Judge: H. Jay Ford, III, Case: 22SMCV02839, Date: 2023-10-26 Tentative Ruling

Case Number: 22SMCV02839    Hearing Date: October 26, 2023    Dept: O

  Case Name:  MSS Properties Special Purpose II, LLC v. Majstorovic

SUBJECT:                 MOTION FOR SUMMARY JUDGMENT

MOVING PARTY:   Defendant Jovo B. Majstorovic

RESP. PARTY:         Plaintiff MSS Properties Special Purpose II, LLC

TENTATIVE RULING

Defendant Jovo B. Majstorovic’s Motion for Summary Judgement is DENIED. Defendant did not meet their burden of establishing that the Plaintiff is not entitled to a declaration in its favor. Furthermore, Plaintiffs met their burden of raising a triable issue of material facts.           

“The summary judgment procedures of C.C.P. 437c are applicable to declaratory relief actions.” ((c) [§ 247] Actions for Declaratory Relief., 6 Witkin, Cal. Proc. 6th PWT § 247 (2023); see Walker v. Munro (1960) 178 Cal.App.2d 67, 70. [“it is apparent that section 437c was intended to include declaratory relief actions in a proper case.].) “If there is a jurisdictional defect not apparent on the face of the complaint, or if the relief sought is dependent upon facts which are shown by uncontradicted affidavits not to exist, or if it appears that in the particular case the court desires to exercise the discretion invested in it by section 1061, Code of Civil Procedure, there is no reason why the case should be prolonged and a summary judgment not granted.” (Walker, supra, 178 Cal.App.2d at pp. 70–71.)

“Thus, in a declaratory relief action, the defendant's burden is to establish the plaintiff is not entitled to a declaration in its favor. It may do this by establishing (1) the sought-after declaration is legally incorrect; (2) undisputed facts do not support the premise for the sought-after declaration; or (3) the issue is otherwise not one that is appropriate for declaratory relief.” (Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1402.)

“A party is entitled to summary judgment only if it meets its initial burden of showing there are no triable issues of fact and the moving party is entitled to judgment as a matter of law. This is true even if the opposing party fails to file any opposition. The court's assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court's evaluation of the opposing party's papers. Therefore, the burden on the motion does not initially shift as a result of what is, or is not, contained in the opposing papers.” (Mosley v. Pacific Specialty Insurance Company (2020) 49 Cal.App.5th 417, 434–435 [landlord’s failure to address issue of whether they were aware of their tenant’s marijuana growing operation was not grounds to grant summary judgment where moving party failed to satisfy its initial burden as to the issue]; (Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1086-1087 [court cannot grant summary judgment based merely on lack of opposition; court must first determine if the moving party has satisfied its burden].)

In addition, the evidence and affidavits of the moving party are construed strictly, while those of the opponent are liberally read. (See Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 100.) “All doubts as to the propriety of granting the motion (whether there is any issue of material fact [Code of Civil Procedure] § 437c) are to be resolved in favor of the party opposing the motion (i.e., a denial of summary judgment).” (Hamburg v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 502.)

I.                Triable Issues of Fact Remain as to the Plaintiff’s Complaint for Declaratory Judgment

Defendant Jovo B. Majstorovic ("JBM") argues he is entitled to summary judgment on Plaintiff’s Declaratory Relief claim because (1) JBM purportedly gave renewal notice by mail and the rebuttable presumption of CA Evidence Code section 641 apply (2) Plaintiff MSS Properties Special Purpose II, LLC’s (“MSS”) has no standing to bring the action, and (3) MSS allegedly waived the right to assert the Sublease terminated on 8-8-22 because MSS allegedly accepted rent for the full month of August, 2022.

            A.        There is a triable issue regarding JBL’s exercise of its option to renew the lease.

“The renewal option in a lease is an irrevocable offer by the landlord that binds the landlord in advance to make a contract if the tenant exercises its option and accepts the offer, but the tenant is free to accept or reject the offer. The act of exercising the option is the act of accepting an offer and is subject to the general rules applicable to an acceptance.” (§ 34:36. Option to extend or renew lease term—Requirements for exercise of the option, 10 Cal. Real Est. § 34:36 (4th ed.), citations omitted.)

When an offer specifies the manner in which an acceptance must be communicated, no other method is sufficient (§ 1:41. When acceptance is effective, 1 Cal. Real Est. § 1:41 (4th ed.); see Palo Alto Town & Country Village, Inc. v. BBTC Company (1974) 11 Cal.3d 494, 500 [“in the absence of any specified means in the lease, plaintiff's thesis against ordinary mail seems to us to be an astonishing one in the light of the common practice of today's world of business.”].) “If a proposal prescribes any conditions concerning the communication of its acceptance, the proposer is not bound unless they are conformed to; but in other cases any reasonable and usual mode may be adopted.” (Civ. Code, § 1582.)

JBM states he provided Plaintiff with written notice of his intention to extend the Sublease term on or around March 1, 2022 by mailing the notice, via regular stamped mail, with return address, from a Post Office in Serbia to the correct Plaintiff’s address at 6524 Fremont Circle, Huntington Beach, California 92648. (See JBM Decl., ¶¶ 6, 7, Ex. 2–5.)

Section 3 of the sublease agreement provides for the sublease extension requirement of written notice made at least ninety days before the sublease term end date. (Id. ¶ 4, Ex. 1.) JBM allegedly mailed the notice on 3-1-22, which is more than ninety days prior to the sublease end date of 8-8-22 or 8-9-22 (See SSUMF, ¶ 1 [Parties dispute the correct sublease end date].) The sublease agreement expressly provides for notices to be deemed valid only if sent by certified mail, return receipt requested. (See JBM Decl., Ex. 1, ¶ 15 [“All notices hereunder must be in writing and, unless otherwise provided herein, shall be deemed validly given if sent by certified mail, return receipt requested,” emphasis added.].) JBM mailed the notice via regular stamped mail without a return receipt, and thus JBM’s notice did not comply with the express terms of the sublease agreement.

Furthermore, if in fact regular mail would have been accepted by MSS, MSS argues they never received the noticed letter until the notice was personally dropped at their address on 8-8-22, well past the ninety-day notice deadline. (Summers Decl., ¶ 25, Ex. 5.) MSS rejected this notice via US mail, postage prepaid, certified receipt, and in an email to JBM. (Id. ¶ 26, Ex. 6.)

JBM argues the “Mailbox Rule” applies from Evidence Code § 641, and thus even if MSS did not receive the 3-1-22 mailed notice, the date of the notice shipment is the effective date of notice. Evidence Code § 641 establishes a presumption of receipt stating “[a] letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail." (Evid. Code § 641.) “The effect of a presumption affecting the burden of producing evidence is to require the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence, in which case the trier of fact shall determine the existence or nonexistence of the presumed fact from the evidence and without regard to the presumption.” (Evid. Code, § 604.)

Here, JBM attached evidence of the stamped envelope, letter, and receipt, but no evidence that the letter was actually shipped, or placed in the mailbox. (JBM Decl., Ex. 2–5.) Furthermore, there is no evidence of a tracking number, or return receipt requested. (Id.). JBM also did not “properly” mail the notice letter, as he did not utilize certified mail, return receipt requested, or any other manner of tracking the letter. (Morasse Decl., ¶ 2B, 2C, 2E [“JBM admits that return receipt was available but he did not use it.”].)

Thus, there is a triable issue of material fact as to whether JBM’s method of the alleged renewal option acceptance was properly noticed, or reasonable.  Thus, the Defendant’s Motion for Summary Judgment is DENIED.

            B.        JBM has failed to show MSS does not have standing.

In reliance on the allegations of the complaint, JBM argues (1) MSS’s complaint pleads no further assignments or subleases and thus Ambulnz Health “has the right to the property through 2042”; (2) MSS first provided a notice of Abandonment on 2-4-19 one year after MSS claims Ambulnz abandoned the property; (3) Section 17.03 of the MSS/AmeriCare contract specifically provides that the lease continues in effect as long as the landlord does not terminate the tenant’s right to possession; (4) Section 17.03(c) further provides that no act by the landlord other than its giving notice of termination terminates the Master Lease, and Plaintiff did not do this. (MSJ, p. 7–9.)

In response, Plaintiff provides evidence showing (1) the Master Lease was modified by an assignment effective 6-1-17 changing the premises under the Master Lease to cover the entire second floor and uncovered parking lot, and remainder of the Property reverted back to MSS at that time (Summers Decl., ¶ 6, Ex. 2); (2) the Master lease terminated on 3-31-18 through the statutory notice of belief of abandonment process under Civ code §§ 1951.3(b) and 1951.35(b) after giving notice on 2-3-18 (Summer Decl., ¶¶ 9–11, Ex. 3 [See Summers Decl., Fn 1, p. 3 - Summers states there is a date typo on when the notice was sent stating the year 2017, but the correct year is 2018].); and (3) the Master lease expired on its own on 9-30-22 as per the terms of the assignment (Summers Decl., ¶ 14, Ex. 2.)  Thus, JBM has failed to establish as a matter of law that Plaintiff does not have standing to bring the complaint.

            C.        There is a triable issue regarding JBL’s affirmative defense that Plaintiff waived its right to renew the lease.

JBM argues Plaintiff waived its right to claim JBM did not renew the lease because “Plaintiff accepted defendant’s payment of rent for the full month of August 2022, and therefore cannot contend that the Sublease ended on August 8, 2022.” (MSJ, pp. 9–10.) JBM cites to Gould v. Corinthian Colleges, Inc, “Acceptance of benefits under a lease is conduct that supports a finding of waiver.” (Gould v. Corinthian Colleges, Inc, (2011) 192 Cal.App.4th 1176, 1179.) Defendant also states the Plaintiff tried to return part of the payment, but the defendant refused, and Defendant has since tendered his monthly rental payments each month after. (MSJ, p. 10.) Plaintiff provides a declaration and evidence of the prorated check for the period of 8-9-22 to 8-31-22 by certified mail, return receipt requested, which was returned to Plaintiff, and Plaintiff then sent it to attorney Michael Smalley. (Summer Decl., ¶ 27, Ex. 6.)  Plaintiff further attests to not accepting any rent from JBM for any period after 8-8-22 to the present. (Summer Decl., ¶ 28.)  Thus, JBM has failed to establish its defense of waiver as a matter of law.