Opinion
G061722
12-27-2023
DUNPOL INVESTMENTS, INC. Plaintiff and Appellant, v. ALISO VIEJO ICE PALACE, INC., et al, Defendants and Respondents.
Lindborg & Mazor, Irina J. Mazor and Peter F. Lindborg for Plaintiff and Appellant. Thomas C. Watts, SKB Law, and Susan Knock Beck for Defendants and Respondents.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 30-2021-01228388 Kimberly A. Knill, Judge. Affirmed.
Lindborg & Mazor, Irina J. Mazor and Peter F. Lindborg for Plaintiff and Appellant.
Thomas C. Watts, SKB Law, and Susan Knock Beck for Defendants and Respondents.
OPINION
DELANEY, J.
This appeal from an unlawful detainer proceeding raises the question of whether, under the terms of a particular lease, the landlord or the tenant must pay for a roof restoration on a commercial property. Appellant Dunpol Investments, Inc. (Dunpol), the landlord, contends Respondents Aliso Viejo Ice Palace, Inc., and Aliso Viejo Ice Rink, Inc. (collectively Ice Palace), the tenants, were responsible to pay for the restoration under section 6.03 of the lease, which requires Ice Palace pay to "keep" the roof in "good order, condition and repair," or section 6.04, which requires Ice Palace pay for damage it caused. Dunpol alternatively argues Ice Palace waived any right to challenge responsibility to pay for the roof restoration. The trial court found Ice Palace was not responsible under any of Dunpol's theories. We conclude substantial evidence supports the trial court's findings and affirm the judgment.
FACTS
Ice Palace leases certain commercial property (Property) from Dunpol. Under the terms of the lease agreement between the parties (Lease), Dunpol is responsible to keep the roof in "good order, condition and repair" and Ice Palace is required to "pay or reimburse" Dunpol for "all costs" incurred in that endeavor.
In February 2021, Ice Palace notified Dunpol the roof was leaking. Dunpol obtained bids to repair the roof, including a bid from SoCal Roof Restoration (SoCal). SoCal's bid did not offer to repair the existing leaks. Instead, SoCal proposed to restore the entire roof by covering it with a "lightweight, seamless, leak free cool roof system that prevents ALL leaks . . ." (Italics added.) The roof system was a "roof restoration" which would "once and for all resolve your roofing issues past, present and future." The bid cost was $89,540. Dunpol accepted the bid and then notified Ice Palace that Ice Palace would be responsible for the full cost of the roof restoration.
Although the roof restoration work had not begun, Dunpol charged Ice Palace "roof reserves" of $25,000 in April and another $25,000 in May. Ice Palace refused to pay the amounts and began repairing the existing leaks itself. When Dunpol learned this, it notified Ice Palace the self-repairs were a violation of the Lease and directed the repairs cease immediately. Ice Palace then obtained a $60,000 bid from a third party for an overlay of the entire roof, similar to that offered by SoCal. Ice Palace offered to pay 40 percent of the $60,000 bid. Dunpol rejected the offer.
In July, SoCal began the roof restoration. Before re-covering the roof, SoCal repaired three skylights and two small sections of rot. Repair of the skylights and areas of rot impacted about 100 square feet of 30,000 square feet roof. SoCal did not perform any leak repairs. SoCal then reinforced the roof seams and re-covered the entire roof.
In August, September, and October, Dunpol invoiced Ice Palace for the cost of the roof work as the costs were incurred. Ice Palace did not pay the invoiced amounts. In October, Dunpol served Ice Palace with a Three-Day Notice to Pay Rent or Quit, demanding payment of $102,910.10-the full amount charged by SoCal for the roof restoration, plus interest and late charges. Ice Palace did not pay and Dunpol proceeded with an unlawful detainer claim.
Following the unlawful detainer trial, the trial court issued a statement of decision. The trial court made the following germane findings: (1) paragraph 6.03(a) of the Lease requires Dunpol to keep the roof in good order, condition, and repair; (2) paragraph 6.03(b) of the Lease requires Ice Palace to reimburse Dunpol for all costs incurred under paragraph 6.03(a); (3) Ice Palace notified Dunpol the roof needed attention; (4) Dunpol retained SoCal to work on the roof; (5) SoCal re-covered the old roof with a membrane and the membrane became a new roof covering; (6) the work done by SoCal was a roof re-cover, not a repair and is classified as a new roof under the building code; (7) requiring Ice Palace to pay for the new roof would be an "'unwarranted burden of improvement of the lessor's premises;'" (8) Dunpol demanded Ice Palace pay for the work done by SoCal; (9) Ice Palace refused; (10) Ice Palace did not waive its right to contest liability; (11) Dunpol served a three-day notice to pay or quit; and (12) Ice Palace refused to pay or quit and the underlying unlawful detainer action ensued. Judgment was entered for Ice Palace.
DISCUSSION
Dunpol challenges the trial court's judgment on multiple grounds, which can be summarized into the following four general categories: (1) Ice Palace must pay for the roof to be repaired under section 6.03 of the Lease; (2) Ice Palace damaged the roof so it must pay for SoCal's work under section 6.04 of the Lease and the doctrine of estoppel; (3) Ice Palace waived any right to contest liability for SoCal's work; and (4) the court's factual findings compel judgment for Dunpol. We conclude Dunpol's contentions lack merit.
I. Standard of Review
The judgment involves both questions of law and questions of fact. Accordingly, the standard of review is mixed. Interpretation of the lease language is reviewed de novo. (Arntz Builders v. City of Berkley (2008) 166 Cal.App.4th 276, 284.) The trial court's factual findings are reviewed under the substantial evidence standard. Under substantial evidence review, "findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) "The substantial evidence standard applies to both express and implied findings of fact . . . ." (SFPP v. Burlington Northern &Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.)
II. Ice Palace's Obligations Under Section 6.03 of the Lease
Obligations under section 6.03 of the Lease, including related factual findings, are addressed in sections 1, 2, 3, and 7 of Appellant's Opening Brief.
Section 6.03 (a) of the Lease requires that Dunpol "keep" the roof in "good order, condition and repair." Section 6.03(b) requires that Ice Palace "pay or reimburse" Dunpol for "all costs" incurred fulfilling the requirements of Section 6.03(a). Dunpol contends the roof re-cover falls within section 6.03's obligation and Ice Palace is, therefore, required to pay or reimburse the cost Dunpol incurred in re-covering the roof.
"A lease agreement establishing a landlord-tenant relationship is a contract and is subject to the rules governing the formation and interpretation of contracts." (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1268 (ASP).) The meaning of a lease depends upon the intent of the parties as expressed in the language of the lease. (Id. at p. 1266.)
The lease examined in ASP involved language somewhat similar to that used by the parties here. It required the tenant pay to "maintain . . . the [roof] in good and safe condition ...." (ASP, supra, 133 Cal.App.4th at p. 1264.) At some point during the lease, an inspector told the landlord the roof was leaking badly and should be replaced. The landlord believed the roof replacement fell within the duty to maintain the roof in good and safe condition and demanded payment from the tenant. When the tenant refused, the landlord commenced unlawful detainer proceedings. The appellate court held the tenant's duty to "maintain" the roof did not include a duty to pay for a roof replacement. "Case law supports a conclusion that, absent an express provision (or undisputed extrinsic evidence) showing a tenant has an obligation to replace a roof, a tenant's obligation to maintain or repair the premises (including a roof) does not include an obligation to replace an old, dilapidated roof with a new roof at tenant's expense." (ASP at p. 1272; see Whalen v. Ruiz (1953) 40 Cal.2d 294, 300 ["The word 'repair' in its ordinary sense relates to preservation of property in its original condition, and does not carry the connotation that a new thing should be made"].)
Under the Lease, Ice Palace had a duty to pay to "keep" the roof in "good order, condition and repair." "Keep" means to "preserve, maintain." (Webster's 3d New Internat. Dict. (1986) p. 1235.) "Maintain" means to "to keep in a state of repair, efficiency, or validity." (Webster's 3d New Internat. Dict. (1986) p. 1362.) "Maintain," the word used in the ASP lease, and "keep," the word used in the lease at issue here, have the same meaning. As was the case in ASP, the Lease did not include any express provision requiring that Ice Palace replace the roof. Accordingly, under the terms of the Lease, Ice Palace was not required to pay for work on the roof that extended beyond the duty to "keep" the roof in good order, condition and repair.
Ice Palace presented expert testimony that the work done by SoCal was not a repair. The expert testified repair work is done on discrete sections of a roof. According to the expert, the work done by SoCal was a "re-cover," which is a subsection of a roof replacement under the 2019 California Building Standards Code (Cal. Code Regs., tit. 24, Part 2, § 1511.3.1). The SoCal witness confirmed the expert's testimony. He admitted SoCal completed a roof restoration. Substantial evidence supports the trial court's factual finding that the work done by SoCal, whether labeled a re-cover or a restoration, did not "keep" the roof in "good order, condition and repair" within the meaning of section 6.03.
Dunpol also contends Ice Palace was required to pay for the roof restoration because it was necessitated by normal wear and tear. Section 6.03 does not address the issue of normal wear and tear. However, even if Ice Palace had been responsible to pay for work necessitated by normal wear and tear, Dunpol did not produce evidence the roof restoration was necessary, either to repair existing leaks or to address normal wear and tear.
In addition to finding the work done by SoCal was a restoration rather than a repair, the trial court also found requiring Ice Palace to pay for the roof restoration would be an unwarranted burden of improvement. Dunpol asserts the doctrine of unwarranted burden of improvement is inapplicable here because the cases employing the doctrine typically involve either tenants who are coming to a property in need of repair or tenants who are at the end of their lease. Dunpol argues this case does not fall into either category because Ice Palace is neither a new tenant or one at the end of a lease. Ice Palace has occupied the property for nearly thirty years and, although the Lease term expires next year, Ice Palace has the right to exercise two successive five-year extensions.
While the cases employing the doctrine or unwarranted burden may be factually distinguishable, the underlying logic is sound. As expressed in Lynn v. DePue Warehouse Co. (1962) 198 Cal.App.2d 742, 746, "[m]odern cases show reluctance to place too literal an interpretation on the [tenant's] covenant to repair. 'The covenant will be reasonably interpreted to avoid placing any unwarranted burden of improvement of the [landlord's] premises on the [tenant].' [Citation.]."
Substantial evidence supports the trial court's finding that paying twice the amount of monthly rent to replace the roof would be an unwarranted burden on Ice Palace.
III. Damage to the Roof
Dunpol maintains Ice Palace must pay for the roof restoration under section 6.04 of the Lease which requires Ice Palace must pay for repair or replacement of any part of the Property "damaged by any act or omission of Tenant." Dunpol argues Ice Palace damaged the roof by failing to notify Dunpol of the need for repairs to the roof and making repairs itself. However, Dunpol presents no evidence that the roof was damaged by the lack of notice or the previous repairs. SoCal, itself, testified only about 100 square feet of the 30,000 square feet roof required any repair and that repair was of three skylights and two areas of rot and did not involve prior repairs. Because the argument is not supported by evidence, it fails.
In support of its argument, Dunpol relies heavily on Connell v. Brownstein-Louis Co. (1927) 86 Cal.App.610. Connell held the tenant was responsible for repair made necessary by its own conduct. (Id. at p. 613.) Connell is inapplicable here, where there was no evidence the roof restoration was necessitated by Ice Palace's acts or omissions.
Dunpol also argues Ice Palace is estopped from denying liability by its failure to notify Dunpol of leaks until February 2021 and self-repairs. "Generally speaking, four elements must be present in order to apply the doctrine of equitable estoppel: (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." (Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 305.) As set forth above, there was no evidence Ice Palace damaged the roof by any act or omission. Without injury, there is no estoppel.
In support of its estoppel argument, Dunpol cites extensively from Wal-Noon Corporation v. Hill (1975) 45 Cal.App.3d 605 (Wal-Noon). Wal-Noon does not address estoppel. Further, Wal-Noon is factually inapposite as it involved a tenant who, without notice to the landlord, replaced the roof, and then asked the landlord to pay for the replacement. (Id. at p. 609.)
IV. Waiver
Dunpol claims Ice Palace waived any right to contest liability for the roof restoration. "'"[W]aiver is the intentional relinquishment of a known right after knowledge of the facts." [Citations.] The 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, and "doubtful cases will be decided against a waiver" [citation].'" (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.) "'"Waiver always rests upon intent.'" [Citation.] The intention may be express, based on the waiving party's words, or implied, based on conduct that is '"so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.'" [Citations.]" (Lynch v. California Coastal Comm. (2017) 3 Cal.5th 470, 475.)
Dunpol argues Ice Palace waived its right to contest liability for the roof restoration because it: (1) repaired the roof on its own between 1994 and February 2021; (2) failed to notify Dunpol of any roof leaks until February 2021; (3) obtained a $60,000 bid for a roof restoration; and (4) submitted a claim to its insurer for the roof restoration. Ice Palace's handling of necessary repairs between 1994 and February 2021 does not evidence an intention to pay for a roof restoration. As for the remaining conduct allegedly showing a waiver, the uncontroverted evidence established Ice Palace refused to pay for the roof repair at least twice before SoCal began its work. Further, there was no evidence Ice Palace ever agreed to pay for the work. The trial court found no waiver. Substantial evidence supports that finding.
V. The Trial Court's Factual Findings
Dunpol contends the trial court's factual findings compel reversal of the judgment for Ice Palace. The argument is largely duplicative of the prior arguments. The argument also includes a misrepresentation of the trial court's Statement of Decision. Specifically, Dunpol asserts the trial court found the work performed by SoCal "constitute[d] 'Additional Rent' under Paragraph 4.01 of the Lease." The trial court made no such finding. The court's ruling does not refer to either additional rent or paragraph 4.01. The trial court's factual findings do not compel reversal of the judgment.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: GOETHALS, ACTING P. J. SANCHEZ, J.