Judge: Mark H. Epstein, Case: 22SMCV02285, Date: 2023-05-09 Tentative Ruling

Case Number: 22SMCV02285    Hearing Date: May 9, 2023    Dept: R

The petitions are GRANTED IN PART.

This is an action by a landlord against a tenant for back rent.  Plaintiff alleges that it owns commercial property in Santa Monica.  It entered into a lease agreement with BSM 2nd on November 9, 2010.  The lease was assigned to defendant in 2018.  Defendant exercised an option to extend the lease until April 30, 2026.  The complaint alleges that defendants have not paid rent since April 2020.  As of November 2022, plaintiffs allege that $1,319,207.15 was due including base rent, additional rent, late charges, and interest.  Defendant has a judgment against plaintiff of which $37,359.40 remains outstanding.  As part of its attachment request, plaintiff includes an approximation of attorneys’ fees of just under $30,000.  Plaintiff seeks a writ of attachment.  There currently exists a Temporary Protective Order issued by Judge Young, who entered it before the case was reassigned to this department.  The TPO was extended when the original hearing date was continued on the court’s own motion.

To obtain a writ of attachment, plaintiff must demonstrate that its claim is for a “fixed or readily ascertainable amount” of not less than $500 (excluding costs, interest, and attorney fees).  (CCP § 483.010(a).)  The damages need not be liquidated but they must be measurable by reference to the contract itself and the basis for computing damages must be reasonable and certain.  (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App.4th 537, 541.)  Here, Plaintiff seeks an attachment order of $1,319,207.15 consisting of base rent, triple-net charges, late charges, interest, attorneys’ fees, and an offset for Blankspaces’ judgment.  (Ayala Decl., ¶¶22-31.)  These charges are provided for in the attached lease agreement.  (Id., at Exh. 1, §§ 13, 31.)

In opposition, defendants claim the amount is not readily ascertainable for a variety of reasons.  They first argue that plaintiff is seeking rent from a prior UD action that sought rent from October 2020 to December 2020, in which judgment was entered in favor of defendants.  Defendants fail to explain whether plaintiff is actually precluded (claim or issue preclusion) from recovering the rent from that period due to the judgment, or whether the judgment simply meant plaintiff’s action was procedurally deficient.  At first glance, the court cannot see any reason why the UD judgment bars the instant motion.  Indeed, the opposite would seem to be true.  The UD action was dismissed due to the moratorium.  That made the action improper at that time.  However, nothing in the order dismissing the UD action—even with prejudice—means that an action for back rent cannot be brought once the moratorium so permits.

Defendants also challenge the calculation of late fees, interest, and increased rent of $37,500 from May 1, 2021 to April 30, 2022 and $38,625 from May 1, 2022 to November 9, 2022.  The late fees and interest calculations are set forth in the lease.  And as to the interest charges, the Ayala declaration suggests that there is no double-dipping—or at least the court does not understand defendants’ argument.  The calculation performed is to obtain a daily interest percentage (which is .1 divided by 365) and multiply that by the number of delinquent days and multiply that by the amount that is delinquent.  That seems to the court to be a reasonable way of calculating interest owed, and it does not compound the interest amount. 

The court also agrees with plaintiff regarding the triple-net calculation.  The Ayala declaration explains that the ledger charges an amount based on insurance and property taxes for the property, which are passed through under the lease.  (Ayala Decl., ¶22.)  She states that the $1002 being charged is actually less than those amounts.  While the actual bills are not attached, her ledger is sufficient for these purposes.

Defendants argue that late fees and interest themselves cannot be charged on the unpaid rent per the LA County Moratorium.  “Landlords shall not impose any passthroughs otherwise permitted under Chapters 8.52 and 8.57 of the County Code, or charge interest or late fees on unpaid rent or other amounts otherwise owed during the Moratorium Period.  Landlords are prohibited from retroactively imposing or collecting any such amounts following the termination or expiration of the Moratorium.”  (Moratorium, ¶VIII.)  In reply, plaintiff contends that this section only applies to residential tenants.  It notes that Chapter 8.52 is the Rent Stabilization and Tenant Protection Act, and Chapter 8.57 is the Mobilehome Rent Stabilization and Mobilehome Owner Protections Act, and, therefore, those sections only apply to residential dwellings and mobile homes.  Plaintiff dismisses the remaining clause (“or charge interest or late fees on unpaid rent or other amounts otherwise owed during the Moratorium Period”) as necessary because neither of those Chapters address interest or late fees on unpaid rent.  It also adds that the County moratorium cannot limit such fees due to the statute on commercial rent control.  “No public entity shall enact any measure constituting commercial rental control, nor shall any public entity enforce any commercial rental control, whether enacted prior to or on or after January 1, 1988.” (Civ. Code, § 1954.27, subd. (a).)  The court does not agree with plaintiff on this.  While the sentence in question is not a model of clarity, the court cannot, on this record, resolve the ambiguity as plaintiff suggests.  Had the County intended to limit interest and late fees to residential tenants, it would have said so clearly.  Instead, the County placed no apparent limitation on the resolution’s language.  Nor does the court believe that the Moratorium is preempted by state law.  While it is true that state law would normally prohibit such an ordinance, there were emergency rules then in place giving local governments greater power and authority.  Neither side really addressed the question adequately, and therefore, while the court provisionally agrees with defendant on this point, the court will allow plaintiff to file a new supplemental request to increase the attachment amount supported by a fuller exposition of this issue.  Defendants, of course, will be able to respond as permitted by the Code.

As for the rent calculation, the lease dictates how the FRV of the space should be determined and plaintiff purports to follow that method.  (Ayala Decl., Exh. 1, ¶55E.)  The letter by Mr. Schelberg discusses the process and appears to conform to that set forth in the lease.  (Ayala Decl., Exh. 4.)  Defendants have not presented any explanation, at least that the court can readily see, showing that the lease procedure was ignored or was improper.  It might well be that defendant’s appraiser had the “right” number in some sense, but the lease discusses how the rent will be determined and how a disagreement between plaintiff’s and defendant’s appraisers will be resolved.  Moreover, the letter discussing the issue has a date well into the pandemic.  In short, defendant cannot challenge the FMV calculation in this manner.

Defendants present another argument: they provide extensive evidence of long-standing complaints about the roof leaks. The roof leaks and business interruption could be a basis for an offset against the amount claimed by plaintiff.  However, the evidence presented is not sufficient to warrant so adjudicating at this time.  Therefore, while the court will not reduce the request for this amount, defendants are not precluded from moving for a reduction in the writ amount (or the amount attached) if they can make out a stronger claim.  Plaintiff will, of course, be permitted to respond per Code.

The court therefore believes that the amount is readily ascertainable under the lease, but only as to the amount of the base rent and triple-net rent (as well as attorneys' fees and less the offset).  Plaintiff will submit a revised order reflecting the lower amount.