Opinion
B223829
01-31-2012
LUCILLE WOOD, Plaintiff and Appellant, v. PETER STEHLIK et al., Defendants and Respondents.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Allison A. Arabian; Law Offices of Stanley T. Denis and Stanley T. Denis for Plaintiff and Appellant. Archer Norris, W. Eric Blumhardt and Phillip Allan T. Perez for Defendant and Respondent BP West Coast Products, LLC. David M. Danny for Defendant and Respondent Peter Stehlik.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. NC042635)
APPEAL from an order of the Superior Court of Los Angeles County. Roy L. Paul, Judge. Affirmed.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Allison A. Arabian; Law Offices of Stanley T. Denis and Stanley T. Denis for Plaintiff and Appellant.
Archer Norris, W. Eric Blumhardt and Phillip Allan T. Perez for Defendant and Respondent BP West Coast Products, LLC.
David M. Danny for Defendant and Respondent Peter Stehlik.
Lucille Wood and Peter Stehlik, landlords, and BP Coast Products (BP or defendant), tenant, are successors in interest under agreements that created a leasehold running from 1968 to 2008. Pursuant to the agreements, upon termination of the leasehold BP had 30 days to remove improvements, primarily a service station its predecessor had constructed in 1968. If it did not remove the improvements they would become the property of the landlords. When the leasehold ended in 2008, BP removed the improvements in a timely manner. Wood sued BP for damages contending the improvements had converted to her ownership in 1988 or 1998, when there had been gaps in the leasehold of more than 30 days, during which the improvements were not removed. Wood also sued Stehlik, alleging his acquiescence in BP's removal of improvements breached a separate contract giving her the right of first refusal should the property be sold. BP moved for summary judgment and Stehlik demurred, both contending there was never a gap in the leasehold.
The trial court agreed with BP and Stehlik, granting BP's motion for summary judgment and sustaining Stehlik's demurrer without leave to amend. The only issue on appeal is whether a 30-day gap in the leasehold existed at some point between 1968 and 2008. We agree with defendants and the trial court that no triable issue exists as to whether there was such a gap. Accordingly, we affirm.
BACKGROUND
A. Facts
1. ARCO Leases
Plaintiff and defendants are the assignees of a 20-year lease executed on June 5, 1967. The subject property was a plot in San Pedro, California, upon which Wood's and Stehlik's predecessors operated a service station. Under the lease, Atlantic Richfield Co. (ARCO), the original tenant, was required to construct a new service station on the land, which it was required to remove within 30 days of termination of the leasehold. If it did not timely remove the service station, the station would become the property of the landlords.
Pursuant to the terms of the lease, ARCO agreed to take possession of the property and pay rent while it constructed the service station, but the 20-year leasehold term would not commence until the station was completed. ARCO took possession of the property in 1967 and completed the service station some time in 1968. It is not known exactly when the service station was completed, and therefore not known when the 20-year leasehold expired.
Article 7 of the lease agreement provided: "At any time during the term of this lease and prior to 30 days after the termination thereof . . . Lessee may at its option and expense, remove from said premises any and all . . . improvements . . . placed or owned by it thereon . . . . Should Lessee fail to remove any buildings, structures and other property belonging to it located on the demised premises within said 30 days after such termination of this lease, title to the same shall pass to the Lessor."
In 1988, the parties amended the lease twice. The first agreement, entitled "Lease Amendment," was dated April 6, 1988. It provided that "Lessor and Lessee hereby amend that certain lease dated June 5, 1967 between Lessor's predecessors and [ARCO] . . . . [¶] 1. Effective July 20, 1988 the term of said lease is extended to and including July 19, 1998." (Italics added.)
ARCO and Stehlik's predecessor in interest signed the agreement in April 1988. Wood did not sign it until August 9, 1988.
The second amending agreement, dated July 14, 1988, provided: "Lessee will remove Lessee's improvements, fixtures, and property within 30 days after lease expiration and restore the land in accordance with Article 7 of the lease. Lessee shall continue for this extended period to pay rent to Lessor . . . ."
In 1998, Wood, Stehlik and ARCO entered into a second lease agreement (the 1998 lease), which established a leasehold running from July 20, 1998 to July 19, 2008. Section 1 of the 1998 lease provides: "Tenant has been a tenant of the Premises since May 1, 1968, pursuant to the Lease (the "Original Lease") dated June 5, 1967 . . . . The term of the Original Lease expires at midnight on [July 19, 1998]."
Section 6 of the 1998 lease entitled the tenant to remove "its improvements" from the party at any time during the term of the lease. Pursuant to section 10, title to any improvements the tenant elected not to remove would pass to the landlords when the tenant surrendered possession at the end of the leasehold.
ARCO later assigned its rights under the lease to BP, which sublet the service station to an operator until July 2008, when it removed all improvements and surrendered possession of the premises.
2. Right of First Refusal Agreement with Stehlik
In 1997, Wood and Stehlik's predecessor entered into an agreement giving Wood the right of first refusal should the property be sold.
B. Procedure
1. Claims against BP
Wood commenced this lawsuit on July 8, 2008, naming BP as a defendant and seeking an injunction to prevent removal of improvements on the land. When her efforts to enjoin removal of the improvements were unsuccessful, she filed an amended complaint, seeking damages for breach of contract, breach of the covenant of good faith and fair dealing, and conversion. After a series of demurrers, the fourth amended complaint is operative. The gravamen of the complaint is that BP breached the 1998 lease by removing improvements that belonged to her. Plaintiff alleged a 90-day gap existed in 1988 when the original leasehold ended, and a similar gap existed in 1998 when the amended lease term ended, which caused the improvements to pass to the landlords.
BP moved for summary judgment, arguing the leasehold continued unbroken under two leases from 1968 to 2008, and both leases authorized it to remove its improvements within 30 days after the leasehold ended. It supported the motion with the four lease documents.
Opposing the motion, Wood contended the original lease expired on April 30, 1988, and was not reinstated until July 20, 1988, when the first amendment became effective, or until August 9, 1988, when she signed the first amendment. There was thus a 90- or 100-day gap between expiration of the lease and reinstatement, during which title to the improvements passed to the landowners.
Wood supported her opposition with three internal documents from ARCO in which ARCO employees stated the original leasehold terminated on April 30, 2008. On January 21, 1988, one R. N. Moore, a real estate representative writing on ARCO letterhead, in a letter to Irene Mazich, Wood's predecessor in interest, stated, "As you know, this lease expires 4.30.88." On February 19, 1988, a Linda R. Hayes wrote an internal memo on ARCO letterhead to a Belle Tom, in which she stated "Management has decided to let the base lease at this facility expire—4-30-88." On May 3, 1988, Ms. Hayes wrote an internal memo to one Jan Destazio, stating that "[t]he lease expired 4/30." The ARCO employees are not otherwise identified in the record, and no foundation was established as to how they arrived at the April 30, 1988 termination date.
Wood also supported the opposition with her own declaration, in which she set forth her understanding of the terms of the various agreements. Wood declared: An ARCO representative had confirmed the April 30, 1988 termination date to her in private communications; no agreement was made before April 30, 1988, to extend the original lease; the three ARCO letters show ARCO knew the lease terminated on April 30, 1998; she never intended to relinquish title to the improvements; and paragraph 10 of the 1998 lease, which provided that ARCO would leave the premises '"in as good an order and condition as when Tenant took possession,'" would be meaningless if the parties had intended that ARCO raze the lot's buildings.
BP objected to Wood's declaration and the internal ARCO documents on the ground that they violated the parol evidence rule and the statements set forth in the ARCO letters lacked foundation, constituted hearsay, and contradicted the unambiguous language of the agreements. The trial court sustained the objections.
BP contended in its reply that pursuant to the first amendment of the original lease, the original term was "extended" to July 19, 1998. This indicated two things. First, the original leasehold would have ended on July 19, 1988, not April 30. Second, the original leasehold did not in fact end on that date, but continued unbroken from April 30, 1968 to July 18, 1998 (at which time the new lease went seamlessly into effect). Even if some gap in time existed between the original lease and its first amendment, BP argued, that gap was filled by a month-to-month holdover tenancy subject to the same terms as the original lease.
The trial court announced its tentative ruling at the hearing. The court stated that the amendment extending the original leasehold negated the existence of a gap in the leasehold and permitted the improvements to remain in place under ARCO's ownership. To the extent any gap existed, it was filled by a month-to-month tenancy on the same terms of the purportedly expired lease, particularly as the gas station remained in operation during this period. Wood did not contend BP ever gave up possession of the subject property or stopped paying rent. When asked in deposition whether there had ever been a gap during which she was not paid rent, she replied that she did not know. When asked if she had ever sent a letter to ARCO or BP stating they had not paid rent during an alleged three month gap in the lease, she answered she was not sure. Wood stated in her declaration that "'[s]ince that property had been a gas station for over 50 years with an established goodwill in that neighborhood, my plan was to continue operating that property as a gas station so that I could continue with the income stream . . . . '" She declared several times "that income from the gas station lease was her sole income in 1998 other than social security, not once suggesting that the income stream had been disrupted for any period of time . . ." Finally, in its separate statement, BP had stated that from 1988 on, it intended to and did continue to operate the service station, until at least July 2008. Plaintiff did not dispute that operations continued, she argued only that the cited evidence did not support BP's statement of intent. The trial court inferred from this evidence that plaintiff did not dispute that the tenants retained unbroken possession of the property and paid rent.
The court concluded the four lease documents and the parties' course of dealing established a continuous leasehold sufficient to ensure that title to the improvements did not pass to the landlords. Plaintiff presented no evidence of any gap in operations and never asserted, when negotiating the new lease or amendments to the original lease, that she owned the improvements.
Plaintiff disagreed with the tentative ruling. She argued the 1988 amendment did not go into effect until its stated effective date of July 19, 1988, or, alternatively, until August 9, 1988, when she signed it. The original leasehold had ended 80 to 100 days earlier, on April 30, 1988. Plaintiff's counsel did not dispute that ARCO and BP possessed the property continuously from 1968 and paid rent, he argued only that pursuant to statute, any holdover tenancy could have lasted only one month. That left a two month gap in the leasehold during which title to improvements passed to the landlords. Counsel argued that "what the parties intended, based on possession or payment of rent," was a disputed factual issue.
The court disagreed with plaintiff's counsel and granted summary judgment in a written order that tracked the tentative oral ruling. Wood filed a timely appeal from the ensuing judgment.
2. Claims Against Stehlik
In her original complaint against Stehlik, Wood sought only partition of the leasehold property and improvements. Once the improvements were removed, Wood amended the complaint to assert causes of action for breach of the right of first refusal contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. She alleged Stehlik encouraged BP to remove the improvements, which deprived her of her 50 percent interest in them and deprived her of her right to first refusal. Wood also alleged Stehlik attempted to sell the property to third parties, though she admitted in paragraph 95 of the complaint that the purchase contract expressly provided the sale was subject to her right of first refusal. Wood alleged Stehlik's conduct breached his fiduciary duty as her partner or joint venturer "in the lease."
Stehlik demurred to the fourth amended complaint, contending the contract claims failed because he owed no duty to preserve his interest in the property or its improvements. He argued Wood's cause of action for breach of fiduciary duty failed because the complaint alleged no partnership or joint venture pertaining to any particular use of the property.
The trial court sustained Stehlik's demurrer without leave to amend, holding that Wood admitted in the fourth amended complaint that Stehlik's proposed sale of the property to third parties was subject to her first refusal rights. It held plaintiff's claim for breach of fiduciary duty failed because although she alleged in conclusory fashion that she and Stehlik were partners in the "lease," she did not allege any partnership or joint venture pertaining to use of the improvements on the property, much less operation of a service station.
Wood moved for reconsideration. At the hearing on the motion, Stehlik's counsel requested judicial notice of the court's order granting BP's motion for summary judgment and argued that because BP had obtained summary judgment, Stehlik could not, as a matter of law, be liable for some breach of implied covenant of good faith and fair dealing or breach of fiduciary duty. The court ultimately denied the motion for reconsideration.
Wood appealed from the resulting judgment of dismissal.
DISCUSSION
A. Motion for Summary Judgment
A trial court must grant a summary judgment motion when no triable issue exists as to any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) We independently review the trial court's decision, "considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.] In the trial court, once a moving defendant has 'shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established,' the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff 'may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .' [Citations.]" (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.)
To prevail on her claims for breach of contract, breach of covenant, and conversion, Wood must show that when BP removed improvements from the leasehold property they belonged to her, not BP. It is undisputed Article 7 of the 1967 lease granted her ownership of the improvements in the event the leasehold lapsed for more than 30 days. The issue is whether such a lapse occurred. Wood contends two lapses occurred, from April 30, 1988 to July 20 (or August 9), 1988, and from July 19, 1998 to November of 1998. The improvements therefore passed to her ownership on either May 30, 1988 or August 19, 1998, and were hers when BP removed them in 2008.
BP presented evidence that no lapse occurred; the leasehold continued uninterrupted from July 19, 1968 to July 19, 2008. The original lease provided that ARCO would take possession of the property to build a service station, and the leasehold term would commence once the service station was completed and continue for 20 years. In April 1988, the parties entered into an "amendment" which provided that "Effective July 20, 1988," the leasehold was to be "extended." In 1998, the parties entered into a new lease. Section 1 of the 1998 lease states that the original lease expired at midnight on July 19, 1998, and the new lease commenced the next day.
Further, Wood stated in her declaration that a service station had been operated on the premises for 50 years, enjoyed good will in the community, and was her only source of income in 1998 other than social security. Wood did not dispute BP's assertion in its separate statement that as of 1998 it continued to operate the service station. Neither did plaintiff's counsel at the hearing dispute the court's several references to there being an unbroken period of 40 years during which the tenants operated the service station and paid rent. On the contrary, plaintiff's counsel impliedly admitted this was so, disputing merely the legal effect of the purported holdover tenancy.
This evidence carried BP's burden of demonstrating that Wood's claims against it had no merit by showing she could not establish a greater than 30-day gap in the leasehold. The burden then shifted to Wood to show a triable issue of material fact existed as to the gap.
Wood relied primarily on three letters written by ARCO employees in which they stated the lease expired on April 30, 1988. The trial court properly sustained BP's objections to the letters, as nothing indicated who the employees were or how they arrived at the April 30 date. Wood also relied on her own declaration as to the meaning of the original lease agreement, to which she was not a party, and the two amendments and 1998 agreement, to which she was. The trial court properly sustained BP's objections to her statements regarding the original agreement because Wood did not explain how she knew the intent of the parties that had entered into it. The objections to her statements regarding the remaining three agreements were properly sustained because they lacked foundation or contradicted the agreements themselves. "Contract formation is governed by objective manifestations, not subjective intent of any individual involved. [Citations.] The test is 'what the outward manifestations of consent would lead a reasonable person to believe.' [Citation.]" (Roth v. Malson (1998) 67 Cal.App.4th 552, 557.) Plaintiff thus failed to establish a triable issue as to whether the leasehold lapsed at any time between 1968 and 2008.
Even if the written lease lapsed, the leasehold is presumed to have continued month to month. "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.) In determining whether a triable issue exists, the trial court must consider "all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court . . . ." (Code Civ. Proc., § 437c, subd. (c).) The same requirement applies to our review of the order granting summary judgment. (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534.) Wood does not dispute that ARCO and BP possessed the property continuously for 40 years and paid all rent. Continual possession and payment of rent can be inferred from plaintiff's own declaration, in which she stated the service station on the property had been operated for 50 years, gaining good will in the community, and as of 1998 was her sole source of income except for social security. They can also be inferred from plaintiff's failure to recall any lapse in the leasehold or to complain about not receiving rent, and from the 1998 agreement, which stated that ARCO had "been a tenant of the Premises since May 1, 1968." (See Merrill v. Navegar, supra, 26 Cal.4th at p. 476 [court on appeal considers uncontradicted inferences reasonably supported by the evidence].) The uncontradicted (and undisputed) inference is that a holdover tenancy extended the lease even if no written agreement did.
Wood argues that the 1998 lease provides that the effective date of "commencement" of the original lease was May 1, 1968. The 1998 lease states that pursuant to the original lease ARCO had been a "tenant" since May 1, 1968. Pursuant to the original lease, the leasehold commenced not when ARCO took possession, but after it erected a service station. (This distinction between a tenant's possession and the running of the leasehold is also found in the second amending agreement, dated July 14, 1988, which provided that after the leasehold expired, the tenant would retain possession of the premises to remove fixtures and would "continue for this extended period to pay rent" to the lessor. The date the service station was erected is unknown, but can be inferred to have been July 19, 1968, because the first amendment, which was dated April 8, 1988, before the lease expired even under plaintiff's construction, stated the original lease was extended "effective July 20, 1988."
Wood argues that because the parties to the original lease did not include an option to renew the lease or provide for the possibility of a holdover tenancy, they clearly never intended that the leasehold go beyond 20 years. If what she means is that the leasehold could not later be extended, Wood offers no cogent support for the proposition. Of course, "[a] contract in writing may be modified by a contract in writing." (Civ. Code, § 1698, subd. (a).) And the parties' unexpressed original intent regarding holdover is irrelevant, as a holdover tenancy is presumed in law when the tenant retains possession and continues to pay rent. (Civ. Code, § 1945.) It is neither created by contract nor defeated by contractual silence.
Wood relies on Earle v. Kelly (1913) 21 Cal.App. 480 for the proposition that when continued possession and payment of rent creates a holdover tenancy, the term of the tenancy does not include any provision in the original lease regarding fixtures. The case is inapposite. There, the landlord and tenant entered into the five-year lease of an unimproved plot, executed in 1888. The original tenant constructed a livery stable on the premises and then sold his interest in the lease to one Jones, who sold it to one Smith, who sold it to defendant Kelly in 1896. In 1909, 16 years after the original lease had expired, Kelly ended his tenancy, vacated the premises, and moved a building off the property. (Id. at pp. 482-483.) The landlord sued for damages for the removal and appealed the jury's adverse verdict. The appellate court concluded that over the course of the 16-year holdover period the parties were deemed to have entered into a new, unwritten lease. The new lease recited nothing about the state of the property, so was deemed to be a lease of both the land and any improvements on site when Kelly first took possession, including the livery stable. Thus, even if the lease agreement had granted the original tenant the right to remove fixtures, that right was lost under the new lease agreement, "even though the new lease is for the same rental and term as the former one, or, in effect, merely a renewal of the old lease." (Id. at pp. 484-485.)
Earle v. Kelly did not involve Civil Code section 1945, which permits a holdover tenancy of no more than one year. The court did mention section 1945 in dicta, stating that under it, "a new term and a new lease would arise by force of law upon the tenant's holding over and paying rent, just as thoroughly as though a new express lease had been made between the parties for a term within that fixed by the statute. The statute does not extend the old term when the tenant holds over; it creates a new one for a period not exceeding one year." (21 Cal.App. at p. 485.) But the word "term" in the court's reasoning pertained to the duration of the lease, not the parties' obligations. The case therefore does not stand for the proposition that a holdover tenancy under Civil Code section 1945 runs without regard to the terms of the original lease. On the contrary, such a tenancy (up to one year) runs "on the same terms" as the original lease. (Civ. Code, § 1945; Woods v. Bank of Haywards (1909) 10 Cal.App. 93, 96 [continued occupancy of premises is regarded as an extension of the lease on the same terms "save as modified in respect to the monthly rent"].)
Wood argues the first 1988 amendment, which continued the leasehold effective July 20, 1988, was incomplete while it remained unsigned by her, and thus conveyed no rights to BP until she signed it on August 8, 1988. The argument is without merit. "It is not the rule that a contract which, on its face purports to be between the parties named in the instrument, must invariably be executed by all whose names appear in the instrument before it will be binding on any. In the absence of a showing that a contract is not to be deemed complete unless signed by all parties, the parties signing may be bound though others have not signed." (Kaneko v. Okuda (1961) 195 Cal.App.2d 217, 225; see Angell v. Rowlands (1978) 85 Cal.App.3d 536, 542.) Here, ARCO and Wood's co-owner both executed the first amendment in April 1988, before the original lease expired even under plaintiff's construction. It became effective once they had both signed, leaving no gap in the leasehold. At any rate, on August 8, 1988, Wood accepted ARCO's offer to continue the leasehold effective July 20, 1988, effectively affirming the contract.
B. Demurrer
The court sustained Stehlik's demurrer to Wood's contract causes of action on the ground that the only alleged act that could have breached the right of first refusal contract was a proposed sale of the leasehold property to third parties, and Wood admitted in the complaint that the sale was subject to her first refusal rights. The court sustained the demurrer to Wood's cause of action for breach of fiduciary duty because Wood failed to allege facts giving rise to a fiduciary duty.
On appeal, Wood's entire argument consists only of the last sentence of her opening brief—"[This court] should also reverse the order sustaining [Stehlik's] demurrer to the fourth amended complaint, since Mrs. Wood's contract claim against [him] is dependent on her ownership of the improvements, and is viable, if she owned the improvements"—and of her reply brief—"The judgment in favor of defendant Peter Stehlik is also erroneous, because it depends on the validity of the summary judgment."
Because the brief contains no argument on or discussion of this point, we treat the appeal as abandoned. (108 Holdings, Ltd. v. City of Rohnert Park (2006) 136 Cal.App.4th 186, 193, fn. 3.)
C. Stehlik's Motion for Sanctions
Stehlik seeks $2,500 in sanctions against Wood on the ground that the appeal against him is frivolous. He argues the appeal's lack of merit is self evident by virtue of Wood having abandoned it, and it was filed out of intrafamily animosity that has arisen over differing views as to the best use of the subject property.
"[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment— or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650; accord, In re Marriage of Gong & Kwong (2008) 163 Cal.App.4th 510, 516.)
Stehlik presents no evidence that Wood filed the instant appeal out of family animosity or for any other improper motive. Nor is the appeal to be deemed frivolous merely because Wood has abandoned it. An appeal may be abandoned for many reasons. The issue is whether any reasonable attorney would agree that the position taken on appeal is without merit. The only position Wood takes on appeal is that her claims against Stehlik survive or fail with her claims against BP. Whatever its merit or lack thereof, Stehlik can hardly complain the position is frivolous because he took the same position below.
We do not consider sanctions to be warranted under the standards set out in In re Marriage of Flaherty.
DISPOSITION
The judgment in favor of BP is affirmed. The appeal as to Stehlik is dismissed. Stehlik's motion for sanctions is denied. Respondents are entitled to costs on appeal. NOT TO BE PUBLISHED.
CHANEY, J.
We concur:
MALLANO, P. J.
ROTHSCHILD, J.