Armstrong v. CaliforniaValley Assocs.

Filed 10/27/08 Armstrong v. California Valley Assocs. CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Bert L. Swift, Judge. Reversed with directions.

Bidna & Keys and Richard D. Keys for Defendant and Appellant.

Giardinelli & Duke, J. Niswonger, Kelly A. Neavel and D.W. Duke for Plaintiffs and Respondents.

1. Introduction

Defendant California Valley Associates (CVA) is the landlord of commercial real property, a Del Taco restaurant, leased by plaintiffs Robert Armstrong and Kolleen Armstrong (Armstrong). Armstrongs first amended complaint was for breach of contract and declaratory relief. The issue on appeal involves who is responsible for maintaining and repairing the restaurants kitchen septic system,^[1]which serves the leased premises.

After a court trial, the court issued a statement of decision and judgment, finding that CVA, as landlord, was responsible for repairing and replacing the kitchen septic system. Because the lease expressly and unambiguously makes the tenant responsible for the septic system, we reverse the judgment.

2. Factual and Procedural Background

Both Armstrong and CVA are the successors in interest to the original partiesDel Taco, Inc. and Joshua Village Co., a limited partnershipto the subject lease. The build-to-suit lease was executed in December 1979. The Del Taco restaurant is part of the larger Joshua Village shopping center.

The relevant provisions of the lease are as follows. The leased property is a 3,800 square-foot pad, including a building 1,872 square feet in size: . . . the Property and the Improvements are collectively herein called Demised Premises.

The landlord agreed to construct a sixty (60) seat Improvement according to plans supplied by Del Taco. On-site improvements included a septic tank for Del Tacos benefit only. During the restaurants original construction, the landlord installed a septic system for kitchen waste water but not for sewage.

Regarding the tenants duty to maintain, the lease provides: Tenant, at its expense, shall make all repairs as shall be reasonably necessary to keep the Demised Premises in good condition and repair during the term of this Lease . . . . The tenant is also responsible for damage or destruction of the premises.

The lease defines common areas to mean all exterior areas, which are available for nonexclusive use, including those portions of the Demised Premises not occupied by [the] floor area of the building. In other words, part of the demised premises is the building and part is the surrounding area.

The landlord has the sole and exclusive control of the common areas but the lease grants the tenant, the landlord, and permittees, reciprocal, nonexclusive rights to use the common areas for parking and ingress, egress and access by cars and pedestrians. The landlord is obligated to operate and maintain the common areas and all improvements and facilities situated thereon and required in connection therewith, and keep same in good state of repair.

Malcolm Riley, the property developer, testified that the Demised Premises were limited to the footprint of the Del Taco building but he could not remember whether the septic tank was included as an improvement of the demised premises.

Armstrong also testified the footprint of the building constituted the demised premises. But Armstrong admitted it was the tenants responsibility to perform periodic maintenance and pumping of the septic system.

In 1999, CVA paid to replace the septic system as part of the settlement of a separate dispute involving the calculation of common area operating charges. At that time, CVA installed two new seepage pits with 31 percent greater capacity. The septic system failed again in 2003.

CVAs expert, Butch Spillman, blamed the 2003 failure on Armstrong not maintaining the system by periodically removing accumulated grease from the grease trap. Spillmans opinion was that some fast food restaurants require septic maintenance every other month.

Armstrongs expert, Robert Fountain, had performed periodic pumping every six months. He blamed the septic systems failure on its design because he thought the seepage pit was too small.

CVAs property manager, Mavis Northern, testified that a tenant could not make repairs of the septic system located in the common area without the landlords permission. In 2005, CVA raised concerns about Armstrong installing a new seepage pit in the common area but CVA did not prohibit Armstrong from having access to the common area to make repairs to the kitchen septic system.

In its statement of decision, the trial court found, based on Rileys testimony, that the demised premises, as identified in the subject lease, were limited to the perimeter, or footprint, of the Del Taco building. The court also determined that the kitchen septic system was located in the common area and was not part of the demised premises, meaning CVA had the duty to repair and replace it as necessary. The trial court based this finding on its interpretation of the landlords lease obligation to operate and maintain the common areas and on the testimony of Riley and Northern.

The court awarded damages of $90,181.19 plus interest of $14,167 to Armstrong. The court further declared CVA to be responsible for repair, replacement, and inspection of Del Tacos septic system located in the common area and further found that pumping every six months constituted routine maintenance.

In its judgment, the court stated: [CVA] is responsible for the repair and replacement of both septic interceptor tank and seepage pits for the Del Taco Restaurant . . . . [CVA] is responsible for any unreasonable maintenance of the septic interceptor tank and seepage pits. Plaintiffs[] are only responsible for regular maintenance for the septic interceptor tank and seepage pits. Plaintiffs are not responsible for incorrect installation, defects or replacement of the septic interceptor tank and seepage pits.

3. Discussion

CVA argues the trial court erred because the lease makes the tenant responsible for maintenance, repair, and replacement of the septic system. Armstrong argues the trial court properly interpreted the lease provisions to make CVA liable for the septic system. The parties disagree about the proper standard of review, CVA contending the standard of review is de novo and Armstrong countering the proper standard is the substantial evidence test.

If the relevant facts in this case are generally undisputed, instead of using substantial evidence, we independently review the legal meaning of the lease: In reviewing a trial courts interpretation of a written instrument where no conflicting extrinsic evidence is received, an appellate court is not bound by the trial courts ruling but must give the writing its own independent interpretation. [Citations.] (Davies Machinery Co. v. Pine Mountain Club, Inc. (1974) 39 Cal.App.3d 18, 23.) The objective intention of the parties governs our interpretation: In interpreting a contract, the objective intent, as evidenced by the words of the contract, is controlling. [Citation.] We interpret the intent and scope of the agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made. (Lloyds Underwriters v. Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197-1198; Civ. Code, 1644 & 1647.)

There exists an exception to the usual independent review: If a lease is ambiguous on its face, parol evidence is admissible to interpret it. (Severns v. Union Pacific Railroad Co. (2002) 101 Cal.App.4th 1209, 1214.) Further, a lease is latently ambiguous if it appears clear on its face, but parol evidence shows it is reasonably susceptible to two or more interpretations. (ASP [Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257,] 1267.) In that instance, the decision whether to admit parol [or extrinsic] evidence involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning the parties intentions to determine ambiguity, i.e., whether the language is reasonably susceptible to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid in the second stepinterpreting the contract. (Ibid.) The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. (Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co.(1968) 69 Cal.2d 33, 37.)

The trial courts threshold finding of ambiguity is a question of law subject to our independent review. The courts ultimate construction of ambiguous language is subject to our independent review if the extrinsic evidence is not in conflict, even when the parties draw different inferences from the evidence. If the extrinsic evidence conflicts, we uphold any reasonable construction supported by substantial evidence. (ASP, supra, 133 Cal.App.4th at pp. 1267-1268 & fn. 4.) (Bill Signs Trucking, LLC v. Signs Family Ltd. Partnership (2007) 157 Cal.App.4th 1515, 1521.)

In the present case, we conclude there is no patent or latent ambiguity in the lease allowing the court to consider extrinsic evidence to aid in interpretation. As discussed below, the lease unambiguously defines the meaning of Demised Premises as including the septic system and makes the tenant responsible for the latters maintenance, repair, and replacement. Any other evidence based on private and subjective understanding about the meaning of the lease is not relevant.

First of all, contrary to Armstrongs assertion in the respondents brief, the leased property, the Demised Premises, is not limited to the area of the Del Taco restaurants footprint. The lease describes the demised premises as being a 3,800 square feet pad. The buildings footprint was only 1,872 square feet. In spite of Riley and Armstrong testifying that they thought differently, the demised premises was twice the area of the buildings footprint. The foregoing was not an example of an ambiguity or a factual dispute but was a factual error by the witnesses, which contradicted the express terms of the lease.

After trial, the court commented erroneously that the four corners of the contract dont discuss septic tank, nor septic system, nor a leach system. So that is an interpretation I assume thats probably going to have to be up to the Court. The lease, however, expressly mentions septic tank as an on-site improvement. The lease unambiguously defines the demised premises as including on-site improvements and a septic tank, even if the latter is located in the common area. Furthermore, the common areaeven to the extent it may include a portion of the demised premisesis defined as being nonexclusive, primarily for parking and access. The underground septic tankor seepage pitat issue here was clearly for the exclusive use of Del Taco.

There was also no evidence provided by Northern that CVA had prohibited Armstrong from installing new seepage pits in the common area if it obtained CVAs consent. Although Northern signed the 2005 declaration objecting to Armstrongs contract for construction of a new seepage pit in the common area, she testified the reason for CVAs objection was that the seepage pit was too small and the contract did not provide for asphalt replacementnot that the seepage pit could not be located in (or under) the common area.

4. Disposition

The longstanding rule is, except as provided by contract, a commercial landlord has no obligation to repair, maintain, or replace commercial premises. (Strecker v. Barnard (1952) 109 Cal.App.2d 149, 152.) The lease in this instance expressly makes the tenant responsible for the demised premises, including the kitchen septic system, even if it is located in the common area. The trial court misinterpreted and misapplied the lease.

We reverse the judgment and order the trial court to enter judgment in favor of CVA. As the prevailing party, it is entitled to its costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

s/Gaut

J.

We concur:

s/McKinster

Acting P. J.

s/Miller

J.

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^[1] The septic system has two components: the grease interceptor or trap that processes waste and the leaching system or seepage pits. Ordinarily, a septic system is expected to last between 10 and 15 years.