Opinion
E081001
11-05-2024
LOS PORTALES ASSOCIATES, LP, Plaintiff, Cross-defendant and Respondent, v. FITNESS INTERNATIONAL, LLC, Defendant, Cross-complainant and Appellant.
Ellenoff Grossman & Schole, and Bryan M. McGarry for Defendant, Cross-complainant and Appellant. The Law Offices of Daniel A. Kaplan, Daniel A. Kaplan and Daniel C. Pierce for Plaintiff, Cross-defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. No. CVRI2102808 Irma Poole Asberry, Judge. Affirmed.
Ellenoff Grossman & Schole, and Bryan M. McGarry for Defendant, Cross-complainant and Appellant.
The Law Offices of Daniel A. Kaplan, Daniel A. Kaplan and Daniel C. Pierce for Plaintiff, Cross-defendant and Respondent.
OPINION
RAMIREZ P. J.
In 2015, Fitness International, LLP (Fitness) entered into a lease with the predecessor in interest Los Portales Associates LP (Los Portales) for the commercial purpose of conducting a fitness club and other related business enterprises. In March 2020, Fitness, like other businesses, was required to cease indoor operations due to Covid-19 and informed Los Portales of its need to abate the payment of rent. Los Portales and Fitness entered into three successive letter agreements modifying the lease to forgive or defer certain nonpayments of rent and related expenses at Fitness's request, while confirming Fitness's obligation to repay the deferred rent beginning in 2021.
Fitness continued to occupy the rental premises throughout the lease period but failed to repay the unpaid rent amounts and related expenses as agreed in the lease modifications, although it remained in possession of the premises. Los Portales filed a complaint for recovery of the unpaid rent and for rescission of the letter agreements, to which Fitness filed a cross-complaint. In a previous appeal, we affirmed Los Portales right to a prejudgment writ of attachment to secure the amounts yet unpaid. (Los Portales Ass'n. v. Fitness Int'l (Nov. 10, 2022, E078152) [nonpub. opn.] (Los Portales I.) In proceedings following remand, the trial court granted Los Portales's demurrer to Fitness's second amended cross-complaint (SACC) without leave to amend, as well as Los Portales's motion for summary judgment. Fitness appealed.
On appeal, Fitness argues that the trial court erred in (1) dismissing the SACC on the breach of contract and common count claims, and (2) granting summary judgment in favor of Los Portales. We affirm.
Background
This case involves review of both an order sustaining a demurrer without leave to amend as to Fitness's SACC, and an order granting summary judgment in favor of Los Portales on its complaint. Generally, in reviewing an order sustaining a demurrer, we accept as true the factual allegations in the operative complaint. (River's Side at Washington Square Homeowners Assn. v. Superior Court (2023) 88 Cal.App.5th 1209, 1218, quoting City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) We summarize the facts underlying the dispute from the original complaint and the SACC, as appropriate, in accordance with this practice.
In the discussion section addressing the motion for summary judgment, we will set out any additional matters taken from the affidavits, exhibits, or matters judicially noticed by the court.
According to the complaint, in 2015, Fitness entered into a retail lease agreement with the predecessor in interest of Los Portales, to lease certain premises, described in the agreement, located in a then proposed shopping center at Menifee Lakes Plaza in Riverside County, including the right to use common areas. The primary term of the lease was for 184 months (15 years and 4 months), with options to extend the term for three consecutive five-year terms. The rent for the premises comprised a minimum rent of $886,160.00 per year ($73,846.67 per month), plus a share of the common area expenses, insurance, and a pro rata portion of the real estate taxes.
The primary use of the premises was for the operation of a health club and fitness facility, along with various ancillary and incidental uses of a retail nature as well as for other related uses. However, the lease terms also permitted Fitness to change its use of the premises to any alternate legal use which is not otherwise expressly prohibited by the lease and is not in conflict with any exclusive use agreement then in effect.
In 2020, the Covid-19 pandemic interrupted businesses and on April 6, Fitness failed to pay rent. As a preemptive matter, on March 17, Fitness had already emailed correspondence to the various lessors to which it owed rent, declaring that the pandemic had both frustrated the purpose of the lease and constituted a force majeure event, allowing Fitness to fully abate rent (which it referred to as "rent holiday") and otherwise excuse Fitness the performance of their other obligations of the lease, indicating it would discuss lease modifications.
In addition, Fitness's general counsel emailed correspondence, asserting that Los Portales was responsible for the business closure by preventing Fitness from operating its business, interfering with Fitness's quiet possession and enjoyment of the premises and for falsely representing that Fitness's use of the premises would not violate any restrictions on its use. The letter also asserted that due to the unforeseen occurrence of the pandemic closures, Fitness's operation of its business has been made impossible and that its business purpose has been frustrated, Fitness was abating payment of all rents until operations could be recommenced.
On June 9, 2020, Los Portales and Fitness executed the first letter agreement, amending the lease and reaffirming Fitness's obligation to repay deferred rents commencing in January 2021. Pursuant to this modification, 50 percent of the rent due for the months of April and May was abated and forgiven by Los Portales, while 35 percent of the rents for those months would be deferred until January 2021, when it would be repaid by installments between January 1, 2021, and June 30, 2022. The amendment further provided that the additional rents due under the original lease (for common area maintenance and taxes) would also be delayed and deferred until August 5, 2020.
The second letter agreement was dated August 13, 2020, and further amended the terms of the original lease and the June 9th, letter agreement by deferring and delaying the payment of the minimum rent for the month of August 2020 to be repaid under the same terms as the previously deferred rents, but requiring payment of the additional rent as provided under the original lease.
On October 9, 2020, a third letter agreement was executed, deferring 100 percent of the minimum rent due for September, subject to repayment as provided in the previous letter agreements. In January 2021, Fitness failed to initiate the installment payments of the deferred rent.
On June 25, 2021, Los Portales filed a complaint comprising two causes of action: (a) for rent and damages pursuant to Civil Code section 1951.4, and (b) for rescission based on fraud in the inducement respecting the execution of the three modifications to the lease for rent deferral, seeking recovery of $706,186.99 in damages for the first cause of action, and for restitution of the full monthly rents ($73,846.67 per month as minimum rent) under the original lease for the second cause of action, along with attorneys' fees.
Fitness answered the complaint, and filed a cross-complaint against Los Portales, the operative version of which is the SACC. The SACC alleged causes of action for (1) breach of contract; (2) common count for monies had and received; (3) common count for monies paid by mistake; (4) common count for monies paid and expended; (5) declaratory relief-closure period; and (6) declaratory relief-ongoing restrictions.
The register of actions shows that Los Portales demurred successfully to Fitness's initial cross-complaint, as well as to the first amended cross-complaint.
On March 10, 2022, Los Portales filed a motion for summary judgment. On April 4, Los Portales demurred to the SACC. In opposition to the motion for summary judgment, Fitness argued it could not be held in breach of the lease because Los Portales had not served it with a notice of the breach, although it acknowledged it had not paid rent pursuant to the lease modifications. In reply to Fitness's opposition, which argued there was no breach because Los Portales failed to serve it with a formal notice of default, Los Portales argued that written notice was not required unless it invoked the provisions of section 19.2 of the lease, and that the three letter agreements amending the lease, in which Los Portales reaffirmed that Fitness continued to owe rent, constituted notice.
After receiving and considering supplemental briefing on the issue of notice of the default or breach of the lease, the court issued its rulings sustaining Los Portales's demurrer to Fitness's SACC without leave to amend and granting Los Portales's motion for summary judgment. Judgment was then entered in favor of Los Portales on its complaint, in which the court awarded Los Portales $689,920.34 for unpaid rent, plus prejudgment interest at the annual rate of 10 percent, in the sum of $169,199.05 for the period between April 1, 2021, and March 15,2023, with interest accruing at a rate of $188.89 per day. Costs and attorneys' fees were to be determined later.
On April 3, 2023, Fitness appealed.
Discussion
A. The Correctness of the Trial Court's Order Sustaining Los Portales's Demurrer to the SACC
Fitness argues that the trial court erred in dismissing its SACC, claiming the court erroneously concluded that the government-mandated closure orders fell outside the scope of the landlord's warranty on operation. It interprets the "right to operate" language found in section 1.9 of the lease, as guaranteeing that Fitness would be able to operate the fitness club and that the lease required Los Portales to indemnify and hold Fitness harmless under section 2.2 of the lease. We disagree.
1. The Trial Court's Ruling
In sustaining the demurrer without leave to amend, the court stated: "[Fitness] does not allege facts sufficient to show its performance of the terms of the lease or excuse for nonperformance of the payment of its rent obligations, despite its claims that the primary use provisions of the agreement were breach by [Los Portales]. There are no allegations that the government closure orders suspended or eliminated the requirement that [Fitness] pay rent. There are no allegations as to how [Los Portales] violated the warranties in light of the government closure. The fact that [Los Portales] warrantied the right to use the premises as a gym does not mean that [Los Portales] breached it because the government mandated the closures. [Fitness] has failed to provide any authority other than an out of state case that has no application here. [Fitness] has not provided any authority to support its position that rent was abated due to the government closures."
On appeal, Fitness has populated the record with multiple unpublished trial court opinions from other courts and jurisdictions that ruled in favor of Fitness, apparently ignoring the many cases which disagreed. These references were unhelpful to the trial court and to this court.
As to the common counts, the court held that all were based on the alleged breach of contract cause of action, which was based on the proposition that rent was abated due to the closures, for which theory Fitness had provided no legal authority. In addition, the trial court rejected Fitness's reliance on the force majeure clause of the lease because financial inability to pay is not a force majeure, particularly where Fitness had not shown it was prevented from paying rent by the government closures or that the closures caused Fitness to stop paying rent.
The trial court also rejected Fitness's reliance on Civil Code section 1511, subdivisions (1) and (2), which excuse performance when that performance is prevented or delayed by the creditor, or when it is prevented or delayed by an irresistible, superhuman cause, or an act of public enemies of this state or of the United States. Because that claim is not renewed on appeal, we do not address it.
2. General Principles Relating to Demurrers Sustained Without Leave to Amend
"'An order sustaining a demurrer without leave to amend is reviewed de novo. The court exercises its independent judgment to determine whether or not the complaint states facts sufficient to constitute a cause of action as a matter of law. [Citation.] We assume the truth of properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters that are judicially noticeable. [Citation.] We construe the pleading in a reasonable manner and read the allegations in context. [Citation.] However, courts will not close their eyes in situations where a complaint contains allegations of fact inconsistent with attached documents/exhibits, or allegations contrary to facts which are judicially noticed. [Citation.] Where facts appearing in attached exhibits or judicially noticed documents contradict, or are inconsistent with, the complaint's allegations, we must rely on the facts in the exhibits and judicially noticed documents.'" (A.S. v. Palmdale School Dist. (2023) 94 Cal.App.5th 1091, 1096, quoting Genis v. Schainbaum (2021) 66 Cal.App.5th 1007, 1014-1015.)
Fitness offers little legal analysis to support its interpretation of the lease provisions at issue, probably because there is none. It merely cites cases setting forth the standards of review, as well as cases setting forth the elements of a breach of contract claim and the general principles of contract construction, but offers no authority to support its interpretation of the provisions of the lease.
"'Perhaps the most fundamental rule of appellate law is that the judgment challenged on appeal is presumed correct, and it is the appellant's burden to affirmatively demonstrate error.'" (Ruelas v. Superior Court (2015) 235 Cal.App.4th 374, 383.) "'"[E]very brief should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration."''' (Supervalu, Inc. v. Wexford Underwriting Managers, Inc. (2009) 175 Cal.App.4th 64, 80-81.) Unfortunately, the many pages of regurgitated lease provisions, news articles, and irrelevant trial court rulings from other trial courts in other jurisdictions, coupled with Fitness's own interpretations, are insufficient to meet its burden on appeal to demonstrate, with legal authority, why the trial court's ruling was incorrect as a matter of law. Fitness's subjective interpretation is not persuasive. (In re A.C. (2017) 13 Cal.App.5th 661, 672-673 (In re A.C.).)
Additionally, "[i]f an argument in an appellate brief is supported by only an opinion or argument of appellant's counsel without 'citation to any recognized legal authority,' that argument may be deemed waived for failure to present supporting substantive legal analysis." (In re A.C., supra, 13 Cal.App.5th at p. 672.)
3. Analysis
"A general demurrer presents the same question to the appellate court as to the trial court, namely, whether [Los Portales] has alleged sufficient facts to justify any relief, notwithstanding superfluous allegations or claims for unjustified relief." (B &P Development Corp. v. City of Saratoga (1986) 185 Cal.App.3d 949, 952-953, citing Harnish v. Bramer (1886) 71 Cal. 155, 158; Matteson v. Wagoner (1905) 147 Cal. 739, 742; California Trust Co. v. Cohn (1932) 214 Cal. 619, 628; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496.)
"Because this appeal is from a judgment entered after the sustaining of a demurrer, '"We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions, or conclusions of law.'"'' (Rosenberg-Wohl v. State Farm Fire &Casualty Co. (2024) 16 Cal.5th 520, 523, quoting County of Santa Clara v. Superior Court (2023) 14 Cal.5th 1034, 1041.) We also consider matters that are subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank).)
When a demurrer is sustained without leave to amend, we must also decide "whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion, and we affirm." (Blank, supra, 39 Cal.3d at p. 318; Kilgore v. Younger (1982) 30 Cal.3d 770, 781; Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636 (Cooper).)
The burden of proving such reasonable possibility is squarely on the Los Portales. (Cooper, supra, 70 Cal.2d at p. 636.) "It is the appellant's responsibility to support claims of error with citation and authority; this court is not obligated to perform that function on the appellant's behalf." (Keyes v. Bowen (2010) 189 Cal.App.4th 647, 656, citing Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 113.) A crosscomplainant must therefore present legal authority and factual analysis on each point raised, with appropriate citations to the material facts in the record, or we may deem the argument forfeited. (Keyes v. Bowen, supra, at p. 655; Boyle v. CertainTeed Corp. (2006) 137 Cal.App.4th 645, 649 ["party asserting trial court error may not then rest on the bare assertion of error but must present argument and legal authority on each point raised"].)
(a) Breach of Contract
"The elements of a cause of action for breach of contract are: "'(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) damage to plaintiff therefrom.'"" (Property California SCJLW One Corp. v. Leamy (2018) 25 Cal.App.5th 1155, 1162, quoting Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)
We agree with the trial court. Given that Fitness asserts Los Portales failed to carry out its burdens under the lease, it is necessary for Fitness to establish that it had performed, that is, it had paid rent, or that it was excused from doing so. Fitness could not establish performance, so it relied on excuse, specifically, its theory that the force majeure provision, and that Los Portales's breach of warranties contained in the lease, excused it from paying rent. On appeal, he seeks reversal of the trial court's ruling rejecting his excuses for nonperformance. Fitness's interpretations of these provisions are not legally tenable.
(i) Force Majeure
In its initial notification to Los Portales of its intent to "abate" rent during the government ordered closures, Fitness invoked the force majeure provisions of the lease. In opposing the demurrer, however, Fitness merely repeated the provision and proffered its own tortured interpretation of its application, without citing any authority in support of that interpretation. In this manner, Fitness failed to establish that its performance was excused, because, according to decisional law, the language of the lease is not susceptible to Fitness's interpretation.
"22.3 FORCE MAJEURE. If either party is delayed or hindered in or prevented from the performance of any act required hereunder because of strikes, lockouts, inability to procure labor or materials, retraction by any Governmental Authority of the Building Permit or any building permit applicable to Landlord's Work once any such permit (i.e. the Building Permit or any building permit applicable to Landlord's Work) has already been issued, discovery of Native American artifacts during the development of the Project, failure of power, restrictive laws, riots, insurrection, war, fire, inclement weather or other casualty or other reason of a similar or dissimilar nature beyond the reasonable control of the party delayed, financial inability excepted (each, a 'Force Majeure Event'), subject to any limitations expressly set forth elsewhere in this Lease, performance of such act shall be excused for the period of delay caused by Force Majeure Events and the period for the performance of such act shall be extended for an equivalent period (including delays caused by damage and destruction caused by Force Majeure Events). Delays or failures to perform resulting from lack of funds or which can be cured by the payment of money shall not be Force Majeure Events. Force Majeure Events shall also include, without limitation, hindrance and/or delays in the performance of a party's work or such party obtaining a governmental approved certificate or sign off by reason of any of the following: (i) any work performed by the other party in or about the Project (including, but not limited to, the completion of any items of a party's work remaining to be completed); and/or (ii) the existence of Hazardous Substances in, on or under the Project not introduced by such party. In the event a party believes a Force Majeure Event has occurred, such party must notify the other party of the occurrence of such event within ten (10) days of its first occurrence." (Boldface added.)
The plain language of the force majeure provision contradicts Fitness's assertion that a government-ordered restriction constitutes a Force Majeure. Under the language of section 22.3 of the lease, financial inability is expressly excluded from the list of occurrences that will constitute a force majeure. Only if the tenant's "'ability to pay rent [has] been "delayed, interrupted, or prevented" by COVID-19 because timely performance would have either been impossible or was made impracticable due to extreme and unreasonable difficulty"' by the force majeure event would section 22.3 of the lease excuse the obligation to perform the act. (KB Salt Lake III, LLC v. Fitness Internat., LLC (2023) 95 Cal.App.5th 1032, 1054 (KB Salt Lake); West Pueblo Partners, LLC v. Stone Brewing Co., LLC (2023) 90 Cal.App.5th 1179, 1188 ["'[a]lthough a force majeure provision is often included in a contract to specify which qualifying events will trigger its application, the qualifying event must have still caused a party's timely performance under the contract to "'bec[o]me impossible or unreasonably expensive'"'" (italics omitted)].)
Other published cases undermine Fitness's interpretation of the force majeure provision. (See SVAP III Poway Crossings, LLC v. Fitness Internat., LLC (2023) 87 Cal.App.5th 882, 891, 893 (Poway Crossings) [the closure orders did not delay, hinder, or prevent Fitness from performing under the contract; "[n]othing about the pandemic or resulting closure orders" made Fitness's "performance of its obligation to [plaintiff]- paying rent-impossible"]; KB Salt Lake, supra, 95 Cal.App.5th at pp. 1056-1057 [Fitness's contractual obligation was to pay the plaintiff rent, and "Fitness International did not show temporary frustration of purpose excused it from paying rent"].) Governmental acts that merely make performance unprofitable or more difficult or expensive do not suffice to excuse a contractual obligation. (Lloyd v. Murphy (1944) 25 Cal.2d 48, 54-55; Poway Crossings, supra, 87 Cal.App.5th at pp. 892-893.)
A commercial tenant's obligation to pay rent is independent of the landlord's obligations under the lease. (Arnold v. Krigbaum (1915) 169 Cal. 143, 145-146; Fairchild v. Park (2001) 90 Cal.App.4th 919, 928.) Fitness's difficulty in operating a fitness club due to restrictive COVID-19 laws and closure orders does not excuse its failure to pay rent, particularly where it remained in possession of the premises. Nothing in the lease relieves Fitness of its obligation to pay rent if it is prevented from using the premises as a fitness club and the pandemic did not prevent Fitness from paying rent or dispossess Fitness of the premises.
Like numerous other businesses, Fitness was impacted by the pandemic and the consequent government restrictions, and we assume this resulted in reduced revenue. But the government closures (as opposed to any act by the Los Portales) affected Fitness's "performance from lack of funds," which is expressly excluded from the definition of force majeure under the lease. However, the lease makes clear financial inability to perform that obligation is not a force majeure event. (See Poway Crossings, supra, 87 Cal.App.5th at p. 893, involving a nearly identical lease.)
Based on the plain meaning of the force majeure provision, we conclude the government restrictions themselves did not delay, interrupt, or prevent Fitness timely performance of the duty to pay rent under the lease. (West Pueblo Partners, LLC v. Stone Brewing Co., LLC (2023) 90 Cal.App.5th 1179, 1188; see KB Salt Lake, supra, 95 Cal.App.5th at pp. 1053-1054.) In fact, the Governor's executive order N-28-20 expressly required tenants to pay rent. (Governor's Exec. Order No. N-28-20, §§ 1-2 (March 2020)
As the trial court concluded, Fitness failed to establish it was excused of its rent obligation by reason of a force majeure. This, coupled with the fact Fitness made no attempt to rescind the lease due to a force majeure, seeking only to avoid paying rent while continuing to occupy the premises throughout the closure periods, Fitness remained obligated to pay rent while in possession of the premises. (Poway Crossings, supra, 87 Cal.App.5th at p. 896, citing Grace v. Croninger (1936) 12 Cal.App.2d 603, 606 ["liability under the lease continues as long as the lessee continues in possession"].)
Fitness failed to meet its burden of showing it was excused from its obligation to pay rent, that is, its performance under the lease, due to the occurrence of a force majeure.
(ii) Alleged Breaches of Warranties or Guarantees Under the Lease
Fitness also alleged in the SACC that its rent obligations were excused because the Los Portales violated various warranties that Fitness had a right to be free of interference from operation by landlord under the lease. There were no allegations of the SACC as to the manner in which Los Portales violated the warranties in light of the government closures, and the fact that Los Portales warranted the right to use the premises as a fitness club and gym did not mean Los Portales breached it in light of the same government closures. In other words, because Fitness did not allege and could not demonstrate that Los Portales caused COVID-19 or the government restrictions, those unforeseen events cannot be categorized as "interference by Landlord."
Fitness also argues the trial court erred in rejecting Fitness's assertion that Los Portales's warranty that it will "not violate any agreements respecting exclusive use rights or restrictions on use within the Project" referred also to government restrictions on use. We disagree.
In interpreting the warranties under the lease, we rely not only the language used in the lease, but also on legal authorities interpreting that language. A "key rule of contract interpretation is that, to the extent practicable, the contract should be read so as to give effect to all provisions and avoid rendering some meaningless." (Poway Crossings, supra, 87 Cal.App.5th at p. 891, citing Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027.) "The character of a contract is not to be determined by isolating any single clause or group of clauses." (Transportation Guarantee Co. v. Jellins (1946) 29 Cal.2d 242, 247-248.) Instead, "[a] contract is to be construed as a whole, 'so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.'" (McCaskey v. California State Automobile Assn. (2010) 189 Cal.App.4th 947, 970.)
Here, as Fitness has rightly assumed, our decision takes into account recent published California decisions that have addressed the same issues and rejected Fitness's interpretations. In the recent decision of Poway Crossings, supra, 87 Cal.App.5th 882, the court interpreted section 1.9 of the lease, providing that Fitness "shall have the right throughout the Term and all Option Terms to operate for uses permitted under this Lease," to mean the landlord would not restrict Fitness from using the premises in any way permitted under the lease. (Id. at p. 891.) The lease provision in Poway Crossings is nearly identical to the same-numbered provision in this case; we agree with its interpretation.
The court in Poway Crossings noted that section 8.2 of the lease supports this interpretation, as it specifically allows Fitness to '"change the use of the Premises to any alternate lawful retail use' not otherwise prohibited by the lease or certain other restrictions." In other words, the reviewing courts concluded that the lease language "further underscores that [Poway Crossings'] obligation under the contract was not to ensure Fitness's ability to operate a health club and fitness facility for the entire duration of the lease term, but rather to provide Fitness with possession of the premises in exchange for its payment of rent to [Poway Crossing]." (Poway Crossings, supra, 87 Cal.App.5th at p. 891 .) This it did.
Here, the only expressed representations or warranties by Los Portales related to its authority to develop and lease out space in the shopping center. All of the expressed warranties were made to assure Fitness of uninterrupted possession of the leased premises during the period of the agreement. Los Portales did not, and could not, warrant that the government would not order business restrictions or closures in addressing an unanticipated worldwide pandemic. The warranties in the lease relate to the development and execution of the build-out plans for the shopping center, of which Fitness contracted to occupy a space. Los Portales did not violate any of its representations, warranties, or covenants, express or implied.
In section 2.2, of the lease it included the express "representations, warranties and covenants." Those representations included (as paraphrased) that it was authorized to enter into the lease; it has or was acquiring ownership (as tenant in common with another entity) of the premises; upon acquisition of the project [the shopping center] it would have exclusive title to the project the shopping center complex then being developed] in fee simple, free and clear of any tenancies, covenants, conditions, restrictions, liens, encumbrances and easements that might prevent or adversely affect the tenant's use of the premises for the primary uses, or disturb tenant's peaceful and quiet possession and enjoyment thereof; Los Portales would defend its title to insure against any outside claims to title or possession, and, so long as tenant substantially fulfilled its material covenants and conditions of the lease, tenant shall have, throughout the entire term and any extensions and renewals hereof, peaceful and quiet possession and enjoyment of the premises without any ejection by landlord or by any other person claiming by, through or under landlord; the person executing the lease on behalf of the landlord had the authority to bind the landlord; landlord's work [the development of the shopping center project] shall be in compliance with all applicable laws; that the site work would be free from defects; that the landlord would be responsible for transportation uniform mitigation fees and other charges relating to the construction work; that the tenant and its members were guaranteed ingress and egress from all contiguous streets to the project; the premises would have sanitary and storm sewer capacity; that the legal description appended to the lease was complete and accurate; there were no utility lines underneath the building that served another other building, and the tenant's signage complied with the project sign criteria. In section 3.3 of the lease, Los Portales warranted that its work in developing the project would meet all applicable standards.
Fitness also argues that section 1.9 of the lease guarantees its right to operate a health club and fitness facility "throughout the term of the lease." That provision relates to the "Primary Uses" of the premises, which were intended for the operation of a health club and fitness facility, and multifarious related uses. But no such language or its equivalent is found in that provision. Section 1.9 of the lease states, "Landlord hereby represents, warrants and covenants to Tenant that Tenant's operation of business from the Premises for the Primary Uses does not and will not violate any agreements respecting exclusive use rights or restrictions on use within the Project or any portion thereof. Tenant shall have the right throughout the Term to operate the Premises, or any portion thereof, for uses permitted under this Lease. Further notwithstanding anything to the contrary in this Lease, Landlord will not allow any other fitness related operation . . . to operate in [the shopping center project]."
Here, Fitness has continuously retained possession of the premises, so it was required to pay rent unless otherwise excused. Section 1.9 of the lease provided Fitness was able to make use of the space for any of the permitted uses described in the lease and nothing in this provision required the landlord to make Fitness's business profitable, or guaranteed that Fitness can operate its business indoors, or without government restrictions; nor does the lease guarantee Fitness has a right to operate the premises for any particular purpose. It provides that Fitness may "operate the Premises" for uses permitted under the lease. In this respect, we agree with the conclusion in Poway Crossings that Fitness's interpretation of section 1.9 of the lease would render meaningless the provisions of section 2.2 of the lease, and that the reasonable interpretation of section 1.9 of the lease, is that the landlord merely agreed not to restrict Fitness from using the premises in any way permitted under the lease. (Poway Crossings, supra, 87 Cal.App.5th at p. 891.)
We conclude that the Los Portales's warranties under the lease are not susceptible to the strained interpretation proffered by Fitness and for which it offers no citable legal authority as support. Our analysis also disposes of Fitness's claims regarding other "implied warranties," such as the implied right to operate its business on the premises, its implied right to operate without restrictions, and its implied right to operate indoors, as raised in its opposition to the demurrer to the SACC. None of these implied warranties is expressed in the lease, and all are at odds with the express language of the lease, by which Los Portales only warranted that Fitness could "operate the premises," that is, occupy them in conducting its business.
Fitness failed to establish Los Portales's breach of the lease. This failure, coupled with Fitness's failure to plead a valid excuse for its failure to pay rent, supports the trial court's ruling sustaining the demurrer to the first cause of action of the SACC without leave to amend.
(b) Common Counts
The trial court concluded that the common count claims failed under the same rationale for the same reasons it dismissed Fitness's breach of contract claim, namely, that no legal authority supported an abatement of rent during the government mandated closure periods. On appeal, Fitness simply states that the trial court erred without offering any legal analysis or authority to support its position. Fitness has forfeited this issue. (In re A.C., supra, 13 Cal.App.5th at p. 672; In re Masoner (2009) 179 Cal.App.4th 1531, 1538-1539; see Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 ["[w]hen an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived"].)
Nevertheless, the trial court's ruling was correct. It is well settled that "[a] common count is not a specific cause of action, however; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. [Citations.] When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable." (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394; see Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1038.)
Here, the cause of action for breach of contract in the SACC is demurrable for reasons we have explained; therefore, the common counts are demurrable. Absent any legal authorities or analysis establishing that the trial court erred as a matter of law, the demurrer to the SACC was properly sustained without leave to amend.
B. The Correctness of the Trial Court's Order Granting Summary Judgment on the Complaint
On appeal, Fitness argues that summary judgment was improperly granted, because it was excused from paying rent because (1) Los Portales's failed to serve it with notice of its default, (2) the force majeure provision of the lease relieved it of its rent payment obligation, and (3) it was entitled to cease paying rent under the doctrine of frustration of purpose. We have previously addressed the applicability of the force majeure provision of the lease in our discussion of the ruling on the demurrer, and need not address that issue again insofar as our opinion would not change.
We turn to Fitness's remaining arguments respecting the summary judgment, focusing on the issues briefed: lack of notice of default and the duty to quit or cure, and whether it was excused from its rent obligations under the doctrine of frustration of purpose.
As to other issues that Fitness had raised in its opposition to the motion for summary judgment in the trial court, which are not challenged on appeal they have been forfeited and we need not spend time there. (In re A.C., supra, 13 Cal.App.5th at p. 672 ['"[w]hen an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived"'].)
a. Standard of Review
"In reviewing a grant of summary judgment, we independently evaluate the record, liberally construing the evidence supporting the party opposing the motion and resolving any doubts in his or her favor." (Patterson v. Domino's Pizza, LLC (2014) 60 Cal.4th 474, 499-500, citing Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 274.) As the moving party, the Fitness must show that the Los Portales has not established, and reasonably cannot be expected to establish, one or more elements of the cause of action in question. (Hernandez v. Hillsides, Inc. (2009) 47 Cal.4th 272, 285.)
b. Analysis
(1) Lack of Notice to Quit or Cure
Fitness opposed Los Portales's motion for summary judgment on various grounds, including the claim that there was no breach of the lease for failing to pay rent because the Los Portales did not serve Fitness with a notice to quit or cure. The trial court agreed that the lease did include a provision requiring written notice under the lease in the event of default. However, it determined that the letter agreement dated June 9, 2020, implicitly acknowledged the unpaid rent and concluded that notice would have been an idle act at that point because the parties had agreed to modify it. It went on to conclude that lack of written notice did not actually excuse the breach for failure to pay rent.
In so stating, the court impliedly determined that the notice provision contained in the lease was superseded by the subsequent series of letter agreements amending the lease and deferring payment of unpaid rent. Although these agreements were later found to have been rescinded by Fitness's failure of consideration when Los Portales filed its complaint, at the time of their creation, they impacted both parties' duties under the original lease.
The trial court's ruling was correct, but there is an additional basis for concluding that the lack of written notice did not excuse Fitness from its default. Section 19.1 of the lease addresses "Tenant's Defaults," and provides in part: "Tenant's failure to pay any Minimum Rent or Additional Rent or other charges when due under this Lease, where such failure continues for ten (10) days after Tenant receives written notice from Landlord that such payment is due." That provision is followed by section 19.2 of the lease, which provides: "Upon any Event of Default by Tenant pursuant to Section 19.1 above, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to (A) terminate this Lease and all rights of Tenant hereunder by giving at least five (5) days' written notice of such intention to terminate; or (B) have this Lease continue in effect for so long as Landlord does not terminate this Lease and Tenant's right to possession of the Premises, in which event Landlord shall have the right to enforce all of Landlord's rights and remedies under this Lease including the right to recover the Minimum Rent, Additional Rent; or (C) without terminating this Lease, cure, pay or discharge any breach or violation hereof which amount so expended plus interest at the Interest Rate shall be added to the next monthly incremental payment of Minimum Rent, and treated in the same manner as Additional Rent hereunder; or (D) without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Premises, and relet the Premises." Los Portales did not terminate the lease.
If Los Portales had sought to terminate the lease, or had filed an action for unlawful detainer, the "quit or cure" notice would be mandatory. (Culver Center Partners East #1, L.P. v. Baja Fresh Westlake Village, Inc. (2010) 185 Cal.App.4th 744, 749-750; Liebovich v. Shahrokhkhany (1997) 56 Cal.App.4th 511, 513 [proper service on the lessee of a valid notice to pay rent or quit is an essential prerequisite to a judgment in an unlawful detainer action].) But section 19.2 of the lease explains that there are other remedies available to the landlord. Because a landlord is not required to terminate the lease, "the lease continues in effect for so long as the lessor does not terminate the lessee's right to possession, and the lessor may enforce all the lessor's rights and remedies under the lease, including the right to recover the rent as it becomes due under the lease." (Civ. Code, § 1951.4, subd. (b).)
The statute permits the landlord to elect this procedure providing the lease includes reference to this remedy and the lease permits the tenant to sublet the premises. (Civ. Code, § 1951.4, subd. (a).) The lease in this case authorizes Fitness to sublease the premises upon notice to the landlord and consent. A judgment in unlawful detainer declaring the forfeiture of the lease or agreement under which real property is held does not relieve the lessee from liability pursuant to section 1951.2, relating to the obligation of the Civil Code.
The mandatory notice asserted by Fitness is only required if the landlord intends to evict the tenant and rely on an unlawful detainer action to regain possession of the premises and secure unpaid rent. Nevertheless, the record includes a letter dated May 13, 2020, sent in response to Fitness' letter, informing Los Portales of its intention to seek a "rent holiday," where Los Portales stated, among other things, "Please be further advised we believe your position is without merit and all rent is fully due and payable notwithstanding the current Covid-19 situation and/or governmental orders. We retain all rights to exercise any and all legally permissible remedies for the collection of all monetary obligations under our lease and do not waive any of the same in any manner." This is not, strictly speaking, a notice of intent to invoke the quit-or-cure remedy under the lease, but it made clear Los Portales's position that rent was due while the premises were occupied. It would, indeed, have been an idle act to require a separate written notice as a condition precedent to filing a civil suit for unpaid rent under a lease.
Additionally, Fitness is estopped from relying on any affirmative defenses under the lease because its own conduct in inducing Los Portales to forebear from terminating the lease through the series of lease modifications had caused Los Portales to change its position in reliance on Fitness's promises to repay the unpaid rent, as we discussed in our decision in the interlocutory appeal. (Los Portales I., supra, E078152.)
In an earlier appeal by Fitness involving the same lease obligations we held that Fitness was estopped from claiming affirmative defenses under the original lease by which it induced Los Portales to enter into negotiations for the forgiveness and deferment of unpaid rent in the first place. (Los Portales I., supra, E078152.)
"'Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.'" (Westoil Terminals Co., Inc. v. Industrial Indemnity Co. (2003) 110 Cal.App.4th 139, 151, quoting Evid. Code, § 623.) While the trial court did not expressly rely on estoppel principles in making its ruling, in reviewing a grant of summary judgment, we affirm the trial court's judgment if it is correct on any ground. "[I]t is well settled that on appeal following summary judgment the trial court's reasoning is irrelevant, and the matter is reviewed on appeal de novo. [Citations.] We exercise our independent judgment as to the legal effect of the undisputed facts [citation] and must affirm on any ground supported by the record." (Jimenez v. County of Los Angeles (2005) 130 Cal.App.4th 133, 140.)
The trial court held Fitness did not violate the notice provision of the lease pertaining to default in Fitness's payment of rent because the agreement to modify the rent obligations under the lease, at Fitness's instance, made a notice of default an idle act. Despite the trial court's determination that the lease modifications were rescinded due to lack of consideration on the part of Fitness, this fact does not work in Fitness's favor where it acknowledged nonpayment of rent and was on notice of Los Portales's intent to pursue legal remedies in the event of default of the lease modifications.
The trial court's ruling that lack of notice did not excuse the nonpayment of rent was correct.
(2) Frustration of Purpose
Fitness argues that the trial court's rejection of its defense of frustration of purpose was error. Citing Lloyd v. Murphy (1944) 25 Cal.2d 48, 53 (Lloyd), Fitness argues that frustration of purpose excuses a party's performance under a contract when, even though "[p]erformance remains possible[,] but the expected value of performance to the party seeking to be excused has been destroyed by a fortuitous event, which supervenes to cause an actual but not literal failure of consideration." We disagree.
"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 counterperformance 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." (Poway Crossings, supra, 87 Cal.App.5th at p. 895, citing Lloyd, supra, 25 Cal.2d at p. 55; see KB Salt Lake, supra, 95 Cal.App.5th at p. 1056, citing Poway Crossings, at p. 895; Dorn v. Goetz (1948) 85 Cal.App.2d 407, 410-413 (Dorn).)
Frustration of purpose "is akin to the doctrine of impossibility of performance" in that "both have developed from the commercial necessity of excusing performance in cases of extreme hardship." (Lloyd, supra, 25 Cal.2d at. p. 53.) They differ in the nature of the hardship. Impossibility and impracticability require that it be either impossible or at least extremely or unreasonably expensive or difficult to perform one's obligations (Poway Crossings, supra, 87 Cal.App.5th at p. 893), while frustration of purpose applies 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.'" (Dorn, supra, 85 Cal.App.2d at p. 410.)
Frustration of purpose may be triggered by government action. (20th Century Lites, Inc. v. Goodman (1944) 64 Cal.App.2d Supp. 938, 943.) However, laws or other governmental acts that make performance unprofitable or more difficult or expensive do not excuse the duty to perform a contractual obligation. (Lloyd, supra, 25 Cal.2d at pp. 51, 55 [where, under the National Defense Act, the federal government ordered the sale of new cars discontinued, precluding defendant, the tenant car dealer, from conducting its new car dealership].) '"[T]he applicability of the doctrine of frustration depends on the total or nearly total destruction of the purpose."' (Poway Crossings, supra, 87 Cal.App.5th at p. 895, citing Lloyd, supra, at p. 53.)
Fitness argues that a temporary frustration of purpose excuses its duty to pay rent, arguing the trial court erred by rejecting this proffered theory. But at least three other published California cases have rejected this notion, including two cases addressing the identical claims by Fitness in defending against other lawsuits for recovery of unpaid rent. The courts reasoned that because application of the frustration of purpose defense terminates the contract, there can be no temporary frustration of purpose. (See KB Salt Lake, supra, 95 Cal.App.5th at pp. 1056-1057, citing Poway Crossings, supra, 87 Cal.App.5th at p. 896.) In Poway Crossings, the court concluded that "[f]rustration is not an available defense where, as here, counter-performance has been and remained valuable" and "because the value of the lease had not been totally or substantially destroyed." (Poway Crossings, at pp. 895-896.)
Even in Lloyd, on which Fitness relies, the Supreme Court concluded that the doctrine did not apply because the dealership had not "sustained the burden of proving that the value of the lease has been destroyed." (Lloyd, supra, 25 Cal.2d at p. 56.) The court reasoned, "The sale of automobiles was not made impossible or illegal but merely restricted and if governmental regulation does not entirely prohibit the business to be carried on in the leased premises but only limits or restricts it, thereby making it less profitable and more difficult to continue, the lease is not terminated or the lessee excused from further performance." (Ibid.)
Specifically addressing the possibility of a temporary frustration of purpose, the Supreme Court cautioned against expanding the frustration doctrine, stating, "The consequences of applying the doctrine of frustration to a leasehold involving less than a total or nearly total destruction of the value of the leased premises would be undesirable. Confusion would result from different decisions purporting to define 'substantial' frustration. Litigation would be encouraged by the repudiation of leases when lessees found their businesses less profitable because of the regulations attendant upon a national emergency. Many leases have been affected in varying degrees by the widespread governmental regulations necessitated by war conditions." (Lloyd, supra, 25 Cal.2d at p. 57.)
The lease in the present case provided that Los Portales would grant possession of certain premises to Fitness in return for rent. Fitness remained in possession of the premises throughout the pandemic, but did not pay rent for a significant period. The trial court properly rejected the temporary frustration of purpose defense to Fitness's obligation to pay rent. The frustration doctrine does not apply because the government restrictions did not prevent Fitness from occupying the premises or operating a commercial enterprise thereon for a portion of the lease term, and because Fitness never rescinded or terminated the lease. (See KB Salt Lake, supra, 95 Cal.App.5th 1032, 1057; Poway Crossings, supra, 87 Cal.App.5th at p. 896.) '"[E]ven 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." (KB Salt Lake, at pp. 1057, italics added.)
The conclusion of KB Salt Lake, supra, 95 Cal.App.5th 1032 mirrors the reasoning of Lloyd, where the court observed, "It must not be forgotten, however, that 'The landlord has not covenanted that the tenant shall have the right to carry on the contemplated business or that the business to which the premises are by their nature or by the terms of the lease restricted shall be profitable enough to enable the tenant to pay the rent but has imposed a condition for his own benefit; and, certainly, unless and until he chooses to take advantage of it, the tenant is not deprived of the use of the premises.'" (Lloyd, supra, 25 Cal.2d at pp. 56-57.)
This is not a new idea. Among the authorities cited by the court in KB Salt Lake, supra, 95 Cal.App.5th 1032 is the case of Grace v Croninger (1936) 12 Cal.App.2d 603, which is instructive here. There the guarantor of the tenant sought relief from unpaid rent obligations relating to premises after passage of the War-Time Prohibition Act of 1919 making the sale of alcohol illegal. There, the reviewing court noted that the lease expressly limited the tenant's lease purposes to the operation of a saloon and cigar store, but it also permitted the lessee to sublease a portion of the premises to a bootblack. (Grace v. Croninger, supra, at p. 605.) The court rejected the tenant's assertion that it owed no rent because although the governmental action rendered it illegal to sell alcohol, two of the other uses to which the premises were restricted (the bootblack and cigar store purposes) remained wholly legal after the enactment of the War-Time Prohibition Act, while even '"the business of a saloon', remained legal in part, insofar as 'the business of a saloon' contemplates the sale of nonintoxicating beverages as well as the sale of intoxicating liquors." (Id., at pp. 605-606.) The court noted that the tenant and the subtenant remained in possession of the premises but paid no rent. (Id., at p. 605.)
The court summarized the rule saying, "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." (Grace v. Croninger, supra, 12 Cal.App.3d at p. 606.) It is undisputed that Fitness remained in possession of the leased premises without paying rent and without a valid defense for the nonpayment. Having retained possession, it is liable to pay the agreed upon rent.
Summary judgment was properly granted.
Disposition
The judgment is affirmed. Los Portales is awarded its costs on appeal.
We concur: McKINSTER J. MILLER J.