Opinion
A121104
09-15-2011
CITY AND COUNTY OF SAN FRANCISCO, Plaintiff and Appellant, v. CARL ERNST, JR. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(City & County of San Francisco Super. Ct. No. CUD-07-621476)
The City and County of San Francisco, by and through its Port Commission (City), filed an unlawful detainer action against its commercial tenants, Carl Ernst Jr. and the Pier 38 Maritime Recreation Center, Inc. (collectively, respondents). The trial court granted summary judgment against the City and entered judgment in respondents' favor on the grounds that the City's notice to pay rent or quit was defective in that it failed to comply with statutory requirements. The City argues that its notice to respondents was adequate as a matter of law under the terms of the governing lease. The City also challenges the trial court's award of attorney fees. We affirm.
I. UNLAWFUL DETAINER LAW
" 'An unlawful detainer action is not based upon contract . . . ; it is a statutory proceeding and is governed solely by the provisions of the statute creating it.' [Citations.]" (Kwok v. Bergen (1982) 130 Cal.App.3d 596, 599.) "Unlawful detainer is a summary proceeding to determine the right to possession of real property. Generally, in order to take advantage of this summary remedy, the landlord must demonstrate strict compliance with the statutory notice requirements contained in [Code of Civil Procedure] section 1161 et seq., including providing the tenant with three days' written notice to pay rent or quit the premises." (Culver Center Partners East #1, L.P. v. Baja Fresh Westlake Village, Inc. (2010) 185 Cal.App.4th 744, 749 (Culver Center).) "A valid three-day pay rent or quit notice is a prerequisite to an unlawful detainer action. [Citations.]" (Bevill v. Zoura (1994) 27 Cal.App.4th 694, 697.)
In a residential tenancy, any modification or waiver of these statutory notice requirements is void as contrary to public policy. (Civ. Code, § 1953, subd. (a)(3).) But, "[i]n commercial leases the landlord and commercial tenant may lawfully agree to notice procedures that differ from those provided in the statutory provisions governing unlawful detainer." (Culver Center, supra, 185 Cal.App.4th at p. 750; accord 250 L.L.C. v. PhotoPoint Corp. (2005) 131 Cal.App.4th 703, 718; Folberg v. Clara G. R. Kinney Co. (1980) 104 Cal.App.3d 136, 140 (Folberg); Hignell v. Gebala (1949) 90 Cal.App.2d 61, 67.)
II. FACTUAL AND PROCEDURAL BACKGROUND
In January 1996, respondents entered into a commercial lease with the City. On February 1, 2007, the City sent respondents a three-day notice which stated that respondents were behind in their rent by approximately $195,000 and demanded that respondents pay rent or quit possession of the premises (the Notice). The Notice also stated: "YOU ARE HEREBY REQUIRED within three (3) days after service on you of this notice to pay in full said rent and charges to the undersigned lessor (the 'Lessor') or to quit possession of the Premises and surrender possession thereof to the Lessor. [¶]. . . [¶] ALSO IN THE EVENT that you fail to pay in full the above stated amount of past due rent and charges within three (3) days after service upon you of this notice, the Lessor hereby elects to declare a forfeiture of your Lease and tenancy."
On March 27, 2007, the City filed an unlawful detainer action against respondents. Respondents moved for summary judgment, pointing out in their separate statement of undisputed facts that the Notice failed to state the name, telephone number, address, and usual hours of availability of the person to whom the rent must be paid, as required by Code of Civil Procedure section 1161, subdivision (2) (section 1161(2)). Respondents' separate statement of undisputed facts also noted that section 24.1 of the lease provides: "If either party hereto brings an action or proceeding . . . against the other party by reason of a default, or otherwise arising out of this Lease, the prevailing party . . . shall be entitled to recover from the other party its costs and expenses of suit, including but not limited to reasonable attorneys' fees . . . ."
Section 1161(2) provides, in relevant part: "A tenant of real property, for a term less than life, or the executor or administrator of his or her estate heretofore qualified and now acting or hereafter to be qualified and act, is guilty of unlawful detainer: [¶] . . . [¶] When he or she continues in possession, in person or by subtenant, without the permission of his or her landlord, or the successor in estate of his or her landlord, if applicable, after default in the payment of rent, pursuant to the lease or agreement under which the property is held, and three days' notice, in writing, requiring its payment, stating the amount which is due, the name, telephone number, and address of the person to whom the rent payment shall be made, and, if payment may be made personally, the usual days and hours that person will be available to receive the payment (provided that, if the address does not allow for personal delivery, then it shall be conclusively presumed that upon the mailing of any rent or notice to the owner by the tenant to the name and address provided, the notice or rent is deemed received by the owner on the date posted, if the tenant can show proof of mailing to the name and address provided by the owner), or the number of an account in a financial institution into which the rental payment may be made, and the name and street address of the institution (provided that the institution is located within five miles of the rental property), or if an electronic funds transfer procedure has been previously established, that payment may be made pursuant to that procedure, or possession of the property, shall have been served upon him or her and if there is a subtenant in actual occupation of the premises, also upon the subtenant." (Italics added.)
The City opposed summary judgment. It did not dispute respondents' facts, but, submitted its own separate statement of undisputed facts, which reads: "1. Pursuant to a written lease, [respondents] rent . . . commercial property . . . . [¶] 2. With respect to notices, the lease requires only that they be in writing and be delivered by a certain method, to certain specified addresses. It provides: 'Except as otherwise expressly provided in this Lease or by Law, any and all notices or communications required or permitted by this Lease or by Law to be served on, given to or delivered to either party by the other party shall be in writing and shall be given by one of the following methods: (a) delivering the notice in person, (b) sending the notice by United States Mail, first class, postage prepaid, or (c) sending the notice by overnight courier or mail, with postage prepaid, to the mailing address set forth in Section 1.12. . . .' [¶] 3. The 3-Day Notice served prior to the institution of this suit is in writing." (Italics added.)
This is a direct quote from section 30 of the lease. The entire lease was submitted to the trial court as an exhibit in support of City's opposition.
At oral argument on the motion, the trial court asked if any provisions of the lease, other than section 30, contained notice requirements. The City's counsel answered "No." The court responded: "Okay. So the only language about notice is here on paragraph 30. Okay. All right." At the conclusion of the hearing, the trial court stated: "I do believe that the only reasonable construction of the lease paragraph 30 and paragraph 33.1, which states that the lease shall be construed and interpreted in accordance with the laws of the State of California would require that the notice be given consistent with the statutory requirements for an unlawful detainer action and § 30 only confirms that it should be in writing, which of course is the statutory requirement." (Italics added.)
On September 26, 2007, the trial court granted respondents' motion for summary judgment. In its order, the trial court stated: "The facts are undisputed. The parties' January 13, 1996 Lease differs from [the] lease in [Folberg, supra,] 104 Cal.App.3d 136 . . . in that this Lease does not waive any notice provision provided by law. The applicable notice provision of the Lease does not supplant the notice required by law. The Notice to Pay Rent or Quit underlying [the City's] Complaint for Unlawful Detainer . . . fails to comply with the statutory requirements for the content of such notice under . . . section 1161(2) in that it fails to specify how and to whom the allegedly overdue rental payment is to be made. Accordingly, [the City] fails to state a cause of action for unlawful detainer on the defective notice."
Judgment was entered in respondents' favor and the court further ordered that "[respondents] may recover from [the City] their costs and disbursements, according to statute." Thereafter, the City filed a timely notice of appeal.
After the notice of appeal was filed, we received notice that Pier 38 Maritime Recreation Center, Inc. had filed a bankruptcy petition in federal court. We issued an order staying appellate proceedings during the pendency of the bankruptcy proceedings. On June 30, 2010, we vacated our stay order after the bankruptcy court lifted the bankruptcy stay with respect to this appeal. On August 5, 2010, we were informed that the bankruptcy trustee had sold Pier 38's claims against the City to Ernst, with the bankruptcy court's authorization. Only Ernst has filed a respondent's brief.
III. DISCUSSION
On appeal, the City has abandoned its argument that section 30 of the lease constituted a waiver of the notice requirements of section 1161(2). Instead, the City now contends the trial court erred by granting summary judgment because the three-day notice was adequate as a matter of law under the terms of section 23.1 of the lease. The City also argues that, if the trial court erred in granting respondents' motion for summary judgment, the trial court's award of attorney fees must also be reversed. We conclude that the City forfeited its current argument by not raising it before the trial court. A. Summary Judgment Standard of Review
"[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc., § 437c, subd. (c).) Ordinarily, on review of an order granting summary judgment, "we independently examine the record in order to determine whether triable issues of fact exist . . . ." (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) Here, however, the City asserts that it is not contending a triable issue of fact precludes summary judgment. The City instead contends that respondents are not "entitled to judgment as a matter of law" (Code Civ. Proc., § 437c, subd. (c)) because the Notice was adequate under the terms of the lease. Regardless, the standard of review is the same. "On appeal, we determine de novo whether there is a triable issue of material fact and whether the moving party is entitled to summary judgment as a matter of law. [Citations.]" (Republic Indemnity Co. v. Schofield(1996) 47 Cal.App.4th 220, 225.) B. Analysis
The City argues, on appeal, that "the trial court ignored the well-established principle that parties to a commercial [l]ease can alter the notice provisions provided in the unlawful detainer statutes." Specifically, the City contends that section 23.1 of the lease "trump[s] the [unlawful detainer] statutes," and that "the Three-Day Notice is adequate as a matter of law" under that section of the lease. Thus, the City essentially argues that the trial court erred in granting summary judgment, because it did not consider the effect of section 23.1 of the lease.
Section 23.1 of the lease provides that "[f]ailure by Tenant to pay when due any Rent" is an event of default. It further provides: "Notices given under this section shall demand that Tenant perform the provisions of this Lease or pay the Rent that is in arrears, as the case may be, within the applicable period of time, or quit the Premises."
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Having previously failed to assert that lease section 23.1 had anything to do with the notice issue on summary judgment, we are not particularly sympathetic to the City's position on appeal. Preliminarily, then, we must consider whether the City's argument is properly before us, given its decision to rely solely on section 30 of the lease in opposing summary judgment, as well as its concession before the trial court that no other section of the lease was relevant. The entire lease was submitted to the trial court in opposition to the motion for summary judgment, but the City did not mention section 23.1 in its separate statement of undisputed facts or in any of its other opposition papers.
Ernst argues that we cannot address the City's argument regarding section 23.1 of the lease because it was raised for the first time on appeal. "[I]n reviewing a summary judgment, ' ". . . the appellate court must consider only those facts before the trial court, disregarding any new allegations on appeal. [Citation.] Thus, possible theories that were not fully developed or factually presented to the trial court cannot create a 'triable issue' on appeal. [Citations.]" ' [Citation.]" (Havstad v. Fidelity National Title Ins. Co. (1997) 58 Cal.App.4th 654, 661.) However, the City is correct that we "have discretion to consider a new theory on appeal when it is purely a matter of applying the law to undisputed facts." (Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316; accord, Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 847.) The City urges us to exercise such discretion.
It is not self-evident, however, that the issue the City tenders on appeal is purely a matter of applying the law to undisputed facts. "Issues of contract interpretation are questions of law . . . ." (De Guere v. Universal City Studios, Inc. (1997) 56 Cal.App.4th 482, 501.) Our Supreme Court has explained: "The interpretation of a written instrument, even though it involves what might properly be called questions of fact [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. [Citations.] Extrinsic evidence is 'admissible to interpret the instrument, but not to give it a meaning to which it is not reasonably susceptible' [citations], and it is the instrument itself that must be given effect. [Citations.] It is . . . solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence." (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
The City asks us to conclude that section 23.1 of the lease precludes the trial court's grant of summary judgment because it unambiguously demonstrates that the Notice was adequate as a matter of law. It does not. Section 23.1 says nothing, one way or the other, regarding the requirements of the unlawful detainer statutes or whether the Notice must include the name, telephone number, address, and usual hours of the person to whom rent must be paid as otherwise required under section 1161(2). Section 23.1 of the lease merely provides: "Notices given under this section shall demand that Tenant perform the provisions of this Lease or pay the Rent that is in arrears, as the case may be, within the applicable period of time, or quit the Premises." Citing Folberg, supra, 104 Cal.App.3d at 140, the City asserts: "The Lease omits Section 1161(2)'s requirement of including in a three-day notice the address and telephone number where rent can be paid. Therefore, the Lease's provisions are ' different from' the provisions of Section 1161(2), and so the Lease controls."
Section 23.1 of the lease obviously contains no explicit waiver of the statutory notice requirements. Contrary to Ernst's suggestion, Folberg supra, 104 Cal.App.3d at pages 140-141, does not hold that an explicit waiver is required. And, more recent authority suggests that an implicit waiver is sufficient. (250 L.L.C. v. PhotoPoint Corp., supra, 131 Cal.App.4th at pp. 719-726.) But, contrary to the City's contention, the question remains whether the parties intended to waive the requirements of section 1161(2). (See id. at p. 726; see also Qualcomm, Inc. v. Certain Underwriters at Lloyd's, London (2008) 161 Cal.App.4th 184, 191 [the fundamental rule of contract interpretation is that " 'a court must give effect to the mutual intention of the parties when they formed the contract' "].)
Section 23.1 of the lease may well be reasonably susceptible to the waiver interpretation that the City urges, but it is also reasonably susceptible to a contrary interpretation. And we cannot resolve the ambiguity on the record before us. " 'When the relevant provisions of [a contract] are ambiguous, extrinsic evidence may be admitted to determine the proper interpretation. [Citations.] If there is no relevant extrinsic evidence or the extrinsic evidence does not resolve the ambiguity, the court must interpret " ' " 'the ambiguous provisions in the sense the [promisor] believed the [promisee] understood them at the time of formation. [Citation.] If application of this rule does not eliminate the ambiguity, ambiguous language is construed against the party who caused the uncertainty to exist. [Citation.]' " ' " ' " (Qualcomm, Inc. v. Certain Underwriters at Lloyd's, London, supra, 161 Cal.App.4th at p. 192.) Here, respondents had no opportunity to present, and the trial court was not asked to consider, extrinsic evidence on the issue of whether the parties intended in section 23.1 of the lease to waive the statutory notice requirements. (See 250 L.L.C. v. PhotoPoint Corp., supra, 131 Cal.App.4th at p. 726.)
The City states that it "does not contend that there is a triable issue regarding the adequacy of the contents of the Three-Day Notice" and only argues that "the Three-Day Notice is adequate as a matter of law under the undisputed terms of the Lease." But, we cannot decide the latter question as a matter of law on this record. Nor can we conclude that section 23.1 of the lease created a triable issue of material fact. The City has forfeited the triable issue argument on appeal because it is based on facts that may have been supported by the evidence before the trial court, but which were not included in its separate statement of undisputed facts or otherwise brought to the court's attention. (See United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337 [" 'Golden Rule of Summary Adjudication' " provides that if a fact is not set forth in the separate statement of undisputed facts, " 'it does not exist' "]; San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 316 ["where evidence is not referenced, is hidden in voluminous papers, and is not called to the attention of the court at all, a summary judgment should not be reversed on grounds the court should have considered such evidence"]; Eddins v. Redstone (2005) 134 Cal.App.4th 290, 318-319; but see Kulesa v. Castleberry (1996) 47 Cal.App.4th 103, 107-108, 113-115 [trial court cannot ignore facts not identified in separate statement, but expressly identified in points and authorities and supported by short evidentiary exhibit].) Here, the lease was more than 75 pages long and the City did not refer the trial court to section 23.1 of the lease in any of its papers opposing summary judgment. The City even explicitly disavowed that it was relying on a section of the lease other than section 30.
The trial court was correct in its conclusion that the language of section 30 of the lease cannot be reasonably construed as a waiver of section 1161(2). Because the City has forfeited the only argument of error it now asserts to challenge the grant of summary judgment, its challenge to the award of attorney fees necessarily also fails.
IV. DISPOSITION
The judgment is affirmed. Ernst is to recover his costs on appeal.
Bruiniers, J.
We concur:
Jones, P. J.
Needham, J.