Filed 11/16/17 Papavasiliou v. Equilon Enterprises LLC 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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


SOTIRIOS PAPAVASILIOU, as Trustee, etc., et al.,

Plaintiffs and Appellants,

v.

EQUILON ENTERPRISES LLC et al.,

Defendants and Respondents.


G053611

(Super. Ct. No. 30-2014-00753918)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Frederick P. Aguirre, Judge. Affirmed.
Law Offices of James W. Bates and James W. Bates for Plaintiffs and Appellants.
AlvaradoSmith, Kevin A. Day and Nitya N. Ram for Defendants and Respondents.
* * *


Plaintiffs Sotirios Papavasiliou and Georgia Papavasiliou (collectively referred to as Papavasiliou), as trustees of the 2005 Papavasiliou Family Revocable Trust, appeal from the judgment entered on their complaint against defendants Shell Pipeline Company and Equilon Enterprises LLC (collectively referred to as Shell) for breach of contract (lease) and common count (rent). They contend Shell paid the wrong amount in holdover rent between November 2010 and October 2013 and thus, the trial court erred in concluding Shell did not breach the lease. We disagree and affirm the judgment.
I
FACTS
In 1986, Shell entered a written lease for a parcel of real property (property) with Walter H. Duff. The initial term of the lease was from October 1986 to December 31, 1991, at an initial rent at $2,500.00 per month payable on or before the first day of every month with a prorated amount for any period less than a month.
The lease contains the following relevant provisions: Paragraph 4, entitled “EXTENSION OPTIONS,” gave Shell the opportunity to extend the lease for four additional five-year periods with the monthly rent increasing to $2,600.00, $2,900.00, $3,500.00, and $4,200.00, respectively for each of the four extensions. Shell could exercise any of the options by giving lessor at least 45 days’ notice before the primary term or the then-current extension period expired. The paragraph also provided, “If Shell does not have or does not exercise any then-current option to extend, this Lease shall be automatically extended from year-to-year on the same covenants and conditions as herein provided, except the monthly rent for such year-to-year extension shall be twenty percent (20%) greater than the monthly rent in effect for the period prior to said year-to-year extension.”
Under Paragraph 5, entitled “END OF TERM,” “either Lessor or Shell may permit this Lease to expire by giving the other at least . . . (30) days’ notice prior to the end of said primary term, the then-current extension period, or any subsequent year (as the case may be) whereupon the term shall end at 11:59 p.m. on the last day of the then-current term.”
Paragraph 18, entitled “REMOVAL-SURRENDER-FORFEITURE,” provides in part: “At any termination of this Lease or any tenancy thereafter, Shell shall surrender the Premises to Lessor, subject to ordinary wear and tear . . . . Any holdover by Shell after any termination of this Lease shall create no more than a month-to-month tenancy at the rent and on all other applicable provisions hereof.”
When the initial term of the lease was about to expire, Shell exercised its option to extend the lease for another five-year term, ending on December 31, 1996, at the monthly rent of $2,600.00. Shell also exercised its second option to extend the lease, ending on December 31, 2001, at the monthly rent of $2,900.00.
In March 1999, Shell discovered the property required remediation due to contamination. On September 17, 2001, Shell wrote to Riemer as follows: “‘Pursuant to the provisions of said Lease, this is to notify you that we hereby elect not to permit the lease to automatically renew itself as provided therein, and you are hereby notified we consider the lease to be terminated as of December 31, 2001.’”
Despite its termination of the lease, Shell continued making monthly rental payments of $2,900.00 from January 1, 2002 through October 13, 2014. During that time, Shell performed remediation and cleanup of the property.
In a letter dated November 4, 2002, Shell informed Riemer as follows: “We believe that the rent we are currently paying of $2,900 per month is correct per Article 18 of the Addendum to the Lease dated 2/5/86. It states, ‘any holdover by Shell after any termination of this Lease shall create no more than a month-to-month tenancy at the rent and on all other applicable provisions hereof.’ [¶] Shell terminated the Lease by letter to you dated 9/17/01, and gave proper notice that we elected not to permit the lease to automatically renew itself. The Article 4 that you pointed out in your letter is referring to a year-to-year extension, not the holdover we are in currently.” The letter from Shell was in response to a letter from Riemer, which Shell no longer has possession of.
In December 2004, Papavasiliou purchased the property from Riemer without reading any documents about the property, talking to the former owner, or asking about Shell’s tenancy. Although Papavasiliou was provided a copy of the lease, he did not review it until 2014. Before escrow closed, Papavasiliou was informed Shell was a holdover tenant making monthly rental payments. When asked if it was “true that at the time [he] purchased [the property], [he] did not care about the amount of the monthly rental payments from Shell,” Papavasiliou answered, “Yeah.” Instead, Papavasiliou provided the necessary information, including a valid social security number, an active telephone number, and a completed Form W-9 (Request for Taxpayer Identification Number) to Shell in order to receive the holdover checks.
From January 1, 2005 through January 31, 2014, Shell made monthly payments of $2,900.00 to Papavasiliou. Papavasiliou cashed all of these checks and did not terminate Shell’s monthly holdover tenancy.
On January 23, 2014, Shell wrote to Papavasiliou as follows: “‘On September 17, 2001, timely notice was provided to Lessor that the Lease was to be terminated on December 31, 2001. However, due to certain environmental work being performed by [Shell] at the Premises, [Shell] agreed to continue paying rent until a ‘No Further Action’ letter was received from the California Water Boards regarding the Premises. [¶] Please accept this letter as [Shell’s] notification that it has fulfilled all of its obligations, has received the enclosed No Further Action letter from the California Water Boards regarding the Premises and will cease monthly payment rent effectively [sic] immediately. Any holdover under the Lease and the Lease itself are terminated effective October 14, 2013, the date of [Shell’s] receipt of the No Further Action Letter.’”
A week later, Shell sent a termination of lease and a memorandum of lease for Papavasiliou to sign. Instead of signing, Papavasiliou, on September 29, 2014, made a demand on Shell for unpaid holdover rent. Shell denied the claim.
On October 31, 2014, Papavasiliou filed a complaint for breach of contract and common count. Papavasiliou sought over $870,000.00 in “unpaid holdover rent” and interest for the four years prior to the filing of the complaint. This was based on the theory that Shell’s failure to exercise one of its extension options automatically placed Shell in an annual holdover tenancy under the automatic rollover language in paragraph 4, which provides for a 20 percent increase in rent each year from the rent in effect for the previous period.
Shell argued its written termination of the lease in 2001 eliminated the applicability of paragraph 4 and resulted in a month-to-month holdover tenancy under paragraph 18, with a monthly rent of $2,900.00, the amount paid prior to the termination of the lease. Shell also asserted Papavasiliou waived his claim by negotiating the checks, and the statute of limitations barred any claims before October 2010.
Shell requested and received a statement of decision. The trial court made the following findings: The lease terminated on December 31, 2001 based on Shell’s letter to Riemer of that date. Shell became a holdover tenant beginning on January 1, 2002 by consent, making the presumption of a month-to-month tenancy under Civil Code section 1945 applicable and creating a month-to-month tenancy. Shell confirmed the month-to-month tenancy in its November 4, 2002 letter to Riemer in which Shell stated it believed $2,900.00 was the correct monthly rent to be paid. “Riemer and Papavasiliou affirmed the holdover tenancy by continued acceptance and negotiating of each $2[,]900 monthly lease payment check from Shell from 2002 through January 31, 2014,” thereby ratifying that as the rental amount agreed upon. “Papavasiliou’s acceptance of the $2[,]900 monthly rent from 2005 through 2013, after an alleged breach of the lease, is a waiver of the alleged breach.”
The trial court entered judgment for Shell on the first cause of action for breach of contract. It entered judgment for Papavasiliou in the amount of $2,223.33 on the second cause of action for common count, finding Shell owed unpaid holdover rent for the 23 days in February 2014 after Shell terminated the lease.
II
DISCUSSION
Papavasiliou contends the trial court erred in entering judgment in favor of Shell on the breach of contract cause of action. We disagree.

A. Standard of Review
“In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court’s findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)
“We review a trial court’s construction of a lease de novo as long as there was no conflicting extrinsic evidence admitted to assist in determining the meaning of the language. [Citation.] If a lease provision is ambiguous, parol evidence may be admitted as to the parties’ intentions if the language is reasonably susceptible to a suggested interpretation. [Citation.] If there is conflicting evidence necessitating a determination of credibility, we use the substantial evidence test.” (California National Bank v. Woodbridge Plaza LLC (2008) 164 Cal.App.4th 137, 142.)
“A lease agreement is subject to the general rules governing the interpretation of contracts. [Citation.] ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ [Citation.] When possible, the parties’ mutual intention is to be determined solely from the language of the lease. ‘The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” . . . controls judicial interpretation.’ [Citation.] ‘Interpretation of a contract “must be fair and reasonable, not leading to absurd conclusions.”’” (Bill Signs Trucking, LLC v. Signs Family Limited Partnership (2007) 157 Cal.App.4th 1515, 1521.)
“‘We consider the contract as a whole and interpret the language in context, rather than interpret a provision in isolation.’” (Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2014) 229 Cal.App.4th 549, 567; citing Civ. Code, § 1641 [“The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other”].) “Moreover, it is well settled contracts ‘are construed to avoid rendering terms surplusage.’” (Rebolledo v. Tilly’s, Inc. (2014) 228 Cal.App.4th 900, 923.)

B. Rental Amount Owed Under the Lease After its Termination
Papavasiliou does not dispute the trial court’s findings the lease was terminated effective December 31, 2001 or that, as of January 1, 2002, Shell was a holdover tenant. Rather, Papavasiliou challenges the rental amount owed after the lease was terminated and Shell became a holdover tenant.
Papavasiliou argues, because Shell did not exercise an option to extend the lease, and continued to be in possession of the property after the lease was terminated, all terms of the lease remained in effect, including paragraph 4’s automatic year-to-year rollover of the lease at a 20 percent greater rent. We are not persuaded.
The plain language of the lease does not support Papavasiliou’s contention. Paragraph 4 governs year-to-year “extension options,” not the rent to be paid when a tenant holds over after the lease is terminated. Once Shell terminated the lease, an “extension option,” automatic or otherwise, under paragraph 4 was no longer available. It follows that neither was the provision for a 20 percent rent increase.
Papavasiliou cites Civil Code section 1945, which provides: “If a lessee of real property remains in possession thereof after the expiration of the hiring, and the lessor accepts rent from him, the parties are presumed to have renewed the hiring on the same terms and for the same time, not exceeding one month when the rent is payable monthly, nor in any case one year.” He also refers us to a sentence in Shenson v. Shenson (1954) 124 Cal.App.2d 747, 752-753, stating “the correct rule is that the tenancy continued at the same rental (and terms as to amount and time of rent payment) as provided in the lease.” But neither authority suggests that an expired term can be revived by a tenant’s holdover.
At the time Shell terminated the lease, it was paying $2,900.00 a month in rent. Thereafter, it continued paying that amount in accordance with paragraph 18, which provides, “Any holdover by Shell after any termination of this Lease shall create no more than a month-to-month tenancy at the rent and on all other applicable provisions hereof.” (Italics added.) Thus, consistent with Civil Code section 1945 and Shenson v. Shenson, supra, 124 Cal.App.2d at pages 252-253, Shell entered a month-to-month holdover tenancy at the rent then applicable under paragraph 18.
Papavasiliou maintains paragraph 18 does not state that upon termination of the lease, Shell “would only have to pay monthly holdover rent in the amount of the last monthly rent payment [it] paid prior to termination.” He argues the italicized language means Shell’s “monthly payment would be twenty percent (20%) greater than the prior period’s monthly rent” in accordance with paragraph 4.
Again, however, the termination of the lease extinguished the possibility of extending the lease under paragraph 4, and with it, the 20 percent increase in rent. Absent any other provision in the lease that would suggest a different amount of rent, the only reasonable interpretation of the lease is that Shell’s holdover tenancy was to continue at the same rent as when it terminated the lease. Given our conclusion, we need not address the issue of waiver.

C. Costs
Papavasiliou contends the trial court erred in denying him an award of costs under Code of Civil Procedure section 1032, subdivision (b), because he was the prevailing party having recovered the amount of $2,223.33. We disagree.
Section 1032, subdivision (b) states, “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Italics added.) Section 1033, subdivision (a) expressly provides such an exception. It reads, “Costs or any portion of claimed costs shall be as determined by the court in its discretion in a case other than a limited civil case in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a limited civil case.” (§ 1033, subd. (a).)
“In other words, section 1033[, subdivision] (a) applies when a plaintiff has obtained a judgment for money damages in an amount (now $25,000 or less) that could have been recovered in a limited civil case, but the plaintiff did not bring the action as a limited civil case and thus did not take advantage of the cost- and time-saving advantages of limited civil case procedures. In this situation, even though a plaintiff who obtains a money judgment would otherwise be entitled to recover litigation costs as a matter of right, section 1033[, subdivision] (a) gives the trial court discretion to deny, in whole or in part, the plaintiff’s recovery of litigation costs.” (Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 982-983 (Chavez).)
Papavasiliou argues Chavez does not apply because it involved a Fair Employment and Housing Act (FEHA) claim. On the contrary, Chavez concluded section 1033, subdivision (a) applied regardless of the fact the case concerned a FEHA action. (Chavez, supra, 47 Cal.4th at pp. 987-988 [disagreeing with Court of Appeal “that section 1033[, subdivision] (a) ‘is designed to encourage pursuit of minor grievances in courts of limited jurisdiction,’ whereas a FEHA action is a ‘bona fide civil rights claim’ that ‘serve[s] to vindicate a substantial legal right’ and therefore can never appropriately be characterized as ‘an insignificant grievance’”].)
Papavasiliou also asserts section 1033, subdivision (a) does not apply because it merely provides that costs shall be determined by section 1034. He is incorrect based on the plain language of section 1033, subdivision (a) and for the reasons explained in Chavez.
Where, as here, a trial court does not explain why it declined to award costs, “we will affirm the award on any basis properly supported by the record.” (Carter v. Cohen (2010) 188 Cal.App.4th 1038, 1053.) Here, Papavasiliou recovered just over $2,000.00, well under the limit for a limited civil action. Therefore, the court had discretion whether or not to award costs. Papavasiliou had the burden of showing an abuse of discretion (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682) but failed to do so.
III
DISPOSITION
The judgment is affirmed. The parties shall bear their own costs on appeal.



MOORE, J.

WE CONCUR:



BEDSWORTH, ACTING P. J.



ARONSON, J.