Tin Tin Corp. v. Pacific Rim Park, LLC, H032371.
| Decision Date | 02 February 2009 |
| Docket Number | No. H032371.,H032371. |
| Citation | 88 Cal. Rptr. 3d 816,170 Cal.App.4th 1220 |
| Court | California Court of Appeals Court of Appeals |
| Parties | TIN TIN CORPORATION et al., Plaintiffs and Appellants, v. PACIFIC RIM PARK, LLC, Defendant and Appellant. |
Judy C. Tsai for Plaintiffs and Appellants.
Kenneth R. Van Vleck, Robert W. Luckinbill and Kathryn C. Curry for Defendant and Appellant.
In this action for breach of contract and related causes of action, 12 commercial tenants alleged that their landlord, Pacific Rim Park, LLC (PRP), had been unfairly charging them the cost of its LLC (limited liability company) taxes and fees. Plaintiffs further alleged that PRP had failed to provide reasonably detailed annual statements of the expenses they were required to pay under their leases. In a cross-complaint PRP alleged that one of the tenants, Tin Tin Corporation (Tin Tin), had breached its lease by failing to remodel the premises it occupied. After a court trial, neither side recovered, and both appeal. We find merit in plaintiffs' first argument and reverse on that ground alone.
In November 2000 Steven F. Caserza formed PRP, a limited liability company, expressly to acquire and operate the Pacific Rim Park shopping center. The center was occupied by a number of business tenants anchored by Tin Tin, a grocery store. Each business rented the premises under a lease that differed in some respects from the others, but they all included one term, the "Lessee's Share of Common Area Operating Expenses." These "CAM" expenses (or CAM's) were defined in four of the leases as "all costs incurred by Lessor relating to the ownership and operation of the Project."1 The other form of lease used for most tenancies was similar, although it referred to the "Industrial/Commercial/office/Shopping Center" rather than the "Project." In each case the definition of "Common Area Operating Expenses" was followed by a list of examples, such as maintenance and improvement costs, utilities, property management and other property services, "Real Property Taxes," and insurance premiums. Each tenant's share of these CAM expenses was based on the proportion of space the tenant occupied relative to the entire premises.
In 2003, 11 of the tenants in the shopping center sued PRP for breach of contract, breach of the covenant of good faith and fair dealing, and fraud. The plaintiffs alleged that PRP had inflated the amounts it had incurred for the CAM's and had failed to provide a reasonably detailed statement showing each tenant's actual share of the CAM charges for the prior year. The parties settled that action, with the tenants to pay a lower amount in accordance with a newer method of calculating the management, accounting, and administrative fees.
On December 9, 2005, 12 tenants commenced the instant action against PRP, asserting breach of contract, fraud, unfair business practices, and related causes of action. Plaintiffs again alleged that the CAM charges were excessive; this time they specifically sought restitution for the LLC fees collected by the Franchise Tax Board for 2001 through 2006, totaling $32,153.92. Plaintiffs further alleged that PRP had failed to provide a reasonably detailed statement showing each tenant's actual share of the CAM's for the preceding year. Plaintiffs requested damages, an accounting, injunctive relief, and a judicial declaration of each party's rights and duties under the leases.
PRP cross-complained for breach of the lease, declaratory relief, and related claims. PRP alleged that Tin Tin had failed to remodel its premises as required by its lease, and that another tenant, All Luck Enterprises, LLC (All Luck), had breached its lease by failing to maintain insurance policies for PRP's benefit. Because plaintiffs' new complaint contained the same claims as in the prior action, PRP further alleged that nine of the plaintiffs had breached the settlement agreement.
The matter was tried by the court in May 2007. Plaintiffs sought to prove that PRP had improperly included as a CAM expense its LLC fees and taxes. They further argued that the annual statement of CAM's did not provide details of the actual expenses incurred, and that PRP had not adequately complied with their requests for more information.
The court granted nonsuit on plaintiffs' causes of action for fraud, breach of fiduciary duty, and accounting. On October 11, 2007, after hearing testimony and considering the parties' posttrial briefs, the court found in PRP's favor on plaintiffs' complaint. The court specifically found that plaintiffs were properly charged the challenged LLC fees and taxes because those were "costs relating to the ownership and operation of the shopping center within the definition of Common Area Operating Expenses." In the court's view, LLC fees and expenses fell into the category of "Real Property Taxes," a term defined in the leases and included on the list of CAM expenses that could be passed on to the tenants. As to the second claim, the court ruled that plaintiffs had waived their right to a more detailed annual statement. They had received an annual letter in the same format for several years without complaining or asking for more detail; instead, they had only asked for more information. PRP had then provided a "detailed accounting of the CAM charges," and when plaintiffs requested invoices to support the accounting, they received those as well. Thus, the court found, PRP had "substantially complied with the contract requirement" and plaintiffs had demonstrated their "willingness to overlook any lack of detail in the annual letter in favor of access to the source material."
Addressing the cross-complaint, the court found in PRP's favor on the cause of action for declaratory relief, but against PRP on its claims against Tin Tin and All Luck for breach of contract. The court ruled that PRP's allegation that Tin Tin had breached its promise to remodel its premises before March 31, 2000, was barred by the statute of limitations, and the court rejected PRP's assertions of equitable tolling and estoppel. The court further ruled against PRP on its claim that All Luck had failed to maintain insurance, as PRP had suffered no damages as a result of that lapse.
Both sides have appealed. Plaintiffs contend that the leases did not permit the lessor to pass through its LLC fees to its tenants, and they renew their claim that PRP had failed to provide a "reasonably detailed statement" of the CAM charges as required by the leases. PRP challenges the court's ruling that its cross-complaint was barred by the statute of limitations.
On appeal, plaintiffs contend that the court misinterpreted the CAM provisions to allow PRP to charge them with its LLC fees and taxes. These expenses, plaintiffs argue, "are voluntary costs of doing business solely for the personal benefit and protection of the landlord/owner to shield himself from liability . . . and unlike common area operational expenses which are related solely to the repair, maintenance and operation of the land and improvements."
The parties disagree on the standard this court must apply in reviewing plaintiffs' challenge on appeal. PRP insists that to the extent the issues are even cognizable,2 review for substantial evidence is the correct standard because conflicting extrinsic evidence was presented on the meaning of the lease term "Common Area Operating Expenses." Plaintiffs maintain that there is no factual dispute on this issue and that we must decide de novo whether LLC fees are CAM expenses. Although plaintiffs advocate independent review in vague terms without citation to relevant authority, their position is the more accurate in the procedural circumstances presented here. The key issue before us is whether the lease term "Common Area Operating Expenses" encompasses LLC fees. The trial court appears to have answered this question primarily, if not exclusively, by resorting to the contract language itself. When the meaning of the contract language may be determined without the aid of extrinsic evidence, we generally apply a de novo standard of review to the construction of the instrument. "` '" (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1269 , citing the Civ. Code.) (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [44 Cal.Rptr. 767, 402 P.2d 839]; see also City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [75 Cal.Rptr.3d 333, 181 P.3d 142] [].) To the extent that the testimony adduced by the parties revealed a meaning of which the contract was reasonably susceptible, we defer to the court's determination of those witnesses' credibility and apply the substantial evidence rule to that determination. (See Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 847-848 ; Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912 .) Nevertheless, we believe, as the trial court apparently did, that the question of...
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