Opinion
B330586
06-18-2024
FITNESS INTERNATIONAL, LLC, Plaintiff and Appellant, v. WEDGE OFFICE, LLC, Defendant and Respondent.
Klehr Harrison Harvey Branzburg, A. Grant Phelan; Saul Ewing and Dawn B. Eyerly for Plaintiff and Appellant. Hodel Wilks, Fred L. Wilks and Matthew A. Hodel for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. 20STCV46465 Robert B. Broadbelt, III. Affirmed.
Klehr Harrison Harvey Branzburg, A. Grant Phelan; Saul Ewing and Dawn B. Eyerly for Plaintiff and Appellant.
Hodel Wilks, Fred L. Wilks and Matthew A. Hodel for Defendant and Respondent.
SEGAL, J.
INTRODUCTION
This case is one of many where a commercial tenant (and in particular, this commercial tenant-Fitness International, LLC) seeks to avoid its rent obligations for the period when state and local government orders issued in response to the COVID-19 pandemic required the tenant to temporarily cease business operations. Wedge Office, LLC leased space in an office complex to Fitness International to operate a fitness center. After state and local officials issued orders requiring fitness centers to close, Fitness International closed its gym but, to avoid eviction, continued to pay rent. Fitness International later filed this action against Wedge, seeking reimbursement for the rent it paid Wedge while it could not operate the fitness center. Wedge filed a motion for summary judgment, arguing Fitness International was not excused from paying rent, which the trial court granted.
Fitness International appeals from the judgment, arguing a rent abatement provision in the parties' lease excused its rent obligations while it could not operate the fitness center. That provision stated Fitness International was not obligated to pay rent while the leased premises were "untenantable" as a result of "lack of reasonable access to the Premises within the" office complex. We conclude, as did the trial court, the rent abatement provision did not apply here, where the government restrictions were the only reasons Fitness International could not use the leased premises as a fitness center.
Fitness International also argues the doctrines of frustration of purpose and impracticability excused its obligation to pay rent. We conclude, as did the trial court, those doctrines did not apply because the government restrictions prevented Fitness International only from using the leased premises for their intended purpose for a portion of the lease term, and because Fitness International never terminated the lease. (See KB Salt Lake III, LLC v. Fitness International, LLC (2023) 95 Cal.App.5th 1032 (KB Salt Lake); SVAP III Poway Crossings, LLC v. Fitness International, LLC (2023) 87 Cal.App.5th 882 (Poway Crossings).) Therefore, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Wedge Leases Space in an Office Complex to Fitness International
Fitness International operates indoor health clubs and fitness centers. Like other fitness center operators, Fitness International generates most of its revenue from dues paid by members.
Wedge and Fitness International are parties to a lease, under which Fitness International leases from Wedge space in an office complex in Los Angeles to operate one of its fitness centers. The lease defines the office complex as the "Project" and the space in the Project leased to Fitness International as the "Premises." The lease states Fitness International "shall use the Premises solely" to operate a health club and fitness facility under the trade name "LA Fitness" and to engage in ancillary business activities such as selling fitness apparel, food, and beverages. The term of the lease was 15 years ending in 2028, with options for Fitness International to extend the lease for two, successive five-year terms.
B. The Lease Abates Fitness International's Rent Obligations Under Certain Circumstances
The lease required Fitness International to pay base rent, plus adjustments based on Wedge's operating expenses and property tax assessments. The lease sets forth certain circumstances, however, where Fitness International's rent obligations are either reduced or abated.
As relevant here, Article 30, titled "Abatement," states: "Except in the event of Damage (which is separately addressed . . .), if the Premises or any portion thereof is rendered untenantable and is not used by [Fitness International] for a period of at least five (5) consecutive business days or ten (10) business days in any twelve (12) month period . . . as a result of (a) failure of the Building Systems, or lack of reasonable access to the Premises within the Project, or (b) interruption in utility services solely or primarily because of the failure by [Wedge] to supply utilities to the Premises to the extent, if any, that [Wedge] is specifically obligated under this Lease to supply the same, then [rent obligations] shall be reduced and abated after the expiration of the Eligibility Period for such time as the Premises or such portion thereof remain untenantable and are not used by [Fitness International], in the proportion that the rentable area of the portion of the Premises rendered untenantable and not used by [Fitness International] bears to the total rentable area of the Premises." A separate provision of the lease provides Fitness International's rent obligations shall also be abated during the period where "damage to, or destruction of, all or any part of the Premises, the Building or any other portion of the Project by fire or other casualty" renders the Premises untenantable.
The agreement also has a force majeure provision. It states: "Neither Landlord nor Tenant shall be liable for any failure to comply or delay in complying with its obligations hereunder if such failure or delay is due to acts of God, inability to obtain labor, strikes, lockouts, lack of materials, governmental restrictions, enemy actions, war, terrorism, bioterrorism, civil commotion, fire, earthquake, unavoidable casualty or other similar causes beyond the reasonable control of the party obligated for performance (all of which events are herein referred to as force majeure events).... In no event shall failure to pay rent or other sums due hereunder from one party to the other be excused as a result of any force majeure event."
C. State and Local Orders Issued in March 2020 in Response to the Covid-19 Pandemic Force Fitness International To Close the Fitness Center
Fitness International operated a fitness center on the Premises from late 2013 to March 2020. In March 2020 the Governor of California proclaimed a state of emergency under Government Code section 8625 due to the COVID-19 outbreak. Similarly, the Mayor of Los Angeles declared a state of local emergency under Los Angeles Administrative Code section 8.27. On March 15, 2020 the Mayor issued a public order under the City's emergency authority that "[a]ll gyms and fitness centers shall be closed to the public." Fitness International closed the fitness center the next day.
On March 19, 2020 the Governor issued Executive Order N-22-30, which required all California residents to stay at home, "except as needed to maintain continuity of operations of the federal critical infrastructure sectors ...." According to Fitness International, subsequent state and local orders permitted it to reopen the facility from June 12, 2020 to July 12, 2020, but again required Fitness International to close the facility on July 13, 2020.
It is unclear from the record whether Fitness International in fact reopened the facility during the interim.
D. Fitness International Pays Rent To Avoid Eviction
Shortly after closing the facility in March 2020, Fitness International sent an email to Wedge requesting a "rent holiday," asserting it was permitted to "fully abate rent" because state and local orders had required it to close the fitness center. A few weeks later, Wedge responded that the terms of the lease did not permit Fitness International to avoid its rent obligations. Between April 2020 and December 2020 Fitness International paid all rent due "under protest."
E. Fitness International Sues Wedge To Recover Rent Payments Made During the Period It Could Not Operate the Fitness Center
Fitness International filed this action against Wedge in December 2020, alleging Wedge had breached the terms of the lease by demanding rent during the period government orders precluded Fitness International from operating the fitness center. Fitness International asserted a cause of action for declaratory relief, seeking, among other things, judicial declarations that (1) it had no obligation to make rent payments to Wedge during the period Fitness International could not operate the fitness center; (2) Wedge was "required to excuse [Fitness International's] performance under the Lease because the parties' intent and purpose in entering the Lease [was] frustrated"; and (3) Wedge was "required to excuse [Fitness International's] performance under the Lease because performance [was] impracticable." Fitness International also asserted causes of action for breach of contract and money had and received, seeking to recover all rent payments made under protest. Fitness International reopened the facility on March 15, 2021, while this action was pending.
F. The Trial Court Grants Wedge's Motion for Summary Judgment
Wedge moved for summary adjudication on each of Fitness International's causes of action and for summary judgment, contending Fitness International could not prevail on its causes of action for several reasons. Wedge argued Article 30 of the lease-which, as stated, provided Fitness International's rent obligations were abated where lack of "reasonable access to the Premises within the Project" rendered the Premises untenantable-did not excuse Fitness International's rent obligations. Wedge argued the term "access," as used in that provision, referred only to "a means of physical entrance" or "'a way by which a thing or place may be approached or reached,'" and not to use of the Premises where restricted by government orders.
Wedge also argued the doctrine of frustration of purpose did not excuse Fitness International's rent obligations because Fitness International never vacated the leased property and the lease remained valuable, even though Fitness International could not operate a fitness center for part of the lease term. Wedge similarly argued the doctrine of impracticability did not apply because Fitness International could continue to pay its rent without "extreme" expense.
In opposition to the motion Fitness International argued that, during the period state and local orders required fitness centers to close, neither Fitness International's employees nor its customers had access to the Premises. Therefore, according to Fitness International, there was no reasonable access to the Premises, and its rent obligations were abated under Article 30. Fitness International also argued the doctrine of "temporary" frustration of purpose excused its obligation to pay rent because the value of the lease was temporarily destroyed while Fitness International could not operate a fitness center. Similarly, Fitness International argued the doctrine of impracticability excused its obligation to pay rent because it derived no revenue from the fitness center while it was closed.
The trial court granted Wedge's motion for summary adjudication on each cause of action and for summary judgment. The court agreed with Wedge the phrase "reasonable access to the Premises," as used in Article 30, referred to physical access to the Premises, but did not apply to use of the Premises where restricted by government orders. The court ruled the doctrine of temporary frustration of purpose did not excuse Fitness International from making rent payments because the value of the lease was not totally destroyed and California does not recognize "temporary" frustration of purpose. Finally, the court ruled the doctrine of impracticability did not excuse Fitness International from paying rent because the cost of making the payments was not excessive or unreasonable. The court subsequently entered judgment for Wedge, and Fitness International timely appealed.
DISCUSSION
A. Standard of Review
"A court may grant a motion for summary judgment only when all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Fajardo v. Dailey (2022) 85 Cal.App.5th 221, 225, internal quotation marks omitted; see Code Civ. Proc., § 437c, subd. (c); Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618.) "'A defendant moving for summary judgment has the initial burden of presenting evidence that a cause of action lacks merit because the plaintiff cannot establish an element of the cause of action or there is a complete defense.'" (Long Beach Memorial Medical Center v. Allstate Ins. Co. (2023) 95 Cal.App.5th 710, 715; see Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) "'Only after the defendant carries that initial burden does the burden shift to the plaintiff "to show that a triable issue of one or more material facts exists as to the cause of action ....'"" (Campbell v. FPI Management, Inc. (2024) 98 Cal.App.5th 1151, 1162; see Luebke v. Automobile Club of Southern California (2020) 59 Cal.App.5th 694, 703.)
"We review a ruling on summary judgment . . . de novo and 'decide independently whether the facts not subject to triable dispute warrant judgment for the moving party or a determination a cause of action has no merit as a matter of law.' [Citation.] In so doing, we liberally construe the evidence in favor of the party opposing the motion and resolve all doubts concerning the evidence in their favor." (Campbell v. FPI Management, Inc., supra, 98 Cal.App.5th at p. 1161; see Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347.)
B. The Trial Court Did Not Err in Granting Wedge's Motion for Summary Adjudication on Fitness International's Cause of Action for Declaratory Relief
A court "may properly grant summary adjudication of a claim for declaratory relief." (Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, 1156; see Gafcon, Inc. v. Ponsor &Associates (2002) 98 Cal.App.4th 1388, 1401.) "When seeking summary [adjudication] on a claim for declaratory relief, the defendant must show that the plaintiff is not entitled to a declaration in its favor by establishing '(1) the sought-after declaration is legally incorrect; (2) [the] undisputed facts do not support the premise for the sought-after declaration; or (3) the issue is otherwise not one that is appropriate for declaratory relief.'" (Cates v. California Gambling Control Com. (2007) 154 Cal.App.4th 1302, 1307; see California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 185.) Here, Wedge sought to establish the second ground: the undisputed facts did not support the premise for any of the judicial declarations Fitness International sought.
1. Fitness International Was Not Entitled to a Declaration Its Rent Obligations Were Abated Under the Terms of the Lease
In support of its motion for summary judgment, Wedge submitted deposition testimony from a Fitness International executive that Fitness International closed the fitness center because of state and local orders issued in response to the COVID-19 pandemic (as Fitness International alleged in its complaint). (See Canales v. Wells Fargo Bank, N.A. (2018) 23 Cal.App.5th 1262, 1268 ["a summary judgment motion is directed to the issues framed by the pleadings"].) Wedge argued that, under the terms of the lease, the closure did not excuse Fitness International's rent obligations. Fitness International argued the closure did excuse its rent obligations under the lease, but Fitness International did not submit any extrinsic evidence in support of its interpretation of the lease.
"'The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.' [Citations.] 'Such intent is to be inferred, if possible, solely from the written provisions of the contract.'" (State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195; see Gilkyson v. Disney Enterprises, Inc. (2021) 66 Cal.App.5th 900, 916.) Interpretation is "solely a judicial function" where, as here, there is no extrinsic evidence regarding the meaning of the contract and the interpretation "is based on the words of the instrument alone ...." (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395; see Bravo v. RADC Enterprises, Inc. (2019) 33 Cal.App.5th 920, 922; Brown v. Goldstein (2019) 34 Cal.App.5th 418, 433.)
As we explain, there was some ambiguity in the lease, ambiguity we must resolve. The more reasonable interpretation of the lease, however, supports Wedge's position. Therefore, the trial court correctly ruled Fitness International was not entitled to a judicial declaration that, under the lease, its rent obligations were abated.
a. The Lease is Ambiguous
"'"The 'clear and explicit' meaning of [contract] provisions, interpreted in their 'ordinary and popular sense,' . . . controls judicial interpretation. [Citation.] Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning."'" (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 752; see San Francisco CDC LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266, 286.) "'"An ambiguity exists when a party can identify an alternative, semantically reasonable, candidate of meaning of a writing."'" (Mattei v. Corporate Management Solutions, Inc. (2020) 52 Cal.App.5th 116, 125, fn. 8; see Eriksson v. Nunnink (2015) 233 Cal.App.4th 708, 722.)
As discussed, Article 30-the provision of the lease titled "Abatement"-states Fitness International's rent obligations are abated where the Premises are "rendered untenantable . . . as a result of . . . lack of reasonable access to the Premises within the Project ...." Fitness International argues there was no reasonable access to the Premises during the period it could not operate the fitness center because none of its members, and (nearly) none of its employees, could access the Premises. Wedge argues "access," as used in Article 30, relates only to "the condition of the Premises and its surroundings" and includes, for example, means of physical entrance, ingress, and egress.
Fitness International stated that, from March 16, 2020 to April 10, 2020, state and local orders prohibited all employees from accessing the fitness center and that, from April 10, 2020 to March 14, 2021, those orders allowed an employee or other person to access the fitness center only for limited purposes, such as ensuring the Premises were secure.
Each side's interpretation of Article 30 is reasonable. Wedge's interpretation is based on a dictionary definition of "access" that states "access" generally refers to the "right, opportunity, or ability to enter, approach, [and] pass to and from." (Black's Law Dict. (11th ed. 2019); see Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1121-1122 ["When attempting to ascertain the ordinary, usual meaning of a word, courts appropriately refer to the dictionary definition of that word."].) That definition, however, does not necessarily support either party's proposed interpretation of Article 30 more than the other. For example, during the period state and local orders prohibited Fitness International from operating the fitness center, Fitness International's members and employees did not have the "right" to "enter" the Premises, at least not unless Fitness International breached the terms of the lease and used the Premises for something other than a fitness center (by, for example, using the Premises to operate a COVID-19 testing clinic). Thus, Fitness International's interpretation, that reasonable access means access to the Premises to operate and use a gym, is reasonable.
On the other hand, Wedge did not take any actions, and there were no physical obstructions, that prevented Fitness International's members and employees from entering, approaching, or passing to and from the Premises. And Article 40.9-which states that "government restrictions" are a force majeure event and that "in no event" shall a force majeure event excuse failure to pay rent-supports Wedge's interpretation that "reasonable access" is limited to the physical condition of the Premises and its surroundings, and does not include rights of use inconsistent with government restrictions that prohibit certain businesses from operating. Thus, Wedge's interpretation is reasonable too.
b. The Rules of Contract Interpretation Support Wedge's Interpretation over Fitness International's
"'"If the contract is capable of more than one reasonable interpretation, . . . it is the court's task to determine the ultimate construction to be placed on the ambiguous language by applying the standard rules of interpretation in order to give effect to the mutual intention of the parties."'" (Breathe Southern California v. American Lung Assn. (2023) 88 Cal.App.5th 1172, 1181; see Kashmiri v. Regents of University of California (2007) 156 Cal.App.4th 809, 842.) Several of these rules support the interpretation that Fitness International's rent obligations were not abated during the period it could not operate the fitness center.
Here's a roadmap to how those rules apply here: First, Fitness International overlooks an important phrase in Article 30: "within the Project." As we explain, the phrase "within the Project" modifies the term "access," which means Fitness International's rent obligations are only abated where there is lack of reasonable access within the Project, i.e., within the office complex, not in all cases where there is lack of reasonable access to the Premises. The most straightforward interpretation of reasonable access "within the Project" is that (as Wedge contends) conditions of or in the office complex must permit entry and passage to and from the Premises, not that Fitness International's use of the Premises is guaranteed against government prohibitions on certain businesses. Second, the other circumstances where Fitness International's rent obligations are abated under Article 30 occur where there is an issue with the physical conditions of the office complex that Wedge has a duty to address, and Wedge does not have a duty to address government restrictions prohibiting operation of businesses. Finally, an interpretation that limits reasonable access to conditions in or of the office complex is most consistent with the force majeure and eminent domain provisions, which state Fitness International's rent obligations are not abated in other circumstances where events outside Wedge's control prevent access to the Premises. Thus, in the end, Wedge's interpretation is more reasonable.
Now for the road: We start with the language of Article 30. Article 30 does not state that Fitness International's rent obligations are abated any time lack of reasonable access to the Premises renders them untenantable. Article 30 states Fitness obligations are abated where "lack of reasonable access to the Premises within the Project" renders the Premises untenantable. (Italics added.) At first glance it may appear the phrase "within the Project" modifies the word "Premises"; but it is clear from examining the contract as whole that the phrase in fact modifies the term "access," not Premises. (See Civ. Code, § 1641 ["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."]; Olson v. Doe (2022) 12 Cal.5th 669, 680 [a clause in a contract "must be understood in connection with the . . . agreement as a whole"].)
Both Project and Premises are defined terms in the lease. The lease defines the Project as the office complex known as "Water's Edge," which consists of two buildings, a common courtyard, two parking facilities, an outdoor athletic field, and the real property on which the complex sits. The lease defines the Premises-the portion leased to Fitness International-as a specific area of space in one of the buildings and a designated portion of the outdoor athletic field. Under these definitions, there is no portion of the Premises that is not within the Project. Therefore, to interpret the phrase "within the Project" in Article 30 as modifying "Premises" would render the phrase surplusage and redundant. (See Yahoo Inc. v. National Union Fire Ins. Co. etc. (2022) 14 Cal.5th 58, 69 ["Courts will favor an interpretation that gives meaning to each word in a contract over an interpretation that makes part of the writing redundant."]; Coral Farms, L.P. v. Mahony (2021) 63 Cal.App.5th 719, 727 ["Contracts 'are construed to avoid rendering terms surplusage.'"]; Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 753 ["The way we define words [in a contract] should not produce redundancy, but instead should give each word significance."].)
Moreover, the phrase "Premises within the Project" appears only in Article 30. The stand-alone term Premises, however, is ubiquitous; every Article of the lease uses the term Premises when describing the parties' obligations and rights regarding the leased property. Thus, had the parties intended in Article 30 to refer only to the space leased to Fitness International, they would have used the term "Premises," not the phrase "Premises within the Project." (See E.M.M.I Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 475 [a word used multiple times in a contract is "generally given the same meaning unless the [contract] indicates otherwise"].)
On the other hand, the lease includes a provision that addresses access "within the Project": Article 20, which governs rent abatement in the event of damage. Like Article 30, Article 20.1 generally provides that, during the period damage to "all or a part of the Project or Premises render[s] all or part of the Premises untenantable," Fitness International's rent obligations are abated in the proportion the nonoperational area bears to the total area of the Premises. Several other provisions of Article 20 discuss the parties' rights and obligations "[i]f the Premises, reasonable access thereto within the Project, or Building Systems or parking serving the Premises suffer Damage ...." (Italics added.) For example, Article 20 states that in those circumstances, Wedge "shall diligently repair" any "portion of the Project, including any damaged parking facilities, that is reasonably necessary for [Fitness International] to have reasonable access to the Premises and parking ...."
Thus, because (1) the (entirety of the) Premises is within the Project, (2) the parties used the term Premises when referring to the leased space, and (3) the phrase "within the Project" in Article 20 modifies the term "access," the phrase "within the Project" in Article 30 modifies the term "access." And these three things mean Fitness International's rent obligations are abated only where lack of reasonable access within the Project, i.e., within the office complex, renders the Premises untenantable, not necessarily in all cases where there is lack of reasonable access to the Premises.
With this understanding of Article 30, we conclude Wedge's interpretation of "reasonable access . . . within the Project" is more reasonable than Fitness International's. The physical conditions of or in the office complex must permit Fitness International and its members to enter or pass to and from the Premises. But conditions outside the office complex that may prevent access to the complex or restrict use of the Premises, such as road closures, "government restrictions," and a global pandemic, do not qualify as conditions that prevent reasonable access "within the Project." Fitness International's interpretation that its rent obligations are abated any time it cannot access the Premises would render the phrase "within the Project" largely surplusage.
Next, our interpretation that reasonable access within the Project does not include use of the Premises when government orders prohibit certain business finds support in "the doctrine of noscitur a sociis: that a word takes its meaning from the company it keeps." (Blue Shield of California Life &Health Ins. Co. v. Superior Court (2011) 192 Cal.App.4th 727, 740.) "'"In accordance with this principle of construction, a court will adopt a restrictive meaning of a listed item if acceptance of a more expansive meaning would . . . make the item markedly dissimilar to the other items in the list."'" (Rossa v. D.L. Falk Construction, Inc. (2012) 53 Cal.4th 387, 397; see Eisen v. Tavangarian (2019) 36 Cal.App.5th 626, 644.)
Article 30 lists two other circumstances that will abate Fitness International's rent obligations. Both involve circumstances where the Premises are untenantable because of conditions Wedge has a duty under the lease to address. First, Fitness International's rent obligations are abated where the Premises are untenantable because of "failure of the Building Systems." The lease states that Wedge represents and warrants the Building Systems are in good working order and that Wedge has the duty to "repair and maintain with reasonable diligence" the Building Systems. Second, Fitness International's rent obligations are abated where the Premises are untenantable because of "interruption in utility services" caused by "the failure by [Wedge] to supply utilities . . . to the extent, if any, that [Wedge] is specifically obligated under [the] Lease to supply the same ...." Wedge has the duty under the lease to install electric, gas, and water meters for the Premises. Wedge is not required to repair or maintain the corresponding utility lines "if such utility lines and systems are separately metered by the utility company," but Article 30 makes clear Fitness International's rent obligations are abated only where the interruption in utilities is due to the failure of Wedge to comply with its obligations.
Like the other circumstances that may abate Fitness International's rent obligations, "reasonable access to the Premises within the Project," as used in Article 30, is best interpreted as a condition of or within the Project that Wedge generally has a responsibility to maintain or a duty to address. For example, the lease provides Fitness International has the "right to use the common areas and public areas in the Project for itself, its employees, agents, customers and invitees." Wedge is required to maintain the common areas and may not make improvements or otherwise modify them in a manner that "would unreasonably interfere with [Fitness International's] use of or access to the Premises." Wedge also warrants Fitness International "shall have the right" to enter and exit "the Project through the then-existing designated entryways and . . . exits" and "have rights of ingress to and egress from contiguous streets to the Project." Wedge does not (and indeed cannot) have a duty to prevent or remediate government restrictions that prohibit Fitness International from operating a fitness center.
Finally, our interpretation harmonizes Article 30 with two potentially inconsistent provisions by giving effect to all provisions. (See Civ. Code, § 1652 ["Repugnancy in a contract must be reconciled, if possible, by such an interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole contract."]; Gilkyson v. Disney Enterprises, Inc., supra, 66 Cal.App.5th at p. 922 [same].) First, as discussed, the force majeure provision states a force majeure event shall "in no event" excuse Fitness International's rent obligations. In addition to governmental restrictions, there are several defined force majeure events that (depending on the circumstances) could prevent reasonable access to the Premises, including "enemy actions," "war," "terrorism," and "civil commotion." Fitness International's interpretation of Article 30-that reasonable access means the ability to use the Premises for its intended purpose as a fitness center-would limit the circumstances the force majeure provision would apply.
Second, the lease contains an eminent domain provision: "If all or any portion of the Premises are condemned or otherwise taken for public or quasi-public use" for less than 270 days, "this Lease shall remain in full force and effect and [Fitness International] shall continue to perform all of the terms, conditions and covenants of this Lease, including without limitation, the payment of [rent] and all other amounts required hereunder." Under Fitness International's interpretation of Article 30, it is difficult to imagine cases where the government takes the Premises for public use, but Fitness International still has "access" to the Premises.
On the other hand, limiting "reasonable access . . . within the Project" to conditions of or within the office complex that enable entry and passage to and from the Premises avoids an interpretation that would limit the applicability of the force majeure provision and that is inconsistent with the eminent domain provision. If a condition in the office complex prevents entry or passage to and from the Premises, Fitness International's rent obligations are abated. If, however, a government taking, government restrictions, enemy actions, war, terrorism, or a civil commotion (or again, global pandemic) prohibits use of the Premises for their intended purpose, Fitness International's rent obligations are not abated. Of course, it is possible to interpret the contract so that Fitness International's rent obligations would not be abated if the government initiated eminent domain proceedings, but would be abated if other government actions prevented access to the Premises. But a more reasonable interpretation is that the parties allocated to Fitness International the risk that any type of government action outside the reasonable control of Wedge would prevent Fitness International from using the property for its intended use.
Fitness International contends the force majeure provision should not take precedence over other provisions of the lease because it is inconsistent with Article 20. As Fitness International points out, the force majeure provision defines "fire," "earthquake," and "unavoidable casualty" as force majeure events that in no way excuse the obligation to pay rent; yet the entire purpose of Article 20 is to set forth conditions where damage "by fire or other casualty" abate Fitness International's rent obligations. But the difficulty in harmonizing the force majeure provision with Article 20-to the extent fire, earthquake, and unavoidable casualty are defined force majeure events-does not mean we should ignore the force majeure provision altogether. "'Generally the parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement, and this purpose should not be thwarted except in the plainest case of necessary repugnance. Even where different parts of the instrument appear to be contradictory and inconsistent with each other, the court . . . will not strike down any portion unless there is an irreconcilable conflict wherein one part of the instrument destroys in effect another part.'" (Southern Pacific Land Co. v. Westlake Farms, Inc. (1987) 188 Cal.App.3d 807, 822.) Thus, "reasonable access . . . within the Project," as used in Article 30, does not include use of the Premises for their intended purpose where government orders prohibit the operation of certain businesses.
2. Fitness International Was Not Entitled to a Declaration the Doctrine of Frustration of Purpose Excused Its Rent Obligations
"'The doctrine of frustration excuses contractual obligations where '"[p]erformance remains entirely possible, but the whole value of the performance to one of the parties at least, and the basic reason recognized as such by both parties, for entering into the contract has been destroyed by a supervening and unforeseen event."' [Citation.] A party seeking to escape the obligations of its lease under the doctrine of frustration must show: (1) the purpose of the contract that has been frustrated was contemplated by both parties in entering the contract; (2) the risk of the event was not reasonably foreseeable and the party claiming frustration did not assume the risk under the contract; and (3) the value of counter performance is totally or nearly totally destroyed. [Citations.] Governmental acts that merely make performance unprofitable or more difficult or expensive do not suffice to excuse a contractual obligation.'" (KB Salt Lake, supra, 95 Cal.App.5th at p. 1056; see Lloyd v. Murphy (1944) 25 Cal.2d 48, 54; Poway Crossings, supra, 87 Cal.App.5th at pp. 892-893.)
In the trial court, Wedge argued the undisputed evidence showed the doctrine of frustration of purpose did not excuse Fitness International's rent obligations because the lease term was for up to 25 years, and therefore the orders temporarily requiring Fitness International to close the fitness center did not destroy the value of the lease. Wedge submitted deposition testimony by a Fitness International executive that Fitness International never removed its equipment or other personal property from the Premises. This evidence met Wedge's burden on summary adjudication to show the doctrine did not apply.
Recall Fitness International did not submit any extrinsic evidence on this issue.
This case is legally indistinguishable from Poway Crossings, supra, 87 Cal.App.5th 882, another case where Fitness International sought to avoid rent obligations to its landlord during the period it could not operate a fitness center. (See id. at p. 885.) As the court in Poway Crossings explained, "temporary government closure of a fitness facility for a period of months when the premises have been leased for more than 19 years" and "the lease term spans more than 23 years total"-or in this case, where the premises have been leased for seven years and the lease term spans up to 25 years-"does not amount to the kind of complete frustration required for the doctrine to apply." (Id. at p. 895; see also Fitness International, LLC v. DDRM Hill Top Plaza L.P. (C.D.Cal. 2021, No. SACV 21-00142CJC)(ADSx) 2021 WL 5456666 ["temporary shut down of Tenant's fitness center does not 'destroy' the entire value" of a 15-year lease].) Moreover, even during the year Fitness International did not operate the fitness center, Fitness International still received some value from the lease. It was able to store its equipment and personal property on the Premises, which allowed it to save storage expenses and open the fitness center more promptly than it otherwise could have had it vacated the Premises and been forced to seek another commercial space.
Fitness International contends, as it contended in KB Salt Lake and Poway Crossings, the doctrine of "temporary" frustration of purpose excused its rent obligations during the period it could not operate the fitness center. (See KB Salt Lake, supra, 95 Cal.App.5th at p. 1055; Poway Crossings, supra, 87 Cal.App.5th at p. 894.) As we explained in KB Salt Lake, "[a]t least two courts," including the court in Poway Crossings, "have held California law does not recognize 'temporary' frustration of purpose ...." (KB Salt Lake, at p. 1056; see Poway Crossings, at p. 896; 20th Century Lites, Inc. v. Goodman (1944) 64 Cal.App.2d Supp. 938, 945.) "This conclusion follows from the legal effect of the frustration doctrine, which terminates the contract." (KB Salt Lake, at p. 1056; accord, Poway Crossings, at p. 896; 20th Century Lites, at p. 945; see Johnson v. Atkins (1942) 53 Cal.App.2d 430, 433 ["the legal effect of frustration is the immediate termination of the contract as to all matters and disputes which have not already arisen"].)
Fitness International relies on Bergin v. Van Der Steen (1951) 107 Cal.App.2d 8 for the proposition California recognizes the doctrine of temporary frustration of purpose. Bergin does not stand for that proposition. In Bergin a concessionaire contracted with a horse racing club to operate a concession stand at a horse track. (Id. at p. 10.) The concessionaire assigned his rights in the concession agreement to two individuals; in return, the assignees agreed to pay the original concessionaire 2.5 percent of their gross proceeds for five years. (Id. at pp. 10-11.) During that five-year term, government regulations issued during the Second World War temporarily prohibited racing meets. In response, one of the two assignees executed an agreement with the original concessionaire stating that "'the result of wartime restrictions and regulations shall be understood to have merely suspended said Agreement . . ., and the period of time during which said Agreement was inoperative . . . shall be deemed added to said contract and shall extend its term accordingly.'" (Id. at p. 13.)
The parties in Bergin did not contest whether the assignees were obligated to perform under the assignment agreement during the period wartime regulations prohibited racing meets. Indeed, it appears there was nothing for the assignees to pay, because they did not operate a concession. (Bergin v. Van Der Steen, supra, 107 Cal.App.2d at p. 13.) Instead, the parties disputed "whether the period of the contract was ultimately extended beyond its normal termination date for an additional period equal to the period during which performance was suspended," and the court relied on principles of temporary impossibility (not frustration of purpose). (Id. at p. 17; see Autry v. Republic Productions, Inc. (1947) 30 Cal.2d 144, 149 ["Temporary impossibility . . . operates as a permanent discharge if performance after the impossibility ceases would impose a substantially greater burden upon the promisor; otherwise the duty is suspended while the impossibility exists."].) Nothing about Bergin suggests California recognizes a temporary frustration of purpose defense that excuses a party's obligation to perform under a contract where it remains possible for the party to do so.
And even if California did recognize the defense of temporary frustration of purpose, the doctrine would not apply here for two reasons. First, "Fitness International did not attempt to rescind the lease and instead remained in possession of the premises." (KB Salt Lake, supra, 95 Cal.App.5th at p. 1057; see Poway Crossings, supra, 87 Cal.App.5th at p. 896.)As we explained in KB Salt Lake, "'even where the sole business to which premises are restricted by the terms of a lease becomes unlawful, the lease is not terminated merely by the enactment of the law declaring such business unlawful, but liability under the lease continues as long as the lessee continues in possession.'" (Id. at p. 1057; see Grace v. Croninger (1936) 12 Cal.App.2d 603, 606; Industrial Development & Land Co. v. Goldschmidt (1922) 56 Cal.App. 507, 122 (opn. of Supreme Ct. denying petition for rehg.) [a lessee may not "continue to hold possession of the premises after [a] prescribed business became unlawful, and escape payment of the rent on the ground of such illegality, without surrendering to the lessor"]; Rest.2d Property (Landlord &Tenant) § 9.2, reporter's notes 2 &7, pp. 316, 319 [a tenant who "vacates the leased property" is excused from rent obligations "after the enactment of a statute which makes the use to which he is restricted unlawful," but the "landlord is, of course, entitled to possession of the premises and rent for the period of time the tenant occupied the premises"].)
In addition to deposition testimony by the Fitness International executive that Fitness International never removed its equipment or other personal property from the Premises, Wedge submitted a declaration from the principal of its property management company stating Fitness International never returned keys to the fitness center or communicated it intended to terminate the lease.
Second, "'[i]t is settled that if the parties have contracted with reference (to the frustrating event) or have contemplated the risks arising from it, they may not invoke the doctrine of frustration to escape their obligations.'" (Glenn R. Sewell Sheet Metal, Inc. v. Loverde (1969) 70 Cal.2d 666, 676; accord, Autry v. Republic Productions, Inc., supra, 30 Cal.2d at p. 148; see KB Salt Lake, supra, 95 Cal.App.5th at p. 1056 [for doctrine to apply, the party claiming frustration must not have "assume[d] the risk under the contract"].) As discussed, the force majeure provision states that in no event shall government restrictions excuse Fitness International's rent obligations, and neither Article 30 nor any other provision in the lease renders the force majeure provision inoperable.
3. Fitness International Was Not Entitled to a Declaration the Doctrine of Impossibility or Impracticability Excused Its Rent Obligations
"The doctrine of impossibility includes 'not only cases of physical impossibility but also cases of extreme impracticability of performance.'" (KB Salt Lake, supra, 95 Cal.App.5th at p. 1058; see Lloyd v. Murphy, supra, 25 Cal.2d at p. 53.) "In contrast to the doctrine of frustration, where 'performance remains possible,' the doctrine of impossibility or impracticability excuses performance of a contractual obligation when performance is impossible or extremely impracticable." (KB Salt Lake, at p. 1058; see Autry v. Republic Productions, Inc., supra, 30 Cal.2d at p. 148.) "'"'A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.'"'" (KB Salt Lake, at p. 1059; see Mineral Park Land Co. v. Howard (1916) 172 Cal. 289, 293; Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336.) "Circumstances that '"may make performance more difficult or costly than contemplated when the agreement was executed do not constitute impossibility,"'" and a party "cannot 'avoid performance simply because it is more costly than anticipated or results in a loss.'" (KB Salt Lake, at p. 1059; see Habitat Trust for Wildlife, Inc., at p. 1336; Kashmiri v. Regents of University of California, supra, 156 Cal.App.4th at p. 839.)
To demonstrate the undisputed evidence showed the doctrine of impracticability did not excuse Fitness International's rent obligations, Wedge submitted deposition testimony from a Fitness International executive that Fitness International paid all rent due under the lease during the period the fitness center was closed. When asked whether "Fitness International agrees that it has always been financially able to pay the rent that [Wedge] claims is due under the lease," the executive said, "Yes." Wedge also admitted, in response to a request for admission, that at all times since January 2020 Fitness International has "had sufficient cash to pay the rent due under the LEASE." This evidence was sufficient for Wedge to meet its burden to show that Fitness International could continue to make its rent payments without "excessive and unreasonable cost" (KB Salt Lake, supra, 95 Cal.App.5th at p. 1059), and therefore that the doctrine of impracticability did not excuse its rent obligations.
Fitness International argues the court "should apply the doctrine of impracticability in a way that takes into account the extreme economic hardship that Fitness was forced to endure, by having to pay full rent every month for nearly a year for a closed property that generated no revenue." Fitness International submitted a declaration from the same executive, who stated Fitness International "did not collect any dues, fees, or monetary payments from its members at the Premises" during the period it could not operate a fitness center. That evidence, however, did not create a triable issue of material fact regarding whether Fitness International made the rent payments at an excessive and unreasonable cost. (See Poway Crossings, supra, 87 Cal.App.5th at p. 893 ["Nothing about the pandemic or resulting closure orders has made Fitness's performance of its obligation to [its landlord]-paying rent-impossible."]; Fitness International, LLC v. DDRM Hill Top Plaza L.P., supra, 2021 WL 5456666 ["nothing about the coronavirus pandemic has increased the 'cost' of [Fitness International's] performance of paying rent"].) Absent evidence of how much revenue Fitness International lost while the fitness center was closed, how (un)profitable the fitness center has been during the lease term, or how long Fitness International reasonably anticipated it would take to recoup the rent payments from future revenue, a rational trier of fact could not find the rent payments were excessive or unreasonable or caused Fitness International "extreme economic hardship." (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 845 ["There is a genuine issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion [for summary judgment] in accordance with the applicable standard of proof."].) That Fitness International at all times had sufficient cash to meet its rent obligations, made the required rent payments, and never sought to terminate the lease demonstrates it was not extremely impracticable to continue to pay rent during the temporary period it could not operate the fitness center.
Moreover, like the doctrine of frustration of purpose, the doctrine of (temporary) impracticability "is, of course, subject to contrary agreement." (G. W. Andersen Construction Co. v. Mars Sale (1985) 164 Cal.App.3d 326, 335; see Rest.2d Contracts, § 269, com. a, p. 349.) Because the force majeure provision states government restrictions shall in no event excuse Fitness International's rent obligations, the doctrine does not apply.
C. The Court Did Not Err in Granting Wedge's Motion for Summary Adjudication on the Remaining Causes of Action and for Summary Judgment
To prevail on its cause of action for breach of contract at trial, Fitness International had to prove the existence of a contract, Fitness International's performance or excuse for nonperformance, Wedge's breach, and resulting damages. (See Coral Farms, L.P. v. Mahony, supra, 63 Cal.App.5th at p. 727; J.B.B. Investment Partners Ltd. v. Fair (2019) 37 Cal.App.5th 1, 9.) To prevail at trial on its cause of action for money had and received, Fitness International had to prove Wedge had money that belonged to Fitness International and that "'"in equity and good conscience should be paid"'" to Fitness International. (Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1454; see Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 937.)
As discussed, Wedge met its burden to show the undisputed facts demonstrated that it did not breach the lease by requiring Fitness International to continue making rent payments and did not receive any money that belonged to Fitness International. Fitness International did not create a triable issue of material fact. Therefore, the court did not err in granting summary adjudication on these causes of action, and in granting summary judgment.
Fitness International asserted two additional causes of action: a separate cause of action for breach of contract alleging Wedge breached various representations, warranties, and covenants of the lease and a cause of action for money paid by mistake. The trial court also granted summary adjudication on these causes of action, and Fitness International does not challenge the court's rulings on these causes of action.
DISPOSITION
The judgment is affirmed. Wedge is to recover its costs on appeal.
We concur: MARTINEZ, P. J., RAPHAEL, J. [*]
[*] Judge of the San Bernardino County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.