Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC378570, Holly E. Kendig, Judge.
Davis, Cowell & Bowe, Richard G. McCracken, Kristin L. Martin, Sarah T. Grossman-Swenson for Plaintiffs and Appellants.
Seyfarth Shaw, Aaron R. Lubeley, Paul Berkowitz for Defendant and Respondent.
BOREN, P.J.
This appeal concerns the application of the Living Wage Ordinance (LWO) enacted by the City of Los Angeles (the City). The LWO requires that lessees of City-owned property pay their employees a wage set by the City, plus health benefits and compensated time off. In this case, a restaurant called La Golondrina is in City-owned property on Olvera Street. Since 1985, La Golondrina has been a month-to-month tenant without a written lease. Because the LWO applies to public lease agreements “consummated” after January 1999, the LWO does not apply to La Golondrina.
FACTS
La Golondrina is a restaurant on Olvera Street that has been operated by the same family for 80 years. The City owns the property where the restaurant is located. La Golondrina and the City entered a two-year written “concession agreement” in 1984. Since the concession agreement expired on December 31, 1985, La Golondrina has remained in possession of the property and pays monthly rent in excess of $1,000.
La Golondrina employs cooks, waiters, bartenders, busboys, cashiers and dishwashers, who are represented by a union, UNITE HERE Local 11 (Local 11). La Golondrina and Local 11 reached a collective bargaining agreement spanning 2002 to 2005 (the Agreement). It specifies wage scales for La Golondrina employees, and covers annual wage increases, health benefits, and vacation time. The Agreement “shall automatically be renewed for one year at a time” after January 31, 2005, “unless terminated or reopened for alteration” by La Golondrina or the union.
On October 28, 2004, Local 11 sent a notice to La Golondrina stating that it wished to reopen the Agreement, and they began negotiations on a new collective bargaining agreement. On April 30, 2008, the City issued a provisional exemption from the LWO to La Golondrina, while the restaurant and the union negotiate the terms of a new collective bargaining agreement. To date, no agreement has been reached.
In October 2007, this class action was initiated to compel La Golondrina’s compliance with the LWO, and to recover unpaid wages owing to all employees due to the alleged violation of the LWO, plus treble damages. In their first amended complaint, plaintiffs allege that they are paid less than the LWO wage rates and are not provided at least 12 compensated days off annually, as required by the LWO. La Golondrina admits that the named plaintiffs are Local 11 members employed at the restaurant as a tortilla maker and a food server.
In September 2008, plaintiffs filed a motion “for partial summary judgment.” They asked the court to rule that (1) La Golondrina is a nonexempt employer under the LWO; (2) La Golondrina’s duty to comply with the LWO has not been superseded by a collective bargaining agreement; and (3) La Golondrina has a duty to comply with the LWO. La Golondrina filed its own motion for summary judgment, arguing that the LWO does not apply as a matter of law because the restaurant last “consummated” a lease with the City in 1984. La Golondrina also claimed that it is exempt from the LWO by virtue of the Agreement.
The trial court issued a statement of decision on May 21, 2009. With respect to plaintiffs’ motion, the court observed that there is no “partial” summary judgment. Even if plaintiffs had requested a summary adjudication of issues, it could not be granted because none of their requests (for wages, penalties, and injunctive relief) would be resolved if the court merely determined that La Golondrina was required to comply with the LWO.
With respect to La Golondrina’s motion, the court found that the restaurant is a month-to-month tenant, without a written lease. A new lease is not “consummated” each month when La Golondrina pays rent; rather, the only date consummation occurs is when a lease is signed by the landlord and tenant, and possession is delivered to the tenant. The LWO does not apply to periodic tenancies. As a result, La Golondrina is not bound by the LWO because no lease was consummated by the restaurant and the City after the effective date of the LWO. The court’s finding resolves all of plaintiffs’ pending claims. Judgment was entered in favor of La Golondrina on July 24, 2009. This timely appeal followed.
DISCUSSION
1. Appeal and Review
The judgment is final and appealable. (Code Civ. Proc., § 437c, subd. (m)(1).) A motion for summary judgment “shall be granted if 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.” (Id., subd. (c).) Summary judgment provides courts “with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Summary judgment will be upheld when... the evidentiary submissions conclusively negate a necessary element of plaintiff’s cause of action, or show that under no hypothesis is there a material issue of fact requiring the process of a trial....” (Thompson v. Sacramento City Unified School Dist. (2003) 107 Cal.App.4th 1352, 1360.) Review is de novo. (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003.)
“In interpreting the LWO we are guided by well-established principles of statutory construction.” (Aguiar v. Superior Court (2009) 170 Cal.App.4th 313, 323.) We give the words “their usual and ordinary meaning.” (Id. at p. 324.) “‘If there is no ambiguity, then we presume the lawmakers meant what they said, and the plain meaning of the language governs.’” (Ibid.) If the terms are ambiguous, then we may resort to extrinsic sources, selecting “‘“‘the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.’”’” (Ibid.; Hopp v. City of Los Angeles (2010) 183 Cal.App.4th 713, 717.)
2. The Living Wage Ordinance
The LWO was enacted in 1997. As amended in 1998, it applies to an employer who is a “public lessee.” (L.A. Admin. Code (LAAC) § 10.37.1(g).) A “public lease” means a lease of City property that “is visited by substantial numbers of the public on a frequent basis.” (LAAC § 10.37.1(i)(a)(1).) The law affects service employees who work for lessees of City property, requiring that they be paid a living wage, health benefits, and compensated time off. (LAAC §§ 10.37, 10.37.2, 10.37.1(f).) The City sets the living wage rates. The definition of a “public lease” is liberally interpreted to achieve the LWO’s policy objectives. (LAAC § 10.37.13.)
The LWO applies to public leases “consummated” after January 14, 1999. It also applies to “amendments” to public leases “consummated” after January 14, 1999, which “extend term.” (LAAC § 10.37.11(b)(2).)
A public lessee may be exempt from the LWO if it has no more than seven employees, or has annual gross revenues of less than $350,000 from business conducted on City property. (LAAC § 10.37.1(i)(b)(1)-(2).) In this instance, it is stipulated that La Golondrina has more than seven employees and has gross revenues in excess of $350,000. The requirements of the LWO may be superseded by a collective bargaining agreement. (LAAC § 10.37.12.)
The LWO is administered by a “designated administrative agency” (DAA), which monitors compliance, investigates claimed violations, and promulgates implementing regulations. The DAA determines whether particular contracts are “public leases” for purposes of applying the LWO. (LAAC § 10.37.7.) The DAA is the City’s Department of Public Works, Bureau of Contract Administration. (LAAC § 10.37.1(e).)
An employee claiming a violation of the LWO is authorized to bring suit to recover wages and medical benefits. For willful violations, the damages are trebled. An employee who prevails is entitled to attorney fees; an employer who prevails may recover attorney fees if the employee’s claim is frivolous. (LAAC § 10.37.6.)
3. Existence of a “Consummated” Lease with the City
The LWO applies to public leases and to amendments extending the term of a lease that are “consummated” after January 14, 1999. The undisputed evidence shows that La Golondrina and the City entered into a written lease in 1984, and it expired on December 31, 1985. The lease was not amended to extend its term. Nevertheless, La Golondrina remains in possession of the property, and pays rent.
Plaintiffs contend that “consummation of the lease occurs each month when La Golondrina pays rent and the City accepts it.” Alternatively, plaintiffs contend that La Golondrina consummates an amendment extending the term of the original lease each month, by the act of paying rent. Plaintiffs acknowledge that when the City extended the LWO to apply to public leases, starting in 1999, it intended for the enactment to apply prospectively to public leases consummated after the effective date of the legislation, to avoid claims that the new legislation impaired existing leases, in violation of the Contracts Clause of the United States Constitution.
The word “consummated” is not defined in the LWO. The City’s rules and regulations implementing the LWO define a “lessee” as “any person who enters into a public lease agreement with the City.” A lease agreement is “entered into” when it is executed or signed. (See Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 366 [stating that a statutory provision relating to leases “executed” after September 23, 1983, means that it “applies only to leases entered into after September 23, 1983, ” italics added].) We infer that the City used the word “consummate” in the LWO to mean “enter into” or “execute” a public lease agreement with the City.
Interpreting “consummate” to mean “enter into” or “execute” a lease is consistent with judicial interpretation and common sense. “‘The word “consummate” means to bring to completion.’” (Hodges v. Lewis (1952) 112 Cal.App.2d 526, 529; Cochran v. Ellsworth (1954) 126 Cal.App.2d 429, 440.) In Colwell Co. v. Hubert (1967) 248 Cal.App.2d 567, the parties “executed” a lease on February 13, 1961, after engaging in negotiations since the fall of 1959. (Id. at pp. 572-573.) The court found that “there can be no doubt that the lease of February 13, 1961, ‘was a consummation of negotiations initiated by plaintiff.’” (Id. at p. 577.) As a matter of common sense, a lease agreement cannot be “brought to completion” every month; rather, it is consummated or entered into when negotiations are completed, the landlord and tenant sign the lease, and the tenant takes possession of the leasehold.
Plaintiffs argue that “[n]othing in the [LWO] requires that public leases be in writing.” We read the City’s administrative code as a whole, not piecemeal. “‘[E]very statute should be construed with reference to the whole system of law of which it is a part so that all may be harmonized and have effect.’” (Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640, 645.) Under the City’s code, a written lease is required: “Except as otherwise provided by ordinance, every contract involving consideration reasonably valued at more than One Thousand Dollars ($1,000) shall, except in cases of urgent necessity for the preservation of life, health or property... be made in writing or other manner as provided by ordinance....” (LAAC § 10.2.) The contract “shall be signed on behalf of the City” by the mayor, board, officer or employee authorized to enter the contract, or a person authorized by the City Council. (Ibid.) La Golondrina does not have a written lease with the City, as required by the City’s administrative code for contracts over $1,000.
Once the written agreement between La Golondrina and the City expired in 1985, the lease was transformed by statute into a periodic tenancy. “If a lessee of real property remains in possession thereof after the expiration of the hiring, and the lessor accepts rent from him, the parties are presumed to have renewed the hiring on the same terms and for the same time, not exceeding one month when the rent is payable monthly, nor in any case one year.” (Civ. Code, § 1945.) Thus, when (1) a written lease expires, (2) the tenant continues to occupy the premises with the landlord’s consent, and (3) the landlord accepts rent from tenant, the law implies a month-to-month tenancy with the same terms as the written lease. (Spaulding v. Yovino-Young (1947) 30 Cal.2d 138, 141-142; Dover Mobil Estates v. Fiber Form Products, Inc. (1990) 220 Cal.App.3d 1494, 1501; Drybread v. Chipain Chiropractic Corp. (2007) 151 Cal.App.4th 1063, 1077.)
A month-to-month tenancy implied by law is not a public lease “consummated” after the effective date of the LWO. As noted, City leases over $1,000 must be in writing, a requirement that is acknowledged by the use of the word “consummate” a lease in the LWO and the words “enter into” a lease in the implementing rules and regulations. The written lease agreement between La Golondrina and the City was “entered into” in 1984, long before the effective date of the LWO. No amendment extending the term of the lease was consummated after January 14, 1999, the effective date of the applicable LWO provisions. Thus, the LWO does not apply to La Golondrina. (LAAC § 10.37.11.)
The very fact that the LWO contemplates an “amendment” to “extend term” of a public lease indicates that a written memorialization is required for lease extensions, in conformity with LAAC section 10.2, and in the spirit of creating a transparent public record of the City’s business dealings.
4. The DAA’s Determination Is Not Binding
On September 22, 2008, while this lawsuit was pending, the DAA issued a determination that the LWO “applies to the La Golondrina lease, not withstanding [sic] its ‘hold-over’ status.” Plaintiffs contend that the courts should defer to the DAA’s determination that the LWO applies to La Golondrina. Plaintiffs observe that the LWO creates a presumption that all City leases meet the definition of a public lease, subject to “a determination by the DAA of non-coverage or exemption on any basis allowed by this article, including, but not limited to, non-coverage for failure to satisfy such definition.” (LAAC § 10.37.13.)
Only regulations formally adopted by an agency are binding on the courts. (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7.) An agency’s “case-specific” legal interpretations are not regulations. (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571.) “[T]he binding power of an agency’s interpretation of a statute or regulation is contextual: Its power to persuade is both circumstantial and dependent on the presence or absence of factors that support the merit of the interpretation.” (Yamaha Corp. of America v. State Bd. of Equalization, supra, 19 Cal.4th at p. 7.) “‘The standard for judicial review of agency interpretation of law is the independent judgment of the court, giving deference to the determination of the agency appropriate to the circumstances of the agency action.’” (Id. at p. 8.)
The DAA’s determination is not persuasive. It cites no authority in support of the merits of its conclusion, and does not acknowledge the City’s administrative code requirement that all leases over $1,000 be in writing and signed by the mayor, or other City employee authorized to sign the contract. Nor does the DAA acknowledge that the City has not had a written contract with La Golondrina for 25 years. We note that the DAA’s determination in this case is inconsistent with its own “Living Wage Ordinance Summary.” The DAA’s summary states that “Agreements executed after May, 1997 are subject to the LWO. An agreement entered into before May, 1997 may become subject to the LWO if it is later amended or modified in order to add time or money to the original agreement.” La Golondrina’s agreement with the City was executed or entered into in 1984; there was no amendment to add time to the original agreement. Under the DAA’s own interpretation of the LWO in its summary, the LWO does not apply here.
The LWO did not exist when the City entered into a concession agreement with La Golondrina; therefore, the LWO was not an express or implied term of the written agreement. If the City wants the LWO to apply to La Golondrina, then it needs to consummate a new lease or an amendment extending the original lease, in compliance with LAAC section 10.2. Alternatively, it can amend the LWO to apply to month-to-month tenancies. The way that the LWO is presently written, the City cannot treat a month-to-month tenancy created by operation of law following the expiration of a lease as if it were a public contract entered into by the City.
In 1999, the City Council approved a master lease for Olvera Street tenants, for a 55-year-long lease term. No individual lease agreements were ever consummated because the City Attorney disapproved of the lease rates accepted by the City Council. In 2006, the City Attorney informed La Golondrina that it had no new lease with the City because “the parties have never come to a meeting of the minds, ” and the City has not conformed to the statute of frauds or its charter, which “impose[s] strict lease formation requirements.”
5. Effect of the Collective Bargaining Agreement
In light of our conclusion that the LWO does not apply to La Golondrina because it does not have a public lease agreement consummated after January 14, 1999, we need not reach the issue of whether the collective bargaining agreement between Local 11 and La Golondrina supersedes the LWO. Likewise, we need not determine whether the trial court erroneously sustained or overruled the parties’ objections to witness declarations relating to the collective bargaining agreement. These issues are moot.
DISPOSITION
The judgment is affirmed.
We concur: DOI TODD, J., CHAVEZ, J.