Judge: Theodore R. Howard, Case: 20-1151242, Date: 2022-10-20 Tentative Ruling
Defendants Dana Point Beach Resort LLC, Dana Point Beach Resort II LLC, and Ohana Real Estate Investors LLC move for summary judgment. Plaintiff Sea Villas HOA also moves for summary judgment.
Background of the Issues
Defendants are owners of the Monarch Beach Resort located at One Monarch Drive in Dana Point California, known as the St. Regis Monarch Beach Resort and Spa (“Hotel”). Defendants are the exclusive tenants, owners, and operators of the Monarch Beach Bay Club (“Beach Club”), which includes exclusive beach and restaurant services, serving only guests of the Hotel and/or paid private members of the Monarch Beach Resort or Beach Club.
Defendants are successors-in-interests to CPH Monarch Hotel, LLC with respect to ownership of the Hotel and exclusive tenancy, ownership and/or operation of the Beach Club.
Pursuant to an agreement with the developer of Plaintiff Sea Villas’ development, in 2006, the owner of the Beach Club set aside 18 special memberships in the Beach Club for Plaintiff’s members at no cost, which remained valid through May 31, 2020. Those memberships allowed Plaintiff’s members to use the amenities at the Hotel, including the Beach Club and amenities, with entitlement to purchase food at the restaurant at a discount. Upon expiration of those 18 special memberships, Plaintiff’s members were entitled to access the Hotel facilities and use the Beach Club and amenities pursuant to an irrevocable license recorded on May 26, 2006 (“License”). The License permitted Plaintiff’s members the following rights:
• To access the Hotel pools, gardens, and trails at no charge when they are open for use by an on the same basis as Hotel guests
• To spa membership
• To reserve occupancy at the Hotel
• To receive a 20% discount off the retail rate of services and goods at the spa and fitness center located on the Hotel grounds
• To receive a 20% discount off the retail rate of food and beverage at the dining facilities from time to time located on the Hotel grounds, but excluding the Monarch Bay Club, provided, however, gratuities shall be based on the pre-discounted amount
• To receive signing privileges at the Hotel facilities on the same terms and conditions offered to Hotel guests
• To receive the same access(including the same tram services) to the same public beach with the same beach amenities and services, if any, as the Hotel provides to its guests
Plaintiff and its members have been advised, both verbally and in writing, that despite the irrevocable license, as of June 1, 2020, its members were prohibited from accessing the Beach Club at all, including for dine-in or take-out food services. Plaintiff’s members have also been refused any type of access card or identification that would allow them to use the tram from the Hotel to the Beach Club or exercise signing privileges at the Hotel facilities.
The 1st cause of action alleges that Defendants’ conduct constitutes a breach of the License.
The 2nd cause of action alleges that there is an actual controversy between the parties regarding their respective rights and duties under the License, in that Plaintiff contends: (1) the Beach Club, its restaurant and beach, dine-in and take-out food services from the Beach Club, chair and towel services, beach activities, and beach access tram, are all part of the Hotel facilities, and beach amenities and services provided and enjoyed by Hotel guests; (2) pursuant to the License, Plaintiff’s members are entitled to the use of the aforementioned; (3) Defendants are precluded under the License from preventing or prohibiting Plaintiff’s members from access to the Beach Club and its restaurant and beach amenities; and (4) Defendants are required to provide Plaintiff’s members any card or identification necessary to exercise their rights under the license.
Undisputed Facts
On July 1, 1960, First Western Bank leased land in Monarch Bay to Laguna Niguel Corporation (“LNC”). [ROA 81, Opp. SS, UF 8, Winterhalter decl., ¶ 3, Exh. 7]
On August 1, 1965, LNC subleased a portion of the land to Monarch Bay Club (MBC) solely to operate the Beach Club. [ROA 81, Opp. SS, UF 8, Winterhalter decl., ¶ 3, Exh. 7]
On July 30, 1974, AVCO Community Developers, Inc. (“ACD”), as successor-in-interest to LNC, assigned the entire original ground lease, including the Beach Club premises, to Monarch Bay Association (“MBA”). [ROA 81, Opp. SS, UF 11, Winterhalter decl., ¶ 6, Exh. 9] MBA is a HOA of a 214 single home residential community in Monarch Bay. [Id., Exh. 9] MBA subleases portions of the land to third party sub-tenants, who are residents in its community. [Id.]
In 1983, MBA, MBC and ACD were in litigation regarding the use and operations of the Beach Club. [ROA 81, Opp. SS, UF 9, Winterhalter decl., ¶ 4, Exh. 8] The parties entered into a settlement agreement (“1983 Agreement”). [Id.] They agreed to amend the 1965 sublease to allow certain new classes of members into the Beach Club, including non-residents. [Id.]
In 2001, MBA, MBC, Makallon Resorts I, LLC (“Makar”), Capital Pacific Holdings, LLC, (“CPH”) and CPH Monarch Hotel, LLC (“CPHMH”) were in litigation regarding the interpretation of the 1983 Agreement. [ROA 81, Opp. SS, UF 10, Winterhalter decl., ¶ 5] The parties entered into a settlement agreement (“2003 Agreement”) [ROA 81, Opp. SS, UF 11, Winterhalter decl., ¶ 6 and Exh. 10] Makar was ACD’s successor-in-interest. [Id.] Makar was the owner of the sole sponsor membership of MBC and the sole voting member of MBC and directs the operations and management of the Beach Club. [Id.] The 2003 Agreement did not describe who CPH or CHPMH were. [See id., Exh. 10] Among other things, the parties agreed to terminate the 1983 Agreement and amend the 1965 sublease. [Id.] It also stated that, among other things, that the Beach Club and its operations shall be managed by MBC’s Board of Directors, and that MBC shall only permit authorized users to use the Beach Club. [Id.]
As part of the 2003 Agreement, MBA and MBC entered into the 2003 amended sublease of the Beach Club premises (“2003 Sublease”). [ROA 81, Opp. SS, UF 12, Winterhalter decl., ¶ 7, Exh. 10] The 2003 Sublease began on January 1, 2003 and expired on June 29, 2020. [Id.] Under paragraph 5.3, MBC could only admit the enumerated categories of members into the Beach Club, which included registered overnight Hotel guests. [Id.] MBA and MBC acknowledged that Makar owned MBC and the Beach Club. [Id.] Under paragraph 5.7, MBC agrees not to use or permit anyone to use the premises for use or purpose contrary to the provisions of the 2003 Sublease. [Id.]
Plaintiff is a HOA of a planned community of homes called Sea Villas. [ROA 81, Opp. SS, UF 1] The homes in Sea Villas were first marketed for sale in 2006. [ROA 81, Opp. SS, UF 2]
On May 26, 2006, CPHMH granted the License to Plaintiff (“2006 License). [ROA 81, Opp. SS, UF 16]
On March 22, 2018, MBA leased the Beach Club premises to Monroe MBR, LLC (“2018 Lease”). [ROA 81, Opp. SS, UF 5, Ginochio decl., ¶ 3 and Exh. 2 and Winterhalter decl., ¶ 10 and Exh. 11] The 2018 Lease was to commence on June 30, 2020 and expire on June 29, 2025. [Winterhalter decl., ¶ 10 and Exh. 11] It gave Monroe the right to operate the Beach Club on the premises. [Id.]
On November 15, 2019, Defendants Dana Point Beach Resort LLC and Dana Point Beach Resort II, LLC (collectively “Dana Point Defendants”) purchased the Hotel from Monroe MBR, LLC (“Monroe”) and are the Hotel’s current owners. [ROA 81, Opp. SS, UF 3-4] Also on November 15, 2019, Monroe assigned to Dana Point Defendants the March 22, 2018 written lease it had with MBA. [ROA 81, Opp. SS, UF 5]
Defendants and their predecessors never owned the real property on which the Beach Club sits. [ROA 81, Opp. SS, UF 7]
Defendants have not denied Plaintiff’s members the right to:
• Use the Hotel pools, gardens, and trails at no charge consistent with the terms outlined in Paragraph 4 of the License. [ROA 81, Opp. SS, UF 18-20]
• Use the Hotel spa and fitness center. [ROA 81, Opp. SS, UF 21]
• Reserve occupancy at the Hotel at the then “best available transient room rate.” [ROA 81, Opp. SS, UF 23]
Defendants have not:
• Charged Plaintiff’s members an initiation fee to use the spa and fitness center. [ROA 81, Opp. SS, UF 22]
• Denied Plaintiff’s members a 20% discount off the retail rate of goods and services sold at the spa and fitness center. [ROA 81, Opp. SS, UF 24]
• Denied Plaintiff’s members a 20% discount off the retail rate of food and beverage at the dining facilities on the Hotel grounds, excluding the Beach Club. [ROA 81, Opp. SS, UF 25]
• Denied Plaintiff’s members signing privileges at the Hotel facilities. [ROA 81, Opp. SS, UF 26]
• Denied Plaintiff’s members the same access, including the same tram service, to the same public beach as the Hotel provides to Hotel guests. [ROA 81, Opp. SS, UF 27]
• Denied Plaintiff’s the same access, including the same tram service, to use or rent towels, umbrellas, beach chairs, sun loungers, skim boards, surf boards, and beach toys, as the Hotel provides the Hotel guests. [ROA 81, Opp. SS, UF 28]
Analysis
Defendants presented evidence that it has complied with all of those rights granted to Plaintiff’s members in the 2006 License. Plaintiff agrees. As such, the only point of contention is whether the 2006 License includes a grant to Plaintiff’s members the right to use the Beach Club.
“When a landowner allows someone else to use [its] land, the owner is granting a license. [Citation.]” (Shoen v. Zacarias (2019) 33 Cal.App.5th 1112, 1119.) “A ‘license’ is a personal, revocable and generally nonassignable privilege conferred (either orally or in writing) to do a particular act (or acts) upon the land of another. It is a nonpossessory right to use the property as specified between the parties. [Citation.]” (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1040, internal quotation marks omitted.)
The rights acquired under license cannot exceed the property rights possessed by the licensor. It is well established that one who grants property rights to another cannot convey more than it has. (See Qualls v. Lake Berryessa Enterprises, Inc. (1999) 76 Cal.App.4th 1277, 1284 (Qualls ) [concessioner cannot grant license with rights greater than those received in original concession agreement]; United Pacific Ins. Co. v. Cann (1954) 129 Cal.App.2d 272, 276 [concluding “[i]t would fly in the face of logic to hold that a tenant can convey to another by way of grant, assignment, mortgage or otherwise greater rights than the tenant himself has in the property”].)
Defendants met their initial burden of showing that, at the time of CPHMH granted Plaintiff the 2006 License, CPHMH did not own the Beach Club premises. As such, while the parties wrangle over whether the 2006 License conveyed any right for Plaintiff’s members to use the Beach Club, Defendants presented evidence to show that CPHMH did not own the land nor was it a lessee of it, and therefore, did not have the right to grant Plaintiff’s members any rights with regards to that property.
Plaintiff attempts to raise a triable issue of fact by disputing Defendants’ fact #17, which stated that, in 2006, MBC operated the Beach Club pursuant to the 2003 Sublease with MBA. [See ROA 81, Opp. SS, UF 17] Plaintiff submitted two pieces of evidence to show that, as of May 26, 2006, Makar owned the MBC, and CPHMH owned the Hotel and controlled the Beach Club as part of the Makar entities. [Id.] The first piece of evidence is an August 21, 2003 quit claim deed which purported to transfer the Hotel to CPHMH. [ROA 85, Tabback decl., ¶ 2 and Exh. A] Exhibit A is a copy of a quit claim deed in which Makar transferred to CPHMH a piece of real property described as “Parcels 1, and G as shown on Exhibit ‘B’ of Lot Line Adjustment No. 2003-131, recorded concurrently herewith in the Official Records of Orange County, California.” [Id.] Exhibit A does not attach any other document and it is not clear from the description in the quit claim deed that the property transferred was the Hotel. Even if the property transferred was the Hotel, that evidence that does not raise a triable issue of fact regarding MBC’s ownership and operation of the Beach Club in 2006 because the Hotel does not own the land where the Beach Club is located.
The other piece of evidence is several passages from the July 6, 2022 deposition of Michael Winterhalter. [ROA 85, Tabback decl., ¶ 3 and Exh. B] Winterhalter is the current president of MBA. [Id., Winterhalter depo., p. 9.] Plaintiff relies on the following brief exchanges:
Q: Does the owner of the resort always operate the Monarch Bay Club?
A: Historically, I think that has been the case.
Q: In June of 2006, what was your understanding of the position of CPH Monarch Hotel, LLC in relation to the Monarch Bay Club?
A: I believe that they were the administrative controlling entity.
Q: As part of the Makar entities?
A: Yes.
Q: And Makar owned the Monarch Bay Club at that time, correct?
A: Yes. [Winterhalter depo., pp. 30, 33-34]
Defendants objected to those portions of Winterhalter’s deposition on the ground that they lack foundation. [ROA 106, Evidentiary objections no. 1-3] The objections are SUSTAINED. Plaintiff did not provide sufficient excerpts of Winterhalter’s deposition to show that he has personal knowledge concerning the subject matter of his testimony. (Evid. Code, § 403, subd. (a)(2).) Plaintiff only provided an excerpt to show that Winterhalter has been the president of MBA for the last 2.5 years, has been on MBA’s Board of Directors for 15 years, and lives in MBA. [Winterhalter depo., pp. 30, 33-34] There is no evidence to show how Winterhalter knows what transpired in the years leading up to the 2006 License or who all the stakeholders have been or currently are.
Without the Winterhalter statements, there is no triable issue of fact that it was MBC in 2006 who leased the Beach Club premises from MBA, and that it owned and operated the Beach Club. Plaintiff did not provide any other evidence to show how CPHMH had the right to grant Plaintiff’s members access to the Beach Club in the 2006 License when it was only the owner of the Hotel.
To the extent that Plaintiff in the 1st cause of action for breach of the license and 2nd cause of action for declaratory asserts a right to access to access the Beach Club based on the 2006 License, Defendants have demonstrated that Plaintiff cannot establish that such an agreement existed. To the extent that Plaintiff in the 1st and 2nd causes of action asserts Defendants denied any of the other rights in the 2006 License alleged in the Complaint, Defendants have demonstrated, and Plaintiffs concede, that they have not denied any of those other rights. Therefore, Defendants’ motion for summary judgment is GRANTED.
Plaintiff’s motion for summary judgment is MOOT.
Defendants to give notice of ruling.