Tsai v. WRI/San Marcos

Filed 5/1/07 Tsai v. WRI/San Marcos LLC CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Richard G. Cline, Judge. Affirmed.

Plaintiff Chin Lung Tsai (Chin), sued defendant WRI/Rancho San Marcos, LLC (WRI or the landlord), to allege entitlement under his lease to an award of damages and declaratory relief, based on WRI's alleged breach of contract in allowing competing restaurant businesses to operate in the same shopping center. The matter went to court trial and a nonsuit was granted as to one of the businesses, Panda Express (or Panda), which was operating within the premises of another tenant. After trial, the court rendered judgment for the landlord as to the remaining business, Super Buffet, finding no violations of the lease provisions. The court also awarded fees and costs, including expert witness fees. (Code Civ. Proc.,^[1] 998.)

Chin appeals, contending the trial court incorrectly interpreted the lease in light of his arguments that (1) Chin's lease included an exclusivity paragraph, providing the landlord would not lease any space in the shopping center to any other restaurant whose principal business was a Chinese food restaurant, (2) the landlord breached the lease by allowing Panda Express to operate within the space leased to another tenant, and (3) the landlord breached the lease by allowing the other restaurant, Super Buffet, to serve a significant amount of Chinese food, which therefore represented part of its principal business. He also challenges the award of expert witness fees.

We have reviewed Chin's arguments about the allegedly incorrect refusal by the trial court to consider extrinsic evidence to interpret the lease, and find the court followed proper contract interpretation principles. Moreover, nonsuit was appropriately granted as to the Panda Express business, because the lease did not afford Chin relief as to that business within another tenant's business. Substantial evidence supports the trial court's ruling on the Super Buffet claims, regarding the nature of its "principal business." Finally, there was no abuse of discretion in the amount of expert witness fees awarded. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A

Lease; Complaint

In 1990, Chin entered into a lease with the landlord's predecessor, to operate his Chin's Szechuan restaurant in the San Marcos Village Shopping Center. He owns approximately 12 such restaurants. In the lease negotiations, he was represented by a commercial real estate broker, who requested that the landlord include an exclusivity provision. Chin's was the only Chinese restaurant in the center. The key term of the lease under dispute here is its paragraph 41, providing as follows:

"Landlord hereby covenants and agrees that during the term of this Lease and as may be extended by any renewals or extensions hereof, Landlord shall not lease, to any other Tenant whose principal business is a Chinese food restaurant, any space within the shopping center owned by Landlord."

Vons was another longtime tenant of the shopping center. The Vons lease provided that it would not allow its premises to be used to sell products or services for which the landlord had already granted an exclusive right to supply in the center. In 2001, in connection with its remodeling and renewal of its lease, Vons allowed Panda Express to open a 500 square foot restaurant or concession within its approximately 48,000 square foot leased premises. At the time, the landlord offered to obtain any necessary consents from other tenants regarding this expansion, but this never occurred.

Sales went down at Chin's restaurant and he complained to the then-landlord (the BOSC Group) who told him that there was nothing they could do. Chin responded by increasing his advertising and taking other measures to improve the premises and the services, but sales remained down.

In 2002, the then-landlord entered into a new lease of a freestanding restaurant property at the shopping center with the representatives of "Lin & Cheung Int'l Buffet, Inc." (Super Buffet). This lease included a provision that Super Buffet should not offer more than 10 percent Chinese food items. Ownership of the shopping center was then transferred to the current defendant, which owns other California shopping centers.

Chin's representatives and employees contacted the landlord to complain that they had heard a Chinese buffet was going into the space. They were told it would be a Japanese buffet, but in any case, the landlord did not have to monitor the tenants. After the Super Buffet opened, Chin's employees and staff visited it and informally counted the types of dishes that it offered. It had a hot entre section with a number of Chinese dishes, as well as many kinds of Japanese sushi and seafood and other "Pan-Asian" dishes. A copy of the sign posted outside the Super Buffet restaurant advertised "Japanese Sushi and Seafood." Although Chin again requested that the landlord enforce the exclusivity clause or reduce his rent to reflect that it was not being enforced, his requests were refused. His sales continued to go down after 2002 through the trial date, in June 2005.

In April 2004, Chin filed a complaint for damages and declaratory relief based on WRI's breach of contract.^[2] He alleged the landlord breached the lease by allowing Panda Express to operate within the space leased to Vons, and by allowing Super Buffet to serve a significant amount of Chinese food.

WRI answered the complaint with a general denial and various affirmative defenses to the action.

Settlement negotiations were conducted and although a tentative settlement was reached shortly before trial, the landlord refused to finalize it on the grounds that it wanted to add new and additional terms. The landlord's offer to settle the case for $75,000 was thus never accepted. ( 998.)^[3]

B

Trial: Nonsuit Order

A bench trial began in June 2005. The court initially heard and granted the landlord's in limine motion to exclude extrinsic evidence to interpret the lease, in particular, its exclusivity provision.

Plaintiff presented his own testimony and that of his employees about the nature of the operations of his own and the two other businesses. He always requests exclusivity clauses in all of his restaurant leases to promote their success. He was never consulted about the opening of the Panda Express within Vons, or the opening of the Super Buffet. Plaintiff, his staff members, and his expert food witness (his brother-in-law, Mr. Fan), all testified to the effect that the majority of the hot entres at Super Buffet were Chinese food items. His accountant and an expert economist estimated that he had lost profits of $605,000 since 2001-2002.

At the close of plaintiff's case, WRI moved for an order of nonsuit as to the Panda Express claims. This motion was granted, on the basis that the tenant Vons had a principal business of selling groceries, and there was nothing in the lease to require the landlord to obtain Chin's permission before allowing Vons to sublease a portion of its premises to Panda. The court found that paragraph 41 had clear language, and that it used the term "principal" to mean primary, chief, or main. The Vons/Panda operation did not meet those criteria.

However, the trial court denied the landlord's motion for an order of nonsuit as to Super Buffet, as well as the overall nonsuit request regarding the cause of action for declaratory relief.

C

Trial: Super Buffet

At court trial, the landlord went forward with its case regarding Super Buffet by presenting expert evidence from its food consultant, Mr. Miller. He testified about his visits to the Super Buffet, including the kitchen and storage areas, and about the food business in general, as will be further described in part IV, post. His view was that Super Buffet was principally a Japanese restaurant, because 50 out of 60 dishes he saw served were different types of individual sushi and/or Pan Asian dishes. The manager, Mrs. Zhang, testified at deposition about the variety of dishes served there.

The landlord also presented evidence from a forensic economist, Mr. Engel, about the review conducted by himself and his staff of Chin's restaurant profit and loss records. He gave the opinion that Chin's business was losing money for other reasons, and it was possible that cash was being skimmed from the receipts or underreported.

The trial court issued a tentative decision analyzing the evidence as follows. Plaintiff was found not to have met his burden to establish a breach of the lease, either by the landlord's actions in leasing to Super Buffet or by allowing Super Buffet to offer certain food dishes. The court explained:

"Although the evidence was in conflict, the weight of the evidence establishes that the Super Buffet restaurant was principally a Japanese and Pan/Asian buffet and seafood restaurant. The court gives great deference to the testimony of Mr. Miller. He had several advantages over plaintiff's witnesses. He visited Super Buffet for both lunch and evening meals. He had extensive information about all dishes offered by Super Buffet. He tasted a large number of dishes. He spent over an hour in the kitchen. He inspected cooking ingredients, tools, sauces, and accompaniments. He inspected dry goods and the cold lockers. He saw dishes being prepared and being served. His testimony is corroborated by Mrs. Zhang, the manager of Super Buffet. Additionally, the fact that the outside sign and the menu advertise the restaurant as "Japanese" was also important because a patron would expect the food of the facility to correspond to the advertising representation. Common sense would have us believe that how one describes oneself is strong evidence of one's actual nature. [] It is undoubtedly true that the Super Buffet was directly in competition with Plaintiff's restaurant. In contrast, other non-Asian food establishments in defendant's shopping center were inconsequential competitors. But the competition by Super Buffet was not forbidden by the lease. The lease did allow for the sale of some Chinese dishes by other establishments. Further, the lease did not prohibit direct competition by restaurants offering Pan/Asian cuisine as long as the principal business was not that of a Chinese restaurant." (Italics added.)

Accordingly, the court adhered to the tentative decision and ruled that Chin would take nothing from WRI.

D

Order: Expert Fees

Posttrial proceedings were conducted regarding requests for attorney fees and expert witness fees. The court ruled that WRI should recover from Chin costs of suit and attorney fees in the amount of $99,316.64, which represented some reduction of the fees request (which is not disputed on appeal).

With respect to the defense offer to settle the case pursuant to section 998, even though it was never finalized, the court decided that Chin should pay for the expert witness services that took place after the section 998 offer was made. Although the landlord requested a total of $40,387 for the defense economist, Mr. Engel and his staff, the court awarded $32,440 as a more reasonable amount. The court used the local Superior Court rules and guidelines for an economist's testimony, setting an hourly rate of $200, as opposed to the top rate of $228 that the landlord was requesting for Engel and staff.

In addition, the court awarded $3,310.95 for the post-section 998 offer services of the defense food expert Mr. Miller, such that the total award of expert fees was $35,750.95. The total judgment amounted to $141,476.59 including all costs and fees.

Chin appeals. Although the record did not originally include the formal judgment, the parties have obtained a copy at the request of this Court, dated September 11, 2006.

DISCUSSION

We will address Chin's claims of error regarding the Panda Express nonsuit ruling and the decision regarding Super Buffet separately, in light of the applicable standards of review. First, however, we address several issues common to both rulings. Finally, we will turn to the fee award for the expert witnesses.

I

GENERAL INTERPRETATION PRINCIPLES; IN LIMINE RULING

At the beginning of trial, the court heard a defense motion in limine to exclude parol evidence about the meaning of the contract terms. In opposition to that motion, Chin argued that he should be able to present evidence from his real estate broker about the meaning to be attributed to the term "principal" in the exclusivity clause. He did not intend to present his own testimony on that issue. In interrogatory responses, Chin had indicated that he interpreted the term "principal" as meaning a majority of the business.

The court granted the motion, ruling that the lease was an integrated writing and its language should control, and paragraph 41 had a plain meaning that was not susceptible to any other meaning. Chin now contends this was error, because the lease language "principal" was susceptible of different meanings. Specifically, he suggests, "a restaurant can be 'principally' known or popular for a particular type of food, even though that type of food is not the most prevalent on the restaurant's menu." Contrary to the landlord's argument, this in limine ruling challenge is properly raised on appeal, as subsumed in the judgment.

"The integration doctrine, which brings the parol evidence rule into operation, raises a question of law for the judge, not a question of fact for the jury. [Citations.]" (2 Witkin, Cal. Evidence (4th ed. 2000) 68, p. 188.) Generally, the purpose of contract interpretation is to give effect to the intention of the parties, and requires a determination of what the parties meant by the words they used. (Pacific Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d 33, 38 (PGE).) Through their conduct, the parties' dealings with each other may demonstrate their contractual intent. (Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 754.) "The precise meaning of any contract, including a lease, depends upon the parties' expressed intent, using an objective standard. [Citations.] When there is ambiguity in the contract language, extrinsic evidence may be considered to ascertain a meaning to which the instrument's language is reasonably susceptible. [Citation.]" (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 21 (Golden West Baseball Co.).)

It is not reversible error for a trial court to refuse to consider extrinsic evidence offered to show the intention of the parties, where that evidence would go to show a meaning to which the language of the contract is not fairly susceptible. (PGE, supra, 69 Cal.2d at pp. 39-41.) The objective test applies and PGE also states, "The correct test of admissibility of extrinsic evidence is not whether the meaning appears plain and unambiguous on the face of the instrument, but whether the evidence is relevant to prove a meaning to which the language is reasonably susceptible. ([PGE, supra, 69 Cal.2d at p. 37].)" (2 Witkin, Cal. Evidence, supra, 80, p. 199.)

" 'The trial court's determination of whether an ambiguity exists is a question of law, subject to independent review on appeal. [Citation.] The trial court's resolution of an ambiguity is also a question of law if no parol evidence is admitted or if the parol evidence is not in conflict.' " (Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1350-1351 (Wolf).) On appeal, the interpretation of a written document is a question of law, not of fact. In the absence of conflicting extrinsic evidence, a reviewing court will independently interpret the written instrument. (Edmond's of Fresno v. MacDonald Group, Ltd. (1985) 171 Cal.App.3d 598, 603.) The "interpretation of a document such as a lease will involve only questions of law, where no extrinsic evidence was admitted by the trial court. [Citation.]" (Del Taco, Inc. v. University Real Estate Partnership V (2003) 111 Cal.App.4th 16, 22 (Del Taco).)

Through the in limine ruling, the trial court complied with proper contract interpretation procedures, by determining whether the challenged language required further explanation. (Wolf,supra, 114 Cal.App.4th 1343, 1351.) The court was not required to conclude on this record that Chin's views amounted to a showing that "the language is 'reasonably susceptible' to the interpretation urged," and it therefore had an adequate basis to exclude the extrinsic evidence before interpreting the contract. (Ibid.; citing Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) The exclusion of extrinsic evidence to interpret the lease was appropriate.

II

ALTERNATIVE APPROACHES ON APPEAL

Before we turn to the particular lease violations alleged, we first address several additional and alternative theories pursued by Chin on appeal. After trial, the judgment was limited to breach of contract (lease) and declaratory relief causes of action. On appeal, Chin also argues that the trial court did not adequately account for the implied covenant of good faith and fair dealing in the lease, when interpreting the contract. Chin explains in his oral argument letter: "Furthermore, under California law, WRI had an affirmative duty to protect Chin from Vons' attempt to deprive Chin of the benefits of the provision -- even if the presence of Panda Express did not technically violate the express terms of the exclusivity."

Chin is correct that the covenant of good faith and fair dealing " '. . . requires that neither party do anything which will deprive the other of the benefits of the agreement. [Citation.] [Citation.] In California, the implied duty of good faith and fair dealing exists in virtually every commercial lease. [Citation.]' [Citations.]" (Del Taco,supra, 111 Cal.App.4th 16, 22.) However, there is no basis to apply that authority to this case, in which the trial court was required to interpret the lease for purposes of determining the obligations under it and whether Chin was entitled in the first place to the benefits he was claiming. Accordingly, we treat the questions presented narrowly, as did the trial court.

For the same reason, we also decline to address Chin's argument that under the circumstances of the license or concession granted by Vons to Panda Express to operate within the Vons premises, this court should construe the lease broadly and interpret Panda Express's status as a subtenant or tenant of landlord, within the meaning of Chin's own lease. In support of this position, Chin relies on Golden West Baseball Co., supra, 25 Cal.App.4th at pages 35-37, in which the court interpreted a land use agreement between the parties that did not fit exactly into any of the time-honored categories such as easement, license, or lease. The appellate court outlined the rules regarding the definitions of easement and license, but concluded that those distinctions were not dispositive of the matter before it. Rather, the court said the label given to the "interest" conveyed by agreement was of little importance:

"Arrangements between landowners and those who conduct commercial operations upon their land are so varied that it is increasingly difficult and correspondingly irrelevant to attempt to pigeonhole these relationships as 'leases,' 'easements,' 'licenses,' 'profits,' or some other obscure interest in land devised by the common law in far simpler times." (Golden West Baseball Co., supra, 25 Cal.App.4th 11, 36.)

This type of view was foreshadowed in Medico-Dental Bldg. Co. of Los Angeles v. Horton & Converse (1942) 21 Cal.2d 411, 428-429 (Medico-Dental), in which the California Supreme Court reconciled and coordinated the law concerning contracts and leases, in terms of concurrent conditions and dependent covenants. As explained in 12 Witkin, Summary of California Law (10th ed. 2005) Real Property, section 673, pages 789-790, in that leading case, "[T]he Supreme Court departed from the conventional view and followed the rule applicable to ordinary bilateral contracts for an agreed exchange, that the mutual promises will be construed as dependent, i.e., as concurrent conditions. The landlord violated a covenant against leasing space to a competitor, and the court held that the lessee could terminate. Although the court found some slight evidence tending to show the actual intention of the parties, the opinion mainly rests on the ground that the covenants were dependent because the exclusive right to conduct the business was vital to the lessee's successful operation. (21 C.2d 419.)" (12 Witkin, Summary of Cal. Law, supra, at p. 790.) In keeping with this approach, the court stated:

"In measuring the breach of a covenant not to let for a specified purpose in cases where the objectionable competition is in connection with a business of a character other than that of the party entitled to protection by the lessor, technical subterfuges will be disregarded and the substance of the situation giving rise to the controversy will determine the issue. [Citations.]" (Medico-Dental, supra, 21 Cal.2d at p. 428; italics added.)

Similarly, Chin argues on appeal that "an agreement under which an owner of real property allows another to conduct his own separate business in a section of a store creates the relationship of 'landlord-tenant' rather than 'licensor-licensee.' " However, this theory requires examination of the various lease provisions involved, as we will discuss further in part III, utilizing that authority, Medico-Dental,supra, 21 Cal.2d 411, with regard to the nonsuit issues. Here, we note only that the pleadings and trial record show there was no lease or contractual relationship between the landlord and Panda, and we may not treat it as such on policy grounds, if unsupported by the record.

Further, we see no justification for addressing Chin's backup position on appeal, that he apparently is entitled on some kind of third-party beneficiary theory to enforce the Super Buffet lease provision that imposed a 10 percent limit on the Chinese dishes that it could offer. This theory would have allowed him breach of contract damages from the landlord for the time period during which the limitation was not enforced by the landlord. However, that issue was not thoroughly litigated or preserved below and should not be resolved on appeal.^[4]

With these caveats, we now turn to the trial court's resolution of these lease disputes.

III

NONSUIT: PANDA EXPRESS

We note that the nonsuit request (motion for judgment) occurred during a court trial. ( 631.8.) Section 631.8 serves the same purpose as does section 581c, which permits the court to grant a nonsuit in a jury trial. The trial court's order represented its determination, as a matter of law, that evidence presented by Chin would have been insufficient to permit a jury/factfinder to find in his favor. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291 (Nally); Roth v. Parker (1997) 57 Cal.App.4th 542, 549 [motion for judgment].) In considering the nonsuit, the trial court was required to accept the evidence most favorable to plaintiff Chin and to disregard conflicting evidence. (Nally, supra, 47 Cal.3d at p. 291.)

" 'In determining whether plaintiff's evidence is sufficient, the court may not weigh the evidence or consider the credibility of witnesses. Instead, the evidence most favorable to plaintiff must be accepted as true and conflicting evidence must be

disregarded. The court must give "to the plaintiff ['s] evidence all the value to which it is legally entitled, . . . indulging every legitimate inference which may be drawn from the evidence in plaintiff ['s] favor." ' [Citation.] A mere 'scintilla of evidence' does not create a conflict for the jury's resolution; 'there must be substantial evidence to create the necessary conflict.' [Citation.]" (Nally,supra, 47 Cal.3d 278, 291, original italics.)

The nonsuit motion argued that the landlord was not prohibited from leasing space to some competing tenants, but only to those tenants who are in the "principal" business of a Chinese food restaurant. Therefore, the landlord argued Chin had agreed to allow some degree of sales of Chinese food by other tenants, so long as those sales did not amount to the primary aspect of the other businesses. The landlord pointed out that it did not itself lease to Panda Express. It also pointed to portions of the Vons lease allowing Vons to sell incidental amounts of any type of food that is customary for supermarkets. Specifically, it cited to paragraph 4.2, allowing Vons to use its premises for sales or services that were typically sold or performed by supermarkets, so long as the primary use remained its supermarket operation. Also, the landlord argued that since the 1981 Vons lease predated the 1990 Chin lease, the landlord had no duty to change or supersede it.

Chin's main argument on appeal is that the trial court read the lease too technically, to find that there was no breach by the landlord with respect to Vons only. Rather, plaintiff argues that the landlord had an affirmative duty to enforce the Vons lease against any other prohibited use of the premises, such as by Panda. He relies on other portions of paragraph 4.2 of the Vons lease that restrict it from allowing its premises to be used to sell products or services for which the landlord had already granted an exclusive right in the center. Chin argues that the landlord's predecessor acknowledged to Vons that there could be a problem with its renovations that added Panda as a concession, due to Chin's exclusivity clause. Similarly, he argues the Vons lease was renewed at that time, requiring the landlord to adhere to its provisions. He therefore argues those circumstances should be used to show the landlord's intent and admissions regarding the true meaning of paragraph 41.

We have already set forth above our view that Chin's general argument (that the landlord should not deprive Chin of the benefits of his agreement) may not be based in an implied covenant cause of action, which was not pled, and Chin is not seeking tort damages. However, Chin relies on Medico-Dental,supra, 21 Cal.2d 411, to support his argument that the landlord owed him a duty to stop Vons from allowing Panda to sell Chinese food within the supermarket. In the Medico-Dental case, the original tenant, the Horton drug store, signed a lease that included an exclusivity clause reading: " 'Lessor agrees not to lease or sublease any part or portion of the Medico-Dental Building to any other person, firm or corporation for the purpose of maintaining a drug store or selling drugs or ampoules . . .  during the term of this lease.' " (Id. at p. 415.) This clause was characterized as a material part of the consideration that induced Horton to enter into the lease with the landlord (the right to be protected against competition), such that a material part of the consideration failed when the landlord executed the competing facility's lease. (Id. at p. 417.) This lease and its restrictive covenant were breached when the landlord allowed the competing tenant to conduct the same kind of activity, and did not take immediate action to abate it, and when it told the original tenant that it could not do anything to stop the objectionable activity. (Ibid.)

According to Chin, paragraph 41 in his lease imposed the same kind of affirmative duties on the landlord as in Medico-Dental, supra, 21 Cal.2d 411. He contends the trial court's nonsuit ruling violated these principles by failing to recognize the landlord retained a duty to object to Vons' arrangement with Panda. He also cites to cases holding that a lessor cannot abrogate its own duties by delegating responsibility to its tenants. (Peoples Trust Co. v. Schultz Novelty & Sporting Goods Company (N.Y. 1926) 154 N.E. 649, 651; Hildebrand v. Stonecrest Corp. (1959) 174 Cal.App.2d 158, 164.) He cites out-of-state authority to the effect that the lessor has a duty to enforce the terms of other tenants' leases to prevent competing uses. (Five Towns Card & Gift Shoppe v. Lawrence Drug Co. (N.Y. 1975) 49 A.D.2d 568, 569.)

Here, we should compare plaintiff's paragraph 41 to the restrictive covenant in the Medico-Dental case. (Medico-Dental, supra, 21 Cal.2d 411.) The latter did not contain the qualification that competition was to be restricted regarding businesses that principally provided a certain service or product. (" 'Lessor agrees not to lease or sublease any part or portion of the Medico-Dental Building to any other person, firm or corporation for the purpose of maintaining a drug store or selling drugs or ampoules . . .  during the term of this lease.' " (Id. at p. 415.) We think this paragraph 41 was narrower in scope than the restrictive covenant enforced by the Supreme Court in Medico-Dental, and also the relationship of the competing business (Panda) is more removed from the landlord itself. The Vons lease (paragraph 4.2) allowed it to use its premises to sell or allow services to be performed that were typically sold or performed by supermarkets, which normally includes retail food services, so long as the primary use remained supermarket operation. That provision was stated to be effective over any other lease provision.

In light of the specific lease language at issue, plaintiff cannot show the landlord here had this kind of broad duty, nor that plaintiff submitted sufficient evidence to create a factual conflict for resolution by the trier of fact. (Nally,supra, 47 Cal.3d 278, 291.) Plaintiff did not provide other definitions of "principal business" that required extrinsic evidence to be admitted, as already discussed above, and the trial court properly concluded there was no ambiguity in that respect. Also, the trial court had sufficient grounds to conclude that the lease language, properly construed, did not require the landlord to prevent Panda Express from operating, nor did the lease sued upon prohibit Vons from subletting a portion of its premises to Panda, nor was Panda shown to qualify as a "tenant" of the landlord. To the extent that Chin sought to rely upon the Vons lease, to interpret his own paragraph 41, he is unsuccessful, because he still did not meet his burden of proof to show that the landlord leased space to another tenant, Vons, whose principal business was Chinese food. The grant of nonsuit was appropriate.

IV

TRIAL COURT DECISION: SUPER BUFFET

In reviewing a disputed factual issue resolved by the finder of fact, we use the substantial evidence test. Substantial evidence is "evidence of 'ponderable legal significance, . . . reasonable in nature, credible, and of solid value.' [Citations.]" (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873.) In determining its existence, we look at the entire record on appeal rather than simply considering the evidence cited by a party. (Ibid.) "The ultimate determination is whether a reasonable trier of fact could have found for the respondent based on the whole record. [Citation.] While substantial evidence may consist of inferences, such inferences must be 'a product of logic and reason' and 'must rest on the evidence' [citation]; inferences that are the result of mere speculation or conjecture cannot support a finding [citations]." (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)

To interpret the contract, the trial court determined the term "principal" was used to mean primary, chief, or main. At trial, the parties addressed this issue as follows. Plaintiff presented evidence from his own food expert, his brother-in-law, Mr. Fan, that Super Buffet's food looked mostly like Chinese food, such as most of the hot entres. The rice that they used in their fried rice was Chinese style, as opposed to Japanese style, as was the soup. Sushi, salad, and dessert were also offered. Other employees had the same opinion, that Super Buffet served a lot of Chinese food, although they did not perform any systematic surveys or counts.

Chin testified at trial that the purpose of the exclusivity clause was to prevent customers from migrating from his restaurant to another in order to find Chinese food to buy. In his opinion, a competitor that served 10 percent or less Chinese food would be within the lease terms. His broker also testified that the purpose of the provision was to prevent other restaurants in the shopping center from competing significantly for customers who wanted prepared Chinese food.

In response, the landlord presented expert testimony from its food expert Mr. Miller, who visited Super Buffet for both lunch and evening meals, and obtained information about all dishes offered by Super Buffet. He tasted their dishes and inspected cooking ingredients, tools, sauces, and accompaniments. He visited the kitchen to inspect storage facilities and lockers and to watch dishes being prepared and served. The deposition testimony of the Super Buffet manager, Ms. Zhang, was provided, about the types of food served, and menus were supplied. Trial exhibits were admitted, including photographs of the sign of the Super Buffet, referring to it as providing "Japanese Sushi and Seafood." The landlord therefore argued Chin's evidence did not prove that the majority of the business at the Super Buffet was selling Chinese restaurant food.

On appeal, Chin argues that the "principal business" requirement in the clause was misinterpreted by the court, because the term "principal" could also be interpreted as most important, leading, or considerable. Thus, even though the Super Buffet offered different kinds of Pan Asian food, its competition was extremely significant because according to the experts, hot food choices are the most important factor when Americans choose a lunch or dinner restaurant.

Chin further contends that the provision in the Super Buffet lease limiting its food choices to less than 10 percent Chinese food shows that the landlord understood its obligations but nevertheless breached them, by not enforcing food limitations. There were two years during which the landlord ignored this limitation. In any case, Chin argues that he made a sufficient showing that the predominant purpose of Super Buffet was to provide Chinese food, because its serving of many kinds of sushi (Japanese food) or Pan Asian food is not as important as its serving of hot Chinese entrees. Further, he argues the court should not have relied on the Super Buffet sign reading "Japanese Sushi and Seafood," but instead should have looked at the substance of what kind of food it served.

In its tentative decision, the trial court relied on the testimony of the defense expert, Mr. Miller, which it found was well grounded in a thorough investigation. The court also found significant "the fact that the outside sign and the menu advertise the restaurant as 'Japanese' . . . because a patron would expect the food of the facility to correspond to the advertising representation. Common sense would have us believe that how one describes oneself is strong evidence of one's actual nature." Next, the court concluded the type of competition engaged in by Super Buffet was not forbidden by the lease: "The lease did allow for the sale of some Chinese dishes by other establishments. Further, the lease did not prohibit direct competition by restaurants offering Pan/Asian cuisine as long as the principal business was not that of a Chinese restaurant."

From all of the evidence, the trial court made factual determinations that the Super Buffet restaurant was principally a Japanese and Pan Asian buffet and seafood restaurant, rather than a Chinese one. The court was entitled to rely upon the expert evidence offered by the landlord and the deposition testimony of the Super Buffet manager, Ms. Zhang. Chin and his employees provided only generalized and anecdotal evidence, and his expert was apparently not as thorough. The court had a sufficient basis in the evidence to conclude that no breach of the lease occurred when Super Buffet became or continued as a tenant in the shopping center, and that no damages were due. Chin has failed to show reversible error in this respect.

V

EXPERT FEES AWARD

"In reviewing an award of costs and fees under Code of Civil Procedure section 998, the appellate court will examine the circumstances of the case to determine if the trial court abused its discretion in evaluating the reasonableness of the offer or its refusal. [Citations.] The purpose of Code of Civil Procedure section 998 is to encourage the settlement of litigation without trial. [Citation.] ' "Its effect is to punish the plaintiff who fails to accept a reasonable offer from a defendant." ' [Citation.] To implement these principles, the following rule has been developed: 'Where, as here, the offeror obtains a judgment more favorable than its offer, the judgment constitutes prima facie evidence showing the offer was reasonable and the offeror is eligible for costs as specified in section 998. The burden is therefore properly on plaintiff, as offeree, to prove otherwise.' [Citation.]" (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 152.)^[5]

In its November 17, 2005 ruling, the court made the following observations. The landlord had offered to settle the case for $75,000, and pursuant to section 998, sought to recover expert witness fees in the amount of $40,387. Although the court found the landlord was clearly entitled to expert witness fees, it reduced the amount on the following basis: "[T]he court notes that pursuant to the San Diego County Superior Court Rules of Court, Rule 2.11, the reasonable rate for an 'economist' is $200/hour. Here, Mr. Engel charged $228. The court finds $32,440 to be a more reasonable amount for Engel's post-998 offer services. In addition, Defendant is entitled to $3,310.95 for the post-998 offer services of Mr. Miller for a total of $35,750.95 in expert witness fees."

Plaintiff challenges this award on several bases. First, he contends it was improperly used as a penalty for the failure of the parties to complete their initial settlement agreement, which was not his fault, but rather the landlord's (adding new terms that had not been negotiated). He argues the defense economist's office had billed for excessive hours and fees, because the 172.2 hours spent in an effort to show plaintiff had skimmed cash off his restaurant profits was unconvincing and speculative. Plaintiff points to the fees charged by his economist, $7,900, as more appropriate. Also, the defense food expert's fees were approximately $3,300, so plaintiff believes that the defense economist's request must be out of line.

Additionally, plaintiff contends that he, as a self-made man working in the restaurant industry, has relatively lesser means than the landlord company, so the fees were excessive and unreasonable. He relies upon Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1561-1562 for the concept that "when two competing parties possess vastly disparate economic resources this may require the trial courts to 'scale' the financial incentives (in this instance the 998 cost awards) to the parties' respective resources." (Seever, supra, at p. 1562.) In making that statement, the court was attempting to pursue the goals of section 998 in encouraging fair and reasonable settlements, rather than settlements at any cost. (Id. at p. 1561.) However, even assuming that factor should have been an appropriate consideration in the trial judge's exercise of discretion, plaintiff did not make a record of evidence about his financial condition, other than that he owns about a dozen restaurants. He has accordingly not supported this argument with an adequate record, and we need not further consider it. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296; Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141.)

Instead, we should focus on "the circumstances of the case to determine if the trial court abused its discretion in evaluating the reasonableness of the offer or its refusal." (Carver, supra, 94 Cal.App.4th at p. 152.) We agree with the trial court that the landlord had a statutory entitlement to expert witness fees, because the pretrial offer of $75,000 was not inconsiderable in light of the $605,000 damages plaintiff was claiming, and due to the difficulty of proof of the lost profits claims. Moreover, the trial court utilized local rules to set a reasonable rate for an "economist" at $200/hour, to reduce Mr. Engel's charges from $228/hour. This showed an effort to reach an equitable result, even in light of any adjustments required by the fact that Mr. Engel used his staff for some of the work. Also, in light of the inevitable uncertainties of what issues would be dispositive at trial, the expert work could not be deemed to be excessive or unnecessary. The trial court did not impose punitive amounts, but rather amounts supported by the record, that were well within the appropriate exercise of its discretion. We have been given no basis in the record to reverse the judgment or the order awarding expert witness fees.

DISPOSITION

The judgment is affirmed. Costs are awarded to respondent.

HUFFMAN, J.

WE CONCUR:

McCONNELL, P. J.

AARON, J.

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^[1] All further statutory references are to the Code of Civil Procedure unless noted.

^[2] Although Chin originally also alleged causes of action for unfair business practices (Bus. & Prof. Code,  17200 et seq.) and interference with prospective economic advantage, nonsuit was granted on those claims and that order is not challenged on appeal.

^[3] Shortly before trial, Super Buffet quit paying its rent and was evicted.

^[4] The trial record shows, and the parties acknowledged at oral argument on this appeal, that the matter was tried on a straightforward theory of breach of Chin's lease, and we decline to address third party beneficiary theories arising from the other leases with Vons or Super Buffet.

^[5] Section 998, subdivision (c)(1) states that "[i]f an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer. In addition, in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant."