Opinion ID: 521461
Heading Depth: 2
Heading Rank: 1

Heading: Abandonment of Premises

Text: 4 Plaza contends that the bankruptcy court erred in finding that Club had not abandoned the premises because: (1) the bankruptcy court improperly placed the burden of proof on Plaza to provide evidence of Club's intent to abandon the premises; (2) there was substantial evidence to support Plaza's belief that Club intended to abandon the premises; and (3) Club's failure to respond to Plaza's Notice of Belief of Abandonment and Notice to Pay Rent or Surrender Possession relieved Plaza of any wrongdoing in retaking the premises. These contentions lack merit. 5 Under California Civil Code section 1951.3(a), real property is deemed abandoned by the lessee if the lessor gives written notice of his belief of abandonment and the lessee fails to give the lessor written notice that he does not intend to abandon the property. Cal.Civ.Code Sec. 1951.3(a) (West 1985). The lessor may only give such notice, however, where the rent on the property has been due and unpaid for at least 14 consecutive days and the lessor reasonably believes that the lessee has abandoned the property. Id. Sec. 1951.3(b). Property may not be deemed abandoned if, at the time the notice of belief of abandonment was given, it was unreasonable for the lessor to believe that the lessee had abandoned the property. Id. Sec. 1951.3(e)(2). The lack of reasonable belief by the lessor is tested objectively. The bankruptcy court held that Plaza's notice was inadequate because Plaza could not have reasonably believed that Club had abandoned the premises. 6 (A) Burden of Proof 7 The lessee has the burden of establishing that it was unreasonable for the lessor to believe that the lessee had abandoned the premises. Cal.Civ.Code Sec. 1951.3 (West 1985) (Legislative Committee Comment). Plaza points to the following language in the bankruptcy court's opinion in support of its contention that the bankruptcy court impermissibly shifted the burden of proof to Plaza: 8 The determination of whether acts constituting an abandonment has occurred is a question of fact which involves evaluation of the intent of parties. Martin v. Cassidy, 149 Cal.App.2d 106, 111 (1957). Absent convincing, credible evidence that the property was abandoned, defendant must show that it complied with California's statutory scheme to recover possession of the premises in order to defend against the claim of forcible entry and detainer. 9 As the bankruptcy appellate panel noted, this language does not suggest that the bankruptcy court placed the burden of proof upon Plaza to establish Club's intent to abandon. The bankruptcy court simply indicated that because there was not convincing, credible evidence that Club intended to abandon the premises, Plaza was required to comply with the procedural requirements of section 1951.3. See Cal.Civ.Code Sec. 1951.3 (West 1985) (Legislative Committee Comment) (purpose of section 1951.3 is to establish that leased real property has been abandoned by the lessee); id. Sec. 1951.3(c), (d) (detailing procedural requirements for giving notice under section 1951.3(a)). 10 (B) Intent to Abandon 11 The bankruptcy court found that Club had met its burden to establish that it was unreasonable for Plaza to believe that Club had abandoned the premises based on the following undisputed facts: (1) Club advised Plaza of its intent to reopen after completion of construction; (2) Plaza's agents were aware that Club placed a sign on the premises notifying the public of its intent to reopen in November 1985; and (3) Club left personal property of substantial value on the premises. 12 Based on the undisputed facts in the record, the bankruptcy court did not clearly err in finding that Plaza could not have reasonably believed that Club had abandoned the premises. Plaza's evidence of Club's intent to abandon does not negate the undisputed facts. First, although Club closed its business and vacated the premises in June 1985, such action is consistent with Club's claim that it was unable to operate due to the construction activity. Second, although Plaza's legal counsel may have been unaware that Club had posted a sign indicating that it would reopen, it is undisputed that Plaza's management personnel were aware of the sign. The relevant inquiry is whether the lessor, not the lessor's counsel, reasonably believed that the lessee had abandoned the premises. See Cal.Civ.Code Sec. 1951.3(e)(2) (West 1985) (real property shall not be deemed to be abandoned if it was not reasonable for the lessor to believe that the lessee had abandoned the real property (emphasis added)). Finally, although the property Club left on the premises may have been heavily encumbered, the fact that Club left property of substantial value on the premises is itself significant evidence that Club had not abandoned the premises. See Cal.Civ.Code Sec. 1951.3 (West 1985) (Legislative Committee Comment). 13 (C) Club's Failure to Respond to Notices 14 It is undisputed that Club failed to respond to Plaza's Notice of Belief of Abandonment and Notice to Pay Rent or Surrender Possession. Contrary to Plaza's contention however, Club's failure to respond to the notices did not terminate the lease or relieve Plaza of any wrongdoing. 15 First, Club's failure to respond to Plaza's Notice of Belief of Abandonment did not terminate the lease because a failure to respond to such a notice terminates the lease only where the lessor reasonably believed that the lessee had abandoned the premises. See Cal.Civ.Code Sec. 1951.3(b) (West 1985). As previously discussed, the bankruptcy court properly concluded that it was unreasonable for Plaza to believe that Club had abandoned the premises. 16 Nor did Club's failure to respond to Plaza's Notice to Pay Rent or Surrender Possession terminate the lease because the notice did not comply with California's unlawful detainer statute. See Cal.Civ.Proc.Code Secs. 1159-1179a (West 1985 and Supp.1988). The statute permits a lessor, upon compliance with the statutory notice requirements, to declare a forfeiture and terminate a lease for nonpayment of rent. See Lehr v. Crosby, 123 Cal.App.3d Supp. 1, 8, 177 Cal.Rptr. 96, 100 (1981). A notice to pay rent or surrender possession which overstates the amount of rent due is of no legal consequence and will not support an action for unlawful detainer. Ernst Enters. v. Sun Valley Gasoline, 139 Cal.App.3d 355, 358, 188 Cal.Rptr. 641, 644 (1983). Under the terms of the lease, Plaza was required to reduce the rent if Plaza's construction activities materially interfered with Club's access to the premises. The bankruptcy court found that Plaza's construction activities materially interfered with Club's access to the premises, but that Plaza failed to reduce the rent. Therefore, the notice overstated the amount of rent due and was of no legal consequence. Accordingly, Club's failure to respond to the Notice to Pay Rent or Surrender Possession did not relieve Plaza of any wrongdoing.