Filed 8/29/17 Bush-Grant, LLC v. Hotel Astoria CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

Hotel Astoria, Inc. appeals the award of attorney fees to the owners of a commercial building in San Francisco, following the owners’ successful unlawful detainer action. Finding the award of attorney fees was proper, we affirm the judgment.

I. FACTS

The facts are undisputed. The property is a commercial building located at the corner of Bush and Grant Streets in San Francisco. Bush-Grant, LLC and Arturo F. Tudury and Lisa A. Cordray, as trustees of the Tudury Keesing Properties Trust dated December 10, 2009 (collectively Landlord) own and lease the property to multiple businesses.

A. The Master Lease

On June 29, 1980, Landlord’s predecessors-in-interest entered into a 34-year commercial lease (Master Lease) with Frank Lembi for various portions of the property. The Master Lease had an attorney fees clause at paragraph 22, which provided, in part: “In the event that the Lessor should institute any suit against Lessee for violation of any of the covenants or conditions of this lease or for recovery of the possession of the demised premises . . . the prevailing party shall be entitled to the fees of its attorneys in the reasonable amount thereof . . . .”

B. The Original Sublease

On January 1, 1991, Lembi subleased (Original Sublease) a portion of his interest in the property to Hotel Astoria, Inc. (Subtenant), more specifically, 510 Bush Street. The Original Sublease, at paragraph 2, incorporated the terms of the Master Lease as follows: “It is understood and acknowledged by Sublessor and Subtenant that this Sublease is subject to all of the terms and conditions of the Master Lease which is attached hereto and incorporated herein by reference . . . .” Paragraph 14, entitled “Surrender of the Premises,” provided, in part: “If the Premises are not . . . surrendered at the termination of this Sublease, Subtenant shall indemnify Sublessor and its Agents against all loss or liability resulting from delay by Subtenant in so surrendering the Premises, including . . . attorneys’ fees and costs.” Paragraph 27, entitled “Default,” described the Sublessor’s remedies in the event of Subtenant’s default, which included any amount necessary to compensate Sublessor, “including, without limitation . . . reasonable attorneys’ fees and court costs.” The term of the Original Sublease was for 14 years 11 months, and expired on May 31, 2006. Subtenant did not exercise its option to renew the Original Sublease.

C. First Amended Sublease

At some point prior to the expiration of the Original Sublease, Lembi assigned all of his interest in the property to Astoria, LLC (Astoria). On October 5, 2009, Lembi, as manager of Astoria, extended the term of the Original Sublease (First Amended Sublease). Under the terms of the First Amended Sublease, Subtenant agreed to an extension of the term of the Original Sublease to September 30, 2014. The First Amended Sublease was “made with reference to the [Original] Sublease,” and the parties agreed “all provisions of the [Original] Sublease shall remain unchanged and in full force and effect.”

D. Lembi’s Bankruptcy

Lembi filed for bankruptcy in October 2011. In September 2012, the United States Bankruptcy Court for the Northern District of California (Bankruptcy Court) issued a judgment and an injunction against Astoria, declaring its interest in the Master Lease to be property of the bankruptcy estate. Astoria was ordered to relinquish “any and all subleases” to the trustee of the bankruptcy estate.

In October 2012, the Bankruptcy Court issued an order authorizing E. Lynn Schoenmann, Chapter 7 Trustee (Bankruptcy Trustee), to operate the property covered by the Master Lease, including 510 Bush Street.

E. Second Amended Sublease; Lease Transition Agreement

On September 30, 2014, the Bankruptcy Trustee entered into an agreement with Subtenant to extend the term of Subtenant’s lease of 510 Bush Street (Second Amended Sublease). The Second Amended Sublease expired on December 31, 2014, the same date the Master Lease expired.

On October 31, 2014, Landlord and the Bankruptcy Trustee entered into a Lease Transition Agreement and Release. Under the terms of the Lease Transition Agreement, Landlord and the Bankruptcy Trustee affirmed that the Master Lease expired on December 31, 2014, and agreed Landlord would have sole discretion with respect to entering any new direct leases with existing subtenants.

F. Bankruptcy Trustee’s Assignment to Landlord; Unlawful Detainer Proceedings

On December 31, 2014, Landlord and the Bankruptcy Trustee entered into an agreement in which the Bankruptcy Trustee assigned to Landlord “the rights and interests” of Lembi’s estate under the subleases that survived after December 31, 2014, except the right to collect rent (Assignment).

The Second Amended Sublease expired on December 31, 2014. Landlord did not extend, renew, or expand the Second Amended Sublease, and did not enter into a new lease with Subtenant for 510 Bush Street. Subtenant failed and refused to vacate the property. Following this unauthorized holdover of possession, Landlord sued for unlawful detainer. Landlord prevailed at summary judgment and was awarded attorney fees.

II. DISCUSSION

A. Preliminary Matters

“It is a fundamental rule of appellate review that the judgment appealed from is presumed correct and ‘ “ ‘all intendments and presumptions are indulged in favor of its correctness.’ ” [Citation .]’ [Citation.] An appellant must provide an argument and legal authority to support his contentions. This burden requires more than a mere assertion that the judgment is wrong. ‘Issues do not have a life of their own: If they are not raised or supported by argument or citation to authority, [they are] . . . waived.’ [Citation.] It is not our place to construct theories or arguments to undermine the judgment and defeat the presumption of correctness. When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived. [Citation.]” (Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852.)

From what we can discern from the somewhat confusing and abbreviated appellate briefs, the gist of Subtenant’s appeal is this: the Sublease^[1] was not assigned to Landlord, and to the extent the Sublease was included in the Assignment, any rights Landlord had thereunder, including the right to attorney fees, did not survive December 31, 2014. Because Subtenant has failed to present cogent appellate arguments supported by applicable legal authority, we may properly treat any appellate issues as having been forfeited. (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830.) In any event, these otherwise forfeited claims are without merit.

B. Standard of Review

Subtenant’s appeal challenges only the legal basis for the trial court’s award of attorney fees to Landlord.^[2] The determination of the legal basis for an award of attorney fees is a question of law that this court reviews de novo. (City and County of San Francisco v. Ballard (2006) 136 Cal.App.4th 381, 399.) Where, as here, the relevant facts are not in dispute, we examine the applicable statutes and provisions of the Sublease to determine whether Landlord is entitled to fees. (Exxcess Electronixx v. Heger Realty Corp. (1988) 64 Cal.App.4th 698, 705.)

C. The Sublease Was Assigned to Landlord

Subtenant argues that the Bankruptcy Trustee’s Assignment to Landlord did not include the rights under the Sublease.[3] The plain language of the Assignment belies this claim.

The Assignment defines the rights assigned as follows:

“(a) ‘Assigned Rights’ means the rights and interests of Assignor under the Subleases that continue after the Termination Date or otherwise survive the expiration or termination of the Subleases, except Tenant’s rights under the Subleases to collect rent or other monetary amounts that are payable, or which otherwise accrue, on or before the Termination Date.

“[¶] . . . [¶]

“(d) ‘Subleases’ means the Subleases of the Premises, as described in Exhibit 1 to the Lease Transition Agreement.” (Original bolding, underlining omitted.)

Exhibit 1 of the Lease Transition Agreement provides, in part, as follows:

“Subleases

1. Sublease Agreement by and between Frank Lembi, as sublessor, Hotel Astoria, Inc., a California corporation, as subtenant, as amended, with respect to 510 Bush Street, San Francisco, California.” (Original bolding.)

By its terms, the Assignment transfers “rights and interests” under the Subleases “that continue after the Termination Date or otherwise survive the expiration or termination” of the Subleases. Subtenant argues that since its Sublease expired on December 31, 2014, Landlord could not expect its rights, including its ability to claim attorney fees, to extend beyond the termination date. This assertion not only defies logic, it is contrary to basic contract interpretation principles and property law.

Any contract must be construed as a whole, with the various individual provisions interpreted together so as to give effect to all, if reasonably possible or practicable. (Civ. Code, § 1641; Code Civ. Proc., § 1858.) Courts must interpret contractual language in a manner which gives force and effect to every provision, and not in a way which renders some clauses nugatory, inoperative or meaningless. (New York Life Insurance Co. v. Hollender (1951) 38 Cal.2d 73, 81–82; Titan Corporation v. Aetna Casualty & Surety Co. (1994) 22 Cal.App.4th 457, 473–474.) “When an inconsistency exists in the language of a contract, courts must give effect to the parties’ main purpose.” (Sy First Family Ltd. Partnership v. Cheung (1999) 70 Cal.App.4th 1334, 1342; Civ. Code, § 1653.)

Applying these rules of contract interpretation, we conclude that, contrary to Subtenant’s assertion, the Assignment validly transferred Subtenant’s interest in the Sublease to Landlord. In the first place, the Assignment clearly and unambiguously pertains to the Sublease in question. As written, the subordinate clause “that continue after the Termination Date or otherwise survive the expiration or termination of the Sublease[]” most logically refers to the rights and interests that survived the expiration or termination of the leaseholds, not the leaseholds themselves. (Civ. Code § 1641 [“The whole of a contract is to be taken together, so as to give effect to every part . . . .”) If that clause modified subleases, the Assignment would be limited only to those leaseholds that survive after the termination date. Clearly, such an interpretation would render the Assignment meaningless. A leasehold “gives rise to two sets of rights and obligations—those arising by virtue of the transfer of an estate in land to the tenant (privity of estate), and those existing by virtue of the parties’ express agreements in the lease (privity of contract).” (Valley Investments, L.P. v. BancAmerica Commercial Corp. (2001) 88 Cal.App.4th 816, 822.) Here, the termination of Subtenant’s leasehold estate—its ability to occupy the property in exchange for rent—on December 31, 2014 did not terminate Subtenant’s contractual obligations or the Bankruptcy Trustee’s contractual rights under the Sublease. By virtue of the Assignment, the Bankruptcy Trustee transferred all of the rights in Lembi’s bankruptcy estate to Landlord.

With respect to these rights, Landlord “stepped into [Lembi’s] shoes as a matter of law,” and was entitled to enforce the provisions of the Sublease, including the right to attorney fees. (See Cal. Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598, 605, 607.) To the extent any inconsistency exists in the language of the Assignment, we conclude that the main purpose of the Assignment was to transfer the rights associated with Lembi’s bankruptcy estate that survived the expiration or termination of the leaseholds, which unquestionably included the right to recover the property from an unauthorized holdover tenant and to seek attorney fees related to that recovery. (See, e.g., Sy First Family Ltd. Partnership v. Cheung, supra, 70 Cal.App.4th at p. 1342.)

C. The Trial Court Properly Awarded Attorney Fees to Landlord

Subtenant advances a muddled theory regarding why Landlord should not be entitled to attorney fees. According to Subtenant, once Lembi’s interest in the Master Lease terminated on December 31, 2014, he had no legal rights either as a Tenant or as Sublessor, which included the right to evict Subtenant. Subtenant’s protracted claim is this: if Lembi could not evict Subtenant under the Sublease, he “would not have been entitled to attorneys’ fees for a nonexistent right to evict. Therefore, standing in [Lembi’s] shoes, neither could [Landlord] as [Lembi’s] assignee[] sue to evict [Subtenant] under the Sublease, though as owner of the property, [Landlord was] entitled to sue [Subtenant] as a hold-over tenant under Code of Civil Procedure section 1165. And if [Landlord] had no right to sue [Subtenant] for eviction under the Sublease, obviously [Landlord], like [Lembi] had no right to attorneys’ fees as assignees of the Sublease.” (Italics omittied.)

This nearly incomprehensible argument is not supported by any legal authority and may properly be treated as forfeited. (In re Marriage of Falcone & Fyke, supra, 164 Cal.App.4th at p. 830.) In any event, this otherwise forfeited claim is without merit.

A prevailing party is generally entitled to recover its costs in any action or proceeding. (Code Civ. Proc., § 1032, subd. (b).) Recoverable costs ordinarily do not include attorney fees, however, unless such fees are specifically authorized by statute or agreement. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 127–128; see Code Civ. Proc., § 1021.) Recoverable litigation costs will therefore include attorney fees “only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 606 (Santisas), citing Code Civ. Proc., § 1033.5, subd. (a)(10).)

Under Code of Civil Procedure section 1021, parties have the right to enter into agreements for the award of attorney fees in litigation. (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342 (Xuereb).) Civil Code Section 1717 (hereafter Section 1717) ensures mutuality of remedy for attorney fees claims under such contractual provisions. (Santisas, supra, 17 Cal.4th at p. 610.) Section 1717, subdivision (a) provides: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

“By its terms . . . [S]ection 1717 has a limited application. It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to enforce that contract. Its only effect is to make an otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions to enforce the contract.” (Xuereb, supra, 3 Cal.App.4th at p. 1342.)

An action for unlawful detainer may be an action on a contract or one sounding in tort depending on the nature of the claim. (Mitchell Land & Improvement Co. v. Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 486.) “f an unlawful detainer action is based on an alleged breach of the lease during an unexpired term (e.g., nonpayment of rent, improper use of the premises), then it is an action sounding in contract. If an unlawful detainer is brought to oust a holdover tenant following expiration of a lease, then the action is premised on tortious conduct (e.g., trespass), and it is an action sounding in tort.” ([i]Ibid.)

The unlawful detainer action here is of the latter type. In the unlawful detainer complaint, Landlord demanded “immediate possession” of the property that Subtenant was “holding over in possession” without Landlord’s “permission or consent.” The action thus sounds in tort and attorney fees would not have been recoverable under Section 1717 based on the complaint alone. Nevertheless, the trial court did not err in awarding attorney fees to Landlord in light of the plain terms of the attorney fees provisions in the Original Sublease, as well the attorney fees provision in the Master Lease.

Section 1717 does not “supersede or limit the broad right of parties pursuant to Code of Civil Procedure section 1021 to make attorney fees agreements.” (Xuereb, supra, 3 Cal.App.4th at p. 1342.) “Code of Civil Procedure section 1021 provides the basic right to an award of attorney fees. [Citation.] It states: ‘Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.’ Under this statute, the allocation of attorney fees is left to the agreement of the parties. There is nothing in the statute that limits its application to contract actions alone.” (Id. at pp. 1341–1342.) Rather, “ ‘[P]arties may validly agree that the prevailing party will be awarded attorney fees incurred in any litigation between themselves, whether such litigation sounds in tort or in contract.’ ” (Santisas, supra, 17 Cal.4th 599, 608.)

The attorney fee provision in the Master Lease applies to “any suit against Lessee . . . for recovery of possession of the demised premises.” (Italics added.) The Original Sublease, in turn, incorporates the terms of the Master Lease as follows: “It is understood and acknowledged by Sublessor and Subtenant that this Sublease is subject to all of the terms and conditions of the Master [L]ease which is attached hereto and incorporated by reference . . . .” The Original Sublease also expressly provides for attorney fees for failure to surrender the property: “If the premises are not so surrendered at the termination of this Sublease, Subtenant shall indemnify Sublessor and its Agents against all loss or liability resulting from delay by Subtenant in so surrendering the Premises, including, without limitation, any claims made by any succeeding subtenant, losses to landlord due to lost opportunities to Sublease . . . and attorneys’ fees and costs.” (Italics added.)

The use of similarly broad language has been held to embrace all claims, whether sounding in contract or tort, in a legal action between the parties. (See Santisas, supra, 17 Cal.4th at p. 608 [“On its face, the provision embraces all claims, both tort and breach of contract, in plaintiffs’ complaint, because all are claims ‘arising out of the execution of th[e] agreement or the sale’ ”]; Xuereb, supra, 3 Cal.App.4th at p. 1340 [“ ‘If this Agreement gives rise to a lawsuit or other legal proceeding between any of the parties hereto . . . the prevailing party shall be entitled to recover actual court costs and reasonable attorneys’ fees in addition to any other relief to which such party may be entitled.’ ”].) Here, Landlord’s complaint for unlawful detainer was “a[] suit . . . for recovery” of the property, which under the express terms of the Master Lease and Original Sublease, entitled Landlord to attorney fees.

DISPOSITION

The judgment is affirmed. Landlord shall recover its costs on appeal.

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REARDON, ACTING P. J.

We concur:

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RIVERA, J.

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STREETER, J.