Busby Family, LLC v. Zervos
| Decision Date | 23 May 2022 |
| Docket Number | G059220 |
| Parties | BUSBY FAMILY, LLC et al., Plaintiffs, Cross-defendants and Appellants, v. ANDREW G. ZERVOS et al., Defendants and Respondents; SUMMER Z CORP., Defendant, Cross-complainant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No 30-2017-00900308, Robert J. Moss, Judge. Affirmed in part reversed in part, and remanded. Motion for judicial notice. Granted.
David B. Dimitruk for Plaintiffs, Cross-defendants and Appellants.
Morasse Collins & Clark and Steven R. Morasse for Defendants, Cross-complainant and Respondents.
Following heavy rainfall, water seeped through the ceiling of a building under lease for use as a restaurant and caused significant damage to the kitchen area. The culprit was the condition of the 37-year-old roof, which had a useful life, at most, of 25 years, and a questionable maintenance record. When the rains came, a plastic membrane was being installed over the roof structure, but work had stalled because the landlords and the tenant could not reach an agreement about which was responsible for disassembling and removing various items of equipment and debris from the roof to permit the roofing work to be completed. And life being what it is the rainwater leaked into the building through the very section of the roof over which the membrane had not been installed.
This appeal centers on the rights and duties of the parties to that lease with regard to making repairs to the interior of the building, maintaining and repairing the roof, completing the roofing work or replacing the aging roof, and disassembling and removing the equipment on the roof. The landlords are Busby Family, LLC (Busby Family), Goldenwest/Edinger, L.P. (Goldenwest), and The Frank M. and Gertrude R. Doyle Foundation, Inc. (the Doyle Foundation). They are referred to collectively as the Landlords. The tenant is Summer Z Corporation (Summer Z).
The Landlords sued Summer Z, along with Andrew Zervos, Cindy Zervos, Shado Zervos, and Lily Brie Corporation (Lily Brie Corp.)[1] for negligence, nuisance, waste, breach of contract, injunctive relief, and ejectment. The Landlords alleged Defendants were in breach of the lease by failing to repair in a timely manner the damages to the ceilings and walls of the restaurant caused by the rainfall, properly maintain and repair the leaky roof, procure and maintain insurance required by the lease, and have a functioning makeup air unit. Defendants filed a cross-complaint for breach of contract and declaratory relief. Each side claimed the other had the duty to replace the roof or complete the installation of the membrane, as well as to disassemble and remove the various items of equipment on the roof. The Landlords contended the roof failure was attributable to poor maintenance and repair by Defendants; Defendants responded the roof failure was due its age.
Following a bench trial, the trial court found against the Landlords on their complaint and in favor of Defendants on their cross-complaint. The court issued a mandatory injunction requiring the Landlords to complete the reroofing of the building and, at their own expense, remove the equipment from the roof.
The Landlords' appeal presents a host of issues. Although these issues can be quite complicated, certain core themes appear and are repeated in the Landlords' appellate briefs: (1) the trial court failed to make necessary findings on whether Defendants breached compliance with laws and the maintenance and repair provisions of the lease; (2) Defendants failed to comply with the California Retail Food Code (Health & Saf. Code, § 113700 et seq.); (3) the trial court's statement of decision includes a finding of a dangerous condition on the roof that contradicts or negates other findings; (4) the Landlords did not use the equipment on the roof and therefore were not responsible for it; (5) the trial court's conclusion the Landlords had the duty to replace the roof was "ex nihilo" (out of nothing); and (6) the lease imposed on Defendants the duty to replace the roof. We address these themes in the course of deciding this appeal.
We affirm, with one exception, the judgment in favor of Defendants on the Landlords' causes of action for breach of contract, negligence, nuisance, and waste. The Landlords' breach of contract cause of action was limited by the scope of a 30-day notice to perform covenants or quit, which did not mention the roof or cite its condition as a breach of the lease. Whether Defendants were liable for the condition of the roof and whether they had the duty to pay for its replacement therefore are issues that were not squarely before the trial court and are not before us. The trial court's findings in the statement of decision, though barebones, were legally sufficient and withstand scrutiny under the relevant standard of review. The one exception to affirmance on the complaint is that we find the trial court legally erred in concluding the tenants were not required by law to have a makeup air unit at the restaurant.
We reverse the judgment in favor of Defendants on their cross-complaint. The trial court erred by issuing an injunction requiring the Landlords to complete the reroofing work. No express lease provision imposes that duty on the landlord, and injunctive relief could only be based on the lease. The trial court erred by concluding injunctive relief could be based on an oral contract, promissory estoppel, or breach of the implied covenant of good faith and fair dealing because Defendants did not plead any of those causes of action. The court erred by concluding the injunction could be based on a landlord's tort liability to third parties for a dangerous condition on the leased premises. That duty exposes the landlord to liability for damages and does impose an affirmative duty on the landlord to remediate the condition.
The maintenance and repair provision of the lease does not impose on the tenant the duty to replace a dilapidated roof or make substantial repairs. But that does not mean, as Defendants contend, the landlord has such duty by default: When no express covenant requires a landlord to replace a dilapidation, and no government rule or order specifically directs the dilapidation be rectified, it is possible that no party to the lease has such a duty. That is the situation here.
Finally, the trial court awarded Summer Z $2, 000 in damages based on the Landlords, unreasonable withholding of consent to a sublease. We reverse because those damages were not caused by the Landlords, withholding of consent.
The Landlords are the fee owners of a shopping center, called Goldenwest Plaza Shopping Center (the Shopping Center) in Huntington Beach. The Shopping Center has several large buildings, including a single-tenant building located at 7148 Edinger Avenue (the Restaurant Building), which was constructed in 1979. In 1993, the Landlords' predecessors in interest entered into a lease of the entire Restaurant Building (the Lease) to Spires Restaurants, Inc. (Spires) for use as a restaurant. On the same day the Lease was made, Spires assigned its tenancy interest in the Lease to Andrew Zervos and Cindy Zervos.
Several provisions of the Lease are of particular relevance to this appeal:
• Paragraph 7 (Default by Tenant) requires the landlord to give the tenant notice of and opportunity to cure a breach of the Lease before the landlord may terminate the Lease or exercise a remedy.
• Paragraph 9 (Compliance with Laws in Use) requires the tenant use the premises "in conformity with all ordinances and laws of Municipal, State and Federal Authorities" and to "make any and all alterations to the premises required in order to comply with any such ordinance or law."
• Paragraph 15 (Damages to Real or Personal Property) provides in relevant part: "Landlord shall not be liable for any damage done to said premises, or any of the fixtures, merchandise, property, or equipment therein contained . . . from any other cause whatsoever, and whether having its origin in the premises hereby demised or any other portion of the building of which said demised premises are a part, or elsewhere."
• Paragraph 21 (Compliance with Laws by Tenant) provides in part: "Tenant shall at its sole cost and expense, comply with all of the requirements of all Municipal, County, State, and Federal authorities now in force, or which hereafter be in force, pertaining to said premises, in any manner whatsoever." We sometimes refer to paragraph 21 as the compliance with laws provision.
• Paragraph 35 (Repairs) provides in relevant part: "Tenant shall, at its sole cost, keep and maintain said premises and appurtenances and every part thereof, including the exterior walls structure, glass and roof, in good and sanitary order, condition, and repair, hereby waiving all right to make repairs at the expense of Landlord." We sometimes refer to paragraph 35 as the maintenance and repair provision.
• Paragraph 36 (Insurance) requires the tenant, at tenant's expense, to procure and maintain in full force and effect, throughout the term of the Lease, public liability insurance, fire insurance on real property, and fire insurance on the tenant's fixtures. We sometimes refer to paragraph 36 as the insurance provision.
The tenancy interest in the Lease was assigned several times and ultimately, was assigned by Shado Zervos to Summer Z in 2009, on the last day of the Lease term, pursuant to an Amendment and Assignment of Lease dated May 31, 2009 (the 2009 Amendment and Assignment). The Landlords consented to every assignment. The Landlords,...
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