Meline v. Dadson Washer Service

Filed 7/16/07 Meline v. Dadson Washer Service CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from a judgment of the Superior Court of Los Angeles County. Gregory W. Alarcon, Judge. Reversed.

Steven P. Krakowsky for Defendant and Appellant.

Ralph W. Boshes for Plaintiff and Respondent.

__________________________

INTRODUCTION

Defendant and appellant, Dadson Washer Service, Inc. (Dadson), appeals from the judgment following the granting of a motion for summary judgment in favor of plaintiff and respondent, Ray Meline (Meline).

Meline is the owner of an apartment building. Dadson purports to have a leasehold estate in the apartment building to operate a coin operated laundry business having its initial source in a written 1983 lease agreement, recorded in the office of the county recorder for Los Angeles County. Dadsons current claim of entitlement to a leasehold estate has its source in a 1995 unrecorded written lease of the premises, in existence when Meline purchased the property on December 21, 1998. Meline deemed it to his advantage to terminate Dadsons leasehold estate and gave notice of termination in accordance with the 1983 leasehold agreement, which Meline maintains would terminate Dadsons leasehold as of September 10, 2005. Dadsons claim of entitlement is based on the theory that Meline was obligated to discover the unrecorded written lease dated in 1995 and terminate the tenancy therewith, relying on the doctrine that an unrecorded lease is binding upon a party who has actual or constructive notice of the lease, and Meline having failed to give such notice, Dadson is entitled to occupy the premises under the 1995 lease until the year 2025. The trial court entered summary judgment for Meline following the filing of his complaint for declaratory relief. For the reasons hereafter given, we reverse the judgment.

FACTUAL AND PROCEDURAL SYNOPSIS

The parties.

Meline is the owner of the apartment building (the building) located at 14334 South Redondo Boulevard, Los Angeles, California.

Dadson is in the business of operating and maintaining laundry equipment in apartment buildings throughout the State of California.

The 1983 lease.

On September 10, 1983, Allan Gower, (Gower) the then-owner of the building, entered into a printed form lease agreement with Dadson for the laundry room of the building for a period of one year. Paragraph 1 of the lease provided: 1. LESSOR hereby leases to LESSEE the laundry room(s) on the premises described above, for a period of one[[1]] years [sic] from the date of this lease for the purpose of installing and operating its laundry equipment for use by tenants, all of which shall remain its exclusive control, and shall be maintained by LESSEE. Paragraph 6 of the lease provided that This lease shall be automatically renewed for the same period of time described in Paragraph 1 hereof unless cancelled in writing sent by registered or certified mail by either party 90 days prior to expiration.

It is undisputed than neither Dadson nor prior owner Gower elected to terminate the 1983 lease before expiration of the initial one-year term. As a result, the lease was renewed by its provisions on September 10, 1984, for a second one-year term to expire on September 10, 1985. After September 10, 1985, Dadson occupied the premises purportedly as a month-to-month tenant of Gower. (Civ. Code, 1945.)

The 1995 lease.

In October of 1995, Brad and Lisa Reed (Reed) acquired the building from Gower. Reed then hired HLS Property Management (HLS) to manage the building. Sandra Lucas (Lucas) of HLS contacted Dadson regarding execution of a new lease agreement for the building laundry room. Dadson inquired if Lucas was authorized by Reed to execute such a lease and in response to Dadsons inquiry, on October 26, 1995, Lucas sent Dadson a written Letter of Authorization dated October 22, 1995, executed by Reed.

In reliance on the Letter of Authorization, Dadson signed a new lease dated December 8, 1995. Paragraph 3 of the lease provided that Lucas was signing the 1995 lease with full authority in writing to enter into this lease on Lessors behalf. The 1995 lease had an initial term of ten years. Paragraph J of the lease further provided as follows: J. It is further understood and agreed by and between the parties hereto that this lease shall be renewed from the date of its expiration for two (2) additional terms each equal to the original term unless LESSEE gives LESSOR notice in writing by registered or certified mail return receipt requested at least ninety (90) days prior to the end of then-current term of LESSEES intention not to renew this lease. At the expiration of the term and additional terms herein this lease shall continue for additional terms equal to the original term unless terminated by either LESSEE or LESSOR by a notice in writing by registered or certified mail return receipt requested at least ninety (90) days prior to the end of the thencurrent term. If the real property is sold or management is changed subsequent to the written notice by LESSOR provided herein, and prior to the end of the term herein, then said notice shall be null and void and shall be considered rescinded.

Melines purchase of the building.

In 1998, Meline purchased the building. Escrow closed on December 21, 1998, and the Grant Deed conveying title to the property from Reed to Meline, dated October 14, 1998, was recorded in the office of the county recorder for Los Angeles County on December 21, 1998. A preliminary title report prepared by Chicago Title Company revealed the conveyance of a leasehold estate to Dadson from Gower which was recorded on September 28, 1983.

Prior to the purchase of the building, Meline walked by the laundry room and noticed by looking in the windows that Dadson had posted signs on the walls of the laundry room that had instructions on how to use the coin operated washer and dryer inside the room and indicating Dadson should be called at a certain telephone number in the event the laundry equipment was in need of maintenance.

Meline read the September 10, 1983, lease, documents evidencing the chain of title from Gower to Reed, and a deed from Gower to Reed.

Melines notice of cancellation of Dadsons lease.

During the first part of 2004 Meline telephoned Dadson and related what Meline had read in the documents inspected by him prior to consummation of the sale, whereupon Dadson contended that the 1983 lease was not operative and the 1995 lease was the relevant lease and was still in effect. Meline maintained that he had never seen or heard of the 1995 lease and proclaimed that he had no knowledge of an individual by the name of Sandra Lucas who was purportedly the authorized agent for business manager HLS.

On August 24, 2004, Meline gave notice of the cancellation of the recorded 1983 lease by certified mail to Dadson more than 90 days prior to the end of the September 10, 2004, to September 10, 2005, period of the lease.

Proceedings in the Superior Court.

On October 6, 2005, Meline filed his complaint for declaratory relief seeking to have the 1983 lease declared valid and operative until terminated by him in accordance with the terms and conditions contained therein and to have the 1995 lease declared a nullity, giving Dadson no legitimate occupancy claim thereunder. On October 27, 2005, Dadson filed its answer to the complaint which contained a general denial and eight affirmative defenses.

Meline filed his motion for summary judgment with supporting documentation on February 28, 2006. Dadson filed opposition and supporting declarations on May 4, 2006, followed by the filing of Melines reply brief in support of his motion on May 12, 2006.

Melines motion for summary judgment was heard on May 18, 2006. The trial court took the matter under submission. The trial court issued its minute order granting summary judgment in favor of Meline and declared the 1983 lease valid and controlling until cancelled by Meline effective September 10, 2005, and finding that Dadson has no right, title or interest in the premises. The court presumably also considered the post-hearing memorandum of points and authorities filed by Dadson on May 18, 2006.

On June 19, 2006, a Judgment by Court pursuant to Code of Civil Procedure section 437c was filed, followed by Meline serving his notice of entry of judgment on June 22, 2006.

Dadson filed a timely notice of appeal from the judgment after an order granting a summary judgment motion, concededly appealable as a final judgment in accordance with Code of Civil Procedure sections 437c, subdivision (m)(1) and 904.1.

Standard of review.

The standard of appellate review is well established by statute and case law in California and is accurately stated in Appellants Opening Brief as follows: A motion for summary judgment may properly be granted only 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. [(Code Civ. Proc., 437c, subd. (c).] As explained by the Supreme Court: [] Summary judgment is a drastic measure that deprives the losing party of a trial on the merits. . . .  It should therefore be used with caution, so that it does not become a substitute for trial. . . .  The affidavits of the moving party should be strictly construed, and those of the opponent liberally construed. . . .  Any doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. [(Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107; citations omitted.)] To succeed, the moving party must demonstrate that under no hypothesis is there a material issue of fact that requires the process of a trial. [(Flatt v. Superior Court (1994) 9 Cal.4th 275, 279.)] [] An appellate court reviews the trial courts decision granting summary judgment de novo, considering all of the evidence set forth in the supporting and opposition papers, except that to which objections have been made and sustained by the court, and all uncontradicted inferences reasonably deducible from the evidence. [(Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 612.)] (Bold and underlining in original.)

With this standard of review in mind, we examine whether there is a triable issue of material fact, requiring resolution by a trier of fact, or whether the matter was properly resolved by the trial court, summarily, as a matter of law in favor of Meline.

DISCUSSION

The core issue in this litigation appears to be conspicuous and relatively uncomplicated. The issue can be highlighted by posing an initial question. The question to be asked in bringing the core issue into focus is: Did Meline acquire the property as a bona fide purchaser for value without notice of the existence of a leasehold interest therein by Dadson stemming from the 1995 unrecorded written lease? The answer to this question turns on whether Meline had actual or constructive notice of the 1995 lease.

Neither side takes issue with the general principle that the notice required to bind subsequent purchasers may be actual or constructive. This general principle has its origin in Civil Code section 18 which provides: Notice is: 1. Actual -- which consists in express information of a fact; or, 2. Constructive -- which is imputed by law. This principle is brought more in focus to issues in this litigation by the decision in Claremont Terrace Homeowners Association v. United States (1983) 146 Cal.App.3d , 408-409, where the court held possession that is open, notorious, exclusive and visible and not consistent with the record title gives notice not only of whatever title the occupant has but also of whatever right he may have in the property. The law was summarized in Evans v. Faught (1965) 231 Cal.App.2d 698 as follows: [An] unrecorded lease is not void as against a purchaser who has notice of the lease or such notice as should put him on such inquiry as would disclose its existence. [Citations.] The rationale of this rule is that a purchaser of the premises occupied in part by a third person under an unrecorded lease cannot be said to be an innocent purchaser since possession by such third party may constitute notice to the purchaser provided it is open, notorious, exclusive and visible, and not consistent with record title. The law of negligence comes into play also via Civil Code section 19 which states: Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact. In Marlenee v. Brown (1943) 21 Cal.2d 668, 676, the court stated the principle another way by stating that possession of land imparts to the intending purchaser such knowledge as would be gained by inquiry from the one having possession.

The evidence proffered by Meline in bringing his motion for summary judgment indicated that before purchasing the property, he inspected the property; looked through the window of the laundry room as he walked by noticing signs posted on the wall giving instruction for use of the laundry equipment and to call Dadson at a certain telephone number in the event the laundry equipment was in need of maintenance; reviewed a preliminary title report prepared by Chicago Title Company which reported a lease having been recorded on September 28, 1983, conveying a leasehold interest to Dadson by Gover for possession and use of the laundry room; and obtained a copy and read the recorded lease particularly noting paragraphs 1 and 6 thereof.

Dadson, on the other hand proffered evidence in opposition to Melines motion for summary judgment as follows: The 1983 lease had terminated and a new unrecorded 1995 lease was entered into giving Dadson the right to occupy the premises as lessee until the year 2025. Dadson also notes that prior to closing of escrow, Meline failed to obtain an estoppel certificate from Reed to protect himself against unforeseen eventualities as occurred in this case by virtue of the unrecorded 1995 lease. Dadson also offered the observation that Meline should have been placed on inquiry notice of the possibility of a subsequent lease in view of the fact that the 1983 lease had run its fixed term in 1985 thereby suggesting a subsequent and more recent lease in favor of Dadson, a conspicuous occupier of the premises in 1998 when Meline purchased the premises.

Melines position in his summary judgment motion was that the recorded 1983 lease was the operative lease, giving him actual notice of the lessees rights and current occupation of the premises by lessee Dadson, which was consistent with the 1983 recorded lease. Further, no additional facts were presented which impliedly gave him constructive notice.

Dadson, on the other hand, in effect asserted that the unrecorded 1995 lease was the operative lease in effect at the time of Melines purchase of the property. All Meline had to do was make reasonable inquiry to Dadson about any claim by Dadson as to a leasehold estate and Dadson would have told Meline about the 1995 lease before Meline consummated the purchase. Dadson maintained that Meline was negligent in failing to make inquiry of Dadson before Meline purchased the property.

We keep in mind that our function on appeal is to isolate any triable issues of material fact and to reverse the judgment of the trial court if any such triable issues be found. On the other hand, if no triable issues of material fact are found, then we determine de novo if the judgment was error free or in the alternative erroneous as a matter of law.

In searching the record on appeal, we find there are triable issues of material fact on whether Meline had sufficient information before him that might reasonably give rise to a duty to make pre-purchase inquiry of Dadson about any interest of the lessee in the property, which might have resulted in Dadson informing Meline of the unrecorded 1995 lease.

Having isolated and found triable issues of material fact, we reverse the judgment of the trial court and remand for further proceedings consistent with this opinion.

DISPOSITION

The judgment is reversed and remanded to the trial court for further proceedings consistent with this opinion. Appellant is awarded costs of appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

WOODS, J.

We concur:

JOHNSON, Acting P.J. ZELON, J.

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[1] The word ten was stricken with one line drawn through it, and the word ONE was handwritten in, purportedly initialed by H.B. Stein, as witness and salesman, on behalf of Gower.