Filed 1/30/20 Foothill Terrace v. Johnson CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOOTHILL TERRACE, LTD.,

Plaintiff, Cross-defendant and Appellant,

v.

NADINE B. JOHNSON et al.,

Defendants, Cross-complainants and Respondents.

B292486

(Los Angeles County

Super. Ct. No. KC067894)

APPEAL from a judgment of the Superior Court of Los Angeles County, Robert A. Dukes, Judge. Affirmed.

Dowdall Law Offices, Terry R. Dowdall and Maureen Levine for Plaintiff, Cross-defendant and Appellant.

Law Offices of Doonan & Doonan and D. Scott Doonan for Defendants, Cross-complainants and Respondents.

_____________________________

Plaintiff operates a mobile home park on two parcels of land leased from defendants. The parties disputed plaintiff’s right to renew the leases. Plaintiff claimed it had an unfettered right to extend the leases, and defendants claimed any extensions were conditioned upon a change in use of the property. Alternatively, plaintiff argued the court should reform the leases to allow lease extensions without a change in use, because local ordinances made it impracticable to change the use of the land from a mobile home park. Following a court trial, the court agreed with defendants, and entered judgment in their favor. We affirm.

FACTS

In August 1970, plaintiff Foothill Terrace Ltd.’s predecessor in interest entered into identical leases with Frank and Nadine Johnson and the Cullen Family Trust, to lease land for the purpose of operating a mobile home park. Paragraph 2 of the leases, captioned “Term,” provides that “[t]he term of this lease shall be for a period of 55 years commencing on September 1, 1970 and terminating August 31, 2025.” It says nothing about lease renewal.

Paragraph 3 established the rent for the properties as the greater of either a percentage of the then-value of the land, or 20 percent of the gross rental income from the mobile home park.

Paragraph 7, captioned “Use of Premises,” provided that “said premises shall be used by the Lessee for a mobile home park and in the event the Lessee deems it advantageous to change the use of said premises other than for a mobile home park then said premises shall be reappraised and the rental payment for same shall be based upon a 7% net-net-net per annum basis of the reappraised value—that is, Lessee shall pay taxes, insurance, and all other costs generally born by the owner of property so that Lessor shall have no expenses in connection therewith, and the Lessee shall be given a further extension of this lease based upon the number of expired term of years in which Lessee has used said premises as a mobile home park although the total aggregate period shall in no event exceed 99 years.”

Paragraph 21 sets forth certain conditions precedent for the leases, such as obtaining a conditional use permit from the City of La Verne to operate a mobile home park, and final approval from the City to operate a mobile home park.

On September 11, 2015, plaintiff sued defendants (the survivors of the original lessors) for declaratory relief and breach of contract, alleging that paragraph 7 of the leases entitled plaintiff to a lease extension up to 99 years, and that the properties need only be reappraised if plaintiff elects to use them for a different purpose than a mobile home park. Plaintiff alleged that defendants refused to honor plaintiff’s right to a lease extension beyond the original 55-year term without a reappraisal, even though plaintiff does not intend to change the use of the properties.

Respondents filed a cross-complaint for declaratory relief, alleging that paragraph 7 of the leases allow for a lease extension only if there is a change in use of the premises.

Plaintiff filed a first amended complaint adding a cause of action for reformation based on commercial impracticability. The first amended complaint alleged that the City of La Verne (where the properties are located) enacted zoning ordinances in 1980 making it infeasible to convert the properties to another use. Specifically, plaintiff alleged “[i]f the change of use of the property from a mobilehome park is determined by the Court to be a condition precedent to lease extension under paragraph 7, such condition should be excused, and the leases reformed so as to remove the requirement of change of use as a condition to Plaintiff’s exercise of the option to extend the subject leases.”

The case was tried to the court. The court determined the leases were unambiguous, excluded parol evidence of the parties’ intent, and found the extension clause applied only if the parties agreed to change the use to some use other than a mobile home park. The trial court also found that the municipal ordinances did not render performance under the contract impracticable; the ordinances require the continued use as a mobile home park which furthers the purpose of the contract, and the impracticability of a different use due to changes in zoning laws does not effect a forfeiture because the parties had the benefit of the full term of the lease, 55 years, and plaintiff has no intent to change the use of the property, and therefore had no right to an extension. Judgment was entered in favor of defendants.

This timely appeal followed.

DISCUSSION

1. Extension of the Lease
2.
When construing a contract the court should give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made. (Civ. Code, §§ 1636, 1639, 1644, 1647.) The whole of a contract should be taken together, to give effect to every part, if reasonably practicable. (§ 1641.) A court must view the language in light of the instrument as a whole. (Ibid.; Rice v. Downs (2016) 248 Cal.App.4th 175, 185-186; see also Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1378.)

Here, the lease extension provision does not appear under paragraph 2, defining the “Term” of the leases. Paragraph 2 provides for a lease term of 55 years, and contains absolutely no provision for its extension. Instead, the extension clause appears under the “Use of Premises” heading, and appears after language setting forth the procedure for changing the use of the property. Plainly, by its terms, the leases only permit plaintiff to extend the leases if plaintiff changes the use of the property. By the express terms of the contract, the parties contemplated that the property would be used as a mobile home park. Only if plaintiff later decided to use the property for some other purpose, and invested funds to change the character of the property, the parties agreed to a change in rent, and an extension of the lease term, to fully realize the benefit of this change.

Plaintiff relies on rules of construction such as the “last antecedent rule” and its exceptions, and comma placement to argue that the extension clause applies to all of the preceding clauses of the paragraph; e.g., that the contract should be construed to allow extension of the leases if plaintiff continues to use the premises as a mobile home park, or if plaintiff “deems it advantageous to change the use of said premises . . . .” (See White v. County of Sacramento (1982) 31 Cal.3d 676, 680 [discussing last antecedent rule].)

As plaintiff admits, we only resort to such aids in construction if a contract is ambiguous. (People ex rel. Lockyer v. R. J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 530.) Here, there are no ambiguities in the material portions of the leases. The leases provided for discrete terms of 55 years, and only contemplated an extension if plaintiff changed the use of the premises from a mobile home park.

3. Commercial Impracticability
4.
The parties do not dispute that after the leases were entered, local zoning ordinances changed that would make it infeasible if not impossible to change the use of the properties from a mobile home park. Plaintiff argues that to the extent a change in use is required to trigger the extension clause, it should be excused due to impracticability, and that construing the extension clause to require a change in use would result in “an extreme forfeiture.” (See Vernon v. Los Angeles (1955) 45 Cal.2d 710, 712 [discussing impracticability and reformation]; Alpha Beta Food Markets v. Retail Clerks (1955) 45 Cal.2d 764, 771 [discussing forfeiture]; see also Civ. Code, § 1442 [“A condition involving a forfeiture must be strictly interpreted against the party for whose benefit is created.”].)

These contentions have no merit. That the parties were prevented from extending the lease for some new purpose does not effect a forfeiture or render performance impracticable. It is undisputed that plaintiff does not intend to change the use of the property, and that the leases state the property was to be used as a mobile home park. The parties received exactly what they bargained for, and the changes in the law furthered the purpose of the contract—that the land be used for a mobile home park.

DISPOSITION

The judgment is affirmed. Respondents may recover their costs on appeal.

GRIMES, Acting P. J.

WE CONCUR:

STRATTON, J.

WILEY, J.