Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County. Judith C. Chirlin, Judge.Los Angeles County Super. Ct. No. BC341431
Lager & Weingarten and Alex M. Weingarten; Dreier, Stein & Kahan and David S. Gubman for Defendant and Appellant.
Venable, Timothy J. Gorry, Jon-Jamison Hill, and Donald W. Yoo for Plaintiffs and Respondents.
CHAVEZ, J.
Defendant and appellant Thomas Naud, Jr. (defendant) appeals the judgment entered in favor of plaintiffs and respondents Mikel Elliott (Elliott) and Jordan Kitaen (Kitaen) (collectively, plaintiffs) in plaintiffs’ declaratory relief action concerning the terms of a sublease entered into by the parties in March 1988 (the sublease). The parties disputed whether certain handwritten changes on the sublease were part of their agreement. The handwritten changes incorporated provisions of a master lease entered into by defendant and the owners of the property.
The trial court found that the handwritten changes on the sublease were part of the parties’ agreement. The trial court then determined that the terms of the sublease require defendant’s prior written consent for any assignment of the sublease, but not for subletting of the premises. The trial court further determined that the sublease accords plaintiffs a right of first refusal to purchase the property, subordinate to a right of first refusal accorded to defendant under the terms of the master lease.
Defendant contends the evidence is insufficient to support the trial court’s findings. Defendant further contends the trial court erroneously precluded defendant’s counsel from cross-examining Kitaen about certain communications with his attorney; improperly adjudicated issues affecting the property owner, who was not a party to this action; and abused its discretion by awarding plaintiffs certain attorney fees. We affirm the judgment and the attorney fee award.
BACKGROUND
A. The Master Lease
Defendant leases property in Los Angeles, California from the Frank E. Matoon Trust (master lessor) pursuant to the terms of an industrial lease dated January 30, 1984 (the master lease). The leased premises consist of a 32,000 square foot building, divided into separate sound stages and offices on approximately one acre of land. The original term of the master lease was for 15 years, commencing on August 1, 1985, and ending on July 31, 2000, with an option to extend the term for an additional 15 years.
Paragraph 12.2 of the master lease allows defendant to assign his rights under the lease to an affiliated entity without the consent of the master lessor. Paragraph 12.3 allows defendant to sublease the premises without the master lessor’s consent. It states, in pertinent part: “Lessee may, at any time and from time to time, without Lessor’s consent, sublet all or any portion of the Premises, or mortgage, pledge, convey, a security interest in, or otherwise encumber Lessee’s interest in this Lease.” Paragraph 13 of the master lease accords defendant 30 days in which to cure an alleged breach after written notice from the master lessor.
Paragraph 12.2 of the master lease provides in part: “Lessee may assign its interest in this Lease or in the Premises without Lessor’s consent to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting in the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided that said assignee assumes, in full, the obligations of Lessee under this Lease.”
Paragraph 13(c) of the master lease provides in relevant part: “The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee . . . where such failure shall continue for a period of 30 days after written notice hereof from Lessor to Lessee; provided, however, that if the nature of Lessee’s default is such that more than 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30-day period and thereafter diligently prosecutes such cure to completion.”
Paragraph 45 of the master lease accords defendant a right of first refusal in the event of a sale of the property to any person or entity not affiliated with the master lessor: “Should Lessor offer the subject property for sale or receive an offer acceptable any time within the term of this Lease, then Lessor shall grant to Lessee a first refusal to purchase said property, except that Lessee shall not have a right of first refusal of such offer is received [from specified affiliated persons or entities].” Paragraph 31 allows the prevailing party in an action to enforce the master lease to recover its attorney fees and costs.
Defendant occupied the property for a number of years, operating a business that supplied visual effects technology to the motion picture industry. When business declined, defendant looked for tenants to sublease the property from him. Defendant eventually met plaintiffs, who owned and operated a business that rented studio production space to photographers and motion picture companies. Shortly after meeting plaintiffs, defendant visited plaintiffs’ then existing studio facility. Defendant knew that plaintiffs were renting out portions of their facility to others and that they intended to expand their business operations.
B. The Sublease
The parties negotiated the terms of their sublease over the course of a six-month period. Neither side was represented by counsel. Early in the negotiations, plaintiffs objected to paragraph 10 of the sublease, which prohibited them from assigning their interest in the sublease or subletting any portion of the premises. Paragraph 10 states: “Sublessee shall not assign, transfer, mortgage, pledge, hypothecate or encumber this Sublease or any interest therein and shall not sublet the Premises or any part thereof, without the prior written consent of Sublessor, which consent shall not be unreasonably withheld. No consent by Sublessor to any assignment or subletting by Sublessee shall relieve Sublessee of any obligation to be performed by the Sublessee under this Sublease. Consent to one assignment, subletting or other transfer shall not be deemed to constitute consent to any subsequent assignment subletting or other transfer nor shall it relieve Sublessee from the obligation to obtain Sublessor’s consent to any other assignment, subletting or other transfer.” Plaintiffs explained to defendant that the prohibition against subletting was inconsistent with their business model.
Because defendant was unwilling to delete paragraph 10 from the sublease, plaintiffs sought to limit the scope of that paragraph by incorporating certain provisions of the master lease. Plaintiffs asked that paragraphs 12.2, 12.3, and 45 of the master lease be added to paragraph 12 of the sublease. Paragraph 12 of the sublease incorporates by reference several provisions of the master lease, including the attorney fee provisions of paragraph 31.
Negotiations continued until the day the sublease was signed. At that time, the parties were sitting around a table, and Kitaen reached over and made handwritten changes directly onto the sublease document. A change that is not in dispute is a handwritten addition to paragraph three of the sublease, which states that plaintiffs agree to pay all CPI increases during the sublease term. That handwritten change was initialed by the parties. Disputed changes are handwritten additions to paragraph 12 of the sublease, indicating that paragraphs 12.2, 12.3, and 45 of the master lease are incorporated by reference. Those changes were not initialed by the parties.
After the sublease was signed, plaintiffs entered into a separate agreement with defendant, allowing him to remain on the premises as a subtenant for another year. Two other existing subtenants of defendant’s also continued to occupy the property after plaintiffs took possession. During the year that defendant remained on the premises, he did not object to plaintiffs’ renting of the premises to other tenants. After defendant vacated the premises, he continued to visit the property four to five times per year. During these visits, defendant did not object to the presence of other subtenants on the premises.
In early 2005, plaintiffs began discussing with defendant exercise of his renewal option under the master lease. In exchange for his agreement to exercise the option, defendant sought to increase plaintiffs’ monthly rent. The sublease did not provide for such a rental increase.
In July 2005, defendant claimed for the first time that plaintiffs were breaching the terms of the sublease by renting the premises to others without his consent. Plaintiffs took steps to obtain defendant’s consent, but defendant refused to give his approval.
C. The Instant Lawsuit
Plaintiffs filed this action in October 2005 seeking, among other relief, a judicial determination of their rights and obligations under the sublease. Defendant filed a separate action for unlawful detainer based on alleged breach of the sublease. The trial court bifurcated plaintiffs’ declaratory relief claim from their other claims and consolidated the declaratory relief claim with defendant’s unlawful detainer action. The trial court then determined that the declaratory relief claim should be tried before the unlawful detainer claim.
At the trial on the declaratory relief claim, several different versions of the sublease were identified and admitted into evidence. Plaintiffs’ version of the sublease contained the handwritten additions to paragraph 12, indicating that paragraphs 12.2, 12.3, and 45 of the master lease were incorporated by reference. Defendant’s version of the sublease did not contain these additions.
Plaintiffs, defendant, and defendant’s attorney, James Melman, testified concerning the many versions of the sublease. Plaintiffs and defendant also testified concerning the parties’ negotiation and execution of the sublease, and their subsequent course of dealing with one another.
At the conclusion of the trial, the trial court issued a statement of decision in which the court noted that the parties’ testimony conflicted with regard to when and where the handwritten interlineations on the sublease were made. Plaintiffs had both testified that the handwritten changes were agreed to and added before the sublease was signed, whereas defendant denied that this was the case. The trial court found, “based on the credibility of the witnesses, an analysis of the documentary evidence as well as the inference that can be drawn therefrom,” that the parties intended to require defendant’s prior written consent for any assignment of the sublease, but to allow subletting of the premises without defendant’s consent. The trial court further found that the version of the sublease containing handwritten changes incorporating paragraphs 12.2, 12.3, and 45 of the master lease was the operative agreement, and the only original document considered, and that the parties’ conduct was consistent with this version.
The judgment entered in plaintiffs’ favor states that any assignment of the sublease must be approved in writing by defendant, but no prior written consent is required for plaintiffs to sublease any portions of the premises. The judgment also states that the provisions of paragraph 12.3 of the master lease were incorporated into the sublease and supercede the provisions of paragraph 10 of the sublease to the extent that paragraph 10 prohibits subleasing of the premises without defendant’s consent. Finally, the judgment states that paragraph 45 of the master lease was incorporated into the sublease only to the extent that it puts plaintiffs in a subordinate position to defendant; breach of any condition in the sublease is curable pursuant to paragraph 13 of the master lease; and plaintiffs are entitled, pursuant to paragraph 31 of the master lease, to their reasonable attorney fees and costs as the prevailing parties in the action.
Defendant subsequently dismissed his unlawful detainer action, and plaintiffs dismissed their remaining untried claims. Plaintiffs filed a motion for their attorney fees and costs. Defendant opposed the motion on the ground that most of plaintiffs’ fees and costs were incurred in the unlawful detainer action, and plaintiffs were not entitled to recover fees and costs incurred in that action. After a hearing on the motion, the trial court found that the two actions were “integrally related” and “intertwined” and that apportionment of attorney fees was not required. Defendant filed this appeal.
DISCUSSION
I. Operative Version of the Sublease
We review the trial court’s factual determination that plaintiffs’ version of the sublease is the operative agreement between the parties under the substantial evidence standard. (See Brawthen v. H & R Block, Inc. (1972) 28 Cal.App.3d 131, 138, fn. 1.) Under this standard, “we are bound by the ‘elementary, but often overlooked principle of law, that . . . the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,’ to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor in accordance with the standard of review so long adhered to by this court. [Citations.]” (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) The interpretation of a lease is a question of law, subject to de novo review, absent conflicting evidence. (Del Taco, Inc. v. University Real Estate Partnership V (2003) 111 Cal.App.4th 16, 22.)
Substantial evidence supports the trial court’s determination that plaintiffs’ version of the sublease is the operative agreement. Plaintiffs testified that they objected to paragraph 10 of the sublease, which prohibited assignment and subletting without defendant’s prior written consent, because it was inconsistent with their business model. Kitaen explained that obtaining defendant’s prior consent to subleases would have been onerous because plaintiffs often subleased space on a short-term basis to photographers or film companies for one- or two-day photo shoots.
Kitaen also testified that he discussed with defendant plaintiffs’ desire to incorporate paragraphs 12.2, 12.3 and 45 of the master lease into the sublease. Kitaen and Elliott both testified that by incorporating paragraph 12.3 of the master lease into the sublease, the parties intended to limit the scope of paragraph 10 to require defendant’s prior written consent only in the event of an assignment of the sublease.
Plaintiffs further testified that they wanted the ability to exercise defendant’s right of first refusal under the master lease in the event that defendant declined to exercise that right. Plaintiffs testified that having a right of refusal was important to them because the property was in a state of disrepair and required a considerable capital investment to make it suitable for their business needs. They asked that paragraph 45 of the master lease be incorporated into the sublease in order to protect their investment in the property.
Plaintiffs both testified that during the signing of the lease, Kitaen made handwritten changes onto the sublease to include the desired provisions of the master lease. Defendant confirmed during his testimony at trial that Kitaen made handwritten changes onto the sublease at the time it was signed.
The parties’ subsequent conduct was consistent with plaintiffs’ version of the sublease. Defendant, who remained on the premises for a year after the sublease was signed and who often visited the premises after he vacated the premises, did not object to plaintiffs’ subleasing of the premises to others. Defendant also conceded during his trial testimony that plaintiffs had the right to sublease the property without his prior written consent. Finally, defendant attached plaintiffs’ version of the sublease to his own unlawful detainer complaint and admitted in his responses to discovery requests that plaintiffs’ version of the sublease is the operative agreement between the parties.
Defendant argues that the trial court’s factual determination concerning the operative version of the sublease is untenable because it conflicts with other evidence in the record. He maintains that plaintiffs’ version of the sublease contradicts other versions of the sublease signed by the parties and introduced into evidence at the trial. It is not the role of the appellate court, however, to reweigh the evidence or determine issues of credibility. (In re Marriage of Friedman (2002) 100 Cal.App.4th 65, 71.) If there is substantial evidence, contradicted or uncontradicted, to support the trial court’s finding, that finding must be upheld, regardless of whether the evidence is subject to more than one interpretation. (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571.) An appellate court is without power to substitute its deductions for those of the trial court. (Von Beltz v. Stuntman, Inc. (1989) 207 Cal.App.3d 1467, 1481.) Substantial evidence supports the trial court’s determination that plaintiffs’ version of the sublease was the operative agreement.
II. Attorney-Client Privilege
Defendant contends the trial court abused its discretion by precluding defendant’s attorney from cross-examining Kitaen about certain communications with his attorney about the sublease. He maintains that Kitaen waived the right to assert the privilege by disclosing the substance of his communications with his attorney.
Evidence Code section 912 provides a statutory basis for determining whether one has voluntarily waived the attorney-client privilege. It provides in relevant part: “[T]he right of any person to claim a privilege provided by Section 954 (lawyer-client privilege) . . . is waived with respect to a communication protected by the privilege if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to the disclosure made by anyone. Consent to disclosure is manifested by any statement or other conduct of the holder of the privilege indicating consent to the disclosure, including failure to claim the privilege in any proceeding in which the holder has the legal standing and opportunity to claim the privilege.” Merely acknowledging that one has consulted at attorney is not sufficient to waive the privilege. (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 603.)
The following exchange occurred at trial:
“[Defendant’s counsel]: Did you testify previously that you realized by going back and looking at the sublease again that you had in your files that you didn’t need [defendant’s] consent in order to enter into subleases?
“[Kitaen]: I don’t recall exactly what made me aware of that there was a recollection of the actual lease itself or my attorney telling me or me reading it. I don’t recall specifically when that dawned on me. It wasn’t an issue.
“[Defendant’s counsel]: Did you have any discussions with your attorney about what the provisions of the sublease required or provided for?
“[Plaintiffs’ counsel]: I’m going to object to the response. Calls for attorney-client communications.
“[Defendant’s counsel]: He just opened the door, your Honor.
“[The Court]: No, he didn’t. Sustained.”
No waiver of the attorney-client privilege occurred during this exchange. Kitaen disclosed none of the substance of his communications with his attorney regarding the sublease. The trial court was correct in precluding defendant’s counsel from inquiring further.
III. Nonjoinder of Master Lessor
Defendant contends the master lessor was an indispensable party that should have been joined in the declaratory relief action. Defendant did not raise this issue in the trial court but does so for the first time in this appeal. “Where a case has been fully tried without objection to the absence of parties and the claim that the absent parties were indispensable is raised for the first time on appeal, the rules underlying policy considerations of avoiding piecemeal litigation and multiplicity of suits [citations] are of little consequence inasmuch as the judicial and litigant resources necessary to the litigation have already been expended. [Citation.] The only justification for the rule permitting the issue to be raised for the first time on appeal is that the absence of a party has precluded the court from rendering any effective judgment between the parties before it. [Citations.]” (King v. King (1971) 22 Cal.App.3d 319, 326-327.)
Under the foregoing standard, defendant has failed to establish that the master lessor is an indispensable party to this action. The only issues adjudicated at the trial were plaintiffs’ ability to sublet the premises without defendant’s prior written consent, and whether plaintiffs had been accorded a right of first refusal in the event defendant elected not to exercise his right of refusal under the master lease. The trial court properly adjudicated these issues based on the parties’ negotiations and the terms of their sublease. The parties’ incorporation of certain provisions of the master lease into the sublease did not make the master lessor an indispensable party to this action.
IV. Rights of the Master Lessor
Defendant argues that the judgment alters the rights of the master lessor, a nonparty to this action. In general, a litigant may assert a claim on behalf of a nonparty only when (1) the litigant has suffered an injury in fact; (2) the litigant has a relationship with the nonparty so that it can, and will effectively present the nonparty’s rights; and (3) obstacles exist preventing the nonparty from asserting his own rights. (Novartis Vaccines & Diagnostics, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2006) 143 Cal.App.4th 1284, 1297.) Under the second prong of this standard, “the relationship between the litigant and the absent third party whose rights the litigant asserts must be so close that the litigant ‘is fully, or very nearly, as effective a proponent of the right as’ would be the absent party. [Citations.]” (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 61, quoting Singleton v. Wulff (1976) 428 U.S. 106, 114-116.) Defendant fails to meet this standard. Defendant contends that plaintiffs had no right to sublet the premises without his prior written consent, and no right of first refusal. Defendant admits, however, that the terms of the master lease accorded him a right of first refusal and the right to sublet the premises without the master lessor’s consent. The rights he asserts in this action are therefore not rights held by the master lessor. Defendant accordingly may not assert those rights on the master lessor’s behalf.
V. Attorney Fees
Defendant contends the trial court erred by awarding plaintiffs attorney fees incurred in defending against defendant’s unlawful detainer action as well as fees incurred in prosecuting their declaratory relief action. We review the attorney fee award under the abuse of discretion standard. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331.)
In granting plaintiffs’ motion for attorney fees, the trial court concluded that the two cases were “integrally intertwined” and “integrally related” with one another. As defendant notes, all of the parties’ discovery was conducted as part of the unlawful detainer action because of the accelerated time frame for litigating such actions. After discovery was completed, the trial court bifurcated plaintiffs’ declaratory relief cause of action from their remaining claims and consolidated the declaratory relief claim with defendant’s unlawful detainer action. The trial court then determined that the declaratory relief claim should be tried first. The issues in the consolidated actions were identical. Both actions concerned plaintiffs’ ability to sublet the premises without defendant’s prior written consent. Discovery conducted as part of the unlawful detainer action was used by both parties during the trial of the declaratory relief action. The trial court did not err by awarding plaintiffs attorney fees they incurred in defending against defendant’s unlawful detainer action. No abuse of discretion occurred.
DISPOSITION
The judgment and the attorney fee award are affirmed. Plaintiffs are awarded their costs on appeal.
We concur: BOREN, P. J., ASHMANN-GERST, J.