Quinlan v. Paxton CA1/5 ( 2016 )

Filed 8/16/16 Quinlan v. Paxton CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 FIVE
BRENDAN QUINLAN,
Plaintiff and Respondent,
A145008
v.
JOHN PAXTON, (San Francisco County
Super. Ct. No. CGC-13-535986)
Defendant and Appellant.
This dispute, over the scope of landlord Brendan Quinlan’s duty to repair and the
scope of tenant John Paxton’s right to control the “color, style, and quality” of those
repairs pursuant to a 1986 residential lease, originated over a decade ago and ultimately
resulted in three years of litigation. After Quinlan was granted a preliminary injunction
permitting him entry to make repairs to Paxton’s apartment, a bench trial was conducted
to interpret the contested lease terms. The trial court determined that Quinlan’s claims
were not time-barred, found that Paxton had breached the lease and was in violation of
the covenant of good faith, and awarded Quinlan attorney fees. We affirm.
I. BACKGROUND
Circumstances require us to discuss in some detail the evidence presented at trial.1
Since 1974, Paxton has lived in an apartment building located in San Francisco’s Pacific
1
Paxton requests that we take judicial notice of 10 items. He acknowledges that
nine of the items were not admitted into evidence at trial, but argues those items would
allow this court “greater resources to make an accurate ruling in this appeal.” A “ ‘court
will not normally take judicial notice of matters which were not brought to the attention
1
Heights neighborhood. Built around 1906, the apartment building was completely
renovated before Paxton moved in. Paxton’s apartment has three bedrooms, a western
bathroom with a bathtub, and an eastern bathroom with a shower stall. The eastern
bathroom is 27 square feet in size, and in 1986 the shower had tile walls, a simple shower
head with two knobs, a terrazzo shower pan, and a door made of nontempered glass. The
bathroom also had a small sink, toilet, and tile floor.
In about 1986, Paxton settled pending litigation with his then-landlord by
negotiating favorable terms in a lease that was later recorded. Pertinent here is a
provision entitled “Landlord’s Obligation to Repair and Maintain” (the repair provision):
“Landlord agrees to maintain the building, roof, plumbing, electrical and heating system,
Tenant’s parking space, and grounds in good quality, and in a safe and sanitary condition.
Landlord agrees to provide interior paint for Tenant’s unit, to clean garbage areas, stairs,
and all other common areas at least once a week; Landlord shall also comply with all
state and local laws, regulations and ordinances concerning the condition of dwelling
units. [¶] Landlord agrees to make repairs with reasonable quality materials and
craftsmanship. When items are replaced Landlord agrees to obtain Tenant’s consent
with regard to color, style, and quality. [¶] For the purpose of this Lease, the definition of
repairs under Civil Code Section 1941 shall be expanded to include water leaks. [¶] If
Landlord fails to comply with his obligations under this paragraph, in addition to other
remedies available under law, Tenant may make such repairs and deduct the cost thereof
from the rent. [¶] Landlord agrees not to pass through to Tenant the costs of making
repairs under this Section.” (Italics added.)
Most of the present controversy concerns the single sentence of the lease dealing
with Paxton’s “consent with regard to color, style, and quality” of items replaced during
of the trial court . . . .’ ” (County of Orange v. Smith (2005) 132 Cal. App. 4th 1434,
1450.) We deny the request to take judicial notice of the first nine items on this ground.
Paxton describes the 10th item as a set of exhibits that were admitted at trial but are
missing from the record transmitted by the superior court. Quinlan does not oppose
Paxton’s request. We therefore augment the record with those exhibits.
2
repairs by his landlord (the consent clause). Also relevant is a provision entitled “Entry
by Landlord,” which allows the landlord to enter only to make necessary repairs, to
exhibit the unit to prospective purchasers, mortgagees and tenants, or in cases of
emergency. Except in emergencies, “[s]uch entries shall take place only with the consent
of Tenant, which consent shall not be unreasonably withheld.”
Paxton testified that his understanding at the time the lease was negotiated was
that the consent clause gave him the right to select replacement items in his apartment,
“within what the landlord explained to me was his understanding of the word ‘good.’ ”
“What I understood was what [the then-landlord] expressed as to limitations . . . . And
that was that they would be maintained in . . . good condition. The quality of
replacement materials would be good. And when asked to elaborate what ‘good’ meant
to him, he said consistent with other buildings, what was accustomed to other buildings in
the Pacific Heights neighborhood. He went on to say . . . that I certainly don’t expect him
. . . [to] put in gold-plated faucets.”
When the building was sold to Quinlan’s predecessor, Paxton’s relationship with
the new property manager was “hostile,” and the manager did not complete repairs
despite promising to do so. By the time Quinlan bought the building in 2005, the
building had possible structural problems and Paxton’s apartment had severe paint
chipping and flaking in the living room; rotten and deteriorated window frames in the
kitchen; old flooring in the kitchen; cracks, holes in the wall, peeling paint and mold in
the eastern bedroom; cracked tile and a broken sash in the western bathroom; several
problems in the eastern bathroom; chipping paint and extensive mold in the front room;
and a malfunctioning heating system.
Quinlan had notice of Paxton’s lease when he bought the building. Within a
month or two of Quinlan’s purchase, Paxton asked him to make some repairs. Quinlan
believed tiles on the shower wall were becoming detached from the substrate.2 Quinlan
2
A photograph taken at the time shows white square tiles that are somewhat
askew and interspersed with darkened grout and apparent mold at the edges of the shower
floor.
3
testified that it would have cost about $500 to repair the shower when it was in that
condition. Paxton also asked Quinlan to take care of peeling paint throughout his
apartment and repair cracks in the lath and plaster walls. Quinlan agreed to make all
requested repairs.
Before performing the work, Quinlan received a February 2006 letter from Paxton
with detailed plans for remodeling the eastern bathroom. Paxton proposed replacing the
shower with a new irregularly-shaped shower unit with a custom frame glass enclosure;
moving and replumbing the sink; electrical rewiring; and adding a custom-built bench.
Paxton specified two-toned tile work with accents, and a “Hansgrohe/Axor Phoenix
Traditional shower; chrome finish (with thermostatic mixer, volume control and
diverter).” In the cover letter, Paxton wrote, “I am not necessarily wedded to any of the
specific materials (except for the shower fixtures); if you can get the same quality
elsewhere at a cheaper price, I would be happy to work with you on that.” Paxton
testified that he proposed remodeling the eastern bathroom because he believed the
shower pan’s deteriorated condition required its replacement, and that replacement would
necessitate enlargement of the shower to comply with current building codes. His plans
were designed to accommodate a larger code-compliant shower in the eastern bathroom’s
small space. Quinlan testified he disagreed about the need to replace the shower pan and
therefore disagreed that the shower needed to be enlarged to become code-compliant.
Communicating through the property manager, Quinlan rejected Paxton’s 2006
proposal, saying he was not required to make such a “drastic upgrade.” Quinlan and
Paxton continued to discuss the issue between 2006 and 2009 (apparently indirectly
through the property manager), but each party agreed only to his own proposed scope of
work and no work was done to the eastern bathroom. However, other repairs were made
in Paxton’s apartment during this time period, including repairs to the heating ducts,
certain windows, the dishwasher, and the garbage disposal. As to the last item, Paxton
testified, “There were several choices on garbage disposals. I wanted to have one that
was a slightly larger horsepower. There was some resistance from the [current] property
4
manager, and I said this one is the one I would like to have in our kitchen. I went ahead
and purchased it, [deducting the cost from my rent,] and it got installed.”
In 2008, Paxton purchased the Hansgrohe shower fixture he wanted for the eastern
bathroom and deducted the $1,600 cost from his rent.3 Paxton testified he was having
trouble with water pressure and temperature fluctuations, and the Hansgrohe fixture was
the cheapest fixture on the market with temperature and pressure controls as well as a
diverter. However, Quinlan refused to install the Hansgrohe fixture in the eastern
shower.
In October 2009, Paxton reported the condition of his apartment to the San
Francisco Department of Building Inspection (DBI), which issued a notice of violation to
Quinlan (2009 NOV). The 2009 NOV required Quinlan to make the following repairs
within 30 days: “[p]rovide adequate water pressure [to the] shower room”; “[r]epair
damaged ceilings [and walls in the] eastern living[ ]room, bathroom, bedroom and hall (2
locations)”; “[r]eplace missing/cracked tiles [in the] tub[ ]room”; “[r]epair/[r]eplace
deteriorated shower floor and prevent water seepage from shower area”; “[e]liminate
mold/mildew from wall and windows of eastern bedroom”; “[r]emove peeling paint [in
the] ceiling (western bedroom)”; and “[c]lean heater vent system to ensure vents
operating properly.” Each ordered repair was supported by citation to provisions of the
San Francisco Housing Code (see, e.g., S.F. Housing Code §§ 1001, 1301, 1306).
Quinlan testified that he was willing to make the repairs listed on the 2009 NOV,
and he so informed the DBI. However, his property manager and Paxton were not able to
come to an agreement on a scope of work. In December 2010, Paxton filed small claims
actions against Quinlan, seeking $7,500 in “[l]iquidated damages, per contract, for
harassment on January 1, 2010. Failure to correct NOVs, intolerable condition of
shower; locking me out of storage; allowed conditions to persist preventing me from
3
Quinlan never took action to recover the withheld rent.
5
having access to my parking space and storage.” Paxton lost both cases and judgment
was entered for Quinlan.4
In 2012, Quinlan received a final warning from DBI stating that he would face
substantial penalties if the violations were not abated. The property manager met with
Paxton to discuss the repairs, but Quinlan directed her to refuse Paxton’s requests for the
Hansgrohe fixture, recessed lights, recessed soap niches, a nonstandard shower enclosure,
or a new shower pan. Quinlan attempted to carry out the repairs, but Paxton refused
access to the apartment. On March 8, 2012, Paxton sent the property manager an updated
proposal, which was similar to, but more detailed than, his 2006 proposal. In a cover
letter, he wrote, “You have told me that [Quinlan] object[s] to some of my specifications.
[He has] no right to object, since the Lease provides me with the right to select styles,
materials and colors. Nonetheless, I have told you that I will voluntarily increase my rent
by $25 per month to placate [Quinlan] on this issue.” Paxton requested compensation
under San Francisco’s rent ordinance for his relocation costs while the repairs were being
done or, in the alternative, relocation to a hotel. He also requested escalating monetary
penalties if the repairs took longer than 10 days (a rent waiver), 15 days ($100 per day) or
30 days ($10,000 lump sum). He wrote that repairs could commence on April 9 if
Quinlan agreed to his demands. Paxton testified that his 2012 proposal was a general
guideline of what he wanted. “I sat down with [the property manager] somewhere
around this point in time, and we went through things. And I think if she and I would
have been left alone, we would have hammered it out.” He specifically would have been
willing to negotiate on the financial terms of the proposal, but Quinlan never engaged in
negotiation.
Referencing Paxton’s March 8, 2012 letter, Quinlan proposed his own written
scope of work. He proposed installing a “pressure balanced valve with adjustable volume
4
Quinlan suggested at trial that the small claims judgments collaterally estopped
Paxton from arguing Quinlan breached the lease by rejecting Paxton’s 2012 proposal, but
the trial court did not appear persuaded and made no collateral estoppel ruling in its
statement of decision. Quinlan does not renew the argument on appeal.
6
and temperature” and attached a description of a specific fixture. He planned to test the
shower pan for leaks and if necessary replace it with a new shower base using the tiles
Paxton had approved for the walls and floor. He would also replace the glass shower
enclosure if it leaked. He attached descriptions of the tile and shower enclosure. For
repairs needed in the western bathroom, he enclosed a sample of tile that Paxton
apparently had already approved. Quinlan also planned to remove peeling paint and
repaint using lead abatement techniques, and to clean the heating vents. Quinlan agreed
to an April 9, 2012 start date and arranged for Paxton to stay at a hotel of Paxton’s choice
while the repairs were being made, which was estimated to take four weeks.
Quinlan and Paxton continued to exchange correspondence. They did not come to
agreement on the scope of repairs in 2012, and Paxton did not allow contractors to enter
the apartment to carry out Quinlan’s proposal. Neither party took legal action to force
compliance with the lease or partial repairs to prevent further damage to the building.
Quinlan testified: “[B]ecause the final warning was not being acted upon, because of my
inability to get access of the apartment, the [DBI] referred the matter to [the] Abatement
Appeals Board, which is their administrative body” and a hearing was scheduled. Paxton
and Quinlan both attended the hearing. The board upheld the order of abatement but
recommended mediation, which was unsuccessful. The DBI chief housing inspector,
who met with Paxton and Quinlan in 2013, testified at trial that Quinlan seemed ready
and willing to make the repairs necessary to clear the 2009 NOV.
In December 2013, Quinlan filed this action against Paxton. He pleaded claims
for breach of contract and breach of the implied covenant of good faith and fair dealing,
and sought declaratory relief clarifying the parties’ rights and obligations under the lease,
as well as preliminary and permanent injunctive relief allowing Quinlan to perform the
work.
By 2014, the condition of Paxton’s apartment had deteriorated. Many tiles had
fallen off the shower wall in the eastern bathroom and the substrate had a large gaping
hole; the shower pan was discolored and pitted; and, just outside the shower stall, the
wall paint had buckled and a dark area of apparent water damage was by the baseboard.
7
Floor tile in the western bathroom was cracked, and several ceilings and walls had
severely flaking paint.
In March 2014, Quinlan moved for a preliminary injunction to require Paxton to
provide access to the apartment so the repairs listed in the 2009 NOV could be
completed. On May 22, the court (Judge A. James Robertson II) ordered: “[Paxton] is
enjoined from obstructing [Quinlan’s] good faith efforts (these efforts have to be
compliant with all the building codes and signed off by the DBI upon completion) to
make . . . necessary repairs to [the apartment] as described in [Quinlan’s 2012 proposal].
[¶] . . . [¶] . . . I[n] granting this preliminary injunction the Court concluded that the Court
should read the provisions re ‘tenant consent’ as requiring tenant defendant to not
unreasonably with[h]old approval of necessary repairs.” The court ultimately ordered
Paxton to “have the subject premises ready for [Quinlan] to commence repairs and free of
human occupancy no later than 9:00 a.m. on July 14, 2014.”
The repairs were made in 2014.5 In the eastern bathroom, Quinlan installed a
medium-quality shower fixture similar to what he previously proposed, which cost $150
and had water temperature and pressure controls to address Paxton’s concerns.6 He did
not install the Hansgrohe fixture provided by Paxton because it had been discontinued by
the manufacturer due to performance problems and was more difficult to install. He did
not give Paxton a choice of fixtures. Quinlan ultimately had to remove the shower pan
due to extensive water damage to the structural wood framing of the shower stall.
Consequently, he enlarged the shower to comply with building codes. He inquired about
a replacement terrazzo shower pan but was told it would take six weeks to obtain, so he
installed a non-terrazzo shower pan that he deemed to be of similar quality and cost. He
did not ask for Paxton’s consent regarding the choice of shower pan. Quinlan also
5
Paxton moved for appointment of a receiver to “oversee and facilitate” the
repairs and ensure they were done “in conformity with [the] Lease.” The court denied the
motion.
6
A building inspector testified that all current code-compliant shower fixtures
provided water pressure and temperature controls.
8
installed a new shower enclosure without asking for Paxton’s consent. Quinlan repainted
areas of the apartment listed on the 2009 NOV using lead abatement techniques. He did
not repaint the trim, baseboards or upper moldings unless they were specifically
identified in the 2009 NOV because doing so would have been very labor intensive,
adding probably another 100 person-hours of work at $65 an hour and approximately
doubling the cost of the paint job. Quinlan used paint and tile colors Paxton had agreed
to. He also paid Paxton’s relocation costs during the construction work.
The 2014 repairs passed inspection and the 2009 NOV was cleared. The bathroom
repairs alone cost Quinlan $20,000 to $25,000 in addition to the 110 hours of personal
work he expended on the project, which he valued at $100 per hour. Photographs
admitted in evidence showed the apartment walls, ceilings and bathrooms in what
appeared to be good condition. Quinlan opined that the repairs were the same quality as
was typical for the neighborhood.
Paxton testified that the shower fixture Quinlan installed did not have all of the
features of the Hansgrohe fixture, and it only marginally improved the water pressure and
temperature fluctuation problems. Moreover, following the 2014 repairs, Paxton had to
approach the sink from his side due to a reduced clearance (18-inches) between the
bathroom wall on one side of the sink to the shower wall on the other side. Some of the
rooms had more than one color of paint, very few baseboards or trim had been painted,
and large areas of paint had been pulled off when tape was removed to disassemble the
lead paint mitigation. Finally, the tub in the western bathroom leaked. Paxton contacted
Quinlan about additional work that was needed, but was rebuffed except with respect to
repairing the tub. Paxton hired painters to correct the mismatching colors and to paint
baseboards and trim, at a cost of approximately $1,300.
Judge James J. McBride presided over a three-day bench trial. Paxton moved for
judgment on the pleadings at the outset and for judgment after the close of Quinlan’s case
(see Code Civ. Proc., § 631.8), both times on the ground that Quinlan’s claims were time-
barred. He argued the claims arose in 2005, or 2009 at the latest, and were barred under
the four-year limitations period for contract actions (see Code Civ. Proc., § 337). The
9
court denied the motions but indicated the statute of limitations defense remained a live
issue. Other issues included whether the 2014 repairs complied with the lease and a
declaration on the meaning of the repair provision.7
During closing arguments, the court repeatedly asked both parties to explain what
caused the multiple-year delay in completing repairs, and closely questioned Paxton as to
what Paxton believed was the scope of his discretion under the consent clause. The court
made a tentative oral ruling from the bench and later signed a statement of decision
submitted by Quinlan’s counsel.
In the statement of decision, the court ruled that the lease “requires reasonable
behavior on . . . both sides and that is a term implied throughout the lease, and
furthermore, the Court finds that the Lease requires that the tenant is to not unreasonably
withhold his consent to necessary repairs. [¶] [Quinlan’s] 2012 Work Proposal, . . . and
the repairs that [Quinlan] made to the Premises in July 2014 consistent with that Work
Proposal, complied with the terms of the Lease. [Quinlan] offered to make repairs with
reasonable quality materials and craftsmanship when he provided [Paxton] with the Work
Proposal. [He] agreed to remedy the condition of the bathroom and [Paxton] imposed
unreasonable conditions in response, including monetary penalties and a quality of fixture
with respect to plumbing fixtures which was not reasonably required under the terms of
the Lease which requires [Quinlan] to obtain consent for color, style, and quality. The
$1,600 Hansgrohe shower fixture was far in excess of what was reasonably required.
Had [Paxton] engaged in any reasonable behavior there may have been some compromise
but there was not. The Court finds that the evidence supports a finding that [Quinlan]
behaved reasonably in response to the 2009 [NOV], that his proposals were reasonable
under the Lease, and that [Paxton] unreasonably withheld his consent under the Lease
7
Before trial, Paxton moved for leave to file a cross-complaint, arguing he was
“concerned that [Quinlan] may attempt to dismiss the current action, depriving [Paxton]
an adjudication on the merits and permanently leaving him with repairs that do not
conform” with the lease. At an unreported hearing, the court (Judge Ronald E.
Quidachay) denied the motion.
10
when he refused to give [Quinlan] access to the Premises to make the repairs and by
placing unreasonable conditions on the repair work.
“Furthermore, the Court finds that the work that [Quinlan] performed in 2014 was
adequate, compliant with his obligations under the terms of the Lease, and that [Quinlan]
is not required to make any additional repairs to the Premises. [He] is not obligated to
repaint areas of the trim that were not damaged or deteriorated and [the court finds] that
the areas of wall painted which were badly deteriorated have been remedied. [Quinlan] is
not obligated under the Lease to repaint the entire Premises, nor to use, install or consent
to a quality of repair or replacement items that is anything higher or greater than
‘reasonable’ or ‘good.’ To the extent [Quinlan] was required to use paint of a quality and
color consented to by [Paxton], [he] did so in a manner consistent with the Lease.
“Lastly, the Court finds that [Quinlan’s] action was filed timely after it became
obvious that [Paxton] was not going to consent to the Work Proposal offered by
[Quinlan].” The court ruled that Paxton breached the lease and the implied covenant of
good faith and fair dealing. No damages were awarded, as Quinlan neither sought nor
proved them. Quinlan’s request for permanent injunctive relief was denied “as moot in
light of the work that was completed in July of 2014 and the declaratory relief as set forth
herein.” The court overruled Paxton’s objections to the proposed statement of decision.
The court later awarded Quinlan $126,411.50 in attorney fees and costs pursuant to the
lease.8
II. DISCUSSION
“ ‘In general, in reviewing a judgment based upon a statement of decision
following a bench trial, “any conflict in the evidence or reasonable inferences to be
drawn from the facts will be resolved in support of the determination of the trial court
decision.” ’ ” (Lui v. City and County of San Francisco (2012) 211 Cal. App. 4th 962,
969.) “ ‘We may not reweigh the evidence and are bound by the trial court’s credibility
8
Paxton does not separately challenge the fee award on appeal.
11
determinations. [Citations.] Moreover, findings of fact are liberally construed to support
the judgment.’ ” (Ibid.)
When the trial court has resolved a disputed factual issue, we review the court’s
findings for substantial evidence. (Winograd v. American Broadcasting Co. (1998)
68 Cal. App. 4th 624, 632.) An issue presented on undisputed facts is an issue of law,
which we review de novo. (Ghirardo v. Antonioli (1994) 8 Cal. 4th 791, 799.) When an
issue raised on appeal is a mixed question of law and fact, a three-step analysis is
employed by the appellate court: (1) review the trial court’s resolution of disputed
historical facts under the deferential substantial evidence rule; (2) exercise independent
judgment as to what law applies; and (3) review application of the law to the facts. (Id. at
p. 800.) The third step is treated as a question of law when legal concepts and their
underlying values must be considered or when the issue has practical significance beyond
the confines of the case at hand, but the question is reviewed as a question of fact when
the application of the law to the facts is founded on experience with human affairs. (Id.
at pp. 800–801.)
A. Statute of Limitations Defense
Paxton argues that Quinlan’s cause of action for breach of contract accrued at the
latest on October 9, 2009, which was more than four years before he filed suit.9 Quinlan
counters that the gravamen of his complaint was Paxton’s refusal to consent to Quinlan’s
proposed scope of work, which occurred in 2012. The court found that the action was
“filed timely after it became obvious that [Paxton] was not going to consent to [Quinlan’s
proposal].” We conclude the action was timely under the theory of continuous accrual.
The underlying timeline of events that is relevant to Paxton’s statute of limitations
defense is undisputed by the parties. “The application of the statute of limitations on
undisputed facts is a purely legal question [citation]; accordingly, we review the lower
9
On June 24, 2016, Paxton requested leave to file a supplemental brief because he
had recently discovered a 1979 case relevant to the statute of limitations issue. Belated
discovery of long-extant case law is not a reasonable justification for filing a
supplemental brief. (See Cal. Rules of Court, rule 8.200(a)(4).) The request is denied.
12
court[’]s rulings de novo. . . . [¶] . . . [¶] An affirmative defense, the statute of limitations
exists to promote the diligent assertion of claims, ensure defendants the opportunity to
collect evidence while still fresh, and provide repose and protection from dilatory suits
once excess time has passed. [Citations.] . . . [¶] The limitations period . . . runs from the
moment a claim accrues. [Citations.] Traditionally at common law, a ‘cause of action
accrues “when [it] is complete with all of its elements”—those elements being
wrongdoing, harm, and causation.’ [Citation.] This is the ‘last element’ accrual rule
. . . .’ [Citations.] [¶] To align the actual application of the limitations defense more
closely with the policy goals animating it, [however,] the courts and the Legislature have
over time developed a handful of equitable exceptions to and modifications of the usual
rules governing limitations periods.” (Aryeh v. Canon Business Solutions, Inc. (2013)
55 Cal. 4th 1185, 1191–1192.)
As relevant here, “the theory of continuous accrual . . . is a response to the
inequities that would arise if the expiration of the limitations period following a first
breach of duty or instance of misconduct were treated as sufficient to bar suit for any
subsequent breach or misconduct; parties engaged in long-standing misfeasance would
thereby obtain immunity in perpetuity from suit even for recent and ongoing misfeasance.
In addition, where misfeasance is ongoing, a defendant’s claim to repose, the principal
justification underlying the limitations defense, is vitiated. [¶] To address these concerns,
we have long settled that separate, recurring invasions of the same right can each trigger
their own statute of limitations. . . . [¶] Generally speaking, continuous accrual applies
whenever there is a continuing or recurring obligation: ‘When an obligation or liability
arises on a recurring basis, a cause of action accrues each time a wrongful act occurs,
triggering a new limitations period.’ . . . [¶] However, . . . the theory of continuous
accrual supports recovery only for damages arising from those breaches falling within the
limitations period.” (Aryeh v. Canon Business Solutions, Inc., supra, 55 Cal.4th at
pp. 1198–1199.)
The continuous accrual exception applies here. The lease imposed continuing
obligations on both parties—on Quinlan to keep the apartment in good repair (and to
13
obtain Paxton’s consent regarding the color, style and quality of replacement items), and
on Paxton to reasonably consent to entry into the apartment for the purpose of making
repairs. To suggest Quinlan’s refusal to make requested repairs in 2006 or Paxton’s
refusal to grant access in 2006 barred an action by either party based on the then-existing
defects in the apartment, would lead to absurd results that are inconsistent with the
purpose of the statute to protect a defendant’s claim to repose. Paxton would be forever
after unable to pursue any remedy for those defects, and Quinlan would be powerless to
correct water damage originating from the apartment that could threaten the structural
integrity of the entire building. In this case, both sides continued to demand action from
the other party so that repairs would be performed. Repeated failures to repair or obtain
consent and repeated denials of access are recurring invasions of rights under the lease.
The consequence of Quinlan’s delay in filing a lawsuit is a limitation on recoverable
damages. Given that he did not seek damages in this action, that limitation is immaterial.
The trial court did not err in rejecting Paxton’s statute of limitations defense.
B. Contract Interpretation
Paxton argues the consent clause should be interpreted to grant him what he refers
to as “broad” and “very unusual” discretion to give or withhold his consent to selection of
replacement materials. While he does not assert a right to unfettered discretion, he
contends he had a right to require materials consistent with other buildings in the
neighborhood, even if that required higher quality materials than the items they replaced.
Paxton also suggests, however, that his decision to grant or withhold consent was not
subject to any requirement of reasonableness.
Although the court’s statement of decision does not provide an explicit
interpretation of the consent clause, Quinlan argues the trial court implicitly construed the
clause to grant Paxton power to ensure the apartment would not be downgraded through
replacement materials, with due consideration for the landlord’s costs. We agree with
Quinlan’s view and conclude the court’s interpretation was correct.
“ ‘When a dispute arises over the meaning of contract language, the first question
to be decided is whether the language is “reasonably susceptible” to the interpretation
14
urged by the party. If it is not, the case is over. [Citation.] If the court decides the
language is reasonably susceptible to the interpretation urged, the court moves to the
second question: what did the parties intend the language to mean?’ [Citations.]
Whether the contract is reasonably susceptible to a party’s interpretation can be
determined from the language of the contract itself or from extrinsic evidence of the
parties’ intent. [Citation.] Extrinsic evidence can include the surrounding circumstances
under which the parties negotiated or entered into the contract; the object, nature and
subject matter of the contract; and the subsequent conduct of the parties. [Citations.]
When no extrinsic evidence is introduced or the extrinsic evidence was not relied on by
the trial court or is not in conflict, we independently construe the contract.” (Cedars-
Sinai Medical Center v. Shewry (2006) 137 Cal. App. 4th 964, 979–980.) When
“ascertaining the intent of the parties at the time the contract was executed depends on
the credibility of extrinsic evidence, that credibility determination and the interpretation
of the contract [based on the extrinsic evidence] are questions of fact . . . .” (City of Hope
National Medical Center v. Genentech, Inc. (2008) 43 Cal. 4th 375, 395.)
As a preliminary matter, we reject Paxton’s argument that he was “hobbled in
presenting [parol] evidence that the contract was reasonably susceptible to the
interpretation urged by Paxton.” At the start of trial, the trial court stated that it viewed
the repair provision as unambiguous, but it did not impose any restrictions on Paxton’s
evidence. When Paxton said he intended to present extrinsic evidence on the meaning of
the contract, the court said, “I will pay attention to what I pay attention to [during the
trial], but the contract is the contract . . . .” In other words, the court indicated it might
consider any offered parol evidence legally irrelevant, but it did not restrict presentation
of Paxton’s case. Paxton essentially concedes this fact by arguing “discourage[d]
evidence as to the intent of the original contracting parties” (italics added) when it should
have “remained silent . . . until it had heard Paxton’s unfettered testimony.” He does not
contend any proffered evidence was improperly excluded. Paxton in fact testified at trial
about the circumstances under which the lease was negotiated, and the court made
15
comments during closing argument suggesting Paxton’s testimony influenced the court’s
understanding of the lease.
The only express interpretation of the lease in the statement of decision is the
court’s statement that the lease “requires reasonable behavior on . . . both sides” as to all
of its provisions. We accept Quinlan’s invitation to consider the trial court’s comments
during closing arguments as evidence of its interpretation of the consent clause:
comments agreeing with Paxton’s argument that the consent clause was intended to
prevent the landlord from downgrading the apartment’s overall quality and opining that
reasonableness regarding the style and quality prongs of the consent clause must relate
primarily to the associated costs to the landlord. We now consider whether that implicit
interpretation was correct.
We begin with the plain language of the provision: “When items are replaced,
Landlord agrees to obtain Tenant’s consent with regard to color, style, and quality.” This
sentence is ambiguous regarding the extent of Paxton’s discretion to withhold consent for
replacement items because the term “consent” is neither defined nor expressly restricted.
In the trial court, Quinlan argued the consent clause gave Paxton no power to insist on a
level quality higher than the statutory standards of habitability for residential rental units.
He noted that the repair provision references a habitability statute (Civ. Code, § 1941),
and argued that “repair” in the provision means “anything that . . . takes the unit out of an
untenantable condition. That’s what the landlord is obligated to do . . . as a matter of this
particular contract.” We are not persuaded by this argument, which Quinlan does not
pursue on appeal. The first paragraph of the repair provision requires the landlord to
maintain the building and apartment in “good quality, and in a safe and sanitary
condition,” and to “also comply with all state and local laws, regulations and ordinances
concerning the condition of dwelling units.” (Italics added.) The expansive term “good
quality” and the use of “also” suggests that the contractual standard of repair goes beyond
the statutory standard. The next sentence in the provision reads, “Landlord agrees to
make repairs with reasonable quality materials and craftsmanship,” followed by the
consent clause. Because the consent clause patently grants Paxton rights above and
16
beyond those conferred by the habitability statutes, this entire two-sentence paragraph
can reasonably be read to impose a standard of quality above and beyond the statutory
standard. When construed in its entirety, the plain language of the repair provision does
not unambiguously limit the landlord’s repair obligation to the statutory habitability
standard; the contractual language is ambiguous. The trial court reached the same
conclusion.
Because the plain language is ambiguous, we consider extrinsic evidence on the
meaning of the repair provision and its consent clause. In the statement of decision, the
trial court made a finding that the lease, “among other things, was part of the settlement
of a lawsuit.” During closing arguments, the court commented that Paxton’s testimony
about the 1986 lease negotiations was relevant evidence because “he moved into a
recently upgraded building and his expectation was that any changes would not
downgrade that. I agree with that.”10 We infer that the trial court found that the mutual
intent of the parties who negotiated the lease in 1986 was that the landlord would have an
obligation to make repairs in such a manner that the quality of the apartment was not
downgraded. In light of that extrinsic evidence, we infer that the court construed
ambiguities in the plain language of the repair provision in the manner previously
discussed: Quinlan has an obligation to make repairs in a manner that does not
downgrade the apartment’s condition from its condition in 1986 and to obtain Paxton’s
consent to the color, style and quality of replacement items within reasonable cost limits.
Because the court’s factual findings on the extrinsic evidence is supported by substantial
evidence (Paxton’s testimony), we find this to be a reasonable interpretation of the repair
provision.
Paxton argues that his rights under the consent clause are more expansive. He first
argues that “[t]he original contracting parties had no intention to limit the qualitative
standard to something similar to what was being replaced; that interpretation was the
10
The court, however, observed that the condition of the apartment in 1986
indicated that it was “obviously intended as a rental,” and specific areas like the shower
room and kitchen might be characterized as “functional” or “nice,” but “hardly high end.”
17
Court’s own proffered supposition, not supported by any evidence.” We disagree.
Paxton testified as to the consent clause: “I certainly assumed that there is [a] limitation
within what the landlord explained to me was his understanding the word ‘good.’ That
the building be kept in good condition . . . .” (Italics added.) The court reasonably
inferred from this testimony that the applicable standard was the existing condition of the
apartment. Paxton notes that he also testified the landlord told him the apartment’s
condition would be consistent with other units in the neighborhood, and he argues this
evidence demonstrates the applicable standard was “consistent with other buildings in the
Pacific Heights neighborhood,” even if that standard was higher than the existing
condition of the apartment. However, even if that was a possible inference from the
evidence, we must defer to the trial court’s finding that is supported by substantial
evidence. Moreover, Paxton’s proposed interpretation would not assist him in any event
because substantial evidence in the record (Quinlan’s testimony) supported the inference
that the 2014 repairs were consistent with prevailing standards in the neighborhood.
Paxton next argues that “consent” in the consent clause, when construed in the
context of the entire lease, should be interpreted to confer nearly unfettered discretion to
him. He notes that “consent” in other lease provisions is expressly limited with the
phrase “consent shall not be unreasonably withheld,” but “consent” is not so limited in
the consent clause. This argument might have force but for the extrinsic evidence (i.e.,
Paxton’s testimony) that Paxton, an original contracting party, understood that his right to
withhold consent under the consent clause was subject to a reasonableness limitation.
Because the court found this was the original intent and the lease is amenable to that
interpretation, the possible inconsistency in the plain language of various provisions of
the lease does not compel a different interpretation.
Finally, Paxton argues that applying the implied covenant of good faith and fair
dealing (i.e., the reasonableness requirement) to the consent clause improperly vitiates an
express contract right that Paxton bargained for and obtained in the contract. The cases
he cites, however, stand for the principle that the implied covenant will not alter an
unambiguous and specific express contractual right of unfettered discretion, not that the
18
implied covenant is inapplicable to any contractual provision that involves the exercise of
discretion. Carma Developers (Cal.), Inc. v. Marathon Development California, Inc.
(1992) 2 Cal. 4th 342, for example, holds “ ‘that the parties may, by express provisions of
the contract, grant the right to engage in the very acts and conduct which would otherwise
have been forbidden by an implied covenant of good faith and fair dealing.’ ” (Id. at
p. 374.) In Carma, a commercial lease prohibited subletting of the premises without the
landlord’s prior written consent, “ ‘which consent shall not be unreasonably withheld’ ”;
however, the lease also expressly allowed the landlord to terminate the existing lease and
enter into a new lease with the intended sublessee and thereby capture any rent increase.
(Id. at pp. 351–352.) The court rejected an argument that the implied covenant of good
faith and fair dealing barred the landlord from exercising that right unless it had a
reasonable objection to the proposed sublessee. (Id. at pp. 373–374.) Similarly, in Wolf
v. Walt Disney Pictures & Television (2008) 162 Cal. App. 4th 1107, a contract gave the
Disney corporation the right to license use of film characters for promotion or advertising
“as [Disney] may see fit,” and also provided that Disney “shall not be under any
obligation to exercise any of the rights granted” under the contract. (Id. at p. 1121 &
fn. 7; see id. at pp. 1112–1113.) The court held the implied covenant did not apply to
Disney’s licensing decisions. (Id. at pp. 1121–1123.) In contrast, a federal district court
held that a provision that simply granted a clothing company discretion to approve or
disapprove retailers was subject to the implied covenant. (Gabana Gulf Distribution, Ltd.
v. GAP International Sales, Inc. (N.D.Cal., Jan. 9, 2008, No. C-06-02584 CRB) 2008
U.S.Dist. Lexis 1658; see Locke v. Warner Bros., Inc. (1997) 57 Cal. App. 4th 354, 358,
364–367 [provision granting movie studio nonexclusive first look at movie proposals and
“pay or play” directing deal subject to implied covenant].) The consent clause here
grants Paxton the power of consent to replacement materials, but does not expressly grant
him unfettered discretion to withhold his consent nor does it specifically grant him the
power to withhold his consent to particular items. The general right of consent conferred
by the clause is therefore subject to the implied covenant of good faith.
19
In sum, we affirm the trial court’s implied interpretation of the consent clause:
Paxton had the right to withhold his consent to replacement items that would have
downgraded the condition of the apartment, subject to reasonable restraints on the costs
to the landlord.
C. Breach of Contract
The trial court’s judgment granted Quinlan declaratory relief that the work
performed pursuant to the preliminary injunction “fully conforms with the lease terms
requiring repairs.” The court found that Paxton breached the lease “by unreasonably
withholding his consent to the repairs proposed by [Quinlan],” and that Paxton breached
the covenant of good faith “by refusing to grant [Quinlan] access to the premises to make
necessary repairs and by imposing unreasonable conditions on [Quinlan’s] ability to do
so.” Paxton argues that denial of access to the apartment was not a breach because
Quinlan failed to perform conditions precedent under the lease. Paxton also contends that
the court erred in finding Quinlan complied with the injunction: he specifically argues
that “Quinlan’s work did not comply with the terms of the Lease.”11 We construe these
arguments as contentions that the trial court erred in finding Paxton breached the lease
and Quinlan did not.12 Quinlan argues the court’s findings were “proper,” i.e., supported
by substantial evidence. We agree.
We first reject Paxton’s specific argument that Quinlan’s failure to perform
conditions precedent excused any breach on Paxton’s part. Paxton argues that he did not
breach the access provision because Quinlan never fulfilled the condition precedent of
obtaining his consent to Quinlan’s proposed repairs. Paxton relies on Civil Code
11
Paxton also argues the court erred in granting the preliminary injunction.
Quinlan correctly notes that Paxton’s appeal is untimely with respect to the preliminary
injunction. (Code Civ. Proc., § 904.1, subd. (a)(6); Cal. Rules of Court, rule 8.104(a)(1).)
The clarified preliminary injunction order was filed June 24, 2014, and the notice of
appeal was filed more than 180 days later on April 23, 2015.
12
We note that, in its oral tentative decision, the trial court found that “neither
party acted reasonably with respect to their rights under the lease [between 2005 and
2012].” That finding is amply supported by the trial record, but it is not relevant to the
ultimate issues here.
20
section 1439, labeled “Performance, etc., of conditions, when essential,” which provides
that “[b]efore any party to an obligation can require another party to perform any act
under it, he must fulfill all conditions precedent thereto imposed upon himself . . . .”
(Italics added.) However, “no obligation of a contract is to be regarded as a condition
precedent unless made so by express terms or necessary implication.” (Verdier v.
Verdier (1955) 133 Cal. App. 2d 325, 334 [requirement in marital separation agreement
that wife not molest husband was not a condition precedent to husband’s obligation to
support her].) Paxton cites cases where the defendant’s contractual obligation was
expressly conditioned on the plaintiff’s performance of a specific act (Wiz Technology,
Inc. v. Coopers & Lybrand (2003) 106 Cal. App. 4th 1, 5–7, 11–12 [accounting firm
agreed to perform audit on condition that company hire new securities counsel; continued
use of prior counsel excused accounting firm from conducting audit]), or where the
condition precedent could be implied from the contract as a whole (Consolidated World
Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal. App. 4th 373, 380 [when plaintiff
failed to close escrow within 60 days as required by contract, the defendant’s
performance under the contract was excused]).
Here, Paxton’s obligation to reasonably provide access was not expressly
conditioned on Quinlan’s compliance with the consent clause, and the latter was not a
specific one-time act that was a necessary precondition to Paxton’s performance. Rather,
Quinlan’s obligation to repair and obtain Paxton’s consent to replacement items and
Paxton’s obligation to allow access to perform repairs were both ongoing obligations that
required good faith on both sides. Enforcement of these provisions, therefore, is not
amenable to condition precedent analysis.13
13
Paxton also argues Quinlan was required to comply with San Francisco’s rent
control ordinance before Paxton could be required to vacate the premises for repairs. He
ignores the fact that he was required to vacate by court order. Paxton also contends he
was denied compensation required by the ordinance and the city’s enforcement rules and
regulations. He sought no such relief at trial. In a September 16, 2014 pretrial motion,
Paxton sought $19,291 in such relocation expenses, which was denied on October 16,
21
Moreover, the evidence supports a finding that Quinlan sought Paxton’s consent,
but that Paxton unreasonably refused to provide it. Substantial evidence supports the trial
court’s finding that Paxton breached the access provision by imposing unreasonable
conditions on the repair work—“including monetary penalties and a quality of fixture . . .
which was not reasonably required”—at least as of 2014, and by unreasonably
withholding his consent to allow Quinlan to make repairs necessary to abate the
2009 NOV.
Substantial evidence further supports the finding that the 2014 repairs were
“compliant with [Quinlan’s] obligations under the terms of the Lease.” As we have
discussed, the court could reasonably infer, from Paxton’s own testimony, that Quinlan’s
obligation was to keep the building “in good condition . . . ,” equivalent to the condition
of the apartment in 1986 or earlier. Even applying Paxton’s putative standard of
neighborhood equivalence, Quinlan’s testimony by itself would supported an inference
that the 2014 repairs were consistent with the prevailing standards in the neighborhood.
The court reasonably found that Quinlan had offered, in his 2012 proposed scope of
work, “to make repairs with reasonable quality materials and craftsmanship,” and the
repairs Quinlan made to the apartment “complied with the terms of the Lease” as the
court had interpreted it.
III. DISPOSITION
The judgment is affirmed. Paxton shall bear Quinlan’s costs on appeal.
2014 (Hon. Ronald E. Quidachay). That order was not appealed, and the issue is not
before us.
22
_________________________
BRUINIERS, J.
WE CONCUR:
_________________________
JONES, P. J.
_________________________
SIMONS, J.
23