Hamwi v. Citinational-Buckeye Inv. Co.

• Decision Date: 05 August 1977
• Docket Number: CITINATIONAL-BUCKEYE
• Citation: 140 Cal.Rptr. 215,72 Cal.App.3d 462
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph R. HAMWI, and Richard I. Roemer, Individually and as Lessees, and for all other Lessees similarly situated, Plaintiffs and Appellants, v.INVESTMENT CO., Citinational Buckeye Building Co., Buckeye Realty and Management Corp., and Buckeye Construction Co., Inc., Defendants and Respondents. Civ. 50281.

Page 215

140 Cal.Rptr. 215

72 Cal.App.3d 462

Joseph R. HAMWI, and Richard I. Roemer, Individually and as Lessees, and for all other Lessees similarly situated, Plaintiffs and Appellants, v. CITINATIONAL-BUCKEYE INVESTMENT CO., Citinational Buckeye Building Co., Buckeye Realty and Management Corp., and Buckeye Construction Co., Inc., Defendants and Respondents.

Civ. 50281.

Court of Appeal, Second District, Division 1, California.

Aug. 5, 1977.

Hearing Denied Sept. 28, 1977.

Cotchett, Hutchinson & Dyer, and Charles A. Dyer, San Mateo, for plaintiffs and appellants.

Loeb & Loeb, Howard I. Friedman, and Andrew S. Clare, Los Angeles, for defendants and respondents.

THOMPSON, Associate Justice.

This is an appeal from a judgment dismissing a class action 'as to unnamed members of the purported class.' It raises the issue of the propriety of a trial court determination denying class status where: (1) the action is based upon an ambiguous provision common to written contracts between purported class members and defendants; (2) all contracts were individually negotiated by contracting parties of equivalent business sophistication; (3) the ambiguous provision was individually discussed by purported class members and defendants; and (4) no standard presentation of the transaction or set representation is involved.

We conclude: (1) the plaintiffs purporting to represent the class have the burden of establishing that there is an ascertainable class and a well-defined community of interest in the questions of law and fact involved in the litigation; (2) the trial court's conclusion that plaintiffs failed to satisfy their burden must be sustained if founded on a rational basis; and (3) here there is such a rational base in evidence which establishes that individual factual determinations necessary to construction of the ambiguous provision of the contracts negate the existence of the requisite community of interest. Accordingly, we affirm the judgment.

Facts

On April 15, 1966, Joseph R. Hamwi, Richard I. Roemer, and two others leased approximately 2,400 square feet of space for a law office in the City National Bank Building. The lease was negotiated by the lessees with Buckeye Realty and Management Corporation acting and agent for Citinational-Buckeye Investment Co., the lessor. It is embodied in a printed form prepared by the lessor but modified by typed addenda.

Rent for the five-year term is stated at $1,391.50 per month. Paragraph 21 of the printed portion of the lease states: 'It is mutually agreed that LESSEE shall pay, during the term hereof, all taxes assessed on trade fixtures, personal property or leasehold improvements installed by LESSEE or in possession of LESSEE in, upon or about the premises, and assessed against the real property of which the premises are a part. In the event any such taxes should be assessed against said real property, the amount of such taxes shall become a part of the rent due hereunder and shall be payable upon the first rent due date after demand for payment has been made. ( ) LESSEE shall pay to LESSOR upon receipt of a statement therefor, such proportion of the following items as the area of space rented by LESSEE bears to the total net rentable area of the building: (a) any increase in cost to the LESSOR of all utilities, janitorial services and supplies, elevator and air conditioning maintenance, security guard service and insurance over and above that incurred during the first full calendar year following the commencement date of this lease; and (b) any increase in the city, county and special district real estate taxes in excess of the real estate taxes levied against the building for the fiscal year ending on June 30 following the commencement date of this lease.'

On July 7, 1972, Hamwi and Roemer filed the complaint which commenced the case at bench. As amended, the complaint names Citinational-Buckeye Investment Co., Citinational-Buckeye Building Co., Buckeye Realty and Management Corp., and Buckeye Construction Co., Inc., as defendants. Plaintiffs sued on their own behalf and as representatives of a class composed of all tenants 'who have, during unascertained periods in the past, leased and are presently leasing floor space pursuant to a written lease' in the City National Bank Building and 20 other buildings owned or operated by Buckeye.

The complaint contains the mechanical allegations necessary for a class action and asserts that paragraph 21 of the lease was breached by Buckeye in two respects: (1) Buckeye failed to include garage space in determining the total 'rentable area' of its buildings when computing amounts to be added to rent for increase in taxes and building services; and (2) Buckeye computed the additional rent with reference to increased taxes on the entire real property rather than upon an allocation of increased taxes attributable to the 'building' alone. The assertion is the basis of causes of action on behalf of the class for breach of leases, fraud in the nature of an intent not to perform as promised in the leases, and 'breach of fiduciary duty' for failing to compute additional rent as required by the leases. $1,000 is sought as damages for Hamwi and Roemer, and $300,000 is sought for the class.

On March 11, 1974, plaintiffs pursued discovery by interrogatories designed to establish that there was, through a set of complex business arrangements, a common ownership in City National Bank Building and the 20 other buildings managed or operated by the Buckeye group, and that the leases of space in the 21 buildings contained identical rent escalation clauses. Interrogatory number 7 sought the identity of the owners of the City National Bank Building and the other 20 Buckeye buildings. That interrogatory was answered by defendants. Defendants objected to interrogatories which sought a listing of all other buildings owned by the persons named in the answer to interrogatory 7, buildings other than the 21 for which Buckeye was the leasing and managing agent and the owners of those buildings, whether the leases in the other buildings were substantially identical with those utilized in the City National Bank Building, the square footage and garage space of all buildings, the trades and occupations of the tenants of all the Buckeye buildings, the total number of tenants in those buildings, and the rental rates used. Defendants objected, also, to supplementary interrogatories seeking the total number of tenants in Buckeye buildings with leases calling for rent escalation clauses similar to the clause used in the City National Bank leases.

Plaintiffs accepted defendants' response to interrogatory 7 specifying the owners of interests in the 21 buildings. They moved for further response to interrogatories to which objection had been made. On August 5, 1974, the trial court ordered further answers to the interrogatories seeking a listing of buildings for which Buckeye was agent and the names of the owners of those buildings. It required further answers to the interrogatories dealing with the content of leases in all buildings connected with Buckeye but limited defendants' obligations to respond to the rent escalation clauses of those leases. It otherwise denied plaintiffs' motion for further response to interrogatories.

The trial court explained its order with respect to plaintiffs' motion to compel further responses, stating: 'It appears questionable . . . whether plaintiffs can proceed on a class action basis as to tenants in buildings other than the City National Bank Building. . . . This determination will need to be made at a later date by the class action department (of the Los Angeles Superior Court) in pre-trial proceedings. The above order is designed to allow plaintiff (sic) to obtain the necessary information to pose the question of the makeup of the class to the class action department without at this time requiring the detailed and expensive discovery necessary as to the rights of each potential class member in buildings other than the City National Bank Building. Accordingly, plaintiffs should at this time be allowed to find out if identical or similar rent escalation clauses exist as to other buildings managed by Buckeye . . . and whether there are tenants in the other buildings under leases with such clauses, but discovery as to amounts, square feet, etc., should be deferred pending pre-trial determinations.'

Defendants filed further responses pursuant to the trial court order. Plaintiffs accepted the further response without questioning them by a follow-up motion.

Subsequent interrogatories served and filed by plaintiffs on July 18, 1975, which sought greater detail of the ownership interests in the various Buckeye buildings, were met with an objection based upon the August 5, 1974 order. On September 2, 1975, plaintiffs moved to compel further answers to the interrogatories. No ruling on the motion appears in the clerk's or reporter's transcript.

On May 14, 1976, acting pursuant to the Class Action Manual of the Los Angeles Superior Court, plaintiffs filed their notice of motion for determination of class action. The motion states in part: 'In Paragraph 12 of their Answer . . . the defendants admit that the calculation of additional rental on account of increased real estate taxes has been determined by reference to increases in total real estate taxes levied upon the real estate, and that calculation of 'net rentable area' excluded garage floors. The only issue as to liability, therefore, is whether or not said practice breached the lease.' Points and authorities in support of the motion expand that proposition with the statement: 'The focal issue of the litigation is the issue of defendants' breach of the lease contracts.' In their points and authorities, plaintiffs state that their theory is not that the leases are contracts of adhesion.

The motion seeks declaration of a class of plaintiffs consisting of all tenants in...