54 Cal.App.5th 482
Cal. Ct. App.2020Background
- FISM operates an indoor swap meet and issued one-year vendor permits; Carrasco (signed) and Aljabban (owner) acquired the beauty salon business in space H-2 and signed a 2011 vendor permit renewed for 2012–2013.
- Plaintiffs spent about $30,000 remodeling the salon, including installing a sink/cabinet unit with a water heater and decorative molding; FISM’s standard permit states “Booth construction ... becomes a permanent fixture” and disclaims a landlord–tenant relationship.
- FISM notified plaintiffs in July 2013 it would not renew the permit; when vacating in August 2013 plaintiffs attempted to remove the sink/cabinet, water heater and molding; FISM prevented removal and returned $2,000 of the $2,680 security deposit, withholding $680 for repairs.
- Plaintiffs sued for breach of contract, breach of the covenant of good faith and fair dealing, conversion, interference with prospective economic advantage, assault/battery and unjust enrichment; bench trial resulted in judgment for defendants and an award of attorney fees and costs to defendants.
- On appeal Aljabban challenged (1) denial of right to remove fixtures, (2) retention of $680 of the security deposit, (3) failure to renew the license, and (4) denial of a fair trial due to defendant conduct.
- The Court of Appeal affirmed the trial court on the fixture-removal, renewal, and fairness issues but reversed as to the $680 security-deposit withholding: it ordered judgment for Aljabban against FISM for $680 on breach of contract and conversion, and reversed the attorney-fee and cost awards as to Aljabban and remanded for recalculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs could remove sink/cabinet, water heater and decorative molding when vacating (fixture status) | Items were trade fixtures / personal property installed by licensee and therefore removable | Vendor permit ¶4 and facts show these were permanent “booth construction” fixtures that must remain | Items were permanent fixtures under the contract and fixture law; plaintiffs could not remove them — judgment for defendants on related claims |
| Whether FISM validly withheld $680 of the security deposit for repairs | No contractual authorization for use of the deposit to pay repairs; Civil Code §1950.7 requires deposits be "made for those specific purposes" | Withholding covered repair costs incurred after removal attempts; testimony showed $680 in repair expenses | Statute and contract interpreted to require express authorization for commercial deposit uses; FISM not entitled to withhold — judgment for Aljabban against FISM for $680 on breach of contract and conversion |
| Whether FISM breached contract / good faith by refusing to renew the vendor permit (plaintiff claimed oral promise to renew and 60‑day notice) | Parties had an oral, mutual understanding of renewal so long as rent paid and 60 days’ notice required | Permit was a one‑year license; no automatic renewal; FISM may refuse renewal without cause under the permit | Substantial evidence supports trial court: no automatic renewal or 60‑day notice obligation; defendants entitled to deny renewal |
| Whether trial conduct by defendant (mocking/signaling) denied plaintiffs a fair trial; whether fee/cost award must be reversed if judgment changed | Conduct prejudiced witnesses and trial fairness; fees/costs award should be vacated if prevailing-party status changes | No proper contemporaneous objection or request for curative action at trial; defendants prevailed at trial; fee clause entitles prevailing party to fees | Appellant forfeited the fairness claim by not obtaining trial relief; no reversible error on that ground. Because judgment is partially reversed in appellant’s favor ($680), the trial court’s attorney‑fee and costs orders as to Aljabban are reversed and remanded for recalculation |
Key Cases Cited
- Winet v. Price, 4 Cal.App.4th 1159 (1992) (parol evidence admissible to construe ambiguous contract language)
- Goldie v. Bauchet Properties, 15 Cal.3d 307 (1975) (landlord ordinarily becomes owner of fixtures affixed by tenant absent agreement to the contrary)
- Knell v. Morris, 39 Cal.2d 450 (1952) (fixture status turns on annexation, adaptability and intent; water heater can be realty)
- San Diego Trust & Savings Bank v. San Diego County, 16 Cal.2d 142 (1940) (ability to remove without material damage is not determinative of fixture status)
- Crocker National Bank v. City & County of San Francisco, 49 Cal.3d 881 (1989) (fixture test: manner of annexation, adaptability, and intent)
- Valerio v. Andrew Youngquist Construction, 103 Cal.App.4th 1264 (2002) (pleading admissions are judicial admissions binding at trial)
- 250 L.L.C. v. PhotoPoint Corp., 131 Cal.App.4th 703 (2005) (commercial‑lease protections differ from residential; parties may contract re: security deposits)
- Careau & Co. v. Security Pacific Business Credit, 222 Cal.App.3d 1371 (1990) (breach of implied covenant requires more than contractual breach; bad faith involves unfair dealing)
- Cutujian v. Benedict Hills Estates Assn., 41 Cal.App.4th 1379 (1996) (reversal of judgment mandates reversal of attendant attorney‑fee award)