Dovetail, Inc. v. Professional Childcare Management

Filed 8/21/06 Dovetail, Inc. v. Professional Childcare Management CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

Professional Childcare Management, Inc. (PCM) appeals from a judgment following a court trial that awarded Dovetail, Inc. (Dovetail) $56,356, and denied PCM any relief on its cross-complaint. We affirm.

BACKGROUND

In July 1996, PCM leased a building from Dovetail at 2780 Camino Diablo in Walnut Creek. It was one of eight commercial properties owned and managed by Dovetail. The lease was negotiated by the corporate principals for PCM and Dovetail, and there was specific discussion between them about the lease's common area expense (CAE) provisions. While PCM would have preferred the lease not have any CAE provisions, they knew Dovetail would not enter into a lease that did not contain them. So, PCM entered into the lease and operated a child care center in the building from 1996 until June 2001, approximately one and a half months before the end of the lease term.

For almost the first two years of the lease, it appears the parties got along without incident. But trouble started when the amount charged for CAE increased from approximately $373 per month at the beginning of the lease to $917.62 in February 1998. PCM questioned the increase and asked for justification for the charges. Dovetail said that the increase was largely attributable to a prior bookkeeping error that undercharged CAE. It was also clear that Dovetail was charging a portion of its corporate and property management expenses and overhead to PCM as CAE. By the time the lease was up, CAE had risen to $1,088 per month.

Because PCM took exception to the amount and nature of CAE charged under the lease, it would not pay the increased amount. But PCM continued to pay CAE approximately $373 per month until they stopped making payments under the lease. In December 2000, PCM made a partial payment of $10,292 to Dovetail for outstanding and in arrears CAE. But beginning in April 2001, payments stopped. PCM then withheld rent and CAE altogether, and made no further monthly payments to Dovetail.

PCM vacated 2780 Camino Diablo as of June 30, 2001, one and one-half months early. At the time, PCM owed Dovetail a total of $58, 051.60. But PCM sought an offset of $20,006.25 against that debt due to the security deposit that was retained by Dovetail.

PROCEDURAL HISTORY

PCM beat Dovetail to the courthouse, and filed suit for damages for breach of the lease, declaratory relief and fraud on June 13, 2001. Dovetail filed an unlawful detainer action against PCM on June 21. Dovetail answered the PCM complaint and filed a cross-complaint against PCM for breach of contract. PCM answered the cross-complaint. Once PCM moved out of 2780 Camino Diablo, Dovetail amended its unlawful detainer complaint to an action for damages for breach of contract. By stipulation, the cases were consolidated and Dovetail was designated as the plaintiff.

The case was tried to the court, and upon the request of PCM, the court issued a statement of decision. Judgment was entered in favor of Dovetail in the amount of $56,356.

PCM's CONTENTION ON APPEAL

The core of PCM's claim centers on Dovetail's practice to include within CAE a portion of its overall corporate, administrative and management expenses. PCM claims this allocation of expenses is not authorized by the lease. Instead, it argues that the lease requires all CAE charges to be 100 percent attributable to 2780 Camino Diablo, and that the lease prohibits Dovetail from â€