Court Opinion

ID: 9941800
Source: CourtListenerOpinion
Date Created: 2024-02-16 22:02:03.325796+00
Date Added: 2024-06-11T13:47:03.062033
License: Public Domain

Filed 2/16/24 Fitness International v. Andrews Rancho Del Sur CA2/3
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION THREE

FITNESS INTERNATIONAL, LLC,                                        B325595

         Plaintiff and Appellant,                                  Los Angeles County
                                                                   Super. Ct. No.
         v.                                                        20STCV43366

ANDREWS RANCHO DEL SUR,

         Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of
Los Angeles County, Timothy Patrick Dillon, Judge. Affirmed.

      Klehr Harrison Harvey Branzburg, A. Grant Phelan, Mary
Ellen O’Laughlin; Freeman, Freeman & Smiley, Saul Ewing
and Dawn B. Eyerly for Plaintiff and Appellant.

     Ferruzzo & Ferruzzo, Gregory J. Ferruzzo and Sean E.
Morrissey for Defendant and Respondent.
                   _________________________
       Plaintiff Fitness International, LLC (Fitness) appeals
a summary judgment in favor of defendant Andrews Rancho
Del Sur (Andrews) on Fitness’s complaint to recover rent
payments made under protest during the months when state
and local closure orders responding to the COVID-19 pandemic
prevented Fitness from operating its indoor health club. Fitness
contends the orders excused its obligation to pay rent under both
the terms of the parties’ lease and the frustration of purpose
doctrine. We conclude otherwise and affirm.
                          BACKGROUND
       Fitness operates indoor health clubs nationwide in
properties leased from commercial landlords, such as Andrews.
Andrews owns a shopping center located in Downey.
       In December 1999, Fitness entered into an agreement with
Andrews to lease an approximately 41,000 square foot building
in the shopping center. The lease required Fitness to construct
the building and outfit it for use as a health club. In 2005, the
parties executed an amendment to the lease, authorizing Fitness
to add another 11,800 square feet of space to the building. The
lease provides for a 15-and-a-half-year term plus three five-year
extension options.
       In March 2001, the city of Downey issued Fitness a
certificate of occupancy permitting it to use the premises as
a health club and fitness facility. Since then, Fitness has used
the leased premises solely for this purpose.
       In March 2020, the Governor proclaimed a state of
emergency in California and issued a set of related executive
orders to address the public health threat posed by COVID-19.
One order instituted a moratorium on residential and commercial
evictions for nonpayment of rent, while expressly declaring that

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“[n]othing” in the order “shall relieve a tenant of the obligation
to pay rent, nor restrict a landlord’s ability to recover rent due.”
Another order directed all California residents to stay home,
with certain exceptions, and directed all non-essential businesses
to stop operating immediately.
       Consistent with the Governor’s executive order, on
March 16, 2020, the County of Los Angeles Department of
Public Health issued an order requiring the closure of “Gyms
and Fitness Centers” within Los Angeles County, including
Fitness’s health club. The next day Fitness ceased all health club
operations at the leased premises and froze membership dues.
       Over the course of the following year, Fitness was
periodically allowed to reopen its doors to the public for brief
periods of time and at limited capacity. On June 15, 2021, it was
finally able to return to normal operations.
       Fitness did not vacate or surrender possession of the
leased premises during the closure period. Nor did it attempt
to terminate the lease. Instead, Fitness exercised an option to
extend the lease for five years, effective September 2020. It also
kept its equipment on the premises during the closure period
and requested permission to install three electric car charging
stations in the parking area.
       During the closure period, Andrews sent Fitness eight
default notices for nonpayment of rent. Fitness paid the rent
under protest, reserving all rights and remedies with respect to
the payments.
       Fitness sued Andrews to recover the rent paid under
protest. Among other things, the complaint asserted causes
of action for breach of contract and a common count for money
had and received.

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       Andrews moved for summary judgment. It argued the
lease unambiguously obligated Fitness to pay rent in exchange
for Andrews leasing the premises to Fitness. Fitness opposed
the motion, arguing Andrews had guaranteed Fitness the right
to use the premises as a health club and its obligation to pay
rent was therefore excused during the period that Andrews was
in breach of this guarantee. Fitness also argued the doctrines
of impossibility and impracticability excused its performance.
       The trial court agreed with Andrews and entered judgment
in its favor. Fitness timely appealed.
                            DISCUSSION
1.     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.” (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.)
       In an appeal from a summary judgment, “[w]e 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.” (Regents of University of California v. Superior
Court (2018) 4 Cal.5th 607, 618.) We will affirm a summary
judgment if it is correct on any of the grounds asserted in the

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moving party’s motion. (American Meat Institute v. Leeman
(2009) 180 Cal.App.4th 728, 747–748.)
2.      The Lease Does Not Excuse Fitness from Paying Rent
        During the Government-Ordered Closure Period
        Fitness contends its “obligation to pay rent was conditioned
on [Andrews’s] constant, repetitive, and repeatable obligation
to Fitness that Fitness could use and enjoy the Premises for
a health club and fitness facility every month, throughout the
term of the Lease.” It argues Andrews “breached” this obligation
during the COVID-19 closure periods, when Fitness was
temporarily prohibited from legally operating as a health club.
While this purported breach persisted, Fitness maintains its
obligation to pay rent under the lease was abated. We disagree.
        Section 2.2 of the lease sets forth Andrews’s
representations and warranties as landlord. Those include
representations about Andrews’s authority to conduct business,
its title to the premises, its compliance with “applicable laws . . .
in effect as of the Commencement Date” of the lease, and its
obligation to deliver the premises to Fitness free of latent or
patent defects. None of these representations or warranties
makes any mention of Fitness’s health club operations or of
the parties’ obligations to comply with applicable laws after
the lease’s commencement date.
        Fitness nonetheless contends Andrews’s purported
obligation to ensure the premises could be legally used as a
health club throughout the lease term is set forth in section 1.9
of the lease, titled “Initial Uses,” which provides:
               “The ‘Initial Uses’ of the Building shall be
               for the operation of a health club and fitness
               facility . . . . As part of the health club and

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             fitness facility operated on the Premises,
             Tenant may use portions of the Premises
             for uses ancillary to a health club and fitness
             facility . . . . So long as Tenant (or its successor
             or assigns) is operating as a health club and
             fitness facility, Tenant (or its successor or
             assigns) shall have the right throughout the
             Term and all Option Terms to operate for uses
             expressly permitted under this Lease and
             Landlord will not allow any other fitness
             related operation . . . to operate in the
             Shopping Center.”
       Although the word “guarantee” is nowhere to be found
in the provision, Fitness nonetheless argues the reference to its
“right ‘to operate’ ” in section 1.9 constitutes “a guarantee . . .
that its purpose for entering into the Lease—the right to operate
a health club and fitness facility—would at all times be fulfilled.”
Because there plainly is no express guarantee of this sort in
section 1.9 or anywhere else in the lease, Fitness necessarily asks
us to imply one. There is no basis to do so. As we will explain,
because the lease states the parties’ obligations completely—
specifically with respect to compliance with legal regulations
and restrictions—we cannot imply a covenant making Andrews
liable for regulations that temporarily rendered Fitness’s use
of the premises illegal.
       Implied covenants generally are not favored because courts
recognize we “cannot make better agreements for parties than
they themselves have been satisfied to enter into.” (Walnut Creek
Pipe Distributors, Inc. v. Gates Rubber Co. Sales Division (1964)
228 Cal.App.2d 810, 815 (Walnut Creek Pipe); Cousins Inv. Co. v.

                                 6
Hastings Clothing Co. (1941) 45 Cal.App.2d 141, 143.) Judicial
authority to insert implied covenants is therefore subject to
many strict rules of construction, including that “ ‘there can
be no implied covenant where the subject is completely covered
by the contract.’ ” (Lippman v. Sears Roebuck & Co. (1955)
44 Cal.2d 136, 142 [listing rules governing implied covenants].)
Nor may an implied covenant be drawn from the mere recital
of facts that do not express a promise or agreement. On the
contrary, the law requires some clear statement in the contract
from which the court may reasonably infer the party to be
charged with an implied obligation intended to assume liability
for it. (See O’Sullivan v. Griffith (1908) 153 Cal. 502, 506;
see, e.g., McArthur v. Goodwin (1916) 173 Cal. 499, 505.)
       Under these rules, we cannot imply a covenant making
Andrews liable for government orders that temporarily rendered
Fitness’s use of the premises illegal, because Fitness expressly
covenanted that it would ensure its uses of the premises were
lawful. Section 8.3 of the lease provides: “Tenant [Fitness]
hereby covenants to Landlord [Andrews] that, during the Term
of the Lease and for so long thereafter as Tenant occupies the
Premises, Tenant shall . . . (e) not use or allow the Premises to
be used for any illegal purposes.” Consistent with that covenant,
section 8.1 states: “If any governmental license(s) or permit(s)
shall be required for the proper and lawful conduct of Tenant’s
business or other activity carried on in the Premises, or if a
failure to procure such a license or permit might or would in
any way adversely affect Landlord or the Premises, then Tenant,
at Tenant’s expense, shall duly procure and thereafter maintain
such license(s) or permit(s) and submit the same for inspection by
Landlord.” (Italics added.) In view of Fitness’s express covenants

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that it would not use the premises for an illegal purpose and that
it would take measures necessary to ensure it could conduct its
business in a “proper and lawful” manner during the lease term,
we cannot imply a covenant making Andrews liable for the
temporary illegality of Fitness’s operation. (See, e.g., SVAP III
Poway Crossings, LLC v. Fitness International, LLC (2023)
87 Cal.App.5th 882, 891 (Poway Crossings) [landlord’s express
covenant and warranty that, “ ‘as of the Effective Date, Tenant’s
Initial Uses of the Premises will not violate any applicable rule,
regulation, requirement or other law of any governmental agency
. . . applicable as of the date hereof’ ” precluded implied covenant
requiring landlord “to make that guarantee throughout the
term of the lease” (italics added)].)
        Fitness suggests its express covenants have no bearing
on its rights or obligations under the lease because, with or
without the covenants, “[n]o one is privileged to use any property
for unlawful purposes.” We are not persuaded. As Fitness
itself emphasizes, a fundamental rule of contract interpretation
directs that, to the extent practicable, a contract must be read
as a whole, with individual clauses helping to interpret others,
so as to give effect to all provisions and to avoid rendering some
meaningless. (Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th
1010, 1027, citing Civ. Code, § 1641; accord Poway Crossings,
supra, 87 Cal.App.5th at p. 891.) Consistent with this principle,
Fitness’s “right . . . to operate for uses expressly permitted” under
the lease must be read together with its express covenants, which
necessarily limit the scope of this “right” to only lawful uses.
(Italics added.) More to the point, the broad reference to
Fitness’s “right” to operate in section 1.9 cannot be read
to impose an implied obligation on Andrews to bear the risk

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that Fitness’s operations could be rendered illegal, because
the express covenants in sections 8.1 and 8.3 unambiguously
allocate the relevant obligations and attendant risks of illegality
to Fitness.
       Fitness insists that, in entering the lease and making
substantial improvements to the property, it plainly intended to
operate a health club on the premises throughout the lease term.1
That may be true, but neither that purpose nor the possibility
that Fitness’s investment might lose value is sufficient to imply
a covenant making Andrews the guarantor of those operations.
“It is not enough to say that without the proposed implied
covenant, the contract would be improvident or unwise or
would operate unjustly. Parties have the right to make such
agreements. The law refuses to read into contracts anything
by way of implication except upon grounds of obvious necessity.”
(Walnut Creek Pipe, supra, 228 Cal.App.2d at p. 815.) As
discussed, the lease expressly assigns to Fitness the obligation

1       As Andrews points out, the express terms of the lease
give reason to doubt Fitness’s claim that it intended to use the
premises only as a fitness facility throughout the lease term.
Specifically, section 1.9 provides that Fitness’s “ ‘Initial Uses’ ”
of the premises “shall be for the operation of a health club and
fitness facility,” while section 8.1 requires Fitness to open for
business on the premises for only “one (1) day for the Initial
Uses set forth in Section 1.9.” Section 8.2 in turn provides that,
“[f]ollowing such initial opening for business . . . , [Fitness] shall
have the right to change the use of the Premises to any alternate
lawful use which is not otherwise prohibited.” The fact that
Fitness bargained for this right casts doubt on its contention
that it never anticipated changing its use of the premises,
as circumstances might demand.

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to ensure it uses the premises for only lawful operations, and
this obligation necessarily carries with it the attendant risk that
those operations could be rendered illegal during the lease term.
There is no obvious necessity for the covenant that Fitness asks
us to imply here.
       Rejecting this implied covenant does not render section 1.9
illusory or meaningless. At its core, the fundamental bargain
embodied in the lease is Andrews’s promise to grant Fitness
possession of the premises in exchange for Fitness’s promise
to pay rent to Andrews.2 Consistent with that bargain, we can
reasonably infer that, in recognizing Fitness “shall have the
right throughout [the lease term] to operate for uses expressly
permitted,” Andrews implicitly covenanted not to interfere with
Fitness’s permitted uses of the premises. As the trial court
recognized, this implied covenant is consistent with Andrews’s
central promise to grant Fitness possession of the premises and
accords with Andrews’s express covenant in the last clause of
section 1.9 “not [to] allow any other fitness related operation . . .
to operate in the Shopping Center,” “[s]o long as [Fitness] is
operating as a health club and fitness facility.” There is no
evidence that Andrews interfered with Fitness’s possession or

2     These mutual promises are plainly set forth in section 2.1,
which reads: “In consideration of the rents agree[d] to be paid
and of the covenants and agreements made by the respective
parties hereto, Landlord hereby demises and leases to Tenant
and Tenant hereby leases from Landlord the Premises, upon
the terms, conditions and provision set forth in this Lease.”
Critically, nothing in this section or any other provision of
the lease expressly ties Fitness’s obligation to pay rent to the
operation of a fitness center or any other particular type of
operation on the premises.

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use of the premises. The trial court did not err in concluding
Fitness had an obligation to pay rent under the lease,
notwithstanding the disruption to its operations occasioned
by the COVID-19 closure orders.
3.      Fitness’s Obligation to Pay Rent Was Not Excused
        Due to a Temporary Frustration of Purpose
        Fitness contends the frustration of purpose doctrine
temporarily excused its obligation to pay rent during the closure
periods. We disagree. As our colleagues in Division Seven
recently explained, the frustration of purpose doctrine does
not excuse Fitness from its obligation to pay rent because
Fitness did not attempt to rescind the lease but instead remained
in possession of the premises. (KB Salt Lake III, LLC v. Fitness
International, LLC (2023) 95 Cal.App.5th 1032, 1057 (Salt Lake).)
        “The doctrine of frustration excuses contractual obligations
where ‘ “[p]erformance remains entirely possible, but the whole
value of the performance to one of the parties at least, and the
basic reason recognized as such by both parties, for entering into
the contract has been destroyed by a supervening and unforeseen
event.” ’ [Citation.] A party seeking to escape the obligations
of its lease under the doctrine of frustration must show:
(1) the purpose of the contract that has been frustrated was
contemplated by both parties in entering the contract; (2) the
risk of the event was not reasonably foreseeable and the party
claiming frustration did not assume the risk under the contract;
and (3) the value of counterperformance is totally or nearly
totally destroyed. [Citations.] Governmental acts that merely
make performance unprofitable or more difficult or expensive do
not suffice to excuse a contractual obligation.” (Poway Crossings,
supra, 87 Cal.App.5th at p. 895; Salt Lake, supra, 95 Cal.App.5th

                                11
at p. 1056; see Lloyd v. Murphy (1944) 25 Cal.2d 48, 55; Dorn v.
Goetz (1948) 85 Cal.App.2d 407, 410–413.) Where the doctrine
applies, “the ‘legal effect . . . is the immediate termination of the
contract.’ ” (Poway Crossings, at p. 896; Salt Lake, at p. 1056; see
Johnson v. Atkins (1942) 53 Cal.App.2d 430, 434–435; see also
20th Century Lites v. Goodman (1944) 64 Cal.App.2d Supp. 938,
945 [“ ‘frustration brings the contract to an end forthwith’ ”].)
       “At least two courts have held California law does not
recognize ‘temporary’ frustration of purpose, which ostensibly
excuses a party’s performance under a contract temporarily
until the cause of the frustration abates.” (Salt Lake, supra,
95 Cal.App.5th at p. 1056, citing Poway Crossings, supra, 87
Cal.App.5th at p. 896; 20th Century Lites v. Goodman, supra,
64 Cal.App.2d Supp. at p. 945.) As the Salt Lake court explained,
“[t]his conclusion follows from the legal effect of the frustration
doctrine, which terminates the contract.” (Salt Lake, at p. 1056;
Poway Crossings, at p. 896; 20th Century Lites, at p. 945.)3

3       Fitness cites Maudlin v. Pacific Decision Sciences Corp.
(2006) 137 Cal.App.4th 1001 and Bergin v. van der Steen (1951)
107 Cal.App.2d 8 for the proposition that California law does
recognize temporary frustration of purpose. As the Salt Lake
court explained, Maudlin does not support the proposition
because the case addressed the doctrine of temporary
impossibility or impracticability—not temporary frustration
of purpose. (See Maudlin, at p. 1017; Salt Lake, supra,
95 Cal.App.5th at p. 1056.) Similarly, in Bergin, although
the reviewing court used the term “temporary frustration,”
it is clear from the facts of the case that the court addressed
what amounted to a temporary impossibility. (Bergin, at p. 16.)
The contract in Bergin required one party to pay the equivalent
of two-and-a-half percent of its gross sales from a concession
at a racetrack to the other party as a commission. (Id. at p. 10.)

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       Ultimately, the Salt Lake court found no need to decide
the issue because, regardless of whether our state law embraces
the temporary frustration of purpose doctrine, it would not
excuse Fitness from its obligation to pay rent as Fitness “did not
attempt to rescind the lease and instead remained in possession
of the premises.” (Salt Lake, supra, 95 Cal.App.5th at p. 1057.)
We reach the same conclusion for the same reason. As the court
in Grace v. Croninger (1936) 12 Cal.App.2d 603 explained, “even
where the sole business to which premises are restricted by the
terms of a lease becomes unlawful, the lease is not terminated
merely by the enactment of the law declaring such business
unlawful, but liability under the lease continues as long as
the lessee continues in possession.” (Id. at p. 606.) The Grace
court relied on the Supreme Court’s reasoning in Industrial
Development & Land Co. v. Goldschmidt (1922) 56 Cal.App. 507,
where, in denying rehearing, our high court stated a lessee
could not “continue to hold possession of the premises after
the prescribed business became unlawful, and escape payment
of the rent on the ground of such illegality, without surrendering
to the lessor.” (Id. at p. 512; see Grace, at p. 606; Salt Lake,
at pp. 1057–1058.)
       Here, the undisputed facts show Fitness remained in
possession of the premises, storing its equipment in the building
and requesting permission to install three electric car charging

However, in 1942 to 1944, wartime government regulations
forbade race meets, which rendered it impossible for the
concession to make any sales at the racetrack and, thus,
impossible to pay the commission. (Id. at p. 13.) That plainly
is not the case here, as the undisputed facts show Fitness
was able to pay rent under its lease with Andrews during
the closure period, albeit under protest.

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stations in the parking area, in anticipation of the closure orders
being lifted. Thus, even if California law recognized temporary
frustration of purpose, Fitness was still obligated to make rent
payments under the lease for the time it remained in possession
of the premises. (See Salt Lake, supra, 95 Cal.App.5th at
p. 1058.)
                          DISPOSITION
       The judgment is affirmed. Defendant Andrews Rancho
Del Sur is entitled to costs.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                     EGERTON, J.

We concur:

             EDMON, P. J.

             ADAMS, J.

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