Judge Randolph M. Hammock, Case 19STCV33849 2022-09-22 Tentative Ruling

Plaintiff WVS SPE, LLC (“Plaintiff”) brought the instant action against Defendants Lloyd Sugarman (“Sugarman”) and Robert Azinian (“Azinian”), asserting a single cause of action for breach of written guaranty. Plaintiff alleges Defendants have failed to pay rent, costs, and expenses they personally guaranteed to be paid to Plaintiff for the lease of Ike’s Sandwich Place of Westwood, Inc.

Plaintiff’s Motion for Summary Judgment is CONDITIONALLY GRANTED, to wit, the Plaintiff withdraws and waives any and all claims for “liquidated damages” of $33,450.80 (and all claimed interest thereupon of $10,676.76 ). If Plaintiff elects not to accept this conditional granting, then the motion is DENIED in its entirety.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP Section 437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

Where a plaintiff moves for summary judgment, the burden is to produce admissible evidence on each element of a “cause of action” entitling him or her to judgment. (CCP § 437c(p)(1); see Hunter v. Pacific Mechanical Corp. (1995) 37 CA4th 1282, 1287, 44 CR2d 335, 337 (citing text) (disapproved on other grounds by Aguilar v. Atlantic Richfield Co. (2001) 25 C4th 826, 107 CR2d 841)). This means that plaintiffs who bear the burden of proof at trial by a preponderance of evidence must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not. At that point, the burden shifts to defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (CCP § 437c(p)(1)).

As framed by the pleading, Plaintiff owns real property at 1151 Westwood Boulevard, Los Angeles, CA 90024 (“the premises”.) On or about February 19, 2013, pursuant to a written lease agreement, Plaintiff as landlord leased the property to tenant Ike’s Sandwich Place of Westwood, Inc. (“Ike’s) for a term of 10-years. (Compl. ¶ 8.) The Lease required Ike’s to pay “Minimum Annual Rent” (as defined in the Lease) in the amount of $180,000 for the first year of the Term, paid in equal monthly installments of $15,000 per month, with annual adjustments based upon increases in the cost of living. (Id. ¶ 9.) The Lease also required Ike’s to pay “Additional Rent” (as defined in the Lease), which included Tenant’s pro rata share of common area maintenance, operating and repair expenses, taxes, insurance, and utilities (CAM Charges) incurred in connection with the maintenance, operation and repair of the shopping center of which the premises is a part. (Id. ¶ 10.)

Guarantor unconditionally and absolutely guarantees to Landlord the full and prompt payment and performance of each and all of the terms, covenants and conditions of the Lease to be kept and performed by Tenant, within the time and in accordance with the terms of the Lease, including, without limitation, the payment of all Rent (as defined in the Lease) and other charges required to be paid by Tenant under the terms of the Lease, regardless of any law, regulation or order now or hereafter in effect (collectively, “Tenant’s Obligations”). Time is of the essence in the performance by Guarantor under this Guaranty.

This is a continuing guaranty and, by this instrument, Guarantor guarantees the prompt payment and performance of any and all Tenant Obligations which may now or hereafter exist or accrue from Tenant to Landlord under the Lease. Without limiting the foregoing, this Guaranty shall continue in favor of Landlord notwithstanding any modifications, amendments, alterations, renewals and extensions of the Lease … and no modification, amendment, alteration, renewal, extension or assignment thereof shall in any manner release or discharge Guarantor, and Guarantor hereby consents thereto.

Plaintiff alleges Ike’s has failed to perform its obligations under the Lease by failing to pay Rent and CAM Charges beginning with the monthly payments of those obligations due on August 1, 2018. (Id. ¶ 12.) As a result of Ike’s default and failures to perform under the Lease, Plaintiff contends Defendants are liable under the Guaranty for all damages Plaintiff sustained and will continue to sustain from the breach. (Id. ¶ 15.) Plaintiff seeks damages in excess of $1,100,000.00 and attorney’s fees.

Less than a year into the lease, Ike’s defaulted. On June 5, 2014, the parties executed a Reinstatement of Lease Agreement, which incorporated and attached a separately executed “Lease Amendment No. 1.” (UMF 3.) Each Defendant, in their capacity as guarantors, signed a written “Acknowledgement by Guarantor” for both the Reinstatement of Lease Agreement and Lease Amendment No. 1 at the time the Lease was reinstated and amended in 2014. (Bronte Dec. ¶¶ 3, 7, Exh. 4.) The Acknowledgment provided that the Guarantor “agrees that the foregoing Lease Amendment No.1 shall in no way diminish or limit the obligations of the undersigned as guarantor of the Lease or otherwise exonerate the undersigned from any or all of Guarantor’s obligations as guarantor of the Lease.” (Bronte Dec. ¶ 7, Exh. 4.)

Ike’s then re-took possession of the leased Premises and occupied it for the next four years, paying all the Base Rent and Additional Rent due under the Lease, as amended, until about August 1, 2018. At this point, Ike’s stopped paying any amounts due under the Lease and defaulted. (UMF 4, 5.) By September 15, 2018, Ike’s closed and ceased operating its business at the Premises. (UMF 5.) On or about March 14, 2019, Plaintiff filed a Complaint for Unlawful Detainer against Ike’s (the “Second UD Action”) and, on about July 16, 2019, obtained a Judgment by Default and for Possession Only. (UMF 6.) On or about October 9, 2019, Plaintiff lawfully evicted Ike’s from the Premises. (Bronte Dec. ¶ 22.)

Based on the above, Plaintiff argues “[t]here is no dispute of material fact regarding Defendants’ liability on the single cause of action for breach of contract.” (Mtn. 13: 27-28.) That is because Ike’s entered into the Lease for the Premises (UMF 1); each Defendant executed a written Continuing Guaranty of Ike’s obligations (UMF 2); Plaintiff fully performed its obligations, but Ike defaulted on the lease (UMF 3, 4); and Defendants have failed to pay all sums due and owing under the Continuing Guaranties (UMF 5, 6, 7.) As result, Plaintiff has been damaged in the amount of $1,366,819.84. (UMF 7.)

As an initial matter, it is Plaintiff’s position that Defendants are barred from raising any affirmative defenses, as the Continuing Guaranties expressly waived them. The Guaranties provide that “Guarantor waives…any defense arising by reason of the invalidity, illegality or lack of enforceability of the Tenant Obligations or any part thereof, or by reason of any incapacity, lack of authority, death, disability or other defense of Tenant or any other person.” (Bronte Decl. ¶ 4, Exhs. 2, 3 [Continuing Guaranty], ¶ 4.) Plaintiff reads this clause to waive Defendants’ rights to assert affirmative defense such as mitigation of damages or unclean hands. The court disagrees.

The first portion of the provision does not support waiver in this context. That provides that “Guarantor waives…any defense arising by reason of the invalidity, illegality or lack of enforceability of the Tenant Obligations or any part thereof.” (Id.) Here, the “invalidity, illegality or lack of enforceability” of the Tenant Obligations is not at issue. There are no allegations that the Tenant Obligations are somehow illegal or unenforceable.

The second portion of the provision is equally off-the-mark. That provides that “Guarantor waives…any defense arising…by reason of any incapacity, lack of authority, death, disability or other defense of Tenant or any other person.” Likewise, again, “incapacity, lack of authority, death, disability” are not at issue in this case.

Further, this court does not interpret the catch-all phrase “or other defense of Tenant or any other person” to include the affirmative defenses raised here. “Under the principle of ejusdem generis (literally, ‘of the same kind’) where specific words follow general words in a contract, ‘the general words are construed to embrace only things similar in nature to those enumerated by the specific words.’” (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal. App. 4th 1027, 1045.) As applied here, the principle requires that the phrase “or other defense of Tenant or any other person” be construed in light of the words enumerated immediately before it—“incapacity, lack of authority, death, [or] disability.” The affirmative defenses raised here, such as failure to mitigate and unclean hands, cannot be construed to be of the same kind as those expressly raised. Accordingly, they are not waived by the catch-all. Finally, this court notes that Plaintiff has not cited a case where a court found that the duty to mitigate had been waived. Accordingly, this court continues its analysis assuming the affirmative defenses have not been waived.

The main argument in opposition raised by both Defendants is that Plaintiff failed to mitigate its damages. The issue of mitigation of damages is covered by Civil Code section 1951.2, which provides in pertinent part: “(a) Except as otherwise provided in Section 1951.4, if a lessee of real property breaches the lease and abandons the property before the end of the term or if his right to possession is terminated by the lessor because of a breach of the lease, the lease terminates. Upon such termination, the lessor may recover from the lessee:

As an initial matter, Defendants argue that it is Plaintiff’s burden on summary judgment to show its reasonable attempts to mitigate. This position is incorrect. Plaintiff's initial burden of proof in moving for summary judgment does not include disproving any affirmative defenses asserted by defendants. (Oldcastle Precast, Inc. v. Lumbermens Mut. Cas. Co. (2009) 170 Cal. App. 4th 554, 564–65.) Code of Civil Procedure section 437c, subdivision (p)(1) provides a plaintiff meets the burden of showing there is no defense to a cause of action “if that party has proved each element of the cause of action.” Upon meeting that burden, the burden shifts to the defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1), italics added; see also Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 853, 107 [“summary judgment law in this state no longer requires a plaintiff moving for summary judgment to disprove any defense asserted by the defendant as well as prove each element of his own cause of action.... All that the plaintiff need do is to ‘prove[ ] each element of the cause of action’ ”]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2008) ¶ 10:235, p. 10–89 (rev.# 1, 2006) [when plaintiff moves for summary judgment “[u]nlike former law, it is not plaintiff's initial burden to disprove affirmative defenses and cross-complaints asserted by defendant”].

As evidenced by the statute’s language requiring that a “lessee prove[]” rental loss that could have been reasonably avoided, “the defendant bears the burden of establishing the amount of the loss that could have been reasonably avoided. [Citation.] On a motion for summary judgment, such evidence should at least raise a factual question of whether the plaintiff made any effort whatsoever to mitigate or whether the effort made was reasonable under the circumstances.” (Sebastian Int'l, Inc. v. Peck (1987) 195 Cal. App. 3d 803, 810.)

Plaintiff submits evidence it did attempt to mitigate damages. Plaintiff submits the declaration of its Asset Manager, Rima Bronte, who is “responsible for managing” the subject premises. (Bronte Decl. ¶ 1.) She attests that WVS’s efforts to re-let the premises included “placing signage on the Premises, sending email blasts to various restaurants and prospective brokers, and attending a retail convention from September 16-18, 2019 and a franchise expo on December 5, 2019. Plaintiff also showed to the Premises to and communicated by email with representatives of numerous prospective tenants.” (Bronte Decl. ¶ 22.)

In opposition, Defendant Azinian contends Plaintiff made “anemic efforts” to re-let the premises. (Opp. 11: 1.) Defendant objects to the sufficiency of Plaintiff’s evidence, namely the Bronte Declaration, which details Plaintiff’s efforts to re-let the premises. However, Defendant Azinian presents no evidence of his own that these efforts were insufficient. He notes only that it took Plaintiff approximately two-years to re-let the premises after it retook possession from Ike’s, and that the tenant on the replacement lease will not start paying rent until April 1, 2023.

On these facts, Defendants have failed to establish a dispute of triable fact on the issue of Plaintiff’s duty to mitigate damages. Defendants attempt to point only to the insufficiency of Plaintiff’s evidence, but present no evidence of their own to establish a triable issue. “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, 25 Cal. 4th at 850 [emphasis added.) Accordingly, Defendants have not met their burden.

Because the Guaranties expressly provide to continue notwithstanding any modifications or extensions, it appears irrelevant whether Defendants signed or otherwise agreed to the lease Reinstatement or Amendment.

Moreover, in a Declaration previously filed by Defendant Azinian in this case, he expressly recognized the reinstatement. (See Karic Decl., Exh. 14.) [FN 1] On October 20, 2022, Azinian filed a declaration in opposition to Plaintiff’s application for right to attach order. (Id.) Azinian stated that in consideration of payment, “the Lease was reinstated…[and] acknowledged by each of the Guarantors.” (Id.)(Emphasis added.) This concession appears to contradict Azinian’s current position that he “do[es] not remember receiving or signing the Reinstatement or the Amendment.” (Azinian Decl. ¶ 16.) Nonetheless, he still concedes that “the signatures above [his] typewritten name bear some sort of resemblance to [his] signature.” (Id.)

Accordingly, this issue is ultimately not relevant to the summary judgment motion. Even if it was, however, Defendant has not demonstrated a triable issue of fact, with competent evidence, by which reasonable trier of fact could conclude that the defendants did not otherwise sign or approve of the lease modification or reinstatement. (See King v. United Parcel Services, Inc. (2007) 152 Cal.App.4th 426, 433 [uncorroborated and self-serving declarations are insufficient to create a genuine issue of material fact].)

Defendant Azinian next argues that the contractual damages sought by Plaintiff are an unlawful and unrecoverable “penalty,” rather than liquidated damages. As noted above, Plaintiff seeks $33,450.80 for liquidated damages and another $10,676.76 for interest on the liquidated damages pursuant to the lease agreement.

“[A] liquidated damages clause becomes an unenforceable penalty ‘if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.’ [Citation.] ‘The amount set as liquidated damages ‘must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ ‘Absent a relationship between the liquidated damages and the damages the parties anticipated would result from a breach, a liquidated damages clause will be construed as an unenforceable penalty.’” (Purcell v. Schweitzer (2014) 224 Cal. App. 4th 969, 974.)

Defendant Azinian argues that Plaintiff has not presented evidence that it made a “reasonable endeavor” to estimate damages in the event of Ike’s breach of the lease. Azinian states that “at no time between December of 2012 and February 19, 2013,” did he have “any communications whatsoever with WVS about the losses it would suffer should Ike’s default on the Lease.” (Azinian Decl. ¶ 6.) He also attests he is not aware “of any such communication ever taking place.” (Id.) Thus, Defendant argues “a disputed issue of material fact exists as to the exact amount of damages” to which WVS is entitled. (Opp. 14: 9-10.)

WVS has not presented evidence of what efforts (if any) it undertook to determine liquidated damages. Importantly, this court does not see this issue addressed in at all in Plaintiff’s Memorandum or Reply. “[I]t is essentially a factual question whether the parties reasonably estimated foreseeable damages under the prevailing circumstances that becomes a question of law when the facts are undisputed and susceptible of only one reasonable interpretation.” (Krechuniak v. Noorzoy (2017) 11 Cal. App. 5th 713, 723.)

Here, Plaintiff, on one hand, has not addressed the issue. Defendant, on the other, presents evidence that he was not involved in “any communications whatsoever” and is not aware “of any such communication ever taking place.” (Id.) On this evidence, the court agrees with Defendant that there is a dispute of material fact on the narrow issue of whether the liquidated damages bear a reasonable relationship to the actual harm Plaintiff would suffer in the event of a breach. (Artiglio v. General Electric Co. (1998) 61 Cal.App.4th 830, 835, 71 [doubts as to whether material, triable issues of fact exist are resolved in favor of party opposing summary judgment].) Put differently, if the facts demonstrate that WVS did not make a reasonable endeavor to estimate its damages in the event of a breach, it will not be entitled to liquidated damages.

In this case, Plaintiff has clearly met his burden of proving that it is entitled to a judgment, as a matter of law, on the only cause of action for a breach of written guarantee. There are no triable issues of material fact concerning the viability of that legal cause of action. Additionally, Plaintiff has met its initial burden of proof as to all of its claimed monetary damages, except as to the liquidated damages claims. Currently, there is a triable issue of material fact as to that particular item of claimed damages, as explained supra.

In view of the relatively paltry amount of such claimed liquidated damages, in view of the total damages proven, this Court will allow the Plaintiff to withdraw and waive such this particular claim for damages, if it chooses to do so. In such an event, there would be no triable issue of material fact remaining to prevent the granting of this motion for summary judgment. Suffice it to state, the Defendants would suffer no actual harm or prejudice if such a claim is withdrawn and waived. Indeed, he would benefit from such a waiver.

Defendant Sugarman’s opposition also raised the affirmative defenses of (1) equitable estoppel and (2) unclean hands. First, Defendant argues Plaintiff should be equitably estopped from seeking damages. He contends that WVS “intentionally led Sugarman and his intended business partner Michael Goldberg to believe they would be granted a new lease once they provided certain detailed information requested by Rima Bronte.” (Sugarman Decl., ¶¶ 6-9, Exs. B, C, D and E.).

If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just.

Based on the above discussion, this court concludes that the opposing Defendants have demonstrated the existence of a triable issue of fact only to the narrow issue of the claimed liquidated damages and interest thereupon. That is because there exists a triable issue as to whether the parties took a “reasonable endeavor” to estimate liquidated damages, and whether the liquidated damages provision is therefore valid and enforceable.

Accordingly, Plaintiff’s motion for summary judgment is CONDITIONALLY GRANTED, to wit, the Plaintiff withdraws and waives any and all claims for “liquidated damages” of $33,450.80 (and all claimed interest thereupon of $10,676.76). If Plaintiff elects not to accept this conditional granting, then the motion is DENIED in its entirety.

Randolph M. Hammock
Judge of the Superior Court

FN 1 - Plaintiff submitted Azinian’s declaration as Exhbit 14. The court also takes judicial notice of Azinian’s filing itself, made October 20, 2020. “The court may take judicial notice on its own volition.” (See Evid.Code, § 455, subd. (a); Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App. 4th 743, 752.)

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.