Judge Thomas D. Long, Case 21STCV40237 2022-10-25 Tentative Ruling

On November 1, 2021, Plaintiff Simon Parsakar filed this action against Defendant Shlomo Meiri for breach of a commercial lease.

On August 9, 2022, Plaintiff filed a motion for summary judgment, or in the alternative, summary adjudication.

Defendant’s request for judicial notice of Los Angeles City Council Emergency Ordinances and the County of Los Angeles COVID-19 Tenant Protection Resolution is granted.

Plaintiff’s request for judicial notice of Executive Orders, the Report of the Chief Legislative Analyst, and the Official Action of the Los Angeles City Council is granted.

On or about March 8, 2019, Plaintiff, as landlord, and Defendant, as tenant, entered into a written Lease Agreement for a term of two years for property at 1026 S. Los Angeles Street, Los Angeles California 90015. (Undisputed Material Facts “UMF” 1.) The lease required Defendant to pay monthly rent of $4,500.00 from the beginning of the lease term until March 2020. (UMF 2-3.) Pursuant to Paragraph 54 of the Addendum to the Lease, “On each twelve month anniversary of the Commencement Date of this lease, the base rent shall be increased by three percent (3.0%) cumulative and compounded.” (UMF 4.) Accordingly, the base rent was scheduled for an increase of 3% on April 2020, which increased the rent from $4,500.00 to $4,635.00. (UMF 5.) Defendant did not pay rent from March 2020 to March 2021 in the total amount of $60,120.00. (UMF 6, 12, 15.)

The lease term ended on March 31, 2021, but Defendant remained in possession until October 6, 2021. (UMF 8.) Pursuant to Paragraph 26 of the Lease, if the lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. (UMF 9.) Defendant did not pay the holdover rent from April 2021 to September 2021 in the total amount of $41,715.00. (UMF 10, 15.)

Defendant invokes various COVID ordinances as defenses to his non-payment, and the parties dispute their applicability.

A plaintiff moving for summary adjudication must satisfy the initial burden of proof by proving each element of a cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) Then the burden shifts to the defendant to show that a triable issue of material fact exists as to the cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(1).) To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.)

The standard elements of a claim for breach of contract are (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

It is undisputed that the parties entered into a lease, and Defendant was obligated to pay monthly rent. (UMF 1-3.) Plaintiff was never placed in default of the lease. (UMF 20.) Defendant did not pay rent from March 2020 to March 2021 in the total amount of $60,120.00, and he did not pay the holdover rent from April 2021 to September 2021 in the total amount of $41,715.00. (UMF 6, 10, 12, 15.)

Plaintiff has met his initial moving burden as to the elements of the causes of action, and Defendant does not attempt to dispute the existence of the lease. (See generally Opposition.) Instead, Defendant argues that the rent increase was illegal and any rent owed is not yet due.

Defendant argues that under Los Angeles Emergency Ordinance No. 186607, the three-percent rental increase was illegal. (Opposition at p. 8.) Under that ordinance, “[t]he maximum adjusted rent of any occupied rental unit may not be increased, unless necessary to obtain a just and reasonable return, until one year following the termination of the local emergency.” (Def. RJN, Ex. 2 at p. 1.) However, the ordinance is “effective upon publication.” (Ibid.) It was published on May 12, 2020, after the contractual rent increase went into effect in April 2020. (Id. at p. 2; UMF 4-5.) Plaintiff cites no authority, and the Court is not award of any, showing that the ordinance is retroactive.

Defendant also argues that under Los Angeles Emergency Ordinance No. 186606, his rent is not yet due. (Opposition at p. 8.) Under that ordinance, “Tenants shall have up to three months following the expiration of the Local Emergency Period to repay any rent deferred during the Local Emergency Period.” (Def. RJN, Ex. 1 at p. 4, § 49.99.3.)

The city’s authority for this ordinance comes from the Governor’s Executive Order N-28-20 that was issued on March 16, 2020. That executive order provides, in part, “Any provision of state law that would preempt or otherwise restrict a local government’s exercise of its police power to impose substantive limitations on residential or commercial evictions . . . is hereby suspended to the extent that it would preempt or otherwise restrict such exercise.” (Pl. RJN, Ex. 1.) But on June 11, 2021, the Governor issued Executive Order N-08-21, which provided, in part, “As applied to commercial evictions only, the timeframe for the protections set forth in Paragraph 2 of Executive Order N-28-20 . . . is extended through September 30, 2021.” (Pl. RJN, Ex. 2.) As explained, by the Chief Legislative Analyst for Los Angeles City Council, “as the Governor’s Executive Order on this matter expired on September 30, 2021, the provisions in Ordinance No. 186606 concerning the protection of commercial tenants from eviction due to COVID-19 related financial impacts are no longer legally effective.” (Pl. RJN, Ex. 3 at p. 1.)

Accordingly, Defendant has not shown that the Los Angeles Emergency Ordinances provide a defense.

Defendant also relies on the Resolution Further Amending and Restating the County of Los Angeles COVID-19 Tenant Protections, adopted on January 25, 2022. (Opposition at pp. 7-8.) Under this resolution, a commercial tenant with nine or fewer employees may provide, and the landlord must accept, a self-certification of inability to pay rent, and they are required to provide notice to the landlord to this effect within seven days of the date the rent was due. (Def. RJN, Ex. 4 at pp. 15-16, § VI(B)(2)(a); see id. at p. 10, § VI(A)(1).) Commercial tenants then have until January 31, 2023 to repay unpaid rent incurred during the Protected Time Period. (Def. RJN, Ex. 4 at p. 16, § VI(C)(2)(a).) The “Protected Time Period” is March 4, 2020 through January 31, 2022, during which a commercial tenant was unable to pay rent due to Financial Impacts Related to COVID-19. (Def. RJN, Ex. 4 at p. 8, § IV(J)(2).) Financial Impacts “Related to COVID-19” include “reduction or loss of income or revenue resulting from a business closure or other economic or employer impacts related to COVID-19.” (Def. RJN, Ex. 4 at p. 8, § IV(M)(2).)

Defendant declares that “[d]uring the lockdown initiated in March 2020, Mr. Meiri’s business halted completely,” and “no one purchased any products from Mr. Meiri, instead spending their money on food, water, and other necessities.” (Meiri Decl. ¶ 6.) He “promptly” gave his landlord notice of his inability to pay rent. (Meiri Decl. ¶ 7.) In late March 2020, Defendant called Plaintiff and informed him of the situation. (Meiri Decl. ¶ 8.) Defendant did not pay any rent “as a result of [his] struggling business.” (Meiri Decl. ¶ 9.) Sometime after July 14, 2021, Defendant contacted Plaintiff, and they “agreed that [Defendant] could remain on the premises and that the turnover rate of 150% will be halted, as a result of the COVID-19 Pandemic.” (Meiri Decl. ¶ 11.)

In reply, Plaintiff argues that Defendant failed to certify his financial hardship in writing. (Reply at pp. 3-5.) Plaintiff contends, without support or citation, that “[t]he word ‘certification’ implies an official document attesting to a status or level, in this case a financial hardship,” and Defendant’s oral communication as an “alleged certification is insufficient. Such communications are not akin to a certification, which is an official document of attestation.” (Id. at pp. 4-5.) Plaintiff also argues that Defendant was required pursuant to Section 23.1 of the Lease to provide all notices to Plaintiff in writing. (Id. at p. 5.) But Plaintiff cites no evidence or authority requiring that Defendant’s certification pursuant to the Resolution, enacted after the parties signed the lease, be in writing.

Plaintiff argues that “the argument by Defendant that they are protected under the County Moratorium is invalid because such moratorium only protects tenants from eviction.” (Reply at p. 4.) That is not correct. Although the sections about certifying an inability to pay rent is contained in “VI. Eviction Protections,” in order to avoid eviction, a tenant must proactively provide notice of his inability to pay rent. The fact that Plaintiff did not ultimately attempt to evict Defendant does not prevent Defendant from invoking this section. Moreover, the Resolution expressly applies to “other civil actions, including, but not limited to, actions for repayment of rental debt accrued on or after March 4, 2020.” (Def. RJN, Ex. 4 at p. 9, § V(A).)

Plaintiff also argues that “Defendant had the ability to provide its financial hardship, as it is merely an affirmative defense[], however, Defendant has not proffered any financial statements, profit/loss statements, bank statements of its inability to pay the Rent.” (Reply at p. 5.) However, when opposing a motion for summary judgment, Defendant does not need to prove his affirmative defense; he only needs to create a triable issue of fact as to a defense.

Defendant has shown that “a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1); see FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381-382 [“It is incumbent upon a moving party plaintiff not only to show there is no material factual dispute with respect to its cause of action but also to show that there is no material factual dispute with respect to the defenses proffered by the defendant.”].)

In the alternative, Plaintiff seeks summary adjudication of four issues: (1) As a matter of law, Plaintiff’s First Cause of Action of Breach of Lease in Plaintiff’s Complaint, Plaintiff leased the Premises to Defendant”; (2) “As a matter of law, Plaintiff’s First Cause of Action of Breach of Lease in Plaintiff’s Complaint, Plaintiff performed all of its obligations”; (3) “As a matter of law, Plaintiff’s First Cause of Action of Breach of Lease in Plaintiff’s Complaint, Tenant breached the Lease by, among other things, failing to deliver all of the Rent due under the Lease”; and (4) “As a matter of law, Plaintiff’s First Cause of Action of Breach of Lease in Plaintiff’s Complaint, Tenant owes to Plaintiff pursuant to the Lease $101,835.00 in unpaid Rent.” (Motion at pp. 11-12.)

“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 Civ. Proc., § 437c, subd. (f)(1).) Plaintiff’s issues would not completely dispose of the sole cause of action for breach of lease, and the parties did not follow the procedures for moving for summary adjudication of “a legal issue or a claim for damages other than punitive damages that does not completely dispose of a cause of action, affirmative defense, or issue of duty.” (Code Civ. Proc., § 437c, subd. (t).)

Plaintiff also seeks summary adjudication of Defendant’s second, fifth, twelfth, fifteenth, twenty-fifth, and twenty-sixth affirmative defenses. (Motion at pp. 13-17.)

The second affirmative defense of mitigation states that “Plaintiff is barred from recovery by Plaintiffs failure to mitigate his damages.”

The fifth affirmative defense of waiver states that “if and to the extent Plaintiff has any claim and/or right against Defendant, Plaintiff has waived each and every purported claim.”

The twelfth cause affirmative defense of no damages states that “Plaintiff has no suffered or sustained any loss, injury, or damage as alleged in Plaintiffs Complaint.”

The fifteenth affirmative defense of consent states that “Plaintiff consented to the conduct alleged in his complaint.”

The twenty-sixth cause of action of contrary to public policy states that “in light of recent events in the world, enforcement of the contract would be Contrary to Public Policy.”

For each of these, Plaintiff generally argues that Defendant failed to pay rent and Plaintiff was never in default. (Motion at pp. 13-14.) This does not disprove the defense of failure to mitigate. Defendant’s declaration creates triable issues of fact about waiver or consent based on whether Plaintiff “agreed that [Defendant] could remain on the premises and that the turnover rate of 150% will be halted, as a result of the COVID-19 Pandemic.” (Meiri Decl. ¶ 11.) And because there are triable issues of fact regarding the applicability of Los Angeles County COVID-19 Tenant Protections, there are also triable issues regarding whether Plaintiff is yet owed damages and whether enforcement of the contract would indeed be contrary to public policy.

Plaintiff also argues that “in Defendant’s Response to Plaintiff’s Form Interrogatory No. 15.1, Defendant failed to state all facts upon which he bases his denial or twenty-eight (28) affirmative defenses, nor did Defendant identify any documents to support his denial or twenty-eight (28) affirmative defenses,” and “Defendant failed to provide Plaintiff with any sort of evidence regarding his defenses and allegations.” (Motion at p. 17.) But “a [party] moving for summary judgment [must] present evidence, and not simply point out that the [opponent] does not possess, and cannot reasonably obtain, needed evidence.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854, footnote omitted.) The movant must therefore “present evidence that the [opponent] does not possess, and cannot reasonably obtain, needed evidence—as through admissions by the [opponent] following extensive discovery to the effect that he has discovered nothing.” (Id. at p. 855.) Defendant’s response that he “does not have sufficient information and/or documentation and/or other tangible things in its possession to fully respond to this interrogatory, as discovery and investigation have not been completed” does not meet this standard. (Pl. Ex. E at p. 11.)

For these reasons, summary adjudication of the second, fifth, twelfth, fifteenth, and twenty-sixth affirmative defenses is denied.

The exception is the twenty-fifth affirmative defense of breach of contract, which states that “Plaintiff breached the terms of the contract and Defendant therefore cannot be held responsible for the terms of the contract.” It is undisputed that Plaintiff was not placed in default of the lease. (UMF 20.) Summary adjudication is granted on Defendant’s twenty-fifth affirmative defense.

The motion for summary adjudication is GRANTED as to Defendant’s twenty-fifth affirmative defense of breach of contract. The motion for summary adjudication is otherwise DENIED.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court