Judge: Ronald F. Frank, Case: 20TRCV00950, Date: 2023-12-05 Tentative Ruling
Case Number: 20TRCV00950 Hearing Date: February 29, 2024 Dept: 8
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HEARING DATE: February 29, 2024
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CASE NUMBER: 20TRCV00950
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CASE NAME: 6232 Manchester, LLC v.
Orb Tertius, LLC, et al.
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MOVING PARTY: Defendant, Orb Tertius, LLC
RESPONDING PARTY: Plaintiff, 6232 Manchester, LLC (No written
opposition)
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TRIAL DATE: Not
Set.
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MOTION:¿ (1) Petition for Relief From Forfeiture of the Lease Agreement
Dated July 27, 2015
Tentative Rulings: (1) GRANTED on condition of payment of back rent in full by
close of business today
I. BACKGROUND¿¿
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A. Factual¿¿
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On December
24, 2020, during the first year of the declared state of emergency for COVID
19, Plaintiff 6232 Manchester LLC (“Plaintiff”) filed a Complaint for Unlawful
Detainer against Defendant, Orb Tertius, LLC (“Orb”) and DOES 1 through 10.
This action involves the real property located at 6224 West Manchester Avenue,
Los Angeles, CA 90045. Plaintiff asserts that it is the owner and landlord of
the Property and rents the property to Defendant based on a commercial lease
dated July 27, 2015. The notice to quit attached to the Complaint was for the
failure to pay rent for the fourth quarter of 2020, i.e., October, November,
and December.
On January
30, 2024, this Court GRANTED Plaintiff’s Motion for Summary Judgment, awarding Orb’s
right to possession of the Subject Premises back to Plaintiff, ruling that the
Lease Agreement under which the property was held was thereby forfeited, and
that a Writ of Possession was to be issued.
After an ex
parte application to stay enforcement of the judgment was granted, Orb has now
filed a Petition for Relief from Forfeiture of the lease Agreement Dated July
27, 2015. At the hearing on the ex parte
application, the Court telegraphed to both sides that when it set the merits
hearing on relief from forfeiture, it would require a showing of immediate
ability to meet the statutory conditions of granting such relief such as defense
counsel bringing certified funds or cash to the merits hearing.
B. Procedural¿¿
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On February 6, 2024, Defendant Orb Tertius,
LLC (“Orb”) filed its Petition for Relief from Forfeiture of the Lease
Agreement Dated July 27, 2015. To date, no opposition has been filed. On February 9, 2024, Plaintiff filed its
Application for Writ of Possession and it opposed the ex parte application to
stay, indicating historical issues with Orb’s tenancy and desiring to regain possession of the premises.
II. ANALYSIS
A. Legal Standard
The
mere fact a judgment for possession has been rendered does not mean eviction is
authorized. [. . .] the tenant may have been granted relief from the
judgment.” (Bedi v. McMullan (1984) 160 Cal.App.3d 272, 276-77.) Code
of Civil Procedure § 1179 provides in pertinent part, “[t]he court may relieve
a tenant against a forfeiture of a lease or rental agreement, whether written
or oral, and whether or not the tenancy has terminated, and restore him or her
to his or her former estate or tenancy, in case of hardship, as provided in
Section 1174. The court has the discretion to relieve any person against
forfeiture on its own motion.”
Section
1179 “vests the court with discretion to relieve a tenant from forfeiture and
restore him or her to his or her former estate or tenancy. So long as the court
imposes the statutory conditions, the full payment of rent due or
full performance of conditions or covenants so far as practicable,
the court has broad equitable discretion to determine the conditions upon which
relief will be granted.” (Gill Petrolium, Inc. v. Hayer (2006) 137
Cal.App.4th 826, 832-833.) Further, “‘[t]he power of a court of equity is
invoked by plaintiff in every action in forcible detainer, when he seeks in his
complaint to have a forfeiture declared on account of default in conditions of
the lease.... If such an equitable power is in a court in cases of this class,
of which we have no doubt, no reason is apparent why such equitable power may
not be extended into a full examination of all the equities involved, to the
end that exact justice may be done.’” (Id. at 833 (emphasis
added).) What is more, to fully serve its purpose, the statute must be
construed to vest the trial court with equitable power to consider and adjust
all of the equities between the parties. (Id.)
The
court notes that it is tasked with balancing the equities on both
sides, weighing the alleged hardship to the tenant if the forfeiture is
declared against the likely prejudice to the landlord if it is not. (Hignell
v. Gebala, 90 Cal.App.2d 61, 70-71 (1949) (“Under section 1179, the court
in balancing the equities should take into consideration the circumstances of
the case, the hardship, if any, to the lessee from the forfeiture, the
hardship, if any, to the lessor from relieving the lessee from the forfeiture,
the willful or other character of the breach, and then use its best discretion
in determining whether relief will be granted”).) In exercising its
discretion, the court should consider all underlying circumstances, including
the nature of the unlawful detainer, the nature of the tenant’s breach, the
landlord’s good or bad faith, the degree of arbitrariness or unreasonableness
on the part of the lessors, and any other relevant factors. (Thrifty Oil Co.
v. Batarse (1985) 174 Cal.App.3d 770, 778.)
Some
cases suggest that, if a tenant brought forfeiture upon himself or knew what he
was doing, then relief may not be appropriate. (Matthews v. Digges
(1920) 45 Cal.App. 561, 566 (“not only that the defendant making such
application had taken his assignment of said lease with his eyes open to the
fact that he was buying a lawsuit, but that, as between himself and the
plaintiff, a state of hostility existed which boded ill for any satisfactory
resumption and continuance of their relations as landlord and tenant under said
lease”); see also Cambridge v. Webb (1952) 109 Cal.App.2d Supp. 936
(1952) (where tenant had refused to pay rent for five months, and had
endeavored to force landlord to make repairs when no obligation to repair
existed, and offer of tenant to pay rent was forthcoming only after landlord’s
three-day unlawful detainer notice had expired, hardship of tenant, if any, was
brought about by his own action, and court did not abuse its discretion in
refusing tenant's application for relief on ground of hardship from forfeiture
of lease); compare with Hignell, supra, 90 Cal.App.2d at 70-71
(fact that the court at the trial had found the breach of lease prohibiting
tenant from using premises for business purpose to be willful did not deprive
it of jurisdiction to hear the application for relief under section 1179).)
Granting
relief under this statute is discretionary. (Matthews, supra, 45
Cal.App.at 566 (“The matter of granting or denying such an application is one
which lies so largely in the discretion of the trial court that it would
require a very clear showing of an abuse of such discretion to justify a
reversal of the order made thereon”); see also Superior Motels, Inc. v. Rinn
Motor Hotels, Inc. (1987) 195 Cal.App.3d 1032, 1064 (CCP § 1179 vests “near
plenary discretion” in trial court).)
Tenants may waive the right to seek relief from
forfeiture of a commercial lease under California law. (In re Art and
Architecture Books of the 21st Century, Bkrtcy.C.D.Cal.2014, 518 B.R.
43.) No statute prohibits waiver of such rights, and waiver of such
rights does not contravene public policy. (Id.) Indeed, the public
policy of freedom of contract in commercial leases supports a finding that the
rights to relief from forfeiture of a lease are waivable. Civil
Code § 3513 provides: “Any one may waive the advantage of a law intended solely
for his benefit. But a law established for a public reason cannot be
contravened by a private agreement.” This means a party may waive a statutory
right where its “public benefit . . . is merely incidental to [its] primary
purpose,” while a waiver is unenforceable if it would “seriously compromise any
public purpose that [the statute was] intended to serve.” (DeBerard
Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668-669, internal quotations
omitted.) Relief from forfeiture of a commercial lease serves primarily a
private purpose, and any public purpose would be incidental, therefore a tenant
may waive the right to seek relief from forfeiture under Code Civ. Proc. §
1179.
B.
Discussion
Defendant
brings this motion on the grounds that it contends forfeiture would unduly
burden it given the circumstances, and notes that it is prepared to meet the
statutory requirement of full payment of rent due. As noted above, in balancing
the equities, and exercising its discretion, the court should consider all
underlying circumstances, including the nature of the unlawful detainer, the
nature of the tenant’s breach, the landlord’s good or bad faith, the degree of
arbitrariness or unreasonableness on the part of the lessors, and any other
relevant factors. (Thrifty Oil Co., supra, 174 Cal.App.3d at 778.)
Further, under section 1179, the
court in balancing the equities should take into consideration the
circumstances of the case, the hardship, if any, to the lessee from the
forfeiture, the hardship, if any, to the lessor from relieving the lessee from
the forfeiture, the willful or other character of the breach, and then use its
best discretion in determining whether relief will be granted.” (Hignell, supra, 90 Cal.App.2d at 70–71.)
Here, the unlawful
detainer cause of action was made on the grounds that Defendant owed past due
rents during the COVID-19 pandemic, and fell behind on rent payments for October
2020 through December 2020. Defendant’s arguments here are very similar to
those made on its unsuccessful Motion for Summary Judgment, but this motion is
subject to the Court’s equitable jurisdiction on a different standard than the
dispositive motion. Defendant explains its mistaken belief, allegedly
based on the advice by members of the legal community, that there is no written
or notice requirement for inability to pay rent pursuant to the City of Los
Angeles Ordinance, Article 14.6, Section 49.99.3, Prohibition on Commercial
Evictions. Further Defendant admits to falling behind on rent payments from
April 2020 through May 2021, due to its business being impacted by the COVID-19 pandemic, but notes that it has
attempted to remedy this issue. Defendant has attached, to the declaration of
Milton Sznaider, a cashier’s check in the amount of $110,551, representing to
COVID related past due obligation from April 2020 through May 2021, has been
obtained and is in possession of the Law Offices of Aroustamian &
Associates. Defendant’s moving papers represents that this sum will be
deposited and immediately wired to Plaintiff and/or its counsel of record upon
the granting of this motion and as condition of the granting of the same.
Defendant asserts that this amount will also serve to make Plaintiff “whole” in
terms of past due rent. (Sznaider Decl., ¶ 15.)
Mr.
Sznaider’s declaration attests to the financial hardship to Orb if this motion were
not granted. He notes that Orb has spent
in excess of $50,000 on initial improvements to the leased premises and close
to $400,000 in subsequent improvements to the leased premises, secured by a
personal guaranty from its managing member, Milton Sznaider and Mr. Sznaider’s
Wife (Sznaider Decl., ¶ 4.) Defendant argues that if relief is not granted,
Defendant will suffer tremendous hardship by losing its capital investment of
nearly $500,000, its inability to fulfill executory contracts for goods,
services, equipment, etc., subject its principals to collection and credit
derogatories. In addition, Defendant submits that the ripple effect of
forfeiture will extend to Orb’s nine employees, who will lose their jobs, if
Orb is forced to shut its doors.
The declaration of Milton Sznaider attaches a copy of a
cashier’s check in the amount of $110,551, representing to COVID related past
due obligation from April 2020 through May 2021, which is represented to be in
possession of the Law Offices of Aroustamian & Associates. Defendant promises
that this sum will be deposited and immediately wired to Plaintiff and/or its
counsel of record upon the granting of this motion and as condition of the
granting of the same. Defendant asserts that this amount will also serve to
make Plaintiff “whole” in terms of past due rent. (Sznaider Decl., ¶ 15.)
Here, Plaintiff has not filed an opposition to this motion
to amplify on the asserted hardship to the landlord that counsel asserted at
the hearing on the ex parte application to stay enforcement while this motion
was pending. The Court has no specific
evidence of the potential hardship Defendant may face in the event the Court
reinstates the tenancy notwithstanding the prior granting of the MSJ. Accordingly, the Court will exercise its
discretion and grant this motion. Defendant has submitted that it is ready and
willing to make Plaintiff whole again, noting the cashier’s check that is ready
to be wired to Plaintiff. The Court also weighs in the balance that the risk of
Defendant failing to pay future rents appears to be mitigated given the evidence
that Defendant has kept up current rent payments since those that came due
during the April 2020 through May 2021 period of time.
The Court is thus inclined to GRANT the motion and
relieve Defendant from forfeiture of the lease on the condition of payment to
defense counsel by wire transfer by the close of business on February 29, 2024
the back rent due for the indicated time period.
III.
CONCLUSION¿¿
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For the foregoing reasons, Defendant’s
Motion is GRANTED.
Defendant is ordered to give notice.¿¿¿