Judge: Ronald F. Frank, Case: 20TRCV00426, Date: 2022-12-14 Tentative Ruling
Case Number: 20TRCV00426 Hearing Date: December 14, 2022 Dept: 8
Tentative Ruling¿
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HEARING DATE: December 14, 2022¿¿
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CASE NUMBER: 20TRCV00426
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CASE NAME: Weber Way
LJM, LLC v. Michael Justin Reto, et al.
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MOVING PARTY: Plaintiff, Weber Way LJM, Inc. ¿
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RESPONDING PARTY: Defendant, Michael Justin Reto
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TRIAL DATE: March
7, 2023
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MOTION:¿ (1) Motion for Summary
Adjudication
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Tentative Rulings: (1) Motion for Summary
Adjudication is DENIED. Triable issues
as to the parties’ agreement to 5-year lease as reflected in exchange of emails,
Reto’s payment of changed rental amount and Weber Way’s acceptance of the
changed rental amount demonstrating part performance of the new 5-year lease that
was memorialized in an exchange of writings between the parties
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I. BACKGROUND¿¿
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A. Factual¿¿
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On June 15, 2020, Plaintiff, Weber Way LJM, LLC (“Plaintiff”) filed a
complaint against Defendant, Michael Justin Reto (“Defendant”) for breach of
contract. Plaintiff alleges that on or about October 3, 2016, Plaintiff entered
into a written lease with Defendant. The Lease provided for the lease of
certain commercial property commonly known as 12838 Weber Way, Hawthorne, CA
90250. (Complaint (“Compl.”), ¶ 8, Exhibit A.) Allegedly, Plaintiff and Defendant
entered into an Addendum to the lease on October 3, 2016. (Compl., ¶ 9, Exhibit
B.) Plaintiff contends that the Lease expired on September 30, 2019, without
Defendant exercising his option to extend the Lease term as provided for in the
Addendum. (Compl., ¶ 11.) Plaintiff’s complaint asserts that on or about
October 1, 2016, Defendant took possession of the premises and was required to
pay monthly base rent in the amount of $9,500.00 (“Base Rent”), on or before
the first of each month. (Compl., ¶ 12.)
Plaintiff asserted in the complaint that upon the expiration of the
Lease on September 30, 2019, the Plaintiff continued to occupy and use the
premises and still continues to occupy and use the premises as of the date of
the complaint. (Compl., ¶ 15.) Plaintiff claims that pursuant to Section 26 of
the Lease, Defendant has no right to retain possession of the premises or any
part thereof beyond the expiration of termination of the Lease. In the event
that Defendant holds over, then the Base Rent shall be increased to 150% of the
Base Rent applicable immediately preceding the expiration or termination, which
Plaintiff asserts was September 30, 2019. (Compl., ¶ 16.) Plaintiff now claims
that due to Defendant’s failure to timely pay the Base Rent and other monetary
obligations under the Lease from the period of October 1, 2019 through February
29, 2020, Defendant owes Plaintiff rent in the amount not less than $67,722.26.
(Compl., ¶ 19 (erroneously labeled ¶ 18.).) Further, Plaintiff argues that in
addition to the Rent due and owing from the period of October 1, 2019 through
February 29, 2020, and as a result of his default under the Lease and Addendum
to Lease, Defendant owes Plaintiff the sum of $18,000.00 under the tenant
improvement allowance from the period of October 1, 2020 through February 29,
2020, as stated in Sections 57 and 58 of the Addendum. (Compl., ¶ 21
(erroneously labeled ¶ 20).)
Plaintiff now files a Motion for Summary Adjudication.
B. Procedural¿¿
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On August 11, 2022, Plaintiff
filed this Motion for Summary Adjudication. On November 30, 2022, Defendant
filed an opposition. On December 7, 2022, Plaintiff filed a reply brief. Both
sides submitted Separate Statements and supporting declaration with
exhibits.
¿II. ANALYSIS¿
A.
Legal
Standard
“A party may move for summary adjudication as to one or
more causes of action within an action, one or more affirmative defenses, one
or more claims for damages, or one or more issues of duty, if that party
contends that the cause of action has no merit or that there is no affirmative defense
thereto, or that there is no merit to an affirmative defense as to any cause of
action, or both, or that there is no merit to a claim for damages . . . or that
one or more defendants either owed or did not owe a duty to the plaintiff or
plaintiffs. A motion for summary adjudication shall be granted only if it
completely disposes of a cause of action, an affirmative defense, a claim for
damages, or an issue of duty.” (Code of Civ. Proc., §¿437c,¿subd. (f)(1).)¿ A¿motion
for summary adjudication shall proceed in all procedural respects as a motion
for summary judgment. (Code of Civ. Proc.,¿§¿437c,¿subd. (f)(2).)
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“[T]he initial burden is always on the moving party to make
a prima¿facia¿showing that there are no triable issues of material fact.” (Scalf¿v.
D. B. Log Homes, Inc.¿(2005) 128 Cal.App.4th¿1510,¿1519.) A party moving
for summary judgment or summary adjudication “has met his or her burden of
showing that a cause of action has no merit if the party has shown that one or
more elements of the cause of action . . . cannot be established, or that there
is a complete defense to the cause of action.” (Code of Civ. Proc., §¿437c,¿subd. (p)(2).)¿A¿moving party
need not conclusively negate an element of the non-moving party’s cause of
action. (Aguilar v. Atlantic Richfield Co.¿(2001) 25¿Cal.4th¿826, 854.)¿
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To meet the moving party’s initial burden, the moving party
must provide supporting evidence in the form of declarations, admissions,
depositions, answers to interrogatories, and matters of which judicial notice
may be taken. (Aguilar,¿supra, 25¿Cal.4th¿at 855.)¿ Once the moving party has met its
initial burden, the burden shift to the opposing party to show that a triable
issue of one or more material facts exists as to the cause of action or a
defense thereto. (Code of Civ. Proc., §¿437c,¿subd. (p)(2).) The opposing party may not merely rely on
allegations or denials of its pleadings to show that a triable issue of
material fact exists, but instead, “shall set forth the specific facts showing
that a triable issue of material fact exists as to the cause of action.” (Ibid.)
If the moving party cannot do so, the motion should be granted. (Avivi¿v.
Centro Medico¿Urgente¿Medical
Center¿(2008) 159¿Cal.App.4th¿463, 467.)
In ruling on a motion for summary judgment or summary
adjudication, the court must “consider all of the evidence” and all of the
“inferences” reasonably drawn therefrom, (CCP¿§¿437c(c)), and must view the
evidence and inferences “in the light most favorable to the opposing party,” (Aguilar,
supra, 25 Cal.4th at 843.)
B.
Discussion
The elements for
breach of contract cause of action are: (1) existence of contract; (2)
plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach
(or anticipatory breach); and (4) resulting damage. (Wall Street
Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.) The original Lease,
together with the Addendum provide prima facie evidence that there exists a
valid lease under which Defendant was required to pay monthly rent payments to
Plaintiff. Instead, the question before the Court is whether Defendant is a
Hold Over lessee.
Here, Plaintiff asserts that on September 30,
2019, the Lease between Plaintiff and Defendant expired. (MSA, p. 1.) Prior to
that, Plaintiff also notes that prior to the expiration, Plaintiff and
Defendant were in a 6-month long negotiation which discussed whether Defendant
would: (1) purchase the building he had been leasing for several years; (2)
exercise a 3-year Option Lease (as defined in the Lease); or (3) execute a new
five-year lease for the same Premises (as defined in the Lease). (MSA, p. 1-2.)
Plaintiff asserts that none of these alternatives were materialized. (MSA, p.
2.)
Instead, Plaintiff argues
that on October 1, 2019, Defendant became a “Holdover Tenant” which the Lease
specifies is “a tenant in possession of a property beyond the stated Term of
his or her Lease.” (MSA, p. 2.) Plaintiff argues that during the months of October,
November, and December 2019, and January and February of 2020, Defendant
refused to pay Base Rent, or follow the Holdover provisions of Paragraph 26 of
the Lease. (MSA, p. 2.) Further, Plaintiff notes that sometime in February
2020, Defendant paid “regular” Base Rent to get caught up, but at the time he
still owed significant amounts under the Holdover provisions of the Lease. (MSA,
p. 2.) After this, Coronavirus hit in early March 2020. Los Angeles County
implemented the first in a series of Moratoria to protect tenants from being
evicted. Plaintiff argues that as it stands, the current Los Angeles County
Moratorium dictates that Rents that became due between March 1, 2020 and
January 31, 2022 for commercial tenants such as Defendant will not be collectable
until January 31, 2023. (MSA, p. 2-3.)
Plaintiff argues that
Defendant remains in Possession of the Premises and has continued to pay
“regular” Base Rent (as opposed to Holdover Base Rent) during the period of
February 1, 2022 through the present. Paragraph 52.1 of the Lease notes that
the first Option is not available if the Lessee “has been delinquent in the
payment of any Rent due under the Lease for a period of more than ten (10 days,
regardless of whether or not a Default notice was served by Lessor.” Here,
Plaintiff asserts Defendant was delinquent in the payment of March 2019 Rent of
a period of more than ten (10) days. Plaintiff has attached a copy of the email
he sent on March 11, 2019 (Declaration of Lotfi Mehdian (“Median Decl.”), ¶ 7,
Exhibit 2.) As such, Plaintiff has
alleged sufficient facts to assert that Defendant could not exercise the first
option.
Additionally, Plaintiff
asserts that Defendant did not have a new 5-year lease. Plaintiff has presented
Defendant’s testimony noting that Defendant did not end up signing a new
five-year lease, and that they instead agreed on a price in which Defendant
paid that new price, and Plaintiff cashed the checks. (Declaration of Saman
Manavi (“Manavi Decl.”), ¶ 3, Exhibit 1, p. 44:23-25 – p. 45:1-3.) Additionally, Plaintiff presents an email in
which Defendant noted that it was not realistic for his business “to sign a
lease reflecting a state of economy that no longer exists, unless the lease was
modified to reflect future economic conditions.” (Mehdian Decl., ¶ 11, Exhibit
3.) Based on the foregoing, Plaintiff has alleged sufficient facts to assert
that Defendant could not exercise the second option. As such, the Court finds that Plaintiff has
met its initial burden.
In opposition, Defendant
asserts that Plaintiff’s motion must be denied because a dispute of material
fact exists as to whether Plaintiff was a Hold Over tenant between October 1,
2019 and February 29, 2020. Defendant contends that Plaintiff’s argument
disregards relevant language of the very lease agreement it relies on to
determine that Defendant is a hold over tenant. Defendant cites to § 7.4(c) of
the Lease noting: “The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provision of Paragraph 26 below.” Defendant
argues that there is ample evidence to allow a fact finder to find that
Plaintiff provided “express written consent” for Defendant to continue
possession of the Premises by September 30, 2019. (Opp., p. 5.)
Defendant notes that on
September 5, 2019, Plaintiff offered Defendant a new five-year lease term, at
92cents per square foot triple net, per Opposition Exhibit 15, page 2 of
25. Defendant’s evidence shows he
accepted the offer. (Id.) At 6 p.m. on September 5, 2019, Plaintiff acknowledged
the acceptance of its offer, stating: “We are please to know of your
acceptance.” (Opp. Exhibit 15, page 1 of 25.) Defendant argues that both of these instances
are evidence of express written consent that Defendant remain on the Premises.
Defendant also argues that he continued to pay monthly rent, and Plaintiff
continued to accept monthly rent after the lease expiration date on September
29, 2019. (Reto Decl. ¶ 15.) Further, Defendant stated that on February 3,
2020, Plaintiff requested that Defendant pay two months of back due rent “prior
[to] the five-day grave period to avoid fees.” (Opp. Exhibit 20.) Defendant
notes that he paid the monthly rent at the new five-year extension rate, and
Plaintiff accepted. (Reto Decl. ¶ 18.) This
creates triable issue of fact as to whether the parties agreed to a novation of
the original lease, and entered into a five-year lease as per the exchange of emails
and tender and acceptance of rent at the offered and accepted 5-year lease
rate.
Next, Defendant argues that a fact finder
could also find that Plaintiff waived the claimed breach of the original lease
regarding the tardy base rent payment in March of 2019. Plaintiff’s March 11, 2019 email to Defendant
states that it will “waive the late fee.” (Opp. Exhibit 14; Reto Decl. ¶8.)
Additionally, Defendant notes that subsequent to receiving the rent for March
2019 and “waiv[ing]” the late fee, Plaintiff stated that “we are good to
proceed” with the exercise of Defendant’s option (Opp. Exhibit 13.) Defendant’s evidence demonstrates that the
March 2019 payment was received and cashed on March 12, 2019 (Reto Decl. ¶¶
8-10.) All of this evidence raises triable issues of fact bearing on whether the
claimed delinquency and contractual prohibition against exercising an option
had been waived by conduct. Defendant argues that the parties proceeded
to negotiate the option rent price for many months after that. As such,
Defendant asserts that a fact finder could find that Defendant was not a hold-over
tenant. Moreover, Defendant notes that Plaintiff was cashing his rent checks.
As such, Defendant asserts that a fact finder could find that this may have
created a month-to-month lease after the September 30, 2019 expiration of the
original 2016 lease.
While there are other issues raised
by the parties’ papers, the foregoing constitutes sufficient grounds for
denying the MSA because of the existence of several triable issues of material
fact.
III. CONCLUSION¿¿
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For the foregoing reasons, Plaintiff’s Motion for Summary Adjudication is DENIED. Unless notice if waived, Defendant to give notice of the ruling.¿¿¿¿
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