Filed 1/27/22 Perez v. Public Storage CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
CAROLINA PEREZ et al., B305611
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC611584)
v.
PUBLIC STORAGE, a
Maryland Real Estate
Investment Trust,
Defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Carolyn B. Kuhl, Judge. Affirmed.
Milstein Jackson Fairchild & Wade, Gillian L. Wade, Mayo
L. Makarczyk; Baker Burton & Lundy, Brad N. Baker, and Albro
L. Lundy for Plaintiffs and Appellants.
Willkie Farr & Gallagher, Simona A. Agnolucci, and
Eduardo E. Santacana for Defendant and Respondent.
******
Consumers who rented self-storage space also purchased
policies to insure their stored goods from loss or damage. On
behalf of a class, they have now sued the storage company for
violating California’s unfair competition law (Bus. & Prof. Code, §
17200 et seq.) on the ground that the rental contracts repeatedly
and expressly requiring them to have insurance did not mean
what they said, such that the consumers were duped into buying
insurance that was not required by their contracts. The trial
court rejected their claims as without merit. So do we.
Accordingly, we affirm the judgment for the storage company.
FACTS AND PROCEDURAL BACKGROUND
I. Facts
As its name implies, Public Storage rents self-storage units
to the public.
When a person rents a storage unit from Public Storage, he
is confronted with two documents, as pertinent here. The first is
the Insurance Addendum (Addendum). The Addendum states
two times that the renter “is obligated . . . to insure his own
goods” and must “maintain insurance that covers loss or damage
for the personal property” stored in the unit. The Addendum also
requires the renter to sign an acknowledgment in which Public
Storage explains the consequence of not complying with this
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obligation—namely, that “if [the renter] do[es] not have
insurance . . . [he is] personally responsible for any loss or
damage to [his] goods,” and those goods are deemed to be stored
“at [his] sole risk.”1 The second document is the Lease/Rental
Agreement (Lease). Section six of the Lease mirrors the
Addendum. Like the Addendum, it states that the renter is
“obligated under the terms of [the Lease] to insure his own
goods.” Also like the Addendum, the Lease explains the
consequence of not complying with this obligation—namely, that
if the renter “does not obtain insurance coverage for the full value
of [his] personal property stored in the [storage unit], [the renter]
1 In full, the insurance disclosure section of the Addendum
provides:
“[A]ll personal property is stored by Occupant
at occupant’s sole risk. Occupant is solely responsible
for insuring his own goods and understands that
Owner will not insure Occupant’s personal property
and that Occupant is obligated under the terms of
this lease/rental agreement to insure his own goods.
“I acknowledge that I understand and agree to
the provisions of the above paragraph and that I
understand I am solely responsible to insure my
stored property. I acknowledge that the Lease/Rental
Agreement requires me to maintain Insurance that
covers loss or damage for the personal property that I
intend to store at this facility. . . . I understand that
if I do not have Insurance, or if my Insurance lapses,
I am personally responsible for any loss or damage to
my goods. I personally assume all risk of loss and
Owner is not responsible no matter how the loss or
damage occurred.”
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agrees [he] will personally assume all risk of loss.”2 The Lease
also provides that the “entire agreement” between Public Storage
and the renter consists solely of the Lease and the Addendum
(which is “executed at the same time as th[e] Lease[]”).
Pursuant to Insurance Code section 1758.7 et seq., Public
Storage also presents prospective renters with the option to apply
for a third party insurance policy offered at Public Storage
facilities to insure the goods they store in its units from loss or
damage, and thereby to comply with the insurance obligation set
forth in the Lease and the Addendum. In discussing the
insurance obligation, Public Storage employees are trained to
follow a script approved by the California Department of
Insurance that reiterates the insurance obligation of the Lease
and the Addendum and introduces the offered insurance policy as
2 In full, this section of the Lease addressing insurance
provides:
INSURANCE; RELEASE OF LIABILITY. ALL PERSONAL
PROPERTY IS STORED BY OCCUPANT AT OCCUPANT’S
SOLE RISK. INSURANCE IS OCCUPANT’S SOLE
RESPONSIBILITY. OCCUPANT UNDERSTANDS THAT
OWNER WILL NOT INSURE OCCUPANT’S PERSONAL
PROPERTY AND THAT OCCUPANT IS OBLIGATED UNDER
THE TERMS OF THIS LEASE/RENTAL AGREEMENT TO
INSURE HIS OWN GOODS. To the extent Occupant’s
insurance lapses or Occupant does not obtain
insurance coverage for the full value of Occupant’s
personal property stored in the Premises, Occupant
agrees Occupant will personally assume all risk of
loss. . . . [signed initials] Occupant acknowledges that
he understands the provisions of this paragraph and
agrees to these provisions and that insurance is
Occupant’s sole responsibility.”
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one option for prospective renters to satisfy that obligation.
However, it is up to each renter whether to apply for the policy
offered by Public Storage, or instead to rely on their homeowner’s
insurance policy, renter’s insurance policy, or some other policy.3
Nationwide, some 85 percent of first-time renters opt to
purchase one of the third party policies offered by Public Storage.
Public Storage does not verify to see whether those renters
who do not purchase a Public Storage-offered policy have
otherwise secured the insurance coverage required by the Lease
and the Addendum. That is because the Insurance Code’s limited
authorization for “self-service storage agents” like Public Storage
to sell insurance does not empower them to “[a]dvertise,
represent, or otherwise portray itself or its employees as licensed
insurers, insurance agents, or insurance brokers” (Ins. Code, §
1758.78, subd. (b)), and because “evaluat[ing]” whether some
other policy is “adequa[te]” is something that only an “insurance
agent” or “insurance broker” may do (Id., § 1758.76, subd. (b)(3)).
Because it cannot verify whether its renters’ other policies
are adequate, Public Storage does not cancel any rental contract
due to the renter’s failure to obtain insurance.
Between 2013 and 2016, Carolina Perez, Paulina Cardona,
Guilliana Amico, and Richard Mojica (collectively, the named
plaintiffs) all rented storage units at Public Storage locations in
California and selected the insurance policy offered by Public
Storage.
3 The trial court found that Public Storage made “no uniform
misleading statements” that would lead a “reasonable person to
believe that they were required to purchase” insurance from
Public Storage, and this finding has not been appealed. We
accordingly accept it as established.
5
II. Procedural Background
On February 24, 2016, the named plaintiffs filed a putative
class action lawsuit against Public Storage.4 In the operative
fourth amended complaint, plaintiffs asserted claims for (1)
breach of contract, (2) breach of the implied covenant of good
faith and fair dealing, and (3) violations of the unfair competition
law for engaging in business practices that are fraudulent,
unlawful, and unfair.
On May 3, 2018, the trial court certified a class
(collectively, plaintiffs) on the theory that Public Storage made
uniform misleading statements to prospective renters that
induced them to believe that they were required to purchase a
Public Storage-offered insurance policy.
In January 2019, the matter proceeded to a three-day
bench trial on the unfair competition law claims on behalf of a
class of approximately 700,000 renters.5 At trial, plaintiffs for
the first time presented the theory that Public Storage had
violated the unfair competition law by “telling its customers they
were required to maintain some form of insurance on their stored
goods despite the fact that there was no such requirement.” In
support of this theory, plaintiffs relied on two categories of
evidence. First, they introduced a discovery response verified by
one of Public Storage’s executives, in which Public Storage
4 Perez filed the original complaint; the other named
plaintiffs were added in each amended iteration of the complaint.
5 Plaintiffs’ contract-based claims were obviated by the trial
court’s order denying class certification on plaintiff’s proffered
theory that Public Storage failed to disclose that it stood to gain
from the insurance transaction.
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admitted that (1) “since August 2006, Public Storage’s Lease[]
has required new [renters] to have some form of insurance
coverage for the goods stored at Public Storage’s facilities,
whether or not they choose to purchase the tenant insurance
provided at Public Storage,” (2) renters “can satisfy this
contractual requirement by having or obtaining various types of
insurance, including but not limited to homeowners’ insurance,
renters’ insurance, other self-storage insurance, or by bearing the
risk of loss personally,” and (3) the renter “assumes all risk of
loss” if insurance is not obtained or is inadequate. Second,
plaintiffs pointed to Public Storage’s willingness to rent to people,
even if they did not obtain or provide proof of insurance.
In June 2019, the trial court issued a 16-page statement of
decision denying plaintiffs relief. The court rejected plaintiffs’
initially pled theory that Public Storage had misled prospective
renters into believing that they had to buy a Public Storage-
offered insurance policy. The court then turned to plaintiffs’
newly articulated theory that Public Storage did not really
require tenants to obtain insurance. The court found that this
theory was within the scope of the class notice, but ruled that it
lacked merit. Based on the plain language of the Lease and the
Addendum as well as the consistent testimony of all four Public
Storage representatives that plaintiffs called as witnesses at
trial, the court found that “Public Storage requires its customers
to insure their goods in storage.” The court rejected plaintiffs’
argument that the insurance obligation in the Lease and the
Addendum was “illusory.” The court reasoned that the discovery
response could not modify the plain language of the insurance
obligation set forth in the Lease and the Addendum; even if it
could, the court viewed the response as explaining the
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consequence “if a person failed to obtain insurance” rather than
as a “statement that renters need not comply with the [insurance
obligation set forth in the] Lease . . . .” The court next found
Public Storage’s failure to verify renters’ compliance with the
insurance obligation to be a function of the limitations placed on
it by the Insurance Code; further, the court noted that Public
Storage had “discretion in how to enforce” the insurance
obligation. Because Public Storage did require its renters to
obtain insurance, the court concluded, Public Storage did not act
fraudulently, unlawfully, or unfairly—and hence did not violate
the unfair competition law—in telling renters that insurance was
required.
After the named plaintiffs settled their individual claims
and the trial court entered judgment, plaintiffs filed this timely
appeal.
DISCUSSION
Plaintiffs argue that the trial court erred in concluding that
their unfair competition law claims lacked merit.6 California’s
unfair competition law defines “unfair competition” as a
“business act or practice” that is (1) “fraudulent,” (2) “unlawful,”
6 Plaintiffs also challenge the trial court’s ruling prohibiting
their experts from calculating restitution in a manner that
violates the filed rate doctrine. That doctrine insulates an entity
from civil damages arising from claims challenging rates charged
by the entity if those rates have been filed with and approved by
the governing regulatory authority. (See, e.g., Day v. AT&T
Corp. (1998) 63 Cal.App.4th 325, 334-335 [discussing doctrine as
applied to telephone carrier].) This issue deals with damages,
but we need not reach any remedy-related issues in light of our
conclusion that there is no liability in the first place.
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or (3) “unfair.” (Bus. & Prof. Code, § 17200; see Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163, 180; see also Aryeh v. Canon Business
Solutions, Inc. (2013) 55 Cal.4th 1185, 1196 [each ground is an
independent basis for liability].) On appeal, plaintiffs assert that
Public Storage has engaged in fraudulent, unlawful, and unfair
business practices because (1) the Lease and the Addendum,
despite their provisions requiring renters to obtain insurance, do
not really require them to do so, and (2) even if the Lease and the
Addendum do mean what they say, Public Storage still deceived
renters by not telling them that they can breach this provision
without consequence because Public Storage does not verify
compliance with the insurance obligation and will still rent
storage units despite noncompliance with this obligation.
I. Is Insurance Required Under the Lease and the
Addendum?
Plaintiffs’ first argument—that the Lease and the
Addendum do not really obligate renters to obtain insurance and
are merely “advisory” on whether to obtain insurance—requires
us to interpret those contracts. Especially with integrated
contracts like the Lease, our interpretation is limited to the face
of the contract; however, we may consider parol (that is,
extrinsic) evidence provisionally to assess whether the contract is
“reasonably susceptible” to more than one interpretation and, if it
is, use that parol evidence to determine the contract’s meaning.
(Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 391; Hot
Rods, LLC v. Northrop Grumman Systems Corp. (2015) 242
Cal.App.4th 1166, 1175-1176.) We independently construe the
meaning of contractual terms and whether a contract is
“reasonably susceptible” to multiple interpretations, but review
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the trial court’s resolution of any conflicts in the parol evidence
for substantial evidence. (Winet v. Price (1992) 4 Cal.App.4th
1159, 1165-1166.)
We independently agree with the trial court that the Lease
and the Addendum obligate renters to obtain insurance.
Together, those documents expressly state—no fewer than three
times—that renters are “obligated . . . to insure [their] own
goods” and to “maintain . . . insurance.” The text of a contract is
the first place to look in interpreting its meaning; where, as here,
the text is “clear and explicit,” it is also the last place. (Bank of
the West v. Superior Court (1992) 2 Cal.4th 1254, 1264 (Bank of
the West).)
Plaintiffs respond with three contentions.
First, plaintiffs contend that the plain language of the
Lease and the Addendum are contradicted by (1) Public Storage’s
discovery response, where it admitted that renters can “satisfy”
their “contractual requirement” by “bear[ing] the risk of loss
personally” and “assum[ing] all risk of loss” (that is, by not
having insurance), (2) Public Storage’s failure to verify renters’
compliance with the insurance obligation, and (3) Public
Storage’s inability or failure to terminate rental contracts or to
sue their renters for not complying with the insurance obligation.
Even if we assume that one or all of these items of evidence
render the Lease and the Addendum “reasonably susceptible” to a
reading contrary to their plain text, we conclude that the better
reading is the one consistent with their plain text.
More generally, it is difficult to see how Public Storage’s
extracontractual discovery response explaining the insurance
obligation can negate that obligation when contracts in California
are construed according to their objective meaning (e.g., Founding
10
Members of the Newport Beach Country Club v. Newport Beach
Country Club, Inc. (2003) 109 Cal.App.4th 944, 956 [“[t]he
parties’ undisclosed intent or understanding is irrelevant to
contract interpretation”]; Pardee Construction Co. v. Insurance
Co. of the West (2000) 77 Cal.App.4th 1340, 1360 [“a party’s
subjective intent cannot be used to create an ambiguity in
otherwise clear and explicit language”]), or how Public Storage’s
postcontractual conduct in deciding whether and how to enforce a
contractual provision can retroactively negate that provision
when contracts are to be interpreted “as to give effect to the
mutual intention of the parties as it existed at the time of
contracting” (Civ. Code, § 1636, italics added; Brown v. Goldstein
(2019) 34 Cal.App.5th 418, 437-438; Bank of the West, supra, 2
Cal.4th at pp. 1264-1265).
More specifically, none of the three items plaintiffs cite
undermines the plain text of the Lease and the Addendum. The
discovery response is not the smoking gun plaintiffs portray;
instead, and as the trial court noted, the response largely parrots
the text of the Lease and the Addendum—namely, that (1)
insurance is required, but (2) the consequence of not complying
with this requirement is personal liability for any loss. Thus, to
the extent Public Storage’s discovery response was an
“unequivocal concession of the truth of a matter”—which it likely
was not—the evidence at trial was not contrary to that
admission. (See Code Civ. Proc., § 2033.410 [“[a]ny matter
admitted in response to a request for admission is conclusively
established against the party making the admission”]; Myers v.
Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746 [fact
established as judicial admission made by a response to request
for admission is a conclusive concession of the truth of that
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matter]; Monroy v. City of Los Angeles (2008) 164 Cal.App.4th
248, 260 [trial court may utilize parol evidence “to elucidate and
explain an admission” so long as such evidence does not
“contradict the plain meaning of” the response].)7 And even if the
response could be read another way, substantial evidence
supports the trial court’s reading. Public Storage’s failure to
verify compliance is not evidence of a postcontractual
abandonment of the insurance obligation because verification
would require Public Storage to evaluate whether renters’
alternative insurance policies were adequate to cover the goods in
storage, and the Insurance Code precludes Public Storage from
engaging in such evaluation. (See Ins. Code, § 1758.76, subd.
(b)(3) [self-storage facility must disclose to renter that “self-
service storage facility and its employees are not qualified or
authorized to evaluate the adequacy of the purchaser’s existing
insurance coverage”].) And Public Storage’s unwillingness to
terminate rental agreements for failure to comply with the
insurance obligation (even if the prospective tenant expresses an
intent not to comply)—whether due to an inability to evaluate
compliance or due to a conscious choice—does not somehow
retroactively invalidate that obligation. Accepting plaintiffs’ logic
means that a party’s decision not to enforce the breach of a
contractual provision means that the provision was never a
contractual obligation in the first place. This is nonsensical, and
we may not construe contracts to lead to such absurdities. (Civ.
Code, § 1638; Kashmiri v. Regents of University of California
(2007) 156 Cal.App.4th 809, 831.)
7 Thus, contrary to what plaintiffs assert, the fact that Public
Storage did not seek relief from its admission is of no concern.
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Second, plaintiffs argue that Public Storage’s failure to
enforce the insurance obligation in the Lease and the Addendum
renders that obligation “illusory.” This argument rests on a
misunderstanding of the term “illusory.” A contract is illusory if
“a party to a contract retains the unfettered right to terminate or
modify the agreement”; in this situation, the party with the
unfettered right has given no consideration, and the contract fails
for lack of consideration. (Asmus v. Pacific Bell (2000) 23 Cal.4th
1, 15; Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 923
[contract that is “illusory” is one “lacking in consideration”].)
Here, it is undisputed that the Lease and the Addendum as a
whole are supported by consideration—namely, Public Storage
rents a self-storage unit and renters pay for it. Thus, the Lease
and the Addendum are not illusory. Notwithstanding the
validity of the Lease and the Addendum as a whole, plaintiffs
urge us to find that the insurance obligation specifically is
unsupported by consideration and hence illusory. But “it is not
necessary that each separate promise or covenant [in a contract]
should have a distinct consideration.” (Brawley v. Crosby
Research Foundation, Inc. (1946) 73 Cal.App.2d 103, 118-119;
Tennant v. Wilde (1929) 98 Cal.App. 437, 442.) Accordingly, we
decline plaintiffs’ invitation to shoehorn the facts of this case into
the “illusory contract” doctrine.
Third, plaintiffs argue that Public Storage drafted the
Lease and the Addendum, and that these contracts should be
construed against them. (Victoria v. Superior Court (1985) 40
Cal.3d 734, 739.) This canon of contractual interpretation does
not apply, however, where, as here, the plain text of the Lease
and the Addendum is clear and unambiguous. (Ibid.)
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II. Even If Insurance Is Required, Must Public Storage
Inform Renters Whether It Intends to Enforce That
Requirement?
Plaintiffs’ second argument—that, even if the Lease and
the Addendum require renters to obtain insurance, Public
Storage violated the unfair competition law by not telling renters
that it would not (or could not) enforce that requirement—turns
on the application of the law to undisputed facts. Our review is
accordingly de novo. (Martinez v. Brownco Construction Co.
(2013) 56 Cal.4th 1014, 1018.)
To accept plaintiffs’ argument, we would have to hold that
a party to a contract commits an unfair business practice if it
does not disclose, at the time it signs a contract, which of the
contract’s provisions it does not intend to enforce. Plaintiffs
provide no legal support for this argument, nor have we found
any. This is not surprising. People and businesses generally
have the right to enter into a contract, and to decide not to sue
for a subsequent breach of that contract. (See Alder v. Drudis
(1947) 30 Cal.2d 372, 381-382 [“one who has been injured by a
breach of contract” has three options, including “keep[ing] the
contract alive, for the benefit of both parties”]; Akin v. Certain
Underwriters at Lloyd’s London (2006) 140 Cal.App.4th 291, 296
[party injured by a breach may treat the contract as rescinded or
repudiated and recover damages if he “lacks the ability or the
desire to keep the contract alive”].) As a consequence, we see no
basis for requiring a party to a contract—on pains of incurring
liability under the unfair competition law—to either enforce
every provision of a contract or disclose their intention not to do
so. This would constitute a vast—and, in our view, unwise—
intrusion into the discretion parties to a contract historically and
14
typically enjoy regarding whether and how to seek remedies for a
breach.
* * *
For these reasons, the trial court properly rejected
plaintiffs’ unfair competition law claims. Because the Lease and
the Addendum obligated renters to obtain insurance, Public
Storage did not act in a fraudulent, unlawful, or unfair way in
telling prospective renters that those contracts contained that
obligation. (See Ins. Code, § 1758.76, subd. (b)(1) [self-service
storage employees may advise renter that the “facility’s rental
agreement may contain provisions requiring the renter to provide
insurance on [that renter’s] property in the storage unit”].) And
because there is no legal duty to disclose to contracting partners
one’s intention not to enforce certain provisions of that contract,
Public Storage did not act in a fraudulent, unlawful, or unfair
way in not telling prospective renters it was unable or unwilling
to enforce the provision obligating them to obtain insurance.
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DISPOSITION
The judgment is affirmed. Public Storage is entitled to its
costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________, J.
HOFFSTADT
We concur:
_________________________, P. J.
LUI
_________________________, J.
ASHMANN-GERST
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