Filed 3/10/15 San Fernando Assocs. v. Taylor CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
SAN FERNANDO ASSOCIATES, B253053
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. PC055113)
v.
CRAIG V. TAYLOR et al.,
Defendants and Appellants.
APPEAL from orders of the Superior Court of Los Angeles County, Randy
Rhodes, Judge. Affirmed.
Roger L. Stanard for Defendants and Appellants.
Law Offices of Daniel Friedlander and Daniel A. Friedlander for Plaintiff
and Respondent.
___________________________________
INTRODUCTION
This is an appeal from the trial court’s grant of right to attach orders and issuance
of writs of attachment against guarantors of a commercial lease who claimed they had
satisfied the condition for release of their personal guarantees. We affirm.
FACTUAL AND PROCEDURAL SUMMARY
The Lease, Addendum and Guaranty.
In December 2006, San Fernando Associates, LLC leased one of two units in an
industrial building located at 355 Parkside Drive in San Fernando to Container
Components, Inc. San Fernando Associates and Container Components executed a five-
year AIR Commercial Real Estate Association Standard Industrial/Commercial Single
Tenant Lease Agreement along with a contemporaneous addendum relating to tenant
improvements, annual rent adjustments and other matters; in addition, Craig Taylor and
Darlene Taylor (Container Components’ president and secretary) executed an AIR
Commercial Real Estate Association Guaranty of Lease, acknowledging their financial
interest in Container Components and further acknowledging San Fernando Associates
would not execute the Lease if the Guarantors did not execute the Guaranty of Lease.1
The guarantee was limited to six months’ rent in effect at the time San Fernando
Associates sought to enforce the guarantee.
The lease term commenced on January 16, 2007 and expired on January 15,
2012.2 For the first year, Container Components was obligated to pay base rent in the
amount of $13,693 per month under Section 1.5 of the lease, but the lease and Section
1.11(d) of the addendum provided for annual adjustments to the base rent. As of January
1 According to their opening brief, Craig and Darlene Taylor are the sole owners of
Container Components, a corporation engaged in the manufacture and sale of refuse
container lids.
2 Provided Container Components was not in default under any term or condition of
the Lease, it had the option (as stated in the Addendum) to extend the term of the Lease
for two additional five-year terms.
2
16, 2009, base rent had increased to $14,692 per month. In addition, under Section 11 of
the lease and Section 1.11(e) of the Addendum, Container Components was also
obligated to pay San Fernando Associates a pro rata share (52.5 percent) of “all utilities
and services supplied to the Premises” and “all expenses including, but not limited to
landscape maintenance, water service, real property taxes, property insurance premiums
and other miscellaneous maintenance costs.”3 The Addendum also addressed payments
due for various tenant improvements.
Pursuant to Paragraph 4.1 of the lease, “[r]ent” was defined to include “[a]ll
monetary obligations of Lessee to Lessor under the terms of th[e] Lease (except for the
Security Deposit).”
Paragraph 4.2 provides: “Payments will be applied first to accrued late charges
and attorney’s fees, second to accrued interest, then to Base Rent and Operating Expense
Increase, and any remaining amount to any other outstanding charges or costs.”
For any rent San Fernando Associates did not receive within five days after it was
due, under Paragraph 13.4, Container Components agreed to pay a “late charge” in the
amount of 10 percent of each overdue amount (or $100, whichever is greater). Under
Paragraph 13.5—“in addition to the potential late charge provided for in Paragraph
13.4”—Container Components was obligated to pay interest at the rate of 10 percent
from the date due on any monetary payment due other than late charges. Pursuant to
Paragraph 21, the parties agreed: “Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.”
3 Regarding payment of real property taxes in particular, Paragraph 10.2 of the
Lease stated: “In addition to Base Rent, Lessee shall pay to Lessor an amount equal to
the Real Property Tax Installment due at least 20 days prior to the applicable delinquency
date. If any such Installment shall cover any period of time prior to or after the expiration
or termination of this Lease, Lessee’s share of such Installment shall be prorated. . . .”
Paragraph 8.3 addressed the Lessee’s obligations with respect to property insurance.
3
Paragraph 22 (“No Prior or Other Agreements . . .”) states: “This Lease contains
all agreements between the Parties with respect to any matter mentioned herein, and no
other prior or contemporaneous agreement or understanding shall be effective. . . .”
Regarding the security deposit, Paragraph 5 of the Lease states: “Lessee shall
deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s
faithful performance of its obligations under this Lease.[4] If Lessee fails to pay Rent, or
otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of
said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or
incur by reason thereof. . . .” (Italics added.) In addition, “No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be prepayment for
any monies to be paid by Lessee under this Lease.”
Paragraph 24 provides: “No waiver by Lessor of the Default or Breach of any
term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach of the same
or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or
approval of, any subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such consent. The
acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee.
Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no force or
effect whatsoever unless specifically agreed to in writing by Lessor at or before the
deposit of such payment.
4 The security deposit collected from Container Components at the inception of the
lease was $13,693.
4
Paragraph 37.1 states: Each “Guarantor shall have the same obligations as Lessee
under this Lease.”
Both the Lease and Guaranty contained provisions for attorney fees.
Late Payments.
Beginning in December 2010 and continuing through August 2011, Container
Components failed to pay its rent on time. As provided under the lease, during that time,
San Fernando Associates assessed a late charge in the amount of 10 percent of each
amount not received within five days of the due date for a total of $15,453.22.
The Lease Extension and Second Addendum.
In August 2011, Container Components asked San Fernando Associates for an
extension of the lease term and rent relief, with Container Components allowed “to pay
down any outstanding past-due rent over a [period] of months.” On September 30, 2011,
San Fernando Associates, Container Components and the Taylors (as guarantors)
executed a Second Addendum, extending the lease term for an additional two years to
January 15, 2014. Effective September 15, 2011 and continuing through January 15,
2013, monthly base rent was reduced to $12,500 on a “triple net basis” such that “total
monthly rent” for that period was $12,836, after accounting for landscape maintenance,
water service and “TI [tenant improvement] amortization” (pursuant to Paragraph 11 of
the lease and Section 1.11(m) of the original Addendum). Under the Second Addendum,
the last four months of TI amortization from the original lease ($493 per month) were
waived for the period September 15, 2011 through January 15, 2012; landscape
maintenance and water service costs were subject to adjustment from time to time to
reflect actual cost.
As an additional modification, the parties agreed: “In addition to the monthly rent
set forth above, you [Container Components] will pay $2,673.00 or more per month
which shall be applied to the past due rent balance of $46,608.00. The latter shall be
amortized without interest accruing. Upon the repayment of the past due rent amount, the
Lessor [San Fernando Associates] agrees to release the two guarantors shown below
5
[Craig and Darlene Taylor] from their personal guarantees of this Lease.” Also,
beginning on July 15, 2012, Container Components had the right to terminate the lease by
giving San Fernando Associates six months written notice and paying the rent specified
for that six-month period on a monthly basis (plus pro-rated “triple net charges”).
Container Components’ Election to Terminate the Lease.
On June 8, 2012, Container Components notified San Fernando Associates of its
intention to terminate the lease, effective July 1, 2012. Although the requested effective
date was earlier than the date specified in the Second Addendum (July 15, 2012), San
Fernando Associates accepted the notice as of July 1, 2012, and the parties agreed to a
lease termination date of December 31, 2012.
On November 15, 2012, pursuant to Paragraph 7.4(c) of the lease, San Fernando
Associates sent Container Components written notice identifying areas that needed repair
or cleaning before surrender of the premises.
The Complaint and Right to Attach Orders.
On August 5, 2013, San Fernando Associates filed a complaint asserting a breach
of lease cause of action against Container Components and a breach of lease guaranty
claim against Craig Taylor and Darlene Taylor. San Fernando Associates alleged that
beginning in December 2010 and continuing thereafter, Container Components had
breached the lease by failing to pay amounts due under the lease and had also failed to
surrender the premises in good repair and to remove its alterations and utility installations
as agreed such that San Fernando Associates was entitled to damages exceeding $40,000
plus attorneys fees under the lease.
On August 30, San Fernando Associates filed applications for right to attach
orders and orders for issuance of writs of attachment against Container Components,
Craig Taylor and Darlene Taylor, indicating the amount to be secured by the attachment
was $61,383.94, including estimated costs of $600 and estimated attorney fees in the
amount of $3,500.
6
According to the supporting declaration of Douglas Wax, “Co-Managing
Member” of San Fernando Associates, Container Components had breached its lease in a
number of respects. The “balance of unpaid rent and other amounts due” under the lease
as of September 16, 2011, was $29,002, as reflected in a schedule of “past due rent” for
the period of September 1, 2011 through January 15, 2013 attached as an exhibit.5 As
Container Components failed to make timely rent payments for the months beginning in
December 2010 and continuing through August 2011, San Fernando Associates had
assessed late charges (calculated at 10 percent of each rent amount) in the amount of
$15,453.22 as set forth in a separate summary of late charges through the end of
September 2011 (also attached as an exhibit). Thereafter, Container Components failed
to pay its pro rata share of property taxes and insurance premiums due between
December 1, 2011 and December 1, 2012, totaling $39,463.38 (as reflected in letters,
invoices and bills sent to Container Components).6 After Container Components vacated
5 The “Past Due Rent” schedule (Exhibit 9 to Wax’s Declaration) identifies the
outstanding amount of past due rent at the end of September as $29,002. According to
the “Summary of Late Charges” through September 2011 (Exhibit 5), San Fernando
Associates separately calculated and Container Components separately owed an
additional $15,453.22 (for a total of $44,455.22) at that time. San Fernando Associates
does not explicitly state that these two sums were added together for purposes of
determining the past due rent balance of $46,608 as stated in the Second Addendum or
explain this apparent discrepancy ($2,152.78). In any event, the Taylors acknowledged
the past due balance as of the end of September 2011 to be $46,608 in the Second
Addendum.
6 More particularly, according to Wax’s declaration and supporting documentation,
the first installment of Container Components’ pro rata share of 2011-2012 property taxes
due on December 1, 2011 was $12,195.18; its pro rata share of 2012-2013 insurance
premiums due on March 5, 2012, was $2,464.35; the second installment of Container
Components’ pro rata share of 2011-2012 property taxes due on June 1, 2012, was
$12,195.18; and the first installment of its pro rata share of property taxes due on
December 1, 2012, was $12,608.67 (as reflected in the letter and property tax bill sent to
Container Components and attached as an exhibit to Wax’s declaration—not $12,068.67
as listed in the declaration).
We also note the documentation of property taxes and insurance premiums due
includes a pre-September 2011 request for payment of Container Components’ pro rata
7
the premises, San Fernando Associates applied the security deposit in the amount of
$13,693 against the $27,797.38 in rent then outstanding (excluding late charges and
interest), reducing the amount of outstanding rent due under the lease to $14,104.38
(excluding late charges and interest). Then, in May 2013, San Fernando Associates
received one additional payment in the amount of $3,4087 which reduced the amount of
rent outstanding and due under the lease to $10,696.38 (excluding late charges and
interest).
According to Wax’s declaration, because Container Components had failed to
timely pay rent due under the lease for November 2011 through December 2012 (except
June 2012), San Fernando Associates assessed additional late charges in the amount of 10
percent of each payment not received within 5 days of the due date for a total of
$19,991.34 (as reflected in another attached schedule) for this period of time. Further, as
provided under the lease, because Container Components failed to surrender the premises
in good condition and failed to remove its lessee owned alterations and utility
installations, San Fernando Associates was entitled to recover $11,143 for the repair and
restoration costs documented in supporting exhibits. These amounts totaled $57,283.94.
In addition, as the lease (as well as the guaranty) provided for attorney fees, San
Fernando Associates sought attorney fees in the amount of $3,562 and costs of $600 for a
total of $60,845.94.8
share of property taxes in the amount of $12,289.52 and a pre-September 2011 request
for payment of its pro rata share of the insurance premium in the amount of $2,418.68 for
a total of $14,708.20—evidence of the parties’ course of conduct with respect to property
tax payments and payments of insurance premiums.
7 There is no dispute that Container Components made one payment to San
Fernando in May 2013 in the amount of $3,408. The exact date of this payment is
variously described in the record as May 15, 2013, May 21, 2013 or May 22, 2013. To
avoid confusion, the payment is referred to as the “May 2013” payment.
8 The correct total of these three amounts is $61,445.94 (a difference of $600—the
cost amount); the applications for right to attach orders specified the attorney fee amount
as $3,500 for a total of $61,383.94.
8
Container Components’ and the Taylors’ Opposition to the Applications for Right to
Attach Orders.
In their opposition, Container Components, Craig Taylor and Darlene Taylor
argued San Fernando Associates had agreed to release the Taylors from their personal
guarantees upon payment of $46,608 in past due rent, this amount had been paid and the
Taylors had been released. In addition, they argued, San Fernando Associates had agreed
in writing to waive all late charges, but its claim included $35,444.64 in late charges.9
Further, San Fernando Associates was not entitled to attorney fees as there had been no
determination of a prevailing party.
According to Craig Taylor’s supporting declaration, San Fernando Associates’
statement to Container Components (attached as an exhibit to his declaration) indicated
Container Components had paid 15 monthly payments of $2,700 (a total of $40,500) plus
another payment of $2,868 on January 2, 2013 toward past due rent, and after crediting
its original security deposit in the amount of $13,693, its payments and credits totaled
$57,131 (actually $57,061)—exceeding the $46,608 amount required for the release of
the personal guarantees.10
9 San Fernando Associates filed objections to Craig Taylor’s declaration and exhibit
in this regard, and the trial court sustained the objections.
10 According to the statement attached as Exhibit A to Taylor’s declaration, San
Fernando Associates claimed Container Components owed $24,707.38 (without
including late charges) as of February 5, 2013. More particularly, after crediting
Container Components’ security deposit ($13,693) to the outstanding “Past Due Rent”
balance on January 15, 2013, the balance identified is $13,564.38, and then after adding
$11,143 for enumerated “refurbishing/restoration costs,” the total balance listed is
$24,707.38. We note that according to the “Past Due Rent” summary attached as Exhibit
9 to Wax’s declaration, the balance as of January 15, 2013 (after crediting the security
deposit) was $14,104.38. The difference of $540 is attributable to transposition of the
property tax payment due on December 1, 2012 in Exhibit 9 to Wax’s Declaration; as
evidenced by the attached property tax bills and requests for payment from Container
Components, the correct amount was $12,608.67 as stated in the statement Container
Components says it received from San Fernando Associates as of February 2013. Exhibit
9
Reply.
San Fernando Associates argued Container Components had failed to explain how
it had arrived at its calculation, but its effort to “parse out” its payments in order to
release the personal guarantees was “based on the flawed theory that the $13,693.00
security deposit and [May 2013] payment of $3,408.00 should have been applied first
against the past due rent stated in the Second Addendum, and then against the other
current past due rent items, such as property taxes and insurance premiums.” (Original
emphasis.) “The release of the personal guarantees was expressly conditioned upon
[Container Components’] payment of all of the stated past due rent. Because [Container
Components] failed to satisfy this condition, the personal guarantees remain in full force
and effect.” By San Fernando Associates’ calculations, Container Components’
payments fell “at least $3,240 short in satisfying the condition for release of the personal
guarantees” (although it also stated in its reply “a balance of $3,408 remained unpaid”).
In addition, San Fernando Associates argued, Container Components and the
Taylors had presented no admissible evidence of an agreement to waive late charges and
had conspicuously omitted the “preliminary summary of amounts owed” attached as an
exhibit to the email Taylor purported to reference so that it was impossible to know
whether there were other material terms “such as a condition precedent requiring
repayment of all past due rent” for any waiver of late charges. Further, Taylor’s assertion
late charges were waived in exchange for Container Component’s agreement for early
surrender of the premises was contradicted by the evidence the parties had previously
agreed (in June 2012) Container Components would vacate the premises no later than
December 31, 2012; then, Container Components informed San Fernando Associates it
would be unable to vacate the premises by December 31, 2012, and San Fernando
9 to Wax’s declaration also accounts for Container Components’ subsequent May 2013
payment of $3,408, resulting in a total “past due rent” balance of $10,696.38 (not
including late charges) as of August 28, 2013.
10
Associates agreed to extend the vacation date to January 15, 2013 as an accommodation
to Container Components.
Continuance.
On the date set for hearing, counsel appeared for the hearing on the application
and petition for the writ of attachment. Because San Fernando Associates’ reply had not
been properly served, however, the hearing was continued to November 4.
The “Post-Lawsuit Tender” and Supplemental Brief.
Two weeks later (and two months after the complaint was filed) on October 18,
2013, counsel for Container Components sent counsel for San Fernando Associates a
check in the amount of $3,408 along with a letter stating: “This check is tendered to your
client for the sole purpose of paying in full what your client contends is the remaining
balance due on “Past Due Rent” of $46,608 pursuant to Paragraph (3) of the Second
Addendum dated September 30, 2011.” “Notwithstanding the disagreement over the
amounts that are properly due [San Fernando Associates], there can be no disagreement
my clients have now paid sufficient sums to satisfy the condition for release of the
Personal Guarantees of Craig and Darlene Taylor.” Pursuant to Civil Code section 1479,
defense counsel demanded application of the enclosed payment to the extinction of the
guarantors’ obligation and dismissal of the Taylors from the action.
Plaintiff’s counsel responded that defense counsel’s reliance on Civil Code section
1479 was misplaced as the Taylors and Container Components were in breach and San
Fernando Associates had filed suit against them. Consequently, the Taylors had no right
to insist on application of the payment to release their guarantees.
On October 29, acknowledging the trial court had told the parties no additional
papers were to be filed, defense counsel filed a “request to file supplemental evidence
and argument.” Citing the attached copy of the check in the amount of $3,408 as well as
defense counsel’s and plaintiff’s counsel’s correspondence, Container Components and
the Taylors again argued the guaranty had been released.
11
The Trial Court’s Ruling.
After hearing the parties’ argument (and sustaining San Fernando Associates’
objections to Craig Taylor’s declaration and supporting evidence), the trial court granted
the applications.11 The trial court concluded that San Fernando Associates had
established the probable validity of its claims for breach of lease and breach of guaranty.
The trial court concluded the Taylors had failed to establish satisfaction of the condition
necessary for release of the personal guarantees and had not presented admissible
evidence to establish an agreement between San Fernando Associates and Container
Components or the Taylors to waive entitlement to collect late charges under the lease.
The trial court noted Container Components and the Taylors had filed their supplemental
brief in direct contravention of the court’s advisement which would justify the court’s
refusal to consider it, but even after considering the supplemental brief, the trial court
concluded the applications were properly granted for the reasons set forth in the tentative
ruling (and plaintiff’s counsel’s letter).
Craig and Darlene Taylor appeal.12
DISCUSSION
Applicable Law and the Standard of Review.
“‘“Attachment is an ancillary or provisional remedy to aid in the collection of a
money demand by seizure of property in advance of trial and judgment.”’ [Citation.]
California’s Attachment Law (Code Civ. Proc., § 482.010 et seq.)[] is purely statutory
11 The trial court indicated the writs of attachment would not be issued until San
Fernando Associates posted an undertaking pursuant to sections 484.090, subdivision (b),
489.210 and 489.220 in the amount of $10,000 as to each guarantor.
The right to attach orders and orders for issuance of writs of attachment were
issued on November 20, 2013 as to the Taylors (and on November 26, 2013, as to
Container Components), and the writs of attachment (in the amount of $61,383.94 as to
all three defendants) were issued on December 5, 2013.
12 Container Components did not appeal.
12
and is strictly construed. [Citation.]”13 (Kemp Brothers Construction Inc. v. Titan
Electric Corp. (2007) 146 Cal.App.4th 1474, 1476, fn. omitted.) As relevant here, a
plaintiff seeking a right to attach order must establish the “probable validity” of the claim
on which the attachment is based. (§ 484.090, subd. (a)(2).) “A claim has ‘probable
validity’ where it is more likely than not that the plaintiff will obtain a judgment against
the defendant on that claim.” (§ 481.190.) In determining probable validity, the court
“must consider the relative merits of the positions of the respective parties and make a
determination of the probable outcome of the litigation.” (Loeb & Loeb v. Beverly Glen
Music (1985) 166 Cal.App.3d 1110, 1120.)
To the extent this appeal involves the interpretation of contract documents (the
lease, addenda and guaranty), “[i]t is ‘solely a judicial function to interpret a written
instrument unless the interpretation turns upon the credibility of extrinsic evidence.’”
(McCrary Construction Co. v. Metal Deck Specialists, Inc. (2005) 133 Cal.App.4th 1528,
1535 (McCrary), citing Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
“Where the facts are undisputed, we review the trial court’s application of law
independently. [Citations.] However, ‘where extrinsic evidence has been properly
admitted as an aid to the interpretation of a contract and the evidence conflicts, a
reasonable construction of the agreement by the trial court which is supported by
substantial evidence will be upheld.’ [Citation.]” (McCrary, supra, 133 Cal.App.4th at
p. 1535.)
Ordinarily, the objective intent of the contracting parties is a legal question
determined solely by reference to the contract’s terms. (Wolf v. Walt Disney Pictures &
Television (2008) 162 Cal.App.4th 1107, 1126 (Wolf), citing § 1639 [“[w]hen a contract
is reduced to writing, the intention of the parties is to be ascertained from the writing
alone, if possible . . .”]; Civ. Code, § 1638 [the “language of a contract is to govern its
13 All further statutory references are to the Code of Civil Procedure unless otherwise
indicated.
13
interpretation . . .”].) “The court generally may not consider extrinsic evidence of any
prior agreement or contemporaneous oral agreement to vary or contradict the clear and
unambiguous terms of a written, integrated contract.” (Wolf, supra, 162 Cal.App.4th at p.
1126, citing § 1856, subd. (a), italics added, further citations omitted.) However, the
parol evidence rule “does not exclude other evidence of the circumstances under which
the agreement was made or to which it relates, as defined in Section 1860, or to explain
an extrinsic ambiguity or otherwise interpret the terms of the agreement . . . .” (§ 1856,
subd. (g).)
Because San Fernando Associates Demonstrated the Probable Validity of its Claim, the
Taylors Have Failed to Demonstrate Error in the Trial Court’s Orders.
According to Craig and Darlene Taylor, as a simple mathematical matter,
Container Components made payments exceeding the $46,608 in accrued past due rent
necessary for release of their obligations as guarantors, and San Fernando Associates’
own supporting documentation compels this conclusion. In the Second Addendum to the
Lease, they argue, the parties agreed: “In addition to the monthly rent set forth above
[$12,836 (comprised of $12,500 in base rent plus $116 for landscape maintenance, $220
for water service and waiving the four remaining amortized payments for tenant
improvements)], [Container Components] will pay $2,673 or more per month which shall
be applied to the past due rent balance of $46,608.” The parties further agreed: “Upon
the repayment of the past due rent amount, [San Fernando Associates] agrees to release
the two guarantors shown below [Craig and Darlene Taylor] from their personal
guarantees of the lease.”
The Taylors argue the schedule attached to Wax’s declaration “is easily
misinterpreted as it pertains to satisfying the release of the personal guarantees because it
incorporates both current and past due rent[, and] not just the past due sum of $46,608
required for release of the guarantees. Release of the personal guarantees was not based
upon payment of current rent that might subsequently become past due. The language in
14
[Paragraph] 3 of the Second Addendum is clear that release was conditioned upon
payment of $46,608 . . . .”
In other words, by the Taylors’ calculation (and as evidenced by Exhibit 9 to
Wax’s declaration), Container Components made 15 monthly payments in the amount of
$15,536 (of which San Fernando Associates applied $12,836 to current rent and $2,700 to
past due rent) between September 16, 2011 and December 5, 2012; it made another
payment on January 2, 2013 for December rent (12/16/13 to 12/31/13) in the amount of
$9,286 ($6,418 applied to the current (half-month’s) rent and $2,868 to past due rent); it
was entitled to a credit of $13,693 for its security deposit; and it made another payment
of $3,408 in May 2013.14 Adding $40,5000 (15 times $2,700—the portion of each
monthly payment applicable to past due rent) plus $2,868 (the portion of the final
monthly payment for past due rent) plus $13,693 (the security deposit) and $3,408 (the
May 2013 payment) totals $60,472—more than $46,608—so they satisfied the condition
for release of the guaranty.
Taken together, the documents making up the parties’ agreement support San
Fernando Associates’ position, not the Taylors’. According to the Second Addendum,
“In addition to the monthly rent set forth above, you [Container Components] will pay
$2,673.00 or more per month which shall be applied to the past due rent balance of
$46,608.00. The latter shall be amortized without interest accruing. Upon the repayment
of the past due rent amount, the Lessor [San Fernando Associates] agrees to release the
two guarantors shown below [Craig and Darlene Taylor] from their personal guarantees
of this Lease.” (Italics added.)
Under the Lease and Addendum, Container Components still had an ongoing
obligation to pay its pro rata share of property taxes and insurance premiums, but it paid
nothing toward these obligations (also defined as “rent” under the Lease) after entering
14 Every one of these monthly payments except for June 2012 was late.
15
into the Second Addendum. Even assuming as the Taylors argue that these additional
sums were not to be included in the past due balance to be paid before the Taylors could
be released from their obligations under the Guaranty of Lease, San Fernando Associates
had no obligation to credit the security deposit or the May 2013 payment toward the past
due amount of $46,608. The security deposit was meant to secure Container
Components’ obligations under the Lease and was properly applied against the past due
obligations other than the sum stated in the Second Addendum, such as property taxes
and insurance premiums. The Lease expressly stated the security deposit was not a
prepayment of any of the Lessee’s obligations. Furthermore, according to the Lease, rent
was due on a monthly basis, and time was of the essence.
Likewise, there is no evidence in the record, nor did the Taylors argue in the trial
court that the May 2013 payment was meant to apply as a credit against the accrued past
rent due under the Second Addendum. Once the Lease had terminated and Container
Components was no longer making monthly payments to which the Second Addendum
applied, San Fernando Associates was permitted to credit sums paid long after Container
Components had ceased monthly payments to the outstanding amounts still owed to
them. Although the Taylors argued that those outstanding amounts owed did not include
property taxes, insurance premiums and could not include any “waived” late charges, in
May 2013 Container Components still owed San Fernando $11,143 for Container
Component’s failure to surrender the property in good condition, and for repair and
restoration costs. Those repair and restoration costs were still owed to San Fernando as
of May 2013, and San Fernando was free to apply the $3,408 May 2013 payment towards
those costs.
Civil Code section 1479 does not compel a different result because the parties’
agreement specifically addressed the order in which payments would be applied.
(Sunlight Electric Supply Co. v. Pacific Homes Corp. (1964) 226 Cal.App.2d 110, 117
[section 1479 is not an “inflexible mandate”; the “obvious purpose of the Legislature was
to leave the field of choice wide open to the parties and to require application of the
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guidelines of the section only where the intent or desire of the parties could not be
ascertained even generally”].) While the overage amount included with the monthly rent
payment was to be paid toward the past due balance, the Lease (in Paragraph 4.2)
otherwise authorized San Fernando Associates to apply payments first to late charges and
attorney fees, then accrued interest, then to base rent and operating expenses and finally
to any other outstanding charges or costs.
Leaving to one side the minor mathematical discrepancies in the parties’
calculations, San Fernando Associates documented the amount it sought under the Lease,
Addenda and Guaranty, and the Taylors (and Container Components) presented no
admissible evidence to undermine its claim. It follows that the orders are properly
affirmed.
DISPOSITION
The orders are affirmed. San Fernando Associates is to recover its costs on
appeal.
WOODS, Acting P. J.
We concur:
ZELON, J. FEUER, J.*
*Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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