Opinion
G053227
02-17-2017
AVANT GARDE PROPERTIES LLC, Plaintiff and Respondent, v. UBIQUITY BROADCASTING CORPORATION et al., Defendants and Appellants.
Law Offices of Randall S. Waier and Randall S. Waier for Defendants and Appellants. Martin P. Eramo for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2015-00808595) OPINION Appeal from an order of the Superior Court of Orange County, Robert J. Moss, Judge. Affirmed. Law Offices of Randall S. Waier and Randall S. Waier for Defendants and Appellants. Martin P. Eramo for Plaintiff and Respondent.
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INTRODUCTION
Ubiquity Broadcasting Corporation and Ubiquity, Inc. (together, Ubiquity), were the lessees, and Avant Garde Properties LLC (Avant Garde) was the lessor, under a five-year commercial lease. Avant Garde obtained a default judgment against Ubiquity in an unlawful detainer action, and the lease was declared forfeited. Ubiquity brought a petition (the Petition) under Code of Civil Procedure section 1179 (section 1179) for relief from judgment declaring the lease forfeited. Ubiquity appeals from the trial court's order denying the Petition.
We affirm. Under the terms of a levy forbearance agreement, Avant Garde agreed not to execute a writ of possession and to reinstate the lease if Ubiquity obtained a $1 million letter of credit to secure rental payments. Ubiquity agreed to waive "any right to move to set aside the Judgment or otherwise attack the validity thereof." The Petition, which sought to undo the lease forfeiture, was an attempt to set aside or attack the validity of the unlawful detainer judgment.
FACTS
In September 2010, Avant Garde (as lessor) and Ubiquity Broadcasting Corporation (as lessee) entered into a commercial lease of a portion of a multi-tenant office building in Irvine. The lease has a term of five years. An amendment to the lease, made in July 2014, increased the square footage of the area being leased, added Ubiquity, Inc., as an additional lessee, and extended the lease term for five years commencing on July 21, 2014.
In August 2015, Avant Garde served Ubiquity with a notice to pay rent or quit based on failure to pay rent due on August 1, 2015. In September 2015, Avant Garde served Ubiquity with a notice to pay rent or quit based on failure to pay rent due on September 1, 2015.
After Ubiquity failed to pay rent during the notice period, Avant Garde filed an unlawful detainer action. The unlawful detainer complaint was served on Ubiquity, which did not pay rent or respond to the complaint within the five-day response period. Avant Garde sought and obtained a default judgment for possession, cancellation of rental agreement, and lease forfeiture. The judgment was entered on September 23, 2015. Avant Garde also obtained a writ of possession.
After issuance of the writ of possession, Ubiquity's chief executive officer, Chris Carmichael, contacted Avant Garde and requested that it set aside the judgment and reinstate the lease. Avant Garde told Carmichael it would agree to reinstate the lease on condition that, by October 31, 2015, Ubiquity provided a letter of credit as security for performance under the lease. Carmichael agreed.
On October 5, 2015, Ubiquity and Avant Garde entered into an agreement (the Levy Forbearance Agreement) by which Avant Garde agreed to forbear from having the sheriff levy execution of the writ of possession if Ubiquity obtained a $1 million letter of credit on or before October 31, 2015. Paragraph 6 of the Levy Forbearance Agreement states: "Tenants waive any and all right to contest entry of Judgment and waive any defenses that they may have had with respect to the action for unlawful detainer, including, but not limited to, any defects in notice pursuant to Code of Civil Procedure Section 1161(a) and 1162 and defects in service of the summons and complaint for unlawful detainer. Tenants further waive any right to move to set aside the Judgment or otherwise attack the validity thereof in the above-entitled action, and further waive the right to appeal from any such Judgment."
Paragraph 5 of the Levy Forbearance Agreement states: "Should Tenants fail to obtain a letter of credit, or alternate device satisfactory to Landlord by October 31, 2015, and absent any further written extension of time, signed by all parties, this Levy Forbearance agreement shall terminate and Landlord may instruct the Sheriff to execute the Writ of Possession and evict the Tenants."
In late October, Ubiquity claimed it had not completed arrangement for the letter of credit. On October 31, 2015, Avant Garde agreed to extend the deadline for obtaining the letter of credit to November 30, 2015. On November 24, 2015, Avant Garde agreed to extend the deadline to December 31, 2015, to give Ubiquity more time to obtain the letter of credit.
On December 4, 2015, Ubiquity filed the Petition, which sought "relief from judgment declaring lease forfeited" (capitalization & boldface omitted). The Petition, which did not mention paragraph 6 of the Levy Forbearance Agreement, alleged that Ubiquity would suffer irreparable harm unless relief from forfeiture were granted. Ubiquity alleged that it had not timely paid rent due on September 1, 2015, because Carmichael was out of the office on business and that the default judgment had been obtained because Ubiquity's counsel had allowed the unlawful detainer complaint to "slip[] through the cracks." Ubiquity sought an order "relieving its declared and adjudicated forfeiture of the commercial lease with Avant Garde, and returning it to it[s] former leasehold estate."
Avant Garde filed a verified response to the Petition and filed an opposition in which Avant Garde raised paragraph 6 of the Levy Forbearance Agreement. Avant Garde argued that Ubiquity "unconditionally waived the right to set aside the judgment in this action." Avant Garde asserted that it had suffered "substantial financial hardship as a result of [Ubiquity's] actions in failing to pay rent and its general financial condition."
The Petition, originally set for hearing for December 30, 2015, was continued on the trial court's own motion to January 27, 2016. In early January 2016, Ubiquity obtained an order for temporary stay of enforcement of the writ of possession. On January 27, the trial court posted a tentative ruling denying the Petition on the ground that Ubiquity had waived its right to move to set aside or otherwise challenge the judgment. Also on January 27, counsel for Ubiquity contacted the trial court by telephone to ask for a continuance of the hearing. Counsel claimed he was unable to attend due to a medical condition. The trial court continued the matter to March 18, 2016. Counsel for Avant Garde later brought an ex parte application to advance the hearing date, which was granted, and the hearing was set for February 19, 2016.
On February 18, 2016, Ubiquity filed a "Response Brief to the Court's Tentative Ruling" which urged the trial court "to reconsider its tentative denial, predicated on the express waiver language." Avant Garde objected to Ubiquity's response brief.
The trial court denied the Petition. The trial court ruled: "[Avant Garde]'s evidence establishes that [Ubiquity] entered into a written agreement after entry of judgment in this action waiving: '. . . any right to move to set aside the judgment or otherwise attack the validity thereof in the above[-]entitled action, and further waive the right to appeal from any such Judgment.' There is no question but the present proceeding is an effort by [Ubiquity] to set aside the judgment for forfeiture of the Lease in this action, and constitutes an attack on the judgment."
Ubiquity appealed from the order denying the Petition. Ubiquity sought and obtained from the trial court an order staying enforcement of the writ of possession pending appeal. The order was conditioned on posting a bond in the face amount of $150,000. Ubiquity posted the bond in March 2016.
DISCUSSION
I. Introduction and Standard of Review
The appeal turns on the issue whether Ubiquity waived its right to bring the Petition by entering into the Levy Forbearance Agreement. Paragraph 6 of the Levy Forbearance Agreement states: "Tenants waive any and all right to contest entry of Judgment and waive any defenses that they may have had with respect to the action for unlawful detainer, including, but not limited to, any defects in notice pursuant to Code of Civil Procedure Section 1161(a) and 1162 and defects in service of the summons and complaint for unlawful detainer. Tenants further waive any right to move to set aside the Judgment or otherwise attack the validity thereof in the above-entitled action, and further waive the right to appeal from any such Judgment."
In In re Art and Architecture Books of the 21st Century (Bankr. C.D.Cal. 2014) 518 B.R. 43, 45-46, the court concluded that a waiver of the right to seek relief from forfeiture of a commercial lease does not violate California law or public policy. We agree. Civil Code section 3513 provides: "Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement." This means a party may waive a statutory right if its "'public benefit . . . is merely incidental to [its] primary purpose,'" while a waiver is unenforceable if it would "'seriously compromise any public purpose that [the statute was] intended to serve.'" (DeBerard Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668-669.) Relief from forfeiture of a commercial lease serves primarily a private purpose, and any public purpose would be incidental.
"The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.] When a contract is reduced to writing, the parties' intention is determined from the writing alone, if possible. [Citation.]" (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 (Founding Members).) "The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." (Civ. Code, § 1641.)
"Extrinsic evidence is admissible to prove a meaning to which the contract is reasonably susceptible. [Citations.] If the trial court decides, after receiving the extrinsic evidence, the language of the contract is reasonably susceptible to the interpretation urged, the evidence is admitted to aid in interpreting the contract." (Founding Members, supra, 109 Cal.App.4th at p. 955.)
In this case, the parties did not present admissible extrinsic evidence to aid in interpreting the Levy Forbearance Agreement. In a declaration submitted with Ubiquity's reply papers, Carmichael stated: "I did not intend to waive any of Ubiquity's rights to petition this Court at a later date for relief from the forfeiture declared by the default judgment, or Ubiquity's equitable rights to redeem occupancy after the lapse of the forbearance agreements, if Ubiquity could not obtain the $1 Million line of credit—I only intended not to appeal the judgment and otherwise attack its validity." Such expressions of Carmichael's undisclosed intent are irrelevant to interpreting the Levy Forbearance Agreement. "California recognizes the objective theory of contracts [citation], under which '[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation' [citation]. The parties' undisclosed intent or understanding is irrelevant to contract interpretation. [Citations.]" (Founding Members, supra, 109 Cal.App.4th at p. 956.)
Because no admissible extrinsic evidence was introduced, we independently construe the Levy Forbearance Agreement based on its words alone. (Founding Members, supra, 109 Cal.App.4th at p. 955.)
II. Ubiquity Waived Its Right to Seek
Relief from Judgment.
A. The Words of Paragraph 6 of the Levy Forbearance Agreement Establish Waiver.
Paragraph 6 of the Levy Forbearance Agreement states that Ubiquity waives its right to "move to set aside the Judgment or otherwise attack the validity thereof." The unlawful detainer judgment cancelled the lease and declared it forfeited. The Petition sought to undo the judgment by relieving Ubiquity from that forfeiture, reinstating the lease, and restoring Ubiquity to the leasehold it had before the unlawful detainer action. The Petition sought to annul, vacate, or simply erase the relief obtained by Avant Garde in the unlawful detainer judgment. Although paragraph 6 of the Levy Forbearance Agreement did not mention section 1179, specific citation to the statute was unnecessary because the contractual language was broad enough to include a waiver of the right to seek relief from the judgment. (See Bloom v. Bender (1957) 48 Cal.2d 793, 804.) The Petition was, therefore, an attempt to set aside the judgment and was an attack on its validity.
Ubiquity argues the Petition did not technically seek to "set aside" the judgment but only sought equitable relief from a portion of it. The judgment, Ubiquity maintains, would remain in place. Ubiquity also argues the Petition did not constitute either a direct attack or a collateral attack on the judgment as those terms are defined under California law. Ubiquity's arguments place too much emphasis on the technical meaning of the terms "set aside" and "attack." When interpreting a contract, "[t]he words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." (Civ. Code, § 1644.) "We interpret the intent and scope of the agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made." (Lloyd's Underwriters v. Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197-1198.)
Witkin writes: "In a direct attack, the judgment is reviewed for error, including jurisdictional defects. In a collateral attack, the judgment comes up only incidentally, and may be effectively challenged only if it is so completely invalid as to require no ordinary review to annul it." (8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 6, p. 590.) --------
Nothing in the Levy Forbearance Agreement suggests the parties intended to use the terms "set aside" and "attack" in a technical sense or give them a special meaning. As we shall explain, the Levy Forbearance Agreement, when viewed as a whole, reflects the parties' intent that Avant Garde would retain its right to execute the writ of possession unless and until Ubiquity obtained the letter of credit to secure its lease payment. The Petition, which sought relief under section 1179, in effect sought to nullify the portion of the judgment cancelling the lease and declaring it forfeited. The Petition was, therefore, an attempt to set aside the judgment, as the term "set aside" would be understood in its ordinary popular sense. The word "attack" is defined as "to set upon or work against forcefully" (Webster's 3d New Internat. Dict. (2002) p. 140, col. 2) and most commonly is used to mean "challenge." By seeking relief from the forfeiture declared by the judgment, the Petition worked against or challenged the validity of the judgment. B. The Levy Forbearance Agreement as a Whole Establishes Waiver.
To ascertain the intent of the parties, we look not only at paragraph 6 of the Levy Forbearance Agreement, but at the contract as a whole, "so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." (Civ. Code, § 1641.) "To the extent practicable, the meaning of a contract must be derived from reading the whole of the contract, with individual provisions interpreted together, in order to give effect to all provisions and to avoid rendering some meaningless." (Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027.) We look to the circumstances under which the contract was made. (Lloyd's Underwriters v. Craig & Rush, Inc., supra, 26 Cal.App.4th at pp. 1197-1198.)
The Levy Forbearance Agreement contains recitals explaining the circumstances under which it was made. Recitals A through D recite the making of the lease, the unlawful detainer action, the unlawful detainer judgment, and the issuance of the writ of possession. Recital E states: "On or about September 28, 2015, [Ubiquity] paid a portion of the sums due [Avant Garde] and [Ubiquity] desire[s] to pay all sums due [Avant Garde] and to have said Lease reinstated. [Avant Garde] will agree to reinstate the lease upon compliance with the conditions set forth below." (Italics added.)
Those conditions were that Ubiquity obtain an unconditional, irrevocable standby letter of credit in the amount of $1 million in favor of Avant Garde by October 31, 2015, that Ubiquity continue making timely rent payments, and that Ubiquity waive the rights set forth in paragraph 6 of the Levy Forbearance Agreement, including "any right to move to set aside the Judgment or otherwise attack the validity thereof." If Ubiquity failed to obtain the letter of credit by the deadline, then, pursuant to paragraph 5, "this Levy Forbearance agreement shall terminate and [Avant Garde] may instruct the Sheriff to execute the Writ of Possession and evict [Ubiquity]."
Reading the Levy Forbearance Agreement as a whole and under the circumstances in which it was made supports the conclusion that the Petition was an impermissible attempt to set aside or attack the judgment. When the Levy Forbearance Agreement was made, Avant Garde was ready to execute the writ of possession and could have done so forthwith. Avant Garde agreed not to execute the writ of possession and to reinstate the lease if, and only if, Ubiquity obtained the $1 million letter of credit. If Ubiquity failed to obtain the letter of credit by October 31, 2015, then Avant Garde would have the right to execute the writ of possession. Avant Garde agreed to extend that deadline to December 31.
Avant Garde agreed to forbear execution of the writ of possession in order to give Ubiquity the opportunity to obtain a letter of credit, not to give Ubiquity time to obtain relief from the forfeiture resulting from the unlawful detainer judgment. To preserve Avant Garde's right to execute the writ of possession in the event Ubiquity did not meet the conditions of the Levy Forbearance Agreement, Ubiquity agreed not to challenge the judgment of forfeiture. To read paragraph 6 of the Levy Forbearance Agreement as giving Ubiquity the right to seek relief from lease forfeiture would be contrary the purpose of that agreement and would deprive Avant Garde of its bargained-for consideration. C. Avant Garde Proved an Unambiguous Waiver by Clear and Convincing Evidence.
As Ubiquity argues, a waiver must be clear, unambiguous, and explicit in expressing the parties' intent. (Lund v. Bally's Aerobic Plus, Inc. (2000) 78 Cal.App.4th 733, 738.) Paragraph 6 of the Levy Forbearance Agreement is clear and unambiguous, and explicitly expresses the parties' intent that Ubiquity waived its right to seek relief from the default judgment in exchange for Avant Garde's agreement that Ubiquity would have the right to reinstate the lease upon obtaining the required letter of credit.
Ubiquity also argues that Avant Garde did not prove waiver by clear and convincing evidence. It is correct that "[t]he burden . . . is on the party claiming a waiver of a right to prove it by clear and convincing evidence that does not leave the matter to speculation." (City of Ukiah v. Fones (1966) 64 Cal.2d 104, 107-108.) Avant Garde met that burden. The existence of the Levy Forbearance Agreement is undisputed. The meaning of paragraph 6 is reviewed de novo. Ubiquity argues the declaration of Carmichael establishes that Ubiquity did not intend to waive the right to seek relief under section 1179. But as we have explained, Carmichael's declaration to that effect is inadmissible under the objective theory of contracts. D. The Levy Forbearance Agreement Is a Waiver, Not a Forfeiture.
Ubiquity argues paragraph 6 of the Levy Forbearance Agreement must be strictly construed to avoid forfeiture. Civil Code section 1442 states, "[a] condition involving a forfeiture must be strictly interpreted against the party for whose benefit it is created." Thus, "[a] forfeiture can be enforced only when there is 'such a breach shown as it was the clear and manifest intention of the parties to provide for.'" (Randol v. Scott (1895) 110 Cal. 590, 595.)
Paragraph 6 of the Levy Forbearance Agreement is not, however, a condition involving a forfeiture. It is a waiver between two sophisticated parties to a commercial lease. The lease forfeiture occurred earlier, when a default judgment was entered against Ubiquity for failing to respond to the unlawful detainer complaint.
A waiver generally means the intentional relinquishment of a known right. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31; City of Ukiah v. Fones, supra, 64 Cal.2d at p. 107; RSL Funding, LLC v. Alford (2015) 239 Cal.App.4th 741, 747.) In contrast, a forfeiture is defined as "'[a] deprivation or destruction of a right in consequence of the nonperformance of some obligation or condition.'" (Chase v. Blue Cross of California (1996) 42 Cal.App.4th 1142, 1149; see United States v. Olano (1993) 507 U.S. 725, 733 [distinguishing waiver as the intentional relinquishment of a known right from forfeiture as the failure to make a timely assertion of a right].)
A waiver must be clear, unambiguous, and explicit in expressing the parties' intent, and the burden is on the party claiming a waiver of a right to prove it by clear and convincing evidence. (Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 31.) But the rule of strict construction is not universally applied to all waivers. Strict construction applies to waivers and releases of future potential liability for negligence (Lund v. Bally's Aerobic Plus, Inc., supra, 78 Cal.App.4th at p. 738), waivers of Indian tribal sovereign immunity (Big Valley Band of Pomo Indians v. Superior Court (2005) 133 Cal.App.4th 1185, 1194-1195), waivers of federal government sovereign immunity (Dept. of Treasury—I.R.S. v. F.L.R.A. (9th Cir. 2008) 521 F.3d 1148, 1153), waivers of the right to a jury trial (People v. Solis (1998) 66 Cal.App.4th 62, 65-66), waivers of certain (but not all) other constitutional rights (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 532), waivers of the attorney-client privilege (Maas v. Municipal Court (1985) 175 Cal.App.3d 601, 606-607), and waivers of Civil Code section 1941 (Buckner v. Azulai (1967) 251 Cal.App.2d Supp. 1013, 1014.) A waiver of Fourth Amendment rights, for example, is not strictly construed. (People v. Bravo (1987) 43 Cal.3d 600, 606-607; In re Curtis T. (1989) 214 Cal.App.3d 1391.)
Ubiquity cites no case to support the proposition that the waiver in this case, between two sophisticated parties to a commercial lease, must be strictly construed. It is enough that the waiver was clear, unambiguous, and explicit in expressing the parties' intent. In any event, if the Levy Forbearance Agreement was strictly construed, we would reach the same result. Because we affirm on the ground that Ubiquity waived any right it had to bring the Petition, we do not address its merits.
DISPOSITION
The order denying the Petition is affirmed. Respondent shall recover costs on appeal.
FYBEL, J. WE CONCUR: MOORE, ACTING P. J. IKOLA, J.