Polster, Inc. v. Swing
| Decision Date | 06 February 1985 |
| Citation | 164 Cal.App.3d 427,210 Cal.Rptr. 567 |
| Court | California Court of Appeals Court of Appeals |
| Parties | POLSTER, INC., a corporation, Plaintiff and Respondent, v. Carol SWING; Ronald Swing; Carol's Interiors, Inc., a California corporation, Defendants and Appellants. Civ. B004809. |
Raiskin & Revitz and Steven J. Revitz, Los Angeles, for plaintiff and respondent.
Defendants, Carol and Ronald Swing and Carol's Interiors, Inc. ("Carol's Interiors" or lessee), interior designers, appeal from a judgment in favor of plaintiff, Polster, Inc. ("Polster" or lessor) for damages and an award of pre-judgment interest, for defendants' failure to return leased property to plaintiff in the same condition as received. We affirm the judgment in part and reverse it in part.
On February 5, 1974, Polster and Carol's Interiors entered into a written lease of a store located in Sherman Oaks, California for the term of five years. Carol's Interiors was to conduct a retail furniture store and interior decorating business on the premises. The lease provided that the lessee must surrender the premises at the expiration of the term of the lease in the same condition as when received, reasonable use and wear thereof excepted. Upon taking possession, Carol's Interiors remodeled the interior of the premises over a period of six to eight months for use as an interior design studio and to display furnishings. During some of that time they were open for business.
Before the term expired, the lessees informed Polster that they did not wish to renew the lease and it was agreed that Carol's Interiors would continue to occupy the premises until March 11, 1979, paying pro-rata rental from the date of lease expiration until that date. After Carol's Interiors surrendered the premises, Polster discovered that portions of the interior, including the ceiling, light fixtures, interior walls and front door were in a state of disrepair in violation of the lease agreement and so informed Carol's Interiors.
From November 1978 through the summer of 1979, Polster listed the premises for lease with real estate brokers. The brokers had difficulty in finding a new tenant due to the bad condition of the premises and recommended to Polster that he grant a repair allowance, rent concessions or a period of free rent to a prospective tenant in order to obtain a new lessee. A new tenant was finally located and a new lease was executed, dated September 4, 1979, providing for free rent until December 1, 1979, or until the tenant first opened for business to the public, whichever occurred first. The new tenant took possession of the property in the same condition it was in when Carol's Interiors vacated it in March, and then extensively remodeled the premises to suit its own business needs.
On April 30, 1979 Polster filed a complaint against Carol's Interiors and Carol and Ronald Swing for breach of contract and conversion, praying for damages of $55,000.00 and interest thereon, punitive damages of $100,000.00, and reasonable attorneys' fees.
Trial began on June 30, 1983. On November 1, 1983, the court issued its statement of decision. On November 7, 1983, judgment was entered for plaintiff, and on November 22, 1983, defendants filed their notice of appeal from that judgment.
Defendants contend:
1. They did not violate paragraph 5 of the lease which provided that defendants had to leave the premises in as good a condition as when leased.
2. The court did not apply the proper measure of damages.
3. There was no evidence of diminished market value caused by the condition of the premises.
4. Plaintiff failed to mitigate damages.
5. Plaintiff should not have been allowed to recover pre-judgment interest, because its claim was not liquidated, as found by the court.
6. The award of attorneys' fees was excessive.
Defendant's first contention is without merit. The trial court found that the
property had been left in a state of "gross disrepair and disorder" and the record amply supports this finding. The record on appeal contains substantial evidence of damage to the drop ceiling, ceiling tiles, lighting fixtures, ceiling support bars, the interior walls and the front door sill and jamb. While the tenant is not obligated to renovate the premises at the expiration of his lease, or restore the premises to his landlord in a better condition than they were at the outset of his lease (Kanner v. Globe Bottling Co. (1969) 273 Cal.App.2d 559, 565-566, 78 Cal.Rptr. 25), the covenant to return the premises in as good a condition as when leased, excepting normal wear and tear, was clearly breached by the state in which these premises were returned to the lessor.
Defendant contends that plaintiff may not recover the reasonable cost of making repairs to the premises without actually making the repairs and incurring the attendant expense. Defendant is mistaken. In Iverson v. Spang Industries, Inc. (1975) 45 Cal.App.3d 303, 308, 119 Cal.Rptr. 399, the court described the measure of damages for breach of covenant to restore thusly:
In its statement of decision, the trial court found that under Iverson v. Spang Industries, Inc., supra, 45 Cal.App.3d 303, 119 Cal.Rptr. 399, a proper measure of damages is the diminution in the market value of the premises due to the damage caused by the defendants. The trial court also implicitly found that where the lessor did not actually expend money to effect the necessary repairs but the same were effected by the lessor's agreement with his incoming tenant, evidence of the estimated reasonable cost of such repairs is a proper measure of the diminution in the market value of the premises. The court also allowed for loss of rental for three weeks, finding that to be time which reasonably would be required to effect the necessary repairs.
Civil Code section 3300, pertaining to the measure of damages for breach of contract states, in pertinent part:
"For the breach of an obligation arising from contract, the measure of damages ... is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom."
"The measure of damages for a breach of lease is that established by Civil Code section 3300 in breach of contract cases--an amount which will compensate the aggrieved party for all the detriment caused by the breach of which in the ordinary course would be a likely result." (Guntert v. City of Stockton (1976) 55 Cal.App.3d 131, 142, 126 Cal.Rptr. 690, 127 Cal.Rptr. 602.)
The Iverson case, quoted above, listed three possible measures of damages for breach of the covenant to restore, noting that in California, the cost of restoring the premises is employed. (Iverson v. Spang Industries, Inc., supra, 45 Cal.App.3d, at p. 308, 119 Cal.Rptr. 399.) While noting diminution of value as one of the acceptable measures of damages in the case at bench, the court actually employed the estimated The issue then becomes whether the estimated cost of repair can be used as the measure of the damages which the lessor has sustained because of the lessee's breach of the covenant to restore where, as here, the lessor has not expended money to effect the necessary repairs but has caused the same to be effected by the lessor's agreement with his incoming lessee.
cost of restoring the premises as the measure of damages.
While we have found no California decision directly in point, it has been held in other jurisdictions that the liability of a tenant to pay for the cost of repairs where he has breached a covenant to repair, is not affected by the act of a subsequent tenant who actually makes the repairs, and that:
"[T]he view has been taken that the fact that the landlord has, by an agreement with an incoming tenant or buyer, relieved himself from expending his own money upon repairs, does not mitigate the lessee's obligation to pay damages for breaching his covenant."
As we have stated above, it is beyond doubt that plaintiff actually suffered detriment to his property, as reflected by the condition of disrepair in which defendants left it.
Accordingly, we find that the trial court properly utilized the estimated cost of repairs as the measure of damage resulting from the defendants' breach of the covenant to restore and that the evidence supports its findings.
It is settled that a lessor, injured by breach of a contract must mitigate his damages. (Rubel v. Peckham (1949) 94 Cal.App.2d 834, 837, 211 P.2d 883.) However, the burden is on the lessee to prove that the lessor...
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