91 Cal.App.5th 162
Cal. Ct. App.2023Background
- Two Bunch Palms Building LLC (Two Bunch) orally leased an industrial building in Desert Hot Springs to Coastal Harvest II, LLC (Coastal Harvest) beginning October 2018 for indoor cannabis cultivation conducted in movable pots inside the warehouse.
- The parties negotiated a written lease and a master service agreement (MSA) for over two years but never executed them; Two Bunch maintained the oral tenancy was month-to-month unless a written lease was signed.
- On October 1, 2020 Two Bunch served Coastal Harvest a 30-day notice to quit; Coastal Harvest refused to vacate and continued to pay rent.
- Two Bunch filed an unlawful detainer action (not alleging nonpayment of rent); Coastal Harvest asserted it was entitled to a one-year tenancy/holdover presumption applicable to agricultural tenants (Civ. Code §1943 and CCP §1161(2)).
- The trial court found Coastal Harvest failed to rebut the month-to-month presumption, ruled §1161(2) did not apply because the action was not for nonpayment of rent, entered judgment for Two Bunch, and awarded holdover damages (~$182,000).
- The Court of Appeal affirmed the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tenant's cannabis cultivation triggered the one-year tenancy presumption for agricultural use under Civ. Code §1943 | Two Bunch: oral lease was month-to-month; parties understood tenancy would terminate absent a written lease | Coastal Harvest: licensed cannabis cultivation is agricultural, so §1943 presumes a one-year term | Court: did not need to decide agriculture question; regardless, substantial evidence showed parties agreed to month-to-month, rebutting §1943 presumption |
| Whether the one-year holdover presumption in CCP §1161(2) applies here | Two Bunch: action was a non-rent holdover; §1161(2) applies only to actions after rent-default | Coastal Harvest: §1161(2) protects agricultural holdover tenants for one year | Court: §1161(2) applies to actions after default in payment of rent; it did not apply because this unlawful detainer was not based on nonpayment |
| Whether the trial court’s factual findings are supported by substantial evidence | Two Bunch: evidence showed mutual understanding of month-to-month tenancy during negotiations | Coastal Harvest: alleged oral assurances of a minimum three-year use | Held: substantial evidence supports trial court’s findings and judgment; appellate court defers to trier of fact |
Key Cases Cited
- Stancil v. Superior Court, 11 Cal.5th 381 (2021) (explains scope and requirements of unlawful detainer actions)
- Fraenkel v. Bank of Am. Nat'l Trust & Sav. Ass'n, 40 Cal.2d 845 (1953) (cultivating in movable containers inside buildings is not cultivation of the ground)
- Palm Property Investments, LLC v. Yadegar, 194 Cal.App.4th 1419 (2011) (standard of review—substantial evidence—in unlawful detainer appeals)
- Aaker v. Smith, 87 Cal.App.2d 36 (1948) (intent of parties controls tenancy term in oral leases)
- Brill v. Carsley, 2 Cal.App. 331 (1905) (oral agreement as to term can rebut month-to-month presumption)
- Pierce v. Walker, 129 Cal.App. 228 (1933) (parties may rebut one-year agricultural presumption by showing shorter agreed term)