Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC360648 John Shepard Wiley, Jr., Judge.
Law Offices of Mann & Zarpas and Lloyd S. Mann for Defendant and Appellant.
Law Offices of Barak Lurie, Barak Lurie and Amy C. Vanderwood for Plaintiff and Respondent.
EPSTEIN, P. J.
This is the second time this unlawful detainer case has come before us. In our previous unpublished opinion, Assi Super, Inc. v. Eight Oxfords Property Management, Inc. (B193742 (Assi I)), we upheld two grounds for the unlawful detainer judgment against Eight Oxfords Property Management (Eight Oxfords) and reversed a third for insufficiency of the evidence. While the appeal in Assi I was pending, Eight Oxfords obtained relief from forfeiture of the sublease, conditioned on performance of specified conditions, including a timeframe for construction of a parking structure as required by the governing sublease. The sublessor, Assi Super, Inc. (Assi), filed a second unlawful detainer action based on Eight Oxfords’ failure to comply with these conditions. Eight Oxfords appeals from the resulting adverse judgment, and from denial of its petition to set aside the forfeiture.
Eight Oxfords argues that the evidence is undisputed that it was impossible for it to comply with the conditions imposed by the trial court in granting relief from the forfeiture. It contends the trial court failed to consider evidence that Assi waived its right to insist on full compliance because it continued to accept rent payments; that the trial court abused its discretion by ruling that any motion to set aside the forfeiture would be denied, even before such a motion was filed; and that the trial court abused its discretion by using the wrong standard to weigh Eight Oxfords’ subsequent motion to set aside the forfeiture.
We find substantial evidence to support the unlawful detainer judgment. The clause of the sublease providing that acceptance of rent does not constitute a waiver of any breach applies; it defeats Eight Oxfords’ argument that Assi waived its breach by accepting rent. The trial court’s comments about denying an oral motion to set aside the forfeiture were harmless in light of the subsequent full hearing on Assi’s written motion to set aside the forfeiture. Although the trial court erred in treating the written motion as one for reconsideration, it also weighed the relevant factors under Code of Civil Procedure section 1179. We find no abuse of discretion in the denial of the motion on that basis and affirm.
Statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL SUMMARY
We take a portion of our summary from our opinion in Assi I. Oxford Management Company, Inc., as lessee, and Kwang K. Pak, Kyong R. Pak, Kenneth K. Lee, and Catherine C. Lee, collectively as lessors, entered into a master lease in 1997 for property located at 3525 West 8th Street, Los Angeles (the property). The property included a two-story commercial retail building and a vacant parking area. Assi became the successor lessee under the master lease pursuant to a settlement agreement in 2001.
In March 2003, Eight Oxfords subleased portions of the property from Assi. The sublease term ran from December 1, 2002 to November 30, 2007, with options to extend the lease for a total of 15 years. It was subject and subordinate to the terms and conditions of the master lease. The sublease required Eight Oxfords to construct a parking facility on the property at its sole expense. It did not specify a date for completion of the parking structure.
Eight Oxfords leased the second floor of the property, plus non-exclusive use of the vacant lot for parking. Assi retained exclusive possession of the basement and first floor of the property.
In July 2004, Assi served Eight Oxfords with three separate three-day notices to pay rent or quit. The first of these was based on a claimed $80,000 in unpaid rent; the second on a claim that Eight Oxfords owed $233,700.98 for its share of operating expenses; and the third on the failure of Eight Oxfords to construct a parking structure on the property. Each notice warned that if Eight Oxfords failed to perform, Assi would commence legal proceedings to recover possession of the property and to declare the sublease forfeited.
Assi filed a complaint for unlawful detainer, alleging causes of action on each of the three grounds raised in the notices to quit. It prayed for $80,000 in back rent plus interest; $233,700.98 in unpaid operating expenses plus interest; for possession of the premises; for costs of suit and fees; and for “such other and further relief as the Court deems just and proper.” The court awarded an unlawful detainer judgment to Assi on each of these three grounds. The sublease was deemed forfeited and possession awarded to Assi, but the order to vacate the premises was stayed for 30 days.
Following trial, in July 2006, the court granted Eight Oxfords’ request for relief from forfeiture of the sublease conditioned on payment of all monies due, including back rent and operating expenses, plus interest. (We refer to this as the forfeiture order.) It is undisputed that Eight Oxfords made the required payments.
The issues in this appeal arise from the portion of the forfeiture order imposing deadlines for the construction of the parking structure: “[Eight Oxfords] shall execute and deliver to [Assi] a written promise in [Assi’s] favor, agreeing to (a) commence construction of the parking structure as required under the sublease as soon as possible, (b) seek permits for such construction by no later than July 24, 2006, and obtain permits for said construction within 60 days of July 14, 2006, (c) commence physical onsite construction of the parking structure within 90 days of July 14, 2006, and (d) diligently and continuously pursue the construction of said parking structure until completion, by no later than 24 months of July 14, 2006 . . . .” Assi was ordered to petition the City of Los Angeles for an extension of time to construct the parking structure under the existing conditional use permit, by no later than July 24, 2006.
The trial court ordered that failure of Eight Oxfords to “fulfill any of the Conditions set forth above, including the deadlines . . . shall entitle [Assi] to pursue another 3-day notice and [unlawful detainer] action.” The forfeiture order also provided that it was not to be construed as the waiver or modification of any provision of the sublease.
While the appeal in Assi I was pending, Eight Oxfords did not meet the deadlines imposed in the forfeiture order for construction of the parking structure. Assi served a new three-day notice on Eight Oxfords in October 2006. The notice demanded that Eight Oxfords obtain “all permits for the construction of the parking structure referenced in the sublease . . . and as referenced in the . . . ‘Forfeiture Order’. . . .” It also demanded that Eight Oxfords obtain a completion bond in an amount equal to one and one-half times the estimated cost of the parking structure, and commence lawful “breaking ground” for the purpose of building the parking structure as contemplated by the forfeiture order.
In October 2006, Assi filed a new complaint for unlawful detainer, based on Eight Oxfords’ failure to perform the conditions of the sublease and forfeiture order with respect to the parking structure construction. The complaint alleged that any alterations or improvements on the property exceeding $50,000, or $10,000 in a single year, required consent of the master lessor. It also alleged that the consent to the sublease signed by the master lessors entitled them to sufficient notice to permit the posting of notices of nonresponsibility, and to condition its consent to provision of a lien and completion bond in an amount equal to one and one-half times the cost of the improvements. Assi alleged that Eight Oxfords failed to post the completion bond. Based on the failure of Eight Oxfords to satisfy these conditions, Assi alleged that the sublease and forfeiture order had been breached and that it was entitled to possession of the premises, forfeiture of the sublease, and costs and fees.
A bench trial was held in which the direct testimony of the witnesses was provided by written declaration. The witnesses appeared for cross-examination and redirect. The trial court issued its tentative decision before counsel argued, to provide direction.
The trial court entered judgment in favor of Assi on January 12, 2007, deemed the sublease forfeited, awarded possession of the property to Assi, and ordered Eight Oxfords to vacate the property forthwith. Execution of the judgment was stayed for 60 days from entry of judgment. Eight Oxfords unsuccessfully sought relief from the forfeiture. This appeal followed.
We decided Assi I in early December 2007. In that decision, we affirmed the unlawful detainer judgment on the grounds related to rent and failure to build the parking structure, and reversed the ground related to common area fees for insufficiency of the evidence. Our decision was based in part on rejection of Eight Oxfords’ argument that its obligations under the lease had been modified by an amendment to the sublease. We acknowledged that the trial court had granted relief from the forfeiture aspect of the judgment, which by that time had led to a second unlawful detainer action and this separate appeal. (Assi I, p. 6, fn. 3.)
DISCUSSION
I
In a bench trial, the trial court is the trier of fact and the sole judge of the credibility of witnesses. “We are not in a position to weigh any conflicts or disputes in the evidence. Even if different inferences can reasonably be drawn from the evidence, we may not substitute our own inferences or deductions for those of the trial court. Our authority begins and ends with a determination of whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, which will support the judgment. [Citations.] Therefore, we must consider all of the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference from the evidence tending to establish the correctness of the trial court’s decision, and resolving conflicts in support of the trial court’s decision. [Citations.]” (Estate of Beard (1999) 71 Cal.App.4th 753, 778-779.)
Eight Oxfords argues that uncontradicted evidence supports its defense that it was impossible to comply with the deadlines set in the forfeiture order. It analogizes to authority holding that impossibility of performance of a court order is a defense to an action for contempt. Alternatively, Eight Oxfords invites us to view the forfeiture order “as expanding the underlying sublease agreement” to include the deadlines for construction of the parking structure, and then cites authority for the proposition that impossibility is a defense to a claim of breach of contract.
In this portion of Eight Oxfords’ brief, it cites no testimony or evidence. It merely claims: “Therefore, the only correct result would have been for the trial court to have concluded that impossibility operated to excuse Eight Oxfords from not having obtained the building permit. At that point, the only benchmark should have been whether or not Eight Oxfords was on tract [sic] to complete the project by July, 2008, and, again, the only evidence was that it was. There was no evidence to the contrary.”
In its statement of facts, Eight Oxfords cites the declaration of its president, Jerry Yang. Mr. Yang said that immediately after the forfeiture order was entered, Eight Oxfords retained ROK Development to assist in constructing the parking structure. He declared: “Eight Oxfords attempted to procure the appropriate permits to commence construction of the parking structure.” Mr. Yang said that an application for a building permit was presented to the City of Los Angeles on July 24, 2006, but that Eight Oxfords was told that no permit could be issued until soils testing was performed and the plans completed.
The declarations of Mr. Yang, and of Lloyd Mann, counsel for Eight Oxfords, detailed a lengthy exchange of communications with counsel for Assi in efforts to get permission from the master landlords to perform the soils testing and have debris on the site removed. The soils testing was not performed until November 2, 2006, nearly two months after expiration of the deadline to obtain the permits, and nearly one month past the deadline to break ground on the construction. Although the soils testing was completed on November 2, 2006, as of December 28, 2006 when Yang executed his declaration, no soils report had been obtained by Eight Oxfords. Mr. Yang said, “I have been advised that the report should be completed any day.” Curtis Nagata of the firm which conducted the soils test declared that “[i]t usually takes from 30 to 60 days after the soils samples have been submitted for analysis for a report to be generated.”
In its opening brief, Eight Oxfords asserted that both its expert and the contractor’s representative (unidentified) testified “that Eight Oxfords’ conduct in retaining a contractor, and conducting a soils test so that it could determine the type of structure that could be built on the property, and then be eligible to apply for a building permit, was completely consistent with the concept of completing the construction of the parking structure by July, 2008.”
In support of this assertion, Eight Oxfords cites pages 3 and 4 of a declaration by Donovan Rhee, a vice-president of ROK Development Company, which was retained to construct the parking structure. Mr. Rhee declared that when his firm was retained in July 2006, “it was immediately apparent that it would be impossible to obtain a building permit within 60 days and commence construction within 90 days.” He said that he prepared correspondence to Assi and its counsel on August 24, 2006 to inform them that the geotechnical firm retained to conduct the soils test and geological engineering required the written consent of the master landlord to conduct the tests. He advised that the testing would take a minimum of one full day. Mr. Rhee declared that once permits were issued, the structure could be completed by July 2008 in compliance with the forfeiture order’s ultimate deadline.
Eight Oxfords did not cite to the record for the declaration of its expert witness, Michael Stuart Poles, which served as his direct testimony. After noting that omission, and calling it to the attention of counsel, we were told that the declaration had been filed under the wrong trial court case number, and therefore was not in the clerk’s transcript. Since the trial court reviewed and considered the Poles declaration, we agreed to the parties’ stipulation to augment the record with that document.
Eight Oxfords presented evidence that it had difficulty obtaining permission from the master landlords for the soils testing. It also presented evidence that the master landlords demanded liability insurance or a bond, under the terms of the master lease, to protect it during the soils testing.
The trial court issued its tentative ruling before counsel gave closing arguments. It pointed out that Eight Oxfords failed to respond to the deadline problems with appropriate crisis action. Instead, it “has not responded [to the deadlines set by Judge Minter] with a display of crisis ownership commensurate to the level of genuine emergency that this situation obviously and foreseeably created.”
Counsel for Eight Oxfords cited evidence of problems encountered in complying with the deadlines, but the trial court found, once again, that there was no evidence that Eight Oxfords acted in the appropriate crisis mode in reaction to these obstacles, such as a proposal for drilling at night or on a weekend. The trial court noted that during the hearings before Judge Minter on relief from the forfeiture, counsel for Eight Oxfords said that it would be tough to meet the deadlines because there are problems. The court observed: “Never did you say when Judge Minter was discussing these timelines, your honor, you are asking us to do the impossible. . . . You never said that.”
The trial court continued: “And then you never came back to him ever to say, well, we have now been assigned something that is nearly superhuman. We are making nearly superhuman efforts, and we want the court to adjust the situation in a reasonable way.” In response, counsel for Eight Oxfords suggested that Judge Minter had asked for briefing on only a narrow subject between the first and second hearings on the relief from forfeiture. The trial court responded that if counsel was arguing his ability to be heard was circumscribed, that would be a tough argument in light of the dozens and dozens of pages of transcript and weeks of briefing opportunity. Counsel for Eight Oxfords replied: “The point is that the judge issued an impossible order to comply with.” He argued that no attempts were made by Assi to prove the contrary and that no evidence contradicts the testimony of expert witness Poles.
Although the transcript of the hearings before Judge Minter were made trial exhibits, they were not included in the trial exhibits submitted to us on appeal.
The trial court was not impressed with Eight Oxfords’ expert witness Poles. “[F]rankly, I think your expert added nothing to your case. He couldn’t give me a straight and simple answer to how quickly the drilling could be done. It turns out that your clients know a great deal more about drilling soil for testing on this property than your expert did.” Counsel for Eight Oxfords argued that the point was when could the testing have been done; the court focused on whether Eight Oxfords had made this a priority, and in actuality, its “treatment of this was leisurely.”
Counsel for Eight Oxfords suggested that the court was saying that his client should have violated the sublease and started drilling without permission. The court disagreed: “No. . . . The reasonable conclusion of the record of performance here is that I see no level of urgency, no level of crisis commitment to solve a problem that has lingered for three years. Judge makes a ruling on that basis and says equitably you asked for relief, well, all right, but you got to get this fixed and quick.” The court observed that Eight Oxfords never referred to the term impossibility in the hearings before Judge Minter.
In arguing the lease should not be forfeited on the second unlawful detainer action, counsel for Eight Oxfords asserted “we basically lost the judge who entered the order and couldn’t go back there and seek modification, . . .” He did not explain this comment, nor did he explain why Eight Oxfords could not have sought relief from the trial court even if the judge who issued the order was not available for some reason.
We have reviewed the record of the bench trial. We conclude that Judge Minter exercised his equitable powers to give Eight Oxfords a limited opportunity to retain the sublease by complying with stringent time deadlines. This approach was reasonable in light of the uncontradicted evidence that Eight Oxfords had done nothing up to that point to build the structure as required by the sublease. As we concluded in Assi I, the failure to construct the parking structure was a proper basis to forfeit the sublease. Implicit in the deadlines created by Judge Minter is a finding that Eight Oxfords had had ample time to conduct soils tests, obtain the necessary engineering reports, and obtain plans for construction of the structure before the hearings in June and July 2006. Eight Oxfords basically gambled that it would prevail in the first appeal and be relieved of the duty to construct the parking structure. We found in Assi I that there was no merit to Eight Oxfords’ arguments with respect to the parking structure. Eight Oxfords did nothing before July 2006 to start construction of the structure.
The trial court’s assessment of Eight Oxfords’ conspicuous lack of urgency is fully borne out by the record. While Eight Oxfords presented evidence that it had trouble obtaining the consent of the landlords, it presented no evidence of a sense of urgency. Counsel for Eight Oxfords acknowledged the forfeiture order deadlines in a letter dated August 16, 2006 to counsel for Assi concerning Assi’s demand that Eight Oxfords contact the master landlords directly for their consent to the testing. He asked counsel for Assi to advise him immediately what Assi had done to enable Eight Oxfords to conduct the tests. (Exhibit 110.)
On August 31, 2006, counsel for Assi wrote to counsel for Eight Oxfords asking whether Eight Oxfords had complied with the master landlords’ demand for a completion bond for construction of the parking structure. Assi’s attorney referenced a letter sent by counsel for the master landlords to counsel for Eight Oxfords on August 7, 2006. He asked that Eight Oxfords ensure that it will strictly comply with the master landlords’ demands. The letter continued: “I have not heard anything from Eight Oxfords for some time, other than an effort to obtain soils testing (which the Master Landlord appears to be agreeable to, but Eight Oxfords still has not indicated the scope of the testing). Given the upcoming timing requirements of the court, I must now insist that you please provide the above requested information forthwith, but in no event later than September 15, 2006, so that Assi will remain in compliance with its Master Lease obligations, and can timely turn around matters with the Master Landlord (i.e., the Master Landlord’s consent) for you.” (Exh. 20, p. 2.)
On September 6, 2006, counsel for Eight Oxfords wrote to the attorneys for Assi and the master landlords. (Exh. 21, also marked as Exh. 113.) He reported that the soils testing firm required the written authorization of Assi and the master landlords to conduct the testing. He also described the rough scope of testing and the necessity of closing the parking lot for one day for that purpose. The letter contains no statement of urgency, other than to ask that the recipients contact counsel for Eight Oxfords upon receipt of the correspondence if there were any questions. (Exh. 21.) Assi provided its written authorization the following day. (Exh. 22.) The master landlords gave conditional permission on September 11, 2006, subject to proof of liability insurance in an amount no less than $500,000 to cover the risks of soils testing. (Exh. 23.)
On September 12, 2006, counsel for Assi again asked counsel for Eight Oxfords for the status of the performance bond. (Exh. 24.) Counsel for Assi wrote again on September 14, 2006, saying that Assi was agreeable to the master landlords’ conditions. He again asked counsel for Eight Oxfords to contact him about the date for the testing, and warned: “Separately, I note that more than 60 days has passed since July 14, 2006. Eight Oxfords must have obtained all appropriate permits to proceed with the parking structure building. Please advise whether Eight Oxfords has done so.” (Exh. 25.) Counsel for Assi repeated the request to counsel for Eight Oxfords for the status of the performance bond on September 20, 2006. (Exh. 26.)
Ten days after counsel for the master landlords set out the conditions for soils testing, counsel for Eight Oxfords responded (on September 21, 1006). He questioned the demand for additional insurance. Some urgency was now indicated, eight days after the expiration of the first deadline in the forfeiture order: “As we are anxious to commence the soils testing immediately, a prompt response would be appreciated.” (Exh. 27, p. 2, also marked as Exh. 115.)
On September 21, counsel for Eight Oxfords also wrote to counsel for Assi to report that the building permit had not been obtained because Eight Oxfords did not yet know “precisely the type of structure it is going to build.” (Exh. 28, p. 1, also marked as Exh. 114.) He expressed confidence that upon completion of the soils testing, “everything will move much quicker” and that the structure would be completed “long before the two year deadline set by the Court.” (Ibid.) Although counsel for Eight Oxfords expressed confusion about the master landlords’ demands, he expressed no urgency. Rather, counsel stated that Eight Oxfords would not proceed with “any significant improvements until Assi has forwarded a copy of the master Landlord’s prior written consent allowing Eight Oxfords to go forward as you indicated in your correspondence.” (Id. at p. 2.)
Trial exhibit 8 (also marked as trial exh. 118) is an e-mail sent by counsel for Eight Oxfords to counsel for Assi on October 3, 2006, a date after the expiration of the 60-day deadline to obtain the permits and only nine days before expiration of the deadline to break ground. The entire text of the message is: “Could you please give me a call when you have a chance as I wanted to talk to you about the soils testing.” (Exh. 8.) This is emblematic of the lack of urgency demonstrated by Eight Oxfords until after the first two deadlines expired.
On October 11, 2006, counsel for Eight Oxfords e-mailed counsel for Assi to give various dates for the soils testing. (Exh. 121, p. 3.) Counsel for Assi responded the next day: “I have a concern: I had thought you were going to select a date before the 90-day period called for under the judge’s order by which breaking ground on the parking structure was required to commence (which coincidentally is today, by my calculations). It was not open indefinitely. We did not waive any of our rights under the order. To get your email now suggesting a much later date is just not workable. [¶] I’ll call you in the meantime, and maybe we can discuss further, but as you know, your client has passed the deadlines both (1) to obtain all necessary permits; and now (2) by which to break ground. [¶] Accordingly, I regret to advise that we will be pursuing a 3-day notice tomorrow.” (Ibid.)
Counsel for Eight Oxfords responded the same afternoon, October 12, 2006, expressing surprise. He said that Eight Oxfords had been acting diligently to complete the parking lot. He recounted the problems in obtaining permission for the soils testing, and said that at no time did counsel for Assi suggest that his client expected the tests to be conducted prior to October 12, 2006. He said he would be in the office the following day if counsel for Assi wished to discuss the matter. (Exh. 121, pp. 1-2.) Counsel for Assi responded that he would try to reach counsel for Eight Oxfords. He continued: “Personally, I have no problem with you conducting the soils testing. I was just curious if you still wanted to go forward, since your client is in breach of the July 14 order of the court [forfeiture order], and there will likely be no point to the soils testing. But if you want to go through the soils testing process, I won’t stop you.” (Id. at p. 1.)
There was no evidence that Eight Oxfords offered to pay its soils testing company a premium for completing the testing and report more quickly. The geotechnical engineers who conducted the test, URS Corporation, did not have a final proposal to conduct the soils tests until October 6, 2006, a date well after the September 12, 2006, 60-day deadline for obtaining the permits, and only a week short of the October 12, 2006, 90-day deadline for commencement of construction.
Eight Oxfords relies heavily upon the testimony of its expert witness, even though it did not cite his declaration which served as direct testimony in its brief on appeal. We agree with the trial court that Poles added little to the case. Poles never saw the site for the project, and never addressed the particular needs for the construction of a parking structure on that site in his declaration or testimony. His testimony about the City of Los Angeles planning process is very general, based on his lengthy experience in the construction business.
The record established that Judge Minter gave Eight Oxfords considerable relief by allowing it an opportunity to get the parking structure constructed promptly. In light of Eight Oxfords’ record of having made no effort whatsoever to satisfy this term of the sublease, the deadlines imposed by Judge Minter were equitable. The obstacles encountered by Eight Oxfords in complying with those deadlines were foreseeable and not unusual. While Assi seems not to have cooperated at times, the need for the landlords’ consent, the landlords’ demand that the soils testing process be insured or bonded, and the delay between the testing and the receipt of the soils report are all foreseeable and do not provide an excuse.
In his declaration which served as his direct testimony, counsel for Eight Oxfords, Lloyd Mann, stated that Judge Minter was a retired judge who was presiding over Department 41 due to the absence, because of illness, of the regularly assigned judge. Mr. Mann declared: “Initially, Judge Mentor [sic] advised the clerk that he would hear our motion [to modify his order] and that he might even agree to preside over the unlawful detainer trial, which is something that [counsel for Assi] and I had discussed doing. Later, Judge Mentor [sic] advised the clerk, according to what the clerk told my office, that he would not be able to hear a motion or the trial by virtue of the fact that the defendant had filed an appeal in connection with the unlawful detainer judgment.” Mr. Mann does not discuss any other efforts he undertook to determine whether the forfeiture order deadlines could be modified.
Section 1176, subdivision (a) provides in part: “An appeal taken by the defendant [in an unlawful detainer proceeding] shall not automatically stay proceedings upon the judgment. Petition for stay of the judgment pending appeal shall first be directed to the judge before whom it was rendered. . . .” (See Selma Auto Mall II v. Appellate Department (1996) 44 Cal.App.4th 1672, 1681 [in unlawful detainer proceeding, section 1176 rather than general stay provision in section 917.4 governs].) If the stay is denied by the trial court, the defendant “may forthwith file a petition for an extraordinary writ with the appropriate appeals court.” (§ 1176, subd. (a).) At oral argument, counsel for Eight Oxfords conceded there was no stay here. We conclude that the trial court retained authority to modify the forfeiture order. We are not told whether Eight Oxfords applied for a stay under section 1176, but was denied. Had a stay been requested and denied, Eight Oxfords could have filed a petition for extraordinary writ with this court to seek modification of the forfeiture order. No such petition was filed.
At trial, Eight Oxfords presented evidence that the conditional use permit obtained by Assi for the property had expired, and that a permit had to be in place before building permits could be issued. There was evidence that Assi was attempting to either renew the permit or obtain a new one through a change in zoning or a variance, but there was no valid permit at the time of trial. The trial court found that the expiration of Assi’s conditional use permit was not a factor in Eight Oxfords’ failure to comply with the deadlines. “So I believe that the zoning change . . . was a fortuity that is not an actual cause of the delay. It is something that the defense didn’t know about but discovered and tried to make good advantage of, but, in reality, it doesn’t matter. Because the barrier that it poses is hypothetical only. Certainly, it would be, I think, false to what has happened in this case to suggest that Assi Super has waived its rights. Rather, this has been working at rather considerable expense to enforce its rights.”
We conclude that the evidence supports the trial court’s treatment of the conditional use permit problem. While Eight Oxfords presented evidence that a conditional use permit is required to obtain a building permit, the failure of Eight Oxfords to obtain soils tests, engineering studies, and completed plans were the direct cause of its inability to obtain a permit within the time frame set out by the forfeiture order.
In summary, while there was evidence that various obstacles made compliance with the forfeiture order deadlines difficult or impossible, there was no evidence that Eight Oxfords sought modification of the deadlines. Instead, the evidence shows that it did not respond with the urgency necessary to satisfy the terms of the forfeiture order. It agreed to the deadlines in the forfeiture order, but did not meet them. The unlawful detainer judgment is supported by substantial evidence.
II
Eight Oxfords also argues that Assi waived its right to insist on compliance with the deadlines in the forfeiture order because it continued to accept rent after the first two deadlines expired and it was in breach. Assi cites Section 27.0 of the sublease, which provides in part: “Acceptance of rent by Landlord [Assi] shall not be deemed a waiver of any default or breach of this Sublease by Tenant [Eight Oxfords].” This provision satisfied the requirement in section 1161.1 that a tenant be given notice that acceptance of partial rent payments will not be treated by the landlord as a waiver of any rights. (See Woodman Partners v. Sofa U Love (2001) 94 Cal.App.4th 766, 771.) Assi points out that the forfeiture order expressly provides it was not to be construed as the waiver or modification of any provision of the sublease.
Anticipating Assi’s argument, Eight Oxfords argues: “Assi was attempting to evict based upon an alleged breach of Judge Minter’s order, not the sublease, and there was no similar condition set forth in the Judge Minter order.” We disagree with Eight Oxfords’ characterization of the situation. The sublease required Eight Oxfords to construct the parking structure. Judge Minter’s order did not supplant that requirement, and expressly states that no provision of the sublease was waived or modified. Instead, it only allowed Eight Oxfords additional time to comply. The unlawful detainer judgment we now review is based on breach of a condition of the sublease.
Alternatively, Eight Oxfords argues that it performed the material provisions of Judge Minter’s order and thus was not in violation of its terms. It is difficult to credit this argument in light of the evidence that Eight Oxfords had failed to comply with the deadlines to construct the parking structure. Clearly, the construction of the parking structure was a material component of Judge Minter’s forfeiture order, and of the sublease. Compliance with the rental and operating expense provisions of the order did not relieve Eight Oxfords from its obligation to construct the parking structure under the deadlines imposed by Judge Minter. The obligation to build the parking structure cannot be characterized as immaterial. We find no waiver of its rights by Assi.
III
Eight Oxfords argues the trial court abused its discretion by denying its motion to set aside the new forfeiture before it was filed and heard. After the trial court ruled that it would adopt its tentative ruling, counsel for Eight Oxfords said, “The other request was regarding the setting aside of the forfeiture.” The court said it understood the request, but it seemed that Assi had proved its case, the conditions had not been met to set aside the forfeiture, and “so I am respectfully declining to follow that argument.” Counsel said that his request was that the judge set aside the forfeiture on its own motion, “I assume that the declining to do so is without prejudice to our bringing a motion pursuant to California Code of Civil Procedure to set aside the forfeiture.” The trial court responded: “Well, I am afraid it is with prejudice. It seems to me that today’s proceedings have got to have some meaning, and if they are without prejudice, then really there is no consequence to what happened today.”
We find any error in the trial court’s comments harmless in light of the full hearing given Eight Oxfords’ subsequent written motion for relief from the forfeiture, which we next address.
IV
Despite the trial court’s comments discouraging a petition for relief from forfeiture, Eight Oxfords filed a written petition under section 1179. It asserted that it was ready, willing, and able to complete the construction of the parking structure by July 31, 2008 as required by the forfeiture order. It agreed to forfeit its security deposit of $200,000 if the structure was not completed by that date. Eight Oxfords complained that despite the stay of the unlawful detainer judgment, Assi had advised the subtenants that they might be evicted. It argued that it would suffer extreme hardship because it had over 30 subtenants and that many subtenants had business investment visas that would be at risk if they were evicted.
Eight Oxfords contended that forfeiture of the lease would mean financial disaster for Hyo Kil Yang and Jerry Yang, who personally guaranteed the sublease and who had invested approximately $1,800,000 in the premises. Eight Oxfords explained that it never would have paid the outstanding rent, operating expenses and interest required by the forfeiture order ($666,000) unless it intended to perform the terms of the forfeiture order related to construction of the parking structure. Eight Oxfords argued that it had acted in good faith by performing the portions of the forfeiture order possible to perform. It recounted the obstacles encountered in obtaining the soils tests and complying with the deadlines for obtaining permits and breaking ground.
Eight Oxfords contended that because of the appeal pending in Assi I, the trial court was without authority to modify the forfeiture order because the appeal acted as a stay in the trial court. As we have discussed, there was no stay here under section 1176, and therefore, the trial court retained authority to modify the forfeiture order.
The petition for relief from the second forfeiture judgment was supported by points and authorities and voluminous documents. Many of these consisted of declarations submitted as direct testimony regarding the impossibility of complying with the forfeiture order deadlines. Eight Oxfords argued that balancing of the equities, as required by section 1179, made it clear that relief from the forfeiture was appropriate.
Assi opposed the petition for relief from forfeiture and Eight Oxfords filed a reply. At the hearing, the trial court initially treated the petition as a motion for reconsideration. After the trial court indicated its ruling denying the petition because it was an improper motion for reconsideration, counsel for Eight Oxfords argued that the trial court had employed the wrong standard, and that section 1179 governs petitions for relief from forfeiture.
The trial court took a recess and read a case cited by counsel for Eight Oxfords, Hignell v. Gebala (1949) 90 Cal.App.2d 61. The court then went on to give an alternative ruling on the petition, under the standard set out in section 1179. The court observed that it was required to “balance the equities, taking into consideration the circumstances of the case, the hardship on both sides, the willful character of the breach and exercise of the court’s discretion.” The court observed that the “overwhelming feature of this case is not that it is an original unlawful detainer ruling but rather a long running dispute in which Judge Minter, after fully adversarial and evidentiary process, determined that Eight Oxfords was the wrong-doer.”
The trial court concluded that Judge Minter formulated a plan to give Eight Oxfords a second chance, but that he “plainly was worried about foot-dragging by a wrong-doer who had failed to do what it was obligated to do. So he kept Eight Oxfords on a short leash.” The trial court found: “And my finding is, in essence, that Eight Oxfords did not take him seriously, but seemed, rather, to believe that section 1179 was always an opportunity to go back and say, well, but this will be very bad for us if we lose our lease. I have no doubt that Eight Oxfords now keenly feels dismay and anguish at its legal position, but the balance of the equities clearly is on the side of Assi Super, and for that reason, I am standing by my tentative in the alternative to overrule the petition.”
Section 1179 provides in pertinent part: “The Court may relieve a tenant against a forfeiture of a lease . . . and restore him . . . to his . . . former estate or tenancy, in case of hardship, as provided in Section 1174. . . .” “The manifest purpose of section 1179 of the Code of Civil Procedure is to provide for relief where a hardship would be created by reason of forfeiture. The mere fact that a hardship exists will not, automatically, be a basis upon which to set aside the forfeiture since hardship will exist in almost all cases where relief is not granted. (Olympic Auditorium, Inc. v. Superior Court (1927) 81 Cal.App. 283, 285-286.) Rather, the test in applying section 1179 relative to forfeitures was set forth in Hignell v. Gebala[, supra, ] 90 Cal.App.2d 61, 70-71, as follows: ‘Under section 1179, the court in balancing the equities should take into consideration the circumstances of the case, the hardship, if any, to the lessee from the forfeiture, the hardship, if any, to the lessor from relieving the lessee from the forfeiture, the wilful or other character of the breach, and then use its best discretion in determining whether relief will be granted. Its action will not be upset unless there is a clear showing of abuse of discretion.’” (Thrifty Oil Co. v. Batarse (1985) 174 Cal.App.3d 770, 777, italics added.)
We find that the trial court properly weighed the relevant factors under section 1179. It did not abuse its discretion in denying the petition. While the harm Eight Oxfords would suffer on forfeiture was established, the trial court properly found that Eight Oxfords had continued to drag its feet on the construction of the parking structure and failed to comply with the first two deadlines set out in the forfeiture order. We have concluded that the construction of the parking structure was a material part of the sublease. Eight Oxfords consistently failed to take the steps necessary to comply with that requirement.
DISPOSITION
The judgment is affirmed.
We concur: WILLHITE, J., SUZUKAWA, J.