Court Opinion

ID: 9899023
Source: CourtListenerOpinion
Date Created: 2023-11-15 19:04:13.291799+00
Date Added: 2024-06-11T09:19:19.266863
License: Public Domain

Filed 11/15/23
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION FIVE

CASTAIC STUDIOS, LLC,                 B325853

       Plaintiff and Appellant,       (Los Angeles County Super.
                                      Ct. No. 22CHCV00670)
       v.

WONDERLAND STUDIOS LLC,

       Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Melvin D. Sandvig, Judge. Affirmed.

     Nussbaum, Lane M. Nussbaum, Wayne M. Abb, and
Richard J. Uss for Plaintiff and Appellant.

     Johnson & Johnson, Neville L. Johnson and Melissa N.
Eubanks for Defendant and Respondent.

                   ___________________________
       Plaintiff Castaic Studios, LLC (Castaic) and Wonderland
Studios, LLC (Wonderland) entered an agreement under which
Castaic granted Wonderland the “exclusive right to use” certain
areas of its commercial property. The agreement specified that it
was a “license agreement,” as opposed to a lease, with Castaic
“retain[ing] legal possession and control” of the premises. The
agreement was to be “governed by the contract[] laws and not by
the landlord tenant laws.” When Wonderland defaulted, Castaic
nonetheless filed an unlawful detainer action seeking possession
of the property. The trial court sustained Wonderland’s
demurrer without leave to amend, reasoning that Castaic had
waived its right to pursue the remedy of unlawful detainer. This
was correct, so we affirm.
                               FACTS
1.     The Agreement and Wonderland’s Default1
       Castaic owns a commercial property in Castaic, California.
In October 2021, Castaic entered a “License Agreement” with
Wonderland, under which Castaic granted Wonderland “the
exclusive,” but “non-possessory” right “for the use of” the
property, with the exception of a stage area and storage
building.2

1    These facts are drawn from Castaic’s unlawful detainer
complaint, including the attached exhibits.

2      The License Agreement described the parties as: “This
Exclusive License Agreement with option to purchase
‘Agreement’, dated as of October 27th, 2021, for reference
purposes only, is made by and between Castaic Studios, LLC,
hereinafter ‘Castaic’ or ‘Licensor’; and Wonderland Studios LLC.
A [sic] Delaware limited liability company having only one

                                2
       The agreement afforded Wonderland 35 consecutive one-
month options to extend. To exercise these options, Wonderland
was required to timely make all payments owed and to send
Castaic a letter of intention to extend the term for the next period
at least 20 days before the end of the current month. In July
2022, Wonderland “was in default of the . . . payments owed” and
failed to “timely send a letter of intention to extend the term for
August of 2022 as required.” Therefore, Castaic alleged, “the
agreement expired by its own terms as of July 31, 2022.”
       On July 13, 2022, Castaic sent Wonderland an email
notifying Wonderland that it was in default.3 Wonderland then
attempted to exercise the option even though the time for doing
so had expired. Castaic alleged that it did not “serve[] a notice
[on Wonderland] because the agreement expired by its own
terms” when Wonderland failed to timely notify Castaic of its
intention to exercise the August 2022 option.
2.     Relevant Terms of the Agreement
       Section 6 of the agreement states, “[t]his agreement is not a
lease or any other interest in real property. It is a contractual
arrangement that creates a revocable license. Licensor retains
legal possession and control of the Premises and the area(s)
assigned to Licensee. Licensor has the right to terminate this

member, BENI TADD ATOORI, who is the sole Managing
Member, hereinafter ‘Client’ or ‘Licensee’. Collectively
the Licensor and Licensee are referred to herein as ‘Parties’, or
individually, as a ‘Party’.”
      The option to purchase is not at issue in this appeal.

3   The email was captioned: “Re: Default in license
payment fee.”

                                 3
Agreement due to Licensee’s default. When this Agreement is
terminated . . . the license to use the Premises is revoked.
Licensee agree[s] to remove Licensee’s personal property and
leave the area(s) as of the date of termination. Licensor is not
responsible for personal property left in the area(s) after
termination.”
      Section 12.1 states, “Licensee is in default . . . if: []
Licensee does not pay the required amount payable . . .
hereunder on the designated payment date and after written
notice of the Licensee’s failure to pay, Licensee does not pay
within 3 days after the date of such notice . . . . If Licensee
defaults on Licensee’s obligation under this Agreement, Licensee
agrees that Licensor may cease to provide . . . access to the
Licensee’s area(s) of use without notice or the need to initiate
legal process.”
      Section 13.3(a) provides that if Wonderland defaults,
Castaic may “immediately terminate Licensee’s right to use of the
Premises by any lawful means, in which case Licensor’s
obligations under this Agreement shall immediately terminate
and Licensor shall have option to immediately take over use of
the Premises from the Licensee.”
      Section 29 provides, “[t]his agreement will be governed by
the contract[] laws and not by the landlord tenant laws.”
3.    Unlawful Detainer Action
      Castaic filed its complaint for unlawful detainer against
Wonderland on August 22, 2022, seeking possession of the
property and unpaid “rent.”
      Wonderland demurred on the grounds the agreement
expressly states it is not governed by landlord-tenant laws and
the three-day notice Castaic served on Wonderland did not

                               4
contain the information that Code of Civil Procedure section
1161(2) requires before the filing of an unlawful detainer action.
       After briefing and a hearing, the trial court sustained the
demurrer without leave to amend. Relying on sections 6 and 29
(designating agreement as “revocable license,” “not a lease,” and
governing law as “contract[] law,” not “landlord tenant law”), the
court concluded that Castaic had “waived its right to pursue the
remedy of unlawful detainer.” The court reasoned, Castaic “has
not alleged, and cannot allege, a relationship between it and
[Wonderland] that would allow [Castaic] to pursue an unlawful
detainer action against [Wonderland].” The trial court also
observed that even if Castaic could state a claim under the
unlawful detainer statute, Castaic failed to comply with the
statutory notice requirements set forth in Code of Civil Procedure
section 1161(2).
       After its complaint was dismissed with prejudice on
November 14, 2022, Castaic filed a timely notice of appeal.
                            DISCUSSION
       Castaic asserts that the trial court erred in sustaining
Wonderland’s demurrer without leave to amend, arguing that
despite express designation of “contract[] laws” and disavowal of
“landlord tenant laws” as the governing law, the agreement did
not preclude Castaic from resorting to the summary proceedings
of unlawful detainer.4
       We independently review a trial court’s order sustaining a
demurrer to determine whether the operative complaint states
sufficient facts to constitute a cause of action. (Centinela

4     Castaic does not argue that if we affirm the trial court’s
order sustaining the demurrer, Castaic should be afforded the
opportunity to amend the complaint.

                                 5
Freeman Emergency Medical Associates v. Health Net of
California, Inc. (2016) 1 Cal.5th 994, 1010; Lee v. Hanley (2015)
61 Cal.4th 1225, 1230.) We accept as true all material facts
properly pleaded in the operative complaint, but not contentions,
deductions, or conclusions of fact or law. (Winn v. Pioneer
Medical Group, Inc. (2016) 63 Cal.4th 148, 152; Evans v. City of
Berkeley (2006) 38 Cal.4th 1, 6.)
1.     Pertinent Law
       A.    Contract Interpretation
       “The fundamental goal of contract interpretation is to give
effect to the mutual intention of the parties as it existed at the
time they entered into the contract.” (Klein v. Chevron U.S.A.,
Inc. (2012) 202 Cal.App.4th 1342, 1385 (Klein); see Civ. Code,
§ 1636.) “When the contract is clear and explicit, the parties’
intent is determined solely by reference to the language of the
agreement.” (Klein, at p. 1385, citing Civ. Code, §§ 1638, 1639.)
The words of the contract are to be understood in their ordinary
and popular sense. (Civ. Code, § 1644.) The principles of
contract interpretation apply equally to leases as to any other
kind of contract. (See, e.g., Qualls v. Lake Berryessa Enters.
(1999) 76 Cal.App.4th 1277, 183 (Qualls); Golden West Baseball
Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 21.)
       B.    Waiver
       “Any one may waive the advantage of a law intended solely
for his benefit. But a law established for a public reason cannot
be contravened by a private agreement.” (Civ. Code, § 3513;
Simmons v. Ghaderi (2008) 44 Cal.4th 570, 585; Outboard
Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 41.)

                                6
        C.     Unlawful Detainer
        Unlawful detainer is a remedy available to a landlord
against a tenant who breaches a lease and is “ ‘intended and
designed to provide an expeditious remedy for the recovery of
possession of real property.’ ” (Borden v. Stiles (2023)
92 Cal.App.5th 337, 344 (Borden); see generally Code Civ. Proc.,
§ 1161.)
2.      Analysis
        The trial court correctly sustained Wonderland’s demurrer
without leave to amend. Whether an agreement constitutes a
lease or a license is “a subtle pursuit.” (Qualls, supra,
76 Cal.App.4th at p. 1284; id. at p. 1285 [observing “the
increasing creativity of contracts that blur the distinctions
between interests”].) Although Castaic argues at length that the
agreement was in fact a lease despite its express designation to
the contrary, we need not decide this issue to resolve the appeal.
Even assuming the agreement contains some elements of a lease,
its express terms show the parties’ intent to waive any rights
afforded by the landlord-tenant laws, including a landlord’s
remedy of unlawful detainer. That is what the trial court
concluded, and we agree.
        It is hard to imagine contractual language clearer than that
found in section 29: “This agreement will be governed by the
contract[] laws and not by the landlord tenant laws.” The parties
made explicit their intent that the document was not a lease. It
is titled: “LICENSE AGREEMENT.” And if that were not
dispositive, the parties included paragraph 6 in their agreement.
We spell out the relevant part of the provision in the type style
and font the parties used:
        “LICENSE AGREEMENT. THIS AGREEMENT IS NOT A LEASE OR
      ANY OTHER INTEREST IN REAL PROPERTY. IT IS A

                                 7
      CONTRACTUAL ARRANGEMENT THAT CREATES A
      REVOCABLE LICENSE.”

The parties’ intent to avoid application of landlord-tenant law is
further evinced by Castaic retaining “legal possession” of the
premises. Simply put, the parties unmistakably recorded their
intent to forego the application of laws specific to landlord tenant
relationships. (See Larson v. City and County of San Francisco
(2011) 192 Cal.App.4th 1263, 1297 [unlawful detainer actions are
limited to right of possession and not other claims, even if related
to the property].)
       On appeal, Castaic urges that the parties may not “elect to
contract around particular statutory protections.” But Castaic
does not cite a single authority that supports this position. Nor
does Castaic argue that the parties’ election to disavow the
applicability of landlord-tenant laws violates any public policy.
(See Series AGI West Linn of Appian Group Investors DE, LLC v.
Eves (2013) 217 Cal.App.4th 156, 164 [“A bedrock principle of
contract law in California has always been that competent
parties should have ‘ “ ‘the utmost liberty of contract’ ” ’ to
arrange their affairs according to their own judgment so long as
they do not contravene positive law or public policy”].) Instead,
Castaic merely zeroes in on Wonderland’s misguided discussion
about choice of law provisions, which Castaic argues are “wholly
inapplicable” because such provisions concern “forum selection,”
not at issue here. (See Gramercy Investment Trust v. Lakemont
Homes Nevada, Inc. (2011) 198 Cal.App.4th 903, 908-909 [choice
of law determination turns on either whether chosen state has a
substantial relationship to parties or transaction or whether
there is any other reasonable basis for choice]; Nedlloyd Lines
B.V. v. Superior Court (1992) 3 Cal.4th 459, 465-466 (Nedlloyd)

                                 8
[same, analyzing choice of foreign country’s laws].) We agree
with Castaic that Wonderland’s choice of law arguments are
unwarranted deviations from the real issues before this court,
and we discuss the doctrine no further.
      Castaic’s position that the parties’ express disavowal of
“landlord tenant laws” should not be enforced conflicts with two
well-established principles: First, “ ‘parties, generally speaking,
have power to determine the terms of their contractual
engagements.’ ” (Nedlloyd, supra, 3 Cal.4th at p. 465 & fn. 3.) Or
stated slightly differently, “ ‘The basic policy in the field of
contracts is protection of the justified expectations of the parties.
Parties will generally enter into a contract with the expectation
that the provisions of the contract will be binding on them.’ ”
(See also Maxim Crane Works, L.P. v. Tilbury Constructors (2012)
208 Cal.App.4th 286, 292.) The second of these rules is that,
other than “a law established for a public reason,” “any person
may waive the advantage of a law intended for his benefit.” (Civ.
Code, § 3513.) As the unlawful detainer remedy is “ ‘intended
and designed to provide an expeditious remedy for the recovery of
possession of real property’ ” (Borden, supra, 92 Cal.App.5th at
p. 344), we see no “public reason” (Civ. Code, § 3513) that would
prohibit a landowner from agreeing to waive the unlawful
detainer remedy in any particular undertaking.
      Castaic relies on Provouskivitz v. Snow (1997)
74 Cal.App.3d 554 and Taylor v. Nu Digital Marketing, Inc.
(2016) 245 Cal.App.4th 283 (Taylor) to argue that it was entitled
to proceed with its unlawful detainer action. Neither of these
cases is relevant because neither involved a contract in which the
parties expressly disavowed any rights they may have had under
landlord-tenant law. Indeed, the agreement at issue in Taylor

                                 9
expressly provided for remedies in the case of default that “are
. . . available to landlords pursuant to Code of Civil Procedure,
section 1161, et seq.” (Taylor, at p. 287.) Here, on the other
hand, the contract provides for remedies that directly conflict
with landlord-tenant law. For example, section 12.1 provides
that if Wonderland defaults on the agreement, “Licensor may . . .
access . . . Licensee’s area(s) of use without notice or the need to
initiate legal process.”
        Castaic posits that it is entitled to proceed with its
unlawful detainer action despite the provision in the parties’
agreement that it shall be governed by “contract[] law and not
landlord tenant law,” arguing the unlawful detainer statute does
not qualify as a “landlord tenant law” given that it expressly
extends to licensor-licensee relationships. (Code Civ. Proc.,
§ 1161(1) [unlawful detainer is available to “an owner against . . .
[a] licensee whose relationship has terminated].) We reject this
argument. “In interpreting a contract, we give the words their
ordinary and popular meaning, unless the parties . . . have given
the words a specialized or technical meaning.” (Coral Farms,
L.P. v. Mahony (2021) 63 Cal.App.5th 719, 727.) It is well
established that the unlawful detainer statute primarily concerns
landlord tenant relationships. (See, e.g., Cavanaugh v. High
(1960) 182 Cal.App.2d 714, 716 [“[s]ubject to exceptions specified
in [the unlawful detainer statute],” the existence of “a
conventional relationship of landlord and tenant” “is sine qua non
to maintenance of [an unlawful detainer] action” (first italics
added); Stancil v. Superior Court (2021) 11 Cal.5th 381, 394 [“the
Unlawful Detainer Act governs the procedure for landlords and
tenants to resolve disputes about who has the right to possess
real property”].) Castaic’s position that “landlord tenant laws”

                                10
should be construed not to include unlawful detainer asks us to
ignore the “popular meaning” ascribed to unlawful detainer—i.e.,
that it is a remedy pertaining above all to landlord tenant
relationships. We do not ignore that meaning.
       Because we conclude that Castaic waived any right it may
have had to bring an unlawful detainer action against
Wonderland, we do not reach the issue of whether Castaic
fulfilled the notice requirements set forth in Code of Civil
Procedure section 1161(2).
                           DISPOSITION
       The judgment of dismissal is affirmed. Wonderland is
awarded costs on appeal.

                                         RUBIN, P. J.
WE CONCUR:

                       BAKER, J.

                       MOOR, J.

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