Lawrence> v. JR
Enterprises





















Filed 5/15/13 Lawrence v. JR Enterprises CA4/3













NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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 THREE




>

MICHAEL LAWRENCE et al., Plaintiffs, Cross-defendants and Appellants, v. JR ENTERPRISES, L.P., Defendant, Cross-complainant and Respondent.

G044999 (consol. w/ G045163) (Super. Ct. Nos. 30-2008-00111057, 30-2008-00112740) O P I N I O N

Appeals from a judgment
and postjudgment orders of the Superior
Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Orange
County, Robert J. Moss, Judge.
Affirmed.

Beus Gilbert, Franklyn
D. Jeans, Tiffany E. Cale; Mahaffey & Associates, Douglas L. Mahaffey;
Julander Brown & Bollard and William C. Bollard for Plaintiffs,
Cross-Defendants and Appellants.

Horvitz & Levy,
David M. Axelrad, Kris Bahr; Barnes Crosby Fitzgerald & Zeman, Larry S.
Zeman and Eric P. Francisconi for Defendant, Cross-complainant and Respondent.

* * *

This action involves a
dispute over entitlement to a one-acre parcel of real property in long-term
ground lease covering 14 acres. A lease
provision allowed the original property owner and his two children to live on
the acre as long as they desired, but required delivery of the parcel to the
lessee if they decided to no longer live there.
After the original owner and his children passed away, current owners
Michael and Victoria Lawrence (landlords) refused to deliver the parcel to the
current lessee, JR Enterprises, L.P. (tenant), resulting in various actions
against each other.

In a bench trial, the
court found certain of landlords’ claims to be barred by the statutes of
limitations, waiver, estoppel, and laches.
After a jury trial on landlords’ remaining causes of action, the court
directed a verdict for tenant on its claim landlords had breached the lease by
failing to deliver the parcel. Although
it also directed a verdict for landlords that tenant had breached the lease by
excluding certain calculations from its rent payment, it granted tenant relief
from forfeiture of the lease. (Civ.
Code, § 3275; all further statutory references are to this code unless
otherwise stated.)

In this consolidated
appeal from the judgment (G044999) and denial of their postjudgment motions
(G045163), landlords contend the court erred by not voiding the one-acre lease
provision under section 715 [nonvested lease invalid if term not commenced
within 30 years], nonsuiting their fraud claim; and excluding certain
evidence. They also argue substantial
evidence does not support the grant of relief under section 3275, the
application of affirmative defenses to bar certain claims, or the jury’s award
of damages. We affirm.



FACTS AND PROCEDURAL BACKGROUND



In 1963, Oliver Baker
entered a 100-year ground lease for a 14-acre parcel with developers. The lease allowed the development of 13
acres, and permitted Oliver and his two children, Beatrice Brewer and Albert
Baker, to live on one acre for as long as they desired but once they “elect no
longer to reside on the said parcel, possession thereof shall be delivered to”
developers. On top of monthly rent, the
lease required payment of 6 percent of any gross receipts in excess of $1.5
million “derived in whatsoever manner from the demised premises” during the
preceding five years. The lease was
amended in 1964 and 1971 without substantive change.

The 13 acres was
developed into a mobile home park and transferred to several other companies
before tenant took possession. Tenant
and its predecessors accompanied their excess rent payments with reports
summarizing the mobile home park’s yearly rent receipts.

After Oliver passed away
in 1968, Albert and Beatrice continued living on the property until their
respective deaths in 2007 and 2009.
Neither had biological children; however, Beatrice adopted Lawrence, her
adult nephew, in order to devise the 14 acres to him.

In 2008, tenant paid
landlords $241,951 in excess rent and issued a report summarizing the mobile
home park’s gross receipts for 2003-2007.
Tenant granted landlords’ request to inspect its accounting records for
the 2008 report. In October, landlords
issued a notice of default demanding an additional $297,981 in rent, along with
a demand letter and an accountant’s report outlining the excess rent
calculation. Three months later, tenant
allowed landlords and their accountants to inspect its books related to all of
the five-year reports before the 2008 report.


Following Beatrice’s
death in March 2009, tenant requested the one-acre parcel be delivered to it
for development. Landlords refused,
claiming the lease provision requiring them to do so was invalid.

In August, landlords
retracted the 2008 notice of default and issued two new ones. The first provided tenant failed to pay the
excess rent for a five-year period between 2004 to 2008, “the exact amount of
which only you are aware.” The second
was identical except it addressed the “five (5) year periods of 1974-1978,
1979-1983, 1984-1988, 1989-1993, 1994-1998, and
1999-2003 . . . .”

Landlords sued tenant
for quiet title and cancellation of
the lease, and declaratory relief, asserting the lease provision requiring the
one-acre parcel be transferred to tenant was invalid under section 715 (main
action). Tenant filed a cross-complaint
for declaratory relief and a separate complaint (tenant’s action). Tenant’s second amended (operative)
cross-complaint and complaint both allege, inter alia, breach of contract for
failure to deliver the one-acre parcel as required by the lease and declaratory
relief.

In the main action,
landlords responded to tenant’s second amended cross-complaint with their own
cross-complaint for fraud based on the exclusion of gross receipts from the
five-year reports, lease cancellation due to fraudulent inducement, undue
influence, and unconscionability, and financial elder abuse in fraudulently
inducing Oliver to sign the lease in 1963 and incorrectly reporting gross
receipts to Beatrice and Albert when they were 65 years old or older. They also cross-complained in tenant’s
action, alleging claims for breach of written lease and declaratory
relief. The two actions were
consolidated.

As to the main action,
the court granted tenant’s motion for summary adjudication of the declaratory
relief claim, finding section 715 did not apply retroactively to invalidate the
lease. Landlords agreed to a bench trial
on their unconscionability claim and any affirmative defenses. The court found the lease was not
unconscionable and that landlords’ claims for fraud, cancellation of the lease,
financial elder abuse, and breach of lease, except to the extent they were
based on the 2008 report, were barred by the statutes of limitation, laches,
waiver, and estoppel.

In phase 2, a jury trial
was held on tenant’s breach of contract claims in both actions and landlords’
claims for breach of contract, fraud and elder abuse arising from the 2008
report. On landlords’ fraud claim, the
court granted a nonsuit, finding no evidence of detrimental reliance on
representations made in the 2008 report.
The court thereafter directed a verdict in tenant’s favor on its breach
of contract claim, ruling as a matter of law landlords breached the lease by
failing to deliver the one-acre parcel upon Beatrice’s death. It also directed a verdict in landlords’ favor
on their breach of contract claim, finding tenant breached the lease by failing
to include utility receipts, mobile homes sales, manager lodging, and late fees
in its gross profits calculation for the 2008 report. The parties stipulated landlords’ damages
totaled $90,382.

On the two issues
submitted to it, the jury determined tenant’s damages to be over $170,000 and
rejected landlords’ elder abuse claim based on the 2008 report. The court subsequently ruled landlords were
not entitled to forfeiture of the lease.




DISCUSSION



>1.
Section 715

Enacted in 1991, section
715 provides, “[a] lease to commence at a time certain or upon the happening of
a future event becomes invalid if its term does not actually commence in
possession within 30 years after its execution.” Landlords contend the court erred in, among
other things, concluding section 715 does not apply retroactively to invalidate
any provision of the 1963 lease. We
disagree.

Whether a statute
applies retroactively is reviewed de novo.
(In re Marriage of Hill and
Dittmer (2011) 202 Cal.App.4th 1046, 1055.)
Because of due process concerns and the proscription against ex post
facto laws, “‘a statute may be applied retroactively only if it contains
express language of retroactivity or if other sources provide a clear and
unavoidable implication that the Legislature intended retroactive
application.’” (Bullard v. California State Automobile Assn. (2005) 129 Cal.App.4th
211, 217.)

Nothing in the language
of section 715 indicates the Legislature intended it to operate retroactively. In fact, section 3 specifically states, “[n]o
part of [the Civil Code] is retroactive, unless expressly so declared.”

Landlords nevertheless
argue section 715 is retroactive because Probate Code section 21202,
subdivision (a), provides “this part applies to nonvested property interests
and unexercised powers of appointment regardless of whether they were created
before, on or after January 1, 1992.”
But they have not shown tenant’s property interests were “nonvested.” To the contrary, “[a] lease which becomes
immediately effective vests in all respects at that time, and rights under it,
though exercisable in the future, do not have the characteristics of a
contingent or future estate.” (>Fisher v. Parsons (1963) 213 Cal.App.2d
829, 838-839, 841-842, disagreed with on another ground in Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square
Venture Partners (1997) 52 Cal.App.4th 867, 876.) The lease here became effective immediately
in January 1963. At that time, tenant’s
rights vested as to “those certain premises consisting of fourteen acres,”
including the subject one-acre parcel.
It does not follow tenant’s rights did not vest merely because it could
not immediately exercise them due to the lease provision allowing Oliver and
his children to live on the one-acre parcel as long as they desired. Rather, tenant had a “presently vested
right . . . to occupy in the future” the one-acre
parcel. (Fisher v. Parsons, supra,
213 Cal.App.2d at p. 842.)

Probate Code section
21202 thus does not apply and we need not consider the legislative history of
the California Uniform Statutory Rule Against Perpetuities. (Shaver
v. Clanton (1994) 26 Cal.App.4th 568, 573.)
And because there is no indication section 715 was intended to operate
retroactively, it is unnecessary to address landlords’ claim it voids the
one-acre lease provision.







>2.
Relief from Forfeiture under Section 3275

Under section 3275, a
party may be relieved from forfeiture “upon making full compensation to the
other party, except in case of a grossly negligent, willful, or fraudulent
breach of duty.” The court granted
tenant such relief, finding “no wrongful intent, gross negligence, or willful
or fraudulent breach of duty” in that tenant interpreted the lease in a manner
it thought appropriate and as it had done for many years, the jury found it did
not retain rent for a wrongful use or with an intent to defraud, and any breach
“was not sufficiently material or substantial to justify the forfeiture.”

Landlords assert this
was error because (1) the court improperly shifted to them the burden to show
tenant’s conduct was willful or grossly negligent; (2) tenant did not “make
‘full compensation” before requesting relief from forfeiture; and (3) the
evidence does not support the finding “[t]enant’s conduct was neither willful
nor grossly negligent.” Their failure to
provide any citation to the record where the court shifted the burden to them
forfeits the first issue. (>Duarte v. Chino Community Hospital
(1999) 72 Cal.App.4th 849, 856.) Their
other claims lack merit.

A trial court may grant
relief from forfeiture conditioned upon payment within a reasonable time. (See Scarbery
v. Bill Patch Land & Water Co. (1960) 184 Cal.App.2d 87, 106 [affirming
judgment fixing amount due and giving defaulting party “a reasonable time to
pay,” noting “numerous cases have held that such a judgment is in accordance
with the law and in consonance with equity”]; see also El Rio Oils, Ltd. v. Chase (1949) 95 Cal.App.2d 402, 413 [affirming
relief from forfeiture of lease conditioned on full payment within 15 days of
judgment] (El Rio Oils).) But such condition was unnecessary here as
landlords were fully compensated by tenant’s damage award, which offset the
unpaid rent. (See Parsons v. Smilie (1893) 97 Cal. 647, 653 [“equity will relieve
where the thing may be done afterwards, or compensation can be made for
it . . . so as to put the party in precisely the same
situation”].)

Landlords argue a
judicial order for payment of breach of contract damages does not satisfy
section 3275’s requirement of full compensation. But the cases they cite do not stand for that
proposition. In fact, >Fowler v. Vaughan (1948) 86 Cal.App.2d
772 recognized section 3275 allows a court to permit a party “to make up the
delinquent payments within a reasonable time . . . except,
among other things, where a failure to comply with the contract has been
willful.” (Fowler v. Vaughan, at p. 777.)
And although the remaining cases note the defaulting party’s failure to
tender the full amount due, they do not address the issue of when compensation
must be made under section 3275 or the propriety of a court affording a
reasonable time to pay following a determination after trial on the amount
owed. “‘It is axiomatic that cases are
not authority for propositions not considered.’” (Baeza
v. Superior Court (2011) 201 Cal.App.4th 1214, 1228.)

On the issue of willful
or grossly negligent conduct, landlords contend “willful” “simply denotes
intentional conduct.” We disagree. A breach of a contract may be intentional but
nevertheless not be “willful” under section 3275. (El Rio
Oils, supra, 95 Cal.App.2d at p.
412 [rejecting lessors’ claim lessee’s default was willful because it was
voluntary and holding that although intentional, the failure to pay was not
necessarily willful under section 3275 where lessee honestly but mistakenly
asserted “it did not owe the amount demanded”]; see also Barkis v. Scott (1949) 34 Cal.2d 116, 123 [good faith belief
defaulters “had sufficient funds to cover the checks prevents their breach from
being willful”]; Crofoot v. Weger (1952)
109 Cal.App.2d 839, 842 [evidence supported finding buyer’s breach, based on
belief seller’s negligence caused fire leading to buyer’s failure to pay,
“though intentional in the sense [they] knowingly withheld the payment due, was
yet not so wil[l]ful so as to prevent relief”].) The cases cited by landlords are inapposite
as none involve an honest dispute about the interpretation of a contract or the
amount owed. We conclude the trial court
was within its discretion in finding tenant’s actions not willful under section
3275 based on its determination tenant interpreted the lease in good faith in
excluding utility payments and mobile home sales.

Landlords distinguish >El Rio Oils on the grounds the
defaulting party in that case disclosed the existence of revenue giving rise to
the dispute, filed a declaratory relief action, and deposited the disputed
funds into court. But >El Rio Oils never stated those were
prerequisites to section 3275 relief.
Rather, they were factual matters it considered in concluding lessee did
not act willfully in not paying the amount claimed.

In any event, numerous
declaratory relief actions were filed in this case by both parties. As for not paying the disputed amount into
court, landlords’ operative notices of default, unlike in El Rio Oils, never specified the precise sum due and the court
could have reasonably determined that amount was not ascertainable until the
conclusion of trial. Substantial evidence
also supports the court’s implied finding tenant did not willfully hide revenue
or otherwise engage in willful or grossly negligent conduct. Tenant’s manager testified he excluded gross
utilities and mobile home sales from the excess rent calculation because he did
not consider them gross receipts derived from the property within the meaning
of the lease, always intended to pay the full rent amount owed under the lease,
and believed he had done so. Landlords acknowledged
the 2008 report did not hide tenant’s method of calculating excess rent
payments, in that it revealed both utility income and the expenses they
believed should not have been deducted from the computation, and that upon
their initial request in 2008, tenant willingly allowed the inspection of its
financial records. Landlords’ experts
found those records accurate, the calculations for “the various line items
within the general ledger” correct, and no attempt to conceal the income
received from the mobile home sales.

Landlords’ claim the
evidence supports a conclusion contrary to that found by the court is nothing
more than a request that we reweigh the evidence, which we may not do. Where two or more inferences can reasonably
be drawn from the record, we defer to those drawn by the trial court. (In re
Woodham (2001) 95 Cal.App.4th 438, 443 [abuse of discretion not shown when
party presents facts that merely provide an opportunity for a difference of
opinion].)

The challenges to the
court’s reasons for granting relief from forfeiture also lack merit. First, although landlords argue the evidence
does not support the finding they waived tenant’s conduct by not previously
claiming a breach of the lease provisions, the court never mentioned waiver. Rather, it noted the absence of a prior claim
as part of its determination tenant interpreted the lease in a manner
consistent with how it had been interpreted by both parties for years, and not
due to wrongful intent, gross negligence, or willful breach of duty.

Second, landlords contend
the court erred in relying on the jury’s finding tenant “did not retain rent
money belonging to Beatrice . . . for a wrongful use or
with an intent to defraud” because that was in connection with their elder
abuse cause of action, which has a different standard. The court, however, merely referenced the
jury’s finding as further evidence in support of its conclusion tenant did not
withhold rent payment for a wrongful use or intent to defraud; it did not
equate the two standards.

Finally, landlords assert
the court erred in finding that any breach was not sufficiently material to
justify forfeiting the lease given that neither the statute nor the lease
provided for a materiality exception.
But the determination of whether the breach was so material as to
constitute cause for the forfeiture of a lease is a necessary precursor to
whether tenant is entitled to relief because “although every instance of
noncompliance with a contract’s terms constitutes a breach, not every breach
justifies treating the contract as terminated.”
(Superior Motels, Inc. v. Rinn
Motor Hotels, Inc. (1987) 195 Cal.App.3d 1032, 1051.) The court thus did not abuse its discretion
in considering the materiality of the breach.
As to landlords’ claim no evidence supports that conclusion, they merely
disagreed with the court’s evaluation, which does not show the evidence is
insufficient to support it. (>California Native Plant Society v. City of
Rancho Cordova (2009) 172 Cal.App.4th 603, 626.)

>3.
Nonsuit on Fraud Claim

Landlords contend the
court erroneously granted nonsuit on their fraud claim on the basis they failed
“to establish the required element of justifiable and detrimental reliance upon
the alleged misrepresentation(s)” in the 2008 report. In reviewing the grant of a nonsuit, “we
independently view the evidence most favorably to plaintiff ‘“resolving all
presumptions, inferences and doubts in [its] favor.”’
[Citation.] . . . . “‘Although a judgment
of nonsuit must not be reversed if plaintiff’s proof raises nothing more than
speculation, suspicion, or conjecture, reversal is warranted if there is ‘some
substance to plaintiff’s evidence upon which reasonable minds could
differ . . . .’”’” (>Avidor v. Sutter’s Place, Inc. (2013)
212 Cal.App.4th 1439, 1455.) Reversal is
not warranted.

Evidence of justifiable
reliance is necessary in order for a plaintiff to prevail on a cause of action
for fraud based on concealment. (>West v. JPMorgan Chase Bank, N.A. (2013)
214 Cal.App.4th 780, 794.) Landlords
argue they established this element because had they known tenant was
underreporting the gross receipts, they would have taken steps to correct it,
as shown by their assertion of claims in 2009 and 2010. (Mirkin
v. Wasserman (1993) 5 Cal.4th 1082, 1093 [in a fraud claim based on concealment,
“[o]ne need only prove that, had the omitted information been disclosed one
would have been award of it and behaved different[]”].) But the very fact they asserted those claims
shows they did not rely on any purported omissions in the 2008 report.

Landlords maintain they
were entitled to a presumption of reliance because the omitted information was
material. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951,
977 [“a presumption, or at least an inference, of reliance arises wherever
there is a showing that a misrepresentation was material”].) But the presumption only applies where there
is no “evidence conclusively rebutting reliance.” (Ibid.) Here, landlords rebutted any presumption of
reliance by challenging the very omissions they claimed to have relied on. The court did not err in granting nonsuit.



>4.
Sufficiency of the Evidence

a. Statutes of Limitations,
Waiver, Estoppel and Laches

After a bench trial, the
court found landlords’ pre-2008 claims for breach of contract, fraud, and elder
abuse due to tenant’s miscalculation of the proper amount of excess rent in its
five-year reports were barred by the statutes of limitations, laches, waiver,
and estoppel. Although landlords initially
claimed the court erred in ruling it waived its right to a jury trial on these
affirmative defenses, they have withdrawn the argument. But they maintain no evidence supports the
ruling.

In particular, landlords
assert the only “fact” supporting the court’s statement of decision is that
from 1978 to 1986, their prior trustee investigated the files of Oliver’s
attorney and those of their prior institutional trustee “for lease
misrepresentation [and] underpayment of rent claims. Anything known now could have been learned
then as closer in time to the formation of the lease.” According to landlords, this “does not
identify the records that were investigated nor the documents that were
contained in such records which would have notified [them] as to the omitted
revenues.”

But even if so, the
parties agree the contested affirmative defenses “began to accrue when [they]
knew, or should have known, about [t]enant’s failure to pay rent on total gross
revenue.” A cause of action begins to
accrue when the plaintiff actually discovers its cause of action or could have
discovered it through the exercise of reasonable diligence. (Jolly
v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1109.) It begins once the plaintiff has notice or
information of circumstances to put a reasonable person on inquiry (>id. at pp. 1110-1111), i.e., “when the
plaintiff suspects, or should suspect, that she has been wronged” (>id. at p. 1114). Thus, “‘[i]f a person becomes aware of facts
which would make a reasonably prudent person suspicious, he or she has a duty
to investigate further and is charged with knowledge of matters which would
have been revealed by such an investigation.’”
(McCoy v. Gustafson (2009) 180
Cal.App.4th 56, 108, fn. omitted.)

The record shows that
beginning in 1980, tenant and its predecessors delivered to landlords reports
in which the amount of gross utility receipts collected was disclosed, despite
not included in the rent calculation.
That supports the court’s finding landlords “had enough information, when
they received those reports, to challenge them.
That[] starts the clock ticking on the statute of limitations.” Additionally, as landlords acknowledge, one
of their prior trustee’s goals in viewing Oliver’s attorney’s files in 1978 was
“to determine whether they can obtain an increase in the rents under the ground
lease . . . .”
Viewing the evidence and all inferences in the light most favorable to
the court’s ruling as we must (Cuiellette
v. City of Los Angeles (2011) 194 Cal.App.4th 757, 765), substantial
evidence supports its decision to charge landlords with matters that would have
been revealed by further investigation.

Landlords maintain the
court improperly disregarded evidence that it first obtained tenant’s income
statements in June 2008, and its general ledgers and bank statements in July
and August 2010, and thus the earliest date they “could have or should have
known about [t]enant’s failure to pay rent on total gross revenue was in June
2008.” But as the “sole arbiter of the
facts” (Navarro v. Perron (2004) 122
Cal.App.4th 797, 803), the court had the prerogative to conclude otherwise, as
it did. Landlords essentially request
that we reweigh the evidence, which we will not do. For the same reason, we reject landlords’
claim their former trustee testified his investigation did not reveal or
suggest tenant was not paying rent on the total gross revenue.

Nor do we find merit in
landlord’s assertion that notice of tenant’s payment of rent on net rather than
gross utilities does not provide notice of failure to pay rent in other revenue
categories. Because landlords had a duty
to investigate, it would have been reasonable for the court to determine a
further investigation of the type conducted in 2008 and 2010 would have
revealed the errors.



b. Damage Award

Landlords contend no
evidence supports the jury’s award on tenant’s breach of contract claim because
it was not calculated in accordance with section 3334, which governs damages
for “the wrongful occupation of real property.”
But tenant did not assert a claim for wrongful occupation; it sued for
breach of contract.

“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.” (Civ. Code, § 3300.) “[T]he proper measure of damages for a
landlord’s failure to deliver possession of the premises leased is the
difference between the agreed rent and the rental value of the premises during
the term of the lease.” (>Foreman & Clark Corp. v. Fallon
(1971) 3 Cal.3d 875, 884.) A tenant may
also prove it suffered “lost profits” as a result of a landlord’s breach of a
lease, as tenant did here, rather than seeking the “difference between the
agreed rent and the rental value of the premises.” (S. Jon
Kreedman & Co. v. Meyers Bros. Parking-Western Corp. (1976) 58
Cal.App.3d 173, 184 [a tenant may pursue either measure of damages].)

Landlords assert
tenant’s lost profits “were entirely speculative.” They were not. “‘“‘[E]xpert testimony alone is a sufficient
basis for an award of lost profits in the new business context when the expert
opinion is supported by tangible evidence with a “substantial and sufficient
factual basis” rather than by mere “speculation and hypothetical
situations.”’”’” (Parlour Enterprises, Inc. v. Kirin Group, Inc. (2007) 152
Cal.App.4th 281, 288.) Here, based on
data from a mobile home park surrounding the one-acre parcel on three sides,
which had been successfully run by tenant since the mid-1960’s, tenant’s expert
testified tenant would have gained an additional $181,433 if the property had
been delivered to it for development.
That constitutes substantial
evidence and the fact the amount calculated by tenant’s expert ($181,433)
differed from the amount awarded by the jury ($170,547) matters not because
“[c]ertainty as to the amount is not required; reasonable certainty is
sufficient.” (Ibid.)

We reject landlords’
claims the lost profits award was speculative because tenant intended to
install and sell prefabricated homes on the one-acre parcel without prior
experience in the prefabrication business and did not apply to have the parcel
rezoned from agricultural use until the eve of trial. In addition to tenant’s expert testifying he
based his calculation on tenant’s plan to develop 14 additional mobile homes
for rent, the planning commission unanimously granted the application for
rezoning, supporting an inference it would have done so sooner had landlords
delivered the property to tenant, but since they did not tenant had no reason
to apply earlier for rezoning.

As to landlords’
contention the expert did not include costs in his analysis, the expert
specifically testified he subtracted expenses from the estimated rental income
tenant would have earned from the one-acre parcel. Although landlords are correct the testimony
cited by tenant refers to a different scenario than the one under which the jury
awarded damages, the expert testified he used the same approach for both, which
the jury could have reasonably interpreted as meaning he included expenses in
his calculation.

Finally, landlords
maintain that “in the context of real property transactions, ‘lost profits’ are
only recoverable on a breach-of-contract claim if the circumstances giving rise
to such damages were known with certainty at the time that the parties entered
into the underlying contract.” Raised
for the first time in the reply brief, the argument is forfeited. (Martin
v. PacifiCare of California (2011) 198 Cal.App.4th 1390, 1410, fn.
12.)





5. Exclusion
of Evidence of Prior Five-Year Reporting Periods

Landlords argue the
court abused its discretion in granting tenant’s motion in limine to exclude
evidence of the five-year periods prior to the 2008 report because they were
time-barred. The contention lacks
merit. After granting the motion in
limine, the court suggested, and the parties agreed to, a bench trial on
whether any claim, including the pre-2008 ones, were barred by the statute of
limitations, laches, waiver or estoppel.
During that bench trial, the parties stipulated to the admission of
several pre-2008 reports and questioned witnesses about their knowledge of
them. Landlords do not dispute this but
maintain the court erred in concluding the claims based on tenant’s pre-2008
excess rent reports are time barred, which we have already rejected.



DISPOSITION



The judgment is
affirmed. Respondent shall recover its href="http://www.fearnotlaw.com/">costs on appeal.











RYLAARSDAM,
ACTING P. J.



WE CONCUR:







ARONSON, J.







FYBEL, J.