Wal-Noon Corp. v. Hill

• Decision Date: 27 February 1975
• Docket Number: WAL-NOON
• Citation: 119 Cal.Rptr. 646,45 Cal.App.3d 605
• Court: California Court of Appeals Court of Appeals
• Parties: CORPORATION et al., Plaintiffs, Appellants and Cross-Respondents, v. Norman T. HILL and Edith M. Hill, Defendants, Respondents and Cross-Appellants, Civ. 14042.

Page 646

119 Cal.Rptr. 646

45 Cal.App.3d 605

WAL-NOON CORPORATION et al., Plaintiffs, Appellants and Cross-Respondents, v. Norman T. HILL and Edith M. Hill, Defendants, Respondents and Cross-Appellants,

Civ. 14042.

Court of Appeal, Third District, California.

Feb. 27, 1975.

Gale & Goldstein by Stanley Gale, Sacramento, for plaintiffs, appellants and cross-respondents.

Thomas J. Hammer, Jr., Sacramento, for defendants, respondents and cross-appellants.

PUGLIA, Presiding Justice.

Plaintiffs, lessees, and defendants, lessors, each appeal from a judgment in favor of plaintiffs entered in an action seeking recovery under provisions of a lease. Plaintiffs challenge the trial court's failure to award them full compensation pursuant to the lease and also to award them attorney's fees under a provision in the lease. Defendants' cross-appeal challenges the trial court's decision awarding plaintiffs any damages at all in view of the court's conclusion that plaintiffs breached the lease under which recovery was sought. In its intended decision, the trial court characterized the action as 'a classic case of restitution' and entered a judgment reflecting the application of equitable principles. Both parties register disagreement with the trial court's reasoning and conclusion.

In August of 1957, the parties entered into a lease agreement for the construction and occupancy of a building. The major portion of the building was to be occupied and used by plaintiffs for a market and the remainder was to be sublet by plaintiffs for various satellite enterprises. Construction was completed in 1959.

In 1967 or 1968 the roof started to leak over the market portion of the building. Shortly thereafter complaints were made to plaintiffs by other tenants of similar leaky conditions. On several occasions, repairs were made to the roof at plaintiffs' expense. After approximately 12 to 15 repairs, plaintiffs were advised by roofers whom they consulted that repair was no longer practicable and that a new roof should be installed. Plaintiffs sought and obtained competitive bids for replacing the roof and awarded the job to the lowest bidders. Replacement was accomplished in two stages, the satellite portion being done by one company in September 1968 at a cost of $4,800, and the market portion by another in August 1969 at a cost of $4,000.

The lease in part provided as follows: 'MAINTENANCE AND REPAIRS. The Lessors agree, at their own cost and expense, to make all repairs to the roof and exterior walls (except glazing and painting replacements and/or repairs which Lessees agree to do) of the new building, provided, however, that the Lessors shall have no obligation to make any repairs to the new building made necessary by the negligence or improper use thereof by the Lessees, their sub-lessees, agents or employees. Except as herein qualified, Lessees shall keep the leased premises in good order and condition at their own expense and surrender the same in good order and condition upon the expiration or sooner termination of this lease, reasonable wear from proper use thereof and damage from the elements excepted.

'. . .dam

'WRITTEN COMMUNICATIONS.

All notices, demands, consents and denials hereunder by either party to the other shall be in writing and shall be sufficiently given and served if either personally served, or if sent by United States registered mail, return receipt requested, postage prepaid, in a sealed envelope addressed as follows:

'If sent by mail to Lessors, the same shall be addressed to the Lessors at 4920 15th Avenue, Sacramento, California;

'If sent by mail to Lessees, the same shall be addressed to the Lessees at the leased premises.

'Either the Lessors or the Lessees may change such address by notice in writing to the other party of such new address as the Lessors or the Lessees may desire used for such purpose. All rent or other sums payable hereunder may be paid to Lessors at the above listed address for notices.

'. . .he

'INTERPRETATION. The various headings and numbers herein and the groupings of the provisions of this lease into separate articles and paragraphs shall not be construed to limit or restrict either the meaning or application of any provision hereof, and are for the purpose of convenience only.'

Prior to the repairs to and later replacement of the roof, plaintiffs did not review the lease to determine upon which party the obligation for such work was placed. However, in 1971, the plaintiffs finally became aware of the lease provision which allocated the responsibility for such repair and replacement to defendant lessors. Thereafter plaintiffs requested that defendants reimburse them for the sums expended to replace the roof. Defendants refused and this action was thereafter instituted.

The complaint filed by plaintiffs was phrased purely in terms of contract, as was defendants' answer. The action proceeded to trial on that theory, plaintiffs seeking to establish the provisions of the lease and the circumstances surrounding repair and replacement of the roof. Defendants sought to show that they were prejudiced by plaintiffs' failure to notify them of the defective condition of the roof at a time when they could exercise their contractual right to control repair or replacement.

The contractor who replaced the roof over the market testified that he was asked by plaintiffs to estimate cost of replacement but did not recall if he was asked to estimate cost of repair. He also stated that some of the roof damage possibly could have been caused inservicing the airconditioning equipment placed on the roof by plaintiffs and further, that some of the roof damage was attributable to water overflow from this equipment. The roof that he installed had a 15-year life expectancy. He testified that for an additional $1,200 to $1,300 a roof with a 20-year life expectancy could have been installed. He also testified that roofs can always be repaired, although in some cases it may not be economically feasible to do so.

The contractor who re-roofed the satellite area testified that plaintiffs did not ask him the cost of repair but only for an estimate of replacement cost. He also was of the opinion that some of the damage to the roof could have been caused in servicing the air conditioning equipment. The roof which he installed had a two-year warranty but this could have been extended to 20 years by the purchase at the time of installation of a bond for approximately $600.

Defendant Hill testified that he had no knowledge of leaks in the roof, the need for repairs, or that the roof had been replaced until he was so advised by plaintiffs in February 1971. He was of the opinion that the original roof on the building had a 20-year life expectancy, and that recourse might have been available against the installing contractor had he been timely notified. He testified that as a contractor himself, he might have been able to obtain more advantageous terms for required repairs or replacement. Hill further testified that an examination of the damage to the old roof might have disclosed the cause thereof and that if caused by plaintiffs' activities relating to the air conditioning system, he would not be liable under the lease for repairs or replacement.

The trial court prepared its own findings of fact and conclusions of law. It found that the lease required defendants to repair the roof except for repairs necessitated by plaintiffs' negligent or improper use; that repairs became necessary for which plaintiffs spent $8,941; and that defendants had neither notice from plaintiffs nor knowledge of the need for repairs prior to completion of the work.

From those facts the court concluded that plaintiffs breached the contract by failing to give notice; that they were, however, entitled to restitution because defendants had been unjustly enriched; that an offset equal to one-third of the replacement cost was equitable; and that plaintiffs were therefore entitled to judgment against defendants for $5,867 plus legal interest from the date demand was made for reimbursement under the lease. The court further concluded that plaintiffs were not entitled to attorney's fees 'Inasmuch as this action was not predicated on the lease, and plaintiffs in any event had breached the lease, . . .'

Plaintiffs take the position on appeal that the judgment as rendered by the trial court 'is outside the scope of the pleadings and the theory of the case as presented at the trial' and that the 'case should stand or fall upon the contractual provisions of the lease.' Plaintiffs then argue that the trial court erred in finding them in breach of the lease for failure to give notice and in denying them full recovery thereunder. The argument is made that the lease provision governing the form and manner of giving notice cannot be expanded into a condition precedent that notice to repair in fact be given.

The plaintiffs are, of course, correct that the lease does not contain an express provision that defendants be given notice to repair. However, it is impossible to conceive of how the intentions of the parties as expressed in the covenant to repair could be implemented if notice were not required. Defendants' duty to repair was not unconditional. It did not extend to repairs made necessary by the negligence or improper use of the premises by the lessees, their agents or employees. Such repairs were by necessary implication the responsibility of lessees who were by the lease obligated to keep the premises 'in good order and condition at their own expense . . ..' Clearly the parties did not intend that when repairs became necessary the lessees could unilaterally and conclusively determine the responsibility therefor and allocate the burden thereof as between lessor and lessee. If the interpretation of the lease urged by plaintiffs were accepted, however, it would permit plaintiffs to alter conditions without the lessors' knowledge...