Lawrence v. JR Enterprises CA4/3

Filed 5/15/13 Lawrence v. JR Enterprises CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
MICHAEL LAWRENCE et al.,
Plaintiffs, Cross-defendants and G044999 (consol. w/ G045163)
Appellants,
(Super. Ct. Nos. 30-2008-00111057,
v. 30-2008-00112740)
JR ENTERPRISES, L.P., OPINION
Defendant, Cross-complainant and
Respondent.
Appeals from a judgment and postjudgment orders of the Superior Court of
Orange County, Robert J. Moss, Judge. Affirmed.
Beus Gilbert, Franklyn D. Jeans, Tiffany E. Cale; Mahaffey & Associates,
Douglas L. Mahaffey; Julander Brown & Bollard and William C. Bollard for Plaintiffs,
Cross-Defendants and Appellants.
Horvitz & Levy, David M. Axelrad, Kris Bahr; Barnes Crosby Fitzgerald &
Zeman, Larry S. Zeman and Eric P. Francisconi for Defendant, Cross-complainant and
Respondent.
* * *
This action involves a dispute over entitlement to a one-acre parcel of real
property in long-term ground lease covering 14 acres. A lease provision allowed the
original property owner and his two children to live on the acre as long as they desired,
but required delivery of the parcel to the lessee if they decided to no longer live there.
After the original owner and his children passed away, current owners Michael and
Victoria Lawrence (landlords) refused to deliver the parcel to the current lessee, JR
Enterprises, L.P. (tenant), resulting in various actions against each other.
In a bench trial, the court found certain of landlords’ claims to be barred by
the statutes of limitations, waiver, estoppel, and laches. After a jury trial on landlords’
remaining causes of action, the court directed a verdict for tenant on its claim landlords
had breached the lease by failing to deliver the parcel. Although it also directed a verdict
for landlords that tenant had breached the lease by excluding certain calculations from its
rent payment, it granted tenant relief from forfeiture of the lease. (Civ. Code, § 3275; all
further statutory references are to this code unless otherwise stated.)
In this consolidated appeal from the judgment (G044999) and denial of
their postjudgment motions (G045163), landlords contend the court erred by not voiding
the one-acre lease provision under section 715 [nonvested lease invalid if term not
commenced within 30 years], nonsuiting their fraud claim; and excluding certain
evidence. They also argue substantial evidence does not support the grant of relief under
section 3275, the application of affirmative defenses to bar certain claims, or the jury’s
award of damages. We affirm.
FACTS AND PROCEDURAL BACKGROUND
In 1963, Oliver Baker entered a 100-year ground lease for a 14-acre parcel
with developers. The lease allowed the development of 13 acres, and permitted Oliver
and his two children, Beatrice Brewer and Albert Baker, to live on one acre for as long as
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they desired but once they “elect no longer to reside on the said parcel, possession thereof
shall be delivered to” developers. On top of monthly rent, the lease required payment of
6 percent of any gross receipts in excess of $1.5 million “derived in whatsoever manner
from the demised premises” during the preceding five years. The lease was amended in
1964 and 1971 without substantive change.
The 13 acres was developed into a mobile home park and transferred to
several other companies before tenant took possession. Tenant and its predecessors
accompanied their excess rent payments with reports summarizing the mobile home
park’s yearly rent receipts.
After Oliver passed away in 1968, Albert and Beatrice continued living on
the property until their respective deaths in 2007 and 2009. Neither had biological
children; however, Beatrice adopted Lawrence, her adult nephew, in order to devise the
14 acres to him.
In 2008, tenant paid landlords $241,951 in excess rent and issued a report
summarizing the mobile home park’s gross receipts for 2003-2007. Tenant granted
landlords’ request to inspect its accounting records for the 2008 report. In October,
landlords issued a notice of default demanding an additional $297,981 in rent, along with
a demand letter and an accountant’s report outlining the excess rent calculation. Three
months later, tenant allowed landlords and their accountants to inspect its books related to
all of the five-year reports before the 2008 report.
Following Beatrice’s death in March 2009, tenant requested the one-acre
parcel be delivered to it for development. Landlords refused, claiming the lease
provision requiring them to do so was invalid.
In August, landlords retracted the 2008 notice of default and issued two
new ones. The first provided tenant failed to pay the excess rent for a five-year period
between 2004 to 2008, “the exact amount of which only you are aware.” The second was
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identical except it addressed the “five (5) year periods of 1974-1978, 1979-1983, 1984-
1988, 1989-1993, 1994-1998, and 1999-2003 . . . .”
Landlords sued tenant for quiet title and cancellation of the lease, and
declaratory relief, asserting the lease provision requiring the one-acre parcel be
transferred to tenant was invalid under section 715 (main action). Tenant filed a cross-
complaint for declaratory relief and a separate complaint (tenant’s action). Tenant’s
second amended (operative) cross-complaint and complaint both allege, inter alia, breach
of contract for failure to deliver the one-acre parcel as required by the lease and
declaratory relief.
In the main action, landlords responded to tenant’s second amended cross-
complaint with their own cross-complaint for fraud based on the exclusion of gross
receipts from the five-year reports, lease cancellation due to fraudulent inducement,
undue influence, and unconscionability, and financial elder abuse in fraudulently
inducing Oliver to sign the lease in 1963 and incorrectly reporting gross receipts to
Beatrice and Albert when they were 65 years old or older. They also cross-complained in
tenant’s action, alleging claims for breach of written lease and declaratory relief. The
two actions were consolidated.
As to the main action, the court granted tenant’s motion for summary
adjudication of the declaratory relief claim, finding section 715 did not apply
retroactively to invalidate the lease. Landlords agreed to a bench trial on their
unconscionability claim and any affirmative defenses. The court found the lease was not
unconscionable and that landlords’ claims for fraud, cancellation of the lease, financial
elder abuse, and breach of lease, except to the extent they were based on the 2008 report,
were barred by the statutes of limitation, laches, waiver, and estoppel.
In phase 2, a jury trial was held on tenant’s breach of contract claims in
both actions and landlords’ claims for breach of contract, fraud and elder abuse arising
from the 2008 report. On landlords’ fraud claim, the court granted a nonsuit, finding no
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evidence of detrimental reliance on representations made in the 2008 report. The court
thereafter directed a verdict in tenant’s favor on its breach of contract claim, ruling as a
matter of law landlords breached the lease by failing to deliver the one-acre parcel upon
Beatrice’s death. It also directed a verdict in landlords’ favor on their breach of contract
claim, finding tenant breached the lease by failing to include utility receipts, mobile
homes sales, manager lodging, and late fees in its gross profits calculation for the 2008
report. The parties stipulated landlords’ damages totaled $90,382.
On the two issues submitted to it, the jury determined tenant’s damages to
be over $170,000 and rejected landlords’ elder abuse claim based on the 2008 report.
The court subsequently ruled landlords were not entitled to forfeiture of the lease.
DISCUSSION
1. Section 715
Enacted in 1991, section 715 provides, “[a] lease to commence at a time
certain or upon the happening of a future event becomes invalid if its term does not
actually commence in possession within 30 years after its execution.” Landlords contend
the court erred in, among other things, concluding section 715 does not apply
retroactively to invalidate any provision of the 1963 lease. We disagree.
Whether a statute applies retroactively is reviewed de novo. (In re
Marriage of Hill and Dittmer (2011) 202 Cal. App. 4th 1046, 1055.) Because of due
process concerns and the proscription against ex post facto laws, “‘a statute may be
applied retroactively only if it contains express language of retroactivity or if other
sources provide a clear and unavoidable implication that the Legislature intended
retroactive application.’” (Bullard v. California State Automobile Assn. (2005) 129
Cal. App. 4th 211, 217.)
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Nothing in the language of section 715 indicates the Legislature intended it
to operate retroactively. In fact, section 3 specifically states, “[n]o part of [the Civil
Code] is retroactive, unless expressly so declared.”
Landlords nevertheless argue section 715 is retroactive because Probate
Code section 21202, subdivision (a), provides “this part applies to nonvested property
interests and unexercised powers of appointment regardless of whether they were created
before, on or after January 1, 1992.” But they have not shown tenant’s property interests
were “nonvested.” To the contrary, “[a] lease which becomes immediately effective
vests in all respects at that time, and rights under it, though exercisable in the future, do
not have the characteristics of a contingent or future estate.” (Fisher v. Parsons (1963)
213 Cal. App. 2d 829, 838-839, 841-842, disagreed with on another ground in Bed, Bath &
Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52
Cal. App. 4th 867, 876.) The lease here became effective immediately in January 1963.
At that time, tenant’s rights vested as to “those certain premises consisting of fourteen
acres,” including the subject one-acre parcel. It does not follow tenant’s rights did not
vest merely because it could not immediately exercise them due to the lease provision
allowing Oliver and his children to live on the one-acre parcel as long as they desired.
Rather, tenant had a “presently vested right . . . to occupy in the future” the one-acre
parcel. (Fisher v. Parsons, supra, 213 Cal.App.2d at p. 842.)
Probate Code section 21202 thus does not apply and we need not consider
the legislative history of the California Uniform Statutory Rule Against Perpetuities.
(Shaver v. Clanton (1994) 26 Cal. App. 4th 568, 573.) And because there is no indication
section 715 was intended to operate retroactively, it is unnecessary to address landlords’
claim it voids the one-acre lease provision.
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2. Relief from Forfeiture under Section 3275
Under section 3275, a party may be relieved from forfeiture “upon making
full compensation to the other party, except in case of a grossly negligent, willful, or
fraudulent breach of duty.” The court granted tenant such relief, finding “no wrongful
intent, gross negligence, or willful or fraudulent breach of duty” in that tenant interpreted
the lease in a manner it thought appropriate and as it had done for many years, the jury
found it did not retain rent for a wrongful use or with an intent to defraud, and any breach
“was not sufficiently material or substantial to justify the forfeiture.”
Landlords assert this was error because (1) the court improperly shifted to
them the burden to show tenant’s conduct was willful or grossly negligent; (2) tenant did
not “make ‘full compensation” before requesting relief from forfeiture; and (3) the
evidence does not support the finding “[t]enant’s conduct was neither willful nor grossly
negligent.” Their failure to provide any citation to the record where the court shifted the
burden to them forfeits the first issue. (Duarte v. Chino Community Hospital (1999) 72
Cal. App. 4th 849, 856.) Their other claims lack merit.
A trial court may grant relief from forfeiture conditioned upon payment
within a reasonable time. (See Scarbery v. Bill Patch Land & Water Co. (1960) 184
Cal. App. 2d 87, 106 [affirming judgment fixing amount due and giving defaulting party
“a reasonable time to pay,” noting “numerous cases have held that such a judgment is in
accordance with the law and in consonance with equity”]; see also El Rio Oils, Ltd. v.
Chase (1949) 95 Cal. App. 2d 402, 413 [affirming relief from forfeiture of lease
conditioned on full payment within 15 days of judgment] (El Rio Oils).) But such
condition was unnecessary here as landlords were fully compensated by tenant’s damage
award, which offset the unpaid rent. (See Parsons v. Smilie (1893) 97 Cal. 647, 653
[“equity will relieve where the thing may be done afterwards, or compensation can be
made for it . . . so as to put the party in precisely the same situation”].)
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Landlords argue a judicial order for payment of breach of contract damages
does not satisfy section 3275’s requirement of full compensation. But the cases they cite
do not stand for that proposition. In fact, Fowler v. Vaughan (1948) 86 Cal. App. 2d 772
recognized section 3275 allows a court to permit a party “to make up the delinquent
payments within a reasonable time . . . except, among other things, where a failure to
comply with the contract has been willful.” (Fowler v. Vaughan, at p. 777.) And
although the remaining cases note the defaulting party’s failure to tender the full amount
due, they do not address the issue of when compensation must be made under section
3275 or the propriety of a court affording a reasonable time to pay following a
determination after trial on the amount owed. “‘It is axiomatic that cases are not
authority for propositions not considered.’” (Baeza v. Superior Court (2011) 201
Cal. App. 4th 1214, 1228.)
On the issue of willful or grossly negligent conduct, landlords contend
“willful” “simply denotes intentional conduct.” We disagree. A breach of a contract may
be intentional but nevertheless not be “willful” under section 3275. (El Rio Oils, supra,
95 Cal.App.2d at p. 412 [rejecting lessors’ claim lessee’s default was willful because it
was voluntary and holding that although intentional, the failure to pay was not necessarily
willful under section 3275 where lessee honestly but mistakenly asserted “it did not owe
the amount demanded”]; see also Barkis v. Scott (1949) 34 Cal. 2d 116, 123 [good faith
belief defaulters “had sufficient funds to cover the checks prevents their breach from
being willful”]; Crofoot v. Weger (1952) 109 Cal. App. 2d 839, 842 [evidence supported
finding buyer’s breach, based on belief seller’s negligence caused fire leading to buyer’s
failure to pay, “though intentional in the sense [they] knowingly withheld the payment
due, was yet not so wil[l]ful so as to prevent relief”].) The cases cited by landlords are
inapposite as none involve an honest dispute about the interpretation of a contract or the
amount owed. We conclude the trial court was within its discretion in finding tenant’s
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actions not willful under section 3275 based on its determination tenant interpreted the
lease in good faith in excluding utility payments and mobile home sales.
Landlords distinguish El Rio Oils on the grounds the defaulting party in that
case disclosed the existence of revenue giving rise to the dispute, filed a declaratory relief
action, and deposited the disputed funds into court. But El Rio Oils never stated those
were prerequisites to section 3275 relief. Rather, they were factual matters it considered
in concluding lessee did not act willfully in not paying the amount claimed.
In any event, numerous declaratory relief actions were filed in this case by
both parties. As for not paying the disputed amount into court, landlords’ operative
notices of default, unlike in El Rio Oils, never specified the precise sum due and the court
could have reasonably determined that amount was not ascertainable until the conclusion
of trial. Substantial evidence also supports the court’s implied finding tenant did not
willfully hide revenue or otherwise engage in willful or grossly negligent conduct.
Tenant’s manager testified he excluded gross utilities and mobile home sales from the
excess rent calculation because he did not consider them gross receipts derived from the
property within the meaning of the lease, always intended to pay the full rent amount
owed under the lease, and believed he had done so. Landlords acknowledged the 2008
report did not hide tenant’s method of calculating excess rent payments, in that it
revealed both utility income and the expenses they believed should not have been
deducted from the computation, and that upon their initial request in 2008, tenant
willingly allowed the inspection of its financial records. Landlords’ experts found those
records accurate, the calculations for “the various line items within the general ledger”
correct, and no attempt to conceal the income received from the mobile home sales.
Landlords’ claim the evidence supports a conclusion contrary to that found
by the court is nothing more than a request that we reweigh the evidence, which we may
not do. Where two or more inferences can reasonably be drawn from the record, we
defer to those drawn by the trial court. (In re Woodham (2001) 95 Cal. App. 4th 438, 443
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[abuse of discretion not shown when party presents facts that merely provide an
opportunity for a difference of opinion].)
The challenges to the court’s reasons for granting relief from forfeiture also
lack merit. First, although landlords argue the evidence does not support the finding they
waived tenant’s conduct by not previously claiming a breach of the lease provisions, the
court never mentioned waiver. Rather, it noted the absence of a prior claim as part of its
determination tenant interpreted the lease in a manner consistent with how it had been
interpreted by both parties for years, and not due to wrongful intent, gross negligence, or
willful breach of duty.
Second, landlords contend the court erred in relying on the jury’s finding
tenant “did not retain rent money belonging to Beatrice . . . for a wrongful use or with an
intent to defraud” because that was in connection with their elder abuse cause of action,
which has a different standard. The court, however, merely referenced the jury’s finding
as further evidence in support of its conclusion tenant did not withhold rent payment for a
wrongful use or intent to defraud; it did not equate the two standards.
Finally, landlords assert the court erred in finding that any breach was not
sufficiently material to justify forfeiting the lease given that neither the statute nor the
lease provided for a materiality exception. But the determination of whether the breach
was so material as to constitute cause for the forfeiture of a lease is a necessary precursor
to whether tenant is entitled to relief because “although every instance of noncompliance
with a contract’s terms constitutes a breach, not every breach justifies treating the
contract as terminated.” (Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987) 195
Cal. App. 3d 1032, 1051.) The court thus did not abuse its discretion in considering the
materiality of the breach. As to landlords’ claim no evidence supports that conclusion,
they merely disagreed with the court’s evaluation, which does not show the evidence is
insufficient to support it. (California Native Plant Society v. City of Rancho Cordova
(2009) 172 Cal. App. 4th 603, 626.)
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3. Nonsuit on Fraud Claim
Landlords contend the court erroneously granted nonsuit on their fraud
claim on the basis they failed “to establish the required element of justifiable and
detrimental reliance upon the alleged misrepresentation(s)” in the 2008 report. In
reviewing the grant of a nonsuit, “we independently view the evidence most favorably to
plaintiff ‘“resolving all presumptions, inferences and doubts in [its] favor.”’
[Citation.] . . . . “‘Although a judgment of nonsuit must not be reversed if plaintiff’s
proof raises nothing more than speculation, suspicion, or conjecture, reversal is warranted
if there is ‘some substance to plaintiff’s evidence upon which reasonable minds could
differ . . . .’”’” (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal. App. 4th 1439, 1455.)
Reversal is not warranted.
Evidence of justifiable reliance is necessary in order for a plaintiff to
prevail on a cause of action for fraud based on concealment. (West v. JPMorgan Chase
Bank, N.A. (2013) 214 Cal. App. 4th 780, 794.) Landlords argue they established this
element because had they known tenant was underreporting the gross receipts, they
would have taken steps to correct it, as shown by their assertion of claims in 2009 and
2010. (Mirkin v. Wasserman (1993) 5 Cal. 4th 1082, 1093 [in a fraud claim based on
concealment, “[o]ne need only prove that, had the omitted information been disclosed
one would have been award of it and behaved different[]”].) But the very fact they
asserted those claims shows they did not rely on any purported omissions in the 2008
report.
Landlords maintain they were entitled to a presumption of reliance because
the omitted information was material. (See Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal. 4th 951, 977 [“a presumption, or at least an inference, of reliance arises
wherever there is a showing that a misrepresentation was material”].) But the
presumption only applies where there is no “evidence conclusively rebutting reliance.”
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(Ibid.) Here, landlords rebutted any presumption of reliance by challenging the very
omissions they claimed to have relied on. The court did not err in granting nonsuit.
4. Sufficiency of the Evidence
a. Statutes of Limitations, Waiver, Estoppel and Laches
After a bench trial, the court found landlords’ pre-2008 claims for breach of
contract, fraud, and elder abuse due to tenant’s miscalculation of the proper amount of
excess rent in its five-year reports were barred by the statutes of limitations, laches,
waiver, and estoppel. Although landlords initially claimed the court erred in ruling it
waived its right to a jury trial on these affirmative defenses, they have withdrawn the
argument. But they maintain no evidence supports the ruling.
In particular, landlords assert the only “fact” supporting the court’s
statement of decision is that from 1978 to 1986, their prior trustee investigated the files of
Oliver’s attorney and those of their prior institutional trustee “for lease misrepresentation
[and] underpayment of rent claims. Anything known now could have been learned then
as closer in time to the formation of the lease.” According to landlords, this “does not
identify the records that were investigated nor the documents that were contained in such
records which would have notified [them] as to the omitted revenues.”
But even if so, the parties agree the contested affirmative defenses “began
to accrue when [they] knew, or should have known, about [t]enant’s failure to pay rent on
total gross revenue.” A cause of action begins to accrue when the plaintiff actually
discovers its cause of action or could have discovered it through the exercise of
reasonable diligence. (Jolly v. Eli Lilly & Co. (1988) 44 Cal. 3d 1103, 1109.) It begins
once the plaintiff has notice or information of circumstances to put a reasonable person
on inquiry (id. at pp. 1110-1111), i.e., “when the plaintiff suspects, or should suspect, that
she has been wronged” (id. at p. 1114). Thus, “‘[i]f a person becomes aware of facts
which would make a reasonably prudent person suspicious, he or she has a duty to
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investigate further and is charged with knowledge of matters which would have been
revealed by such an investigation.’” (McCoy v. Gustafson (2009) 180 Cal. App. 4th 56,
108, fn. omitted.)
The record shows that beginning in 1980, tenant and its predecessors
delivered to landlords reports in which the amount of gross utility receipts collected was
disclosed, despite not included in the rent calculation. That supports the court’s finding
landlords “had enough information, when they received those reports, to challenge them.
That[] starts the clock ticking on the statute of limitations.” Additionally, as landlords
acknowledge, one of their prior trustee’s goals in viewing Oliver’s attorney’s files in
1978 was “to determine whether they can obtain an increase in the rents under the ground
lease . . . .” Viewing the evidence and all inferences in the light most favorable to the
court’s ruling as we must (Cuiellette v. City of Los Angeles (2011) 194 Cal. App. 4th 757,
765), substantial evidence supports its decision to charge landlords with matters that
would have been revealed by further investigation.
Landlords maintain the court improperly disregarded evidence that it first
obtained tenant’s income statements in June 2008, and its general ledgers and bank
statements in July and August 2010, and thus the earliest date they “could have or should
have known about [t]enant’s failure to pay rent on total gross revenue was in June 2008.”
But as the “sole arbiter of the facts” (Navarro v. Perron (2004) 122 Cal. App. 4th 797,
803), the court had the prerogative to conclude otherwise, as it did. Landlords essentially
request that we reweigh the evidence, which we will not do. For the same reason, we
reject landlords’ claim their former trustee testified his investigation did not reveal or
suggest tenant was not paying rent on the total gross revenue.
Nor do we find merit in landlord’s assertion that notice of tenant’s payment
of rent on net rather than gross utilities does not provide notice of failure to pay rent in
other revenue categories. Because landlords had a duty to investigate, it would have been
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reasonable for the court to determine a further investigation of the type conducted in 2008
and 2010 would have revealed the errors.
b. Damage Award
Landlords contend no evidence supports the jury’s award on tenant’s
breach of contract claim because it was not calculated in accordance with section 3334,
which governs damages for “the wrongful occupation of real property.” But tenant did
not assert a claim for wrongful occupation; it sued for breach of contract.
“For the breach of an obligation arising from contract, the measure of
damages . . . is the amount which will compensate the party aggrieved for all the
detriment proximately caused thereby, or which, in the ordinary course of things, would
be likely to result therefrom.” (Civ. Code, § 3300.) “[T]he proper measure of damages
for a landlord’s failure to deliver possession of the premises leased is the difference
between the agreed rent and the rental value of the premises during the term of the lease.”
(Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875, 884.) A tenant may also prove it
suffered “lost profits” as a result of a landlord’s breach of a lease, as tenant did here,
rather than seeking the “difference between the agreed rent and the rental value of the
premises.” (S. Jon Kreedman & Co. v. Meyers Bros. Parking-Western Corp. (1976) 58
Cal. App. 3d 173, 184 [a tenant may pursue either measure of damages].)
Landlords assert tenant’s lost profits “were entirely speculative.” They
were not. “‘“‘[E]xpert testimony alone is a sufficient basis for an award of lost profits in
the new business context when the expert opinion is supported by tangible evidence with
a “substantial and sufficient factual basis” rather than by mere “speculation and
hypothetical situations.”’”’” (Parlour Enterprises, Inc. v. Kirin Group, Inc. (2007) 152
Cal. App. 4th 281, 288.) Here, based on data from a mobile home park surrounding the
one-acre parcel on three sides, which had been successfully run by tenant since the mid-
1960’s, tenant’s expert testified tenant would have gained an additional $181,433 if the
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property had been delivered to it for development. That constitutes substantial evidence
and the fact the amount calculated by tenant’s expert ($181,433) differed from the
amount awarded by the jury ($170,547) matters not because “[c]ertainty as to the amount
is not required; reasonable certainty is sufficient.” (Ibid.)
We reject landlords’ claims the lost profits award was speculative because
tenant intended to install and sell prefabricated homes on the one-acre parcel without
prior experience in the prefabrication business and did not apply to have the parcel
rezoned from agricultural use until the eve of trial. In addition to tenant’s expert
testifying he based his calculation on tenant’s plan to develop 14 additional mobile
homes for rent, the planning commission unanimously granted the application for
rezoning, supporting an inference it would have done so sooner had landlords delivered
the property to tenant, but since they did not tenant had no reason to apply earlier for
rezoning.
As to landlords’ contention the expert did not include costs in his analysis,
the expert specifically testified he subtracted expenses from the estimated rental income
tenant would have earned from the one-acre parcel. Although landlords are correct the
testimony cited by tenant refers to a different scenario than the one under which the jury
awarded damages, the expert testified he used the same approach for both, which the jury
could have reasonably interpreted as meaning he included expenses in his calculation.
Finally, landlords maintain that “in the context of real property transactions,
‘lost profits’ are only recoverable on a breach-of-contract claim if the circumstances
giving rise to such damages were known with certainty at the time that the parties entered
into the underlying contract.” Raised for the first time in the reply brief, the argument is
forfeited. (Martin v. PacifiCare of California (2011) 198 Cal. App. 4th 1390, 1410, fn.
12.)
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5. Exclusion of Evidence of Prior Five-Year Reporting Periods
Landlords argue the court abused its discretion in granting tenant’s motion
in limine to exclude evidence of the five-year periods prior to the 2008 report because
they were time-barred. The contention lacks merit. After granting the motion in limine,
the court suggested, and the parties agreed to, a bench trial on whether any claim,
including the pre-2008 ones, were barred by the statute of limitations, laches, waiver or
estoppel. During that bench trial, the parties stipulated to the admission of several pre-
2008 reports and questioned witnesses about their knowledge of them. Landlords do not
dispute this but maintain the court erred in concluding the claims based on tenant’s pre-
2008 excess rent reports are time barred, which we have already rejected.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
ARONSON, J.
FYBEL, J.
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