ROIC Cypress West v. Lu CA4/3

CourtCalifornia Court of Appeal
DecidedNovember 20, 2023
DocketG060750
StatusUnpublished

This text of ROIC Cypress West v. Lu CA4/3 (ROIC Cypress West v. Lu CA4/3) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ROIC Cypress West v. Lu CA4/3, (Cal. Ct. App. 2023).

Opinion

Filed 11/20/23 ROIC Cypress West v. Lu 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

ROIC CYPRESS WEST, LLC,

Plaintiff and Respondent, G060750, G061306

v. (Super. Ct. No. 30-2019-01103254)

XIAO FENG LU et al., OPINION

Defendants and Appellants.

Appeal from a judgment and postjudgment order of the Superior Court of Orange County, James L. Crandall, Judge. Affirmed. NT Law and Julie N. Nong for Defendants and Appellants. Kimball, Tirey & St. John, Abel Ortiz, Aydin Emami and Scott Andrews for Plaintiff and Respondent. * * * Commercial tenants Xiao Feng Lu and Xiao Juan Xing (collectively, Tenants) appeal from a judgment and a postjudgment attorney-fee award in favor of their landlord ROIC Cypress West, LLC (Cypress West or Landlord) for nonpayment of rent. Tenants raise a litany of reasons why Landlord should have lost at trial, including unclean hands, equitable estoppel, lack of mutual consent, waiver, unconscionability, failure to mitigate damages, offset, discovery misconduct, and judicial bias. They also complain the fee award was excessive. We affirm. FACTS In 2009, Tenants leased restaurant space in a shopping center owned by H.R. Barros-Cypress Limited Partnership (H.R. Barros). The lease provided for a five- year term, commencing on May 1, 2009, with one five-year option “exercisable upon at least six (6) months notice [sic] before the expiration term.” Tenants agreed to pay rent of $4,220 and common area maintenance (CAM) fees of $1,147.84 monthly, with rental increases starting in the third year. In 2012, H.R. Barros sold the shopping center and assigned Tenants’ lease to Cypress West. Cypress West is owned by Retail Opportunity Investment Corp. (ROIC), and the shopping center is managed by ROIC employees. On February 5, 2014, ROIC’s real estate manager, Courtney Pease, e-mailed Lu about the lease. Pease wrote, “[A]re you planning on renewing you [sic] lease and staying? Let me know asap since you have missed your notice date.” Two months later, Pease sent Lu another e-mail, with the subject line “Renewal.” She wrote, “Please see attached renewal. Please print, sign and mail me two copies.” The attachment was a document titled “First Amendment to Lease.” Among other things, the amendment recited that the parties “desire[d] to modify” the original lease; provided for a 10-year extension beginning August 1, 2014 and ending July 31, 2024; increased the monthly rent to $5,064 beginning August 1, 2014, with annual rental increases; and added an administrative fee equal to 10 percent of Tenants’ pro rata share of the CAM expenses and other costs. Without reading the amendment, Lu signed and returned it to Landlord.

2 In July 2019, Tenants vacated the premises and stopped paying rent. On October 2, after serving Tenants with a notice of abandonment, Landlord regained possession of the premises. A week later, Landlord sued Tenants for breach of lease. Eighteen months after that, Landlord re-rented the premises to an entity operating a walk- in medical care center. At a one-day bench trial, Pease testified that the increased monthly rent in the amendment was based on what ROIC’s executives and leasing representative believed the market would bear. As for the term length, Pease believed there may have been a discussion about it because she typically would not have inserted a 10-year term unless the tenant requested it. ROIC’s leasing representative, Courtney Brodie, testified that five years is typical, term length is “typically tenant-driven,” and ROIC might accept lower monthly rent in exchange for a 10-year term. To support its claim of damages, Landlord produced a lease ledger containing a complete history of the debits and credits for the lease (trial exhibit 7). Pease testified that Tenants owed the following amounts: $12,293.65 for the balance on the lease as of October 2, 2019 (when Landlord regained possession); monthly rent of $5,870.56 from November 1, 2019 to July 1, 2020; monthly rent of $6,046.84 from August 1, 2020 to December 1, 2021; monthly CAM charges of $3,606.84 from November 1, 2019 to December 1, 2021; $80,000 for the construction manager overseeing the preparation of the premises for a new tenant; $73,250 for the tenant improvement allowance; and $24,524.10 in lease commissions for an outside broker. Tenants received a rent credit of $6,228.08 and CAM fee credit of $601.14, based on what the new tenant had paid for the month of December 2021. Lu testified that he moved to the United States in 1995 and his primary language was Chinese. He described his experience leasing the premises from H.R. Barros. He met the agent in person, negotiated the lease terms including rent and CAM charge, and eventually signed the lease in front of the agent, who explained the terms and

3 pointed out sections he and his wife, Xing, were to initial. Xing also read the lease and explained the terms to him in Chinese. Lu testified to a different experience with Cypress West. When he received Pease’s e-mail about the renewal, he didn’t speak to anyone from ROIC or Cypress West. He didn’t read the document he was asked to sign; he simply signed it because he was asked to. This time, Xing didn’t go over the terms of the amendment with Lu because he hadn’t asked her to. Xing signed the document because Lu told her to sign it. Lu thought by signing he was renewing the original lease with the same terms for five more years. Each year when he received notice of a rent increase, he paid it without verifying the figure. Lu considered a landlord to be a “very important person . . . a trust person.” When they vacated the premises, Lu thought they had completed their five-year lease option. It wasn’t until Cypress West sued him that he learned about the 10-year term in the amendment. Real estate broker James Crossland testified as an expert on behalf of Tenants. He gave three opinions. First, Landlord should have been able to lease the premises within 7–15 months and thus improperly charged Tenants for 28 months of rent. Second, Tenants should have received a rental credit of $4,867.81. Third, Landlord overcharged rent by $24,734. The trial court found in favor of Landlord and against Tenants, jointly and severally, in the amount of $366,591.14. This figure represented $262,067.04 in unpaid rent and CAM fees, $80,000 for cleanup and reconfiguration of the premises for re- renting, and a $24,524 broker commission. The court did not award $73,250 for the tenant improvement allowance. The court found that Pease and Brodie were credible and defense expert’s testimony was “simply not persuasive.” Tenants timely appealed. The trial court later granted Landlord’s motion to be determined prevailing party under the lease and awarded it attorney fees of $44,305.50, the full amount

4 requested, plus costs. Tenants timely appealed that ruling. At Tenants’ request, this court consolidated the two appeals. DISCUSSION Tenants argue: (1) the doctrine of unclean hands barred Landlord’s recovery of damages; (2) equitable estoppel also barred recovery; (3) there was a lack of mutual consent to the amendment; (4) Landlord waived the requirement that Tenants timely exercise their option to renew; (5) the amendment was unconscionable; (6) Landlord failed to mitigate damages; (7) Tenants were entitled to an offset; (8) Landlord should have been barred from claiming damages due to its discovery misconduct; (9) the trial court was biased against Tenants; and (10) the attorney-fee award was excessive.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Foreman & Clark Corp. v. Fallon
479 P.2d 362 (California Supreme Court, 1971)
PLCM Group, Inc. v. Drexler
997 P.2d 511 (California Supreme Court, 2000)
Miller v. Stults
300 P.2d 312 (California Court of Appeal, 1956)
The City v. Hart
175 Cal. App. 3d 92 (California Court of Appeal, 1985)
Ai Ping Lu v. Grewal
30 Cal. Rptr. 3d 623 (California Court of Appeal, 2005)
Girard v. Delta Towers Joint Venture
20 Cal. App. 4th 1741 (California Court of Appeal, 1993)
Stewart v. Preston Pipeline Inc.
36 Cal. Rptr. 3d 901 (California Court of Appeal, 2005)
Brookwood v. Bank of America
45 Cal. App. 4th 1667 (California Court of Appeal, 1996)
Boeken v. Philip Morris Inc.
26 Cal. Rptr. 3d 638 (California Court of Appeal, 2005)
Patterson v. ITT Consumer Financial Corp.
14 Cal. App. 4th 1659 (California Court of Appeal, 1993)
Seltzer v. Barnes
182 Cal. App. 4th 953 (California Court of Appeal, 2010)
Rancho Santa Fe Ass'n v. Dolan-King
8 Cal. Rptr. 3d 614 (California Court of Appeal, 2004)
New Albertsons, Inc. v. Superior Court
168 Cal. App. 4th 1403 (California Court of Appeal, 2008)
Kendall-Jackson Winery, Ltd. v. Superior Court
90 Cal. Rptr. 2d 743 (California Court of Appeal, 2000)
People v. Freeman
222 P.3d 177 (California Supreme Court, 2010)
People v. Harris
118 P.3d 545 (California Supreme Court, 2005)
People v. Snow
65 P.3d 749 (California Supreme Court, 2003)
People v. Guerra
129 P.3d 321 (California Supreme Court, 2006)
Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp., USA
221 Cal. App. 4th 867 (California Court of Appeal, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
ROIC Cypress West v. Lu CA4/3, Counsel Stack Legal Research, https://law.counselstack.com/opinion/roic-cypress-west-v-lu-ca43-calctapp-2023.