Case Number: KC069728 Hearing Date: March 07, 2018 Dept: O

Jendo Ermi, LP v. Ifresh, Inc. (KC069728)

Defendant iFresh, Inc.’s MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION OF FACTS

Respondent: Plaintiff Jendo Ermi, LP

Plaintiff Jendo Ermi, LP’s MOTION FOR SUMMARY JUDGMENT AND/OR SUMMARY ADJUDICATION OF FACTS

Respondent: Defendant iFresh, Inc.

Defendant’s MSJ/MSA

Defendant iFresh, Inc.’s motion for summary judgment and/or summary adjudication of facts is DENIED.

Defendant iFresh, Inc. contends it is entitled to summary judgment/adjudication on the following grounds:

1) The 3-day Notice is defective and

2) iFresh claims as a defense that Plaintiff breached the Lease by failing to provide iFresh with Furniture, Fixtures & Equipment (“FF&E”) and failed to adequately repair and maintain the units.

A defendant moving for summary judgment/adjudication has met his burden of showing a cause of action has no merit if the defendant can show one or more elements of the plaintiff’s cause of action cannot be established. (CCP 437c(p)(2).)

Defendant presents the following evidence on each issue:

3-Day Notice is defective for the following reasons:

1. That the 3-Day Notice is overstated by $100,000.00 as a result of the security deposit (DSS 38);

2) The lease does not mention notice fees (DSS 39), and

3) The Lease provides that all notices be delivered to the address in Long Island City, New York. (DSS 40-41.) The notice was improperly served upon an address in El Monte, California. (DSS 42.)

Breach: The defendant presents the following facts regarding Breach

Defendant presents evidence Jendo failed to provide iFresh with FF&E worth $300,000 (DSS 15-19), and iFresh failed to adequately repair and maintain the units (DSS 24-33) as contracted (DSS 23).

In opposition, Plaintiff presents the following evidence and argument:

3-Day Notice:

Par. 13.1(b) of the Lease states that the failure to pay Rent or the Security Deposit is a breach “where such failure continues for a period of 3 business days following written notice to Lessee.” The specific reference to the security deposit in the same sentence addressing the 3-day notice to pay rent shows that either amounts, when unpaid, are to be stated on the 3-Day Notice.

Further, under Par. 31, fees for notice of default may be due and owed, and Par. 4.1 includes all monetary obligations of Defendant as lessee.

Finally, Par. 23 provides that the “Premises shall constitute Lessee’s address for notice.” A commercial lease can lawfully agree to notice requirements different from and superseding those contained in the statute. (See Foldberg v. Clara G. R. Kinney Co. (1980) 104 Cal.App.3d 136, 140.)

Accordingly, Plaintiff has submitted evidence that creates a triable issue as to whether inclusion of the $100,000 security deposit in the 3-Day notice was proper, whether fees for notice of default may be included in the Notice, and whether service of the 3-Day notice was proper.

Summary adjudication of the issue of the 3-Day Notice is DENIED.

Breach:

Under California law, in commercial leases, a tenant’s obligation to pay rent and a landlord’s obligations under the lease are independent covenants. (Miller & Starr, 10 Cal.Real Est. Sec. 34:227 (4th Ed.).) Any purported breach of a covenant by a landlord does not justify the tenant’s refusal to pay rent. (See also Arnold v. Krigbaum (1915) 169 Cal. 143.)

Further, Par. 64 excludes any warranty by Plaintiff, including Pars. 2.2, 2.3, and 7.2. Additionally, Par. 13.6(a) provides that Plaintiff is not in breach unless Lessor fails to perform an obligation after receipt, by Lessor, of written notice. Plaintiff contends it never received written notice of its obligation to perform under the Lease. Finally, Plaintiff produces evidence that Defendant assumed the risks of defect by agreeing to take the premises “as is.” (Chung Decl., Pars. 5-7.)

The court finds triable issues exist with regard to whether Plaintiff breached the lease. Further, as a landlord’s breach of its obligations under a commercial lease is not a defense to the leasee’s failure to pay rent, Defendant failed to meet its burden of showing that the Breach is a viable defense to this Unlawful Detainer action. Summary adjudication of the issue of breach is DENIED.

Plaintiff’s MSJ/MSA

Plaintiff Jendo Ermi, LP’s motion for summary judgment and/or summary adjudication of facts is GRANTED.

A Plaintiff has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once met, the burden then shifts to the Defendant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (CCP 437c(p)(1).)

Plaintiff contends it is entitled to summary judgment/adjudication of the following issues:

1) 3-Day Notice to cure is proper and there is no triable issue of material fact to the Defendant’s defense that it was improper;

2) There is no triable issue of a disputed fact as to the defense of breach of warranty of habitability because such is not a proper defense to failure to pay rent in a commercial lease setting, nor are the other defenses relating to breach of covenants by the landlord proper in defending this U.D. action; and

3) There is no triable issue of material fact that Plaintiff breached the lease sufficient to defend the Unlawful Detainer action.

CCP 437c(b)(1) and CRC 3.1350(c) requires a motion for summary judgment and/or adjudication to attach a separate statement of facts. Plaintiff’s MSJ/MSA is defective because it does not contain a separate statement. “The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denying the motion.” (CCP 437c(b)(1).) The court in its discretion will address the issues as all were briefed by both sides.

On the merits, Summary adjudication of Issues is granted onthe following issues:

Issue 1. 3 day notice to cure was proper.

There is no controverted evidence of the material fact of proper notice.

Defendant signed the lease and took possession of the premises on May 11, 2017.(Cung Decl. Par. 14). Rent was set at $79,704.50 per month, plus CAM Charges of $24,800.00 and security deposit of $200,000.00. (Chung Decl. Par 13; Lease, Ex. par. 1.5, 1.7, 1.9). Under the terms of the lease (par. 61), Defendant paid ½ of the security deposit ($100,000.00) on May 11, 2017, the remaining due 5 days after Defendant closed escrow on the shopping center. Also then due was payment for Base rent and CAM charges for the first full month of the lease (Chung decl. par. 16, 17.: Ex A, par. 61)

Defendants closed escrow and took possession of the premises on or about July 31, 2017. (Chung Decl. par. 18, 21.) Defendant has failed to make any payments under the lease. (Chung Decl. Par 24, 34, 38),

The notice contained past due amounts totaling $331,229.14 delineated as “2nd half of Security Deposit: $100,000.00. August 2017 Rent and Cam: $104,504.50. August 2017 Late Fee Charges: $1,567,.57. September 2017 Rent and CAM: $104,504.50. September 2017 Late Fee Charge: $1,567.57. It also showed 3 Day Notice Late Fee: $85.00. (Ex B, Complaint, ex 2).

Defendant argues the notice is defective because it overstates the amounts due because it includes the security deposit; because the rent stated in the lease was based upon an incorrect determination of square footage, because it was not served upon the Defendant’s corporate headquarters, and because it demands a fee not part of rent.

Par. 13.1(b) of the Lease states that the failure to pay Rent or the Security Deposit is a breach “where such failure continues for a period of 3 business days following written notice to Lessee.” The specific reference to the security deposit in the same sentence addressing the 3-day notice to pay rent shows that either amounts, when unpaid, are to be stated on the 3-Day Notice. Further, under Par. 31, fees for notice of default also due and owed, and under Par. 4.1 so are all monetary obligations of Defendant as lessee which include late fees and CAM Charges. Finally, Par. 23 provides that the “Premises shall constitute Lessee’s address for notice.” (Ex. A). A commercial lease can lawfully agree to notice requirements different from and superseding those contained in the statute. (See Foldberg v. Clara G. R. Kinney Co. (1980) 104 Cal.App.3d 136, 140.)

Notice was properly served on or about 9/26/2017 (Chung Declaration, par. 35) and defendant acknowledges receiving such, Ex E., Defendant’s response to request for admissions.

Defendant continues to occupy the premises and has not paid the amounts (Ex E., Admission #3, 4, 5, 6); (Ex H Reponses to Inter. 71.4, 73.1); Cung Decl, par.38)

Issue 2:

Defendant defends the action based upon numerous allegations of Plaintiff’s misrepresentations affecting the lease of, inter alia, the useable square footage utilized for determination of rent during the negotiation of the lease, the amount of Furniture, Fixtures & Equipment (“FF&E”) it would provide and the failure by Plaintiff to repair portions of the premises to make them inhabitable, and Plaintiff’s refusal of certain signage. (Ex D, Def’s responses to interrogatories.).

None of the defenses are proper in the context of an Unlawful Detainer action for failure to pay rent in a commercial setting. The defense of breach of warranty of habitability or other promises made by the landlord in a lease and the withholding of rent is not proper in a commercial lease of this nature. “Upon a lessor’s breach of lease, the tenant has a choice of remedies. If the broken covenant is a condition precedent in the contract sense, he may elect to move out, cease payment of rent and under some circumstances seek damages. [Citation.] He also has the alternative of continuing under the lease and suing for breach-of-contract damages. [Citations.]” Schulman v. Vera, 108 Cal. App. 3d 552, 562, (1980). Under California law, in commercial leases, a tenant’s obligation to pay rent and a landlord’s obligations under the lease are independent covenants. (Miller & Starr, 10 Cal.Real Est. Sec. 34:227 (4th Ed.).) Any purported breach of a covenant by a landlord does not justify the tenant’s refusal to pay rent. (See also Arnold v. Krigbaum (1915) 169 Cal. 143.)

As such, the court grants Summary Adjudication of Issue 2.

Issue 3. As the issues raised as defenses to this Unlawful Detainer action are not proper defenses for the withholding of rent under a commercial lease such as here, and may be properly addressed in an action for Breach of Contract, the court finds there is no issue of material fact that Defendant breached the lease by their continued failure to pay any rent and Grants Judgment to Plaintiff.

Therefore, Judgment is GRANTED for possession and damages for unpaid rent in a commercial setting. The lease is forfeited. Plaintiff is entitled to rental damages comprised of past due rent and CAM charges, unpaid security deposit and fees as specified in the 3 day notice, as well as holdover rent of $3,483.48 per day as alleged in the complaint until premises is vacated, plus interest specified in the lease agreement and costs.