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Allesandro Plaza T.H. & N.S. Chow v. Chakmakchi

Court of Appeals of California, Fourth Appellate District, Division Two.
Nov 21, 2003
E033000 (Cal. Ct. App. Nov. 21, 2003)

Opinion

E033000. E033228.

11-21-2003

ALLESANDRO PLAZA T. H. & N. S. CHOW LIMITED PARTNERSHIP, Plaintiff, Cross-defendant and Respondent, v. RAY CHAKMAKCHI, Defendant, Cross-complainant and Appellant. MORENO VALLEY FUN BOWL, INC. Defendant and Appellant.

Law Offices of Edwin Paul, Edwin Paul and Margie L. Jesswein for Defendants, Cross-complainant and Appellants. Jacobs & Gregory and David E. Gregory for Plaintiff, Cross-defendant and Respondent.


Alessandro Plaza T. H. & N. S. Chow Limited Partnership (Chow) sued Ray Chakmakchi (Chakmakchi) and Moreno Valley Fun Bowl, Inc. (Fun Bowl), alleging breach of contract for their failure to pay their share of property maintenance fees as mandated by a set of covenants, codes and restrictions (CC&Rs). Chakmakchi cross-complained against Chow alleging breach of contract for failing to maintain the property as required by the CC&Rs. After a court trial, during which Fun Bowl was dismissed as a defendant, judgment was entered in favor of Chow both on the complaint and on the cross-complaint. Chakmakchi asserts that this was error and appeals. He also appeals from a posttrial award of attorney fees to Chow. We affirm. Fun Bowl appeals, claiming that it was wrongfully included in the judgment as an unsuccessful cross-complainant. While we believe this issue could and should have been dealt with at the trial court level, we will nevertheless instruct the trial court to correct its judgment to remove Fun Bowl as a cross-complainant against whom judgment was entered.

FACTS AND PROCEDURAL HISTORY

On November 30, 1994, the Dewitt Group, of which Chakmakchi was a part, and Chow entered into the CC&Rs to govern their rights and responsibilities in a retail facility known as Alessandro Plaza (the Plaza). The Dewitt Group and Chow each owned parcels of land within the Plaza. The obligations and restrictions represented by the CC&Rs were explicitly intended to run with the land.

The CC&Rs allocated to Chow a nonexclusive easement to construct a pylon sign, the construction and maintenance of which would be reimbursed as a common area expense allocated to each Plaza occupant represented on the sign in proportion to their representation. They also assigned Chow as the manager of the common areas of the Plaza, responsible for their maintenance and operation. As such, Chow was required to "maintain repair and replace all improved portions of the Common Areas so as to keep such areas at all times in a safe, sightly, good and functional condition consistent with the standards of comparable community shopping centers in Riverside County." This standard also applied to lighting. Chow was also required to maintain a security service as a common area expense if it determined one to be necessary. However, special security required by any occupant was to be provided solely at the expense of that occupant.

The CC&Rs required the common area maintenance (CAM) expenses to be borne by each owner of the Dewitt Group and Chow parcels based upon the ratio of square feet of ground floor area in all structures on the owners parcel(s) to the total square footage of ground floor area of all buildings in the Plaza. As configured at the time of contracting, the Dewitt Group was to pay 31.44 percent and Chow was to pay 68.56 percent of the CAM expenses.

Upon default, in addition to other remedies provided by law, the affected owner, after 10 days prior written notice, has the right to perform the obligation on behalf of the defaulting party. If CAM charges are not paid, after 10 days from a written demand for payment, legal action may be instituted for payment and interest, plus attorney fees.

Chakmakchi obtained possession of the entire Dewitt Group parcel before 1999. He is also the sole owner of Fun Bowl, which operates on the property. In June 1999 he stopped paying his share of the CAM expenses.

On September 19, 2000, Chow filed a first amended complaint against Chakmakchi and Fun Bowl alleging that beginning on June 30, 1999, and continuing, they had breached the CC&Rs by failing to pay their proportionate share of the CAM expenses. Chakmakchi filed a cross-complaint alleging that Chow acted negligently, in breach of the CC&Rs and its fiduciary duties, in failing to (1) properly manage and allocate costs for security; (2) provide lighting and lighting improvements in an equitable manner; (3) repair signage; (4) properly bill for CAM expenses; (5) provide adequate accounting; (6) properly prorate expenses, and otherwise failing to perform the duties outlined in the CC&Rs.

A court trial commenced on August 7, 2002. Chow chose to try his case on the parties stipulation that the court could receive the CC&Rs and a compilation of the amounts due from Chakmakchi for CAM expenses. Fun Bowl then moved for and was granted judgment since it was not a party to the contract sued upon. Chakmakchi went on to argue the illegality of the CC&Rs provision allocating payment of CAM expenses and to present evidence of Chows breach intended to establish both his defense against the complaint and support for his cross-complaint.

The trial court issued a statement of decision on October 8, 2002. It found that Chakmakchi had failed to pay for CAM in the amount of $94,700.04, which was a material breach of the CC&Rs. It also found that Chow had breached the CC&Rs by failing to replant a planter in front of Chakmakchis business and by failing to repair and maintain a monument sign for a period of four years. It concluded that Chakmakchi had both failed to establish a defense to Chows claim for breach and failed to establish his right to recover for Chows breach given his own material default. Judgment was entered for Chow on the complaint in the amount of $94,700.04 plus attorney fees and costs, as well as on the cross-complaint. On December 2, 2002, the trial court issued a corrected judgment reflecting that Fun Bowl had obtained a judgment in its favor on Chows complaint based upon Code of Civil Procedure section 438. It also identified Fun Bowl as a cross-complainant against whom judgment was entered. Chakmakchi appealed.

Chow thereafter sought an award of $24,991.94 in attorney fees as the prevailing party, as permitted by the CC&Rs. Over opposition by Chakmakchi, the motion was granted in the amounts requested upon the trial courts finding that the amounts requested were necessary and fair. Chakmakchi filed a second appeal in which Fun Bowl joined. This court consolidated these appeals for briefing and decision.

DISCUSSION

A. Fun Bowl Did Not Prosecute the Cross-complaint

Preliminarily, Fun Bowl asserts that it should not be included on the judgment as a cross-complainant against whom judgment was entered. The question whether Fun Bowl was a cross-complainant was the subject of a hearing on March 7, 2003. The parties pointed out that while Fun Bowl was listed in the caption, it was not named as a cross-complainant in the body of the cross-complaint. At that time the trial court also recognized that Fun Bowl had not been allowed to prosecute the cross-complaint on its own behalf at the time of trial. This observation is supported by the fact that counsel asserted at trial that the cross-complaint was prosecuted not by Fun Bowl but by Chakmakchi, and by the trial courts exclusion of evidence supporting damage to Fun Bowl. Thus, the trial court is directed to correct the judgment by striking "and MORENO VALLEY FUN BOWL, INC. dba CADILLAC BOWL" from page two, lines 22 and 26.

B. Civil Code Sections 1467 and 1468 Do Not Apply

Chakmakchi argues that the method by which the CC&Rs apportion the CAM charges is contrary to Civil Code sections 1467 and 1468 and therefore is void. Civil Code section 1467, which provides for the apportionment of covenants running with the land states, "Where several persons, holding by several titles, are subject to the burden or entitled to the benefit of a covenant running with the land, it must be apportioned among them according to the value of the property subject to it held by them respectively, if such value can be ascertained, and if not, then according to their respective interests in point of quantity." Chakmakchi argues that he and Chow are "several persons, holding by several titles," the burden of a covenant running with the land, here the duty to pay for a portion of CAM expenses. Thus, he concludes, the burden must be apportioned according to the value of their property. As the CC&Rs do not apportion the burden in this fashion, he claims that they are void and unenforceable.

This argument has a facial appeal. However, it does not withstand a deeper analysis. Civil Code sections 1467 and 1468 are both contained in a part of the Civil Code that concerns the transfer of obligations. They do not deal with the establishment of an obligation in the first place, as Chakmakchi urges, but rather with how an existing obligation will be conveyed to subsequent parties. For instance, Civil Code sections 1457 through 1459 deal with the assignment or transfer of burdens and rights under contracts where real property is not concerned. While Chakmakchi is correct in pointing out that statutes must be interpreted giving the words used their plain meaning, statutory language must also be construed both in the context of the statute as a whole and in the context of the overall statutory scheme. (Robert L. v. Superior Court (2003) 30 Cal.4th 894, 900-901.) "`[W]e do not construe statutes in isolation, but rather read every statute "with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness." [Citation.] [Citation.] We must also consider `the object to be achieved and the evil to be prevented by the legislation. [Citations.] [Citation.]" (Horwich v. Superior Court (1999) 21 Cal.4th 272, 276.) Chakmakchi has suggested no object to be achieved nor evil to be prevented by his interpretation that Civil Code section 1467 applies to the creation of a covenant as well as to its transfer. While it seems appropriate to provide a fair method for the division of an obligation or right that one receives by transfer, given the policy of California to allow for the freedom of parties to contract, we cannot conclude that Civil Code section 1467 was meant to limit that right where covenants running with the land are concerned.

The CC&Rs establish the existence of a burden on several parcels of property to pay a percentage of CAM expenses based upon the ratio of square feet of ground floor area in all structures on the parcel(s) of a covenantor to the total square footage of ground floor area of all buildings, here 31.44 percent on one parcel and 68.56 percent on two parcels. Civil Code sections 1467 and 1468 simply provide that the burden attaches to the land and devolves to subsequent owners thereof in proportion to the value of the property they obtain. Since Chakmakchi obtained 100 percent of the parcel burdened with a 31.44 percent portion of the CAM expenses, the entire obligation is his. Were he to sell a portion of his property to another, that party would bear a burden of the 31.44 percent payment in proportion to the value of his property to the former Dewitt parcel as a whole according to Civil Code section 1467.

This interpretation of Civil Code section 1467 is parallel to that in Dishman v. Union Oil Co. (1956) 145 Cal.App.2d 261 (Dishman), the only published case to apply that statute since its enactment in 1872. In Dishman, the owner of several thousand acres of land gave Union Oil the oil and gas rights in the property. Many years later, and after the original acreage had devolved to several owners, Union Oil decided to explore for oil on the land. To facilitate the exploration Union Oil covenanted with the surface owners to pay them 10 percent of the value of the extracted oil from the entire several thousand acres in proportion to the value of their portion of that property. A parcel of property that had a right to a portion of the 10 percent oil payments, Lot 82, was held by two owners who contested how much of the payment owing to Lot 82 each should obtain. (Id. at pp. 262-263.) The trial court divided the Union Oil payment between the owners of Lot 82 based upon their percentage ownership of the lot. (Id. at p. 263.) The Court of Appeal reversed, holding that Civil Code section 1467 required that the oil payments be divided between the owners of Lot 82 according to the value of their portion of that lot. (Id. at pp. 265-266.)

We do not believe that the fact that Union Oils agreement was based upon property values establishes that Civil Code section 1467 required that the agreement be so structured, nor does the Dishman case so hold. The value of the land upon which the apportionment of payments was to be made was fixed by the covenant as that assessed in the year prior to drilling having begun, with Lot 82 having a value of $3,120. (Dishman , supra, 145 Cal.App.2d at p. 263.) That apportionment between Lot 82 and the other affected parcels did not change under the original covenant based upon reassessments, future improvements or changes in fair market value as would have been required if Chakmakchis interpretation of Civil Code section 1467 were the rule.

Chakmakchi argues that the Dishman court held that Civil Code section 1467 applies "to any and all situations" and therefore must apply to the creation of covenants, as well as their transfer. (Dishman, supra, 145 Cal.App.2d at p. 266.) However, in making that statement the appellate court was simply responding to the trial courts faulty analysis that Civil Code section 1467 should not be applied to oil payments. (Id. at pp. 264, 266.) It cannot be stretched as far as Chakmakchi urges.

The very dearth of case law demonstrating the application of Civil Code section 1467 also militates against Chakmakchis interpretation. One would have expected that had it been meant to apply in all cases where covenants running with the land were first created, it would have been the subject of a great deal of litigation in this era of common interest developments and therefore would have likely resulted in a published interpretation since 1956. Further, if it were not being applied as the Legislature intended, one would also logically conclude that it would have long since made the necessary clarifications.

C. The Prior Settlement Agreement Was Properly Admitted

Chakmakchi complains that the trial court should not have admitted Exhibit 129, a settlement agreement and mutual release executed by him and Chow in November and December 1998, because it did not impeach his testimony. Rather, he claims that the document was meant as an affirmative defense to his cause of action for breach of contract, an affirmative defense that was not pled and therefore could not be asserted at trial. However, the trial court specifically stated that the settlement agreement was not admissible as a defense to the cross-complaint, and there is nothing in the statement of decision to indicate that it considered the document in that regard.

Chakmakchi argues that nothing in the settlement agreement was directly contradictory to his trial testimony. He testified that the CC&Rs contained a statement that a pylon sign "shall be constructed and the sign panel thereon shall be installed by Chow as a common area expense" and that Chow did not construct that sign. He was also asked whether it was his argument to the court that Chow was required to construct a pylon sign. Instead of allowing Chakmakchi to answer the question, his attorney stipulated that it was Chakmakchis position that Chow had such a duty. That stipulation was as good as an affirmative answer directly from Chakmakchi. The fact that Chakmakchi had signed a document wherein he acknowledged that Chow had no such duty was contradictory to his testimony and demonstrated the nonexistence of a fact to which he testified. (Evid. Code, § 780, subds. (h) & (i).) Contrary to Chakmakchis position, the inconsistency need only be in effect or in the impression or inference raised by the testimony, rather than in express terms. So long as it appears that the witness has stated contrary beliefs, the impeachment evidence is proper. (Gregoriev v. Northwestern Pac. R. R. Co. (1928) 95 Cal.App. 428, 437-439.) "[T]here need be no direct contradiction between the two statements if they differ in any material particular, and . . . accordingly, `if there is an inconsistency between the belief of the witness as to certain matters as indicated by his previous declarations, and that which would naturally be indicated by his testimony, such prior declarations may be shown, although not directly contradictory of any specific statement made on his examination . . . [citation]." (Id. at p. 439.)

Chakmakchi argues that because his testimony was simply a contention or argument, and not a statement of fact, it could not be impeached. However, as we have just observed, the clear import of his statements was to illustrate that Chow had a duty to construct a pylon sign for his benefit and failed to do so thereby breaching the CC&Rs and resulting in damage to him. "[I]t [is] not necessary that there should be contrariety in terms between the testimony given and the asserted impeaching statement, but [is] only necessary in order to render it admissible that the statement should have a tendency to contradict or disprove the testimony or any inference to be deduced from it" based not upon "individual words or phrases alone, but [on] the whole impression or effect of what has been said or done." (Gregoriev, supra, 95 Cal.App. at p. 438, original italics.) The settlement agreement, which clearly contradicted the impression given by Chakmakchis testimony, was, therefore, properly used for impeachment. The cases that Chakmakchi cites on this point deal with evidence of prior admissions, not with impeachment, and therefore are of no value.

Chakmakchi asserts that the trial court improperly relied on his "admissions" as contained in the settlement agreement in reaching its conclusion that he had failed to demonstrate that Chow had a duty to construct a pylon sign. However, the admissions that the trial court referred to in its statement of decision were those that Chakmakchi explicitly made on the subject after he was confronted with the settlement agreement. Even had the settlement agreement not been admitted into evidence, Chakmakchis testimony as to its terms, shifting the burden of building a pylon sign to him, still existed as evidence to support the trial courts finding.

Finally, Chakmakchi argues that the settlement agreement should have been barred by Evidence Code section 1152, which makes evidence of offers to compromise inadmissible to prove liability and to defeat claims in general. He purports to quote Price v. Wells Fargo Bank (1989) 213 Cal.App.3d 465, 480, for the proposition that Evidence Code section 1152 protects settlement negotiations from being admitted to prove the invalidity of claims sought to be asserted by one of the negotiating parties. The quote does not appear anywhere in the case, which does not stand for that proposition. At any rate, the settlement agreement does not merely reflect negotiations or offers to compromise. Rather, it is the culmination of the negotiations and offers, a signed agreement between the parties. As such it is not an offer to compromise, but a compromise itself and Evidence Code section 1152, by its express terms, does not apply.

D. The Evidence Supports the Trial Courts Finding that Chow Did Not Materially Breach the CC&Rs

Chakmakchis assertions on this point can be generally put into two categories: (1) he should have been awarded damages on his cross-complaint; and (2) he should not have been liable on the complaint. We will examine each in turn.

1. Damages on the Cross-complaint

Chakmakchi argues that the trial court erred when it concluded that he had waived Chows breach of the CC&Rs in failing to maintain a monument sign and that his failure to complain about the problem before ceasing payment for CAM expenses excused Chows performance obligation. Chakmakchi points out that the CC&Rs contain a clause indicating that delay in exercising a right under the agreement will not impair the right or be considered a waiver of that right. Further, waiver was not pleaded as an affirmative defense to Chakmakchis claim for breach and therefore cannot be a ground for denying his claim. (Weinke v. Smith (1918) 179 Cal. 220, 225.) He urges that since Chows failure to maintain the monument sign preceded his cessation of payment of CAM charges, he is entitled to damages on his cross-complaint and the trial court erred in determining he was not. Nor was he required to demand performance before resorting to his available remedies for Chows breach as the trial court concluded.

The trial court did not determine that there had been an implied waiver but merely offered that the evidence suggested as such. It did conclude, however, that the evidence more clearly supported the finding that Chakmakchi believed, at least for a time, that the monument sign was going to be replaced and therefore did not need repair. The trial court observed that Chakmakchis delay in requesting that the sign be repaired gives rise to this reasonable inference, especially in light of the fact that he complained about other perceived deficiencies. The evidence established that while he complained about lighting and security issues in October and November of 1999, Chakmakchi did not complain about the broken monument sign on Alessandro until July 24, 2000, when he requested permission to repair it. He sent another letter on January 19, 2001, offering to repair the monument at his expense, but Chow did not grant permission. At the time these letters were sent, Chow had already commenced this action. Chow replaced the monument sign in June 2002, but did not include Chakmakchis property on it because he had not paid CAM expenses since July 1999. By the time of trial in August 2002, Chakmakchis testimony was that the business on his property had been without street signage for about three years. Thus, he has not shown that the waiver issue supports a reversal of the judgment.

Further, the trial court did not deny damages because Chakmakchi failed to demand performance. Rather, the trial court denied damages because Chakmakchi failed to demonstrate that he had performed or had tendered performance of his obligations under the CC&Rs, and therefore had no right to recover for Chows partial breach. (Civ. Code, § 1439.) At the time that he sought to recover for Chows breach of the CC&Rs, Chakmakchi himself was in substantial breach. Indeed, he stipulated to this fact. The evidence reflected that Chow was performing substantially on his obligations under the CC&Rs, which involved much more than merely maintaining a single monument sign and planter box. Chakmakchi does not contest this fact on appeal. Rather, he claims that the trial court erred in examining each alleged breach of the CC&Rs separately and by failing to consider whether the cumulative breaches constituted a material breach. The trial court determined that Chows failure to replant a planter box on Chakmakchis parcel and failure to repair the monument sign were breaches of the CC&Rs. However, it also concluded that in light of all of Chows obligations under the CC&Rs the failure to maintain the monument sign and the failure to replant the planter box did not constitute a material breach or substantial default. The trial court properly determined that Chakmakchi was obligated to pay for the portion of the CAM charges that were appropriately performed and incurred. Thus, we cannot conclude that it erred in determining that even if Chow breached the CC&Rs in minor respects by failing to maintain the monument sign in an appropriate condition and failing to replant in front of a business on Chakmakchis property, these breaches did not excuse Chakmakchis payment of at least a portion of the CAM charges. His failure to make or offer those payments prevents his recovery on his cross-complaint.

2. Liability on the Complaint

Chakmakchi asserts that since Chow breached the CC&Rs first, it had no right to compel him to perform. (Fenn v. Pickwick Corp. (1931) 117 Cal.App. 236, 243.) He alleges that because the CC&Rs condition his duty to pay CAM charges on Chows performance of maintenance, his performance was excused by Chows prior breach with respect to the monument sign. However, as we have just observed, the trial court found that Chows breach was not material, while Chakmakchis was substantial. (Filet Menu, Inc. v. C.C.L. & G., Inc . (2000) 79 Cal.App.4th 852, 861 [to excuse performance, breach must be material].) Further, while Chakmakchi now urges that his defense to Chows claim for CAM charges was Chows failure to perform, the evidence demonstrated that as far back as October 29, 1999, Chakmakchi told Chow that its failure to perform obligations under the CC&Rs was not the reason that he was failing to make CAM payments. The trial court did not err in concluding that it would be unfair to allow Chakmakchi to use Chows partial breach as an excuse for his nonpayment of CAM charges after the fact. Chakmakchi does not argue that the amount awarded to Chow should have been reduced as a result of his partial breach. Thus, the issue is waived and need not be discussed. (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 Cal.App.2d 675, 698, fn. 12.)

E. The Attorney Fees Award Was Not an Abuse of Discretion

The amount of attorney fees to be awarded is a matter within the trial courts discretion as it is in the best position to judge the value of professional services rendered before it. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1094-1095.) Chakmakchi asserts that the trial court abused its discretion in failing to recognize that Chow was the prevailing party only as to him and not as to Fun Bowl. He argues that the requested fees should have been apportioned, reduced or denied to reflect Fun Bowls prevailing status.

Our review of the record shows that the attorney fees award was made against Chakmakchi alone, and not against Fun Bowl. Chakmakchi does not contest the fact that Chow was the prevailing party on its action against him. Thus, his assertion that the trial court should have exercised its discretion to find no prevailing party is utterly without merit. Further, the fact that the trial court could have exercised its discretion in this manner is not proof of the fact that it abused its discretion in failing to do so.

Without citation to the record or any substantiation, Chakmakchi argues that some of the attorney time for which compensation was sought must have been spent prosecuting the complaint against Fun Bowl and therefore should not be recovered. He has failed to identify any item on any of the invoices submitted by Chow that should not have been awarded because the work related solely to prosecution of the action against Fun Bowl. Indeed, our review of the invoices demonstrates that it was not unreasonable for the trial court to conclude that the work listed was necessary to prosecute the complaint against Chakmakchi and to defend against his cross-complaint. Chakmakchi has not demonstrated that the trial court exceeded the bounds of reason by making an arbitrary, capricious, or patently absurd determination with respect to the award of attorney fees. (In re Stephanie M. (1994) 7 Cal.4th 295, 318-319.)

DISPOSITION

The trial court is directed to correct the judgment to remove Fun Bowl as a cross-complainant against whom judgment was entered as indicated in part A, above. The judgment as corrected is affirmed. Chow to recover its costs on appeal.

We concur: HOLLENHORST, J., McKINSTER, J.


Summaries of

Allesandro Plaza T.H. & N.S. Chow v. Chakmakchi

Court of Appeals of California, Fourth Appellate District, Division Two.
Nov 21, 2003
E033000 (Cal. Ct. App. Nov. 21, 2003)
Case details for

Allesandro Plaza T.H. & N.S. Chow v. Chakmakchi

Case Details

Full title:ALLESANDRO PLAZA T. H. & N. S. CHOW LIMITED PARTNERSHIP, Plaintiff…

Court:Court of Appeals of California, Fourth Appellate District, Division Two.

Date published: Nov 21, 2003

Citations

E033000 (Cal. Ct. App. Nov. 21, 2003)