Filed 3/10/20 Macrotron Systems v. Gooch & Housego CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

MACROTRON SYSTEMS, INC. et al.,

Plaintiffs and Appellants,

v.

GOOCH & HOUSEGO (PALO ALTO) LLC,

Defendant and Respondent.

A153730

(Alameda County

Super. Ct. No. HG16808204)

MACROTRON SYSTEMS, INC. et al.,

Plaintiffs and Appellants,

v.

GOOCH & HOUSEGO (PALO ALTO) LLC,

Defendant and Respondent.

A154721

(Alameda County

Super. Ct. No. HG16808204)

Landlord, Macrotron Systems, Inc. (Macrotron), appeals from a judgment awarding its tenant, Gooch & Housego (Palo Alto) LLC (G&H), over $2 million in damages due to its breach of the parties’ commercial lease. Macrotron contends the evidence was insufficient to prove it breached the lease when it refused to pay the cost of compliance with state energy efficiency standards or allow G&H to utilize a portion of the building’s existing HVAC system. Alternatively, Macrotron asserts G&H failed to notify it of the alleged breaches as required by the lease. In a related appeal, which we order consolidated for oral argument and decision, Macrotron challenges an order awarding G&H $579,117 in contractual attorneys’ fees. Substantial evidence supports the judgment and the fee award. Accordingly, we affirm.

BACKGROUND

G&H manufactures and supplies optical components used in laser technology for high-end microscopes and telecommunications. Macrotron is an electronics supplier owned by Gordon and Anita Ting (hereafter, Ting) that also owns and partially occupies a large commercial building in Fremont, California. In August 2014, G&H leased just over half of the building’s square footage from Macrotron. Various disputes arose over the parties’ responsibilities under the lease, culminating in a jury trial on cross-actions between Macrotron and G&H for breach of contract and related claims. The jury rejected all of Macrotron’s claims against G&H, found that Macrotron breached the lease, and awarded G&H $2,015,100.88 in damages. On appeal, Macrotron challenges two specific claims of breach associated with about half of the total damages: its failure to pay for energy efficiency compliance work and its refusal to allow G&H to access bargained-for HVAC capacity.

I. Title 24 Work

The lease provided for G&H to make specified improvements to the premises. The parties understood those improvements would require compliance with energy efficiency standards for lighting and lighting control systems set forth in Title 24, Part 6 of the California Code of Regulations (Title 24). G&H Vice President of Finance Mark Batzdorf testified that G&H “knew that we had a sizeable renovation project. We knew that that would trigger Title—or we understood that that would trigger Title 24, and we wanted to make sure that that was covered and any incremental or additional cost was covered by the landlord in that case.” The parties addressed this issue during the lease negotiations. To that end, Section 8 of the Lease provided that “Landlord shall deliver the Premises to Tenant . . . (ii) with the Premises and Building in compliance with all Applicable Laws, including ADA Requirements and Title 24. . . . In addition and notwithstanding anything to the contrary, Landlord shall be responsible to perform all work to the Premises and/or Building necessary to comply with Title 24 which may be required as a result of the Landlord’s Work or Tenant’s Work.”

G&H carried out the Title 24 work as part of its tenant improvement project. During the project it regularly submitted design drawings for the mechanical, HVAC, and electrical systems to Macrotron for review and approval. G&H’s general contractor, VANIR Construction, (VANIR) met with representatives of G&H and Macrotron to review those drawings, sometimes including the responsible design professional in the meetings to answer Ting’s questions.

Occasionally Ting demanded changes to the drawings during or after the review meetings. VANIR would then make the requested revisions and resubmit drawings to G&H and Macrotron for approval. VANIR did not proceed with any work until Ting or another Macrotron representative signed off on the revised drawings. Macrotron never offered to undertake the Title 24 work itself, and neither Ting nor anyone else from Macrotron ever objected to G&H’s plans to perform it.

The total cost of the lighting required for Title 24 compliance was $492,177. When G&H presented Macrotron with the bill, Macrotron refused to pay it.

II. HVAC System

The building was originally equipped with six ducted HVAC units mounted on the roof, identified as AC1 through AC6, and a seventh smaller unit, AC7, that served a warehouse in the back of the premises. AC1 through AC6 fed into the building’s duct work in different locations and served the entire building except for the warehouse served by AC7.

Section 8 of the lease provided that “Landlord shall deliver the Premises to Tenant (i) with the Premises, Building, and all Building systems serving the Premises, including, the common areas, sidewalk, driveways, parking lot, truck doors, mechanical systems, HVAC systems, electrical, plumbing and lighting to be in good working condition and repair . . . .” When the parties negotiated and signed the lease, three of the six rooftop units, AC2, AC4, and AC6, served G&H’s part of the building. AC6 had the largest tonnage capacity and also served Macrotron’s side of the building.

When G&H executed the lease it understood from Macrotron’s assurances and the lease’s terms that G&H would have access to the existing building systems that served the premises it was going to occupy. The initial design for its tenant buildout was thus based on that understanding. But in January 2015, when G&H presented its first set of mechanical drawings for review, Ting refused to let G&H use AC6. “He said absolutely not. He refused to allow us to use it. We offered money in exchange. He refused that as well. We offered to upgrade the existing capacity in the existing six units, and he refused that as well.” Instead, Ting demanded that G&H cap AC6 so that it would serve only Macrotron’s side of the building. G&H ultimately had to purchase and install another unit, AC8, at a cost of $445,000.

III. Electrical System

In addition to its claims related to Title 24 compliance and the HVAC system, G&H asserted that Macrotron breached the lease by refusing it access to the building’s electrical transformers, thereby requiring G&H to install a parallel electrical system at the cost of more than $720,000, and also caused it to incur $250,000 in holdover rent at its former facility by delaying completion of G&H’s build-out.

IV. Jury Verdict and Postverdict Motions

The jury rejected all of Macrotron’s claims against G&H, found in favor of G&H on its breach of contract claims against Macrotron, and awarded damages of $2,015,100.88. The verdict form did not allow the jury to identify the bases for its findings of breach or allocate damages between G&H’s various breach allegations.

Macrotron moved for a new trial and judgment notwithstanding the verdict, arguing the evidence failed to establish breach of the lease under any of G&H’s theories and that the damages award was excessive and unsupported by the evidence. The court denied both motions. It ruled: “G&H’s claim for the cost to build an additional HVAC unit is supported by evidence that Macrotron breached the contract and the implied covenant. Under Section 8 of the lease, Macrotron agreed to provide HVAC systems in good working condition and repair. The evidence at trial is sufficient to show that G&H and Macrotron both reasonably expected that the three HVAC units already serving the portion of the buildings leased from Macrotron would be available for use by G&H. The evidence shows that G&H only built an additional unit, AC8, after Macrotron refused to allow use of AC6, which partially serviced the premises leased by G&H when the lease was signed. The lease does not contain any provisions specifying the amount of HVAC capacity that Macrotron agreed to supply; thus, the evidence that G&H reasonably expected that HVAC units servicing its side of the building would remain available is not contrary to the lease.” The court also found the evidence showed G&H notified Macrotron of its breach.

The court also found G&H’s claim for the cost of Title 24 compliance was supported by substantial evidence. “Macrotron’s contention that G&H cannot recover for the Title 24 work because G&H performed that work, and Macrotron did not agree to pay for work done by G&H, also fails to refute G&H’s claims. Under Section 8, Macrotron agreed to ‘be responsible to perform all work to the Premises and/or Building necessary to comply with Title 24 which may be required as a result of the Landlord’s Work or Tenant’s Work.’ Evidence was presented at trial that Macrotron received G&H’s plans for the work, did not object to those plans, and did not offer to perform the Title 24 work. That evidence is sufficient to show that Macrotron is liable for damages resulting from its failure to take responsibility for the Title 24 work.”

The trial court awarded G&H contractual attorneys’ fees in the amount of $579,117.

Macrotron filed timely appeals from the judgment and fee order.

DISCUSSION

I. Title 24 Work
II.
Macrotron contends it is not liable for the cost of the Title 24 work because, while it concedes it was contractually required to “perform all work . . . necessary to comply with Title 24,” G&H, not Macrotron, performed it. In Macrotron’s view, the lease “obligates Macrotron to do the work, but it does not require Macrotron to pay for work done by others.” Substantial evidence supports the jury’s contrary determination.

A. Legal Principles
B.
“A lease agreement is subject to the general rules governing the interpretation of contracts. [Citation.] ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ.Code, § 1636.) When possible, the parties’ mutual intention is to be determined solely from the language of the lease. ‘The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” . . . controls judicial interpretation.’ [Citation.] ‘Interpretation of a contract “must be fair and reasonable, not leading to absurd conclusions. [Citation.]” ’ ” (Bill Signs Trucking, LLC v. Signs Family Limited Partnership (2007) 157 Cal.App.4th 1515, 1521 (Bill Signs).)

“We review a trial court’s construction of a lease de novo as long as there was no conflicting extrinsic evidence admitted to assist in determining the meaning of the language. [Citation.] If a lease provision is ambiguous, parol evidence may be admitted as to the parties’ intentions if the language is reasonably susceptible to a suggested interpretation.” (California National Bank v. Woodbridge Plaza LLC (2008) 164 Cal.App.4th 137, 142.) Parol evidence is also admissible to show the lease is reasonably susceptible to two or more interpretations. (Bill Signs, supra, 157 Cal.App.4th at p. 1521.)

If there is conflicting evidence, our review is for substantial evidence. We “ ‘consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.] [¶] It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment. Even in cases where the evidence is undisputed or uncontradicted, if two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact, which must resolve such conflicting inferences in the absence of a rule of law specifying the inference to be drawn. . . . [Citations.]’ [Citation.] To be substantial, the evidence must be of ponderable legal significance, reasonable in nature, credible, and of solid value. [Citations.] However, substantial evidence is not synonymous with any evidence. [Citations.] ‘The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record.’ ” (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266 (ASP Properties).)

We review the denial of a motion for judgment notwithstanding the verdict to determine whether there is any substantial evidence, contradicted or uncontradicted, supporting the jury’s verdict. If there is, we affirm. (Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1138.) Similarly, “we can reverse the denial of a new trial motion based on insufficiency of the evidence . . . only if there is no substantial conflict in the evidence and the evidence compels the conclusion that the motion should have been granted.” (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 752.)

B. Analysis

In Macrotron’s view, the analysis begins and ends with Section 8’s language that the “[l]andlord shall be responsible to perform” all Title 24 compliance work necessitated by G&H’s tenant improvement project. (Italics added.) From this, Macrotron reasons it was obligated to personally carry out the Title 24 work (or, presumably, to engage contractors for the work), but was under no obligation to pay for Title 24 work performed by G&H. “[T]he lease imposed no obligation on Macrotron to reimburse G&H for work that it unilaterally undertook—even if Macrotron had an underlying obligation to perform that work itself.”

The trial court rejected this argument in light of the evidence, described above, that (1) the parties negotiated and ultimately agreed that Macrotron was responsible for the cost of Title 24 compliance; (2) Macrotron was informed during the design review process that G&H was doing the work as part of its tenant improvement project; and (3) it neither objected to G&H’s plans nor offered to “perform” the work itself. In view of this evidence, the jury could reasonably construe Section 8 as placing responsibility for Title 24 remediation on Macrotron, whether it performed the work or paid for its performance by a third party.

Macrotron disagrees. In support of its own interpretation, it points to other instances in the contract where the parties expressly allocated responsibility for the cost, rather than performance, of various tasks. This argument, at its core, asks us to reweigh the evidence and substitute different inferences and deductions for those of the fact finder. It is beyond our ambit as a court of review to do so. (ASP Properties, supra, 133 Cal.App.4th at p. 1266.)

Macrotron argues the plans it reviewed for G&H’s buildout were insufficiently clear about the nature and scope of the Title 24 work to show that it implicitly agreed to pay for it, and that, in any event, such a “tacit agreement . . . to reimburse G&H for its performance of Title 24 work would amend the parties’ contractual obligations” in violation of a lease term barring oral modifications or amendments. But the evidence supports the conclusion that the parties negotiated Section 8 to allocate to Macrotron the responsibility for and cost of Title 24 compliance, so the prohibition against oral modifications is irrelevant.

Macrotron argues that Section 30.10 of the lease expressly barred G&H from performing the Title 24 work and then seeking reimbursement from Macrotron. Section 30.10 provides that “if the Landlord fails to perform its obligations under this Lease, then Tenant shall not be entitled . . . to make any repairs or perform any acts at Landlord’s expense.” But Macrotron did not make this argument in the trial court. “ ‘A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing party.’ ” (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 29.)

Alternatively, Macrotron contends G&H failed to provide the written notice of its breach and afford it an opportunity to cure as required under Section 15.6 of the lease. This argument, too, is barred by Macrotron’s failure to raise it at trial and provide citations to the record showing us that it did so. Although Macrotron unsuccessfully asserted Section 15.6 as a defense to breach of its obligations concerning the electrical and HVAC system, as far as we can discern from the record it made no such claim regarding the Title 24 work. It is elementary that the appellant’s opening brief must “[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears.” (Cal. Rules of Court, rule 8.204(a)(1)(C).) “When an appellant’s brief makes no reference to the pages of the record where a point can be found, an appellate court need not search through the record in an effort to discover the point purportedly made. [Citations.] We can simply deem the contention to lack foundation and, thus, to be forfeited. [Citations.]” (In re S.C. (2006) 138 Cal.App.4th 396, 406–407.) So it is here.

I. HVAC System
II.
Macrotron cherry picks bits of testimony in support of its construction of the lease to assert its refusal to let G&H utilize AC6 did not breach its contractual obligations. Instead, it argues the lease at most required it to offer G&H a percentage of the building’s total cooling capacity proportional to the area of the leased premises, or roughly 50 percent. Macrotron contends it fulfilled its obligation by giving G&H access to AC2, AC4 and AC7, which it claims jointly comprised 62 percent of the building’s cooling capacity. “If the lease required a proportional share of capacity, as both of G&H’s representatives at trial . . . at some point have claimed, Macrotron satisfied that obligation.”

The jury reasonably rejected this view of Macrotron’s obligations under the lease. Section 8 required Macrotron to “deliver the Premises to Tenant (i) with the Premises, Building, and all Building systems serving the Premises, including . . . HVAC systems . . . in good working condition and repair.” This term and G&H’s testimony about the lease negotiation process comprise substantial evidence the parties intended that the three HVAC units already serving the leasehold premises including AC6, would be available to G&H. Accordingly, even if the evidence and contract language could also support Macrotron’s “proportional share of capacity” theory, we cannot disturb the jury’s verdict.

Macrotron’s alternative claim that G&H failed to provide it with written notice of the default as required under Section 15.6 (infra, fn. 2) is also contradicted by the evidence. As the court observed in denying Macrotron’s new trial motion, “the evidence at trial showed that G&H notified Macrotron that its refusal to let G&H use the existing HVAC units was a breach of the lease. The Notes to Meeting drafted by Mr. Bartham and Mr. Batzdorf, dated April 3, 2015, provided notice of G&H’s claim that Macrotron was in breach of the lease because it refused to allow G&H to use the existing HVAC units and HVAC-related building systems serving the G&H side of the building. The Notes to Meeting further provided notice of G&H’s position that Macrotron’s obligations with regard to the provision of HVAC were well-defined in the existing language of the lease, and that compromise on this issue would affect G&H’s operational requirements and was not an option. The Notes to Meeting further stated that failure to resolve the HVAC issues had already constructively delayed the permitting, construction, and relocation process.” Review of the April 3 notes leaves us with no doubt that substantial evidence supports the jury’s implicit and the court’s explicit finding of adequate notice.

Macrotron’s further contention that any notice was untimely because it was given more than three-months after the lease term began is also meritless. Macrotron relies on the provision in Section 8 that “If Tenant notifies Landlord within the first three (3) months following the Commencement Date that the Premises, Building and/or Building systems are not in good working order and repair . . . , Landlord shall, at its sole cost and expense . . . make such repairs, replacements or corrections as necessary.” But G&H never contended the HVAC system was not “in good working order or repair” at the commencement date. The problem was that Macrotron later refused to allow G&H to fully use the HVAC system as it existed when the parties agreed upon the lease. The timely notice provision has no bearing on the breach occasioned by that refusal.

III. Attorneys’ Fees
IV.
G&H moved as the prevailing party for an award of $674,265.50 in contractual attorneys’ fees pursuant to Civil Code section 1717. With exceptions not relevant here, the court found the hourly rates and amount of time charged by G&H’s counsel were reasonable, rejected fees for duplicative legal work, and awarded G&H fees in the amount of $579,117.

Macrotron argues the court erred in awarding G&H $45,941.50 of the total award for services rendered by two Ohio attorneys before they were granted admission to appear pro hac vice in this matter. Relying on Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119, 127 (Birbrower) for the rule barring recovery for fees incurred by attorneys not authorized to practice law in California, Macrotron argues G&H “cannot recover their Ohio attorneys’ fees unless each of those attorneys was, ‘at the time the services were performed,’ admitted to practice [law] in California.” We disagree.

A. Background
B.
Macrotron filed this action on March 18, 2016. G&H promptly retained both California counsel and an Ohio law firm with which it had a longstanding relationship. On April 12, 2016, less than a month after Macrotron filed suit, G&H reserved a hearing date for applications for pro hac vice admission of its Ohio counsel. Those applications were filed April 28, the date of G&H’s first appearance in the action, and granted on May 27. In the interim, Ohio counsel in their Ohio office worked primarily on preparing demurrers and a cross-complaint.

C. Analysis
D.
Pursuant to rule 9.40 of the California Rules of Court, “[a] person who is not a member of the State Bar of California but who is a member in good standing of and eligible to practice before the bar of any United States court or the highest court in any state, territory, or insular possession of the United States, and who has been retained to appear in a particular cause pending in a court of this state, may in the discretion of such court be permitted upon written application to appear as counsel pro hac vice, provided that an active member of the State Bar of California is associated as attorney of record.” The record indicates that G&H’s Ohio Counsel satisfied the requirements for admission pro hac vice and that their promptly filed application complied with all procedural requirements. Indeed, no one contends otherwise. Macrotron’s only complaint is that it should not have to pay for the legal work Ohio counsel performed in the interim before the court granted the application. We disagree.

Macrotron cites no authority for its broad proposition that as a matter of law a successful litigant cannot recover fees for services rendered by qualified out-of-state counsel who promptly applies for pro hac vice admission, reasonably expects the application will be granted, and starts to provide legal services in the interim before the court grants the application. Certainly the cases on which Macrotron does rely, Birbrower, supra, 17 Cal.4th at pp. 130–131, and Golba v. Dick’s Sporting Goods, Inc. (2015) 238 Cal.App.4th 1251 (Golba) say no such thing. In Birbrower, the New York attorneys who were precluded from recovering fees for unauthorized legal work in California never obtained—and never even applied for—admission pro hac vice. In Golba,

out-of-state counsel was found ineligible for and therefore denied pro hac vice admission. (Golba, supra, 238 Cal.App.4th 1251,

1257–1258.) Neither of these case, accordingly, is inconsistent with the trial court’s award of fees for services rendered by qualified out-of-state counsel between promptly applying for admission pro hac vice and obtaining an order granting that status. Moreover, disallowing those fees on appeal would simply result in a remand for the court to expressly grant Ohio counsel pro hac vice status effective nunc pro tunc to the date of the application. We see no purpose in such an idle act.

Macrotron has also failed to show the court awarded fees in an unreasonable amount. “[T]he fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] . . . [¶] ‘. . . After the trial court has performed the calculations [of the lodestar], it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure.’ ” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095-1096 (PLCM Group).)

“[T]he trial court has broad authority to determine the amount of a reasonable fee. [Citations.] As we have explained: ‘The “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong” ’—meaning that it abused its discretion.” (PLCM Group, supra, 22 Cal.4th at p. 1095.)

Macrotron takes issue with the court’s assessment that counsel expended a reasonable number of hours on the litigation. The court explained: “Although this case was not ‘complex’ as the term is used in rule 3.400 of the California Rules of Court, it was certainly complicated litigation. Macrotron claimed damages of $5,000,000 based on a multitude of claims involving faulty or unauthorized tenant improvements in breach of the parties’

55-page commercial lease agreement. G&H submitted evidence that the database maintained by [counsel] for this case was substantial, consisting of 8,608 separate documents. Macrotron’s characterization of the case as involving only a ‘plain vanilla breach of contract claim’ is grossly inaccurate.”

Macrotron disagrees. It protests that the case was “not unusually complex” or prolonged because the trial lasted only five days, with seven witnesses and 29 exhibits; that on some occasions more than one of G&H’s attorneys participated in the same depositions and other litigation tasks; and, generally, that counsel simply spent too much time on “minor tasks” and “given the relatively modest scope of this case.” But the trial court disagreed with those views, and nothing Macrotron says on appeal persuades us its assessment was “clearly wrong.”

(PLCM Group, supra, 22 Cal.4th at p. 1095.) Finally, Macrotron’s complaint that G&H’s counsel billed substantially more than its own attorneys is perhaps best answered with the simple observation that Macrotron did not prevail at trial.

In this arena “ ‘[a]n appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge.’ ” (Maughan v. Google Technology, Inc. (2006) 143 Cal.App.4th 1242, 1249.) Macrotron has not shown the court’s fee ruling exceeded its discretion, so the attorneys’ fee award stands.

DISPOSITION

The judgment and fee award are affirmed.

 

_________________________

Siggins, P.J.

We concur:

_________________________

Fujisaki, J.

_________________________

Petrou, J.

Macrotron et al., v. Gooch (A153730/A154721)