Filed 2/29/24 Culver City Mall v. Shanghai No. 1 Seafood Vil lage CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION ONE

CULVER CITY MALL LLC et al.

,

Plaintiff s and Respondent s ,

v.

SHANGHAI NO. 1 SEAFOOD VILLAGE , INC., et al.,

Defendant s and Appellant s

. B 322183

(Los Angeles County Super. Ct. No. 21STCV16837 )

APPEAL from a judgment of the Superior Court of
Los Angeles County, Michael L. Stern , Judge. Affirmed.

_______________ P&N Law Firm, Ruben R. Newell and Pooja Patel for
Defendant s and Appellant s

. Ballard Spahr, Brian D. Huben and Nahal Zarnighian for
Plaintiff s and Respondent s

.2 Shanghai No. 1 Seafood Village, Inc. (Shanghai) and
Eric Qian (Qian) appeal fro m a judgment against them in a
breach of lease and guarantee lawsuit by Shanghai’s former landlords, Culver City Mall LLC (Culver City Mall) and Valencia Town Center Venture, L.P. (Valencia Mall) (collectively, the Malls)

. At trial, Shanghai an d Qian argued that governmental restrictions
on dine

- in restaurants during the C OVID

- 19 pandemic excused their obligation s to pay rent

. T heir only challenge is to the sufficiency of the evidence to support the trial court’s finding s in rejecting the pande mic

- related affirmative defenses

. As discussed below, we conclude th a t regardless of government al rest rictions or the challenged factual findings , the leases obligated the restau rants to pay rent. We affirm.

FACTUAL BACKGROUND Shanghai entered into two v irtually identical lease s ( collectively

, the leases) with the Malls. Qi an personally guaranteed the lease with Valencia Mall. The l eases required
that Shanghai use the leased spaces solely for “ the operation of

an Azabu Sabo [the trade name for the resta urant listed in the agreements] Japanese restaurant

. ”
The l eases contain force majeure clause s addressing the possibility that either party is “ delayed in the performance of its initial construction, or maintenance and/or repair obligations, by

reasons o f [ , inter alia,]

. . . A cts of G od

. . . restrictive governmental laws or controls; [or] judicial orders .” These clauses permi t such delayed performance to “ be excused for the period of the delay

. . . provided, however, that the time for performance shall in no

event be extended due to[, inter alia,] financial or ec onomic problems of either party.” T he force majeure clauses impose
notice requirements as “a condition of [Shanghai ] ’s right to claim3

an extension of time as a result [of a force majeure event]. ” T he se clauses further provide : “ Notwithstanding anything to the contrary, the occurrence of any of the events of force majeure herein described
shall not excuse [Shanghai]’ s obligations to pay minimum annual rental, percentage rental and additional r en t [ 1 ]

. . . or e xcuse such obligations as this l ease may otherwise impose on the party to obey, remedy or avoid such event

. ” ( Capitalization omitted & i talics added.) Beginning in January 2020, Shanghai failed to pay any r ent and Qian paid nothing to Valen cia Mall under the g uaranty. The
Malls filed a breach of lease and breach of guaranty complaint against Shanghai and Qian

. Following a bench trial, the court issued a judgment in
favor of the Malls

. In its written judgment, the trial court rejected Shang hai and Qian’s affirmative “ defenses of frustration of purpose, excuse of performance, impossibility or force majeure based on
their inability to operate restaurants and pay rent

. . . due to the
shutdowns of their business locations due to the C ovid pande mic

. ” As to frustration of purpose, the judgment provided that the “value
of [ the ] lease” had not been “destroyed by a government al order

. ”
The court noted Shanghai’s restaurants “had some ‘inside’ dining capacity, but were take

- out or take

- and

- carry foo d establishments
where customers would order and take their food with them while shopping at the mall locations.” The court acknowledged the possibility that Shanghai “could no longer sell food to the public due to mall inaccessibility or foot trade restr ictions due to government al

1 The l eases include exceptions to this provision for situations involving the partial or to tal destruction of the premises or a taking of the premises under the power of eminent domain. Shanghai and Qian do not argue that these exceptions apply

.4

C ovid regulations followed by [the Malls ] tha t limited access

to customers. ” It noted, however, that Shanghai and Qian had

“ presented no evidence that they contacted [ the Mall s ], at any level, or made attempts or requests for p ermission to modify their business practices to allow continued and adapted food sales or sought to negotiate r ent modifications or abatements. ” N or had they presented any evidence “showing that it was more likely
than not that they attempted to operate a functioning business .” As to impossibi lity, the court further noted that the l eases’ force majeure clauses contemplate situations in which performance becomes either impossible or valueless, and that Shanghai and Qian had not established any right to reli ef under the terms of
those clauses. This appeal followed

.

DISCUSSION On appeal, Shanghai and Qian argue that the trial court erred in rejecting their affirmative defenses, because the court premised this rejection on a finding that is not supported by
sub st antial evidence: namely, that Shanghai’s restaurants “ were take

- out or take

- and

- carry food establishments” and thus capable
of operating despite pandemic

- related government al restrictions. They describe Shanghai’s restaurants as “ serving hot pot, Japan ese food known as Shabu

- Shabu,” which is necessarily a dine

- in experience in that “ the food is served uncooked at the table and
the patrons put the food into a bowl of hot broth to let it cook at
the table .” They point to uncontradicted testimony, includi ng testimony from the Malls’ witnesses, that the express purpose of the
l eases was to operate dine

- in Shabu

- Shabu restaurants. Their sole argument on appeal is that, because of the court’s unsupported5

factual finding about the nature of the restaurants, t he court reversibly erred in rejecting their C OVID

- 19 affirmative defenses

. Whether or not the court correctly found that Shanghai could
offer take out at the leased spaces , and whether or not the purpose
of the lease s was to operate exclusively dine

- in re staurant s , Shanghai and Q ian still have not established reversible error. We briefly analyze each defense below, and for the purposes of these analyses, we assume that the restaurants were dine

- in only and
that the purpose of the l eases was to operate suc h dine

- in only

restaurants

. 2 As to impossibility, Shanghai and Qian argue C OVID

- 19 pandemic government closure orders made it illegal for Shanghai to operate a dine

- in restaurant . But Shanghai’s obligation under the
lease was to pay rent, and government closure orders did not make it illegal for Shanghai to pay rent.

2 As to whether the lease permitted Shanghai to operat e

a take

- out restaurant at t he leased spaces, we note that the “permitted use [ s ] ” (capitalization omitted) section of the leases provides that Shanghai “shall use the premises only for the purpose of conducting the business specifically set forth in the data sheet and for no other pu rpose.” (Capitalization omitted.) The portion of the leases titled “data sheet” provides that the “premises shall be used for the operation of an Azabu Sabo [ the trade name for the restaurant listed in the agreements ] Japanese restaurant preparing and se rving the following traditional Japanese menu items as its

p rimary offerings : Katsu dishes (pork) and curry dishes, Japanese noodle dishes such as ramen

, and udon and similar dishes, Japanese confections and deserts plus a variety of coffee and tea drinks

. . . prepared and served on [ the ] premises

. . . . The premises shall be used solely for the use stated above and for no other use

or purpose. ” (Capitalization omitted.)6 As to the affirmative defense of excused nonperformance, Shanghai and Qia n cite Civil Code section 1151, which can excuse “[t]he want of performance of an obligation

. . . [¶]

. . . [¶ ]

. . . [w]hen
it is prevented or delayed by an irresistible, superhuman cause

. ”
E ven if the pandemic had prevented Shanghai from fulfilling its obligations to pay rent under the l eases , Civil Code section 1151 expressly states it does not excuse performance whe n , as here, “the parties have expressly agreed to the contrary .” (Civ. Code

, § 1511
, subd. (2).) Specifically , the parties agreed that “the occurrence
of any of the events of force majeure herein described”

— including “restrictive governmental laws or con trols [ or ] judicial orders ” or

“ A cts of G od”

— “ shall not excuse [Shanghai]’s obligations to pay [rent due under the leases] .” Shanghai and Qian argue that this language cannot prevent their frustration of purpose defense, because it appears
in a force maje ure clause that “only applied to initial construction [obligations].” (Boldface omitted.) Specifically, they point to the
first clause in the first sentence of that provision: “ In the event either party

. . . shall be delayed in the performance of its i nitial construction, or maintenance and/or repair obligations , by reasons of [various force majeure events] . . . then performance of such

act shall be excused for the period of the delay

. ” (Italics added.) Shanghai and Qian contend

, with no further anal ysis, that th is

“ ‘plain language’ ” shows the inapplicability of the force majeure
clause because initial construction on both locations had concluded before the pandemic began

. They fail, however, to read this first
clause in the context of the entire f orce majeure provision.
T h e first clause of the force majeure provision excuses delays in performing initial construction, maintenance and/or repair obligations

— it does not speak to the obligation to pay rent under the lease. Another portion of the force majeure clause does7

speak to the payment of rent , however, and provides

— without
limitation

— that it will never be excused by an act of force majeur e :

“ Notwithstanding anything to the contrary, the occurrence of any
of the events of force majeure herein desc ribed shall not excuse [Shanghai]’s obligations to pay minimum annual rental, percentage
rental and additional rent

. . . or excuse such obligations as this lease may otherwise impose on the party to obey, remedy or avoid such event.” (Capitalization omit ted.) Thus, although some terms of the force majeur e clause address only situations involving certain construction, repair, and maintenance obligations, those terms are inapplicable here. The term in the clause that is applicable

— the term addressing the payment of rent

— reflects an agreement that Shanghai would continue to pay rent, even in the face of force majeur e events.
T he force majeur e clauses likewise preclude the frustration
of purpose affirmative defense. The doctrine of frustration excuses

cont ractual obligations where “ ‘ [p]erformance remains entirely possible, but the whole value of the performance to one of the parties at least, and the basic reason recognized as such by both parties, for entering into the contract has been destroyed by a

sup ervening and unforeseen event. ’ ” ( Dorn v. Goetz (1948) 85 Cal.App.2d 407, 410 .) However, “ ‘ [i] t is settled that if the parties
have contracted with reference [ to the frustrating event] or have contemplated the risks arising from it, they may not invoke the doctrine of frustration to escape their obligations. ’ [Citation s .] ” ( Glenn R. Sewell Sheet Metal, Inc. v. Loverd e (1969) 70 Cal.2d 666, 676.) Here, the l eases expressly address a situation where “restrictive governmental laws or controls” or “ A cts of G od” prevent or delay perfo rmance and provide that such events do not relieve Shanghai of its obligation to pay rent

.8 Thus, regardless of whether or not substantial evidence supports the court’s finding regarding the nature of the restaurant Shanghai pl anned to or was permitted to operate on the leased premises, and regardless of whether or not the purpose of the lease was to operate an exclusively dine

- in restaurant, the court did not err in rejecting their C OVID

- 19 pandemic

- related affirmative
defenses

.
DISPOSITION

We affirm the judgment

. Respondents are awarded their costs on appeal.

NOT TO BE PUBLISHED

.

ROTHSCHILD, P. J.
We concur:

BENDIX , J.

WEINGART , J.