Court Opinion

ID: 9892969
Source: CourtListenerOpinion
Date Created: 2023-10-25 17:03:53.050469+00
Date Added: 2024-06-11T08:50:53.143309
License: Public Domain

Filed 10/25/23 Fitness International v. Cole LA Riverside CA CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

 FITNESS INTERNATIONAL, LLC,

      Plaintiff and Appellant,                                         G062740

           v.                                                          (Super. Ct. No. CVRI2101805)

 COLE LA RIVERSIDE CA, LP,                                             OPINION

      Defendant and Respondent.

                   Appeal from a judgment of the Superior Court of Riverside County, Carol
A. Greene, Judge. Affirmed. Requests for judicial notice. Granted.
                   Dorsey & Whitney, Bryan M. McGarry, Lynnda A. McGlinn, Jill A.
Gutierrez and Jessica M. Leano; Ellenoff Grossman & Schole and Bryan M. McGarry for
Plaintiff and Appellant.
                   Buchalter, Artin Betpera, Robert M. Dato, Robert S. McWhorter and Jarrett
Osborne-Revis for Defendant and Respondent.
              This case involves a commercial lease dispute between appellant Fitness
International, LLC (Fitness) and respondent Cole LA Riverside CA, LP (Cole) arising out
of the COVID-19 pandemic. Fitness appeals summary judgment entered in favor of Cole
on Fitness’s complaint which sought, inter alia, to recoup rent payments made under
protest for periods during which government orders prevented Fitness from operating its
indoor health and fitness facility. According to Fitness, the trial court overlooked
evidence which created a triable issue of fact as to a variety of its contentions, including
breach of contract, impossibility, impracticability and frustration of purpose. On the
record before us, we conclude otherwise and affirm the judgment.
                                          FACTS
              Fitness is an operator of indoor health club and fitness facilities throughout
the United States. In 2008, Fitness and Cole’s predecessor in interest entered into a 15-
year real property lease agreement (the lease) concerning an approximately 50,000 square
foot commercial space (the premises). Fitness agreed to pay monthly rent.
              Pursuant to the lease terms, Fitness was required to open and operate a
health club and fitness facility for one day. Thereafter, it could continue such operations,
pivot to a different use not prohibited by the lease or in conflict with the landlord’s
relevant exclusive use agreements, or cease operations entirely.
              After the completion of various improvements to the premises, Fitness
opened its health club and fitness facility in 2010. It continued the same use until events
leading to the parties’ present dispute took place.
              In March 2020, California Governor Gavin Newsom proclaimed a State of
Emergency in California due to the threat of COVID-19. In the following weeks,
Governor Newsom issued multiple related executive orders. One limited residential and
commercial evictions for non-payment of rent, while expressly not relieving a tenant of
the obligation to pay rent or restricting a landlord’s ability to recover rent due. Another
directed all California residents to stay home or at their place of residence, with certain

                                              2
exceptions, and directed all non-essential businesses to immediately stop operating. Non-
essential businesses included gyms and fitness centers.
              With operation of its health club and fitness facility temporarily illegal,
Fitness ceased operations at the premises. Over the course of the following year, as the
global pandemic unfolded, Fitness was periodically allowed to reopen its doors to the
public for brief periods of time and at limited capacity. It was eventually able to return to
normal operations.
               The parties communicated concerning the pandemic’s impact on Fitness’s
rent payments. Fitness believed certain contract provisions and legal doctrines excused
rent during the mandatory closure periods. Cole disagreed. Ultimately, Fitness paid
under protest the full amount of rent due, reserving all rights and remedies with respect
thereto.
              Fitness sued Cole to recover rent paid for all periods during which Fitness
was legally prevented from operating its health club and fitness facility. Among other
things, the first amended complaint alleged breach of contract, frustration of purpose,
impossibility, and impracticability. It also relied on Civil Code section 1511,
subdivisions (1) and (2)1, as grounds for the requested return of monies paid.
              Cole moved for summary judgment on the complaint. It argued each of
Fitness’s causes of action failed as a matter of law. Fitness opposed the motion, asserting
alternative interpretations of the relevant lease language and contending there were
triable issues of fact as to whether it was excused from paying rent during the closure
periods under section 1511 and the alleged equitable doctrines.
              The trial court agreed with Cole and entered judgment in its favor. Fitness
timely appealed following entry of judgment.

1             All further statutory references are to the Civil Code, unless otherwise
indicated.

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                                       DISCUSSION
              Fitness contends the trial court erred in concluding there is no triable issue
of material fact as to any of its causes of action. It claims there are factual disputes to
resolve concerning whether it was excused from paying rent during the COVID-19
closure periods based on lease provisions, equitable doctrines and codified common law
doctrines. We disagree. On the record before us, each of Fitness’s claims fails as a
matter of law.

I. Summary Judgment Principles and Standard of Review

              “The purpose of the law of summary judgment is to provide courts with a
mechanism to cut through the parties’ pleadings in order to determine whether, despite
their allegations, trial is in fact necessary to resolve their dispute. [Citation.]” (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) A summary judgment motion must
be granted “‘if all the papers submitted show’ that ‘there is no triable issue as to any
material fact’ . . . and that the ‘moving party is entitled to a judgment as a matter of
law.’” (Ibid., citations omitted.)
              “[T]he trial court’s stated reasons for granting summary judgment ‘are not
binding on us because we review its ruling, not its rationale.’” (Johnson v. Open Door
Community Health Centers (2017) 15 Cal.App.5th 153, 157.) “‘We review the entire
record, ‘considering all the evidence set forth in the moving and opposition papers except
that to which objections have been made and sustained.’ [Citation.] Evidence presented
in opposition to summary judgment is liberally construed, with any doubts about the
evidence resolved in favor of the party opposing the motion. [Citation.]” (Regents of
University of California v. Superior Court (2018) 4 Cal.5th 607, 618.) Credibility
determinations, the weighing of evidence, and resolving factual disputes are not proper
matters. (Calemine v. Samuelson (2009) 171 Cal.App.4th 153, 161; Kids’ Universe v.
In2Labs (2002) 95 Cal.App.4th 870, 880; AARTS Productions, Inc. v. Crocker National

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Bank (1986) 179 Cal.App.3d 1061, 1065.) We affirm the summary judgment if correct
on any of the grounds asserted in the moving party’s motion. (American Meat Institute v.
Leeman (2009) 180 Cal.App.4th 728, 747-748.)

II. Breach of Contract

              Fitness contends summary judgment on its breach of contract claim was
error because the trial court misinterpreted the lease’s force majeure provision, failed to
account for extrinsic evidence offered by Fitness which created a triable issue of material
fact concerning the force majeure provision, and incorrectly concluded Cole did not
breach a purported warranty made in the lease. We disagree with each of these claims.
              We begin with force majeure. Section 22.3 of the lease provides: “If either
party is delayed or hindered in or prevented from the performance of any act required
hereunder because of strikes, lockouts, inability to procure labor or materials, retraction,
after receipt of documentary approval, by the governing authorities of the Building
Permit or any of the Required Project Entitlements, failure of power, riots, terrorism,
insurrection, war, fire, inclement weather or other casualty (except casualty attributable to
the party claiming the same shall not constitute a Force Majeure Event) or other reason of
a similar or dissimilar nature beyond the reasonable control of the party delayed, financial
inability excepted (each, a ‘Force Majeure Event’), subject to any limitations expressly
set forth elsewhere in this Lease, performance of such act shall be excused for the period
of delay caused by the Force Majeure Event and the period for the performance of such
act shall be extended for an equivalent period (including delays caused by damage and
destruction caused by such Force Majeure Event). Delays or failures to perform resulting
from lack of funds or which can be cured by the payment of money shall not be Force
Majeure Events.”
              Fitness asserts the force majeure provision should be read to excuse both
parties’ performance of lease obligations during the COVID-19 closure time periods. So

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its argument goes, the entire purpose of the lease was “for Fitness to have the right to
operate the [p]remises as an indoor gym.” The COVID-19 pandemic, along with the
resulting closures and restrictions, constituted a force majeure event which temporarily
hindered or prevented the fulfillment of that fundamental purpose. Accordingly, the
obligations of both parties were excused during the closures.
              While there is little doubt the COVID-19 pandemic significantly impacted
the business and personal lives of those in the United States and around the world, we are
obligated to focus on the negotiated language of the parties memorialized in the lease.
(See Healy Tibbitts Constr. Co. v. Employers’ Surplus Lines Ins. Co. (1977) 72
Cal.App.3d 741, 748 [paramount rule governing contract interpretation is to give effect to
mutual intent of parties, which is derived in first instance from language of contract].)
The plain terms of the lease reveal the weaknesses of Fitness’s argument.
              The force majeure provision temporarily excuses performance of a required
act which is hindered, delayed or prevented by a qualifying event. Here, Fitness is trying
to claim its rent obligation was excused. However, it does not argue the COVID-19
pandemic and the resulting closures impacted its ability to fulfill that obligation. The
evidence demonstrates the opposite. Fitness was able to pay, and in fact paid, all rent due
for the disputed time periods. (See Fitness International, LLC v. KB Salt Lake III, LLC
(Sept. 26, 2023, B320562) __ Cal.App.5th __ [p. 24](KB Salt Lake) [rejecting application
of similar force majeure provision because tenant had funds to pay rent despite COVID-
19 closure orders]; West Pueblo Partners, LLC v. Stone Brewing Co., LLC (2023) 90
Cal.App.5th 1179, 1188 [rejecting application of similar force majeure provision because
no evidence tenant’s ability to pay rent was delayed, interrupted or prevented by COVID-
19].)
              Contrary to Fitness’s assertion, nothing in the lease requires Fitness to
operate an indoor gym throughout the lease’s term. Although it required Fitness to
initially open for business as a health club and fitness facility, that requirement only

                                              6
applied for one day. Thereafter, Fitness could continue with the same use, cease its
operations, or engage in any other use permitted by the lease.
              Even assuming, arguendo, Fitness was required to operate an indoor gym
on the premises and the COVID-19 closures impacted its ability to do so, it does not
follow that the force majeure provision would excuse payment of rent. Based on the
provision’s plain language, the act delayed or prevented by the qualifying event is the act
temporarily excused. Thus, under this hypothetical, the force majeure provision would
have only excused Fitness from operating its gym.
              Fitness cites to what it calls “extrinsic evidence,” claiming it demonstrates
the force majeure provision is reasonably susceptible to its urged interpretation. There
are three types of offered evidence: (1) a lease agreement for a different premises to
which Fitness is party; (2) court decisions from other states interpreting force majeure
provisions in other contracts2; and (3) Fitness’s communications to Cole and payment of
rent in protest following the closure orders. We are not persuaded.
              “Extrinsic evidence is admissible to prove a meaning to which the contract
is reasonably susceptible. . . . [¶] The threshold issue of whether to admit the extrinsic
evidence—that is, whether the contract is reasonably susceptible to the interpretation
urged—is a question of law subject to de novo review.” (Founding Members of the
Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109
Cal.App.4th 944, 955 (Founding Members).)
              Our charge in interpreting the lease is to determine the objective mutual
intent of the parties at the time of contracting. (§ 1636; Bank of the West v. Superior

2             Fitness requests we take judicial notice of various orders and judgments
issued by courts in other states, as well as a document filed by Fitness in one of the cases.
We grant the request, with the understanding we take judicial notice of the existence of
the documents, not the truth of the matters contained therein. (Evid. Code, §§ 452, subd.
(d)(2), 459; O’Neill v. Novartis Consumer Health, Inc. (2007) 147 Cal.App.4th 1388,
1405.)

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Court (1992) 2 Cal.4th 1254, 1264; Founding Members, supra, 109 Cal.App.4th at pp.
955-956.) The language of a force majeure provision in a different lease to which Cole
and its predecessor-in-interest are not parties sheds no light on the parties’ intentions in
this case. The same is true for Fitness’s actions after the closures occurred. Those
actions are not the typical objective “course of conduct” actions which possibly aid in
interpreting a contract; rather, they are subjective actions taken in the face of an
inevitable and pending controversy. (See Crawford v. Continental Cas. Co. (1968) 261
Cal.App.2d 98, 103 [“The parties are less liable to have been mistaken as to the intention
of their contract during the period while harmonious and practical construction reflected
that intention than they are when subsequent differences have impelled them to resort to
law and one of them seeks a construction at variance with the practical construction they
once placed on it” (internal quotations omitted)].)
              Regarding decisions from courts of other states, Fitness provides no support
for its claim that those decisions can constitute extrinsic evidence capable of revealing an
ambiguity in the lease language. (Cf. KB Salt Lake, supra, __ Cal.App.5th __ [p. 26, fn.
8] [rejecting use of other court holdings interpreting different contracts as extrinsic
evidence to resolve claimed ambiguity in language of relevant contract].) Instead, as
both Cole and Fitness elsewhere recognize, the decisions are only relevant to the extent
we find them persuasive. (Lebrilla v. Farmers Group, Inc. (2004) 119 Cal.App.4th 1070,
1077 [“Decisions of the courts of other states are only regarded as
‘persuasive . . . depending on the point involved’”].) And we are not persuaded. The
focus of the plain language of the force majeure provision is the required act that is
delayed or prevented by the qualifying event. The undisputed evidence demonstrated
Fitness’s rent obligation simply was not delayed or prevented by the COVID-19
pandemic or the related closures.
              Fitness next argues there is a triable issue of material fact concerning
whether Cole was required to, but failed to, indemnify Fitness pursuant to a purported

                                              8
warranty in the lease. It relies on two lease provisions. Section 1.9 of the lease provides,
in relevant part: “The ‘Initial Uses’ of the Premises shall be for the operation of a health
and fitness facility . . . . Tenant shall have the right throughout the Term to operate the
Premises, or any portion thereof, for uses permitted under this Lease.” Section 2.2 of the
lease provides, in relevant part: “Landlord shall indemnify, defend and hold harmless
Tenant from and against any and all losses, demands, claims, liabilities. damages, costs
and expenses (including, without limitation, reasonable attorneys’ fees and expenses)
arising as a result of any inaccuracy or breach of any representation, warranty or
covenant of Landlord set forth in this Lease.” According to Fitness, Cole warranted
Fitness would have the right to operate the premises as an indoor gym, that became
inaccurate when COVID-19 restrictions forced Fitness to cease its gym operations, and
the inaccuracy triggered the indemnification provision.
              The lease evidences the identified statements in section 1.9 are neither
warranties nor covenants nor representations, as those terms were used by the parties.
Throughout the lease there are many locations where “Landlord warrants” or “Landlord
represents” or “Landlord covenants” something, including elsewhere in section 1.9. No
such language is used in the provisions identified by Fitness. In these circumstances, the
absence indicates the parties did not intend the indemnification obligation to run to the
specified portions of section 1.9, and Fitness offers no evidence of an intended different
meaning.
              For the first time in its reply brief, Fitness appears to argue the right to
operate conferred in section 1.9 is a bargained for right which, in breach of the lease
irrespective of the indemnification provision, it did not receive during the closure periods.
“‘Fairness militates against allowing an appellant to raise an issue for the first time in a
reply brief . . . .’” (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th
142, 158.)

                                              9
              Even if we were to consider the argument, it is without merit. The lease
specified Fitness “shall have the right throughout the Term to operate the
Premises . . . for uses permitted under this Lease.” Elsewhere in the lease, Fitness
provided a covenant to Cole it would “not use . . . the Premises . . . for any illegal
purposes[.]” The closure orders temporarily made operation of Fitness’s gym unlawful,
meaning such use was not permitted by the lease during the closure periods.
Accordingly, Fitness was not deprived of its right to operate the premises for permitted
uses during those times.

III. Frustration of Purpose, Impossibility, and Impracticability

              Fitness contends there are triable issues of material fact regarding whether
its obligation to pay rent during the closure periods was excused by the doctrines of
frustration of purpose, impossibility and impracticability. We disagree. Under the facts
presented, resort to these equitable doctrines is of no avail, as a matter of law.
              Though historically separate doctrines, impossibility, impracticability and
commercial frustration have similarities and overlap. “‘“A thing is impossible in legal
contemplation when it is not practicable; and a thing is impracticable when it can only be
done at an excessive and unreasonable cost.” [Citation.]’ [Citation.] This does not mean
that a party can avoid performance simply because it is more costly than anticipated or
results in a loss. [Citation.] Impracticability does not require literal impossibility but
applies when performance would require excessive and unreasonable expense.
[Citation.] Similarly, where performance remains possible, but the reason the parties
entered the agreement has been frustrated by a supervening circumstance that was not
anticipated, such that the value of performance by the party standing on the contract is
substantially destroyed, the doctrine of commercial frustration applies to excuse
performance.” (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175
Cal.App.4th 1306, 1336.)

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              When the impossibility or impracticability are temporary, as opposed to
permanent, the impact on performance is likewise temporary. Specifically, the duty to
perform is only suspended while the temporary circumstances exist; it is not discharged
or excused. (Maudlin v. Pacific Decision Sciences Corp. (2006) 137 Cal.App.4th 1001,
1017 (Maudlin).)
              Here, there is no evidence of impossibility or impracticability as to
Fitness’s obligation to pay rent. Fitness has never argued the supervening COVID-19
pandemic closure orders made it such that payment of rent could only be done at an
excessive and unreasonable cost. Tellingly, Fitness paid all the required rent. Thus,
impossibility and impracticability do not apply. (See SVAP III Poway Crossings, LLC v.
Fitness Internat., LLC (2023) 87 Cal.App.5th 882, 893-894 (SVAP) [rejecting
impossibility and impracticability arguments because no evidence pandemic and related
closures made it impossible to pay rent].)
              As for commercial frustration, recent cases call into question whether
temporary frustration is recognized by California law. (KB Salt Lake, supra, __
Cal.App.5th __ [p. 34]; SVAP, supra, 87 Cal.App.5th at p. 896.) We need not decide the
issue because even assuming it is, Fitness has not met its burden of demonstrating a
triable issue of fact under the circumstances.
              Frustration, whether temporary or permanent, requires a showing that the
value of the lease to the party claiming the frustration is totally destroyed or nearly totally
destroyed. (Lloyd v. Murphy (1944) 25 Cal.2d 48, 53 (Lloyd); SVAP, supra, 87
Cal.App.5th at p. 896.) In exchange for payment of rent, a tenant in a leasehold generally
receives the benefit of “the use, possession and enjoyment of the demised premises[,]”
along with any other promises made or rights granted in the specific lease at issue.
(Santa Monica Rent Control Bd. v. Bluvshtein (1991) 230 Cal.App.3d 308, 317; see
Bowman v. Wyatt (2010) 186 Cal.App.4th 286, 322 [lease is the granting of “possession
and use of (land, buildings, rooms, movable property, etc.) to another in return for rent or

                                              11
other consideration”].) Thus, in the lease context, a tenant claiming frustration must
demonstrate, inter alia, the circumstances have prevented the tenant from engaging in all
allowable uses of the premises. (Lloyd, supra, at pp. 53-54; Grace v. Croninger (1937)
12 Cal.App.2d 603, 606-607; Davidson v. Goldstein (1943) 58 Cal.App.2d Supp. 909,
911-912 (Davidson).)
              Here, the lease did not limit Fitness to using the premises as an indoor
health and fitness club. Without seeking approval from Cole, Fitness could engage in a
variety of ancillary uses including weight loss and nutritional advising, food and
beverage service (e.g., juice bar, healthy or natural foods), and the sale of apparel,
exercise or health related electronic media, vitamin and nutritional supplements, and
other fitness related items. And subject to Cole’s option to terminate the lease, Fitness
could pivot to a different primary use not excluded by the lease terms. There is no
evidence COVID-19 or the closures precluded Fitness from engaging in these alternative
uses.
              Fitness argues there is a triable issue of fact as to whether Fitness
reasonably could have engaged in a different use at the premises. It cites evidence it has
only ever operated indoor health and fitness facilities during its 37-year existence, its
employees are hired and trained for such an operation, its expertise lies in the indoor
fitness industry, it has never changed the primary use of a leased premises, it would have
lost the benefit of the $6 million it invested in improvements to the premises for indoor
gym purposes, and it would have needed to invest additional time and money to make the
premises suitable for an alternative use. It also notes, pursuant to its membership
agreement with customers, it could not have charged for fitness classes offered remotely
via the internet or some other electronic means.
              These facts, even if true, would not support a finding of commercial
frustration. “[L]aws or other governmental acts that make performance unprofitable or
more difficult or expensive do not excuse the duty to perform a contractual obligation.”

                                             12
(Lloyd, supra, 25 Cal.2d at p. 55; see, e.g., Davidson, supra, 58 Cal.App.2d Supp. at p.
911 [rejecting frustration argument where government regulations did not impact portion
of tenant’s business even though continuing with business would probably be
unprofitable].)
              Fitness also received the benefit of possession of the premises during the
closure periods. Such possession was valuable in at least two ways. One, Fitness was
able to keep all its equipment and other personal property on-site, thereby avoiding the
cost of moving and storing such property elsewhere. Two, Fitness was able to reopen its
doors immediately when government orders were modified in a way that made its indoor
gym operation allowable. “[F]rustration is no defense if . . . counterperformance remains
valuable.” (Lloyd, supra, 25 Cal.2d at p. 54.)
              Finally, even assuming there was evidence of a total destruction or near
total destruction of the value of the lease, a temporary frustration would at most suspend,
but not discharge, a performance obligation. (Maudlin, supra, 137 Cal.App.4th at p.
1017, quoting Rest.2d, Contracts, § 269 [temporary impracticability or frustration].)
Thus, once the circumstances giving rise to the temporary frustration ceased to exist,
Fitness would have been obligated to pay the rent owed for the closure periods.
(Maudlin, supra, at pp. 1017-1018.)

IV. Civil Code Section 1511

              Fitness’s final argument is its obligation to pay rent during the closure
periods was excused by sections 1511(1) and 1511(2). These sections, which codify
certain common law principles, do not excuse performance under the circumstances for
reasons similar to those discussed above.
              Section 1511(1) excuses a party’s contractual obligation to perform if
“performance . . . is prevented or delayed . . . by the operation of law.” Section 1511(2)
excuses a party’s contractual obligation to perform if performance “is prevented or

                                             13
delayed by an irresistible, superhuman cause.” Here, however, there is no evidence
COVID-19 (the claimed superhuman cause) or the related government orders (the law)
prevented or delayed Fitness’s payment of rent. The trial court correctly concluded
Fitness’s allegations relying on these statutory provisions failed as a matter of law. (See
KB Salt Lake, supra, __ Cal.App.5th __ [pp. 40-41] [reaching same conclusion based on
same facts]; SVAP, supra, 87 Cal.App.5th at p. 894 [same].)
                                     DISPOSITION
              The judgement is affirmed. Cole is entitled to its costs on appeal.

                                                  DELANEY, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

MOTOIKE, J.

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