretion in trying the notice issue before considering the other elements of Melrose’s complaint.
B. Sufficiency of Notice
Turning to the merits of the notice claim, the record establishes a number of facts beyond dispute. Melrose and Varvatos entered into a lease agreement on February 1, 2002, that contained a provision requiring Varvatos to pay Melrose a $72,253 security deposit on August 27, 2007, the fifth anniversary of Varvatos’s commencement of paying rent. Varvatos did not include the $72,253 in its August 20, 2007 check as required. On September 12, 2007, Melrose sent Varvatos a letter entitled “Notice of Default” requesting the payment and reserving the right to proceed with all available remedies. Varvatos received the letter in the manner required by the lease. Respondent failed to make the payment, and appellant instituted the unlawful detainer action on October 9, 2007. We apply an independent standard of review to interpretation of contracts and statutes based on undisputed facts. (County of Humboldt v. McKee (2008) 165 Cal.App.4th 1476, 1494; MacIsaac v. Waste Management Collection and Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1082; Air China Ltd. v. San Mateo County (2009) 174 Cal.App.4th 14, 18.)
We conclude the court was correct in finding the letter did not meet the statutory requirements for notice of an unlawful detainer action set forth in section 1161. That statute provides in pertinent part: “A tenant of real property... is guilty of unlawful detainer: [¶] 3. When he or she continues in possession... after a neglect or failure to perform... conditions or covenants of the lease or agreement under which the property is held... and three days’ notice, in writing, requiring the performance of such conditions or covenants, or the possession of the property, shall have been served upon him or her.... Within three days after the service of the notice, the tenant... may perform the conditions or covenants of the lease... and thereby save the lease from forfeiture....” (§ 1161, subd. (3).) (Italics added.)
“Because of the summary nature of an unlawful detainer action, a notice is valid only if the lessor strictly complies with the statutorily mandated notice requirements.” (Bevill v. Zoura (1994) 27 Cal.App.4th 694, 697, citing Kwok v. Bergren (1982) 130 Cal.App.3d 596; see also Parsons v. Superior Court, supra, 149 Cal.App.4th Supp. at p. 6.) Furthermore, as loss of a tenancy is considered a form of forfeiture under section 1161, we also apply the rule that forfeiture will be strictly construed against the party who seeks it. (§ 1442; Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987)195 Cal.App.3d 1032, 1061.)
The notice must comply with several requirements set forth in section 1161, subdivision (3). The notice must identify the defaulted covenant. (Delta Imports, Inc. v. Municipal Court (1983) 146 Cal.App.3d 1033, 1036; Feder v. Wreden Packing & Provision Co. (1928) 89 Cal.App. 665, 671.) The notice must also be phrased in the alternate when the covenant is capable of being performed, viz. perform the covenant or quit the premises. (§ 1161, subd. (3); Hinman v. Wagnon (1959) 172 Cal.App.2d 24, 27.) That is to say, the notice must convey that “in the event of the failure of the tenant to... perform the defaulted covenant, the [landlord] will exercise his right under the law to regain possession of the premises.” (Hinman v. Wagon, supra, at p. 28, citing Feder v. Wreden Packing & Provision Co., supra, at p. 671.) The notice cannot be ambiguous in its phrasing, as it must “clearly, positively, and unequivocally disclose the intention of the landlord to repossess the premises.” (Horton-Howard v. Payton (1919) 44 Cal.App. 108, 112, see also Delta Imports, Inc. v. Municipal Court, supra, at p. 1036.) Melrose’s September 12, 2007 letter does not meet this standard for several reasons.
First, the language in the letter was too vague to alert Varvatos to the fact that its possession rights were at stake. The statement “... the undersigned reserves all rights and remedies, including the right to proceed with all available remedies” does not state that Melrose intended to proceed with the specific remedy of regaining possession of the property. “All rights and remedies” and “all available remedies” could include a number of options, such as pursuing a standard breach of contract claim or that any delay in receiving payment did not constitute a waiver of any covenant of the lease. The lease itself contemplated that terminating Varvatos’s right to possession was only one of a number of potential remedies Melrose could choose to exercise in the event of a breach. Section 13.2 of the lease agreement not only reserved the option to terminate the lease, but it also reserved the option to continue the lease and recover the rent as it became due, or the option to pursue any other remedy available under the law. Upon receiving the September 12, 2007 letter, Varvatos was not required to speculate which remedy Melrose intended on pursuing.
Second, the language in the letter was not phrased in the alternate. The purpose of statutory notice is to alert the tenant that unless he cures the defaulted covenant, he will lose possession of the premises. (Fifth & Broadway Partnership v. Kimny, Inc. (1980) 102 Cal.App.3d 195, 202.) Melrose contends that the following passage in the lease satisfies this requirement: “Pursuant to the terms and conditions of the Lease please timely comply with the provisions thereof in accordance with Paragraph 13.1 of the Lease. [¶] This letter is not intended to be a complete statement of all the facts pertaining to this matter and the undersigned reserves all rights and remedies, including the right to proceed with all available remedies.” Paragraph 13.1 contained information on the number of days (or grace period) Varvatos had to cure a default before it would be considered a breach. The defect here is that Melrose failed to clearly condition the pursuit of a remedy on Varvatos’s failure to cure the default. The language suggested that even if Varvatos paid the security deposit within the allotted grace period, Melrose could still proceed with any remedy available to it. Because the two clauses were insufficiently dependent in nature, the letter does not comply with the requirement of section 1161 that the notice be phrased in the alternate. On its face, then, the September 12, 2007 letter appears only to be a formal advisement of the contractual 15-day grace period.
DISPOSITION
The judgment is affirmed.
WE CONCUR: BIGELOW, J. BENDIX, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.