Bos. LLC v. Juarez

• Decision Date: 01 October 2015
• Docket Number: No. BV030948.,BV030948.
• Court: California Superior Court
• Parties: BOSTON LLC, Plaintiff and Respondent, v. Juan JUAREZ, Defendant and Appellant.

240 Cal.App.4th Supp. 28

193 Cal.Rptr.3d 521

BOSTON LLC, Plaintiff and Respondent

v.Juan JUAREZ, Defendant and Appellant.

No. BV030948.

Appellate Division, Superior Court, Los Angeles County.

Oct. 1, 2015.

Allen R. King of the Law Office of Allen R. King, Los Angeles, for Plaintiff and Respondent Boston LLC.

Robert J. Reed and Jessica Schibler, of Public Counsel, for Defendant and Appellant Juan Juarez.

OPINION

RICCIARDULLI, J.

I. INTRODUCTION

Defendant and appellant Juan Juarez appeals the judgment in favor of plaintiff and respondent Boston LLC following an unlawful detainer court trial. Defendant contends the judgment should be reversed because the trial court improperly deprived him of defenses based on the breach of the rental agreement not being material. He also contends reversal is warranted because the court did not allow him to defend the case based on plaintiff's waiver. As discussed below, we affirm.

Regarding defendant's compliance with the terms of the parties' rental agreement, the agreement provided that “any failure of compliance or performance by Renter shall allow Owner to forfeit this agreement and terminate Renter's right to possession.” It was undisputed defendant breached the agreement by failing to timely obtain renter's insurance after being given notice and an opportunity to do so.

In the published portion of the opinion we hold that, because defendant did not contend the agreement constituted a contract of adhesion or that its enforcement was unconscionable, the trial court correctly determined the materiality of the breach was irrelevant. Under the facts of the present case, reversal is not warranted based on the court determining defendant's substantial compliance with the agreement, plaintiff's purported retaliatory motive, and its alleged lack of good faith and fair dealing, were inappropriate defenses.

In the unpublished portion of the opinion, we hold defendant failed to establish reversal is warranted due to the court's refusal to allow him to defend the action based on plaintiff's waiver. Defendant's motion to amend to assert the defense was noncompliant with the California Rules of Court, and he did not adequately develop an argument on appeal regarding how plaintiff waived the rental agreement's anti-waiver clause.

II. FACTUAL AND PROCEDURAL BACKGROUND

On February 26, 2014, plaintiff filed an unlawful detainer action based on defendant's failure to perform covenants in the rental agreement, as described in an attached three-day notice. The notice listed three covenants that were violated, but plaintiff elected to proceed at trial on only one: defendant's failure to obtain and pay for renter's insurance, as required by paragraph 11 of the rental agreement. The notice informed defendant that if he failed to comply with the rental agreement within the three-day period, plaintiff would declare forfeiture of the agreement. The complaint alleged the notice period expired, and defendant did not comply and remained in possession of the property. Defendant filed an answer, generally denying the allegations in the complaint and asserting numerous affirmative defenses. The case was subsequently set for jury trial.

Prior to trial, defendant and plaintiff each filed in limine motions and trial briefs, and plaintiff filed objections to defendant's special verdict questions. The trial court considered the motions, briefs, and plaintiff's objections on April 11, 2014, and allowed the parties to restate their arguments at a hearing on April 15, 2014, which was transcribed and subsequently reported. At the April 15, 2014 hearing, the main issue concerned whether defendant substantially complied with the three-day notice by obtaining insurance one week after being given notice, and if, in any event, failure to obtain insurance was a material breach of the rental agreement.

Plaintiff argued, consistent with its written in limine motions and trial brief, that defendant should not be allowed to present evidence, have the jury instructed, or ask the jury to render special verdicts based on substantial compliance or the materiality of the breach. Plaintiff relied on paragraph 11 of the rental agreement, which provided, “Insurance: Owner does not insure Renter for any personal injury or property damage including, but not limited to, that caused by the act or omission of any other renter or third party, or by any criminal act or activity, war, riot, insurrection, fire or act of God. Renter shall obtain and pay for any insurance coverage necessary to protect Renter or Renter's property from any loss or expense that may be caused by such persons or events.” Plaintiff also relied on one of the opening clauses of the rental agreement, which provided, in relevant part, “Owner and Renter agree that Renter's performance of and compliance with each of the terms thereof, ... constitute a condition on Renter's right to occupy the Premises and any failure of compliance or performance by Renter shall allow Owner to forfeit this agreement and terminate Renter's right to possession.” Plaintiff argued that since, pursuant to this forfeiture clause, “any failure of compliance or performance” by defendant constituted grounds for eviction, the materiality of the breach or defendant's substantial performance with the agreement was irrelevant.

Defendant, in turn, consistent with his written in limine motion and trial brief, argued plaintiff should not be allowed to argue to the jury or present evidence concerning the forfeiture clause. Defendant argued that this clause did not override other provisions of law which require a breach to be material in order to warrant rescission of a contract. Defendant also argued he substantially complied with the rental agreement.

The trial court determined the forfeiture clause rendered all breaches of the agreement to be material. Therefore, evidence regarding whether the breach of paragraph 11 constituted a substantial breach of an important obligation under the agreement was irrelevant, and jury instructions and verdict forms which related to the materiality of the breach would not be allowed. The court further ruled, as a consequence of its determination on the impact of the forfeiture clause, that other evidence, such as that related to the affirmative defenses of substantial compliance, retaliation, and good faith and fair dealing, was irrelevant, and that instructions and verdict forms based on the other evidence would also not be permitted.¹

Following the court's ruling, the parties waived their right to a jury trial and stipulated to the facts of the case, and the court rendered judgment at a court trial based on the stipulated facts. The parties stipulated they entered into the rental agreement in 1999 and defendant had occupied an apartment on the property ever since. The property was subject to the Rent Stabilization Ordinance of the City of Los Angeles (LARSO) (L.A. Mun.Code, § 151.00 et seq.). The three-day notice was served on defendant on February 14, 2014, and defendant failed to comply with the notice's requirement that he obtain and pay for renter's insurance by its expiration on February 18, 2014. Based on the stipulated facts, the court rendered judgment in favor of plaintiff.

III. DISCUSSION

Because the issues in this case pertain to statutory construction, undisputed facts, and interpretation of the parties' rental agreement, we exercise de novo review. (See Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th 1522, 1543–1544, 177 Cal.Rptr.3d 897 [statutory construction is reviewed de novo]; Cohn v. Corinthian Colleges, Inc. (2008) 169 Cal.App.4th 523, 527, 86 Cal.Rptr.3d 401 [“When an appeal presents a pure question of law, the appellate court exercises its independent judgment, giving no deference to the trial court's ruling”]; Sierra Vista Regional Medical Center v. Bontá (2003) 107 Cal.App.4th 237, 245, 132 Cal.Rptr.2d 9 [contractual interpretation is subject to de novo review when the issue does not turn on the credibility of extrinsic evidence].)²

We address each of defendant's contentions separately in turn.

A. Materiality of Breach

Defendant contends the judgment should be reversed because he should have been allowed to present evidence that his breach of paragraph 11 of the agreement was not material. He further contends that, had the case proceeded to jury trial, jury instructions and special verdict forms pertaining to materiality and substantial compliance should have been allowed.

The unlawful detainer action in the present case was based on Code of Civil Procedure section 1161, subdivision (3), due to defendant's “failure to perform ... conditions or covenants of the lease or agreement under which the property is held... .” Even though not specifically provided by this section, case law requires that a breach be material in order to justify an unlawful detainer action. (See NIVO 1 LLC v. Antunez (2013) 217 Cal.App.4th Supp. 1, 5, 159 Cal.Rptr.3d 922 [collecting cases].) Thus, “[w]hether a particular breach will give a plaintiff landlord the right to declare a forfeiture is based on whether the breach is material. ‘The law sensibly recognizes that although every instance of noncompliance with a contract's terms constitutes a breach, not every breach justifies treating the contract as terminated. [Citations.] Following the lead of the Restatements of Contracts, California courts allow termination only if the breach can be classified as “material,” “substantial,” or “total.” [Citations.]’ [Citation.]” (Ibid. )

Nonetheless, “it is a general rule a party is bound by contract provisions” (Williams v. California Physicians' Service (1999) 72 Cal.App.4th 722, 739, 85 Cal.Rptr.2d 497 ), and “[i]f contractual language is clear and explicit, it governs [citation]” (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545 ). Even a contract of adhesion, “a standardized contract, which, imposed and drafted by the party of superior...