Filed 3/25/14 Manhattan Loft v. Mercury Liquors CA4/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

MANHATTAN LOFT, LLC,

Plaintiff and Appellant,

v.

MERCURY LIQUORS, INC.,

Defendant and Respondent.

 B245476

 (Los Angeles County

 Super. Ct. No. BC386087)

APPEAL from an order and a judgment of the Superior Court of Los Angeles 

County. Richard L. Fruin, Jr., Judge. Affirmed in part, reversed in part, and remanded 

for further proceedings.

Leonard, Dicker & Schreiber, Richard C. Leonard, Steven A. Schuman and 

Christopher L. Frost for Plaintiff and Appellant.

Freedman + Taitelman, Michael A. Taitelman; Jacqueline C. Brown; Greines, 

Martin, Stein & Richland, Robin Meadow and Jeffrey E. Raskin for Defendant and 

Respondent.

_________________________
2

This appeal continues protracted litigation between two parties to a lease: plaintiff 

and appellant Manhattan Loft, LLC, as lessor, and defendant and respondent Mercury 

Liquors, Inc., as lessee. It is undisputed that (1) the parties’ lease required defendant to 

obtain certain insurance and to defend and indemnify plaintiff in certain circumstances; 

(2) the lease also required plaintiff to give notice of a default; (3) defendant did not obtain 

insurance before a loss occurred; (4) defendant did not defend or indemnify plaintiff in an 

underlying arbitration; and (5) plaintiff did not give defendant notice of these alleged 

defaults until after the loss occurred and the underlying arbitration had concluded. 

Plaintiff sued defendant for breach of lease, arising out of defendant’s failure to obtain 

insurance and failure to defend and indemnify it from the claims in the arbitration. 

Defendant moved for summary adjudication on the grounds that, inter alia, plaintiff had 

not complied with a condition precedent of the lease, namely it failed to give notice to 

defendant of its alleged defaults.

The trial court granted defendant’s motion on the grounds that plaintiff did not 

give defendant written notice of its alleged defaults. As all other claims had been 

withdrawn or resolved, it then entered judgment in favor of defendant. Plaintiff appeals, 

arguing: (1) The notice provisions were removed from the parties’ lease; and (2) It 

would have been futile for it to give notice to defendant of its failure to obtain insurance 

after the loss occurred.

We conclude that the notice provisions were not removed from the lease. Thus, 

plaintiff had a duty to give notice to defendant of the three alleged defaults under the 

lease (failure to obtain insurance; failure to defend in the arbitration; failure to 

indemnify). That said, we also agree with plaintiff that giving notice of the failure to 

obtain insurance after the alleged loss had already occurred would have amounted to an 

idle act; by that time, defendant would not have been able to obtain the contractually-
3

required insurance.1 And, triable issues of material fact exist regarding when plaintiff 

should have given that notice.

Accordingly, we affirm the trial court’s order granting defendant’s motion for 

summary adjudication of issue Nos. 2 and 3.2 We reverse the trial court’s order granting 

defendant’s motion for summary adjudication of issue No. 1. The judgment is reversed, 

and the matter is remanded to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

The Purchase Agreement; the Purchase Addendum; and the Lease

“[Plaintiff] is the owner of a 14-story building located at 215 West Sixth Street in 

downtown Los Angeles (the building). [Plaintiff] purchased the building from Sixth & 

Spring, LLC, pursuant to a purchase agreement and subject to an existing lease for a 

portion of the basement and first floor (the bar space) to [defendant].” (Manhattan Loft, 

LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1045–1046.) 3 The parties 

also executed a four-page purchase addendum.

Certain lease provisions are key to this litigation. At paragraph 8, the lease 

requires defendant to carry liability and business interruption insurance. The lease also 

requires defendant to defend and indemnify plaintiff against claims “arising out of, 

involving, or in connection with, the use and/or occupancy of the Premises by 

 

1 As discussed below, plaintiff only argues futility with respect to the claim for the 

failure to obtain insurance.

2 As discussed below, defendant styled its motion as one for summary adjudication 

of issues. But, it treated each issue as a separate cause of action within the one cause of 

action for breach of lease. We too use the word issue, but treat each alleged breach 

within the one cause of action as separate claims for breach of lease. (Code Civ. Proc., 

§ 437c, subd. (f)(1).)

3 Andrew Meieran is part owner and managing member of Sixth & Spring, LLC. 

He is also president of defendant. When Sixth & Spring, LLC, sold the building to 

plaintiff, it wanted to ensure that the right to possession of the bar space was transferred 

to the Andrew Meieran Family Trust (the Trust), one of Sixth & Spring, LLC’s members.
4

[defendant].” This obligation is triggered “upon notice” to defendant. And, at 

paragraph 13, the lease requires that the defendant receive notice and an opportunity to 

cure before a default matures into a breach. 

At paragraph 2.f.,4the purchase agreement provides: “Any reference anywhere in 

Lease or Addendum that refers to default on the part of Lessee in any way shape or form 

shall be eliminated in its entirety and shall be of no force or effect whatsoever.” 

Arbitration

In August 2006, the Trust commenced an arbitration action against plaintiff, 

asserting a claim for breach of the purchase agreement. The arbitrator found in favor of 

the Trust and against plaintiff, awarding the Trust millions of dollars in damages. The 

trial court reduced the arbitration award and confirmed it as reduced. 

Plaintiff never asserted any right to defense or indemnity at any point during the 

arbitration or the trial court confirmation proceedings. Needless to say, it also did not 

give the type of notice contemplated by the lease.

Notice to Perform Lease Covenant or Quit

On February 11, 2008, plaintiff served a notice to perform lease covenant or quit 

on defendant. According to the notice, defendant was “in breach of the Lease, and 

specifically paragraphs 8.3(a), 8.3(b), 8.3(d), 8.4, 8.5 and 32, in that [it] failed to obtain 

appropriate insurance relating to the Premises.” Plaintiff notified defendant that it had 30 

days to cure the breach either by obtaining the required insurance or delivering up 

possession of the premises to plaintiff. Finally, the notice indicated that if defendant 

failed to comply “AS SET FORTH ABOVE, legal action would be instituted.”

The notice did not mention an asserted right to defense or indemnification.

Complaint

Fourteen days later, on February 25, 2008, plaintiff initiated this action against 

defendant (and others). As against defendant, the complaint alleges a single cause of 

 

4 We discuss this provision only in the context in which it was raised by plaintiff. 

We offer no other interpretation or opinion as to the meaning of this paragraph.
5

action for breach of lease, based upon defendant’s alleged failure to purchase insurance 

and alleged refusal to defend and indemnify plaintiff in the prior arbitration.

5

 

Motion for Summary Adjudication

Defendant filed a motion for summary adjudication, arguing that plaintiff’s claim 

for breach of lease failed because plaintiff did not perform certain conditions precedent 

relating to notice:6 (1) Plaintiff failed to give defendant written notice of its alleged 

default under the lease to obtain insurance and an opportunity to cure the alleged default 

before filing suit; (2) Plaintiff failed to give defendant written notice of its alleged default 

under the lease to defend plaintiff in connection with the arbitration and an opportunity to 

cure the default before filing suit; and (3) Plaintiff failed to give defendant written notice 

of its alleged default under the lease to indemnify plaintiff in connection with the 

arbitration and an opportunity to cure before filing suit.

Plaintiff opposed the motion, arguing: (1) The lease provision requiring notice 

was removed from the lease; (2) It would have been an idle act to require plaintiff to give 

notice to defendant after the arbitration had commenced; and (3) Plaintiff did give notice 

to defendant, and defendant was unable to cure the default.

 

5 This cause of action also alleges failure to allow access to the property. According 

to a footnote in defendant’s motion for summary adjudication, plaintiff withdrew this 

aspect of the cause of action.

6 Defendant also argued that each distinctly alleged wrongful act gave rise to 

individual causes of action that could be adjudicated separately. Plaintiff did not object, 

and the procedural issue was not raised on appeal. Pursuant to Lilienthal & Fowler v. 

Superior Court (1993) 12 Cal.App.4th 1848, 1854–1855, we track defendant’s motion 

and address each issue as a separate cause of action.
6

Trial Court Order Granting Summary Adjudication; Judgment; Appeal

After entertaining oral argument, the trial court granted defendant’s motion for 

summary adjudication. In so doing, it found: “While [defendant] was required under the 

Lease to obtain insurance against the risks defined in paragraph 8, its failure to do so was 

not a breach as defined by the Lease until 30 days after [plaintiff] gave written notice of 

the failure. Lease, para. 31.1(d). [Plaintiff], after it purchased the Building subject to the 

Lease on May 10, 2005, did not give written notice to [defendant] that it had failed to 

comply with the Lessee’s obligation to obtain insurance coverage. [Plaintiff] thereafter 

commenced its demolition and construction work without notice to the Lessee to obtain 

the insurance that the Lease required it [to] obtain. [Plaintiff], therefore, failed to 

perform a condition precedent to putting [defendant] into breach under the Lease for its 

failure to obtain the required insurance coverages.” 

The trial court also determined: “[Plaintiff] failed to provide notice of its asserted 

right to indemnification and defense in the [prior] arbitration until after the arbitration 

was completed. [Plaintiff], therefore, did not comply with a condition precedent to 

placing [defendant] in breach of any failure to defend obligation. [Plaintiff], furthermore, 

did not comply with the terms of the arbitration provision in that it did not give 

[defendant] an opportunity to assume its defense by choosing counsel that was 

‘reasonably satisfactory to [plaintiff]” to conduct the defense. However, at a more basic 

level, the issues in dispute in the arbitration were not the consequence of [defendant’s] 

conduct. The indemnification provision only applies to protect [plaintiff] from damage 

caused by [defendant]. The arbitration litigated [plaintiff’s] conduct that caused damage 

to the Meieran Trust’s interests.”

Last, the trial court found that plaintiff “failed to provide notice of its asserted 

right to indemnification and defense in the . . . arbitration until after the arbitration was 

completed. [Plaintiff], therefore, did not comply with a condition precedent to placing 

[defendant] in breach of any failure to defend obligation. At a more basic level, the 

issues in dispute in the arbitration were not the consequence of [defendant’s] conduct. 
7

The indemnification provision only applies to protect [plaintiff] from damage caused by 

[defendant]. See, Lease para. 8.7.”

Judgment was entered, and this timely appeal ensued.

DISCUSSION

I. Standard of Review

“A trial court properly grants summary [adjudication] where no triable issue of 

material fact exists and the moving party is entitled to judgment as a matter of law. 

(Code Civ. Proc., § 437c, subd. (c).) We review the trial court’s decision de novo.” 

(Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)

II. Analysis

In this appeal, we are called upon to interpret provisions of the parties’ lease. We 

do so de novo under settled rules of contract interpretation. (Ameron Internat. Corp. v. 

Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1377.) “The 

fundamental rules of contract interpretation are based on the premise that the 

interpretation of a contract must give effect to the ‘mutual intention’ of the parties. 

‘Under statutory rules of contract interpretation, the mutual intention of the parties at the 

time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to 

be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) 

The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and 

popular sense,” unless “used by the parties in a technical sense or a special meaning is 

given to them by usage” (id., § 1644), controls judicial interpretation. (Id., § 1638.)’ 

[Citation.]” (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.)
8

A. Issue No 1: Plaintiff’s cause of action for breach of lease fails because it 

neglected to give defendant written notice of its alleged default to obtain insurance and an 

opportunity to cure before filing this lawsuit

In issue No. 1 of its motion, defendant sought summary adjudication of that 

portion of the breach of contract cause of action concerning defendant’s obligation to 

obtain insurance coverage. Defendant argued that because plaintiff failed to provide 30 

days written notice to defendant of defendant’s alleged default, as required by paragraph 

13, it failed to perform a condition precedent and thus cannot prevail.

It is well-established that when a lease requires notice of and an opportunity to 

cure a default, giving notice is a condition precedent to a suit for breach of the lease. 

(See Clark v. Tide Water Associated Oil Co. (1950) 98 Cal.App.2d 488, 489–491.)

Here, it is undisputed that the lease required notice and an opportunity to cure a 

default, a condition precedent to plaintiff’s action for breach of lease. It is also 

undisputed that plaintiff did not give the requisite 30 days notice—it served its notice on 

February 11, 2008, and then, only 14 days later, filed its complaint against defendant. 

Having failed to comply with the condition precedent to obtaining damages, plaintiff 

cannot prevail on its claim for breach of contract—unless it was excused from giving 

notice. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 515, pp. 648–649 [As a 

general rule, a cause of action for breach of contract includes a contract, plaintiff’s 

performance or excuse for failure to perform, defendant’s breach, and damage to the 

plaintiff resulting therefrom].)

At a minimum, it is disputed whether plaintiff was excused from giving notice 

because doing so could have been an idle act. (Civ. Code, § 3532.) What could have 

been more useless than advising defendant of its failure to obtain insurance after the 

insurable act had already occurred? (Stockton v. Stockton Plaza Corp. (1968) 261 

Cal.App.2d 639, 655–656 [written notice of breach not required because defendant could 

not have obtained the financing it needed to remedy the breach].)
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Below, and on appeal, defendant asserts that it was plaintiff’s failure to give notice 

of default that resulted in the impossibility for defendant to now obtain insurance. In 

other words, defendant blames plaintiff for its own failure to comply with its contractual 

obligation to procure insurance. At this stage of the proceedings, we cannot condone this 

argument. At a minimum, there is a triable issue of fact as to who is to blame for 

defendant’s inability to obtain insurance coverage. 

Defendant argues that there is no evidence suggesting that it would have failed to 

purchase the required insurance if plaintiff had given timely notice of the default. But, 

defendant neglects to explain what timely notice should have been. Was it the day the 

lease was signed? Or was it just at some point before nearly three years later, when 

insurance could no longer be purchased? The parties do not help us because they do not 

address this issue, or the question of reasonable time, in their briefs.

Having concluded that a triable issue of fact exists as to this aspect of defendant’s 

motion for summary adjudication, we must reverse the judgment. (Garrett v. Howmedica 

Osteonics Corp. (2013) 214 Cal.App.4th 173, 178.)

B. Issue Nos. 2 and 3: Plaintiff’s cause of action for breach of lease fails because 

it neglected to give defendant written notice of its alleged default to defend and 

indemnify plaintiff in the underlying arbitration and an opportunity to cure before filing 

this lawsuit

As pointed out by defendant in its respondent’s brief, plaintiff did not make any 

futility argument regarding notice of the defense and indemnity obligation. Therefore, 

we agree with defendant that plaintiff has abandoned this argument on appeal. (Padilla v. 

Rodas (2008) 160 Cal.App.4th 742, 753, fn. 2.) 

In urging reversal, plaintiff argues that the notice provision was removed from the 

lease. We cannot agree for at least two reasons. First, the argument raised below 

contradicts the plain language of the purchase addendum. Plaintiff argued that paragraph 

2.f. eliminated plaintiff’s obligation to give notice in the event of a default. But, by its 

terms, paragraph 2.f. applies only to “default[s] on the part of the Lessee.” It did not 
10

eliminate any defaults on the part of the plaintiff, including its obligation to give notice. 

Second, the argument raised on appeal (paragraph 2.f. prohibits plaintiff from evicting 

defendant from the premises) has been forfeited because it was not raised below. (Algeri 

v. Tonini (1958) 159 Cal.App.2d 828, 832; see also In re Marriage of Broderick (1989) 

209 Cal.App.3d 489, 501 [permitting a party to adopt a new theory on appeal would be 

unfair to the trial court and manifestly unjust to the opposing litigant].)

It follows that we affirm the trial court’s order granting summary adjudication of 

issue Nos. 2 and 3.

DISPOSITION

The trial court order’s order granting summary adjudication of issue Nos. 2 and 3 

is affirmed. The trial court’s order granting summary adjudication of issue No. 1 is 

reversed. The judgment of the trial court is reversed and remanded to the trial court for 

further proceedings. The parties to bear their own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

__________________________, J.

ASHMANN-GERST

We concur:

_____________________________, P. J.

BOREN

_____________________________, J.

CHAVEZ