Filed 4/15/13 Lyons v. Thermos CA2/7
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IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
SEVEN
CHARLES J. LYONS, III,
Plaintiff and Respondent,
v.
ELIZABETH
THERMOS, et al.,
Defendants and Appellants.
B238812
(Los Angeles
County
Super. Ct.
No. VC053406)
APPEAL
from a judgment of the Superior Court
of
County, Patrick T.
Meyers, Judge. Affirmed.
Telep
Law and Desiree Telep for Defendants and Appellants.
Buckner,
Alani & Mirkovich, William D. Buckner, Catherine J. Weinberg and Andrew Y.
Prochnow for Plaintiff and Respondent.
__________________________
In September 2000, Bellflower Business Partners, L.P.
(BBP), a California limited partnership, leased commercial property (the
Premises) in the City of Bellflower to defendant and appellant Urethane
Products Corporation (UPC). Plaintiff
and respondent Charles Lyons III (Lyons) executed the lease (Lease) on BBP’s
behalf as President and General Partner.
In 2005, appellant Elizabeth Thermos (Thermos) executed a guaranty of
UPC’s Lease obligations. After UPC
vacated the Premises in January 2009, Lyons filed a complaint against UPC and
Thermos for breach of contract, breach of written guaranty, equitable indemnity
and waste. Judgment was entered against
UPC and Thermos (collectively referred to as appellants) and they appeal.
We affirm.
FACTUAL & PROCEDURAL BACKGROUND
The initial
term of the Lease was five years, from November 1, 2000 to October 31,
2005. The fixed minimum rent was $6,670
per month. Paragraph 7.4 of the Lease
provided that upon expiration of the Lease term, the Premises must be
surrendered “with all of the improvements, parts and surfaces thereof broom
clean and free of debris, and in good operating order, condition and state of
repair, ordinary wear and tear excepted.â€
Gerald Thermos, a principal, officer and director of UPC at that time
(Jerry), executed a guaranty of all the terms and obligations.
In a written amendment dated May 19, 2005 (the
Amendment), the term of the Lease was extended to October 31, 2008.
modified so Thermos would be the guarantor and Jerry would be released of his
liability as of November 1, 2005.
Thermos signed the Amendment on behalf of UPC and also signed a separate
guaranty, limiting her liability to a maximum of $50,000.
After the Lease ended and UPC
vacated the Premises in January 2009, Lyons sought reimbursement for the amount
he spent for cleaning and repair. On
April 27, 2009, Lyons filed a lawsuit for breach of contract against UPC and
Thermos. UPC and Lyons answered and
filed a cross-complaint. Lyons then
filed a First Amended Complaint for breach of contract, breach of written
guaranty, equitable indemnity and waste.
The waste cause of action was subsequently dismissed, and the parties
agreed to trial by court.
At trial, several witnesses
testified about the condition of the Premises before and after UPC’s occupancy.
Lyons
Lyons
testified he built the Premises in 1995.
It was an 11,000 square foot industrial building with a fenced yard and
a heavy duty 5-inch thick reinforced floor.
The floor was sealed with epoxy and all expansion joints were sealed to
prevent penetration by liquid products because Lyons did not want any
environmental liability.
Lyons owned
20 percent of BBP in 2000. Lyons
authenticated his signature on the lease and testified that Jerry signed the
lease on behalf of UPC in his office.
The rent was $6,670 per month.
Lyons also authenticated the renewal agreement and initially said that
Thermos signed it in his office. He did
not remember if Thermos signed the guaranty in his office, but testified that
her signature was the same signature that appeared on the lease.
Lyons said
when he saw the Premises in September 2008, he saw “everything in
disrepair.†He authenticated an email he
sent in September 2008 (Exhibit No. 18C) to Chander Burgos of UPC in which he
stated that the Premises would need about $100,000 in repairs. In a subsequent email to Burgos, he said a
contractor told him the clean-up charges would be in the $50,000 to $60,000
range, and he would require the security deposit to be increased to $60,000 as
a condition for renewal of the lease. He
was not able to negotiate an increased security deposit.
UPC
remained on the Premises until January 5th or 6th, 2009.
UPC when it vacated. He said he provided
UPC with itemizations of damages but then confirmed that he testified at his
deposition that he never provided it any documents, bills or invoices.
Jerry Thermos
Jerry, the
son of appellant Thermos, testified on behalf of Lyons. His father had founded UPC. He executed the Lease and authenticated his
signature. He remembered signing a
guaranty and knew he had been released from it.
UPC
manufactured marine fenders and buoys which were made out of steel, urethane
foam, polyethylene foam, polyurea and/or polyurethane coatings. He described the manufacturing process, which
involved spraying polyurea through a spray gun onto the fenders. Many corrosive chemicals were used. UPC installed a spray booth on the premises
to contain the overspray and obtained a permit to do so. When UPC moved into the Premises in 2000,
they were “in very good shape†with a “brand-new epoxy floor.†In 2004, there was no overspray on the floor
and the asphalt floor did not resemble the floor depicted in the photographs in
Exhibit 15 because there were stains and discoloration. He identified polyurethane overspray in the
pictures in Exhibit 15.
Jerry
testified he left the business in 2004 because of a family disagreement and
currently works for a competitor. He had
not been back to the Premises since then.
On cross-examination he admitted he had pled guilty to a violation of
the Sherman Anti Trust Act.
Haitham
Jammal, a general contractor, testified he visited the premises in September
2008 with Lyons’ son. Jammal testified
about the condition of the Premises, and was provided with a binder of
photographs which he referred to in testifying.
In early
November 2008, he went on another visit to the Premises, with the purpose of
reviewing with UPC what needed to be fixed before it vacated. Lyons told UPC to replace the tile, subfloor
and lights.
Jammal then
walked through the Premises on January 7, 2009, after UPC had vacated. He saw spills and stains on the floor,
corrosion on the asphalt and corroded light fixtures. Jammal and Lyons took pictures, which Jammal
identified in Exhibit 15. He identified
in the photographs corrosion on the light fixtures, damaged foil, staining on
the floor, improper wood repairs, water damages, poor workmanship , and a dirty
spray booth. A “purlin hanger†was
rusted and corroded beyond normal wear and tear. The HVAC venting was covered with lint, foam
and chemicals. The vinyl composition
tile flooring on the mezzanine was damaged.
The warehouse flooring was painted over with the wrong type of paint,
covering metal shavings and dirt. The
ceiling tile was stained, the skylights
were damaged, the roof was poorly patched, and the asphalt was deteriorated and
discolored. In his opinion, the damage
was beyond ordinary wear and tear.
Jammal had
no personal knowledge about how the damage was done.
Jammal
performed repair work in February 2009.
He cleaned and replaced and painted sprinkler pipes and heads. He replaced 34 bulbs, repaired a “saddle,†replaced foil,
sandblasted the floor, replaced ceiling tiles, and the door.
He
authenticated his invoice for the work, Exhibit 5, which showed the amount
billed as $66,975.50.
Jammal
testified he had worked with Lyons since 2002 at dozens of buildings. Although he characterized himself as a friend
of Lyons, he also said “everybody is my friend.â€
Jack Karp
Jack Karp
testified that he was an industrial real estate broker who had brought Jerry to
the Premises and brokered the lease. He
had testified as an expert witness in other cases, and had given lectures to
professional associations of brokers, and was a member of several professional
real estate associations. He had been a
friend of Lyons for 30 years. He
testified “Everything in the premises, including the roll-up door, were in top
shape, brand-new†at the inception of the lease. He also described the asphalt as “pristineâ€
and “in perfect condition.â€
Karp
continued to testify about the condition of the Premises but UPC’s attorney
objected on the grounds that he had not been designated as an expert witness
and to the range of his expertise. Karp
admitted he did not have a formal education in construction, and he was not a
chemical engineer nor a general contractor.
He had no personal knowledge of the Premises being constructed. However, he was a technical advisor to the
Los Angeles County Fire Department and has some familiarity with fire
sprinklers.
When he saw
the Premises in January 2009, the floor was in poor condition and “was painted
with the wrong type of paint and was unacceptable in industrial standards in
Southern California.†The skylights were
damaged, and the asphalt was pitted and gouged and in relatively poor
condition. Bolts were protruding through
the floor, and it was pitted full of holes.
Metal supports were corroded, skylights were not working, fire
sprinklers were compromised, and stairwell treads were damaged, creating a
hazardous condition. In his opinion, the
Premises were not left in good condition.
Chander Burgos
Chander
Burgos was the Vice President of UPC and the manager of manufacturing. He was hired in 2004. He described the manufacturing process, the
chemicals used, and the use of the spray booth to apply the chemicals. He described making a foam and shaping it as
a buoy or fender, and then spraying it with polyurea, using a spray gun. Spraying also took place in the side yard of
the Premises as well. UPC did not have a
building permit for the spray booth.
Burgos
managed the move-out and inspected the Premises. He delegated the repair work to a contractor,
Salvador Padilla, but he inspected it.
He was “partially†there when the floor was sanded.
Approximately
12 employees worked on the Premises prior to vacating. Burgos testified that they removed the spray
booth, re-did the floor, painted walls, re-coated floors, replaced tile fixed
railing, and put in new carpet. He denied
painting over dirt-coated floors. He
took the pictures in Exhibit 16, probably a week before New Year’s Day
2009. He said that upon vacating, the
Premises were in “excellent†condition, “really nice†and free of debris. They did not leave the Premises in the
condition depicted in the pictures in Exhibit 15.
Burgos had
discussed the additional security deposit discussed with Lyons in e-mails
beginning around September 2008. He said
Lyons wanted the Premises in “luxury condition.†After the repairs, Lyons came for a
walk-through and told Burgos he was surprised at how much work they had
done.
Salvador Padilla
Salvador
Padilla testified he was a general contractor who performed repair work on the
Premises for UPC beginning in October 2008 for three and one-half months. Lyons told him to take out electrical
wiring. He removed offices in the
mezzanine and painted inside the warehouse.
He scraped floors, repaired floor tiles, painted bathrooms, and replaced
foil. He removed the “cage area,†plumbing
and ductwork. He did not inspect pipes
or sprinklers. He did not replace lights
because he would have needed a permit to do so.
He observed that the existing lights were not made anymore. There were no problems with holes in the
floor. The asphalt only needed a coating
so they did not replace it. He painted
over the tile because it was so damaged.
He said he used whatever paint was on the specifications given to him.
Padilla
testified he was a mechanical engineer but that he was no longer licensed as a
contractor.
He admitted
to running out of time in mid-December.
He had night laborers come in to work on December 20th.
He talked
to Chander Burgos about the stairs. They
did not replace them because they ran out of time. Burgos did not supervise the work but was
present in the office.
At a
walk-through, Lyons only seemed to be upset about the color of the carpet.
Padilla
recognized and authenticated a copy of his invoices to UPC for $4,000,
$3,978.56 and $6,000 respectively.
Dean Van Doren
Dean Van
Doren testified that he currently leased property to UPC. Prior to entering into that lease, he went to
the Premises in November 2008 to see if it was in good condition. After viewing the Premises, he decided that
UPC would be a good tenant.
On November 7, 2011, the trial
court filed a 52-page Statement of Decision which summarized all the testimony,
exhibits and applicable law. The court
stated, inter alia, “The quality of Lyons’ evidence has more convincing force
than the quality of the evidence mounted by UPC against it. [¶] Lyons has proved more likely to be true
than not true that UPC breached the covenant set forth in . . . the lease
agreement. Lyons also carried such
burden of proof as to his second cause of action against Thermos for Liability
under her written guaranty of lease.
Although his first cause of action for breach of written contract
purports to include Thermos thereunder, she was not a contracting party to the
lease agreement between UPC and Lyons. . . .
Although she is entitled to judgment in her favor under the first cause
of action, her liability under the second cause of action makes her subject to
a recovery by Lyons of up to $50,000 as a guarantor to the maximum extent of
$50,000 in the event UPC fails to satisfy Lyons’ judgment against it.â€
The trial court adjusted the cost
of repairs to exclude portions billed for new light fixtures and insulation
foil costs. It added one month’s rent to
that amount, deducted the cost of the initial security deposit less interest.
Judgment was entered on December 2,
2011, in favor of Lyons and against UPC on the breach of contract action for
$57,624.10, and against Elizabeth Thermos on the breach of guaranty cause of
action in an amount not to exceed $50,000 in the event UPC failed to pay
damages due under the breach of contract cause of action. UPC and Thermos recovered nothing on the
cross-complaint.
On appeal, UPC and Thermos contend
that the trial court’s ruling was biased, there was
judgment, the court erred in admitting testimony from Jerry and Jack Karp, and
that the court erred in entering judgment against UPC and Lyons on their
cross-complaint.
DISCUSSION
1. Sufficiency of the evidence to support the
judgment
We note at the outset that appellants did not include in
their appendix a copy of the judgment or the notice of appeal, as required by
the California Rules of Court, rule 8.122 and 8.124. Lyons did provide a copy of these documents
in his Respondent’s Appendix.
Appellants
contend UPC was not required to renovate the Premises as a condition of the
Lease, and that they presented evidence that UPC surrendered the Premises as
required by the Lease.
Appellants
also contend that Lyons’ photographs (Exhibit 15) identify damage that Lyons
caused, not appellants. In addition,
they contend that the court abused its discretion in relying on Jerry’s
testimony because he was a convicted felon and a biased witness.
When a
party contends there is insufficient evidence to support a judgment, we apply
the substantial evidence standard of review.
(Leslie v. Garvin (1984) 37
Cal.3d 186, 201; Lenk v. Total Western
Inc. (2001) 89 Cal.App.4th 959, 968.)
We view the evidence “in the light most favorable to the prevailing
party, giving it the benefit of every reasonable inference and resolving all
conflicts in its favor. . . .†(
639, 660.)
We agree
that a covenant in a lease requiring a tenant to leave the premises in good
order does not obligate a tenant to restore the premises in a better condition
than they were at the inception of the tenancy.
(ASP v. Fard, Inc. (2005) 133
Cal.App.4th 1257, 1272.) However, here
there was substantial evidence to support the trial court’s findings that the
Premises were in excellent condition at the inception of the Lease, that damage
beyond normal wear and tear was caused by the corrosive chemicals used in UPC’s
operations and that UPC’s efforts to clean and repair the damage were
insufficient.
While
appellants point to evidence and possible inferences therefrom which would
support their claim that their witnesses’ testimony should have been accepted
by the trial court, it certainly cannot be said that there was no substantial
evidence to support the trial court’s finding in Lyons’ favor. (Gray
v. Don Miller & Assoc. (1984) 35 Cal.3d 498, 503.)
Lyons
presented evidence about the condition of the Premises before UPC moved in and
after it moved out. Jammal and Lyons
identified the damage in photographs taken at or near the time UPC
vacated. Lyons and Jammal presented
detailed testimony about the repairs and how much they cost.
The trial
court found Lyons’ witnesses and evidence credible. Appellants’ contentions are nothing more than
a request that we reweigh the evidence.
That is not our role on appeal. (
454, 465.)
Testimony of Jack Karp
Appellants
also contend the court erred in relying on Jack Karp’s testimony since he was
not qualified as an expert and was biased because he was a longtime personal
friend of Lyons.
During
direct examination of Karp, appellants’ counsel objected to his testimony about
the condition of the sprinklers, stating she was not informed that Karp would
be called as an expert. She was allowed
to question him on voir dire. During
that examination, he stated he was an industrial real estate broker with no
formal instruction in construction and he was not claiming he was an expert in
construction. Appellants’ counsel sought
to exclude his testimony as to the condition of the construction. The court stated, “I am just not accepting of
your notion that someone who is a real estate broker of long standing and has
had some involvement in the industry to the point of being involved, which has
not been undermined in the formulation of a commercial lease doesn’t have
experience in assessing and evaluating conditions of properties and what might
be needed to be done to a property to make it marketable or what need not be
done to a property because of its present condition to make it marketable. I just don’t see that someone has to be a
general contractor to be able to do those things.â€
Appellants
contend that Karp did not sufficiently establish his expertise, and even if he
did, that his testimony exceeded his expertise, and finally that he was biased
because he was Lyons’ friend.
“‘A trial
court’s determination that expert testimony is admissible is reviewed for an
abuse of discretion.’ [Citation.]†(Burton
v. Sanner (2012) 207 Cal.App.4th 12, 18.)
“‘Generally, the opinion of an expert is admissible when it is
“[r]elated to a subject that is sufficiently beyond common experience that the
opinion of an expert would assist the trier of fact.â€â€™â€ (Id.
at p. 19.) Expert testimony should not
be admitted when the subject is one of such common knowledge that persons of
ordinary education could reach a conclusion as intelligently as the witness. (Ibid.)
Karp’s testimony
consisted mainly of observations about what he observed at the Premises. His description of the condition before UPC
occupied the Premises was in general, non-technical terms, such as “pristineâ€
and “brand new.†His description of the
premises after UPC left was also in ordinary every day terms, such as a
description of bolts protruding from the floor and pitted and gouged
asphalt. His experience in brokering
commercial leases would have qualified him to testify that the Premises were
not in good condition. He also remarked
that the stairwell treads were in a dangerous condition and that the floor was
painted with the wrong type of paint and the sprinklers were compromised. He later explained that he was a technical
advisor to the County fire department.
The remarks about the stairs and floor paint were of the type that
required an engineer’s or contractor’s expertise. However, his testimony on these conditions
was superfluous to that of Jammal, a licensed contractor, so the court had a
sufficient basis upon which to support its findings.
As for his
bias, Karp’s relationship with Lyons was brought out and duly noted by the
trial court in its Statement of Decision.
Karp testified that he would neither lie nor alter his testimony for
Lyons. The trial court, as trier of
fact, was entitled to find him credible.
3
Validity of Lease Agreement
Appellants
contend that the court erred in admitting the Lease since more than one copy
was submitted to the court and the signatures of Thermos on the two documents
did not conform. We presume they are
referring to the Amendment since Thermos did not sign the original Lease. The only witnesses who authenticated her
signature were Jerry and Lyons, but not Thermos.
Prior to
trial, appellants’ counsel raised the issue of different dates and signatures
on different copies of the Amendment.
Both of the copies were sent by Lyons’ counsel and marked as two
different exhibits. The court took the
matter under submission. After the close
of Lyons’ case, appellants raised the issue of the two different versions of
the Amendment in a motion for judgment under Code of Civil Procedure section
631.8. The court denied the motion,
stating, “There is not a scintilla of evidence that there is another lease as
far as this court is concerned . . .†but reserved ruling on the motion. At the close of evidence, it denied the
motion without prejudice to consideration in the course of preparing the
Statement of Decision.
Jerry
testified that he signed the Lease. A
letter to Jerry from Lyons enclosed three copies of the Lease and asked him to
return two copies of the signed and initialed Lease. Appellants did not establish by any factual
evidence that Thermos did not sign the Amendment. She did not testify at trial, and Lyons testified
he saw her sign the Amendment or the guaranty.
The court stated in its Statement of Decision, “[e]ven given minor
variations in such handwritten insertions . . . in copies of the initial lease,
there appears little, if any, to no doubt that copies of such lease were
executed by [Lyons] and by [Jerry] . . . . No variations of even a minor nature were
meaningfully reflected in the printed terms of [the] agreements
. . . .â€
Appellants
did not present any evidence which established that the Lease, Amendment or
guaranties were forged, inauthentic, or that the terms of the documents were
altered. There was no error in admitting
the exhibits.
4.
Judgment on Cross-complaint
Appellants
contend that Lyons violated Civil Code section 1950.7 since he admitted he did
not return UPC’s security deposit, did not properly notify it of any transfer
of the deposit, and did not prove that any of the repairs were reasonably
necessary or caused by UPC.
The
contention regarding the necessity and reasonableness of the repairs has been
addressed ante.
Section
1950.7 of the Civil Code provides, in pertinent part: “(c) The landlord may
claim of the payment or deposit only those amounts as are reasonably necessary
to remedy tenant defaults in the payment of rent, to repair damages to the
premises caused by the tenant, or to clean the premises upon termination of the
tenancy, if the payment or deposit is made for any or all of those specific
purposes. . . . [¶] (3) If
the claim of the landlord upon the payment or deposit includes amounts
reasonably necessary to repair damages to the premises caused by the tenant or
to clean the premises, then any remaining portion of the payment or deposit
shall be returned to the tenant at a time as may be mutually agreed upon by landlord
and tenant, but in no event later than 30 days from the date the landlord
receives possession of the premises.
[¶] (d) Upon termination of the
landlord’s interest in the unit in question, whether by sale, assignment,
death, appointment of receiver or otherwise, the landlord or the landlord’s
agent shall, within a reasonable time, do one of the following acts, either of
which shall relieve the landlord of further liability with respect to the
payment or deposit: [¶] (1) Transfer the portion of the payment or
deposit remaining after any lawful deductions made under subdivision (c) to the
landlord’s successor in interest, and thereafter notify the tenant . . . of the
transfer . . . . [¶]
(2) Return the portion of the payment or deposit remaining after any
lawful deductions made under subdivision (c) to the tenant.
According
to Lyons’ testimony, BBP sold the property in 2002 to Stockton Lyons. The security deposit was transferred to
them. Stockton Lyons in turn sold a 42
percent interest in the property to Adams Partners #2, and a 42 percent of the
security deposit was transferred to it.
Stockton Lyons sold the remaining 58 percent of the property to Lyons’
parents in 2003. In 2004, Adams Partners
#2 sold its 42 percent interest to Lyons and his wife and transferred its share
of the security deposit. Lyons’ parents
gifted their 58 percent in the property to Lyons and his wife and transferred
their share of the security deposit. At
the time of the trial, Lyons owned 29 percent percent of the property as his
sole and separate property and 71 percent was owned by him and his wife as
community property.
This
testimony establishes that although a portion of the security deposit was
transferred, it was ultimately returned to Lyons, who held the Premises with
his wife by the time UPC vacated.
Therefore, any failure to notify UPC of the various transfers prior to
that time would be utterly harmless. In
any event, since we have found there was no necessity to return the deposit,
appellants cannot show any prejudice.
5.
Judicial Bias
Appellants
contend that the court’s statements, in conjunction with the statement of
decision, demonstrate that the court was “guilty†of prejudicial misconduct and
judicial bias. In particular, they refer
to the court’s remarks at trial and in the Statement of Decision about
appellants’ prior counsel, Mr. Blaskey.
counsel, “I suppose I am venting my spleen more than anything else[,] . . . but
I reviewed at great length the course of this trial before you became involved,
. . . . [¶] [b]ut if any case stands for nominating Mr. Blaskey as a poster boy
for the repeal of C.C.P. Section 473 . . . which permits defaults to be set
aside purely on the basis of the kind of declaration that he filed in this
case, . . . . [¶] This is a sorry record in that regard. I realize that were not in, but . . . the
whole course of this case has been a real lesson for this court.
. . .†Appellants then refer
to portions of the Statement of Decision which sets forth the procedural
history of the case, and documents the actions of Mr. Blaskey.
We find
nothing in the court’s remarks and references in the Statement of Decision
which relate to judicial bias against appellants and UPC. The comments and references clearly indicate
the court was criticizing UPC’s former counsel and not current counsel or UPC.
The judgment is affirmed.
Lyons shall recover costs on appeal.
WOODS,
J.
We concur:
PERLUSS, P. J. JACKSON, J.
name="_ftn1" title="">
[1] Lyons
executed the Amendment as “Charles Lyons III, an individual.â€
name="_ftn2" title="">
[2] Although
the Lease term ended in October 2008, UPC paid rent at a holdover rate.
