Court Opinion

ID: 5126025
Source: CourtListenerOpinion
Date Created: 2021-11-15 21:03:08.976813+00
Date Added: 2024-06-11T08:22:53.802992
License: Public Domain

Filed 11/15/21 Shadkor v. Volwood Management CA2/4
            NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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     IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                SECOND APPELLATE DISTRICT
                       DIVISION FOUR

SHADKOR, INC.,                                                       B305950
     Plaintiff and Respondent,                                       (Los Angeles County
       v.                                                            Super. Ct. No. BC643470)

VOLWOOD MANAGEMENT
COMPANY, L.P., et al.,

       Defendants and Appellants.

      APPEAL from judgment of the Superior Court of Los
Angeles County, Richard L. Fruin, Jr., Judge. Affirmed and
remanded for determination of attorneys’ fees on appeal.
      Hamrick & Evans, A. Raymond Hamrick, III, Jonathan
Dutton, and Adam Koslin for Plaintiff and Respondent.
      Cozen O’Connor, Frank Gooch III and Matthew E. Lewitz
for Defendants and Appellants.
                       INTRODUCTION

       This appeal arises out of a dispute between Shadkor, Inc.,
dba Milt and Edie’s Master Dry Cleaners (Shadkor) on the one
hand, and Volwood Management Company, L.P. (Volwood) and
Pass Avenue Partnership (PAP) (collectively, the Landlords) on
the other, over the terms of a commercial lease.1 After a jury trial
during which Shadkor and the Landlords presented conflicting
testimony regarding their intentions when they negotiated the
lease and amendments to it, the jury found in favor of Shadkor on
its breach of contract claims.2
       On appeal, the Landlords contend: (1) the trial court erred
by permitting the jury to decide issues the court previously
determined as a matter of law in connection with Shadkor’s
motion for summary adjudication; and (2) the trial court abused
its discretion by denying the Landlords’ motion to bifurcate the
trial. We reject both contentions and affirm. We also find the
lease agreement between the parties entitles Shadkor to an
award of attorneys’ fees on appeal, and remand to the trial court
to calculate the amount of those fees.

      FACTUAL AND PROCEDURAL BACKGROUND

     Shadkor is a family-owned laundry and dry-cleaning
business. Since 1988, Shadkor has conducted its business on
property it owns at the corner of North Pass Avenue and West
Alameda Avenue in Burbank.
     In 1995, Shadkor rented corporate office space in a building
owned by PAP, located north of, and directly adjacent to,

1     Jack Vollstedt (along with his two sons) are the principals
of Volwood. Jack Vollstedt also is one of the principals of PAP.

2      Shadkor also sued Patricia Anderson, Jack Vollstedt’s
sister. She was the Landlords’ leasing agent at all times relevant
to this action, and a 49 percent owner of PAP. She is not a party
to this appeal.
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Shadkor’s dry-cleaning business. Under the terms of the lease,
Shadkor received five customer parking spaces.
       In 2005, Shadkor relocated its corporate office from the
building owned by PAP to a building owned by Volwood, located
next door and to the east of Shadkor. In connection with the
relocation, Shadkor and Volwood entered into a new lease (the
Lease). Article 3 of the Lease stated: “The term of this Lease shall
be seventy-two (72) months and shall commence on October 1,
2005 (‘Commencement Date’) and terminate on September 30,
2011.” Article 57 of the Lease provided Shadkor with two
successive five-year options to extend the term of the Lease. To
exercise the option, Shadkor was to “give written notice to
Landlord of its intention to exercise said option at least four (4)
months prior to the end of the initial term of this Lease.” The
Lease also included ten parking spaces for the term of the Lease
“for customer parking of [Shadkor]” (the Customer Parking
Spaces). The Customer Parking Spaces consisted of the five
parking spaces Shadkor received under the terms of the lease it
signed with PAP in 1995, and an additional five spaces, for a
total of ten spaces.3
       In 2007, Volwood and Shadkor entered into a First
Amendment to the Lease (the First Amendment), which deleted
and/or modified certain provisions of the Lease. The First
Amendment did not, however, delete the “Option to Extend”
provision contained in Article 57 of the Lease. Paragraph 4 of the
First Amendment states: “Except as expressly modified hereby,
all terms and conditions of the Original Lease shall remain in full
force and effect.”
       On August 30, 2011, Volwood and Shadkor entered into a
Second Amendment to the Lease (the Second Amendment).
Pursuant the Second Amendment, the parties agreed to “further

3     Although Shadkor moved its corporate office to the building
owned by Volwood, the Customer Parking Spaces remained in the
building owned by PAP.
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modify, change and alter the Original Lease.” As relevant here,
Paragraph 1 of the Second Amendment states the parties
mutually agree to “add to the existing language of Article 3.
‘TERM’ as follows: Tenant is extending the term of the Original
Lease, as amended, for an additional seventy-two (72) months
commencing October 1, 2011 and terminating September 30,
2017.” In the Second Amendment, the parties also agreed to
delete and/or modify other terms in the Lease including the “base
rent,” “rent redetermination: annual adjustment of rent,”
“increase in taxes,” and “operating expenses.” Like the First
Amendment, paragraph 6 of the Second Amendment similarly
states: “Except as expressly modified hereby all terms and
conditions of the Original Lease and any Amendments shall
remain in full force and effect.”
       On September 16, 2016, Shadkor provided Volwood with
written notice that it was exercising its first option to extend the
term of the Lease for a period of five years (or until September
30, 2022).
       On October 3, 2016, Volwood provided Shadkor with
written notice of its intention to “relocat[] [Shadkor’s] (10)
customer parking spaces [in the building owned by PAP] . . . to
(10) un-reserved parking spaces at [the building owned by
Volwood, located approximately 230 feet away from the entrance
of the dry cleaners.] Later that month, Volwood provided Shadkor
with a notice of termination of tenancy and demand for payment
of unpaid rent. The notice stated the Lease expired on September
30, 2017 under the terms of the Second Amendment. The notice
made no mention of Shadkor’s September 16, 2016 notice to
exercise its first option.
       After receiving the notices from the Landlords, Shadkor
filed a complaint against the Landlords asserting twelve causes
of action, including breach of contract, breach of implied contract,
and fraud. The complaint also sought injunctive relief and
declaratory relief. Shadkor alleged the Landlords breached the

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Lease by “unilaterally announcing that it would, on December 31,
2016, and despite [Shadkor’s] contractual expectation and
justifiable reliance on [Landlords’] promises, revoke the
[Customer Parking Spaces] and substitute them for ten (10)
unreserved tandem parking spaces located approximately 230
feet away from the entrance of Milt & Edie’s Dry Cleaners . . .
which do not provide customers . . . with efficient and convenient
ingress and egress from the premises.”
       In response, the Landlords filed an answer and a cross-
complaint for breach of contract, anticipatory breach of contract,
declaratory relief, and injunctive relief. The Landlords sought
declaratory relief regarding the expiration of the Lease. They
alleged the initial term of the Lease expired on September 30,
2011; thus, under Article 57 of the Lease, notice of Shadkor’s
intention to exercise its first five-year option was to be given no
later than May 31, 2011. Because Shadkor did not give notice of
its intention to exercise its option until September 16, 2016, the
Landlords alleged Shadkor failed to timely exercise its option,
and the Lease expired on September 30, 2017.
       Shadkor filed a motion for summary adjudication on the
Landlords’ causes of action in their cross-complaint for
anticipatory breach of contract and declaratory relief. Shadkor
asserted that, based on the plain language of the Lease and the
Second Amendment, Shadkor’s September 16, 2016 notice of its
intention to exercise its option was “timely and valid as a matter
of law.” According to Shadkor, the Second Amendment extended
the initial term of the Lease to September 30, 2017; thus,
Shadkor had until May 31, 2017 to give written notice to exercise
the option (i.e. “four (4) months prior to the end of the initial term
of this Lease” per Article 57 of the Lease). In opposition, the
Landlords submitted the declaration of Patricia Anderson. She
declared that in her conversations with Milton Chortkoff
(principal shareholder of Shadkor) regarding the Second
Amendment, “there was never any mention, conversation, or

                                  5
discussion of the option rights under the [Lease] which had
already lapsed. There was no attempt to extend, revise, restore,
or reset the Option to Extend.” The trial court denied Shadkor’s
motion in its entirety, finding “[t]riable issues of material fact
exist . . . .”
       At trial, the parties offered conflicting testimony of the
parties’ intentions, when they negotiated the Second
Amendment, regarding the two five-year options to extend in
Article 57 of the Lease. For example, Ms. Anderson testified she
never discussed the options to extend the term of the Lease with
Shadkor’s representatives before the parties signed the Second
Amendment. One of Shadkor’s representatives (Michael Shader),
however, testified that in early 2011, he and Ms. Anderson
discussed that the Lease would be extended for six years, and
Shadkor’s Customer Parking Spaces and two-five year options
would not be affected and would be “all part of [the extension].”
       The jury returned a verdict in favor of Shadkor on its
breach of contract claims.4 It found the Lease “grant[ed]
[Shadkor] the use of 10 parking spaces for Milt & Edie’s
customers on the Pass Avenue parking lot,” and Volwood
breached the Lease “by giving written notice to [Shadkor] of its
intention to terminate [Shadkor’s] right to use the 10 [Customer
Parking Spaces].” The jury found Shadkor was harmed by
Volwood’s breach, and awarded Shadkor $3,750. It also found the
“Second Amendment to the [ ] Lease include[d] two five-year
options that [Shadkor] could exercise in the future to extend the [
] Lease.” Shadkor, therefore, “timely exercise[d] its first five-year
option by sending its September 16, 2016 written notice to
exercise option to [the Landlords]” and Volwood breached the
Second Amendment “by declaring to terminate the [Lease] [ ] as
of September 30, 2017.”

4     Because Shadkor prevailed on its claims based on the
contract, the special verdict form instructed the jury to skip
Shadkor’s alternative claims.
                                  6
      The trial court entered judgment in favor of Shadkor and
against the Landlords. It also dismissed the Landlords’ operative
cross-complaint with prejudice.
      The Landlords appeal from the judgment.

                            DISCUSSION

A.    The Trial Court Did Not Err by Allowing the Jury to
      Interpret the Terms of the Lease, and the Second
      Amendment to the Lease, Based on Conflicting
      Extrinsic Evidence
      1. Standard of Review and Governing Principles

       “The interpretation of a contract is a judicial function.
[Citation.].” (Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432
(Goldstein).) “‘The court generally may not consider extrinsic
evidence of any prior agreement or contemporaneous oral
agreement to vary or contradict the clear and unambiguous terms
of a written, integrated contract. [Citations.] Extrinsic evidence is
admissible, however, to interpret an agreement when a material
term is ambiguous. [Citations.]’ [Citations.]” (Ibid.)
       “‘The interpretation of a contract involves “a two-step
process: ‛First the court provisionally receives (without actually
admitting) all credible evidence concerning the parties’ intentions
to determine “ambiguity,” i.e., whether the language is
“reasonably susceptible” to the interpretation urged by a party. If
in light of the extrinsic evidence the court decides the language is
“reasonably susceptible” to the interpretation urged, the extrinsic
evidence is then admitted to aid in the second step—interpreting
the contract. . . . ’ [Citation.]” [Citation.]”’ [Citations.]” (Goldstein,
supra, 34 Cal.App.5th at pp. 432-433.)
       “‘When there is no material conflict in the extrinsic
evidence, the trial court interprets the contract as a matter of
law. [Citations.] . . . . If, however, there is a conflict in the
extrinsic evidence, the factual conflict is to be resolved by the

                                    7
jury. [Citations.]’ [Citations.]” (Goldstein, supra, 34 Cal.App.5th
at p. 433.)
       “On appeal, a ‘trial court's ruling on the threshold
determination of “ambiguity” (i.e., whether the proffered evidence
is relevant to prove a meaning to which the language is
reasonably susceptible) is a question of law, not of fact. [Citation.]
Thus[,] the threshold determination of ambiguity is subject to
independent review. [Citation.]’ [Citation.]” (Goldstein, supra, 34
Cal.App.5th at p. 433.)

      2. Analysis

      The Landlords contend the trial court erred by allowing the
jury to determine whether Shadkor timely exercised its option to
extend the Lease. They argue the trial court, in denying
Shadkor’s motion for summary adjudication, determined as a
matter of law that the option had not been properly exercised. It
follows, according to the Landlords, that the jury improperly
opined on an issue of law. We disagree.
      As discussed above, the trial court denied Shadkor’s motion
for summary adjudication, reasoning:

      “Triable issues of material fact exist, including but not
      limited to:

      “a) whether the option to extend that was
      contained in the original lease lapsed due to moving
      cross-defendant’s failure to give notice that it was
      exercising the option at least 4 months’ [sic] prior to
      the end of the initial lease term – [¶] Per
      [p]ara[graph] 57 of the original Lease, notice of
      exercising the option to extend the lease term had to
      be given at least 4 months before the lease
      terminated. As the original lease terminated on
      9/30/2011, the notice had to be given by 5/30/2011. In

                                  8
     fact, no notice was given by that date, and therefore
     the option lapsed. [Citation.] [¶] Per para[graph]
     58(b) of the original lease, no later option could be
     exercised unless the prior option to extend or renew
     had been exercised. [¶] Therefore, as of May 31, 2011,
     the option lapsed and any attempt to exercise a
     future option would be a nullity.

     “b) whether, by extending the original lease terms
     in the ‘Second Amendment’ (executed o/a 9/1/2011),
     the original option was somehow revived – [¶] Moving
     cross-defendant posits that, by executing the Second
     Amendment . . ., the parties intended to revive the
     lapsed option because the parties were effectively
     ‘extending’ the initial term of the lease, such that
     [the] parties’ original agreement should be read to
     allow notice of exercising the option to be given
     anytime up until 4 months before the extended
     termination date of 9/30/217. [¶] That argument,
     however, assumes that the option hadn’t already
     lapsed. Since it HAD lapsed, it could not be ‘revived,’
     particularly in view of the language of para[graph]
     58(d), pursuant to which the tenant lost any right to
     exercise a future option by failing to give notice of
     exercising the option in the original lease by
     5/30/2011.

     “[This is not a case where the language of the parties’
     agreement has ‘uncertainty,’ such that the
     uncertainty should be interpreted in favor the
     tenant.]”

     Although not a model of clarity, the trial court’s order
denying Shadkor’s motion for summary adjudication could not, as

                                9
the Landlords contend, establish as a matter of law that Shadkor
failed to timely exercise its option to extend the Lease. Rather, an
order denying a motion for summary adjudication “simply
establishes the existence of a triable issue of fact. It does not
decide the issue. [Citation.]” (Transport Ins. Co. v. TIG Ins. Co.
(2012) 202 Cal.App.4th 984, 1009 (Transport); see also Emerald
Bay Community Assn. v. Golden Eagle Ins. Corp. (2005) 130
Cal.App.4th 1078, 1086 [“Denial of a motion for summary
judgment does not establish any fact or resolve any issue; it
merely determines that the issues will be decided later, at the
time of trial.”].)
       We likewise reject the Landlords’ contention that the trial
court’s findings in its order denying Shadkor’s motion for
summary adjudication became the law of the case and therefore,
the issue of whether Shadkor’s option to extend the Lease lapsed
should not have been submitted to the jury. ~(AOB30)~ This
argument is premised on the erroneous claim that the trial court
could conclusively determine an issue in denying a motion for
summary adjudication. (See Transport, supra, 202 Cal.App.4th at
p. 1009.) And, in any event, the law of the case doctrine does not
apply to trial court rulings. (See Golden Door Properties, LLC v.
Superior Court (2020) 53 Cal.App.5th 733, 787 [“‘The law of the
case doctrine states that when, in deciding an appeal, an
appellate court ‘states in its opinion a principle or rule of law
necessary to the decision, that principle or rule becomes the law
of the case and must be adhered to throughout its subsequent
progress, both in the lower court and upon subsequent appeal [ ]”’
[citation.]”]; see also AT&T Communications, Inc. v. Superior
Court (1994) 21 Cal.App.4th 1673, 1680 [“the doctrine of law of
the case applies only to appellate court decisions [citation].”].)
       Had the Landlords brought their own cross-motion for
summary judgment or adjudication, the trial court could have
decided the issue as a matter of law if it determined no triable
issues of material fact existed. (Cal. Civ. Proc. § 437c, subd. (c).)

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The Landlords failed to do so, however. Instead, in support of
their opposition to Shadkor’s motion, the Landlords submitted
extrinsic evidence of the parties’ intent. As discussed above,
Patricia Anderson declared that during her negotiations of the
Second Amendment with Chortkoff, “there was never any
mention, conversation, or discussion of the option rights under
the [Lease] which had already lapsed. There was no attempt to
extend, revise, restore, or reset the Option to Extend.” She
further declared that the Second Amendment created “an
extended term” as opposed to modifying the “initial lease term,”
and therefore the option expired four months prior to September
30, 2011. Based on the parties’ conflicting interpretations of the
Lease and the Second Amendment, the trial court denied
Shadkor’s motion for summary adjudication, and properly
permitted the jury to resolve what it concluded were the “[t]riable
issues of material fact.”
       The Landlords alternatively contend that because the
Lease was an integrated agreement (i.e. a final written
agreement), the trial court erred by admitting parol evidence at
trial. There are two problems with this argument. First, the
Landlords failed to object to the admission of extrinsic evidence
at trial. Thus, they have forfeited the issue. (Evid. Code, § 353,
subd. (a).) Second, “even in an integrated contract, extrinsic
evidence can be admitted to explain the meaning of the
contractual language at issue . . . .” (Hot Rods, LLC v. Northrop
Grumman Systems Corp. (2015) 242 Cal.App.4th 1166, 1175; see
also WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702,
1710 [“Parol or extrinsic evidence is admissible to resolve an
ambiguity. [citations.]”])
       Here, although unclear from the order denying Shadkor’s
motion for summary adjudication, the record demonstrates the
trial court ultimately determined certain terms of the Lease and
the Second Amendment were ambiguous. Specifically, when the
parties were discussing jury instructions, the trial court stated:

                                11
“I’ve made the decision that there are – . . . uncertainties in this
contract, and that’s why we’re in trial, and that’s why the jury
has to decide these things. If there were no extrinsic evidence,
this would be my case. It wouldn’t be a jury case. It’s only
because there’s extrinsic evidence bearing upon the
interpretation of the contract that you get a jury at all.” The trial
court, therefore, provided the jury with CACI No. 314 (to which
the Landlords did not object), stating in part: “Shadkor and
Volwood . . . dispute the meaning of the words contained in the
Second Amendment to the . . . Lease. [¶] In deciding what the
words of a contract mean, you must decide what the parties
intended at the time the contract was created. You may consider
the usual and ordinary meaning of the language used in the
contract as well as the circumstances surrounding the making of
the contract.” Because the trial court found the terms of the
contract were ambiguous, it correctly delegated to the jury the
issue of what the parties intended the language of the Lease and
the Second Amendment to mean, based on the parties’ conflicting
extrinsic evidence. (See e.g. City of Hope National Medical Center
v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [“when, as here,
ascertaining the intent of the parties at the time the contract was
executed depends on the credibility of extrinsic evidence, that
credibility determination and the interpretation of the contract
are questions of fact that may properly be resolved by the jury
[citation.]”].)
       We note the Landlords belatedly argue the trial court erred
by concluding the terms of the Lease were ambiguous. The
Landlords forfeited this argument, however, by failing to raise it
until their appellate reply brief. (California Building Industry
Assn. v. State Water Resources Control Bd. (2018) 4 Cal.5th 1032,
1050 [where appellant fails to raise an argument “until its
appellate reply brief,” it “has forfeited the argument. [citation.]”]
In any event, we reject the contention on the merits. The terms of
the Lease and Second Amendment are “‘reasonably susceptible’”

                                 12
to the interpretation urged by Shadkor (i.e. the Second
Amendment extended the “initial term,” and thus, Shadkor’s
September 16, 2016 notice of its option to extend was timely
because Shadkor sent it more than four months before the end of
the extended initial term). (See Winet v. Price (1992) 4
Cal.App.4th 1159, 1165 [“If in light of the extrinsic evidence the
court decides the language is ‘reasonably susceptible’ to the
interpretation urged, the extrinsic evidence is then admitted to
aid in . . . interpreting the contract. [citation.]”].)
      Accordingly, we conclude the interpretation of the Lease
and the Second Amendment, based on the parties’ conflicting
extrinsic evidence, was properly resolved by the jury.

B.    The Trial Court Did Not Abuse Its Discretion by
      Denying the Landlords’ Motion to Bifurcate the Trial

      In a variation of the arguments above, the Landlords
contend the trial court abused its discretion by denying their
motion to bifurcate the trial “and permitting an issue of contract
interpretation to be determined by the jury after the [c]ourt had
previously determined that the [o]ption had not been properly
exercised.” We reject this argument for the same reasons
discussed above in section A.2 of this opinion. Because the
Landlords proffer no additional arguments in support of this
contention, we discern no abuse of discretion.

C.    Shadkor Is Awarded Its Attorneys’ Fees on Appeal

       Article 30 of the Lease states: “In the event of any action or
proceeding brought by either party against the other under this
Lease, the prevailing party shall be entitled to recover for its
costs, and the fees and expenses of its attorneys in such action or
proceeding such amount as the Court may adjudge reasonable.”
Shadkor requests attorneys’ fees reasonably incurred on appeal.
We agree it is entitled to those fees, in an amount to be
determined by the trial court. (See Serrano v. Unruh (1982) 32

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Cal.3d 621, 637 [“it is established that fees, if recoverable at all –
pursuant either to statute or parties’ agreement – are available
for services at trial and on appeal. [citations.]”].)

                          DISPOSITION

      The judgment is affirmed. Shadkor is awarded its costs and
attorneys’ fees on appeal. The matter is remanded to the trial
court for its determination of the amount of an award of costs and
attorneys’ fees on appeal to Shadkor, and entry of an order
awarding those costs and fees.

  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CURREY, J.

We concur:

MANELLA, P.J.

WILLHITE, J.

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