Court Opinion

ID: 1038806
Source: CourtListenerOpinion
Date Created: 2013-08-28 22:09:47.373584+00
Date Added: 2024-06-11T15:13:52.980414
License: Public Domain

Filed 8/26/13 Regency Centers v. Ivener CA2/6
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.111.5.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                   DIVISION SIX

REGENCY CENTERS, L.P.,                                                    2d Civil No. B247703
                                                                 (Super. Ct. No. 56-2012-421791-CU-BC-
     Plaintiff and Appellant,                                                      VTA)
                                                                             (Ventura County)
v.

HELEN IVENER et al.,

     Defendants and Respondents.

                   Regency Centers, L.P. appeals from a judgment of dismissal entered in
favor of defendants Helen Ivener and Robert Ivener after the trial court sustained, without
leave to amend, a demurrer to appellant's complaint for breach of a shopping center lease.
The trial court sustained the demurrer on the ground that the action was time barred.
(Code Civ. Proc., § 337.2.) We affirm.
                                          Facts & Procedural History
                   This is an action to collect rent from Helen Ivener and Robert Ivener after a
successor tenant, Soung Black Na, defaulted on a shopping center lease and vacated the
premises. The lease dates back to 1991 and was modified and assigned as follows:
                   In 1991, Denis Dutton and Judith Dutton dba TCBY (The Country's Best
Yogurt) entered into a written contract to lease the property from January 1, 1992 to
January 1, 1997. Dutton exercised an option to extend the lease another five years (from
January 1, 1997 to January 1, 2002) and assigned the lease to Ivener in 1999.
              On March 14, 2001, appellant and Ivener modified the lease ("Third
Modification To Lease Agreement"), extending the lease term from January 1, 2002 to
December 31, 2007. Paragraph 2 of the modified lease stated, "[t]here are no options to
extend remaining."
              Paragraph 4 of the modified lease states: "Tenant shall have the option(s)
to extend the Lease Term for one (1) additional period of five (5) years" providing
"Tenant has not assigned or sublet the Premises . . . ." In order to exercise the option,
Ivener had to give appellant written notice within 180 days of the lease expiration date
and appellant had to give written notice of the proposed "Minimum Guaranteed Rental
paid by Tenant during the calendar month immediately preceding the commencement of
the Option Period." Paragraph 4 provides that the option is not exercised until Ivener
accepts in writing the proposed Minimum Guaranteed Rental rate, at which time "the
parties shall immediately execute an amendment to this Lease setting forth the new
Minimum Guaranteed Rental rate for the Option Period."
              Ivener did not exercise the option but did assign the lease to a new tenant.
On February 14, 2002, appellant consented to Ivener's assignment of the modified lease
to Hyunsuk Cha. On November 25, 2004, Cha assigned the modified lease to Soung
Back Na.
              After Na filed a bankruptcy petition, appellant sued Ivener and Cha for
                             1
$300,000 rent and damages. The complaint alleged that Na exercised an option to
extend the lease in May 2006, and defaulted on the rent and vacated the premises on
some unspecified date.

1
 We grant Ivener's request for judicial notice that appellant filed a prior action against
Cha and Ivener (named as Doe defendants) which was dismissed without prejudice on or
about March 5, 2012. (Regency Centers, L.P. v. Hyunsuk Cha et al., Ventura Super. Ct.,
Case No. 56-2011-00397521-CU-BC-SIM.) (Evid,. Code § 452, subd. (d); 459, subd.
(a).)

                                              2
              Ivener filed a demurrer on the ground that the action was time barred.
(Code Civ. Proc., § 337.2.) The trial court sustained the demurrer without leave to amend
and denied appellant's motion for reconsideration/leave to amend the complaint.
                       Non-Assignable Option to Extend Lease Term
              On review, we determine whether the modified lease is reasonably
susceptible to the meaning ascribed in the complaint, i.e., that Na's exercise of the option
to extend the lease term was binding on Ivener. (See e.g., Klein v. Chevron U.S.A., Inc.
(2012) 202 Cal.App.4th 1342, 1384-1385.) Appellant argues that a tenant (Ivener)
remains liable to the landlord if the tenant assigns the lease to a third party. (See
Meredith v. Dardarian (1978) 83 Cal.App.3d 248, 252.) The tenant's contractual
obligation to pay rent continues for the duration of the lease term even where the assignee
assumes the lease obligations and the landlord consents to the assignment. (Ibid.)
              A landlord may, however, restrict the assignment of all or any part of the
tenant's interest in the lease. (Civ. Code, §§ 1995.020, 1995.240; 7 Starr & Miller, Cal.
Real Estate (3d ed 2011) § 19:70, pp. 197-200; Carma Developers (Cal.), Inc. v.
Marathon Development California, Inc. (1992) 2 Cal.4th 342, 368.) That is the case
here. Several restrictions are set forth in the modified lease which is attached to the
complaint. " 'For purposes of a demurrer, we accept as true both facts alleged in the text
of the complaint and facts appearing in exhibits attached to it. If the facts appearing in
the attached exhibit contradict those expressly pleaded, those in the exhibit are given
precedence. [Citation.]' [Citation.]" (Duncan v. McCaffrey Group, Inc. (2011) 200
Cal.App.4th 346, 360.)
              Paragraph 4 of the modified lease states that the option to extend the lease
term may not be exercised if Ivener assigns the lease. Although the complaint alleges
that Na exercised the option "in or about May 2006," paragraph 4 of the modified lease
prohibits Ivener or anyone else from exercising the option after the lease is assigned.
Ivener's assignee (Cha) and those taking under the assignment (Na) acquired no greater
right than what was assigned. (See Childs Real Estate Co. v. Shelburne Realty Co.
(1943) 23 Cal.2d 263, 267 [assignee "stands in the shoes" of the assignor and acquires no

                                              3
rights greater than those possessed by the assignor].) Thus, the trial court reasonably
concluded that Na's exercise of the option did not render Ivener liable for rent accruing
after the lease expired on December 31, 2007. (See Civ. Code, §§ 1995.020, subd. (e);
1995.230; Spaulding v. Yovino-Young (1947) 30 Cal.2d 138, 142-143; 12 Witkin,
Summary of Cal. Law (10th ed. 2005) Real Property, § 555, pp. 637-638.)
                              Four-Year Statute of Limitations
              Section 337.2 provides that an action for breach of a real property lease
must be brought no later "than four years after the breach of the lease and abandonment
of the property, or more than four years after the termination of the right of the lessee to
possession of the property, whichever is the earlier time." Although the complaint does
not state when Na breached the lease, the latest possible date was December 31, 2007, the
day the lease expired. Appellant's compliant was filed August 2, 2012, well beyond the
four-year limitations period. The trial court correctly found that the action was time
barred.
                                 Motion for Reconsideration
              Appellant argues that the trial court abused its discretion in not granting the
motion for reconsideration based on "new or different facts, circumstances, or law . . . ."
(Code Civ. Proc., § 1008, subd. (a).) The minute order on the demurrer states that the
                                                                                    2
option to extend the lease term is a "personal right" and may not be transferred.
Appellant asserts that it was not provided the opportunity to brief or address the ratio
decidendi for the trial court's ruling. We reject the argument because the trial court's
characterization of the option as a "personal right" was a shorthand way of saying that the
right to exercise the option is non-assignable. (Civ. Code, §§ 1995.020, subd. (e);

2
  The minute order states that the modified lease "include[s] a provision for an option to
extend the lease for an additional five year period, provided th[e] tenant has not assigned
or sublet the lease. Such a provision on its face makes the option 'personal', and prevents
the transfer of the option to the assignee as part of the lease. Plaintiff has alleged that the
Iveners . . . assigned the lease to Defendant Cha. Thus, it appears to the Court that the
lease term agreed to by the Iveners expired December 31, 2007, and with that expiration,
they had no further liability under the lease."

                                               4
1995.230.) The privity of contract, assignment, and Meredith v. Dardarian, supra, 83
Cal.App.3d 248 issues were briefed by the parties before the hearing on the demurrer.
Appellant's opposition papers stated that "even though the option was exercised by . . .
Ivenor's remote assignee, . . . is was part of the lease they assigned, [and] they remain
liable for a breach during the option term." The trial court, in sustaining the demurrer,
reasonably concluded that the allegations in the complaint do not trump the option
restrictions set forth in the modified lease. (Civ. Code, §§ 1643-1645.) Appellant's
motion for reconsideration was groundless and properly denied.
                                          Leave to Amend
                   Appellant asserts that the complaint can be amended to allege that the
option restriction was waived. Citing Jeffrey Kavin, Inc. v. Frye (2012) 204 Cal.App.4th
35, appellant argues that an option to extend the lease term may be exercised by the
lessor's conduct. In Jeffrey Kavin, Inc., four tenants leased a store pursuant to a three-
year sublease that had an option to extend the lease term. (Id., at p. 38.) After the lease
expired, one of the tenants held over and gave notice that she was exercising the option to
extend the lease term. (Id., at p. 39.) The Court of Appeal concluded that payment of
rent by the holdover tenant did not render the three other tenants liable based on the
theory that the option was exercised by the holdover tenant's conduct. (Id., at pp. 49-50.)
"[T]he lease provided that lessees must provide written notice of the exercise of the
option to extend the lease, and as stated ante, lessor[s] did not waive that requirement."
(Id., at p. 50.)
                   Here the modified lease provides that the option to extend the lease term
may not be exercised if Ivener assigns the lease. Paragraph 4 provides that, in order to
exercise the option, Ivener must accept in writing the proposed Minimum Guaranteed
Rental rate set by appellant. The option restriction benefits appellant because the value
of the lease changes if the lease is assigned and the lease term is extended. The original
and modified lease grant appellant the power to veto a lease assignment or a subtenant's

                                                 5
                                                  3
exercise of the option to extend the lease term. " 'Where an option to extend or renew a
lease is not automatically binding on the lessor at the election of the lessee, the lessee has
been held not liable on his covenant to pay rent after renewal by his assignee. . . .'
[Citation.]" (Meredith v. Dardarian, supra, 83 Cal.App.3d at p. 255.)
              The same principle applies here. Appellant has failed to show that the
complaint can be amended to allege that Ivener waived the option restrictions or that the
action is not barred by the four year statute of limitations. (Blank v. Kirwin (1985) 39
Cal.3d 311, 318.)
              The judgment (order sustaining demurrer without leave to amend) is
affirmed. Ivener is awarded costs on appeal and reasonable attorney fees in an amount to
be determined by the trial court.
              NOT TO BE PUBLISHED.

                                                          YEGAN, J.
We concur:

              GILBERT, P.J.

              PERREN, J.

3
  Paragraph 19 of the original lease to the Duttons, which was assigned to Ivener, states
that appellant may refuse to consent to an assignment if, "in the Landlord's reasonable
business judgment . . . the financial worth of the proposed new tenant is less than the
financial worth, as of the date hereof, of Tenant or Tenant and Tenant's Guarantor, as the
case may be."

                                              6
                    Fred Bysshe, Judge

             Superior Court County of Ventura

           ______________________________

Ernie Zachary Park; Bewley, Lassleben & Miller, for Appellant.

Adolfo B. Garber, for Respondents.

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