Dr. Leevil v. Westlake Health Care Center CA2/6

Filed 3/17/21 Dr. Leevil v. Westlake Health Care Center 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX
DR. LEEVIL, LLC, 2d Civ. No. B304339
(Super. Ct. No. 56-2015-
Plaintiff and Respondent, 00465793-CU-UD-VTA)
(Ventura County)
v.
WESTLAKE HEALTH CARE
CENTER,
Defendant and Appellant.
Westlake Health Care Center (Westlake Health)
appeals from the trial court’s denial of its motion for restitution.
We affirm.
FACTUAL AND PROCEDURAL HISTORY
In 2002, Westlake Village Property, L.P. (Westlake
Village), leased a skilled nursing facility to Westlake Health for a
term of 20 years. (Dr. Leevil, LLC v. Westlake Health Care
Center (2017) 9 Cal.App.5th 450, 452 (Leevil I), reversed in part
by Dr. Leevil, LLC v. Westlake Health Care Center (2018) 6
Cal.5th 474 (Leevil II).) The lease had an automatic
subordination clause providing that it was to be “subordinated to
all existing and future liens and encumbrances against the
[facility].” (Leevil I, at p. 455, fn. 2.) Six years later, Westlake
Village took out a loan from TomatoBank, N.A., secured by its
deed of trust on the facility. (Id. at p. 452.) When Westlake
Village defaulted, TomatoBank sold the loan to Dr. Leevil, LLC
(Leevil). (Id. at pp. 452-453.) Leevil instituted foreclosure
proceedings, and purchased the facility at a trustee’s sale. (Id. at
p. 453.)
The day after it purchased the facility, Leevil served
Westlake Health with a notice to quit. (Leevil I, supra, 9
Cal.App.5th at p. 453.) Leevil recorded title five days later.
(Ibid.) When Westlake Health refused to vacate the facility,
Leevil sued for unlawful detainer. (Ibid.)
The trial court found that Westlake Health’s lease
was subordinate to Leevil’s deed of trust and had been
extinguished by the trustee’s sale. (Leevil I, supra, 9 Cal.App.5th
at p. 453.) The court also found that the notice to quit was valid
notwithstanding that it was served before title was perfected.
(Ibid.) Westlake Health then “withdr[ew] its defense as to service
of the three-day notice” and stipulated to judgment of possession
in favor of Leevil.
We affirmed the trial court’s findings on appeal.
(Leevil I, supra, 9 Cal.App.5th at pp. 454-457.) The Supreme
Court subsequently granted Westlake Health’s petition for review
of our decision, limiting its review to the issue of whether title
must be perfected before serving a notice to quit. (Leevil II,
supra, 6 Cal.5th at p. 477.) The court concluded that it was, and
reversed that portion of our decision holding to the contrary. (Id.
at pp. 484-485.)
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After the remittiturs issued, Leevil dismissed its
unlawful detainer action against Westlake Health. Ten months
later, Westlake Health moved for $5.7 million in restitution, an
amount representing the income it allegedly would have earned
during the four years following its October 2015 surrender of the
skilled nursing facility to Leevil.
The trial court denied Westlake Health’s motion. It
concluded that the law of the case was that Westlake Health’s
lease was subordinate to the foreclosure deed of trust and had
been extinguished by the foreclosure sale. (Cf. Morohoshi v.
Pacific Home (2004) 34 Cal.4th 482, 491 [“‘The decision of an
appellate court, stating a rule of law necessary to the decision of
the case, conclusively establishes that rule and makes it
determinative of the rights of the same parties in any subsequent
retrial or appeal in the same case’”].) Westlake Health thus had
no legal claim to possession of the skilled nursing facility after
the sale. Under these circumstances, the trial court ruled that a
restitution award would be inequitable.
It also determined that Leevil’s failure to serve a
valid notice to quit did not alter the balance of equities. Between
July 2015 (when Westlake Health surrendered possession of the
facility) and December 2018 (when the Supreme Court issued its
opinion), Leevil had no need to serve a new notice since the case
had consistently been decided in its favor. Only after the
Supreme Court issued its opinion did Leevil know that a new
notice would be required. But by that point Westlake Health had
long since vacated the facility. A new notice would have been
meaningless.
3
DISCUSSION
Westlake Health contends the trial court erroneously
denied its motion for restitution. We disagree.
If an appellate court reverses a judgment or order, it
may “order restitution on reasonable terms and conditions of all
property and rights lost by the erroneous judgment or order . . .
and may direct the entry of a money judgment sufficient to
compensate for property or rights not restored.” (Code Civ. Proc.,
§ 908.) But “[e]ven if the reviewing court has not ordered
restitution, the trial court whose order or judgment has been
reversed on appeal has the inherent authority to afford
restitutionary relief.” (Beach Break Equities, LLC v.
Lowell (2016) 6 Cal.App.5th 847, 852 (Beach Break).) This
authority includes “the award of profits of business conducted on
[property] taken from tenant following incorrect initial
judgment.” (Munoz v. MacMillan (2011) 195 Cal.App.4th 648,
662 (Munoz).) “‘“The fundamental rule guiding the court in such
proceedings is, so far as possible, to place the parties in as
favorable a position as they could have been in had the
judgments not been enforced pending appeal.” [Citation.]’
[Citation.]” (Beach Break, at p. 852, alterations omitted.)
Restitution is “a matter of a right if the judgment is
reversed or set aside, unless [it] would be inequitable.” (Beach
Break, supra, 6 Cal.App.5th at pp. 852-853.) “Whether a party is
entitled to restitution following reversal [thus] presents a
question calling for judicial discretion.” (Id. at p. 853.) We will
not disturb a trial court’s denial of restitution absent “a showing
of manifest abuse of [that] discretion.” (Ibid.)
Westlake Health has failed to show that the trial
court abused its discretion here. After Leevil purchased the
4
skilled nursing facility at the trustee’s sale, Westlake Health
occupied it without a valid lease—i.e., as a holdover tenant. (See
Aviel v. Ng (2008) 161 Cal.App.4th 809, 820.) Westlake Health
then voluntarily gave up its holdover tenancy when it stipulated
to Leevil’s possession of the facility. That stipulation is binding.
(Code Civ. Proc., § 664.6, subd. (a).) As such, Westlake Health
cannot now claim that it is entitled to restitution for profits it
would have earned had it remained in possession of the facility
post stipulation. (Civ. Code, § 3515 [party that “consents to an
act is not wronged by it”].) Such a result would be inequitable, as
the court below rightly concluded.
That Leevil prematurely served the notice to quit
does not shift the balance of equities in Westlake Health’s favor.
In the stipulated judgment, Westlake Health withdrew any
defense to its possession of the skilled nursing facility based on
the notice to quit—valid or otherwise.1 It thus cannot now claim
that it had the right to be served with a valid notice before
dispossession. (Cf. Civ. Code, § 3532 [“law neither does nor
requires idle acts”].)
Additionally, a holdover tenant is entitled to
possession of property only “until the detainer action culminates
in a judgment of forfeiture.” (Four Seas Inv. Corp. v.
International Hotel Tenants’ Assn. (1978) 81 Cal.App.3d 604,
612.) That the parties here secured that judgment through
1 Westlake Health claims that this court previously rejected
Leevil’s arguments regarding its withdrawal of any notice-to-quit
defense. But that withdrawal was separate from Westlake
Health’s preservation of its appellate rights in the stipulation.
Our prior opinion considered only the latter. (See Leevil I, supra,
9 Cal.App.5th at p. 453.)
5
stipulation rather than at the conclusion of trial does not change
this rule. A “‘judgment entered without contest, by consent or
stipulation, is as conclusive a merger or bar as a judgment
rendered after trial.’ [Citation.]” (Studley v. Benicia Unified Sch.
Dist. (1991) 230 Cal.App.3d 454, 460.)
None of the cases on which Westlake Health relies
supports a restitution award here. First, none of the cited cases
involved a lease that had been extinguished. (See Beach Break,
supra, 6 Cal.App.5th at p. 850 [no evidence that foreclosure sale
automatically extinguished lease]; Munoz, supra, 195
Cal.App.4th at pp. 651-652 [existing lease with two five-year
options]; Stockton Theatres, Inc. v. Palermo (1953) 121
Cal.App.2d 616, 618-619 [competing claims over whether lease
was valid].) And second, none involved a situation where the
party moving for restitution had stipulated to giving up
possession of the contested property.
In short, the foreclosure sale extinguished Westlake
Health’s lease of the skilled nursing facility. The stipulated
judgment then terminated its right to possession of the facility.
Westlake Health thus stands in “as nearly as may be in the
condition in which [it] stood previously” without a restitution
award. (Ward v. Sherman (1909) 155 Cal. 287, 291.) The trial
court did not abuse its discretion in denying the restitution claim.
6
DISPOSITION
The trial court’s order denying Westlake Health’s
motion for restitution, entered December 12, 2019, is affirmed.
Leevil shall recover its costs on appeal.
NOT TO BE PUBLISHED.
TANGEMAN, J.
We concur:
YEGAN, Acting P. J.
PERREN, J.
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Vincent J. O’Neill, Jr., Judge
Superior Court County of Ventura
______________________________
Enenstein Pham & Glass, Teri T. Pham and Matthew
W. Rosene for Defendant and Appellant.
Law Offices of Ronald Richards & Associates and
Ronald N. Richards; Law Offices of Geoffrey Long and Geoffrey S.
Long for Plaintiff and Respondent.