This case concerns a dispute over a commercial lease and the landlord's performance under that lease. The parties disagreed on whether the tenant has the right to unlimited extensions of the lease. The trial court concluded the lease grants the tenant the right to unlimited five-year extensions for 99 years. A jury subsequently concluded the landlord breached the lease. In addition to compensatory damages, the jury awarded the tenant over $300,000 in punitive damages, based on a claim for "intentional interference with premises." The trial court issued an injunction ordering the landlord to comply with certain repair obligations under the lease. However, the court struck the punitive damages award.
On appeal, the landlord, Hanna Gamson, contends (1) the trial court erred in concluding the lease gives the tenants, Esther Ginsberg and Harry Eden, the right to unlimited extensions of the lease and (2) the trial court abused its discretion in issuing an injunction that exceeds the parties' rights and responsibilities under the lease. Ginsberg and Eden cross-appeal to challenge the trial court's order striking the punitive damages award. We reverse the trial court's ruling on the interpretation of the option to extend the lease. We conclude the lease cannot be construed as allowing unlimited extensions, and instead it afforded Ginsberg the right to only one extension period. We affirm the trial court's order striking punitive damages.
The evidence adduced at trial was as follows. In April 1996, Ginsberg entered into a commercial lease with Isaac and Ingeborg Rubinfeld for a retail space at 134-136 South La Brea Avenue in Los Angeles. The term of the lease was five years. The lease appeared to give Ginsberg the option to extend the lease for five additional five-year periods.
The lease included a separately typed addendum which contained a provision entitled "Option to Extend Term," stating:
"Provided tenant is not in default under the lease, Tenant shall have the option to extend the term of the lease for additional five year periods upon the same terms and conditions contained in the lease except as hereafter stated. Tenant shall exercise this option to extend the term of the lease by serving on Landlord the Tenant's written notice of Tenant's exercise of the option to extend not less than ninety (90) days prior to the expiration of each term. The rent payable during each option term shall be increased in direct proportion to changes in the Consumer Price Index as hereafter defined. The adjustments shall be determined by the following formula:
"The term `Consumer Price Index' means the Consumer Price Index, U.S. Department of Labor, Bureau of Labor Statistics, All Urban Consumers, (1982-84 base year) for the Los Angeles-Long Beach-Anaheim, California area, all items. In the event the index referred to above ceases to be published or any revised or substituted index ceases to be comparable to the index defined above, then the most reasonably comparable figures available shall be substituted in determining the changes to the rent. In no event shall the rent adjustment for the next extended term exceed 10% of the rent during the expiring term of the Lease."
The addendum also included provisions regarding building repairs the tenant agreed to fund, with corresponding reductions in the monthly rent; a provision entitling the landlord to demand a tenant contribution to real property taxes should the premises be sold "during the term of the Lease or any extended term thereof"; and a tenant right of first refusal should the landlord wish to sell the leased premises "during the term of the Lease or any extended term thereof."
The parties signed the lease and addendum in or around July 1996. In March 2001, Ginsberg extended the lease for an additional five years, in accordance with the lease and addendum, and the parties agreed to an increase in rent from $3,000 to $3,300 per month. Ginsberg operated a vintage clothing store from the leased premises. In November 2004, Ginsberg sent Gamson a letter in which she purported to give notice that she would exercise her "second of five" options to extend the lease.
In February 2006, Ginsberg filed suit against Gamson for breach of contract, intentional interference with use of premises, intentional infliction of emotional distress, fraud, conversion, and injunctive relief. In a subsequent amended complaint, Ginsberg added a claim for trespass to chattel. Ginsberg alleged Gamson had engaged in a scheme to improperly terminate the lease so as to procure higher rent. Ginsberg alleged that in furtherance of this scheme, Gamson failed to repair or allow Ginsberg to repair plumbing leaks that caused damage to her store and merchandise; refused to repair hazardous floor problems that caused the store to look unsightly; refused to provide Ginsberg with access to a phone terminal; unreasonably withheld consent for Ginsberg to sublease a portion of the store; and repeatedly demanded Ginsberg agree to a new lease. In January 2007, Gamson filed a cross-complaint. After a number of amendments, the cross-complaint sought only declaratory relief in the form of a determination that the lease gave Ginsberg and Eden the right to extend the lease only once, rather than perpetually. The cross-complaint also sought a judicial declaration that Ginsberg and Eden (collectively Ginsberg) were holdover tenants in a month-to-month tenancy because the one permitted extended period had expired.
In 2008, both sides sought summary judgment of Gamson's cross-complaint. Gamson contended the undisputed facts established the lease provided only one option for a single five-year extension of the lease. Ginsberg contended the language of the lease clearly provided for "a series" of renewals under the lease, limited by statute to 99 years. Ginsberg also asserted the statute of limitations barred Gamson's claims for declaratory relief. The trial court denied both motions. The court found neither party established there was no disputed fact concerning the meaning of the lease addendum's "[o]ption to [e]xtend [t]erm" provision. The court concluded that "at best ... there is ambiguity as to whether an option or options were granted to the tenant."
In August 2009, Gamson moved to bifurcate the trial. The trial court denied the motion, but indicated it would start the trial with a bench
Ginsberg requested injunctive relief. The trial court issued an injunction ordering Gamson to make repairs to the leased premises within 48 hours of notice of the need for repairs. If Gamson did not make repairs within 48 hours, she was ordered to immediately provide Ginsberg access to the building to make repairs. The injunction further ordered Gamson to give Ginsberg working and updated keys to an apartment security gate and hallway in accordance with the terms of the lease, and access to the premises' telephone connections.
Gamson filed motions for new trial and judgment notwithstanding the verdict, both of which challenged the jury's punitive damages award. The trial court granted the motions and struck the punitive damages award. The court noted that all of Gamson's challenged conduct was "within the contract," and the jury's finding of malice, oppression and fraud on the breach of covenant of quiet enjoyment was "part of the contract claim."
The instant appeals followed. Gamson challenges the trial court's ruling on her declaratory relief claims and the injunctive relief awarded on Ginsberg's claims. Ginsberg challenges the trial court order striking the punitive damages award.
Gamson contends the trial court erred in concluding the lease clearly provided for unlimited extensions, limited only by Civil Code section 718. "`[W]e apply de novo review, exercising our independent judgment as to the
Despite being disfavored, courts will enforce a lease provision that grants a tenant the right to unlimited renewals, so long as the parties' intent to create that right is explicit and clear. In Becker v. Submarine Oil Co. (1921) 55 Cal.App. 698 [204 P. 245] (Becker), the Court of Appeal stated the general rule: "It is true that while not within the purview of the rule against
The second part of the rule is that a "general" covenant to renew is construed as providing only one renewal. The Winslow court explained: "It is quite plain that a lease containing a covenant to renew at its expiration with similar covenants, terms and conditions contained in the original lease is fully
Epstein v. Zahloute (1950) 99 Cal.App.2d 738 [222 P.2d 318], concerned a lease that granted the tenant the "`option for renewal each succeeding year thereafter ....'" The court found the lease created an invalid perpetuity, relying on Morrison, and distinguishing Becker on the ground that it concerned an oil and gas lease. (Epstein, at p. 739.) The Epstein court also concluded the renewal provision was invalid because it violated Civil Code section 718. (Epstein, at p. 739.) Two later cases rejected the Epstein court's reasoning. One of the cases, Fisher v. Parsons (1963) 213 Cal.App.2d 829 [29 Cal.Rptr. 210], did not concern a perpetual renewal provision. However, Shaver, supra, 26 Cal.App.4th 568, rejected Epstein in the context of a perpetual renewal provision.
The Shaver decision does not restate the language of the lease provision at issue in that case. Instead, the court reported only that an amendment to the parties' lease "granted the [tenants] options to extend the lease for additional five-year periods beginning at the end of each prior lease period and gave
The parties have not identified any other California cases addressing perpetual or unlimited renewal provisions in a lease, and our research has disclosed no others.
Several courts have reasoned that an unequivocal perpetual renewal provision would include terms such as "forever," "in perpetuity," or "for all time." (Lonergan, supra, 357 A.2d at p. 914; Geyer, supra, 103 N.E.2d at p. 201; Bancard Services, supra, 292 F.Supp.2d at p. 1250; Rutland Amusement Co. v. Seward (1968) 127 Vt. 324 [248 A.2d 731, 734] (Rutland); Tischner v. Rutledge (1904) 35 Wn. 285 [77 P. 388, 389] (Tischner); Farone v. Mintzer (N.Y.App.Div. 1987) 133 A.D.2d 1009 [521 N.Y.S.2d 158, 160] (Farone).) The North Carolina Supreme Court adopted a "brightline" rule that "[u]nless a lease agreement contains the terms `forever,' `for all time,' `in perpetuity' or words unmistakably of the same import, no perpetual lease or right to perpetual renewals may be found to have been created." (Lattimore, supra, 329 S.E.2d at p. 350.)
Some courts have also searched the lease as a whole for indicia that the parties intended to grant the lessee unlimited renewals. For example, in Lonergan, the Connecticut Supreme Court noted the absence of a rent escalation clause, the lessor's agreement to repair demised buildings and repair and restore them in the event of partial or total destruction, and the lessor's agreement to pay all taxes, assessments, and charges, including those related to water use, all suggested the parties did not intend to create a right to perpetual renewals. (Lonergan, supra, 357 A.2d at p. 914.) In Geyer, the Indiana Supreme Court noted a provision requiring the lessee to return the property in the same condition as when it was leased was inconsistent with the idea that the parties envisioned a lease that might last several centuries. The court further noted restrictions on the use of the property for one specific purpose (general merchandising), and the inclusion of the lessee's heirs, assigns, or other similar terms in the main body of the lease, but not in the renewal clause, cast doubt on whether the parties intended to create a right to perpetual renewals. (Geyer, supra, 103 N.E.2d at pp. 201-202; see McLean, supra, 316 F.Supp. at pp. 828-829, 832; Rutland, supra, 248 A.2d at p. 734; Tischner, supra, 77 P. at p. 389; Oak Bay, supra, 648 P.2d at pp. 467-468.)
To interpret the provision at issue here, we first turn to Becker, which adopted the special rule of construction. In Becker, the renewal provision stated: "`To have and to hold the same period unto the party of the second part, his heirs and assigns for the term and period of ten years from date hereof with the right of renewal for a further term of ten years at the end of such term, or at the end of any subsequent term for which it may be renewed.'" (Becker, supra, 55 Cal.App. at p. 699.) The Becker court concluded this language was "so plain that no room is left for construction. The parties have made it clear that it was their intention that the lessee should have the right of renewal in perpetuity." (Id. at p. 700.) Presumably, the most clear language was "or at the end of any subsequent term for which it may be renewed." This phrase indicated the right to renew would be included in each renewed lease, without limit. (See In re Mackie's Petition (1963) 372 Mich. 104 [125 N.W.2d 482, 485] [right to perpetual renewals created by language stating renewal provision would be operative in each and every renewal lease].) In addition, the provision specifically referenced the lessee's heirs and assigns, suggesting the possibility of a long-term arrangement that would outlast the original lessee.
In contrast, here the language of the extension option does not clearly or unequivocally establish that the parties intended to give the tenant unlimited extensions. The addendum's "[o]ption to [e]xtend [t]erm" does not state the tenant would have the option to extend the term for additional five-year periods in perpetuity, forever, or for all time, except as limited by statute. While the Becker lease referenced a right of renewal "at the end of any subsequent term," the option here more ambiguously references "additional five year periods," requires notice "prior to the expiration of each term," and in other provisions, mentions "any extended term" of the lease. This language is less definite than that of the Becker lease, which indicated the renewal covenant would be included in any renewed lease. Although the option here contains a rent escalation clause, it is not clear that the formula would apply to periods beyond one extension. The formula is, on its literal terms, based on the ratio of the Consumer Price Indexes for March 1996 and March 2001, and the initial rent amount of $3,000. Although the word "etc." is included in parentheses after the formula, this does not clearly indicate that the formula was to be modified to include Consumer Price Indexes for future years. (Cf. Shaver, supra, 26 Cal.App.4th at p. 575 [rent escalation provision tied monthly rental for each new five-year period to "`the smallest value of the Cost of Living Indexes ... as measured over the prior five (5) year period'"].) The rent escalation clause is not an unambiguous indication that the lease was intended to perpetually renew at the lessee's option. (See Oak
Similarly, the option references rent during "each option term." But the provision's cap on rent increases states: "In no event shall the rent adjustment for the next extended term exceed 10% of the rent during the expiring term of the Lease." This also fails to unequivocally establish that the lease was intended to continue perpetually at the tenant's option; the provision could refer to a single extension or to multiple extensions. (Geyer, supra, 103 N.E.2d at p. 201 [rent escalation clause construed to allow only one increase would be an unreasonable provision in a perpetual lease].)
Moreover, the lease as a whole fails to demonstrate a clear intent to create a right to unlimited extensions. It contains numerous provisions more consistent with a short-term lease than a perpetual, decades-long leasehold. For example, the tenant is restricted to using the premises for one specific retail purpose unless the landlord consents to other uses. (Geyer, supra, 103 N.E.2d at p. 201; Rutland, supra, 248 A.2d at p. 734; Cook v. Adams County Plan Com. (Ind.Ct.App. 2007) 871 N.E.2d 1003, 1008 (Cook); Oak Bay, supra, 648 P.2d at p. 467.) The lease requires the landlord to maintain significant responsibility for the leased property, including the obligation to make repairs, pay property taxes, and pay for water and rubbish services. (Geyer, supra, at p. 201; Lonergan, supra, 357 A.2d at p. 914 [landlord's obligations, including water costs, and absence of rent escalation to cover such costs]; Rutland, supra, at p. 734 [taxes]; Oak Bay, supra, at p. 467.) The lease forbids the tenant from making any alterations over $1,000 without the landlord's consent, and requires that the property be returned in "good condition," excepting ordinary wear and tear. (See Geyer, supra, at p. 201; Rutland, supra, at p. 734; Tischner, supra, 77 P. at p. 389; Oak Bay, supra, at p. 467.) We also note that the parties used a preprinted "form" lease. Although the main body of the lease includes a provision stating the lease would be binding on the parties' heirs, successors, and assigns, the extension option in the separately drafted addendum does not repeat this language. (Geyer, supra, at pp. 201-202.) The lease also prohibits the tenant from assigning the lease or subletting without the landlord's consent. (McLean, supra, 316 F.Supp. at pp. 828-829.)
Further, nothing in other provisions of the lease suggests the parties intended the tenant to have the right to unlimited extensions.
Several courts in other jurisdictions have reviewed provisions granting the tenant the right to "successive" renewals, and have concluded the language did not unequivocally establish the intent to create a right to perpetual renewals. (Geyer, supra, 103 N.E.2d at pp. 201-202; Burke, supra, 621 P.2d at pp. 1120-1121; Lattimore, supra, 329 S.E.2d at p. 347; Pults, supra, 745 S.W.2d at pp. 146-147; Carder, supra, 97 P.3d at pp. 180, 182; Schroeder, supra, 696 So.2d at pp. 498-499.) Here, the lease states the tenant has the option to extend the lease for "additional" five-year periods, which is even less suggestive of perpetual or unlimited renewals than the term "successive" periods. Indeed, some courts have concluded language regarding "additional periods" does not clearly show an intent to create unlimited renewals. (See Bancard Services, supra, 292 F.Supp.2d at pp. 1246, 1251 [option to renew "`for additional periods of five (5) years each'" did not create right to perpetual renewals]; Chessmasters, Inc. v. Chamoun (Fla.Dist.Ct.App. 2007) 948 So.2d 985, 986 (Chessmasters) [option to extend for an additional five-year period then mentioning "`each extended Five-Year period'"]; Gray, supra, 280 N.W. at p. 677 [use of plural "renewals" and "periods" not sufficient to indicate the parties intended to create a perpetual right].)
As Ginsberg points out, not all courts have so restrictively construed renewal provisions. In Pechenik v. Baltimore and Ohio Railroad Co. (1974) 157 W.Va. 895 [205 S.E.2d 813] (Pechenik), the West Virginia Supreme Court of Appeals considered a lease that gave the lessee an option to renew for "successive periods of twenty years." (Id., 205 S.E.2d at p. 814.) The lessee had already renewed the lease three times. The lessors contended the lease should not be construed as creating a right to perpetual renewals. (Ibid.) The court noted the lessors relied on cases outside of West Virginia in which
And, as noted above, the parties had already renewed the lease for three additional 20-year terms, beginning in 1931. (Pechenik, supra, 205 S.E.2d at p. 814.) In contrast, here, the extension option referred only to the "tenant," rather than the tenant and any successors in interest. The lease's original term was only five years, which is less indicative of a long-term arrangement than the 20-year term in the Pechenik lease. Further, the parties in this case had not repeatedly renewed the lease by the time the dispute arose.
In Pope v. Lee (2005) 152 N.H. 296 [879 A.2d 735] (Pope), the New Hampshire Supreme Court analyzed a lease that contained a provision for automatic renewals. The lessee contended the lease was not perpetual, and the parties did not challenge a trial court ruling that the lease did not give the lessee the right to perpetual renewals. (Id., 879 A.2d at p. 740.) Although the Pope court repeatedly stated it was not concerned with "perpetual renewals," it employed a standard it described as similar to "that which we use to decide whether a lease agreement creates a perpetual leasehold," and concluded the lease afforded the lessee a right to "continual renewals." (Id. at pp. 741, 744, 746.) The Pope court found language stating the lease would automatically renew "plainly and unequivocally demonstrates that the parties intended to create a right to continual renewals." (Id. at p. 741.) The court also rejected arguments that other lease provisions, such as restrictions on the
This leaves the question of how many times Ginsberg was entitled to extend the lease. In Becker, the court stated the general rule: "[L]eases which may have been intended to be renewable in perpetuity, if at all uncertain in that regard, will be construed as importing but one renewal." (Becker, supra, 55 Cal.App. at p. 700.) And, as noted above, in Winslow, supra, 188 U.S. at page 654, the court explained: "It is quite plain that a lease containing a covenant to renew at its expiration with similar covenants, terms and conditions contained in the original lease is fully carried out by one renewal without the insertion of another covenant to renew." Similarly, in Penilla, the
Winslow, Penilla, and similar cases refer to "general" covenants to renew. (See McLean, supra, 316 F.Supp. at p. 833; Gould v. Harley (1921) 215 Mich. 234 [183 N.W. 705, 706].) However, many courts have applied the "one-renewal-only" rule to more specific renewal or extension provisions. For example, in Waldrop, the Alabama Supreme Court construed a provision granting the lessee an option to renew for an additional three-year term and "`year to year thereafter'" to allow for one 3-year renewal, then one renewal of one additional year. (Waldrop, supra, 237 So.2d at pp. 494, 496; see Lonergan, supra, 357 A.2d at pp. 914-915; Chessmasters, supra, 948 So.2d at pp. 986, 988 [provision for automatic extension of lease for an additional period of five years and detailing rent increase for "`each extended Five-Year period'" construed to give only one extension].) In a later case, the same court construed a provision allowing the lessee to renew the lease for as long as the property was used for a certain purpose to permit only one renewal. (Womack v. Hyche (Ala. 1987) 503 So.2d 832, 833, 836.)
In Geyer, the lease gave the lessee the option to renew the lease "`with and under all the terms and conditions thereof, successively, providing that said lessee shall, at least thirty (30) days before the expiration of any two year period of this lease, or any successive renewals thereof, give written notice of his intention ... and that upon the 3rd or any subsequent renewal the lessors may, at their option, increase the annual rent....'" (Geyer, supra, 103 N.E.2d at p. 201.) The court found the lease did not "so clearly provide for perpetual renewals as to leave no doubt that such was the purpose and intention of the parties." (Id. at p. 202.) The court then followed the one-renewal-only rule. The court concluded the lease did not expressly grant a right to a third or subsequent renewal. The court reasoned: "Bearing in mind that the lease should not be construed as a lease in perpetuity if it can be construed otherwise, the provision must be considered only as a recognition of the fact that the lease might be renewed three or more times and to provide for an increased rental in that event. Since the covenant for renewal does not authorize renewals in perpetuity, it must be limited to a single renewal in the absence of language clearly authorizing a different number." (Ibid.; see Cook, supra, 871 N.E.2d at pp. 1008-1009 [accord].)
Similarly, in Burke, the New Mexico Supreme Court construed a lease containing a renewal provision that allowed the lessee the right to renew the lease for "`successive like terms'" as providing only one renewal. (Burke, supra, 621 P.2d at pp. 1120-1121; see Bancard Services, supra, 292 F.Supp.2d at p. 1251 [construing renewal provision allowing lessee to extend agreement for additional periods of five years each to allow only one renewal period];
We again acknowledge that some courts have taken a different approach. After concluding a lease renewal provision does not provide perpetual renewals, but that the language supports multiple renewal periods, some courts have remanded the case for submission of extrinsic evidence relevant to the parties' intent (Oak Bay, supra, 648 P.2d at p. 468); concluded that the lessee had the option to renew the lease for the duration of the lessee's lifetime (Farone, supra, 521 N.Y.S.2d at p. 160 [parties had already renewed the lease more than once]); or, based on the language of the lease, determined it provided a certain finite number of renewals (Schroeder, supra, 696 So.2d at pp. 498-499 [renewal for "successive five ... year periods" interpreted as allowing two renewal periods]; Tucker v. Byler (1976) 27 Ariz.App. 704 [558 P.2d 732, 735] [covenant that lease could be renewed for a one-year period on the same terms as the original lease, including the renewal option; court construed lease as allowing two renewal periods].)
Ginsberg contends that if we find the lease is ambiguous, we should remand to the trial court for a trial in which the parties may introduce extrinsic evidence to prove their intent as to the number of extensions. However, we conclude the better approach is the one set forth by Becker, which comports with the long-standing rule in numerous other jurisdictions. As stated in Becker, if whether a lease is to be perpetually renewed is at all uncertain, it "will be construed as importing but one renewal." (Becker, supra, 55 Cal.App. at p. 700; see Cook, supra, 871 N.E.2d at p. 1009 [although lease was not perpetual, renewal provision awarded "limitless number of renewals"; applying general rule and construing as only one].) We therefore construe the parties' lease as allowing only one 5-year extension of the lease. The extended period ended in 2006.
Ginsberg challenges the trial court's order striking the jury's punitive damage award. She acknowledges that punitive damages are not available for the breach of a contractual obligation. (Civ. Code, § 3294, subd. (a).) Yet, she contends California law recognizes a tort version of the breach of the covenant of quiet enjoyment, which she proved at trial. Although some courts have either explicitly or implicitly recognized a tort in connection with a breach of the covenant of quiet enjoyment, a careful reading of these cases
The question we consider is one of law: Were punitive damages available in connection with Ginsberg's claim for "intentional interference with use of premises"? "[W]hether a certain measure of damages is permissible given the legal right the defendant has breached, is a matter of law, subject to de novo review." (New West Charter Middle School v. Los Angeles Unified School Dist. (2010) 187 Cal.App.4th 831, 843 [114 Cal.Rptr.3d 504].)
Tort liability is a necessary predicate for punitive damages. Punitive damages may not be awarded as relief in a breach of contract claim. (Civ. Code, § 3294, subd. (a); Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 516 [28 Cal.Rptr.2d 475, 869 P.2d 454] (Applied Equipment Corp.); Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316 [135 Cal.Rptr. 246].) Ginsberg argues she pled and proved a tort claim for "intentional interference with use of premises." She describes this cause of action as a "tort claim for breach of the covenant of quiet enjoyment," or as "intentional interference with use, possession and quiet enjoyment of the Leased Premises." Although Ginsberg titled the claim "intentional interference with use," we can only conclude that the claim was one for breach of the implied covenant of quiet enjoyment. Indeed, Ginsberg's discussion of the claim refers to a breach of the implied covenant, and she relies only upon legal authorities that analyze claims for breach of the implied covenant of quiet enjoyment, as discussed in greater detail below. This was a claim for breach of a contractual obligation, not a tort.
Ginsberg argues California courts have recognized a tort claim for breach of the covenant of quiet enjoyment, and this was the claim she pursued at trial. We disagree. Ginsberg's argument misinterprets the law regarding the breach of the implied covenant of quiet enjoyment.
However, in Guntert v. City of Stockton (1976) 55 Cal.App.3d 131 [126 Cal.Rptr. 690] (Guntert), the court distinguished claims in which the landlord has actually or constructively ousted the tenant from those in which the landlord's interference with the tenant's enjoyment or use of the property does not lead to ouster. The Guntert court recognized that a tenant has alternative remedies to respond to the landlord's interference and, instead of vacating, may "stand upon the lease and sue for damages." (Id. at p. 140.) In Guntert, the plaintiff tenant had not quit the premises, despite the landlord's service of an invalid and bad faith eviction notice. The court thus concluded: "[The tenant] is not suing for a wrongful, constructive eviction but for the lessor's unjustified and unauthorized interference with his profitable use of the leased property. The rule requiring ouster or surrender prior to suit for wrongful eviction does not preclude the tenant from his election to stand upon the lease, remain in possession and sue for breach of contract damages." (Id. at p. 141, italics added.)
It is true, as Ginsberg asserts, that some courts have implicitly or explicitly indicated a tenant may recover punitive damages in connection with a claim for breach of the implied covenant of quiet enjoyment, or identified the claim as a tort. However, all of those cases describe wrongful eviction claims. In other words, they are cases in which the implied covenant of quiet enjoyment
On appeal, the landlord argued she could not be held liable on the conspiracy count because the jury exonerated the other defendants, and she could not have conspired with herself alone. (Barkett, supra, 122 Cal.App.2d at pp. 273-274.) The Court of Appeal rejected this argument. It reasoned:
"[T]he allegations of conspiracy are mere surplusage in a case where the conspiracy itself is unproved but there is evidence of actionable conduct on the part of one defendant....
"Here the basic tort alleged in the third cause of action was the willful wrongful eviction, that is, the breach of the covenant of quiet enjoyment, accomplished by a series of intentionally annoying acts designed to compel the tenant to vacate. Such a tort (as distinguished from an action for breach of the covenant of quiet enjoyment) is recognized in the law. Section 822 of the Restatement of Torts defines this tort as follows:
"`The actor is liable in an action for damages for a nontrespassory invasion of another's interest in the private use and enjoyment of land if,
"`(a) the other has property rights and privileges in respect to the use or enjoyment interfered with; and
"`(b) the invasion is substantial; and
"`(c) the actor's conduct is a legal cause of the invasion; and
"`(d) the invasion is either
"`(i) intentional and unreasonable; or
"`(ii) unintentional and otherwise actionable under the rules governing liability for negligent, reckless or ultra-hazardous conduct.'
The Barkett court explicitly described a cause of action for wrongful eviction, which it distinguished from an action for breach of the covenant of quiet enjoyment. Irrespective of the court's use of elements relating to private nuisance to explain the claim, it remains clear that the Barkett court was describing wrongful constructive eviction. An essential element of a wrongful eviction claim is that the tenant has vacated the premises. (Green, supra, 10 Cal.3d at p. 625, fn. 10; Petroleum Collections, supra, 48 Cal.App.3d at p. 847.) Ginsberg incorrectly interprets Barkett as authorizing tort liability for a breach of the covenant of quiet enjoyment, instead of describing a tort claim for wrongful eviction.
The California authorities the Barkett court cited, and upon which Ginsberg relies, also concerned wrongful evictions. In Sanders, supra, 83 Cal.App.2d 362, the court described the plaintiff's cause of action as "one for damages for constructive eviction. There is alleged a series of acts which were designed to and allegedly did operate to deprive the tenants of the beneficial enjoyment of the premises, causing them to abandon them. [¶] ... [¶] ... In other words, damages are sought for loss of the premises resulting from a breach of duty on the part of the defendants by a series of acts done with the intent to deprive the tenants of the quiet enjoyment of the premises." (Id. at p. 367, italics added.) The plaintiff sought exemplary damages in the complaint. The Court of Appeal concluded the plaintiff had stated a cause of action sufficient to withstand demurrer.
Likewise, in Butler, supra, 73 Cal.App.2d 866, the landlord locked the tenant out of her apartment. A jury awarded the tenant actual and punitive damages. (Id. at p. 869.) On appeal, the defendant contended the verdict was not supported by the evidence, and that the verdict was excessive. The court rejected this argument, citing evidence of the landlord's "unwarranted and malevolent procedure" in conducting an "unlawful eviction" of the tenant. (Ibid.) The court concluded that compensatory and punitive damages in such a case were left to the sound discretion of the jury and the trial judge, and the
Ginsberg's reliance on Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004 [90 Cal.Rptr.3d 453], is also misplaced. In Spinks, the court explicitly distinguished between a claim for breach of the implied covenant of quiet enjoyment, which it identified as a contract claim, and a claim for wrongful eviction, which it identified as a tort. (Id. at pp. 1030-1031, 1036.) The court further stated: "In contrast to plaintiff's contract-based claim [for breach of the implied covenant of good faith and fair dealing], punitive damages may be available for the torts of wrongful eviction, trespass, invasion of privacy, and intentional infliction of emotional distress." (Id. at p. 1055.) In this context, when the court stated in the next paragraph: "As long-standing authority makes clear, punitive damages may be awarded in an action by a residential tenant based on the landlord's interference with peaceful possession. (Tooke[, supra,] 85 Cal.App.2d [at pp.] 236, 239 ...)," we understand the court to mean interference with peaceful possession in the form of wrongful eviction.
Ginsberg also summarily argues that although Gamson's conduct constituted a breach of contractual obligations, Gamson also breached an independent duty arising from tort law principles, thus tort damages were proper. We again disagree.
"Conduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law. `The law imposes the obligation that "every person is bound without contract to abstain from injuring the person or property of another, or infringing upon any of his rights." ([Civ. Code, former § 1708].) This duty is independent of the contract.... "[A]n omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty." ' [Citation.] [¶] ... [¶]
"Within the different spheres of contract and tort, motivations for conduct are also treated differently. In an intentional tort action, motives amounting to malice, oppression, or fraud may justify punitive damages. (Civ. Code, § 3294.) But the law generally does not distinguish between good and bad motives for breaching a contract. `[I]n traditional contract law, the motive of the breaching party generally has no bearing on the scope of damages that the injured party may recover for the breach of the implied covenant [of good faith and fair dealing]; the remedies are limited to contract damages.' [Citation.] `Varying personal or economic reasons motivate one to breach his contract, but the general rule is that ... motives ... are immaterial and cannot be inquired into on the question of compensatory damages.' [Citation.]" (Applied Equipment Corp., supra, 7 Cal.4th at pp. 515-516, some
Gamson's conduct at issue here consisted of her failures to perform under the lease's express and implied covenants. Ginsberg has not identified any duty Gamson had, and breached, that was independent of the contract. Ginsberg did not plead an independent tort and did not submit any tort claims to the jury. Instead, Ginsberg essentially argues that Gamson maliciously breached the contract, and asserts that Gamson's evil motive for breaching her contractual duties warranted imposition of tort remedies. It did not. (Ilkhchooyi v. Best (1995) 37 Cal.App.4th 395, 412 [45 Cal.Rptr.2d 766].) The trial court properly struck the punitive damages award.
We address three issues concerning the relief awarded at trial and the appropriate proceedings on remand from this court.
While Gamson notes that Ginsberg was allowed to present to the jury her theory that Gamson improperly sought to renegotiate or terminate the lease, Gamson does not challenge the compensatory damage award on appeal. And although Ginsberg "requests" a new trial, she is not entitled to a retrial as a result of our decision affirming the trial court's order striking the jury's punitive damage award. Ginsberg also had a full and fair opportunity to litigate her claims. She was able to present evidence premised on her theory that she was entitled to unlimited renewals of the lease, and she secured a verdict in her favor on her claims. (See Regalia v. The Nethercutt Collection (2009) 172 Cal.App.4th 361, 370 [90 Cal.Rptr.3d 882].)
Although we only partially reverse the judgment, we conclude the partial reversal also compels the reversal of the award of fees as costs to the prevailing party based on the judgment. The trial court must reassess the prevailing party determination, and the applicability of Gamson's offer made pursuant to Code of Civil Procedure section 998. (Gillan v. City of San Marino (2007) 147 Cal.App.4th 1033, 1053 [55 Cal.Rptr.3d 158].) As we understand the trial court's statements at the hearing on attorney fees and Gamson's motion to strike or tax costs, the court concluded the section 998 offer was inapplicable because Ginsberg prevailed on nonmonetary issues identified in the offer in addition to the compensatory damage award. In light of our decision reversing the trial court's ruling on the proper interpretation of the lease, on remand the trial court must reassess the applicability of the section
The portion of the judgment adjudicating Gamson's claims for declaratory relief is reversed. The court is directed to enter a new judgment on the declaratory relief claims in accordance with this opinion. The trial court's order striking the punitive damage award is affirmed. Gamson shall recover her costs on appeal.
Flier, J., and Grimes, J., concurred.