Judge: Mark C. Kim, Case: 21LBCV00083, Date: 2023-01-17 Tentative Ruling
Case Number: 21LBCV00083 Hearing Date: January 17, 2023 Dept: S27
1.
Background
Facts
Plaintiff, Fitness International,
LLC filed this action against Defendant, Palo Woods, LLC for declaratory relief
and common counts. The operative complaint
is the FAC, which was filed on 4/05/21. Plaintiff
operates fitness centers and one of its centers was located in a building owned
by Defendant and leased by Plaintiff.
The FAC includes two declaratory
relief causes of action and three common counts causes of action. The declaratory relief causes of action seek
declarations that (a) Plaintiff did not have to pay rent to Defendant, at all,
during the time it was not allowed to operate under Covid regulations, and (b) Plaintiff
only has to pay proportionate rent to Defendant during the time Plaintiff was subject
to maximum occupancy regulations due to Covid.
Plaintiff also seeks a return of monies it paid prior to determining it
did not need to pay monies to Defendant due to the above-mentioned restrictions.
Defendant filed a cross-complaint
against Plaintiff for breach of contract and declaratory relief, contending Plaintiff
is in breach of its contractual obligations to pay rent due under the parties’
contract, and seeking a declaration that the various Covid regulations do not
relieve Plaintiff of the obligation to pay rent. The operative cross-complaint is the FACC,
filed on 10/12/22. It includes causes of
action for breach of contract, declaratory relief, fraud, negligent misrepresentation,
and breach of the implied covenant of good faith and fair dealing.
2. Motion
for Summary Adjudication
On 11/03/22, Palo Woods filed this
motion for summary adjudication. Fitness
filed timely opposition to the motion, and Palo Woods filed timely reply
papers.
a.
Evidentiary Objections
The Court declines to rule on the
parties’ evidentiary objections, as doing so is not necessary to a resolution
of the merits of the motion. CCP
§437c(q).
b. Requests
for Judicial Notice
Both parties filed requests for
judicial notice with the moving and opposition papers. Both RJNs are granted in their entirety.
c.
CRC 3.1350(b)
The Court notes that the moving
papers fail to comply with CRC 3.1350(b), which provides, in pertinent part, “If
summary adjudication is sought…the specific cause of action…must be stated
specifically in the notice of motion and be repeated, verbatim, in the separate
statement of undisputed material facts.”
Palo Woods’s first stated issue for
adjudication in its notice of motion is: “Judgment must be granted in Landlord’s
favor with respect to Landlord’s first cause of Action for Breach of Contract.” Palo Woods’s first stated issue for adjudication
in its separate statement is: “Landlord is entitled to summary adjudication as
to its First Cause of Action for Breach of Contract because the Lease is a
binding contract, Landlord performed its obligations under the Lease, Tenant failed
to pay rent as scheduled in the Lease, and Landlord incurred damages as a
result.”
The two statements above are not
verbatim the same, as required by the Rules of Court. The Court is inclined to deny the motion on
this ground, but will also briefly consider the motion on its merits, as this
defect is easily curable.
d.
Summary Adjudication of Palo Woods’s
First and Second Causes of Action
The Court notes that Palo Woods
lists various amounts it contends are due per the parties’ lease in facts 4-14
in its separate statement. The Court
cannot, however, find a total amount Palo Woods seeks to recover anywhere in
the papers. Palo Woods, at ¶22 of its
FACC, prays for damages including base rent, common area charges, real estate
taxes and assessments, interest, late charges, and attorneys’ fees. It is entirely unclear if Palo Woods is
seeking to recover any/all of these aspects of damages, or in what amount. As Fitness correctly notes in opposition to
the motion, pursuant to CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th
1226, 1239, when a plaintiff (or as here a cross-complainant) seeks summary
adjudication of a contract cause of action, an element of that cause of action
is damages, which must be proved up in full in order to obtain a judgment on
the cause of action.
Palo Woods’s motion for summary
adjudication of its second cause of action suffers from a similar defect. Palo Woods, by way of its FACC, merely indicates
the parties dispute their rights and obligations under the contract. There is no statement in the FACC as to what
declaration Palo Woods seeks to have the Court enter. In Palo Woods’s prayer, it seeks a declaration
of Fitness’s obligation to pay base rent, common area charges, real estate
taxes and assessments, interest, and late charges, as well as attorneys’ fees and
costs. Again, however, no statement of
the amounts due is made anywhere in the motion, so the Court cannot adjudicate
this cause of action.
The Court notes that Fitness points
out a very minor discrepancy between the rent demanded and the rent stated in
the separate statement. The Court is
less concerned about that discrepancy and is more concerned about the fact that
granting the motion for summary adjudication of these causes of action would
not result in a full and complete resolution of all relief sought by way of the
causes of action.
e.
Summary Adjudication of Fitness’s Causes
of Action for Declaratory Relief and Common Counts
i.
Causes of Action at Issue
Palo Woods seeks adjudication of
Fitness’s causes of action for:
1. Declaratory
Relief (seeking a declaration that Fitness has no obligation to pay rent during
closure periods and all monies paid to Palo Woods during closure periods must
be repaid)
2. Declaratory
Relief (seeking a declaration that Fitness is entitled to a proportionate
reduction in rent when rent restrictions are in place, and that Palo Woods must
return rent previously paid in excess of said proportionate reduction)
3. Common
Counts (alleging Palo Woods became indebted to Fitness in the past two years for
money had and received by Palo Woods for the use and benefit of Fitness, in the
amount of $222,135.08)
4. Common
Counts (alleging Palo Woods owes Fitness monies paid in the past two years, due
to mistake of fact and law, in the total amount of $222,135.08)
5. Common
Counts (alleging Palo Woods became indebted to Fitness in the past two years
for money paid, laid out, and extended at Palo Woods’s special instance and request,
in the amount of $222,135.08)
ii.
Palo Woods’s Contentions
Palo Woods contends Fitness is not
entitled to the declaration it seeks and/or return of the monies at issue int
the cross-complaint because payment of rent is not excused by the parties’
force majeure clause, Civil Code §1511 has not been triggered, frustration of
purpose has not occurred, and neither impossibility nor impracticability has
occurred.
iii.
Force Majeure
The Court finds there are triable
issues of material fact concerning whether the force majeure provision in the parties’
lease applies, and therefore the motion for summary adjudication of each cause
of action in the FAC is denied.
Defendant argues the COVID-19
Pandemic and resulting government closure orders constituted a "Force
Majeure" under the Lease since they made it illegal for Defendant to use
the Premises from September 2020 through March 14, 2021, and as a result,
Defendant's performance, its payment of rent in exchange for its right to
operate, was excused.
Defendant submitted evidence the
Lease expressly states that the "primary uses" of the Premises
"shall be for the operation of a health club and fitness facility..
and that "Tenant shall have the right throughout the Term to operate the
Premises, or any portion thereof, for uses permitted under the Lease." Decl.
of Alexander, ¶9, and Lease at §1.9.
The Court notes Defendant asserts
the Governor's 3/19/20 Executive Order N-33- 20 directed all non-essential
businesses, including gyms and fitness centers, to immediately cease operating;
however, a review of the Order does not include any language specifically
addressing the closure of gyms/non-essential businesses, as the order directs
all individuals living in the state to stay at home except as needed. (Fitness RJN,
Exh. 7.)] The clear implication of this
order is that persons shall not go to fitness or health clubs.
Defendant submitted evidence that
following the outbreak of COVID-19 and the various government orders related
thereto, it ceased operating its business from the Premises on March 17, 2020,
in response to the government orders. (Alexander Declaration, ¶15). Defendant gave Plaintiff notice of the Force
Majeure Event. (Alexander Declaration, ¶20).
The Court notes this "force
majeure notice" is the March 17, 2020 letter agreement from Defendant to
Plaintiff captioned "Requested Rent Holiday,” which the parties ultimately
signed on 7/28/20. The agreement is attached
to the opposition as Exhibit 22. The
parties thereby agreed to a rent holiday and a corresponding extension of the
term of the parties’ lease agreement. Specifically,
the agreement contained provisions stating:
In the spirit of cooperation, we
propose to "weather this storm" together with you, our landlord, in
the following manner:
1. Rent Holiday. All regularly
scheduled rent due and payable under the Lease (i.e. minimum rent, common area
expenses, insurance and taxes) will abate from the date of this letter until
the earlier of (a) the 30th day after [Defendant] reopen[s] the club or (b)
June 30, 2020. After the expiration of such period, the payment of all such
rent due under the Lease will resume
2. Extension of Lease Term. The
current term of the Lease will be extended for the number of days of the rent
abatement described above."
Defendant submitted evidence that
on May 26, 2020, Governor Newsom issued an executive order modifying the
3/19/20 Order in which a four-stage framework for reopening California was
announced and in which the State Public Health Officer was directed to
establish criteria and procedures for reopening in a separate order, which the
Public Health Officer issued on May 7, 2020. (RJN, Exhibit 12). It is undisputed that starting on June 11,
2020, indoor gyms were permitted to reopen at 50% capacity, with restrictions,
and on June 12, 2020, Defendant did reopen its facility on the Premises with
restrictions in place. Alexander Declaration, ¶16. However, on July 13, 2020,
pursuant to an order of the Public Health Officer, Los Angeles County gyms were
again ordered to close all indoor operations and, also on July 13, 2020, the
County issued an order stating indoor operations of gyms and fitness centers
would be ordered to close (to align with Governor Newsom's new directives and
prevent more cases as COVID-19 cases continued to rise). (RJN, Exh. 14, pgs. 1,
4. Defendant submitted evidence that in response to these orders, Defendant
closed its business at the Premises as of July 13, 2020. Alexander Declaration, ¶17.
Defendant submitted evidence the
County remained in the most restrictive Purple Tier under the CA re-opening
protocols until March 15, 2021, at which point the County moved into the
"Red Tier" and indoor gyms were permitted to reopen with a 10% cap on
occupancy. (RJN, Exh. 16.) On April 5, 2021, the County moved into the Orange
Tier permitting indoor fitness centers to increase to a 25% cap on occupancy,
on May 6, 2021, the County moved into the Yellow Tier, permitting gyms to
increase to 50% capacity, and on June 11, 2021, the cap on indoor gym capacity
was lifted. RJN, Exhs.17, 18, 19.
Defendant submitted evidence it did
not collect dues from any members during its closure. Alexander Declaration, ¶19.
Defendant submitted evidence
suggesting the government orders mandating closure of indoor gyms in response
to COVID-19 qualified as a Force Majeure event under the parties' Lease, and as
such, Defendant was excused from performance of its rental obligation under the
Lease. (Lease §22.3 ["If [Defendant] is... prevented from the performance
of any act required hereunder because of... restrictive laws... or other
casualty or other reason of a similar or dissimilar nature beyond the
reasonable control of [Plaintiff], financial inability excepted, 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... "].) Here, Defendant argues it was prevented from paying rent
because the restrictive laws responding to the unprecedented COVID- 19 pandemic
prevented it from operating its business at the Premises, and as such it, was
excused from paying rent for the period of delay caused by the Force Majeure
event of such restrictive laws.
Based on the foregoing, there are
triable issues of material fact concerning whether the force majeure provision
applies, and the summary adjudication motion is denied.
iv.
Additional Asserted Arguments by Fitness
The Court declines to rule on the
issue of whether there are triable issues of material fact concerning any of
Fitness’s other stated defenses to its obligation to pay rent, as doing so is
not necessary to a resolution of the merits of the motion. The motion is denied.
Palo Woods is ordered to give notice.
Parties who intend to submit
on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as
directed by the instructions provided on the court website at www.lacourt.org. If the department
does not receive an email indicating the parties are submitting on the tentative
and there are no appearances at the hearing, the motion may be placed off calendar. If a party submits on the tentative, the
party’s email must include the case number and must identify the party submitting
on the tentative. If any party does not submit on the tentative, the party
should make arrangements to appear remotely at the hearing on this matter.