Hester v. Public Storage ( 2020 )

Filed 5/28/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
DAVID HESTER,
Plaintiff and Appellant, G057335
v. (Super. Ct. No. 30-2017-00936828)
PUBLIC STORAGE, OPINION
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Melissa
R. McCormick, Judge. Affirmed.
Law Offices of Dale Washington and Dale E. Washington for Plaintiff and
Appellant.
Keker, Van Nest & Peters, Erin E. Meyer and Christopher S. Sun for
Defendant and Respondent.
* * *
For several years, plaintiff David Hester was a reality television star on
“Storage Wars.” He now finds himself at war with defendant Public Storage over the
contents of a storage unit.
Plaintiff made the winning bid and purchased the contents of a self-storage
unit at an auction held by defendant. Defendant learned it had mistakenly sold the goods
about half an hour after the sale was complete. The unit’s occupant had paid his past due
rent weeks before the auction, but defendant’s computer system incorrectly marked the
unit for sale. Due to this error, defendant immediately rescinded the deal based on two
documents plaintiff had signed that contained clauses allowing defendant to void the sale
for any reason (the null and void clauses). Plaintiff claimed defendant’s rescission was
invalid and sued for breach of contract and conversion, among other claims. Defendant
moved for summary adjudication on the contract and conversion claims on grounds it had
properly voided the sale under the null and void clauses. The trial court granted
defendant’s motion.
Following entry of a stipulated judgment, plaintiff appeals, arguing
summary adjudication was improper. Primarily, he contends the null and void clauses
are invalid because (1) they are precluded by various statutes governing self-storage
auction sales, and (2) he agreed to them under duress. We disagree. We also reject
plaintiff’s argument that defendant was required to file an unlawful detainer action to
retake possession of the purchased goods after it rescinded the sale. For these reasons,
we determine the trial court properly granted defendant’s summary adjudication motion
and affirm the judgment.
I
FACTS AND PROCEDURAL HISTORY
Self-service storage facilities (owners or sellers) rent storage space to
individuals (occupants) for the purpose of storing personal property. (Bus. & Prof. Code,
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§ 21701 subds. (a) & (c).) If an occupant fails to pay rent, an owner may sell the personal
property contained within the occupant’s storage unit through a lien sale. (Bus. & Prof.
Code, §§ 21702-21707.)
Defendant owns and operates self-storage facilities throughout the country
and conducts lien sales in California pursuant to the Self-Service Storage Facility Act
(Bus. & Prof. Code, § 21700 et seq.; the Act). Plaintiff has made a living for the past 30
years buying the contents of storage units at lien sales and reselling the purchased items.
He was featured on several seasons of the television show “Storage Wars,” which
documented the lives of several individuals that make a living in this manner. In his
career, plaintiff has attended about 10,000 lien sales, about 20 percent to 25 percent of
which were conducted by defendant.
Defendant held a lien sale at its facility in Fountain Valley in July 2017.
As a condition to participate in the sale, plaintiff signed a Delinquent Tenant Sale Sign-in
Sheet and Agreement (delinquent sale agreement) containing various rules and
regulations, including, among others: (1) “[a]ll bidders must read these Rules and
Regulations and fill out the Bidder’s Sign-In Sheet below”; (2) “[a]t the time of purchase,
Purchaser must complete a Certificate of Public Sale form . . .”; (3) defendant “reserves
the right to null and void the auction and sale of any unit if, among other reasons, the
District Manager verifies that the tenant has paid the outstanding balance in full while the
auction was taking place”; and (4) “[a]ny violation of the above rules may result in
bidders being barred from future sale at any Public Storage facility.”
At the sale, defendant accepted plaintiff’s offer to purchase the contents of
a storage unit for $11,800. Plaintiff then placed two locks on the unit’s door and paid for
the unit with a credit card and cash. He also signed a Certification of Public Sale for the
unit, which certified he had made the winning bid for the contents of the storage unit
during competitive bidding. The certification also stated plaintiff “[understood] that
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[defendant] reserve[d] the right to null and void the auction and sale of the unit for any
reason.”
About half an hour after plaintiff signed the certification, a senior district
manager for defendant learned the unit had been mistakenly listed for sale due to a
technical glitch. The unit’s occupant had paid his past due balance weeks before the sale,
but the system incorrectly listed the unit as delinquent and marked it to be sold.
Defendant would not have sold the unit had it known of this mistake.
After discovering the error, the district manager immediately notified
plaintiff that defendant was voiding his purchase of the unit. Defendant reversed the
portion of the purchase price paid by credit card and attempted to refund the cash
balance. Plaintiff refused to accept the sale’s rescission and declined the refund.
Defendant then cut plaintiff’s locks off the unit and replaced them with its own locks.
Defendant later sent plaintiff a letter explaining that it had voided his purchase of the unit
and enclosed a refund of the cash balance and reimbursement for the cut locks.
Plaintiff filed this lawsuit in August 2017 based on the rescission of the
sale, among other things. He then filed a first amended complaint in November 2017
asserting the following claims: (1) auctioneer misconduct; (2) conversion; (3) breach of
contract; and (4) breach of the covenant of good faith and fair dealing. In June 2018,
defendant moved for summary adjudication on the second, third, and fourth causes of
action, all of which arose from defendant’s allegedly wrongful rescission of the sale. The
trial court granted the motion, finding defendant had properly voided the sale under the
null and void clauses.
The parties subsequently settled the remaining claim and filed a stipulation
for entry of judgment. On December 10, 2018, the trial court entered judgment in favor
of defendant on the second, third, and fourth causes of action and dismissed with
prejudice plaintiff’s first cause of action for auctioneer misconduct. This appeal
followed.
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II
DISCUSSION
A. Standard of Review
“Summary judgment . . . provide[s] courts with a mechanism to cut through
the parties’ pleadings in order to determine whether, despite their allegations, trial is in
fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 843.) “Summary judgment should be granted if no triable issue exists as to
any material fact and the moving party is entitled to judgment as a matter of law.
[Citation.] The burden of persuasion is on the party moving for summary judgment.
When the defendant is the moving party, the defendant must show the action has no
merit. That showing is made if the defendant either negates an element of the plaintiff’s
cause of action or establishes that a complete defense exists. The burden then shifts to
the plaintiff to show that a triable issue of material fact exists with respect to the cause of
action or defense.” (Rostai v. Neste Enterprises (2006) 138 Cal.App.4th 326, 330.)
“We review the trial court’s decision de novo, considering all the evidence
set forth in the moving and opposition papers except that to which objections were made
and sustained.” (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65-66.) “In ruling
on the motion, the court must consider all of the evidence and all of the inferences
reasonably drawn therefrom, and must view such evidence and such inferences in the
light most favorable to the opposing party.” (Caloroso v. Hathaway (2004) 122
Cal.App.4th 922, 926.)
B. The Breach of Contract Claims
On appeal, plaintiff argues the trial court erred for the following reasons.
First, the null and void clauses are precluded by California Uniform Commercial Code
section 2328 (section 2328) and Business and Professions Code section 21711. Second,
there is a triable issue of fact as to whether plaintiff agreed to the null and void clauses
5
under economic duress. We agree with the trial court and find defendant properly voided
1
the sale under the null and void clauses.
1. Preclusion
a. section 2328
Plaintiff’s primary argument is based on section 2328, which provides rules
governing auction sales. Before considering this argument, we first address defendant’s
contention in a footnote that this statute does not apply because plaintiff has not
established the sale was an auction. There is enough evidence in the record to dispel this
argument. The delinquent sale agreement and certification refer to the sale as an
“auction,” reference bids, and state the contents of the storage unit go to the winning
bidder. Given that we interpret the evidence in favor of plaintiff (Caloroso v. Hathaway,
supra, 122 Cal.App.4th at p. 926), we find the lien sale was an auction for purposes of
this appeal and address the merits of plaintiff’s argument.
Section 2328 is comprised of four subdivisions. Under this statute, an
auction is complete once announced by the auctioneer, referred to as the “fall of the
hammer.” (§ 2328, subd. (2).) Plaintiff contends that after the hammer falls, a binding
sales contract is created between the bidder and seller. He asserts the exclusive grounds
for undoing this contract are in subdivisions (2) through (4) of section 2328. The null
and void clauses are precluded, he argues, because they improperly add additional
grounds for undoing a completed sale. Plaintiff misreads the statute.
“The fundamental objective of statutory interpretation is to determine the
Legislature’s intent.” (County of San Bernardino v. Cohen (2015) 242 Cal.App.4th 803,
816.) The Legislature’s focus in section 2328 is limited to the auction process itself, i.e.,
the process of selling and bidding on goods. This is clear from the text of the statute.
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Because we reach this conclusion, we do not address defendant’s argument that the sale
was properly rescinded under the mutual mistake doctrine.
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Subdivision (1), which is irrelevant to this appeal, governs the sale of goods put up in
lots. (§ 2328, subd. (1).) Subdivision (2) gives an auctioneer discretion to reopen
bidding when a bid is made while “the hammer is falling.” (§ 2328, subd. (2).)
Subdivision (3) establishes rules for selling a good with or without reserve, withdrawing
goods from sale, and retracting bids. (§ 2328, subd. (3).) Finally, subdivision (4)
prevents sellers from secretly bidding on their own goods to inflate prices. If such
bidding occurs, a buyer may void the sale or pay the price of the last good faith bid.
(§ 2328, subd. (4); Nevada National Leasing Co. v. Hereford (1984) 36 Cal.3d 146, 148-
149.)
Contrary to plaintiff’s assertion, nothing in section 2328 shows any intent
by the Legislature to establish the grounds for voiding a completed sale, let alone the
exclusive grounds. The only subdivision that even mentions voiding a completed sale is
subdivision (4), which allows a buyer to void a sale due to improper bidding by the seller.
But the focus of subdivision (4) is on integrity in the auction process, not the grounds for
voiding a sale. Allowing a buyer to void the sale is only a remedy to address seller
impropriety during the auction. Nothing in the text of the statute reasonably supports
plaintiff’s interpretation. If the Legislature had intended for this statute to establish the
entire means for a buyer and seller to void a completed auction sale, it would have said
so. “‘The Legislature “does not, one might say, hide elephants in mouseholes.”’” (Jones
v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1171.)
Further, even if this intent could somehow be read into section 2328,
nothing in the statute’s text bars the parties from agreeing to additional grounds for
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voiding a completed sale. (Cal. U. Com. Code, § 1302, subd. (a) [“Except as otherwise
2
provided . . . the effect of provisions of this code may be varied by agreement”].)
b. Business and Professions Code section 21711
The Act contains various rules governing self-storage facilities, including
lien sale procedure. With regard to lien sales, Business and Professions Code
section 21711 states “[a] purchaser in good faith of goods sold to enforce a lien . . . takes
the goods free of any rights of [the occupants] against whom the lien was claimed,
despite noncompliance by the owner of the storage facility with the requirements of this
chapter.” Plaintiff contends this statute places the risk of an erroneous sale on defendant,
the owner. The null and void clauses, he asserts, violate the statute by allowing
defendant to improperly shift the risk onto himself, the buyer.
Plaintiff reads too much into Business and Professions Code section 21711.
It regulates the relationship between a buyer and the occupant whose property was sold,
not the buyer and the owner of the storage facility. The language on which plaintiff relies
only clarifies that an occupant has no claim against a good faith buyer even if the owner
did not comply with the Act. It does not apportion any risk of an erroneous sale between
a buyer and an owner. Further, plaintiff’s reading of the statute would effectively mean
an owner could never void an erroneous sale regardless of how soon the error was
discovered. A voided sale would create liability to the buyer, while failure to rescind the
sale would invite a lawsuit from the occupant whose personal property was erroneously
sold. None of the language in this statute shows any intent by the Legislature to constrict
an owner in such a manner. Again, if the Legislature had intended this statute to have
2
Neither party cited California Uniform Commercial Code section 1302 in their initial
briefs. Thus, we requested supplemental briefing as to what consideration should be
given to this statute. (Gov. Code, § 68081.) Both parties submitted supplemental letter
briefs in response.
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such a sweeping effect, it would have said so. (Jones v. Lodge at Torrey Pines
Partnership, supra, 42 Cal.4th at p. 1171.)
In support of his interpretation, plaintiff cites Nist v. Hall (2018) 24
Cal.App.5th 40 (Nist). He argues the null and void clauses chill bidder participation,
which violates the purpose of Business and Professions Code section 21711. (See Nist, at
pp. 45-46.) Nist does not support plaintiff’s argument.
In Nist, an occupant whose property had been erroneously sold brought a
conversion claim against the buyer. (Nist, supra, 24 Cal.App.5th at pp. 43-44.) The
occupant argued Business and Professions Code section 21711 did not apply to his claims
because he did not have a written rental agreement for the unit, as required by the Act.
The occupant argued the written agreement requirement trumped the immunity granted
buyers in Business and Professions Code section 21711. Nist rejected this argument.
(Nist, at p. 45.) Absent the immunity, “few if any bidders would attend lien sales or risk
liability due to a technical compliance with the Act . . . . [The occupant’s] construction
of the Act would literally defeat the legislative purpose of providing storage owners an
effective remedy against defaulting customers.” (Id. at pp. 45-46, italics added.)
Nist is inapplicable here. It involved a lawsuit filed by an occupant against
a buyer, the very subject of Business and Professions Code section 21711. Its discussion
regarding the chilling effect is limited to this specific context. Further, Nist was
concerned with reduced bidder participation because it would impair an owner’s ability to
conduct lien sales. If bidders stopped attending lien sales due to the threat of occupant
lawsuits, owners would be deprived of their remedy under the Act. (Nist, supra, 24
Cal.App.5th at pp. 45-46.) Plaintiff’s argument misconstrues Nist by focusing solely on
reduced bidder turnout. The argument fails to appreciate that Nist’s true concern was
impairing an owner’s rights to conduct lien sales under the Act. (Ibid.) This concern is
not present here, since it is the owner requiring the null and void clauses. Defendant does
not need to be protected from its own contract provisions. And in fact, it is far likelier
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that plaintiff’s proposed interpretation would deprive owners of their ability to conduct
lien sales. As discussed above, under plaintiff’s interpretation, an owner could not void
an erroneous sale without exposing itself to liability.
c. improper waiver under the Civil Code
Plaintiff also appears to contend the null and void clauses constitute an
improper waiver of the rights established in section 2328 and Business and Professions
Code section 21711. He argues, based on Civil Code sections 1812.609 and 3513, that
these rights cannot be waived by contract. We reject this argument. The null and void
clauses do not compel plaintiff to waive any of his rights under section 2328 or Business
and Professions Code section 21711. As explained above, the null and void clauses do
not affect any of the rights contained in these statutes. Section 2328 pertains to the
auction process. Business and Professions Code section 21711 establishes immunity for
good faith buyers against occupant lawsuits. In contrast, the null and void clauses relate
to postsale conduct by a seller in relation to a buyer.
d. exercising the null and void clauses
Plaintiff only contests the facial validity of the null and void clauses. He
does not dispute defendant’s contention that it properly exercised the clauses if they are
found to be valid. Nonetheless, we address defendant’s contention and find it to be
supported by the record. Less than an hour after the sale’s completion, defendant
determined it had mistakenly sold the contents of the unit, rescinded the sale, and
attempted to fully refund plaintiff’s money. This all occurred before plaintiff even began
to remove any goods from the unit. Given these facts, defendant timely exercised the
null and void clauses in good faith. As such, its rescission of the sale is not a breach of
contract or of the implied covenant of good faith and fair dealing.
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However, this opinion should not be read as tacit approval of all null and
void clauses that a storage facility owner may require bidders to accept. Similar clauses,
or an owner’s exercise of such a clause, may be invalid for reasons not contemplated
herein. This opinion only finds that such clauses are not facially invalid based on section
2328 or Business and Professions Code section 21711, as argued by plaintiff, and that
defendant properly exercised the clauses in this case.
2. Economic duress
Next, plaintiff argues he consented to the null and void clauses under threat
of economic loss. Refusal to accept the clauses would effectively bar him from
participating in defendant’s lien sales, which, he asserts, would cause him to lose 25
percent of his income. He contends there is a triable issue of fact as to whether the threat
of this loss constitutes economic duress. We find no triable issue of fact exists.
“The underlying concern of the economic duress doctrine is the
enforcement in the marketplace of certain minimal standards of business ethics. Hard
bargaining, ‘efficient’ breaches and reasonable settlements of good faith disputes are all
acceptable, even desirable, in our economic system.” (Rich & Whillock, Inc. v. Ashton
Development, Inc. (1984) 157 Cal.App.3d 1154, 1159.) But, the system disdains “the
wrongful exploitation of business exigencies to obtain disproportionate exchanges of
value. . . . The economic duress doctrine serves as a last resort to correct these
aberrations when conventional alternatives and remedies are unavailing.” (Ibid.)
Economic duress requires an unlawful or “wrongful act which is
sufficiently coercive to cause a reasonably prudent person faced with no reasonable
alternative to succumb to the perpetrator’s pressure.” (Rich & Whillock, Inc. v. Ashton
Development, Inc., supra, 157 Cal.App.3d at p. 1158.) “Examples of such ‘wrongful
acts’ include ‘[t]he assertion of a claim known to be false or a bad faith threat to breach a
contract or to withhold a payment . . . .’” (Myerchin v. Family Benefits, Inc. (2008) 162
11
Cal.App.4th 1526, 1539, disapproved on other grounds by Village Northridge
Homeowners Assn. v. State Farm Fire & Casualty Co. (2010) 50 Cal.4th 913, 929, fn. 6.)
Nothing in the record shows defendant did anything akin to a wrongful act.
All participants must agree to the null and void clauses to participate in defendant’s lien
sales. The clauses are not unlawful under any of the statutes cited by plaintiff. And there
is no evidence that defendant created this requirement for any coercive purpose or in bad
faith or is exercising these clauses in such a manner. Instead, the record suggests the null
and void clauses serve a practical business function. They allow defendant to avoid
mistakenly selling its occupants’ possessions. For example, the delinquent sale
agreement states defendant may void the sale if it “‘verifies that the tenant has paid the
outstanding balance in full while the auction was taking place.’” Similarly, here,
defendant rescinded the sale soon after it learned the occupant had paid his past-due
balance and the unit had been sold by error.
Plaintiff also appears to contend that it is wrongful for defendant to bar him
from a public sale if he refuses to agree to the null and void clauses. However, “[a]bsent
a legal provision to the contrary, a private party generally may choose to do or not to do
business with whomever it pleases.” (Drum v. San Fernando Valley Bar Assn. (2010)
182 Cal.App.4th 247, 254.) Plaintiff has not established an unqualified right to attend
defendant’s lien sales. While he cites In re Wallace (1970) 3 Cal.3d 289, for the
proposition that he has the right to attend public events, this case is unpersuasive. Its
analysis is limited to whether a specific petitioner’s conviction of trespass under Penal
Code section 602 was supported by sufficient evidence. (Wallace, at p. 293.) This has
no bearing on the issues here.
Further, plaintiff has not established that he lacks a reasonable alternative to
accepting the null and void clauses. His assertion that he will lose 25 percent of his
income is unsupported by the record. The record only establishes that 20 percent to 25
percent of the lien sales plaintiff attends are conducted by defendant. It does not
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necessarily follow that defendant’s sales represent 25 percent of all of plaintiff’s buying
opportunities, much less 25 percent of his income. And even if this is true, if plaintiff
does not like the terms of defendant’s sales, he could presumably make up for these lost
buying opportunities elsewhere. Among other things, he could attend lien sales held by
other self-storage facilities or purchase goods from other sources to resell. Plaintiff has
not explained why these options are not reasonable alternatives.
3. Illusory provisions
Throughout his brief, plaintiff refers to defendant’s unqualified right to
void the sale as illusory. We decline to consider this argument. Plaintiff did not raise
this issue with the trial court. (Pratt v. Union Pacific Railroad Co. (2008) 168
Cal.App.4th 165, 174.) Also, this argument is not stated under a separate heading and is
3
not sufficiently developed. (T.P. v. T.W. (2011) 191 Cal.App.4th 1428, 1440, fn. 12.)
C. The Conversion Claim
The trial court properly granted summary adjudication of plaintiff’s
conversion claim. “‘Conversion is the wrongful exercise of dominion over the property
of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right
to possession of the property; (2) the defendant’s conversion by a wrongful act or
disposition of property rights; and (3) damages.’” (Hernandez v. Lopez (2009) 180
Cal.App.4th 932, 939-940.)
3
While we do not consider the merits of this argument, we note that such clauses are not
facially invalid. “[W]hen a party is given absolute discretion by express contract
language, the courts will imply a covenant of good faith and fair dealing to limit that
discretion in order to create a binding contract and avoid a finding that the promise is
illusory.” (Storek & Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 Cal.App.4th 44,
57.)
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As set forth above, defendant timely determined the sale was erroneous and
rescinded the sale under the null and void clauses. This action completely extinguished
the sale, “rendering it void ab initio, as if it never existed.” (DuBeck v. California
Physicians’ Service (2015) 234 Cal.App.4th 1254, 1264.) Under these circumstances,
plaintiff cannot establish ownership or a right to possess the contents of the storage unit.
D. Unlawful Detainer
Finally, plaintiff appears to contend that defendant was required to use the
unlawful detainer process (Code Civ. Proc., § 1161 et seq.) to retake the contents of the
storage unit. The relevance of this argument is unclear. Plaintiff does not explain how
defendant’s failure to initiate unlawful detainer proceedings has any bearing on
defendant’s right to void the sale. We are “not required to examine undeveloped claims
or make [plaintiff’s] arguments for [him].” (Berkley v. Dowds (2007) 152 Cal.App.4th
518, 527.)
We also reject this contention on its merits. Unlawful detainer statutes
provide a “‘summary procedure for regaining possession of real property wrongfully
withheld by a tenant.’” (Deal v. Municipal Court (1984) 157 Cal.App.3d 991, 995, italics
added; see Code Civ. Proc., § 1161 [specifying unlawful detainer applies to “[a] tenant of
real property”].) Plaintiff purchased the contents of the unit at the lien sale, not an
interest in the unit itself. (See Bus. & Prof. Code, §§ 21702, 21705, 21707 & 21711.)
Since he had no interest in any real property, unlawful detainer procedures do not apply.
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III
DISPOSITION
The judgment is affirmed. Defendant is entitled to its costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
ARONSON, J.
FYBEL, J.
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