Johnson v. Dunn Investment Properties CA2/5

Filed 9/17/21 Johnson v. Dunn Investment Properties CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 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 This opinion has not been certified for publication or ordered published for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
SECOND APPELLATE DISTRICT
DIVISION FIVE
CHARLES JOHNSON et al., B305459
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No.
v. 19STCV17262)
DUNN INVESTMENT
PROPERTIES, INC.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Affirmed.
Trutanich & Associates, Dominic J. Trutanich, for Plaintiffs
and Appellants.
JBV Law & Associates, Adam Apollo, for Defendant and
Respondent.
Plaintiffs and appellants Charles Johnson and Sheila
Johnson (the Johnsons) leased commercial real property from
defendant and respondent Dunn Investment Properties, Inc.
(Dunn Investment) for a specified term. The lease provided it
would expire in July 2016 unless the Johnsons exercised an
option to extend the lease in writing. The Johnsons admit they
did not invoke the option in writing, but they argue they
effectively exercised the option to extend through their conduct.
Years later, when Dunn Investment offered the Johnsons a new
term lease or, failing acceptance of that, a significantly higher
month-to-month rent, the Johnsons sued Dunn Investment
alleging breach of the lease. The trial court sustained Dunn
Investment’s demurrer to the complaint without leave to amend.
We primarily consider whether the Johnsons effectively exercised
their option to renew the lease. We also decide whether the
Johnsons can state a claim for breach of the lease based on
alleged failures to repair or replace the property’s roof and HVAC
system.
I. BACKGROUND
A. The Facts as Alleged in the Complaint and Shown by
the Attached Lease Agreement
1. The lease
On January 20, 2011, the Johnsons signed a lease to rent
property located at 24773 Avenue Rockefeller in Valencia,
California (the property) from Dunn Investment. The lease term
ran from March 1, 2011, to July 31, 2016 (the “Expiration Date”).
The lease specified a base rent of $7,411 for the first month
and charged a security deposit but no other fees. A form rent
adjustment addendum specified the rent to be paid over specified
2
periods from April 2012 through July 2016. According to the
addendum, the rent owed from April 2015 to February 2016 was
$8,744. The rent owed from March 2016 to July 2016 was $9,634.
The lease included various terms addressing the parties’
respective responsibilities for upkeep of the property and its
various components. For example, the lease specified Dunn
Investment warranted existing elements on the property,
including the HVAC system, were in good condition on the date
the lease commenced. It also stated that if one of the systems
were to fail during the warranty period, Dunn Investment would
rectify the failure at its expense once it received written notice
from the Johnsons. The warranty period for the HVAC system
was 12 months.
The Johnsons were responsible for keeping the property,
facilities, and equipment (e.g., the HVAC equipment) in good
condition and repair. The Johnsons were to procure and
maintain service contracts to retain contractors specialized and
experienced in, among other things, HVAC equipment. Dunn
Investment also reserved the right to procure and maintain such
service contracts upon notice to the Johnsons, and to demand
reimbursement for the cost of doing so. If certain items,
including the HVAC system, could not be repaired for less than
50% of the cost of replacing the item, Dunn Investment was
required to replace it. The Johnsons would then be required to
pay 1/144th of the cost each month.
Dunn Investment bore full responsibility for the repair of
the surface and structural elements of the roof, foundation, and
bearing walls if the Johnsons provided written notice that such
repair was necessary. Dunn Investment did not have any other
obligation to repair or maintain the property. The parties agreed
3
that notwithstanding negligence or breach of the lease by Dunn
Investment, it would not be liable under any circumstances for,
among other things, injury or damage to the Johnsons’ goods,
wares, merchandise, or other property, whether such damage was
caused by water, the HVAC system, or lighting fixtures. The
lease states the Johnsons’ sole recourse in the event of such
damage would be to file a claim on the insurance policy or policies
the lease required them to maintain. In an addendum to the
lease, the Johnsons further acknowledged Dunn Investment was
not the insurer of their property and any damage to their
property from roof leaks would be their responsibility.
Dunn Investment was not to be deemed in breach of the
lease unless it failed to perform an obligation it was required to
perform within a reasonable time, defined to be a minimum of 30
days after written notice.
An addendum to the lease also included a form option to
extend, which gave the Johnsons with an option to extend the
lease for one additional 60-month term. The form provided that
to exercise the option to extend, the Johnsons were required to
give written notice to Dunn Investment a specified number of
months prior to the date on which the option period would
commence. The form also addressed the rent that would be
charged if the option were exercised. It specified the base rent
would be adjusted to the market rental value of the property on
August 1, 2016. The market rental value was to be set either by
agreement between the parties or, if they could not agree, via
other specified procedures. The addendum also provided a fixed
rental adjustment schedule, which provided the base rent would
increase by 3% of the prior base rent every year from August 1,
2017, through August 1, 2020.
4
2. Events during the lease term
The Johnsons’ primary business contact at Dunn
Investment was its president, James Dunn (Dunn). They also
had dealings with Caesar Guandique (Guandique), who was
assisting Dunn. Both Dunn and Guandique told the Johnsons
they were great tenants and could stay as long as they liked
several times. Dunn and Guandique also expressed a preference
for keeping the relationship between the Johnsons and
themselves informal.
In December 2014, the property’s roof leaked, damaging the
Johnsons’ property and equipment. Dunn apologized for the
damage, said he would have someone patch the roof, and
promised to later replace it.
Dunn died in September 2015. His estate entered probate,
and the Johnsons were informed ownership of the property was
subject to those probate proceedings.
3. Events after July 1, 2016
Following Dunn’s death, the Johnsons continued paying
rent on the property. Their checks were accepted and deposited.
The Johnsons continued to keep different aspects of the property
operational, including by repairing water lines, rebuilding swamp
coolers, and replacing ballasts in lightbulbs.
The Johnsons never exercised their option to renew the
lease in writing. Guandique did not object to the Johnsons
remaining in possession of the property or state the lease had not
effectively been renewed; he continued to tell them they were
great tenants.
5
In August and September 2016, the Johnsons met with
Guandique to review the monthly rent. The Johnsons realized
the rent had increased 5-6% every year during the five-year lease
term, except for the period from March 2016 to July 2016. The
Rent Adjustment addendum to the lease called for the rent to
increase more than 10% during that period. After meeting with
the Johnsons, Guandique agreed Dunn had intended all rent
increases to be in the 5-6% range, and decreased the rent for
March through July 2016 to $9,188. Guandique later sent the
Johnsons a spreadsheet outlining the rent due through October
2016, which specified they were to pay $9,188 each month.
In December 2018, the Johnsons received a letter from illi
Commercial Real Estate (ICRE). The letter represented new co-
trustees had been appointed the trustees of Dunn Management
Services and the new trustees had contracted with ICRE to
operate Dunn Management Services.
As of July 2018, the Johnsons’ rent was $9,747.55. At the
end of February 2019, ICRE informed the Johnsons they could
either pay $14,080 per month for a month-to-month lease or pay
$12,600 if they agreed to a three-year lease. ICRE also informed
the Johnsons they would be required to pay $5,040 in community
area maintenance charges.
Counsel for the Johnsons wrote to ICRE but received no
response. ICRE continued to invoice the Johnsons an amount in
excess of $9,747.55 and continued to bill them for community
maintenance.
The Johnsons “on several occasions alerted [Dunn
Investment] by way of [ICRE] and its predecessors” that the roof
6
at the premises leaked and damaged their property.1 The leaking
roof damaged the Johnsons’ equipment and property in an
amount exceeding $250,000. The Johnsons also “on several
occasions alerted [Dunn Investment] by way of [ICRE] and its
predecessors” that the HVAC system did not work, leaving the
property cold in the winter and hot in the summer. Dunn
Investment removed the existing commercial HVAC system and
replaced it with a residential system that is not equipped to
handle a 15,000 square foot building. The Johnsons complained
to Dunn Investment, but Dunn Investment had not remedied the
problem.
B. This Lawsuit
1. The complaint
The Johnsons filed their complaint on May 17, 2019. The
complaint alleges four causes of action: breach of contract, breach
of the covenant of good faith and fair dealing, injunctive relief,
and declaratory relief.
The Johnsons’ breach of contract cause of action alleges the
Johnsons and Dunn Investment entered into a written contract
and the Johnsons performed all conditions of the lease or were
reasonably excused from doing so. The breach of contract claim
further alleges Dunn Investment breached the lease by
attempting to terminate it, by attempting to unilaterally modify
the lease terms, by imposing an unconscionable rent and
demanding payment of community maintenance fees, and by
1
While the complaint alleges Charles Johnson called James
Dunn in December 2014 to inform him the roof had “leaked
badly,” it does not specify whether there were any other instances
of damage.
7
failing to repair the property’s roof and replace the HVAC system
with one suited for a commercial or industrial setting in a 15,000
square foot building. The Johnsons alleged they suffered
financial damages in an amount exceeding $250,000, as well as
compensatory and consequential damages. The complaint
attached the lease as an exhibit.
The cause of action for breach of the covenant of good faith
and fair dealing alleges Dunn Investment was unfairly
interfering with the Johnsons’ right to receive the benefits of the
lease. The injunctive relief cause of action seeks to enjoin Dunn
Investment from refusing to abide by the renewal of the lease,
from imposing a rent that exceeded that found in the option to
renew, from imposing a common area maintenance fee, and from
refusing to fulfill its obligations under the lease, such as
replacing the HVAC system and installing a new roof.
The Johnsons’ declaratory relief cause of action asserts
there is a present controversy between the parties regarding
whether the Johnsons validly renewed the lease, the rental rate
to be paid by the Johnsons, whether community maintenance
charges are allowed, and Dunn Investment’s obligations to
maintain and repair the property.
The Johnsons prayed for damages in an amount to be
proven at trial, but exceeding $250,000; compensatory and
consequential damages according to proof; additional damages;
interest on their losses; a temporary restraining order and
preliminary injunction; attorneys’ fees; costs of suit; and such
further relief as the court might deem proper.
8
2. The demurrer
Dunn Investment demurred to the complaint. As to the
cause of action for breach of contract, Dunn Investment argued
the terms of the lease attached as an exhibit contradicted the
allegations of the complaint and the terms of the lease should
control. Dunn Investment also argued the Johnsons had not
exercised the option to extend the lease because it required the
option be exercised in writing and the Johnsons had not alleged
they complied with the requirement. Dunn Investment further
argued the lease permitted it to assess charges for expenses
beyond base rent, such as common area maintenance fees. As to
the alleged failure to provide an adequate HVAC system or repair
the roof, Dunn Investment argued the Johnsons did not allege
they followed the procedure prescribed by the lease before there
could be a breach, i.e., that they gave written notice of the
problem and provided an opportunity to cure it.
Dunn Investment argued the causes of action for breach of
the covenant of good faith and fair dealing and injunctive relief
failed because the Johnsons did not sufficiently allege a breach of
the agreement and because injunctive relief is not a cause of
action. Dunn Investment also argued the declaratory relief cause
of action failed because the complaint did not identify any
disputes that were not answered by provisions of the contract.
Specifically, the company argued that absent an allegation the
Johnsons had exercised their option to renew the lease in writing,
the rental rate, including the addition of common area
maintenance fees, was at the landlord’s discretion. It also argued
the lease agreement attached to the complaint answered the
Johnsons’ questions about Dunn Investment’s obligations under
the lease.
9
3. The hearing on the demurrer
The trial court held a hearing on the demurrer. The record
does not contain a reporter’s transcript of this hearing. The
substance of the minute order states, in full, as follows:
“NATURE OF PROCEEDINGS: Case Management
Conference; Hearing on Demurrer — without Motion to Strike
[¶] The matters are called for hearing and argued. [¶] After
conferring with counsel, the Court rules as follows: [¶] The
Demurrer – without Motion to Strike filed by [Dunn Investment]
on 10/25/2019 is Sustained without Leave to Amend. The
demurrer is sustained without leave to amend as to the First
Cause of Action for Breach of Contract, Second Cause of Action
for Implied Covenant, Third Cause of Action for Injunctive Relief
and Fourth Cause of Action for Declaratory Relief. There is no
contract. [¶] The Court orders the Complaint filed by [the
Johnsons] on 5/17/2019 dismissed with prejudice. [¶] Counsel for
defendant is to give notice. [¶] Certificate of Mailing is
attached.”2 The court also entered an order of dismissal
dismissing the entire action with prejudice.
II. DISCUSSION
The Johnsons admit in their complaint that they did not
exercise their option to extend the lease in writing. Though they
argue their conduct was sufficient to renew the lease, the express
terms of the lease and the facts otherwise alleged in the
complaint do not support their contention. The lease accordingly
2
Our review is hindered by the lack of a developed record as
to the trial court’s reasoning, but we will proceed to the merits
because the record is minimally adequate.
10
expired at the end of its initial five-year term and the Johnsons
became month-to-month tenants when Dunn Investment
accepted their subsequent rent payments. Because the Johnsons
did not renew their lease, their breach of contract claim fails to
the extent it is based on Dunn Investment’s alleged attempts to
terminate the lease, increase the rent, or charge additional fees.
The remainder of their breach of contract claim fails because a
reading of the terms of the lease demonstrates the wrongs of
which they complain either do not constitute a breach of the lease
or are not compensable under the lease. The Johnsons’ request
for declaratory relief, derivative of their contract breach theories,
fails for the same reasons. Additionally, we conclude the trial
court did not abuse its discretion in sustaining the demurrer
without leave to amend because the Johnsons have not presented
facts demonstrating they can state a claim for relief.
A. Standard of Review
We review an order sustaining a demurrer de novo.
(Centinela Freeman Emergency Medical Associates v. Health Net
of California, Inc. (2016) 1 Cal.5th 994, 1010.) “[W]e accept the
truth of material facts properly pleaded in the operative
complaint, but not contentions, deductions, or conclusions of fact
or law.” (Yvanova v. New Century Mortgage Corp. (2016) 62
Cal.4th 919, 924, (Yvanova).) We also consider exhibits
incorporated into a complaint. (Holland v. Morse Diesel Internat.,
Inc. (2001) 86 Cal.App.4th 1443, 1447.) “If facts appearing in the
exhibits contradict those alleged [in the complaint], the facts in
the exhibits take precedence.” (Ibid.; see also Dodd v. Citizens
Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627 [“facts
appearing in exhibits attached to the complaint will also be
11
accepted as true and, if contrary to the allegations in the
pleading, will be given precedence”].) “A judgment of dismissal
after a demurrer has been sustained without leave to amend will
be affirmed if proper on any grounds stated in the demurrer,
whether or not the [trial] court acted on that ground.” (Carman
v. Alvord (1982) 31 Cal.3d 318, 324; accord, E. L. White, Inc. v.
City of Huntington Beach (1978) 21 Cal.3d 497, 504, fn. 2
[validity of the trial court’s action, not the reason for its action, is
what is reviewable].)
“To determine whether the trial court should, in sustaining
the demurrer, have granted plaintiff leave to amend, we consider
whether on the pleaded and noticeable facts there is a reasonable
possibility of an amendment that would cure the complaint’s
legal defect or defects. (Schifando v. City of Los Angeles (2003) 31
Cal.4th 1074, 1081 [ ] (Schifando).)” (Yvanova, supra, 62 Cal.4th
at 924.) If we see such a reasonable possibility “then we conclude
that the trial court abused its discretion in denying leave to
amend. If we determine otherwise, then we conclude it did not.”
(Campbell v. Regents of University of California (2005) 35 Cal.4th
311, 320.) “The burden of proving such reasonable possibility is
squarely on the plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311,
318 (Blank).)
B. Breach of Contract Cause of Action3
The Johnsons’ breach of contract cause of action asserts
Dunn Investment breached the lease in four ways: (1) by
3
Dunn Investment contends the Johnsons’ arguments
should be disregarded because they failed to timely file an
opposition to the demurrer below. The record reflects the
Johnsons had not filed an opposition to the demurrer as of two
12
attempting to terminate the lease; (2) by attempting to
unilaterally modify the lease terms, impose an unconscionable
rent, and demand payment of community maintenance fees; (3)
by failing to repair the roof; and (4) by failing to replace the
HVAC system with one suited for a commercial or industrial
setting. The first two contentions fail because, as we shall
explain, the Johnsons did not exercise their option to renew the
lease. To the extent the latter two theories are viable despite the
expiration of the lease, they each fail because other provisions of
the lease demonstrate the Johnsons have not stated a claim.
1. The Johnsons did not exercise their option
When a lease specifically identifies how a lessee is to
exercise an option to renew the lease term, the lessee must
days before the originally noticed demurrer hearing date, when
they filed a notice of substitution of attorney pursuant to which
they substituted in new counsel. The trial court held a hearing,
for which there is no reporter’s transcript in the record. A minute
order reflects the court continued the matter after conferring
with counsel and set a new briefing schedule for the motion. The
Johnsons timely filed an opposition pursuant to that schedule.
While a trial court has the discretion to refuse to consider late-
filed papers, the court did not exercise its discretion to do so in
this case. (Cal. Rules of Court, rule 3.1300(d).) Instead, it
continued the hearing on the motion and set a new briefing
schedule. The contention is thus meritless. Further, even if the
Johnsons raised a legal argument on appeal that was not
included in their opposition below, we would be permitted to
consider it. (Gutierrez v. Carmax Auto Superstores California
(2018) 19 Cal.App.5th 1234, 1244 [appellate court may consider
legal theories first raised on appeal from sustaining of a
demurrer].)
13
comply with those conditions. “An option is an offer by which a
promisor binds himself in advance to make a contract if the
optionee accepts upon the terms and within the time designated
in the option. Since the optionor is bound while the optionee is
free to accept or not as he chooses, courts are strict in holding an
optionee to exact compliance with the terms of the option.”
(Simons v. Young (1979) 93 Cal.App.3d 170, 182 (Simons).)
Absent waiver or estoppel (which, as discussed post, have no
application here), a tenant seeking to invoke the right to renew a
lease as permitted by a lease option “must apprise the lessor in
unequivocal terms of his unqualified intention to exercise his
option, within the time, in the manner and on the terms stated in
the lease.” (Bekins Moving & Storage Co. v. Prudential Ins. Co.
(1985) 176 Cal.App.3d 245, 251.)
A tenancy for a fixed term automatically terminates at the
end of the term. (Camp v. Matich (1948) 87 Cal.App.2d 660, 665
(Camp).) If a tenant remains in possession of property after a
lease term expires and the landlord accepts rent from the tenant,
a month-to-month tenancy is created under the same terms as
the original lease. (Civ. Code, § 1945; see also Aviel v. Ng (2008)
161 Cal.App.4th 809, 820; Dover Mobile Estates v. Fiber Form
Prods. (1990) 220 Cal.App.3d 1494, 1501.) A landlord is
permitted to terminate a month-to-month tenancy, or to change
its terms, so long as the landlord provides the tenant with thirty
days’ notice. (Civ. Code, § 1946.)
Here, the Johnsons’ lease was for a term of 65 months,
expiring on July 31, 2016. The lease specified that to exercise the
option to renew, the Johnsons were required to provide Dunn
Investment with written notice of their intent to renew. The
14
Johnsons concede they did not do so. Accordingly, the lease was
not renewed and expired at the end of July 2016.
Because Dunn Investment accepted rent payments from
the Johnsons following the expiration of the lease, the Johnsons
became month-to-month tenants. The complaint alleges Dunn
Investment offered the Johnsons a new lease, or a higher month-
to-month rate, and began charging community area maintenance
fees, in February 2019. Dunn Investment was allowed to make
these changes so long as it gave the Johnsons 30 days’ notice.
The complaint does not allege Dunn Investment failed to provide
the requisite notice. As a result, the Johnsons have failed to
allege facts sufficient to state a claim that Dunn Investment
breached the lease by attempting to terminate the lease, raise the
rent, or charge a common area maintenance fee.
The Johnsons nevertheless argue their failure to provide
written notice of their intent to exercise the option to renew the
lease is not determinative. Rather, they contend their conduct
between August 2016 and May 2019 communicated their intent
to renew the lease for the additional five-year term and Dunn
Investment either waived timely notice of the election to exercise
the option or is estopped from asserting the requirement. The
Johnsons base these contentions on the following alleged facts:
they consistently paid monthly rent, including annual rent
increases; Dunn Investment accepted the rent without protest
through September 2019; Guandique told them they were great
tenants who could stay as long as they liked; and they continued
to keep aspects of the property operational. This argument for
renewal by conduct is unavailing.
While it is true that a lessor may waive timely notice of an
election to exercise an option or be estopped from asserting the
15
requirement (Simons, supra, 93 Cal.App.3d at 178-179), there is
no waiver nor estoppel here. The Johnsons contend their actions
of continuing to pay rent and continuing to maintain the property
communicated their intent to renew. These actions, which
amount to nothing more than a tenant’s usual behavior, did not
give Dunn Investment any reason to know they had purportedly
renewed the lease. Nor do the Johnsons allege Dunn Investment
made any representations upon which they relied in failing to
give notice. The only statement attributed to Dunn Investment is
Guandique’s statement that the Johnsons were great tenants
who could stay as long as they wanted. That statement, however,
is not inconsistent with the month-to-month tenancy the
Johnsons had following the expiration of the lease. Moreover,
there is no allegation that Guandique’s representation was
anything more than a general statement or in any way related to
the potential exercise of the Johnsons’ option to renew the lease.
2. The remaining claims also fail
“‘A cause of action for breach of contract requires proof of
the following elements: (1) existence of the contract; (2) plaintiff’s
performance or excuse for nonperformance; (3) defendant’s
breach; and (4) damages to plaintiff as a result of the breach.’
[Citation.]” (Miles v. Deutsche Bank National Trust Co. (2015)
236 Cal.App.4th 394, 402.) To the extent that the Johnsons’
claims regarding the roof and HVAC system survive the
conclusion that the lease expired on July 31, 2016, the Johnsons
nevertheless fail to state a claim for breach of contract because
the terms of the lease demonstrate the Johnsons have not pled
facts sufficient to establish all of the elements of a breach of
contract claim.
16
Paragraph 7.2 of the lease provides Dunn Investment bears
full responsibility for the repair of the surface and structural
elements of the roof upon written notice that repair is necessary.
However, paragraph 59 specifically provides the Johnsons agreed
any damage to their property caused by roof leaks would be their
responsibility.4 Paragraph 8.8 also generally exempted Dunn
Investment from liability for damage to the Johnsons’ property
stemming from a breach of the lease or ordinary negligence.
(Frittelli, Inc. v. 350 North Canon Drive, LP (2011) 202
Cal.App.4th 35, 45, 48-49 [interpreting similarly worded clause].)
The only damage the Johnsons alleged as a result of the leaky
roof was property damage. Because they agreed Dunn
Investment would not be liable for any property damage caused
by issues with the roof, and did not allege Dunn Investment acted
with anything beyond ordinary negligence, the terms of the
lease—which control—demonstrate they cannot plead the roof
caused any compensable damage. As a result, their breach of
contract claim fails to the extent it is based on Dunn
Investment’s alleged failures with respect to the roof.
Paragraph 2.2 of the lease states Dunn Investment
warranted the HVAC system was in good condition when the
lease commenced in 2011. The HVAC system was further
warrantied for 12 months. If the system failed during that
period, Dunn Investment would have been responsible for
rectifying the failure. Paragraph 7.1 of the lease provides the
Johnsons were otherwise responsible for keeping the HVAC
equipment in good condition and repair, including by entering
4
Paragraph 59 suggests, and paragraph 8.8 expressly states,
that the Johnsons’ recourse for damage to their property was to
submit a claim under their insurance policy or policies.
17
into service contracts for its maintenance. If the HVAC system
could not be repaired for less than 50% of the cost of replacing it,
Dunn Investment was required to replace it. The Johnsons
would then be required to pay 1/144 of the cost each month.
The complaint alleges the HVAC system was not working
and Dunn Investment eventually replaced it with a new, inferior
system. The terms of the lease itself establish these allegations
do not suffice to state a breach of contract claim. The lease
makes the Johnsons responsible for the maintenance and general
repair of the HVAC system. Dunn Investment was only required
to replace the system if the cost of a repair was sufficiently
expensive compared to the cost of a replacement. Though the
complaint does not allege facts indicating Dunn Investment was
required to replace the system, it alleges the system was, in fact,
replaced. Once replaced, the Johnsons were, again, responsible
for the maintenance and upkeep of the new system pursuant to
the lease. The Johnsons assert the new HVAC system is
insufficient for the property, but the lease does not specify what
type of system must be installed in the property.5 Even if the
Johnsons could allege damage and could assert some claim
against Dunn Investment related to its choice of replacement, it
is not a breach of contract claim.
Additionally, paragraph 13.6 of the lease provides Dunn
Investment was not to be deemed in breach of the lease unless it
failed to perform a required obligation within a reasonable time,
which it defined as at least 30 days after receipt of written notice.
The complaint did not allege the Johnsons provided written
5
The Johnsons thus failed to allege Dunn Investment’s
action or inaction constituted a breach of the lease.
18
notice of either the issues with the roof or the issues of the
HVAC.
C. The Declaratory Relief Cause of Action
The Johnsons’ declaratory relief cause of action sought a
court determination regarding the parties’ rights and obligations
regarding the lease. The Johnsons argue the demurrer should
have been overruled because the complaint alleged the existence
of an actual and present controversy between them and Dunn
Investment. They claim a judicial declaration is necessary so
they can ascertain their rights and obligations regarding the
lease.
A demurrer is properly sustained as to a claim for
declaratory relief that is “wholly derivative of” other non-viable
causes of action. (Ochs v. PacifiCare of California (2004) 115
Cal.App.4th 782, 794 [because facts did not support claim that
PacifiCare violated statutes, “there are no grounds for granting
an injunction or declaratory relief based on purported violations
of those statutes”].) In this case, the Johnsons’ declaratory relief
cause of action is wholly derivative of their breach of contract
claim. The only judicial declaration sought in the complaint
related to the parties’ rights and obligations under the lease,
specifically whether it had been renewed, the rental rate to be
paid by the Johnsons, whether Dunn Investment could charge
maintenance fees, and Dunn Investment’s obligations to
maintain and repair the premises. The breach of contract cause
of action sought damages for alleged breaches of the lease based
on the same conduct. Because the breach of contract claim fails,
the declaratory relief claim also fails.
19
D. Leave to Amend
We review a trial court’s denial of leave to amend for abuse
of discretion. (Schifando, supra, 31 Cal.4th at 1081.) We reverse
if there is a reasonable possibility a pleading can be cured by
amendment. (Ibid.; Blank, supra, 39 Cal.3d at 318.) The
plaintiff has the burden of demonstrating abuse of discretion by
showing how the complaint can be amended to state a cause of
action. (Schifando, supra, 31 Cal.4th at 1081.)
The Johnsons’ opposition below summarily asserted they
were entitled to leave to amend, but it did not identify any
additional facts they were prepared to allege.6 Dunn Investment
argues this means the Johnsons are foreclosed from asserting
facts demonstrating they are entitled to leave to amend on
appeal. To the contrary, a request for leave to amend may be
made for the first time on appeal. (Jensen v. The Home Depot,
Inc. (2018) 24 Cal.App.5th 92, 97.)
We thus turn to the arguments in support of amendment
that the Johnsons assert in their opening brief. To meet their
burden to show they could plead facts sufficient to state a cause
of action the Johnsons were required to “submit a proposed
amended complaint or, on appeal, enumerate the facts and
6
There is no record upon which we can determine whether
the trial court abused its discretion below in declining to grant
leave to amend. The record on appeal does not include a
reporter’s transcript (or a settled or agreed statement)
memorializing what transpired during the demurrer hearing.
Because we have no record demonstrating otherwise, we presume
the trial court did not abuse its discretion in denying leave to
amend in the first instance. (See, e.g., Denham v. Superior Court
(1970) 2 Cal.3d 557, 564; Bennett v. McCall (1993) 19 Cal.App.4th
122, 127.)
20
demonstrate how those facts establish a cause of action.” (Cantu
v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 890.) The
Johnsons did not do the former, and their attempt at the latter is
insufficient.
The Johnsons’ appellate briefing asserts they could amend
their complaint to allege (1) that they provided Dunn Investment
with written notice of the roof and HVAC issues, (2) a nuisance
cause of action, and (3) a negligent interference with economic
relations cause of action. An amendment to allege the Johnsons
provided written notice of the alleged breaches would not cure
the larger defects with the breach of contract cause of action
identified ante, and, as a result, do not render their cause of
action viable. Further, though the Johnsons dutifully recite the
elements of a nuisance and negligent interference claim, which
they contend they could allege for the first time if granted leave
to do so, their purported recitation of facts consist of nothing
more than conclusory statements mirroring the elements of each
cause of action. For example, as to the nuisance cause of action,
the Johnsons assert Dunn Investment’s failure to repair or
replace the roof and HVAC system allowed an abnormally
dangerous condition to persist, but they do not state any facts
demonstrating either failure created a dangerous condition. As
to the negligent interference claim, the Johnsons assert Dunn
Investment’s actions disrupted their business relationships with
their customers, but they do not identify a specific prospective
customer or business relationship that was disrupted or identify
the manner of such disruption. Because the Johnsons did not
identify any facts that would establish these purported new
causes of action, they have not demonstrated there is a viable
theory of amendment.
21
DISPOSITION
The judgment is affirmed. Dunn Investment shall recover
its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, Acting P. J.
We concur:
MOOR, J.
KIM, J.
22