Meeker v. Bank of
Filed 2/27/12 Meeker v. Bank of America CA2/5
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
SEVEN
MARIANNE MEEKER,
Plaintiff and Appellant,
v.
BANK OF AMERICA,
N.A.,
Defendant and Appellant.
B225289
(Los Angeles
County
Super. Ct.
No. SC102674)
APPEAL from a judgment of the Superior Court of
County. John H. Reid,
Judge. Affirmed in part; order denying
attorney fees vacated and matter remanded for further proceedings.
Mesisca, Riley & Kreitenberg,
Dennis P. Riley and Rena E. Kreitenberg for Plaintiff and Appellant.
Reed Smith, David C. Powell, Raymond
A. Cardozo, Heather B. Hoesterey, Zareh A. Jaltorossian and Miles M. Cooley for
Defendant and Appellant.
_______________________
Plaintiff and appellant Marianne
Meeker appeals the trial court’s grant of summary judgment in her
Bank of America. Bank of America also
appeals, contending that the trial court erred in failing to award attorney
fees after granting summary judgment. We
affirm the summary judgment and hold that as a matter of law, Bank of America
was the prevailing party in the litigation and was entitled under Civil Code
section 1717 to an award of reasonable attorney fees.
FACTUAL AND PROCEDURAL BACKGROUND
Marianne Meeker filed an unlawful detainer action
against Bank of America on April 17, 2009, in which she alleged that
Bank of America had breached its commercial real estate lease by failing to pay
business taxes.
Bank of America successfully moved for summary
judgment, and then sought an award of attorney fees as the prevailing
party. The trial court found that there
was no prevailing party in the action and denied the fee request.
Both Meeker and Bank of America appeal.
DISCUSSION
I. Appeal: Summary Judgment
Bank of America moved for summary judgment on seven
different grounds, several of which the trial court found to support judgment
in the bank’s favor. Meeker contends
that the summary judgment was erroneously granted. A motion for summary judgment is properly
granted only when “all the papers submitted show that there is no
that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) We review a grant of summary judgment de novo
and decide independently whether the facts not subject to triable dispute
warrant judgment for the moving party as a matter of law. (Intel
Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.)
Summary judgment was properly granted on the basis
that Meeker had failed to serve the statutorily required notice prior to
instituting the unlawful detainer action.
Code of Civil Procedure section 1161, subdivision (3) requires that when
a tenant continues to possess the premises “after a neglect or failure to
perform other conditions or covenants of the lease or agreement under which the
property is held” beyond the covenant to pay rent, the owner must provide
“three days’ notice, in writing, requiring the performance of such conditions
or covenants, or the possession of the property” before filing an unlawful
detainer action. (Code Civ. Proc.,
§ 1161, subd. (3).) The notice
“must advise the tenant of the alleged breach.
If it does not do so, the tenant cannot know whether to comply with the
notice to quit or remain in possession and contest the landlord’s
allegations.” (Delta Imports, Inc. v. Municipal Court of Los Angeles Judicial District
(1983) 146 Cal.App.3d 1033, 1036 (Delta
Imports).) Strict compliance with
the statutory notice requirements is required (Culver Center Partners East No. 1, L.P. v. Baja Fresh Westlake Village,
Inc. (2010) 185 Cal.App.4th 744, 749 (Culver)),
and “[a] tenant may defend against an unlawful detainer action by asserting
that the lessor has not provided proper
notice . . . .” (
(2005) 35 Cal.4th 1111, 1117.)
None of the documents that could be considered notice
satisfied the requirements of Code of Civil Procedure section 1161, subdivision
(3). The breach alleged in the unlawful
detainer action was that Bank of America allegedly had not paid its business
taxes and provided proof of such payments to the owners of the property. None of the notices given in December 2008
alleged that Bank of America had breached the lease by failing to pay business
taxes.
The letter of December 4,
2008,
was a cover letter accompanying a “Three Day Notice to Pay Rent or Quit” of the
same date. The letter stated that “[t]he
basis” for the notice was “the failure by the Bank to comply with Article II[,]
Section 2 of the Master Lease requiring that upon the direction of the owners,
the Bank must tender rent to a designated depository. . . . [T]he
rent for the month of November was not paid in accordance with the owners’
direction and the failure to pay said rent is the subject of the Notice.” This document served only to allege a breach
of the covenant to pay rent and was not notice sufficient to alert Bank of
America of an alleged breach concerning the covenant to pay business
taxes.
The Three Day Notice to Pay Rent or Quit accompanying
the December 4, 2008 letter alleged that Bank of America had breached the lease
by failing to pay rent: “NOTICE IS
HEREBY GIVEN that, pursuant to the written lease agreement by which you hold
possession of the premises . . . there is now due, owing
and unpaid a total sum of ($100,631.96) being rent due and
owing . . . .” The
notice required Bank of America to pay the rent demanded in full or to
surrender the premises. Again, like the
notice letter, this document alerted Bank of America only that Meeker alleged
that Bank of America had breached the covenant to pay rent.
Finally, the December
17, 2008, “Forty Five Day Notice to Cure Covenant or Quit” issued by Meeker
listed three alleged breaches by Bank of America. Two, not relevant here, alleged a failure to
tender documentation concerning a sublease of the property and a failure to
procure proper insurance coverage. The
other alleged breach was the “[f]ailure to tender copies of all checks or
drafts issued by Tenant to the City of Beverly Hills for the past two years,
including payment of all penalties and interest accrued for delinquent or late
payment and/or original receipts of all such payments. As of the mailing of this letter, the owners
have not been issued a current Business License.” This document also does not mention business taxes,
and it is therefore insufficient to advise Bank of America that the breach
claimed by Meeker includes the failure to pay business taxes. As the trial court observed, “This notice
does not state that Bank of America is in default under the lease for failing
to pay business taxes to the City.
Rather, the notice provides that Bank of America failed to tender
certain documents regarding the sublease and copies of checks issued by Bank of
America to the City. If the second
ground listed in the notice is supposed to include the failure to pay taxes, it
does not clearly indicate. Rather, since
Plaintiff states that the owners of the property ha[ve] not been issued a
current [b]usiness [l]icense, it appears that Plaintiff is requesting
documentation regarding payment of business license fees, not business
taxes. Due to the failure to indicate
that Bank of America was in default on the lease for failure to pay taxes to
the City, this action cannot be based on the Forty Five Day Notice.”
Meeker argues on appeal that summary judgment should
not have been granted because the notices were legally sufficient. She contends that there is no requirement
that the amount of taxes due be stated with specificity and argues that the
Forty Five Day Notice was adequate under Code of Civil Procedure section 1161
because it “expressly identifies that Respondent was in breach, the nature of
the breach and an election of forfeiture of the lease.” While we, like the trial court, acknowledge
that there appears to be no requirement that the amount of taxes be specifically
stated in the notice given under section 1161, subdivision (3), it was the
failure to identify the nature of the covenant that allegedly was not
performed—not a failure to state an amount of unpaid taxes—that rendered the
notice defective. Contrary to Meeker’s
assertion that the Forty Five Day Notice “clearly set forth the breach at issue
as a failure to pay business taxes, penalties and interest and to provide
‘checks or drafts issued by the Tenant to the City of Beverly Hills for the
past two years,’” the notice does not mention business taxes at all.
Next, Meeker contends that correspondence from and
subsequent negotiations by Bank of America’s counsel establishes that Bank of
America knew that business taxes were at issue.
Meeker provides no authority for the principle that notice need not
comply with Code of Civil Procedure section 1161, subdivision (3) if the tenant
already knows or subsequently learns of the nature of the dispute, and we are
unaware of any such authority. Code of
Civil Procedure section 1161 includes no “awareness” exception. The decisional law, moreover, is clear both
that the statute requires that the tenant be “served with a written notice
[citation], specifying the alleged breach” (Delta
Imports, supra, 146 Cal.App.3d at
p. 1036) and that the summary remedy of unlawful detainer is available
only when the property owner has demonstrated strict compliance with statutory
notice requirements. (
Finally, Meeker argues that the reference to a
business license in her Forty Five Day Notice is the equivalent of a reference
to business taxes. She relies for this
argument on City of Los Angeles v. Moore
Business Forms, Inc. (1966) 247
Cal.App.2d 353, in which the Court of Appeal observed that under the Los
Angeles Municipal Code, the City of Los Angeles’s business license tax was not
levied on sales but measured by gross sales.
(Id. at p. 358.) Meeker does not direct us to any language in
the opinion that states that business license taxes are identical for all
purposes to gross receipt taxes such that a reference to one is the same as
referring to the other, nor do we find any language applicable to the present
case in the opinion.
Meeker has not demonstrated any error here. Because the notices given to Bank of America
failed to satisfy the statutory
requirements for a notice to quit, Meeker was not entitled to the summary
remedy of unlawful detainer. The summary
judgment was properly entered on this ground.
Our conclusion that this basis for summary judgment was proper makes it
unnecessary to address the remaining grounds on which the trial court relied in
granting summary judgment in Bank of America’s favor.
II. Cross-Appeal: Denial of Attorney Fees
After obtaining summary judgment in its favor, Bank of
America sought an award of attorney fees involved in defending against this
action on the contract pursuant to the attorney fee provision in the contract
and section 1717. The trial court denied
the request for attorney fees on the ground that there was no prevailing party
in the lawsuit. The trial court reasoned
that there was no prevailing party because Bank of America’s summary judgment
was based on procedural defects in the litigation rather than a determination
of the merits in its favor. Bank of
America appeals the denial of attorney fees.
We conclude that the trial court lacked discretion to
find that Bank of America was not the prevailing party in this unlawful
detainer litigation. Section 1717
requires trial courts to award attorney fees to the prevailing party on the
contract when the underlying contract specifically provides for such an
award. (§ 1717, subd. (a).) The court must make this determination when
requested, “whether or not the suit proceeds to final judgment.” (§ 1717, subd. (b)(1).) The statute provides that “[t]he court may
also determine that there is no party prevailing on the contract for purposes
of this section.” (Ibid.)
The California Supreme Court observed that the cases
in which a trial court may find that there is no prevailing party are typically
those “in which the opposing litigants could each legitimately claim some
success in the litigation.” (
(Hsu).) “By contrast, when the results of the litigation
on the contract claims are not
mixed—that is, when the decision on the litigated contract claims is purely
good news for one party and bad news for the other—the Courts of Appeal have
recognized that a trial court has no discretion to deny attorney fees to the
successful litigant. Thus, when a
defendant defeats recovery by the plaintiff on the only contract claim in the
action, the defendant is the party prevailing on the contract under section
1717 as a matter of law.” (
This approach, the Supreme Court explained, “properly
reflects and effectuates” the legislative intent of section 1717. “It is consistent with the underlying
purposes of the statute—to achieve mutuality of remedy—and it harmonizes
section 1717 internally by allowing those parties whose litigation success is
not fairly disputable to claim attorney fees as a matter of right, while
reserving for the trial court a measure of discretion to find no prevailing
party when the results of the litigation are mixed.” (Hsu,
supra, 9 Cal.4th at
p. 876.)
Accordingly, the Supreme Court concluded that to
determine whether there is a party prevailing on the contract for purposes of
section 1717, “the trial court is to compare the relief awarded on the contract
claim or claims with the parties’ demands on those same claims and their
litigation objectives as disclosed by the pleadings, trial briefs, opening
statements, and similar sources. The
prevailing party determination is to be made only upon final resolution of the
contract claims and only by ‘a comparison of the extent to which each party
ha[s] succeeded and failed to succeed in its contentions.’ [Citation.]”
(Hsu, supra, 9 Cal.4th at p. 876.)
Here, Bank of America obtained summary judgment in its
favor on the unlawful detainer claim. As
the purpose of the litigation was to terminate the lease and regain possession
of the property, neither of which occurred, Meeker clearly failed in achieving
her goals. Bank of America, in turn,
remained in possession of the premises, succeeding in its litigation
objective. (See, e.g.,
Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 485 [“The object
of Mitchell’s unlawful detainer action was to summarily terminate the lease and
regain possession of the premises and Ferrantelli’s objective was to prevent
either event from occurring. By
voluntarily dismissing its action, Mitchell failed in its litigation objective
and Ferrantelli succeeded in its”]; Beverly
Hills Properties v. Marcolino (1990) 221 Cal.App.3d Supp. 7, 10-11 [for
purposes of section 1717 in an unlawful detainer action, “respondent was the
prevailing party, receiving continued possession of the premises”].)
In Hsu,
877, the Supreme Court held that when the judgment is a “‘simple, unqualified
win’ [citation]” for the defendant “on the only contract claim,” the trial
court has no discretion to deny attorney fees to the defendant, who is the
prevailing party as a matter of law. Although the win here came through a summary
judgment rather than after a trial, the decision in Hsu compels the same conclusion here. The summary judgment was a complete, simple,
unqualified win for Bank of America on the unlawful detainer action. Because Bank of America “successfully
defended the only contract claim in [its] litigation with” Meeker, Bank of
America was, “as a matter of law, the part[y] prevailing on the contract.” (Id.
at p. 877.) Accordingly, “[i]n this
situation, the trial court had no discretion to deny” Bank of America its
attorney fees under section 1717 by finding that there was no party prevailing
on the contract, and “[t]he record contains no substantial evidence to support
such a finding.” (Id. at p. 876.)
Meeker argues that the trial court had discretion to
conclude that Bank of America was not the prevailing party because the summary
judgment was granted on technical grounds rather than on the merits of the
contract claim. The resolution of a case
on procedural grounds rather than on the merits does not impact the
determination of a prevailing party. In
(2008) 162 Cal.App.4th 950, the trial court granted the defendant’s motion to
quash service for lack of personal jurisdiction. (Id.
at p. 952.) The Court of Appeal
confirmed that the defendant was the prevailing party, rejecting an argument
similar to Meeker’s that without a determination of a contract claim’s merits,
there was no party prevailing on the contract.
(Id. at
pp. 955-956.) The court explained,
“The only claims before the trial court were contained in Profit Concepts’s
complaint, which sought compensatory and punitive damages in an amount to be
determined, as well as preliminary and permanent injunctive relief. The case in California has been finally
resolved. What was awarded on Profit
Concepts’s complaint Zero. Thus, the contract claim was finally resolved
within the meaning of Hsu v. Abbara,
and that case does not use the term ‘merits.’”
(Id. at p. 956, italics
omitted; see also PNEC Corporation v.
Meyer (2010) 190 Cal.App.4th 66, 71-72 [when an action on a contract is
dismissed for forum non conveniens, attorney fees are available to the
prevailing defendant under section 1717 despite the lack of resolution of the
merits of the contract claim]; Otay River
Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796, 799 [party
that succeeded in obtaining an order denying a petition to compel arbitration
was the prevailing party in the action on the contract under section 1717
although the underlying contractual dispute had not been resolved].)
The trial court erred in denying Bank of America its
attorney fees under section 1717, and the matter is remanded with directions to
the trial court to enter a new order deeming Bank of America the prevailing
party as a matter of law and making an award of reasonable attorney fees
pursuant to section 1717.
DISPOSITION
The order denying attorney fees to
Bank of America is vacated and the matter is remanded to the trial court with
directions to enter a new and different order naming Bank of America the
prevailing party in this action and awarding reasonable attorney fees to Bank
of America under Civil Code section 1717.
In all other respects, the judgment is affirmed. Bank of America shall recover its
ZELON,
J.
We
concur:
PERLUSS, P. J.
WOODS, J.
name="_ftn1" title="">[1] Unless otherwise indicated, all further statutory
references are to the Civil Code.
name="_ftn2" title="">[2] Besides the documents addressed in the following
discussion, one additional document giving notice to Bank of America, a letter
dated March 2008, was mentioned in the complaint and acknowledged as a notice
sent by Meeker in Bank of America’s summary judgment papers. Neither the parties nor the trial court
discussed the sufficiency of the March 2008 letter individually in the summary
judgment papers or ruling; we suspect this is because it cannot be contended
reasonably that the letter, although it did mention alleged breaches of the
lease including the failure to pay business taxes, constituted statutory notice
under Code of Civil Procedure section 1161, subdivision (3). Rather than articulate a demand for
possession of the property, the letter instead advised that the owners were
formally notifying Bank of America of its default and “plac[ing Bank of
America] on notice of [the owners’] right to exercise any remedy provided by
the lease.” It has long been held that a
notice under this statute “requires a demand for possession to be made before
suit” (Schnittger v. Rose (1903) 139
Cal. 656, 663), and because no demand for possession of the property was
included in the letter, it cannot be considered adequate notice preceding an
unlawful detainer action. Neither party
has identified any other documents that could reasonably be construed as
notice.
