Court Opinion

ID: 4561383
Source: CourtListenerOpinion
Date Created: 2020-08-28 23:02:27.236624+00
Date Added: 2024-06-11T11:27:06.446682
License: Public Domain

Filed 8/28/20 Douglas Emmett 2013, LLC v. 1&G Direct Real Estate 10, LP CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

 DOUGLAS EMMETT 2013, LLC,                                              B295429

           Plaintiff and Appellant,                                     (Los Angeles County
                                                                        Super. Ct. No. BC708800)
           v.

 I&G DIRECT REAL ESTATE 10, LP,

           Defendant and Respondent.

      APPEAL from an order of the Superior Court of Los
Angeles County. Elizabeth A. White, Judge. Affirmed.
      Greines, Martin, Stein & Richland, Kent L. Richland,
David E. Hackett; Cox Castle & Nicholson, Edward F. Quigley,
Stacy L. Freeman and Alicia N. Vaz for Plaintiff and Appellant.
      Allen Matkins Leck Gamble Mallory & Natsis, Anthony J.
Oliva and Nancy S. Fong, for Defendant and Respondent.
               _________________________________
       Appellant Douglas Emmett 2013, LLC (Douglas Emmett)
leases property to respondent I&G Real Estate 10, LP (I&G). The
long-term lease (Lease) requires that the rent be recalculated
periodically as a percentage of the current fair market value of
the property. The Lease provides that, absent agreement
between the parties, a panel of appraisers must determine the
value of the property for purposes of rent calculation.
       The trial court ordered that the court, rather than the
appraisers, must decide the proper valuation method under the
Lease. Douglas Emmett disagrees and appeals from that order.1
       In addition to the appraisal provision, the Lease provides
for arbitration of some disputes. The Lease expressly states that
“arbitrators” shall not have the authority to interpret the Lease
or the law. Determining the appropriate method for assessing
the fair market value of the property requires interpreting the
Lease. Thus, the dispositive issue on appeal is whether the
Lease’s reference to “arbitrators” in this context includes the
appraisers.
       We conclude that it does. The parties agree that the
appraisers perform an arbitration function under the Lease. It is
therefore reasonable to conclude that the parties intended to
include appraisers within the broad category of “arbitrators” who
are not permitted to interpret the Lease. Moreover, analysis of
all the dispute resolution provisions in the Lease shows that it is
unlikely the Lease’s drafters intended to give appraisers broader

      1 On May 9, 2019, this court ruled that the trial court’s
order is appealable as an order denying in part a motion to
compel arbitration.

                                 2
powers to interpret the Lease than they gave to other arbitrators.
We therefore affirm.
                           BACKGROUND
1.     The Lease
       a.    Basic terms
       The Lease concerns property located in Woodland Hills.
The Lease was originally executed in August 1979 and was later
amended several times.
       The original term of the Lease was from August 24, 1979,
to December 31, 2054. The termination date was later extended
to December 31, 2074. Douglas Emmett is the current owner of
the Land and the landlord under the Lease. I&G is the current
tenant.
       Under the original Lease terms, rent was fixed for the first
25 years. After 25 years, and each 25 years thereafter on the
“Reappraisal Date,” rent was subject to increase to “an annual
sum equal to 9% of the fair market value of the Demised
Premises.”2 Fair market value was to be determined “as if the
Demised Premises were vacant, unimproved, unencumbered and
free of this Lease, but subject to the restrictions on use set forth
in Article VIII of this Lease, as of the applicable Reappraisal
Date.”
       Article VIII, entitled, “Use of Property,” contains two
provisions. One provision contained in section 8.02 requires that
the tenant: (1) generally comply with applicable laws and
regulations; (2) use the property only for lawful purposes; and
(3) avoid any nuisance. The other provision contained in section

      2 The Lease defines the “Demised Premises” as the land
identified in a formal parcel description (the Land).

                                 3
8.01 states that “Tenant may use the Property for general office
use, commercial use, and all related or ancillary uses.”
       Subsequent Lease amendments changed the Reappraisal
Dates and added some other rent recalculation provisions.
However, the method for periodic recalculation of the rent based
on 9 percent of the fair market value of the Land remained the
same.
       b.    The appraisal procedure
       The Lease provides that, if the parties are not able to agree
on the fair market value of the Land within three months after
the Reappraisal Date, the parties must resort to an appraisal
process described in article XXI of the Lease.3 Section 21.02 in
article XXI addresses the appraisal process.
       Under that process, each party has the right to appoint as
an appraiser a “disinterested person who is a Member of the
American Institute of Real Estate Appraisers (or if such Institute
is not in existence at the time in question, a member of a similar
or successor organization) (an ‘M.A.I.’) and whose office is located
in the County of Los Angeles.”4 The appointed Appraisers are to
appoint a similarly qualified third Appraiser, and the three “shall

      3 Article XXI is entitled, “Arbitration and Appraisal.” The
Third Amendment to the Lease, which was executed in 1998 and
contains the current operative terms for the rent recalculation
procedure, states that the appraisal shall be conducted “in
accordance with Article XIX of the Lease.” As I&G points out,
this appears to be a typographical error, as article XIX addresses
“Mortgages, Assignments and Subleases” rather than appraisals.
      4We use the capitalized term “Appraiser” to refer to the
appraisers specifically identified in section 21.02.

                                 4
as promptly as possible” determine the fair market value of the
Land.
       In the event the two appointed Appraisers cannot agree on
a third Appraiser, and if the parties also cannot agree on a third
Appraiser, either party may give notice to the other party and
“apply for such appointment to the Superior Court for the County
of Los Angeles.”
       During the appraisal, each party is “entitled to present
evidence and argument to the [A]ppraisers and to be represented
by counsel.” The Appraisers’ determination “shall be conclusive
upon the parties and judgment upon the same may be entered in
any court having jurisdiction thereof.” The Appraisers are to
“give written notice to the parties stating their determination,
and shall furnish to each party a copy of such determination
signed by them.” Each party is responsible for the fees of the
Appraiser that it appoints, and the “fees and expenses of the
third [A]ppraiser shall be shared equally by both parties.”
       c.    Arbitration of other disputes
       Section 21.01 of article XXI addresses resolution of disputes
that the parties elsewhere in the Lease “specifically and
expressly agreed” to arbitrate. Section 21.01 provides that such
disputes “shall be settled by arbitration in the City of Los Angeles
in accordance with the Commercial Arbitration Rules then
obtaining of the American Arbitration Association [AAA], and
judgment upon the award rendered in such arbitration may be
entered in any court having jurisdiction thereof.” Section 21.01

                                 5
further requires that “at least one arbitrator shall be an attorney
at law, admitted to practice in the State of California.”5
       Disputes that the parties agreed to arbitrate include:
(1) whether the amount of insurance the tenant maintains is
“inadequate properly to protect the interest of Landlord”;
(2) whether the tenant’s replacement or reconstruction of
improvements on the Land constitutes a “fair and reasonable
economic utilization of the Demised Premises”; and (3) whether
improvements on the Land have been “substantially damaged or
destroyed” within the last five years of the Lease, permitting
early termination of the Lease.
       d.    Limitation on the authority of
             “arbitrators”
       Article XXI of the Lease includes a third section, section
21.03, which imposes limitations on the authority of “arbitrators.”
It reads in full: “The arbitrator or arbitrators or appraiser or
appraisers may not change any of the terms of this Lease or
deprive any party to this Lease of any right or remedy expressly
or impliedly reserved in this Lease and such arbitrators shall be
limited to the determination of the facts presented, and shall not
have authority to interpret this Lease or any applicable law.”
(Italics added.)
2.     Proceedings in the Trial Court
       a.    Douglas Emmett’s complaint
       The parties to the Lease were able to reach agreement on
the fair market value of the Land for purposes of recalculating

      5For clarity, we refer to such arbitrators as “AAA
Arbitrators” to distinguish them from Appraisers under the
Lease.

                                6
the rent in 1994 and 1998. As amended, the Lease next required
a rent recalculation on January 1, 2018.
       Douglas Emmett and I&G were unable to agree on the fair
market value of the Land for purposes of the 2018 rent
recalculation. Consequently, they each appointed an Appraiser
under section 21.02 of the Lease. Neither those two Appraisers
nor the parties themselves were then able to agree on a third
Appraiser.
       On June 4, 2018, Douglas Emmett filed a complaint
seeking a court order appointing a third Appraiser pursuant to
section 21.02(b) of the Lease.
       b.    I&G’s cross-complaint
       I&G answered and filed a cross-complaint. I&G’s cross-
complaint alleged that the parties disagreed concerning the
method for determining the fair market value of the Land for
purposes of recalculating rent. I&G claimed that the Lease
requires fair market value to be determined in light of the
provision in article VIII that the Land be used for “office use,
commercial use, and all related or ancillary uses.” I&G claimed
that, in contrast, Douglas Emmett contends that the parties’
appraisers “may consider ‘residential’ purposes for determining
fair market value.”
       The cross-complaint further alleged that the Lease “is clear
that neither an arbitrator nor an appraiser have authority to
interpret the language of the . . . Lease or applicable law,” and
that the appraisers therefore “do not currently have sufficient
information or guidelines to perform their duties.” The cross-
complaint sought declaratory relief identifying the proper
manner to determine fair market value under the Lease, and

                                 7
requested an injunction prohibiting the appraisal from
proceeding until the court decided that issue.
       c.     Douglas Emmett’s motion for the court to
              appoint an Appraiser
       Douglas Emmett moved to appoint an Appraiser, arguing
that the Appraisers, not the court, should interpret the Lease as
necessary to determine the current fair market value of the Land.
Douglas Emmett argued that section 21.03 of the Lease provides
that only “arbitrators” are precluded from interpreting the Lease.
Douglas Emmett claimed that the Appraisers are not
“arbitrators” for purposes of this limitation because the Lease
distinguishes between “appraisers” who determine the fair
market value of the Land and “arbitrators” who decide other
disputes. Douglas Emmett also argued that, even if the court
were to determine that it must interpret the Lease, I&G’s
interpretation was wrong as a matter of law.
       Consistent with its cross-complaint, I&G responded to
Douglas Emmett’s motion by arguing that the appraisal should
be stayed pending a ruling by the trial court on how fair market
value should be determined.
       The trial court granted Douglas Emmett’s motion to
appoint the Appraiser and denied I&G’s request that the
appraisal be stayed pending resolution of its cross-complaint.
However, with respect to the scope of the Appraiser’s authority,
the court found that I&G’s interpretation of section 21.03 was
correct. Citing Jefferson Ins. Co. v. Superior Court of Alameda
County (1970) 3 Cal.3d 398 (Jefferson), the trial court concluded
that “[i]t is not logical that the parties intended an appraiser to
have more authority than an arbitrator.”

                                8
       The court also stated that it “agree[d] with [I&G’s] position
that the fair market value for purposes of the reappraisal is to be
based upon a valuation of the property as if it were vacant,
unimproved, unencumbered and free of the Lease, for general
office use, commercial use, and all related or ancillary uses,
which does not include residential use.” (Italics added.)
       Douglas Emmett then filed a motion to correct the court’s
order, arguing that the court’s ruling on the meaning of “fair
market value” under section 21.02 was premature. In response,
the court confirmed that the portion of its written order
purporting to intepret the meaning of fair market value for
purposes of the appraisal was only “context for the court’s ruling”
and was not intended to be a decision on I&G’s cross-complaint
for declaratory relief.
                           DISCUSSION
1.     Standard of Review and Governing Law
       The only issue on this appeal is the scope of the Appraisers’
authority to interpret the Lease. Neither party provided any
parol evidence in the trial court bearing on that issue. Thus, we
must decide the issue based solely on the language of the Lease
and the relevant law. Our review is therefore de novo. (Parsons
v. Bristol Development Co. (1965) 62 Cal.2d 861, 865–866
[appellate court independently determines the meaning of a
contract where there is no conflicting extrinsic evidence]; Aryeh v.
Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185,
1191[appellate court reviews legal issues de novo].)
       We interpret the Lease’s dispute resolution provisions as
we would any other contract. (Rice v. Downs (2016) 248
Cal.App.4th 175, 185 (Rice) [ordinary contract interpretation
rules apply to arbitration agreements].) We attempt to give effect

                                 9
to the parties’ intentions in light of the contractual language and
the circumstances under which the contract was made. (Ibid.;
Civ. Code, §§ 1636, 1647.) And we interpret the contract as a
whole, “so as to give effect to every part, if reasonably practicable,
each clause helping to interpret the other.” (Civ. Code, § 1641.)
2.     The Appraisal Process Under the Lease Is a
       Form of Arbitration
       The parties agree that the appraisal procedure described in
section 21.02 of the Lease is a form of arbitration. Under Code of
Civil Procedure section 1280, subdivision (a), an “ ‘Agreement’ ”
for purposes of the arbitration statutes includes “agreements
providing for valuations, appraisals, and similar proceedings.”6
(Italics added; see Doan v. State Farm General Ins. Co. (2011) 195
Cal.App.4th 1082, 1093 (Doan) [citing section 1280, subdivision
(a) in concluding that “[a]n appraisal provision in an insurance
policy constitutes an agreement for contractual arbitration”].)
       The Appraisers who decide the fair market value of the
Land under the dispute resolution provisions of the Lease also
function as arbitrators. They consider evidence; they hear
argument from the parties’ counsel; and they issue a written
decision.
       The parties draw different conclusions from this status of
the Appraisers as arbitrators. Douglas Emmett argues that
because appraisal under the Lease is a form of arbitration, the
Appraisers are presumed to have the power to interpret the
Lease as necessary for their decision. (See Gueyffier v. Ann
Summers, Ltd. (2008) 43 Cal.4th 1179, 1184 (Gueyffier).) On the

      6Subsequent undesignated statutory references are to the
Code of Civil Procedure.

                                 10
other hand, I&G argues that if the Appraisers are arbitrators
under the Lease, they are necessarily included within the
definition of “arbitrators” who are explicitly not permitted to
interpret the Lease under section 21.03.
       Neither of the parties’ arguments is based on a legal rule
that authoritatively establishes whether the Appraisers are
permitted to interpret the Lease. Rather, both arguments simply
identify principles of interpretation that can be brought to bear to
understand the parties’ intent.
       In Gueyffier, our Supreme Court explained that “[w]hen
parties contract to resolve their disputes by private arbitration,
their agreement ordinarily contemplates that the arbitrator will
have the power to decide any question of contract interpretation,
historical fact or general law necessary, in the arbitrator’s
understanding of the case, to reach a decision.” (Gueyffier, supra,
43 Cal.4th at p. 1184.) However, an exception to this “general
rule” “arises when the parties have, in either the contract or an
agreed submission to arbitration, explicitly and unambiguously
limited those powers.” (Id. at p. 1185.) That is because “ ‘[t]he
powers of an arbitrator derive from, and are limited by, the
agreement to arbitrate.’ ” (Ibid., quoting Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375.)
       Here, the Lease’s drafters explicitly and unambiguously
limited the power of some decision makers to interpret the Lease.
The drafters’ clear directive in section 21.03 that “such
arbitrators . . . shall not have authority to interpret this Lease or
any applicable law” leaves no doubt that the parties intended to
withhold from “arbitrators” the authority to interpret the Lease.
(See Gueyffier, supra, 43 Cal.4th at p. 1184.) The issue is what

                                 11
persons the parties intended to include in the class of “such
arbitrators” who may not interpret the Lease.
      Thus, section 21.03 rebuts the otherwise applicable
presumption that “arbitrators” have the power to interpret the
Lease. Determining who is included in this class of “arbitrators”
requires textual interpretation, not reliance on a presumption
that the Lease’s drafters expressly rejected.
      The conclusion that I&G seeks to draw from the
Appraisers’ status as arbitrators also relies upon a general legal
principle that, while informative, is not dispositive. As
mentioned, I&G argues that because the law categorizes
appraisals as arbitrations, the Appraisers must be included in
the category of “such arbitrators” who are not permitted to
interpret the Lease. But that is true only if the parties intended
to import the legal meaning of “arbitrators” into the phrase “such
arbitrators.”
      As I&G points out, the parties to a contract are “presumed
to have had existing law in mind when they executed their
agreement.” (Swenson v. File (1970) 3 Cal.3d 389, 394.) Thus,
for example, parties to a contract are presumed to know and to
incorporate legal rules that affect the scope of their obligations
under the contract. (See id. at pp. 394–395 [former partners were
presumed to have drafted a noncompetition agreement in light of
the then-existing permissible legal scope of such an agreement].)
      Here, however, the law did not dictate what authority the
parties were permitted to give to the Appraisers. The parties
could have chosen to give the Appraisers the authority to
interpret the Lease while denying that same authority to the
AAA Arbitrators. To that end, despite the fact that the law
includes appraisals within the definition of arbitrations, the

                               12
parties could have assigned a meaning to the term “arbitrators”
in section 21.03 that excluded Appraisers. (See Civ. Code, § 1644
[words of a contract should be understood in the “ordinary and
popular sense, rather than according to their strict legal
meaning” and parties may give words a “special meaning”
through usage].) The question is whether the parties intended to
do so.
       To answer that question, we must look to the language of
section 21.03 and the Lease as a whole to discern the drafters’
intent.
3.     Interpreted in Light of the Lease as a Whole,
       “Such Arbitrators” in Section 21.03 Includes
       “Appraisers”
       While not dispositive, the legal status of appraisers as
arbitrators is relevant to interpreting the drafters’ intent.
Because appraisals are included within the legal definition of
arbitrations, and because the Appraisers actually perform the
function of arbitrators under the Lease, it is reasonable to infer
that the drafters intended the term “such arbitrators” to include
Appraisers.
       Consideration of the Lease as a whole strengthens that
inference. The dispute resolution provisions of the Lease do not
provide any reason to believe that the drafters intended to
distinguish between Appraisers and the AAA Arbitrators with
respect to their authority to interpret the Lease. (See Rice,
supra, 248 Cal.App.4th at p. 186 [“ ‘ “A court must view the
language in light of the instrument as a whole and not use a
‘disjointed, single-paragraph, strict construction approach’ ” ’ ”],
quoting City of El Cajon v. El Cajon Police Officers’ Assn. (1996)
49 Cal.App.4th 64, 71.)

                                 13
       The nature of the disputes that AAA Arbitrators decide
under the Lease suggests that those disputes are as likely as
appraisals to require interpretation of the Lease and the law.
For example, under section 15.02 of the Lease, AAA Arbitrators
must decide disputes concerning the value of a tenant’s
improvements. Such a decision requires determining whether
improvements to the Land that a tenant proposes have an
estimated cost “of not less than the then fair market value of the
then existing Improvements” and are “of such type, size, design,
quality of construction and general character as to provide . . . a
fair and reasonable economic utilization of the Demised
Premises.”
       Determining the “fair market value” of the existing
improvements and defining the “fair and reasonable economic
utilization” of the Land could involve interpretation of the
parties’ rights and expectations under the Lease and the law.
That determination could conceivably even involve the Lease’s
requirements for how the tenant may use the Land—the very
dispute at issue here.
       Similarly, under section 6.09 of the Lease, in case of
dispute, AAA Arbitrators must decide whether the insurance
provided by a tenant is “inadequate properly to protect the
interest of Landlord.” A dispute over that issue would
necessarily involve consideration of the Landlord’s interests
under the Lease, which could require interpretation of the Lease
or application of the relevant law.
       Finally, under section 16.04, AAA Arbitrators must decide
any dispute arising from damage to the tenant’s improvements
within the last five years of the Lease to determine whether the
tenant may request early termination of the Lease. Such a

                                14
dispute might involve determining whether damage to the
tenants’ improvements resulted from an “act of God” or was
otherwise outside the “reasonable control” of the tenant. It might
also involve determining whether the tenants’ improvements
were “substantially damaged or destroyed.” Such determinations
could require analyzing the applicable law, or at least applying
the law to the facts.
       In fact, to the degree that the Lease distinguishes between
the respective roles of AAA Arbitrators and Appraisers, their
respective roles suggest that the parties would have been more
likely to expect AAA Arbitrators to interpret the Lease and the
law. The Lease does not require that Appraisers have any
particular legal background or training. It specifies only that
Appraisers must be members of the American Institute of Real
Estate Appraisers (or members of an equivalent or successor
organization). In contrast, the Lease requires that at least one
AAA Arbitrator be “an attorney at law, admitted to practice in
the State of California.” The requirement that AAA Arbitrators
must include at least one lawyer suggests that the parties
expected those arbitrators to be involved in resolving disputes
requiring some knowledge of the law.
       Thus, a conclusion that section 21.03 deprives AAA
Arbitrators but not Appraisers the authority to interpret the
Lease cannot be supported by any substantive analysis of those
persons’ roles. Rather, such a conclusion, if viable, must derive
from the language of the section itself.
       The language of section 21.03 does not support that
conclusion in light of the other provisions of the Lease. The
language is certainly ambiguous. The term “such arbitrators”
could refer specifically to the “arbitrator or arbitrators” identified

                                 15
in the previous independent clause, or it could refer to the entire
phrase “arbitrator or arbitrators or appraiser or appraisers.” No
dispositive textual analysis of section 21.03 can resolve that
ambiguity.
       Douglas Emmett contends that rules of construction
require us to interpret the term “such arbitrators” in section
21.03 as referring only to the specifically identified “arbitrators”
in the preceding clause of the sentence rather than to the entire
group of “arbitrator or arbitrators or appraiser or appraisers.”
Citing Rice, supra, 248 Cal.App.4th 175, Douglas Emmett argues
that when parties to a contract use particular language in one
portion of a contract (i.e., “arbitrator or arbitrators or appraiser
or appraisers”) and use different language in another portion of
the contract (i.e., “such arbitrators”), the choice to use different
language has meaning.
       That principle makes sense when parties to a contract
would be expected to use the same language in different portions
of the contract if they intended the same meaning. For example,
in Rice, the parties used expansive language in describing the
scope of jurisdiction to decide disputes and narrower language in
describing the scope of controversies they intended to arbitrate.
The court concluded that the parties “could easily have copied
and pasted the broader text from the jurisdiction clause to the
arbitration clause, but chose not to do so.” (Rice, supra, 248
Cal.App.4th at p. 188.)
       Here, however, one would not necessarily expect the
drafters of the Lease to use exactly the same language in the first
and second clauses of the sentence comprising section 21.03 if
they intended the same meaning. The second clause is not free-
standing, but clearly intends to import meaning from the first.

                                16
The question is simply what meaning the drafters intended to
incorporate by reference.
       The term that the parties selected for the second clause of
the sentence—“such arbitrators”—refers back to some or all of
the persons described in the prior phrase “arbitrator or
arbitrators or appraiser or appraisers.” The parties could have
simply copied and pasted that entire phrase into the second
clause of the sentence if they intended to refer to the prior phrase
as a whole. However, it was also natural for them to use a
simpler, summary term to refer to the persons that they had just
named. For example, if the drafters had simply said “such
decision makers” rather than “such arbitrators,” the phrase
would have been unremarkable and unambiguous in referring to
all the persons they had just identified. Arbitrators and
appraisers are both decision makers under the Lease. The fact
that the drafters chose an ambiguous term to refer to a concept
they had just identified does not mean they intended a different
meaning.
       To resolve this ambiguity, one must again refer to the
Lease as a whole. In light of the respective roles of Appraisers
and AAA Arbitrators under the Lease, it seems improbable that
the parties would have drawn such a crucial distinction between
the two classes of arbitrators concerning their authority to
interpret the Lease without some clearer description of their
intent to do so.
       That improbability is highlighted by the fact that, in
referring specifically to the “arbitrator or arbitrators or appraiser
or appraisers” in the first clause of the sentence comprising
section 21.03, the drafters clearly precluded both the AAA
Arbitrators and the Appraisers from “chang[ing] any of the terms

                                 17
of this Lease or depriv[ing] any party to this Lease of any right or
remedy expressly or impliedly reserved in this Lease.”
Interpretation of a contract and depriving a party of a right
under the contract are different concepts. (See Gueyffier, supra,
43 Cal.4th at pp. 1185–1186 [arbitrator did not change the terms
of a contract by interpreting it to permit the equitable defense of
futility to excuse a party’s failure to provide the contractually
required notice of breach].) However, the concepts are related. If
the drafters had intended to deprive AAA Arbitrators of the
authority to change or interpret the Lease, but to deprive
Appraisers only of the authority to change the Lease, the drafters
would likely have made such a subtle and specific distinction
explicit.
       The lack of an explicit statement that Appraisers have the
authority to interpret the Lease while AAA Arbitrators do not
have such authority is also telling in light of the traditional role
of appraisers. As the trial court noted, our Supreme Court has
explained that appraisers generally have less authority than
arbitrators. In Jefferson the court observed that “[a]lthough
arbitrators are frequently, by the terms of the agreement
providing for arbitration . . . given broad powers . . . , appraisers
generally have more limited powers.” (Jefferson, supra, 3 Cal.3d
at p. 403.) The court explained that the function of appraisers is
to determine “ ‘the amount of damage resulting to various items
submitted for their consideration. It is certainly not their
function to resolve questions of coverage and interpret provisions
of the policy.’ ” (Ibid.) In light of this generally more limited role,
one would not expect the Lease’s drafters to give Appraisers

                                  18
greater interpretive authority than the AAA Arbitrators, at least
not without saying so directly.7
      Douglas Emmett also argues that depriving Appraisers of
the ability to interpret the Lease would be inconsistent with the
summary nature of arbitrations and would contradict the parties’
direction that the Appraisers, once appointed, “shall as promptly
as possible” determine the fair market value of the Land. Citing
Helzel v. Superior Court (1981) 123 Cal.App.3d 652 (Helzel),
Douglas Emmett contends that by urging this interpretation,
I&G’s declaratory relief claim has unduly delayed the appraisal.

      7 Douglas Emmett correctly points out that Jefferson and
its progeny specifically concern the role of appraisers in the
context of insurance contracts. (See Jefferson, supra, 3 Cal.3d at
p. 403; Kirkwood v. California State Automobile Assn. Inter-Ins.
Bureau (2011) 193 Cal.App.4th 49, 58–59 [role of appraiser under
Insurance Code section 2071 is limited to appraising loss and
does not include the power to interpret the insurance contract];
Doan, supra, 195 Cal.App.4th at pp. 1093–1094 [considering the
nature of insurance appraisals].) However, the role of appraisers
in the insurance context is consistent with the ordinary
understanding of what it means to “appraise,” which is to
“estimate the monetary value of [or] determine the worth of”
something. (
[as of Aug. 12, 2020], archived at .) The point is not that the law precluded the Lease’s
drafters from providing Appraisers with the authority to
interpret the Lease; as discussed above, the parties were free to
give the Appraisers that authority if they chose to do so. The
point is that the ordinary understanding of the role of an
appraiser makes it unlikely that the drafters of the Lease would
have given the Appraisers greater powers to adjudicate disputes
than they gave the AAA Arbitrators without explicitly stating
that intention.

                               19
       In Helzel, the parties to a stock purchase agreement agreed
to a two-phased appraisal of the stock. (Helzel, supra, 123
Cal.App.3d at pp. 656–657.) The first phase involved two
separate appraisals. If the disparity between the two appraisals
was sufficient, the parties agreed that a third appraiser would be
appointed in the second phase. (Ibid.) One of the parties filed a
petition to compel arbitration seeking the appointment of a third
appraiser after the two initial appraisals revealed a significant
disparity. The other party responded with a declaratory relief
claim seeking to delay the appraisal/arbitration pending judicial
determination of the propriety of the first two appraisals. (Ibid.)
       The appellate court held that the arbitration should
proceed. (Helzel, supra, 123 Cal.App.3d at pp. 660–661.) The
court concluded that there was no statutory or contractual basis
to delay the arbitration pending judicial resolution of challenges
to the initial phase of appraisals. (Id. at pp. 660–664.)
       The holding in Helzel is not directly relevant here. Douglas
Emmett complains that I&G sought to use its declaratory relief
claim to delay the appraisal, but the trial court denied I&G’s
request to stay the appraisal pending resolution of its cross-
complaint. The trial court simply ruled that in conducting that
Appraisal, the Appraisers are not permitted to interpret the
Lease.8
       However, Douglas Emmett’s broader point is that the
parties to the Lease, like the parties in Helzel, would not have

      8The propriety of I&G’s cross-complaint is not before us.
This appeal concerns only the portion of the trial court’s order
denying Douglas Emmett’s request to arbitrate the issue of the
meaning of fair market value under section 21.02 of the Lease.

                                20
contemplated an inefficient “piecemeal procedure” to resolve
disputes. (See Helzel, supra, 123 Cal.App.3d at p. 664.) Douglas
Emmett argues that the Lease’s drafters must have intended to
give Appraisers the authority to interpret the Lease because
otherwise a dispute over interpretation would lead to two stages
of judicial review—one to obtain judicial direction before the
Appraisal and one to obtain judicial confirmation after.
       This argument is too speculative to support the conclusion
that the parties must have intended to give Appraisers the
authority to interpret the Lease. The parties who originally
drafted the Lease might have understood its terms better than
the current parties and might not have anticipated that any
disputes concerning interpretation would affect the appraisal
(such as the disagreement over the interpretation of “fair market
value” that divides the parties now). Nor did the drafters
necessarily assume that such a dispute would lead to piecemeal
judicial review. The drafters might have expected that the
appraisal could proceed subject to subsequent judicial resolution
of disputes over interpretation. Appraisers could, for example,
identify separate or alternative values for the Land depending
upon the result of subsequent litigation over disputed
interpretation issues.9

      9 In the analogous context of insurance appraisals (where
appraisers have no authority to interpret the underlying
insurance policies), some courts have approved the process of an
appraisal leading to a judgment that merely confirms the value of
all claimed losses subject to subsequent litigation over coverage
issues. (See Devonwood Condominium Owners Assn. v. Farmers
Ins. Exchange (2008) 162 Cal.App.4th 1498; Lee v. California

                               21
      Thus, we do not know whether the drafters believed that
limiting the Appraisers’ authority to interpret the Lease would
lead to delay in the Appraisal process. However, we do know that
the drafters specifically denied the authority to interpret the
Lease to “arbitrators.” To the degree the drafters were concerned
about the possibility of delay, that concern clearly did not affect
their decision to deny interpretive authority at least to the AAA
Arbitrators. The drafters’ clear directive that “arbitrators” may
not interpret the Lease overrides any assumption that the parties
valued the speed and efficiency of arbitration over their interest
in reserving questions of interpretation for the court. The
drafters’ expressed desire that appraisals proceed “as promptly as
possible” therefore does not compel the conclusion that the
parties intended to provide Appraisers with the authority to
interpret the Lease.

Capital Ins. Co. (2015) 237 Cal.App.4th 1154, 1169 [“A
Devonwood itemization permits an appraisal panel to fulfill its
obligation to assign loss values to damages items without
exceeding its authority . . . . The parties are free to dispute the
insurer’s liability to pay for disputed categories of loss in
subsequent litigation”].)

                                 22
                          DISPOSITION
      The trial court’s order is affirmed. I&G is entitled to its
costs on appeal.
      NOT TO BE PUBLISHED.

                                      LUI, P. J.
We concur:

      ASHMANN-GERST, J.

      HOFFSTADT, J.

                                 23