Lead Opinion
Opinion
I. INTRODUCTION
Defendant and appellant Juan Juarez appeals the judgment in favor of plaintiff and respondent Boston LLC following an unlawful detainer court trial. Defendant contends the judgment should be reversed because the trial court improperly deprived him of defenses based on the breach of the rental agreement not being material. He also contends reversal is warranted because the court did not allow him to defend the case based on plaintiff’s waiver. As discussed below, we affirm.
In the published portion of the opinion we hold that, because defendant did not contend the agreement constituted a contract of adhesion or that its enforcement was unconscionable, the trial court correctly determined the materiality of the breach was irrelevant. Under the facts of the present case, reversal is not warranted based on the court determining defendant’s substantial сompliance with the agreement, plaintiff’s purported retaliatory motive, and its alleged lack of good faith and fair dealing, were inappropriate defenses.
In the unpublished portion of the opinion, we hold defendant failed to establish reversal is warranted due to the court’s refusal to allow him to defend the action based on plaintiff’s waiver. Defendant’s motion to amend to assert the defense was noncompliant with the California Rules of Court, and he did not adequately develop an argument on appeal regarding how plaintiff waived the rental agreement’s anti-waiver clause.
II. FACTUAL AND PROCEDURAL BACKGROUND
On February 26, 2014, plaintiff filed an unlawful detainer action based on defendant’s failure to perform covenants in the rental agreement, as described in an attached three-day notice. The notice listed three covenants that were violated, but plaintiff elected to proceed at trial on only one: defendant’s failure to obtain and pay for renter’s insurance, as required by paragraph 11 of the rental agreement. The notice informed defendant that if he failed to comply with the rental agreement within the three-day period, plaintiff would declare forfeiture of the agreement. The complaint alleged the notice period expired, and defendant did not comply and remained in possession of the property. Defendant filed an answer, generally denying the allegations in the complaint and asserting numerous affirmative defenses. The case was subsequently set for jury trial.
Prior to trial, defendant and plaintiff each filed in limine motions and trial briefs, and plaintiff filed objections to defendant’s special verdict questions. The trial court considered the motions, briefs, and plaintiff’s objections on April 11, 2014, and allowed the parties to restate their arguments at a hearing on April 15, 2014, which was transcribed and subsequently reported. At the April 15, 2014 hearing, the main issue concerned whether defendant substantially complied with the three-day notice by obtaining insurancе one week
Plaintiff argued, consistent with its written in limine motions and trial brief, that defendant should not be allowed to present evidence, have the jury instructed, or ask the jury to render special verdicts based on substantial compliance or the materiality of the breach. Plaintiff relied on paragraph 11 of the rental agreement, which provided, “Insurance: Owner does not insure Renter for any personal injury or property damage including, but not limited to, that caused by the act or omission of any other renter or third party, or by any criminal act or activity, war, riot, insurrection, fire or act of God. Renter shall obtain and pay for any insurance coverage necessary to protect Renter or Renter’s property from any loss or expense that may be caused by such persons or events.” Plaintiff also relied on one of the opening clauses of the rental agreement, which provided, in relevant part, “Owner and Renter agree that Renter’s performance of and compliance with each of the terms thereof, . . . constitute a condition on Renter’s right to occupy the Premises and any failure of compliance or performance by Renter shall allow Owner tо forfeit this agreement and terminate Renter’s right to possession.” Plaintiff argued that since, pursuant to this forfeiture clause, “any failure of compliance or performance” by defendant constituted grounds for eviction, the materiality of the breach or defendant’s substantial performance with the agreement was irrelevant.
Defendant, in turn, consistent with his written in limine motion and trial brief, argued plaintiff should not be allowed to argue to the jury or present evidence concerning the forfeiture clause. Defendant argued that this clause did not override other provisions of law which require a breach to be material in order to warrant rescission of a contract. Defendant also argued he substantially complied with the rental agreement.
The trial court determined the forfeiture clause rendered all breaches of the agreement to be material. Therefore, evidence regarding whether the breach of paragraph 11 constituted a substantial breach of an important obligation under the agreement was irrelevant, and jury instructions and verdict forms which related to the materiality of the breach would not be allowed. The court further ruled, as a consequence of its determination on the impact of the forfeiture clause, that other evidence, such as that related to the affirmative defenses of substantial compliance, retaliation, and. good faith and fair dealing, was irrelevant, and that instructions and verdict forms based on the other evidence would also not be permitted.
III. DISCUSSION
Because the issues in this case pertain to statutory construction, undisputed facts, and interpretation of the parties’ rental agreement, we exercise de novo review. (See Nguyen v. Western Digital Corp. (2014)
We address each of defendant’s contentions separately in turn.
A. Materiality of Breach
Defendant contends the judgment should be reversed because he should have been allowed to present evidence that his breach of paragraph 11 of the agreement was not material. He further contends that, had the case proceeded
The unlawful detainer action in the present case was based on Code of Civil Procedure section 1161, subdivision 3., due to defendant’s “failure to perform . . . conditions or covenants of the lease or agreement under which the property is held . . . .” Even though not specifically provided by this section, case law requires that a breach be material in order to justify an unlawful detainer action. (See NIVO 1 LLC v. Antunez (2013)
Nonetheless, “it is a general rule a party is bound by contract provisions” (Williams v. California Physicians’ Service (1999)
In the present case, paragraph 11 of the parties’ agreement required that defendant obtain renter’s insurance. If there had been no other provision regarding the materiality of breaches in the agreement, the question of whether the breach was material would have been one for the trier of fact to decide. (See NIVO 1 LLC v. Antunez, supra, 217 Cal.App.4th at p. Supp. 4.)
Cases cited by defendant for the proposition that a breach’s materiality may be used to defend against an eviction are not on point because none discuss the applicability of a forfeiture clause. (See, e.g., Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987)
Defendant further contends the forfeiture clause was invalid because it violated public policy. (See Civ. Code, § 1667 [“That is not lawful which is: [¶] 1. Contrary to an express provision of law; [¶] 2. Contrary to the policy of express law, though not expressly prohibited; or, [¶] 3. Otherwise contrary to good morals.”].) Defendant argues the forfeiture clause violates public policy because it would allow evictions based on breaches regardless of their severity, meaning tenants could be evicted for violating covenants such as annoying other tenants (see rental agreement, par. 12 [“Renter shall not. . . in
Defendant further points out that LARSO only permits evictions based on breaches of lawful obligations or covenants of a tenancy, and argues that permitting evictions based on any breaches under the forfeiture clause would undermine LARSO. However, the breach at issue in the present case was for failure to obtain renter’s insurance, and defendant does not maintain such a breach cannot constitute a lawful obligation of tenancy. (See L.A. Mun. Code, § 151.09A.2 [a valid basis for eviction under LARSO includes when “[t]he tenant has violated a lawful obligation or covenant of the tenancy and hás failed to cure the violation after having received written notice from the landlord . . .”].) Further, because the eviction here did not concern an incurable breach (see Code Civ. Proc., § 1161, subd. 4.), and defendant was given three days to comply with the covenant, the purpose of LARSO that an eviction be based on an enumerated ground was satisfied.
B. Elimination of Defenses
1. Substantial compliance
Defendant argued in the trial court that he substantially complied with paragraph ll’s requirement he obtain and pay for renter’s insurance by obtaining the insurance seven days after he was served with the three-day notice. The trial court excluded evidence and a verdict form on the defense of substantial compliance.
Substantial compliance has been approved as a defense to a notice to quit based on an incurable breach of a rental agreement. (See Roth v. Morton’s Chefs Services, Inc. (1985)
Defendant maintained in the trial court that he should be allowed to present the defense of retaliatory eviction. The court refused to instruct the jury on retaliatory eviction and ruled that a correspоnding verdict form would not be given.
Retaliatory eviction is a defense based on state statute,
We do not decide whether the forfeiture clause rendered the retaliatory eviction defense inapplicable. Even assuming the court erred in determining retaliatory eviction was not a valid defense, reversal is unwarranted due to defendant’s failure to establish he was prejudiced by the error. “ ‘Prejudice is not presumed, and the burden is on the appealing party to demonstrate that a miscarriage of justice has occurred.’ [Citation.] To establish prejudice, an appellant must show a reasonable probability exists that, in the absence of the error, he or she would have obtained a more favorable result. [Citation.]” (People ex rel. City of Santa Monica v. Gabriel (2010)
Defendant had the burden to prove the retaliation defense at trial, and thus had the burden of producing evidencе of retaliation. (See Friedman et al., Cal. Practice Guide: Landlord-Tenant (The Rutter Group 2015) ¶ 7:367, p. 7-177.) The record on appeal does not indicate what evidence defendant was going to use to support his burden.
Plаintiff moved in one of its in limine motions to bar the use of defendant’s special verdict regarding retaliation. Although the proposed special verdict itself is not part of the record, plaintiff in its motion quoted the proposed verdict: “In seeking to evict [defendant] is [plaintiff’s] dominant intent retaliation against [defendant] for exercising his rights as a tenant?” This question appeared to be based on LARSO’s retaliatory eviction defense, which required proof of plaintiff’s “dominant intent,” but the motion failed to indicate what evidence supported the defense.
Further, in none of the arguments at the hearing on the in limine motions did defendant make an offer of proof regarding what evidence supported the defense. Moreover, the court, in refusing to provide the proposed special verdict concerning the defense, and in refusing to give the pattern jury instruction on the defense (CACI No. 4321), also did not indicate what evidence supported the defense.
Because the record does not show what evidence supported the defense of retaliatory eviction, we cannot find there was a reasonable probability that, had the defense been presented, defendant would have obtained a more favorable result at trial.
3. Good faith and fair dealing
Defendant requested the court provide the jury with an instruction titled “Affirmative Defеnse, Equitable Considerations.”
“ ‘ “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” [Citation.]’ ” (Acree v. General Motors Acceptance Corp. (2001)
C. Waiver
IV. DISPOSITION
The judgment is affirmed. Plaintiff to recover costs on appeal.
Notes
The court further barred defendant from raising the defense of waiver, rejecting a jury instruction and special verdict form based on the defense.
Given our standard of review, and because, when a judgment is correct, we “affirm it regardless of the trial court’s reasoning” (Cahill v. San Diego Gas & Electric Co. (2011)
Judicially imposed limits on adhеsion contracts include “that such a contract or provision which does not fall within the reasonable expectations of the weaker or ‘adhering’ party will not be enforced against him. [Citations.] . . . [And] — a principle of equity applicable to all contracts generally — is that a contract or provision, even if consistent with the reasonable expectations of the parties, will be denied enforcement if, considered in its context, it is unduly oppressive or ‘unconscionable.’ [Citations.]” (Graham v. Scissor-Tail, Inc., supra,
Civil Code section 1942.5, subdivision (a), provides in relevant part, “If the lessor retaliates against the lessee because of the exercise by the lessee of his rights ... or because of his complaint to an appropriate agency as to tenantability of a dwelling, ... the lessor may not recover possession of a dwelling in any action or proceeding . . . .”
Los Angeles Municipal Code section 151.09B, provides, in relevant part, “If the dominant intent of the landlord in seeking to recover possession of a rental unit is retaliation against the tenant for exercising his or her rights ... or because of his or her complaint to an appropriate agency as to tenantability of a rental unit, . . . then the landlord may not recover possession of a rental unit in any action or proceeding . . . .”
Copies of the proposed instructions are not included in the record on appeal.
See footnote, ante, page Supp. 28.
Dissenting Opinion
Dissenting. — I respectfully dissent.
The trial court erred by ruling that, solely because the lease allowed for forfeiture based on “any” breach, it was unnecessary for the landlord to prove the breach was material in order to prevail on his unlawful detainer action. The court’s error was prejudicial because, if a trier of fact had applied the law defining a “material breach” to the undisputed fаcts of the case, it is reasonably probable, and indeed quite likely, a trier of fact would have determined the breach was not material.
The law governing contractual breaches is settled. “[Although every instance of noncompliance with a contract’s terms constitutes a breach, not every breach justifies treating the contract as terminated. [Citations.] Following the lead of the Restatements of Contracts, California courts allow termination only if the breach can be classified as ‘material,’ ‘substantial,’ or
Here, the trial court ruled the materiality of the breach at issue was not a question for the trier of fact because the language in the lease allowed for forfeiture upon “any” breach. In determining the trial court’s ruling was proper, the majority holds it is appropriate to circumvent the requirement that contractual forfeiture must be triggered by a material breach where, as in this case, a lease specifies that the failure to comply with a term will allow the landlord to forfeit the agreement and terminate the tenant’s right to possession.
The rule created by the majority is contrary to decades of jurisprudence requiring a breach to be material in order to justify contractual forfeiture. Neither the majority nor the landlord cite any published authority in California or any other state standing for the proposition that a lease is properly subject to forfeiture upon an immaterial breach.
In fact, a plethora of published authority has held to the contrary. In deciding forfeiture for a trivial breach of a lease should not be enforced, the Arizona Supreme Court recognized as much:
The majority seem to distinguish Loehmann’s on the ground that the tenant in Loehmann’s argued the breached term of the contract was unconscionable. The majority is mistaken as unconscionability was not the dispute in Loehmann’s. The Arizona Supreme Court characterized the issue before it as follows: “The trial court ruled that Loehmann’s delay in paying a common area charge was a trivial breach of its lease and therefore refused to permit the landlord, Foundation Development Corporation (Foundation), to re-enter and take possession of the leased premises. The court of appeals reversed. We granted review to clarify the law dealing with triviality of breach as a defense to a forfeiture of a tenant’s interest in a commercial lease. [Citation.]” (Loehmann’s, supra,
In pertinent part, the Arizona Supreme Court summed up its holding as follows: “[W]e decline to hold that any breach, no matter how trivial or insignificant, can justify a forfeiture. Nor do we believe such a rule could long survive. Trivial or not, the delay in paying the rent here was at most three days. What if the breach had been three hours instead of three days or the check had been lost in the mail and came at three minutes after midnight? The questions almost answer themselves. Therefore, we now join the overwhelming majority of jurisdictions that hold the landlord’s right to terminate is not unlimited. We believe a court’s decision to permit termination must be tempered by notions of equity and common sense. We thus hold a forfeiture for a trivial or immaterial breach of a commercial lease should not be enforced.” (Loehmann’s, supra, 788 P.2d at pp. 1196-1197, fn. omitted.)
It is true that, in identifying the “[standard for [e]valuating the [triviality of a [b]reach,” Loehmann’s stated, “we believe a material provision of a lease may be breached in such a trivial manner that to enforce a forfeiture would be unconscionable and inequitable. [Citations.]” (Loehmann’s, supra,
By ruling all breaches, regardless of materiality, warranted forfeiture of the lease, the trial court improperly removed the issue from the trial. The question then becomes whether the court’s error was prejudicial. (Cal. Const., art. VI, § 13 [judgment cannot be reversed unless trial court error resulted in a miscarriage of justice]; Pool v. City of Oakland (1986)
“Cardozo had occasion to examine the distinction between material and inconsequential breaches in his landmark decision regarding substantial performance of a construction contract. ‘The courts never say that one who makes a contract fills the measure of his duty by less than full performance. They do say, however, that an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture.’ [Citation.] ‘Where the line is to be drawn betweеn the important and the trivial cannot be settled by a formula. . . . The question is one of degree, . . . We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence. . . . [The] law will be slow to impute the purpose, in the silence of the parties, where the significance of the default is grievously out of proportion to the oppression of the forfeiture.’ [Citation.]” (Superior Motels, supra,
Fifteen years after the lease was signed, the landlord demanded the tenant obtain renter’s insurance. But, although said insurance was a term of the lease, the absence of it did not impact the landlord’s profit margin or, in any way, increase the landlord’s exposure to liability. Indeed, the purpose of the insurance was to protect the tenant, not the landlord.
The landlord served the three-day notice by posting it on February 14, 2014 — a Friday. Given the following two days constituted a weekend, it is reasonable to conclude the options of open and available rental insurance companies were limited. In any event, the tenant’s compliance was a mere four days after the three-day notice expired.
“Decisions of the courts of other states are regarded as persuasive in varying degrees, depending on the point involved.” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 940, p. 980, italics omitted.) There are no California cases addressing the propriety of forfeiting a lease (as opposed to another type of contract) solely based on the tenant’s trivial breach.
2 In a footnote, the Arizona Supreme Court cited cases from various jurisdictions holding, in a variety of circumstancеs, that materiality was a factor in determining whether forfeiture was warranted. (Foundation Development Corp. v Loehmann’s (1990)
Although Loehmann’s considered the breach of a provision in a commercial lease, the majority provide no reason for treating a residential lease any different.
The clause states, in part: “Renter shall obtain and pay for any insurance coverage necessary to protect Renter or Renter’s property from any loss or expense caused by [certain specified acts or persons].” (Italics added.)