Fitness International v. 5900 Wilshire Owner CA2/6 ( 2023 )

Filed 7/17/23 Fitness International v. 5900 Wilshire Owner CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
FITNESS INTERNATIONAL, 2d Crim. No. B323064
LLC, (Super. Ct. No. 20STCV45181)
(Los Angeles County)
Plaintiff and Appellant,
v.
5900 WILSHIRE OWNER, LLC,
Defendant and Respondent.
Fitness International, LLC (Fitness or Tenant) appeals the
summary judgment entered on Fitness’s complaint against 5900
Wilshire Owner, LLC (5900 Wilshire or Landlord) for breach of
contract and other claims. Fitness—which operates an indoor
health club in commercial space it leases from 5900 Wilshire—
primarily sued for the return of rent it paid during the period it
was prohibited from operating the health club due to government
orders enacted in response to the COVID-19 pandemic. Fitness
contends the trial court erred in analyzing its cause of action for
declaratory relief, in entering judgment in favor of 5900 Wilshire
on its causes of action for breach of contract and common counts,
and in denying leave to amend the complaint. We affirm.
FACTS AND PROCEDURAL HISTORY
Fitness operates health clubs throughout the United States
and Canada. On July 1, 1996, Fitness and 5900 Wilshire entered
into a lease (the lease) giving Fitness the right to occupy the
subject property for 10 years. The parties subsequently extended
the lease, which currently remains in effect until April 2027.
Pursuant to the most recent amendment to the lease executed in
July 2018, “[a]t any time between January 31, 2021 and April 30,
2025, Tenant shall have the right to terminate the Lease . . . in
its entirety by delivering to Landlord a written notice . . . of such
election at least twelve (12) months prior to the termination date
specified in Tenant’s Termination Notice.”
The lease identifies the permitted use for the leased
property as “Health Club or any other use reasonably approved
by Landlord.” Another provision of the lease states “[t]he
Permitted Use is a material provision of this Lease. Tenant shall
use the Premises solely for the Permitted Use and shall not use
or permit the Premises to be used for any other purpose without
the prior written consent of Landlord.”
In March 2020, the Governor proclaimed a state of
emergency due to the COVID-19 pandemic and ordered all
residents “to heed any orders and guidance of state and local
public health officials, including but not limited to the imposition
of social distancing measures, to control the spread of COVID-
19.” After state and local public health officers issued orders
requiring non-essential businesses such as health clubs to close,
the Governor issued an executive order to that effect.
2
In his March 16 order permitting local governments to pass
protections against eviction for nonpayment of rent due to
COVID-19, the Governor made clear that “[n]othing in this Order
shall relieve a tenant of the obligation to pay rent, nor restrict a
landlord’s ability to recover rent due.” (Governor’s Exc. Order no.
N-28-20 [Mar. 16, 2020].) Subsequently-enacted Los Angeles
County ordinances and City of Los Angeles resolutions—both of
which expressly excluded large companies like Fitness from the
eviction moratorium—reiterated that they should not be
construed as eliminating or excusing the covered tenants’
obligation to pay rent.
Pursuant to these orders, Fitness temporarily ceased
operating its health club on the subject premises on March 17,
2020. Fitness was allowed to reopen the health club on June 12,
2020, but was ordered to close again on July 13, 2020 and
thereafter remained closed until March 15, 2021. After the
March 17 closure, Fitness sought 5900 Wilshire’s
acknowledgment that Fitness’s obligation to pay rent had been
excused or abated by the closure orders. On May 5, Fitness’s
Senior Vice President and General Counsel notified 5900
Wilshire that “Tenant has abated and will continue to abate Rent
under the Lease beginning with Rent due in April 2020 through
the date that Tenant is both legally permitted to fully operate its
business from the entire Premises and determines that it is safe
to recommence operations and, as Tenant paid Rent for the
entirety of March 2020 but was forced to cease its business
operations as of March 16th due to the Government Closures,
Tenant is due a Rent credit for the period from March 17th
through March 31st.” Fitness, however, continued to pay the
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monthly rent and maintain possession of the leased premises
notwithstanding the closure orders.
In November 2020, Fitness filed its complaint against 5900
Wilshire alleging causes of action for (1) breach of written
contract, (2) common count—money had and received, (3)
common count—money paid by mistake, and (4) declaratory
relief. The trial court subsequently granted judgment in favor of
5900 Wilshire on the breach of contract and common count
claims, and in partial favor of both parties on the claim for
declaratory relief. On the breach of contract claim,1 the court
reasoned that “[Fitness] admits that its inability to operate the
business was due to government-mandated closures. [Citation.]
[Fitness] fails to plead facts that [5900 Wilshire] had any control
over the operation of the government-mandated closures. Nor
does the Complaint allege that [5900 Wilshire] prevented
[Fitness] from possessing the premises during the term of the
Lease . . . . In fact, [Fitness] remained in possession of the leased
premises as tenant throughout the COVID-19 pandemic.
[Citations.] [5900 Wilshire] did not limit [Fitness’s] access to the
premises or interfere with [Fitness’s] use of the premises in any
way.”
1 The claim for breach of contract alleged that “Landlord is
in breach of the representations, warranties and covenants by
Landlord to Tenant in the Lease, including those that provide
Tenant shall have the right throughout the term of the Lease to
use the Premises, or any portion thereof, and operate its business
from the Premises and Tenant shall have and hold, throughout
the entire term of the Lease, peaceful and quiet possession and
enjoyment of the Premises.” It was further alleged that “[d]espite
notice of its breach of the Lease, [Landlord] has failed to cure its
breach of the Lease.”
4
The court granted judgment in 5900 Wilshire’s favor on the
cause of action for common count—money had and received
because the complaint did not allege that 5900 Wilshire had
received money intended to be used for Fitness’s benefit. In
granting judgment in 5900 Wilshire’s favor on the cause of action
for common count—money paid by mistake, the court noted that
Fitness “does not allege any mistake as to a material fact as to its
obligation to pay rent pursuant to the Lease. Indeed, the
Complaint alleges that tenant believed its obligation to pay rent
during the closure periods was excused and/or abated.”
On the claim for declaratory relief,2 the trial court rejected
Fitness’s contentions that its performance under the lease was
2 Fitness’s claim for declaratory relief sought a declaratory
judgment that “(a) Plaintiff has no obligation to pay Rent to
Defendant during the Closure Periods; [¶] (b) Defendant is
required to excuse Plaintiff’s performance under the Lease during
the Closure Periods by operation of California law, including
without limitation, California Civil Code § 1511(1); [¶] (c)
Defendant is required to excuse Plaintiff’s performance under the
Lease because the parties’ intent and real purpose in entering the
Lease is frustrated during the Closure Periods; [¶] (d) Defendant
is required to excuse Plaintiff’s performance under the Lease
because performance was impracticable during the Closure
Periods; [¶] (e) Defendant is required to excuse Plaintiff’s
performance under the Lease because performance was
temporarily impossible during the Closure Periods; [¶] (f)
Defendant is required to return to Plaintiff all monies paid by
Plaintiff to Defendant during the Closure Periods; [¶] (g) Rent
during the period of time Tenant is subject to the On-Going
Restrictions is proportionately abated (e.g., if 50% capacity, Rent
is reduced to 50%); [¶] (h) The length of the term is extended by
the length of the Closure Period; [¶] (i) Plaintiff may recover its
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excused under Civil Code section 1511(1) because Fitness’s
performance of its obligation to pay rent under the lease was not
prevented or delayed by the operation of law. The court also
found that Fitness’s actual payment of rent while the closure
orders were in effect fatally undermined its claim that its
obligation to pay that rent was excused under the doctrines of
impossibility and impracticability. The court rejected Fitness’s
claim that the lease was a severable installment contract on the
ground that Fitness had not offered any relevant authority to
support the claim.
Although the court agreed with Fitness’s assertion that its
obligation to pay rent while the closure orders were in effect was
“suspended” under the doctrine of temporary frustration of
purpose, it also found that “[b]ecause [Fitness] paid all rent due,
the reinstatement of [Fitness’s] rent obligation during the closure
orders is moot.” Contemplating the possibility of another closure
order in the future, the court issued a declaratory judgment
stating that “[a]bsent an agreement between the parties,
[Fitness’s] rent obligations under the Lease are suspended until
the closure orders prohibiting business operations are lifted to
permit at least partial occupancy. Once the government orders
are lifted, [Fitness’s] rent obligation [is] reinstated without a pro-
rated reduction in rent based upon the capacity of permitted
business activity.”
DISCUSSION
Declaratory Relief
Fitness contends the order granting summary judgment on
its claim for declaratory relief is erroneous to the extent the order
costs and reasonable attorneys’ fees; and [¶] (j) Plaintiff may
recover such other relief deemed just and reasonable.”
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does not require 5900 Wilshire to return all of the rent Fitness
paid under the lease while the closure orders were in effect. We
conclude otherwise.
Summary judgment is proper if no issues of triable fact
appear and “the moving party is entitled to a judgment as a
matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “‘“The moving
party bears the burden of showing the court that the plaintiff ‘has
not established, and cannot reasonably expect to establish,’” the
elements of his or her cause of action.’” (State of California v.
Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1017.) On appeal “[w]e
independently determine whether the record supports the trial
court’s conclusions that the asserted claims fail as a matter of
law, and we are not bound by the trial court’s stated reasoning or
rationales.” (County of San Diego v. Superior Court (2015) 242
Cal.App.4th 460, 467.)
We conclude the trial court did not err in issuing a
judgment that does not require the return of rents already paid
by Fitness. Since Fitness actually made the payments, it cannot
demonstrate that its obligation to do so was either impossible or
impractical. As 5900 Wilshire aptly notes, “it is illogical for
Fitness to claim that it was actually prevented from paying rent,
as necessary for impossibility or impracticability to apply, where
Fitness did in fact pay rent and was not prevented from doing so
by the pandemic or any government orders.”
The court also correctly rejected Fitness’s claim that its
obligation to pay rent was excused under Civil Code section 1511,
which states in pertinent part that performance of a contractual
obligation “is excused” where such performance is “prevented or
delayed by . . . the operation of law” or “an irresistible,
superhuman cause.” (Civ. Code, § 1511(1) & (2).) As we have
7
noted, Fitness actually and timely performed its obligation to pay
rent throughout the period in question. In any event, Civil Code
section 1511 “does not excuse Fitness’s performance because the
pandemic and resulting government orders did not prevent
Fitness from performing its contractual obligation to pay rent.
Indeed, . . . the orders explicitly stated that commercial tenants
(such as Fitness) remained obligated to pay their rent despite a
moratorium on commercial tenant evictions.” (SVAP III Poway
Crossings, LLC v. Fitness International, LLC (2023) 87
Cal.App.5th 882, 894 review denied April 26, 2023, S278862
(SVAP Poway Crossings, LLC).)
Although the trial court found the contractual defenses of
impossibility and impracticability did not apply, it was persuaded
by Fitness’s claim that its obligation to pay rent while the closure
orders were in effect was “suspended” by the doctrine of
temporary frustration of purpose. The doctrine of commercial
frustration exists where “‘Performance remains entirely possible,
but the whole value of the performance to one of the parties at
least, and the basic reason recognized as such by both parties, for
entering into the contract has been destroyed by a supervening
and unforeseen event.’” (Dorn v. Goetz (1948) 85 Cal.App.2d 407,
410 quoting Williston on Contracts, vol. 6, Rev.Ed., p. 5419).)
While this appeal was pending, our colleagues in the Fourth
District concluded in a similar case involving Fitness that
“because the application of the doctrine of frustration under
California law compels the termination of the contract, the law
does not recognize the ‘temporary’ frustration defense Fitness
attempts to assert here.” (SVAP III Poway Crossings, LLC, at
p. 896.) We agree.
8
Fitness argues both parties contemplated that the purpose
of the lease was the operation of a health club. We are not
convinced. The lease permitted such a use, but did not require it,
and it permitted other uses subject to the landlord’s approval.
But even if, the primary purpose of the lease was for Fitness to
operate a gym the doctrine of frustration of purpose would not aid
Fitness because “Governmental acts that merely make
performance unprofitable or more difficult or expensive do not
suffice to excuse a contractual obligation. [Citation.]” (SVAP III
Poway Crossings, LLC, supra, 87 Cal.App.5th at p. 895.)
Moreover, the remedy for commercial frustration of purpose
in this context is immediate termination of the contract (SVAP
III Poway Crossings, LLC, supra, 87 Cal.App.5th at p. 896),
which Fitness plainly did not want.3 It is also “clear from the
parties’ actions and argument that neither considered the
contract to terminate as a result of the orders. On the contrary,
Fitness continued to occupy the premises throughout the closure
periods and did not attempt to rescind the lease. It therefore
remain[ed] obligated to pay rent while in possession of the
premises.” (SVAP III Poway Crossings, LLC at p. 896.)
Finally, even assuming that California law recognizes the
doctrine of temporary frustration of purpose, the doctrine would
not apply here because the duration of the events causing the
frustration (i.e., the closure orders) “‘was of indefinite extent.’”
(20th Century Lites, Inc. v. Goodman (1944) 64 Cal.App.2d Supp.
938, 945, quoting Allanwilde Transport Corp. v. Vacuum Oil Co.
(1918) 248 U.S. 377, 386 [63 L.Ed. 312.) Because there was no
“‘reliable speculation’” as to how long the closure orders would
3Not only did Fitness continue to pay rent but it never
exercised its contractual right to terminate the contract.
9
continue, the alleged frustration of the purpose of the lease
cannot be deemed temporary. (20th Century Lites at p. 946.)
To the extent Fitness reasserts its claim that the lease
should be treated as a severable installment contract, nothing in
the language of the lease reflects the parties’ intent that the
monthly rent payments be treated as divisible from the
contractual agreement that requires those payments. “If the
parties to its making intend an entire contract, not a severable
one, the courts will not find it divisible despite periodic
performance.” (Armstrong Petroleum Corp. v. Tri-Valley Oil &
Gas. Co. (2004) 116 Cal.App.4th 1375, 1389.) Moreover, Fitness’s
claim is based on the erroneous premise that Fitness did not
retain possession of the premises throughout the period in
question.4 The trial court thus did not err in declining to order
that 5900 Wilshire return the rent Fitness paid while the closure
orders were in effect.5
4 Contrary to Fitness’s assertion, it did not present any
evidence giving rise to a triable issue of material fact whether
Fitness retained possession of the premises. Indeed, Fitness
admitted below that this fact was “undisputed” but deemed it
“irrelevant.” This admission is also fatal to Fitness’s claim that it
was deprived of possession of the premises such that “there was a
total failure of consideration during the closure period, which
excused rent.”
5Because 5900 Wilshire did not file a notice of appeal from
the judgment, there is no basis for us to modify that judgment to
the extent it purports to authorize Fitness to withhold rent if
another closure order is issued in the future.
10
Breach Of Contract
Fitness next contends the court erred in granting judgment
in favor of 5900 Wilshire on its breach of contract claim because
there is a triable issue of material fact whether 5900 Wilshire
breached Fitness’s contractual right to the quiet possession and
enjoyment of the leased premises. We disagree. In making this
claim, Fitness again downplays the undisputed fact (see fn. 4)
that it remained in possession of the premises throughout the
subject period.
In any event, Fitness’s assertion that its rights to quiet
possession and enjoyment of the premises were violated fails as a
matter of law because the covenant of quiet possession and
enjoyment “‘insulates the tenant against any act or omission on
the part of the landlord, or anyone claiming under him, which
interferes with a tenant’s right to use and enjoy the premises for
the purposes contemplated by the tenancy.’” (Andrews v. Mobile
Aire Estates (2005) 125 Cal.App.4th 578, 588, italics added.) “To
be actionable, the landlord’s act or omission must substantially
interfere with a tenant’s right to use and enjoy the premises for
the purposes contemplated by the tenancy. [Citations.]” (Id., at
p. 589, italics added.) Fitness refers to section 17.2 of the lease,
but that section merely provides that 5900 Wilshire shall
indemnify Fitness against losses arising from the “‘[l]andlord’s
breach or non-performance of any provision of this Lease.’”
(Italics added.) Fitness fares no better in highlighting sections
19.1, 20.1 and 20.2 of the Lease, which provide that a government
“‘[t]aking’” is among the type of “‘[i]nterruptions’” that may
entitle the tenant to an abatement of rent. Simply put, there was
no government taking here. Because no act or omission by 5900
Wilshire interfered with Fitness’s possession and enjoyment of
11
the leased premises and there is no other basis in the record to
support a finding that 5900 Wilshire failed to comply with any of
its obligations under the lease, summary judgment was properly
entered in 5900 Wilshire’s favor on the claim for breach of
contract.
Common Counts
Fitness also claims the court erred in granting judgment in
favor of 5900 Wilshire on the common count claims. We are not
persuaded.
To establish its common claim based on money had and
received, Fitness had to prove that 5900 Wilshire received money
“‘intended to be used for the benefit of [the plaintiff],’ that the
money was not used for [Fitness’s] benefit, and that [5900
Wilshire] has not given the money to [Fitness].” (Avidor v.
Sutter’s Place, Inc. (2013) 212 Cal.App.4th 1439, 1454, quoting
CACI No. 370.) As the trial court correctly found, this claim
“fails on the pleadings” because Fitness did not allege these
requisite facts, much less offer any evidence to give rise to an
issue of material fact sufficient to preclude summary judgment.
Fitness’s common count claim based on money paid by
mistake also fails on the pleadings because there is no allegation
that Fitness paid the rent by mistake. As 5900 Wilshire notes,
“Fitness has claimed from the outset that it was excused from
paying rent to Landlord, but paid it anyway.” Accordingly, 5900
Wilshire was properly granted summary judgment on both
common count claims.
Denial Of Leave To Amend Complaint
Fitness finally contends the court abused its discretion in
denying leave to amend the complaint after ruling that the
12
breach of contract and common count claims failed on the
pleadings. We disagree.
“Where a motion for summary judgment is in effect a
motion for judgment on the pleadings, the court may grant a
plaintiff leave to amend the complaint.” (Stoltz v. Wong
Communications Limited Partnership (1994) 25 Cal.App.4th
1811, 1817.) Although the denial of leave to amend under these
circumstances constitutes an abuse of discretion if the pleading
does not show on its face that it is incapable of amendment, “[t]he
plaintiff has the burden of showing what amendment can be
made, and how it will change the legal effect of the pleading, so
that it states a cause of action.” (Ventura Coastal, LLC v.
Occupational Safety & Health Appeals Bd. (2020) 58 Cal.App.5th
1, 33.) Because Fitness makes no such showing, its claim fails.
(Ibid. [“A plaintiff can even make this showing for the first time
on appeal”].)
DISPOSITION
The judgment is affirmed. Respondent shall recover its
costs on appeal.
NOT TO BE PUBLISHED.
CODY, J.
We concur:
YEGAN, Acting P.J. BALTODANO, J.
13
Christopher K. Lui, Judge
Superior Court County of Los Angeles
______________________________
Dorsey & Whitney, Bryan M. McGarry, Lynnda A.
McGlinn, Jill A. Gutierrez, for Plaintiff and Appellant.
Allen Matkins Leck Gamble Mallory & Natsis, Charles D.
Jarrell, Suzanne E. Kenney, Kent W. Toland, for Defendant and
Respondent.