Filed 9/26/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
FITNESS INTERNATIONAL, B320562
LLC,
(Los Angeles County
Defendant and Appellant, Super. Ct.
No. 21CHCV00790)
v.
KB SALT LAKE III, LLC,
Plaintiff and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Melvin D. Sandvig, Judge. Affirmed.
Dorsey and Whitney, Bryan M. McGarry, Lynnda A.
McGlinn, and Jill A. Gutierrez; Elenoff, Grossman & Schole and
Bryan M. McGarry for Defendant and Appellant.
Loeb and Loeb, Thomas E. Lombardi and Matthew C.
Anderson for Plaintiff and Respondent.
INTRODUCTION
Fitness International, LLC was operating an indoor gym
and fitness center in the Los Angeles neighborhood of Chatsworth
in 2016 when it entered into an amended lease with KB Salt
Lake III, LLC that required Fitness International to renovate the
premises. Construction began in November 2019 and was
expected to be completed in August 2020. In March 2020,
however, the COVID-19 pandemic prompted government orders
that closed indoor gyms but that allowed commercial construction
to continue. Fitness International nevertheless stopped
construction at the Chatsworth site, remained in possession of
the premises, and stopped paying rent. KB Salt Lake filed this
unlawful detainer action, and the trial court granted KB Salt
Lake’s motion for summary judgment and entered judgment in
its favor.
Fitness International asserted various arguments and
affirmative defenses that rested, at least in part, on its
contention the state and local COVID-19 closure orders did not
allow commercial construction, like the renovation Fitness
International was making to the gym, to continue. The trial
court rejected Fitness International’s arguments and ruled the
closure orders did not prevent Fitness International from
continuing construction work at the Chatsworth site. We agree
with the trial court’s interpretation of the COVID-19 closure
orders and reject the arguments by Fitness International that
rely on the lease’s force majeure provision and the doctrines of
frustration of purpose and temporary impossibility and
impracticability. Therefore, we affirm.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Fitness International Leases the Premises for an
Indoor Gym
Fitness International acquired a lease for the premises in
Chatsworth from another fitness company in 2011. In
November 2016 Fitness International and KB Salt Lake entered
into an amended lease agreement for a term of approximately 11
years, with options to renew for up to 20 additional years. The
lease defined the “‘Primary Uses’” of the premises as “the
operation of a health club and fitness facility.”
A rent schedule set the monthly base rent at $11,850 until
the end of 2016 and increased the base rent each year throughout
the term of the lease. In exchange for the rent payments, KB
Salt Lake leased the premises to Fitness International “subject to
the terms, conditions and provisions set forth in [the lease],”
including the provision that, “[s]ubject to all applicable laws,”
Fitness International “shall have the right throughout the Term
to operate the Premises, or any portion thereof, for uses
permitted under [the lease].” KB Salt Lake also agreed to
indemnify Fitness International from and against losses, costs,
and expenses “arising as a result of any inaccuracy or breach of
any representation, warranty or covenant” by KB Salt Lake in
the lease.
The lease required Fitness International to renovate and
expand the existing gym according to a “Work Letter” attached to
the lease. The Work Letter required Fitness International to
begin the “Tenant’s Work” within 20 business days after
obtaining a building permit and to “proceed with due diligence
thereafter.”
3
The lease included a force majeure provision at
section 22.3, which stated: “If either party is delayed or hindered
in or prevented from the performance of any act required
hereunder because of strikes, lockouts, inability to procure labor
or materials, retraction by any Government Authority of the
Building Permit . . . once it has already been issued, failure of
power, restrictive laws, riots, insurrection, war, fire, inclement
weather or other casualty or other reason of a similar or
dissimilar nature beyond the reasonable control of the party
delayed, financial inability excepted (each, a ‘Force Majeure
Event’), subject to any limitations expressly set forth elsewhere
in this Lease, performance of such act shall be excused for the
period of delay caused by Force Majeure Events and the period
for the performance of such act shall be extended for an
equivalent period (including delays caused by damage and
destruction caused by Force Majeure Events). Delays or failures
to perform resulting from lack of funds or which can be cured by
the payment of money shall not be Force Majeure Events. Force
Majeure Events shall also include, without limitation, hindrance
and/or delays in the performance of Tenant’s Work or Tenant
obtaining certificates of occupancy or compliance for the Premises
by reason of any of the following (i) any work performed by
Landlord in or about the Project from and after the Effective Date
. . . ; and/or (ii) the existence of Hazardous Substances in, on or
under the Project not introduced by Tenant.”
4
B. The COVID-19 Pandemic Temporarily Shuts Down
Indoor Gyms, and Fitness International Invokes the
Force Majeure Provision
Fitness International obtained a building permit to
renovate the premises and commenced construction in
November 2019. At that time Fitness International closed the
gym that was operating on the premises and continued paying
rent to KB Salt Lake. Fitness International estimated that
construction would last approximately eight months and that the
newly renovated gym would open sometime in August 2020.
In March 2020 the Governor of California proclaimed a
state of emergency based on the COVID-19 outbreak. On
March 12, 2020 the Governor issued executive order N-25-20,
which provided, “All residents are to heed any orders and
guidance of state and local public health officials, including but
not limited to the imposition of social distancing measures, to
control the spread of COVID-19.” (Governor’s Exec. Order
No. N-25-20, § 1 (Mar. 12, 2020).) On March 16, 2020 the
Los Angeles County Public Health Officer issued an order
requiring the immediate closure of “[g]yms and fitness centers.”
(Los Angeles County Dept. of Public Health, Order of the Health
Officer, § 4 (Mar. 16, 2020).) On March 19, 2020 the Governor
issued executive order N-33-20 requiring all California residents
to stay home “except as needed to maintain continuity of
operations of the federal critical infrastructure sectors . . . .”
(Governor’s Exec. Order No. N-33-20, § 1 (Mar. 19, 2020).)1
1 The federal critical infrastructure sectors included
“Commercial Facilities.” (See Cybersecurity & Infrastructure
Security Agency, Identifying Critical Infrastructure During
5
Executive Order N-33-20 gave the state public health officer
authority to identify additional sectors as critical to protecting
the health and well-being of Californians. (Ibid.)
Also on March 19, 2020 the Mayor of Los Angeles issued a
“Safer at Home” order that stated, “Wherever feasible, City
residents must isolate themselves in their residences, subject to
certain exceptions provided below.” (Los Angeles Public Order
Under City of Los Angeles Emergency Authority (Mar. 19,
2020).) Those exceptions allowed residents to leave their homes
to engage in certain activities, including to “perform any work
necessary to the operations, maintenance and manufacturing of
essential infrastructure, including without limitation
construction of commercial and institutional buildings,
residential buildings and housing, . . . provided that they carry
out those services and [they] work in compliance with social
distancing practices as prescribed by the Centers for Disease
Control and Prevention and the Los Angeles County Department
of Public Health, to the extent possible.” (Id., § 5(ix) [“Essential
Infrastructure”].) The City revised and extended this order on
May 27, 2020. (Los Angeles Public Order Under City of Los
Angeles Emergency Authority (May 27, 2020).) The revised order
continued to allow “[i]ndividuals [to] leave their residences to
provide any services or goods or perform any work necessary to
build, operate, maintain or manufacture essential infrastructure,
including without limitation construction of public health
COVID-19 [as of Sept. 26, 2023], archived at
.)
6
operations, commercial, office and institutional buildings,
residential buildings and housing.”
On March 21, 2020 the Los Angeles County Public Health
Officer issued the “Safer at Home Order for Control of
COVID-19.” This order extended the closure of non-essential
businesses, including gyms and fitness centers, to April 19, 2020
and allowed “Essential Businesses” to continue operations with
certain precautions to prevent the spread of COVID-19.
(Los Angeles County Dept. of Public Health, Order of the Health
Officer, §§ 2, 3(f)(ii) (Mar. 21, 2020).) “Essential Businesses”
included “Construction Workers who support the construction,
operation, inspection, and maintenance of construction sites and
construction projects (including housing construction).” (Id.,
§ 13(x).) The order did not prevent residents from leaving their
homes “to perform any work necessary or provide services to
. . . Essential Infrastructure,” such as “construction of
commercial, office, and institutional buildings.” (Id., § 15(b).)
Subsequent orders of the Los Angeles County Public Health
Officer extended the Safer at Home Order and continued the
closure of gyms and fitness centers through June 11, 2020. Each
of these orders continued to exempt commercial construction from
the Safer at Home Order as an “Essential Business.”2 (We refer
to the Safer at Home Orders issued by the City and County of Los
Angeles, collectively, as the “COVID-19 closure orders.”)
2 The Los Angeles County orders extending the effective date
of the Safer at Home Order did not include “construction of
commercial, office, and institutional buildings” as “Essential
Infrastructure,” but continued to include commercial construction
in the definition of “Essential Business.”
7
On June 12, 2020 the Los Angeles County Public Health
Officer issued an order permitting gyms and fitness centers to
reopen, but a month later the County closed them again. On
March 15, 2021 the County Public Health Officer allowed gyms
and fitness centers to reopen at limited capacity, and on June 11,
2021 the Governor’s Executive Order N-07-21 ended restrictions
on all sectors. (Los Angeles County Dept. of Public Health, Order
of the Health Officer, § 9.5(c) (Mar. 15, 2021); Governor’s Exec.
Order No. N-07-21, §§ 1-2 (June 11, 2021).)
Meanwhile, Fitness International notified KB Salt Lake on
March 20, 2020 that certain “COVID-19-Related Occurrences”
constituted a force majeure event under section 22.3 of the lease.
Specifically, Fitness International claimed “delays in obtaining
governmental inspections, entitlements, permits and/or
approvals, restrictive laws, Tenant’s inability to procure labor or
materials and other delay/hindrance-causing occurrences beyond
the reasonable control of Tenant that are the result of and/or
associated with the global and national emergency caused by the
spread of COVID-19” were “COVID-19-Related Occurrences” that
excused Fitness International from performing its “pre-opening
and development/construction-related obligations” under the
lease “for the period of delay caused by the COVID-19-Related
Occurrences.” Fitness International stopped paying rent
beginning with the April 2020 payment and never resumed.
C. KB Salt Lake Files This Unlawful Detainer Action,
and the Trial Court Grants KB Salt Lake’s Motion for
Summary Judgment
On September 10, 2021 KB Salt Lake served Fitness
International with a notice of potential event of default. The
8
notice stated Fitness International would be in default unless
within 10 days it paid the then-delinquent rent amount of
$336,707.63. On September 30, 2021, after Fitness International
failed to make the requested payment, KB Salt Lake served
Fitness International with a five-day notice to pay $239,598.35 in
rent or quit the premises.3 The notice stated that, if Fitness
International failed to pay the sum due within five days, KB Salt
Lake would take legal action to terminate and forfeit the lease
and recover possession of the premises. Fitness International did
not make a rent payment by October 6, 2021, and KB Salt Lake
filed this action for unlawful detainer on October 7, 2021. Fitness
International answered and admitted it remained in possession
of the premises.
Following discovery, KB Salt Lake moved for summary
judgment, arguing there were no triable issues of material fact on
the elements of its cause of action for unlawful detainer or on five
affirmative defenses Fitness International identified in its
discovery responses. First, KB Salt Lake argued Fitness
International’s defense based on force majeure did not apply
because the lease excluded from the definition of “‘Force Majeure
Events’” any “‘[d]elays or failures to perform resulting from lack
of funds or which can be cured by the payment of money.’” KB
Salt Lake argued the only breach alleged in the unlawful
detainer action was failure to pay rent, which Fitness
International could cure by making a payment of money. KB Salt
3 The amount of rent due was adjusted to reflect the one-year
limitation on recovering back rent in actions for unlawful
detainer. (See Code Civ. Proc., § 1161, subd. 2; Levitz Furniture
Co. v. Wingtip Communications, Inc. (2001) 86 Cal.App.4th 1035,
1041.)
9
Lake also argued Fitness International had the funds to pay rent
and could not blame the COVID-19 closure orders for failing to
make rent payments. Finally, KB Salt Lake argued the force
majeure clause did not apply because the closure orders did not
prevent Fitness International from continuing construction on
the premises or using them for other purposes. KB Salt Lake
contended Fitness International’s obligation to pay rent
continued so long as it occupied the premises, regardless of the
closure orders.
Second, KB Salt Lake argued Fitness International’s
defense under Civil Code section 1511 (section 1511), which
excuses a party from performing contractual obligations under
certain circumstances, did not apply. KB Salt Lake argued
section 1511 did not apply because “the operation of law” did not
prevent Fitness International from, or delay it in, paying rent
(§ 1511, subd. (1)), nor did “an irresistible, superhuman cause”
prevent Fitness International from performing its obligation to
pay rent (id., § 1511, subd. (2)).
Third, KB Salt Lake argued Fitness International could not
rely on the doctrine of frustration of purpose to excuse its
obligation to pay rent under the lease because the COVID-19
closure orders did not destroy the whole value of the performance
of the lease. KB Salt Lake also contended that, for the
frustration of purpose doctrine to apply, Fitness International
had to terminate the lease or surrender the premises.
Fourth, KB Salt Lake argued Fitness International could
not rely on the doctrine of impossibility or impracticality because
the COVID-19 closure orders did not make it unlawful or
impossible for Fitness International to perform its obligations
under the lease, including paying rent. KB Salt Lake argued
10
Fitness International’s performance was not legally impractical
because the closure orders did not sufficiently increase the cost of
Fitness International’s performance.
Finally, KB Salt Lake argued there were no triable issues
of material fact concerning Fitness International’s defense based
on alleged breaches of the lease by KB Salt Lake. In discovery
responses, Fitness International stated KB Salt Lake breached
the lease by failing to comply with KB Salt Lake’s representation
and warranty that Fitness International could use the premises
for all uses permitted by the lease, including as a health club and
fitness facility. KB Salt Lake argued it was Fitness
International’s failure to complete the renovations to the
premises, not KB Salt Lake’s actions or the COVID-19 closure
orders, that prevented Fitness International from using the
premises as a fitness facility. KB Salt Lake also argued that,
even if it had breached the lease, any such breach would not
relieve Fitness International of its obligation to pay rent, so long
as Fitness International retained possession of the premises.
Fitness International’s opposition to KB Salt Lake’s motion
for summary judgment rested on the premise the COVID-19
closure orders made it “illegal” for Fitness International to
complete the renovations to the property. Fitness International
argued that, despite language in the COVID-19 closure orders
exempting construction workers and commercial construction
from the stay-at-home orders, “retail construction was not
included on the list of approved construction.” Fitness
International asserted the orders’ reference to “construction of
. . . commercial, office and institutional buildings” impliedly
excluded “retail construction,” as distinct from “commercial
construction.” Thus, Fitness International contended, it “ceased
11
all activities, including all construction related activities,” to
avoid violating state law and to protect its employees.
Regarding its force majeure defense, Fitness International
argued it did not claim “financial inability or lack of funds, but
rather that its obligation [to pay rent] was excused by the
circumstances.” Fitness International contended the COVID-19
closure orders were a “Force Majeure Event” under section 22.3
because the orders “‘delayed or hindered’” Fitness International
from performing “‘any act’” required by the lease. In particular,
Fitness International argued the COVID-19 closure orders
delayed or hindered Fitness International from completing
“construction and payment of rent.” Fitness International argued
the payment of money could not cure the cause of the delay
because no amount of money could have eliminated the
COVID-19 pandemic.
Regarding its defenses under section 1511, Fitness
International argued it presented evidence the COVID-19 closure
orders prevented it from renovating and using the premises for
its intended use, thus excusing it from paying rent while the
closure orders were in effect. Regarding the doctrines of
frustration of purpose, impossibility, and impracticality, Fitness
International argued California law recognized “temporary”
versions of these doctrines as grounds to excuse rent payments
during the time that the purpose of the contract was frustrated or
that performance of obligations was impossible or impractical.
Fitness International argued it produced evidence sufficient to
raise a triable issue of material fact regarding whether the
COVID-19 closure orders frustrated the purpose of the lease.
Regarding Fitness International’s defense KB Salt Lake’s
alleged breaches of the lease excused the obligation to pay rent,
12
Fitness International argued KB Salt Lake violated its covenant
under the lease to ensure Fitness International could use the
premises as a health club and fitness facility. Fitness
International contended its obligation to pay rent was dependent
on “its right to complete construction of the fitness facility and
occupy the Premises for its intended use, and because Fitness
[International] was prevented from such, it [was] excused from
paying rent.”
The trial court agreed with KB Salt Lake on every issue
and granted the motion for summary judgment. The court first
ruled KB Salt Lake established each element of its unlawful
detainer cause of action. The court then concluded the COVID-19
pandemic did not excuse Fitness International’s failure to pay
rent under the force majeure clause because that provision
excluded “‘failures to perform . . . which can be cured by the
payment of money.’” The court also ruled that, even if the
COVID-19 closure orders were a “Force Majeure Event” under
section 22.3, Fitness International did not cite any evidence
showing the closure orders prevented it from paying rent; “[i]n
fact,” the court said, Fitness International “admitted it had the
funds to pay rent.” The court also concluded the closure orders
did not prevent Fitness International from using the premises as
a fitness club because “there was no fitness club building at the
Premises to operate” due to Fitness International’s decision to
stop construction.
The trial court rejected Fitness International’s defense
under section 1511, ruling neither the COVID-19 closure orders
nor any “‘irresistible, superhuman cause’” prevented or delayed
Fitness International from paying rent. The court concluded the
doctrine of frustration of purpose did not apply because “‘the
13
whole value of the performance to one of the parties’” was not
destroyed. The court determined the purpose of the lease was “to
eventually operate a fitness center on the Premises once [Fitness
International] completed renovations to the property.” The court
stated “both parties contemplated that [Fitness International]
would need to complete the renovation work . . . before it could
operate the Premises as a fitness facility. [Fitness
International’s] claim that it was prevented from completing the
renovations due to COVID-19 and government orders is without
merit. [Fitness International] chose to stop construction. No
orders in California required commercial construction to cease.
Rather, construction was expressly excepted from the relevant
orders restricting activity . . . . As such, frustration of purpose
does not apply because the purpose of the Lease agreement had
not been destroyed, which is clear since [Fitness International]
did not terminate the Lease or surrender the Premises.”
The trial court similarly rejected Fitness International’s
defenses based on impossibility and impracticality. The court
ruled the COVID-19 closure orders did not make it unlawful or
more costly for Fitness International to perform its obligation to
pay rent, nor did they hinder, delay, or prevent Fitness
International from continuing its renovation of the premises.
Finally, the court rejected Fitness International’s defense
based on KB Salt Lake’s alleged breach of the lease. First, the
court ruled, nothing in the lease required KB Salt Lake to
guarantee Fitness International could use the premises as a
health and fitness club. Second, the court concluded, Fitness
International breached its obligation to “‘proceed with due
diligence’” to complete the renovations on the premises by
“abandon[ing] construction of the property rationalizing it under
14
an incorrect interpretation of the [COVID-19 closure orders] and
while admittedly having funds to pay for construction.” The
court ruled that, as a result of Fitness International’s actions, the
premises were “unfit to operate as a fitness facility.” Finally, the
court agreed with KB Salt Lake’s argument that, even if KB Salt
Lake breached the lease, any such breach would not relieve
Fitness International of its obligation to pay rent under
California law.
The trial court entered judgment for KB Salt Lake. Fitness
International timely appealed.
DISCUSSION
A. Applicable Law and Standard of Review
Code of Civil Procedure section 1161 et seq. governs
unlawful detainer actions. “‘“The statutory scheme is intended
and designed to provide an expeditious remedy for the recovery of
possession of real property.”’” (Borden v. Stiles (2023)
92 Cal.App.5th 337, 344.) The remedy is available to a lessor
against a lessee for unlawfully holding over or for breach of a
lease. (Ibid.; see Taylor v. Nu Digital Marketing, Inc. (2016)
245 Cal.App.4th 283, 288.)
A “tenant of real property is guilty of unlawful detainer”
where the tenant, among other circumstances, “is in default for
nonpayment of rent.” (Stancil v. Superior Court (2021)
11 Cal.5th 381, 395; see Code Civ. Proc., § 1161, subd. (2)
[a landlord states a cause of action for unlawful detainer where
the “tenant continues in possession . . . without the permission of
the landlord . . . after default in the payment of rent”].) “The
basic elements of unlawful detainer for nonpayment of rent
. . . are (1) the tenant is in possession of the premises; (2) that
15
possession is without permission; (3) the tenant is in default for
nonpayment of rent; (4) the tenant has been properly served with
a written three-day notice; and (5) the default continues after the
three-day notice period has elapsed.” (Kruger v. Reyes (2014)
232 Cal.App.4th Supp. 10, 16.) “The procedures governing a
motion for summary judgment in an unlawful detainer action are
streamlined (e.g., separate statements are not required under
section 437c, subdivision (s) of the Code of Civil Procedure), but
such a motion ‘shall be granted or denied on the same basis as a
motion under’” Code of Civil Procedure section 437c. (Borden v.
Stiles, supra, 92 Cal.App.5th at pp. 344-345; see Code Civ. Proc.,
§ 1170.7.)
“Summary judgment should be granted when there is no
triable issue as to any material fact and the moving party is
entitled to judgment as a matter of law.” (Brewer v. Remington
(2020) 46 Cal.App.5th 14, 23; see Code Civ. Proc., § 437c,
subd. (c); Hampton v. County of San Diego (2015) 62 Cal.4th 340,
347.) “In moving for summary judgment, a ‘plaintiff . . . has met’
his ‘burden of showing that there is no defense to a cause of
action if’ he ‘has proved each element of the cause of action
entitling’ him ‘to judgment on that cause of action. Once the
plaintiff . . . has met that burden, the burden shifts to the
defendant . . . to show that a triable issue of one or more material
facts exists as to that cause of action or a defense thereto. The
defendant . . . may not rely upon the mere allegations or denials’
of his ‘pleadings to show that a triable issue of material fact
exists but, instead,’ must ‘set forth the specific facts showing that
a triable issue of material fact exists as to that cause of action or
a defense thereto.’” (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 849; accord, Borden v. Stiles, supra,
16
92 Cal.App.5th at p. 345; see Oldcastle Precast, Inc. v.
Lumbermens Mutual Casualty Co. (2009) 170 Cal.App.4th 554,
564-565 [on a plaintiff’s motion for summary judgment the
defendant has the burden to show a triable issue of fact regarding
an affirmative defense].)
“On appeal, we review the record and the determination of
the trial court de novo, viewing the evidence in the light most
favorable to” the losing party. (Dameron Hospital Assn. v. AAA
Northern California, Nevada & Utah Ins. Exchange (2022)
77 Cal.App.5th 971, 982; see Hampton v. County of San Diego,
supra, 62 Cal.4th at p. 347; Rheinhart v. Nissan North America,
Inc. (2023) 92 Cal.App.5th 1016, 1024.) “‘“[W]e take the facts
from the record that was before the trial court when it ruled on
[the] motion. [Citation.] . . . We liberally construe the evidence
in support of the party opposing summary judgment and resolve
doubts concerning the evidence in favor of that party.”’”
(Hampton, at p. 347; see Hartford Casualty Ins. Co. v. Swift
Distribution, Inc. (2014) 59 Cal.4th 277, 286.)
“We apply de novo review to questions of law regarding
statutory interpretation. [Citation.] ‘We also independently
review contractual agreements, including the question of whether
the language used in a contract is ambiguous.’” (Dameron
Hospital Assn. v. AAA Northern California, Nevada & Utah Ins.
Exchange, supra, 77 Cal.App.5th at pp. 982-983; see Brown v.
Goldstein (2019) 34 Cal.App.5th 418, 433 [trial court’s ruling on
whether contractual language is ambiguous is a question of law
subject to independent review].) “‘We are not bound by the trial
court’s reasons for granting summary judgment because we
review the trial court’s ruling, and not its rationale.’” (Dameron,
17
at p. 983; Rheinhart v. Nissan North America, Inc., supra,
92 Cal.App.5th at p. 1024.)
Fitness International challenges the trial court’s ruling
KB Salt Lake met its burden to show there is no triable issue of
material fact concerning the third element of a cause of action for
unlawful detainer, i.e., that the tenant is in default for
nonpayment of rent. In particular, Fitness International argues
it was not in default because the lease did not obligate Fitness
International to pay rent while the COVID-19 closure orders
were in effect. Fitness International also argues the trial court
erred in ruling Fitness International failed to show a triable issue
of material fact on any of its affirmative defenses. All of Fitness
International’s arguments are based, to some extent, on its
assertion the COVID-19 closure orders “made it illegal” to
complete the renovations to the premises. Thus, we begin with
Fitness International’s arguments challenging the trial court’s
ruling to the contrary.
B. The COVID-19 Closure Orders Allowed Fitness
International To Continue Renovating the Premises
Fitness International argues the trial court erred in
interpreting the COVID-19 closure orders to exclude commercial
construction, including the renovations to the premises, from the
orders’ restrictions. In making this argument, Fitness
International invents the term “retail construction,” which did
not appear in the closure orders, and asserts the term’s absence
from the closure orders meant the orders prohibited “retail
construction.” The plain language of the closure orders does not
support Fitness International’s fanciful attempt at excusing its
decision to cease construction.
18
As stated, the COVID-19 closure orders issued by the City
of Los Angeles allowed residents to continue to work on
“Essential Infrastructure” projects, including “without limitation
construction of commercial and institutional buildings.” (Los
Angeles Public Order Under City of Los Angeles Emergency
Authority (Mar. 19, 2020) § 5(ix), italics added; see Los Angeles
Public Order Under City of Los Angeles Emergency Authority
(May 27, 2020) § 5(ix) [allowing residents to perform work
necessary “to build, operate, maintain or manufacture essential
infrastructure, including without limitation construction of . . .
commercial, office and institutional buildings”], italics added.)
Neither the original nor the revised order referred to “retail
construction” or otherwise qualified the ordinary meaning of
“construction of commercial . . . buildings.”
Similarly, the COVID-19 closure orders issued by the
County of Los Angeles allowed “Essential Businesses,” including
commercial construction, to continue. The original order issued
March 21, 2020 stated: “All persons are to remain in their homes
or at their place of residence, except to travel to and from
Essential Businesses, to work at . . . Essential Infrastructure,
. . . or to participate in an individual or family outdoor activity,
while practicing social distancing.” (Los Angeles County Dept. of
Public Health, Order of the Health Officer, § 1 (Mar. 21, 2020),
italics added.) The order defined “Essential Businesses” and
“Essential Infrastructure” to include commercial construction,
without excepting or referring to construction of retail
establishments. “Essential Businesses” included “Construction
Workers who support the construction, operation, inspection, and
maintenance of construction sites and construction projects
19
(including housing construction).” (Id., § 13(x).)4 “Essential
Infrastructure” included “construction of commercial, office, and
institutional buildings,” again without any qualification
concerning “retail” commercial construction. (Id., § 15(b).) And
as discussed, the later closure orders issued by the County
included the same definition of “Essential Businesses.”
We interpret city ordinances and agency rules and
regulations the same way we interpret statutes, by starting with
the text as the best indication of the measure’s intent and
purpose. (Fischl v. Pacific Life Insurance Company (2023)
94 Cal.App.5th 108, 121; see O’Brien v. Regents of University of
California (2023) 92 Cal.App.5th 1099, 1117 [“‘“Generally, the
rules that govern interpretation of statutes also govern
interpretation of administrative regulations,” as well as the
interpretation of ‘policies promulgated by administrative
bodies.’”]; Ngu v. City Bail Bonds (2021) 71 Cal.App.5th 644, 649
[“Rules of ‘statutory construction govern [the] interpretation of
regulations promulgated by administrative agencies.’”];
TG Oceanside, L.P. v. City of Oceanside (2007) 156 Cal.App.4th
1355, 1374 [“the rules of construction applying to statutes apply
equally to ordinances”].) “If the text is unambiguous and
consistent with the purpose of the regulation, our analysis ends.”
(Fischl, at pp. 121-122; see Aguiar v. Superior Court (2009)
170 Cal.App.4th 313, 324.) If not, we may look to a variety of
extrinsic aids, including the measure’s legislative history and
public policy. (Fischl, at p. 122; Butts v. Board of Trustees of
California State University (2014) 225 Cal.App.4th 825, 836;
4 Although the closure order capitalized the initial letters of
the term “Construction Worker,” the order did not define the
term.
20
Aguiar, at p. 324.) The plain language of the City and County
closure orders, and the orders continuing their effective dates,
excluded commercial construction, such as the renovations of the
premises, from businesses that had to cease operations. Thus, as
a matter of law, the COVID-19 closure orders did not prevent
Fitness International from continuing the renovations to the
premises.
Fitness International argues its (invented) distinction
between “retail” commercial construction and other commercial
construction “makes sense in the context of the Pandemic”
because the construction of nonessential retail establishments
was not necessary to maintain critical infrastructure such as
hospitals, airports, and roadways. But the COVID-19 closure
orders allowed more than “critical” infrastructure projects to
continue. They also allowed “Essential Businesses” to continue,
and both the City and County orders defined “Essential
Businesses” to include commercial construction. In addition, the
Los Angeles County COVID-19 closure orders listed many types
of commercial properties and businesses that had to close or shut
down, and “retail construction” was not one of them. (See, e.g.,
Los Angeles County Dept. of Public Health, Order of the Health
Officer, § 3 (Mar. 21, 2020).) The omission of any reference to
“retail construction” among the lengthy list of businesses that
had to close confirms the COVID-19 closure orders did not
require “retail construction” projects to stop. (See Gikas v. Zolin
(1993) 6 Cal.4th 841, 852 [“The expression of some things in a
statute necessarily means the exclusion of other things not
expressed.”]; O.W.L. Foundation v. City of Rohnert Park (2008)
168 Cal.App.4th 568, 590 [same]; Garson v. Juarique (1979)
99 Cal.App.3d 769, 774 [under the doctrine of expressio unius est
21
exclusio alterius, “the expression of one thing in a statute implies
the intentional exclusion of the omitted thing”].)5
Moreover, Fitness International does not identify any
ambiguity in the language of the COVID-19 closure orders that
would allow us to consider extrinsic interpretive aids such as
public policy (see Butts v. Board of Trustees of California State
University, supra, 225 Cal.App.4th at p. 836), and even if it did,
Fitness International did not identify any evidence that would
support a policy distinction between non-retail commercial
construction and retail commercial construction. Fitness
International cites cases, mostly from other jurisdictions, having
nothing to do with the COVID-19 closure orders that (according
to Fitness International) “refer[ ] separately to commercial and
retail development,” but which do so for reasons specific to those
cases and which do not cite or rely on any such distinction. (See,
e.g., San Franciscans Upholding the Downtown Plan v. City &
County of San Francisco (2002) 102 Cal.App.4th 656, 679
[referring to “commercial and retail space” in describing
downtown San Francisco’s preservation policies]; T-C Forum at
5 The inference under the expressio unius doctrine that a
legislature did not intend to include an excluded item from a list
“arises when there is reason to believe a legislative omission was
intentional.” (Lopez v. Sony Electronics, Inc. (2018) 5 Cal.5th
627, 636.) That principle applies here because another section of
the Los Angeles County closure orders listed various types of
construction that could continue, including construction of
commercial, office, institutional, residential, and housing
projects. (See Barron v. Superior Court (2023) 90 Cal.App.5th
628, 638 [including a term in a list in a statute, but excluding it
from another list in the same statute, indicates the exclusion was
intentional].)
22
Carlsbad, LLC v. Thomas Enterprises, Inc. (S.D.Cal., Aug. 14,
2017, No. 16-cv-2119 DMS (BGS)) 2017 WL 3492159, p. 6
[plaintiff sought a permanent injunction against the defendant’s
use of the word “Forum” in connection with “commercial or retail
real estate”]; Friends of Roeding Park v. City of Fresno (E.D.Cal.
2012) 848 F.Supp.2d 1152, 1158 [plaintiff objected to a city’s
approval of a zoo expansion plan, arguing “it would result in
commercial and retail development of land previously used for
open space recreational uses”].)
Fitness International also argues that, “[a]t the very least,”
whether its interpretation of the COVID-19 closure orders was
“reasonable” is a factual issue. But interpreting city ordinances
and agency rules and regulations is a question of law, not fact,
and Fitness International’s subjective understanding of the
COVID-19 closure orders is irrelevant. (See Segal v. ASICS
America Corp. (2022) 12 Cal.5th 651, 662 [interpreting a statute
is a question of law]; Harris v. City of Santa Monica (2013)
56 Cal.4th 203, 225 [“‘ultimately statutory interpretation is a
question of law the courts must resolve’”]; McPherson v. City of
Manhattan Beach (2000) 78 Cal.App.4th 1252, 1266 [where the
meaning of a municipal code section was “clear and unambiguous
as a matter of law,” a city planner’s interpretation of the statute
was irrelevant].)
C. The Force Majeure Provision Did Not Excuse Fitness
International from Paying Rent
Fitness International argues the trial court misinterpreted
and misapplied the force majeure provision in section 22.3 of the
lease. “When interpreting a contract, a court seeks to ascertain
the mutual intent of the parties solely from the written contract
23
so long as possible.” (West Pueblo Partners, LLC v. Stone
Brewing Co., LLC (2023) 90 Cal.App.5th 1179, 1185 (West Pueblo
Partners); see Gilkyson v. Disney Enterprises, Inc. (2021)
66 Cal.App.5th 900, 916.) “When the contract is clear and
explicit, the parties’ intent is determined solely by reference to
the language of the agreement.” (Gilkyson, at p. 916; see Brown
v. Goldstein, supra, 34 Cal.App.5th at p. 432.)
First, Fitness International argues section 22.3 applies
when the “purpose” of the lease is delayed, hindered, or
prevented by a “Force Majeure Event.” Fitness International
further argues that the purpose of the lease was for Fitness
International “to operate the Premises as an indoor gym (and to
perform [the renovations] in order to do so)” and that the
COVID-19 pandemic prevented Fitness International from
operating the premises as a gym. The language of section 22.3
does not support Fitness International’s interpretation.
Section 22.3 applies “[i]f either party is delayed or hindered in or
prevented from the performance of any act required hereunder
because of . . . a ‘Force Majeure Event’ . . . .” The provision
further provides that the “performance of such act shall be
excused for the period of delay caused by Force Majeure Events
and the period for the performance of such act shall be extended
for an equivalent period . . . .” Section 22.3 plainly applies only
when an “act” required under the lease, not its “purpose,” is
delayed, hindered, or prevented. Fitness International admitted
it had the funds to pay rent, despite the COVID-19 closure
orders. Thus, because the COVID-19 pandemic did not delay,
hinder, or prevent Fitness International from the act of paying
rent, section 22.3 did not excuse Fitness International’s
obligation to pay rent. And, in any event, the COVID-19
24
pandemic did not delay, hinder, or prevent the parties from
fulfilling the purpose of the lease Fitness International identifies
because Fitness International never completed the renovations to
the premises.6
Fitness International argues that interpreting section 22.3
to apply where “the fundamental purpose of the Lease is
hindered or prevented by the occurrence of a Force Majeure
Event” is “more reasonable” than the trial court’s “hyper-
technical” interpretation. But because section 22.3 is “clear and
explicit” in this regard, we look only to its plain language to
determine the parties’ intent. (West Pueblo Partners, supra,
90 Cal.App.5th at p. 1185; Gilkyson v. Disney Enterprises, Inc.,
supra, 66 Cal.App.5th at p. 916.) We consider extrinsic evidence
only when a contract is ambiguous, “that is, reasonably
susceptible to more than one interpretation.” (Thompson v.
Asimos (2016) 6 Cal.App.5th 970, 986; see State of California v.
Continental Ins. Co. (2012) 55 Cal.4th 186, 195 [a contract
provision is ambiguous “‘when it is capable of two or more
constructions, both of which are reasonable’”].) There is nothing
ambiguous in section 22.3’s reference to the word “act,” which is
employed twice in the same way in that provision. In both
instances, section 22.3 refers to the “performance” of an “act”
6 Fitness International argued in the trial court the
COVID-19 closure orders “at a minimum delayed and hindered
[its] construction activities,” but Fitness International produced
no evidence to support that contention.
25
“required” by the lease.7 Parties do not typically “perform”
purposes of a contract, nor are purposes of a contract generally
“required” by its terms. We will not give the word “act” an
unreasonable interpretation to deem section 22.3 ambiguous.
(See La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity
Co. (1994) 9 Cal.4th 27, 37 [“‘Courts will not adopt a strained or
absurd interpretation in order to create an ambiguity where none
exists.’”]; Alameda County Flood Control & Water Conservation
Dist. v. Department of Water Resources (2013) 213 Cal.App.4th
1163, 1180 [same].)8
7 The provision first refers to “the performance of any act
required hereunder” and then refers to the “performance of such
act.”
8 Fitness International cites several cases from other states
purportedly holding that “nearly identical lease provisions”
excused the payment of rent during government-ordered business
closures as “evidence that Fitness [International’s] interpretation
of nearly identical lease provisions is at least plausible.”
Plausibility is relevant to whether section 22.3 is ambiguous.
(See California Dept. of Human Resources v. Service Employees
Internat. Union, Local 1000 (2012) 209 Cal.App.4th 1420, 1430
[“An ambiguity exists when language as applied to a concrete
dispute is reasonably susceptible of different, plausible,
meanings.”].) But even if section 22.3 were ambiguous regarding
its application to Fitness International’s obligation to pay rent
(which it isn’t), the holdings of other courts interpreting different
contracts involving different parties and circumstances would not
be extrinsic evidence of the intent of the parties to the lease in
this case. The types of extrinsic evidence relevant to resolving an
ambiguity include “[t]he circumstances surrounding and leading
to the execution of a contract” (Kashmiri v. Regents of University
26
Fitness International also argues that its interpretation of
section 22.3 is “consistent with how the parties equitably
allocated risk based on fault and insurability throughout the
Lease (see, e.g., §§ 15.1, 15.4, 16.1)” and, citing Civil Code
section 1641, that the court must interpret a contract by
considering the entire contract and giving “‘effect to every part, if
reasonably practicable, each clause helping to interpret the
other.’” To the extent it did not forfeit this argument by failing to
make it in the trial court (see Bitner v. Department of Corrections
& Rehabilitation (2023) 87 Cal.App.5th 1048, 1065), Fitness
International does not explain how interpreting the word “act” to
mean “act” and not “purpose” is inconsistent with the lease
provisions it identifies, which concern extending the lease in the
event of damage to the premises by “fire or other casualty”
(§ 15.1), abatement of rent in the event damage or destruction
interferes with Fitness International’s business operations
(§ 15.4), and takings by eminent domain or condemnation
(§ 16.1).
Second, Fitness International argues the trial court
erroneously interpreted section 22.3 by “conflating what
constitutes a Force Majeure Event with what may be excused by a
Force Majeure Event.” The first sentence of section 22.3 provides
a nonexclusive list of examples of potential Force Majeure
Events, such as strikes, insurrection, war, and fire. According to
of California (2007) 156 Cal.App.4th 809, 838), a “party’s conduct
occurring between execution of the contract and a dispute about
the meaning of the contract’s terms” (City of Hope National
Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 393), and
industry custom or practice (Wolf v. Superior Court (2004)
114 Cal.App.4th 1343, 1357).
27
Fitness International, the second sentence “states what cannot
constitute a Force Majeure Event,” namely, “[d]elays or failures
to perform resulting from lack of funds or which can be cured by
the payment of money.” Section 22.3 states that such delays or
failures “shall not be Force Majeure Events.” KB Salt Lake
argues that, instead of defining what shall not “be” a Force
Majeure Event, the second sentence of section 22.3 identifies the
types of performance, such as the payment of rent, that a Force
Majeure Event does not excuse. But regardless of who wins this
battle, Fitness International has lost the war: Even if the
COVID-19 pandemic is, under the lease, a Force Majeure Event
that could excuse obligations requiring only the payment of
money, Fitness International cannot show it was delayed,
hindered, or prevented from paying rent “because of” the
COVID-19 pandemic, as required by section 22.3. As discussed,
Fitness International conceded it had the funds to pay rent,
despite the COVID-19 pandemic. Thus, Fitness International
was not prevented from performing “because of” the COVID-19
pandemic. (See SVAP III Poway Crossings, LLC v. Fitness
International, LLC (2023) 87 Cal.App.5th 882, 892-893 (Poway
Crossings) [force majeure clause did not excuse Fitness
International from paying rent where there was “no evidence or
argument . . . the pandemic and resulting government orders
hindered Fitness [International’s] ability to pay rent”]; see also
West Pueblo Partners, supra, 90 Cal.App.5th at p. 1188
[no triable issue of fact regarding whether the COVID-19
pandemic prevented a lessee from paying rent where, even
though the pandemic affected the lessee’s business operations,
the lessee admitted it had the financial resources to pay rent].)
28
Fitness International similarly argues that the parties did
not carve out “‘rent’” from section 22.3, meaning any Force
Majeure Event would excuse the parties from performing all
obligations under the lease, including payment of rent, regardless
of whether the Force Majeure Event was the cause of the delay in
performance. Again, that’s not what section 22.3 says. It says:
“If either party is delayed or hindered in or prevented from the
performance of any act required hereunder because of . . . a ‘Force
Majeure Event,’” then “performance of such act shall be excused
. . . .” Thus, the performance of a specific act, such as payment of
rent, must be delayed or hindered by the Force Majeure Event
before section 22.3 excuses the obligation to perform the act. (See
West Pueblo Partners, supra, 90 Cal.App.5th at p. 1188
[“[a]lthough a force majeure provision is often included in a
contract to specify which qualifying events will trigger its
application, the qualifying event must have still caused a party’s
timely performance under the contract to ‘become impossible or
unreasonably expensive,’” italics omitted].)
Fitness International argues in its reply brief the
COVID-19 pandemic “hindered” its ability to pay rent because it
could not bill members when the gym was closed, was forced to
stop operating its California locations and close its corporate
office, furloughed over 25,000 employees, and could not continue
renovating the premises in Chatsworth. Fitness International,
however, did not have a cash flow problem. It admitted it had
the funds to pay rent. Moreover, even if Fitness International
were operating at a loss (and there is no evidence it was), that
alone would not excuse Fitness International from paying rent
under section 22.3. For example, in West Pueblo Partners, supra,
90 Cal.App.5th 1179 the court rejected an argument of a
29
commercial tenant, which operated a brewpub,9 that the force
majeure provision in its lease excused it from paying rent while
local COVID-19 closure orders restricted the brewpub’s
operations. (Id. at pp. 1191-1192.) Like Fitness International,
the tenant in West Pueblo Partners admitted that it could have
made rent payments, but argued that it would have been more
costly to do so because local restrictions on indoor dining “were
‘devastat[ing]’ to its operating profits” and forced the brewpub to
lay off the “vast majority” of its employees. (Id. at pp. 1183-
1184.) In affirming an order granting the landlord’s motion for
summary judgment, the court held the force majeure provision in
the lease, which was similar to section 22.3,10 did not excuse the
obligation to pay rent: The tenant’s “ability to pay rent must
have been ‘delayed, interrupted, or prevented’ by COVID-19
because timely performance would have either been impossible or
9 A brewpub is “a business that serves beer that has been
manufactured on the premises.” (Tony’s Taps, LLC v. PS
Enterprises, Inc. (D.Colo., Mar. 29, 2012, No. 08-CV-01119-MSK-
KLM) 2012 WL 1059956, p. 8; see R.S.S.W., Inc. v. City of Keego
Harbor (E.D.Mich. 1998) 18 F.Supp.2d 738, 741, fn. 3
[“A ‘brewpub’ serves alcohol and food and is typically
distinguished by the fact that, aside from the usual selection of
alcohol, it also serves beer brewed on the premises.”].)
10 The force majeure provision in West Pueblo Partners stated:
“If either Party is delayed, interrupted or prevented from
performing any of its obligations under this lease, and such delay,
interruption or prevention is due to [a force majeure event], then
the time for performance of the affected obligations of the Party
shall be extended for a period equivalent to the period of such
delay, interruption or prevention.” (West Pueblo Partners, supra,
90 Cal.App.5th at p. 1187.)
30
was made impracticable due to extreme and unreasonable
difficulty. There is no triable issue of fact as to this issue because
[the tenant] admitted that it had the financial resources to pay
rent . . . for the subject months, even though the brewpub . . . was
operating at a loss. The mere fact that [the tenant] was
generating less revenue during this time period did not render its
performance impossible or impracticable, and the force majeure
event therefore did not impair [the tenant’s] ability to pay its
rent. [The tenant] merely argues that the force majeure event
made it more costly to do so.” (Id. at p. 1188, italics omitted.)
Fitness International argues West Pueblo Partners is
distinguishable because the tenant in that case “was able to
operate in some capacity during the entire closure period.” But
so was Fitness International. It could have continued
construction on the renovated gym so that the gym could reopen
as soon as the COVID-19 closure orders allowed. Instead, the
gym remained unusable even after the closure orders permitted
indoor gyms to operate “in some capacity.” Because the
COVID-19 pandemic did not delay, hinder, or prevent Fitness
International from paying rent, section 22.3 did not excuse that
obligation.
Fitness International next argues that whether the
COVID-19 pandemic delayed, hindered, or prevented its
renovations of the premises is a factual issue that precludes
summary judgment. Had Fitness International produced any
evidence of such delay, hindrance, or prevention, perhaps there
may have been a factual issue. But it didn’t. In the trial court
Fitness International argued only that the COVID-19 closure
orders “at a minimum delayed and hindered [its] construction
activities,” but Fitness International did not submit any evidence
31
of how or for how long or at what cost. “[I]t is axiomatic that the
party opposing summary judgment ‘“must produce admissible
evidence raising a triable issue of fact.”’” (All Towing Services
LLC v. City of Orange (2013) 220 Cal.App.4th 946, 960; see
Santa Ana Unified School Dist. v. Orange County Development
Agency (2001) 90 Cal.App.4th 404, 411.) Yet Fitness
International produced none to support its claim the COVID-19
closure orders delayed, hindered, or prevented construction.11
Finally, and in connection with its argument the trial court
erroneously interpreted section 22.3, Fitness International
argues its obligation to pay rent was excused by KB Salt Lake’s
alleged breach of its covenant in section 1.9 that Fitness
International would have the “right throughout the Term [of the
lease] to operate the Premises . . . for uses permitted under [the]
lease.” Section 1.9, however, qualifies that obligation by stating
it is “[s]ubject to all applicable laws,” which included the
COVID-19 closure orders. Thus, the lease did not obligate KB
Salt Lake to guarantee future applicable laws would allow
Fitness International to operate the premises as a construction
site, gym, or health club throughout the term of the lease.
Fitness International argues, for the first time in its reply
brief, that “[s]ubject to all applicable laws” meant subject to “laws
that were foreseeable at the time of contracting.” Without citing
any evidence, Fitness International asserts “[n]either party
contemplated there would be an outright prohibition on operating
indoor gyms at the time of contract.” But the parties did
11 Fitness International states in its reply brief it laid off its
construction project manager, but as explained, the project
manager could have continued working on the renovation project
under the COVID-19 closure orders.
32
contemplate in section 22.3 that “restrictive laws . . . beyond the
reasonable control” of the parties could delay, hinder, or prevent
a party from performing an act under the lease. Thus, even if
Fitness International had not forfeited this argument by failing
to make it in its opening brief (see Doe v. McLaughlin (2022)
83 Cal.App.5th 640, 653), the phrase “subject to all applicable
laws” would still be unambiguously broad enough to include the
COVID-19 closure orders.
D. Temporary Frustration of Purpose Did Not Excuse
Fitness International from Paying Rent
Fitness International argues the trial court erred in ruling
the doctrine of frustration of purpose did not excuse Fitness
International from paying rent. Specifically, Fitness
International argues the trial court erroneously rejected its
arguments that California law recognizes “temporary” frustration
of purpose and that under that doctrine the COVID-19 pandemic
temporarily excused Fitness International’s obligation to pay
rent. Even if temporary frustration of purpose is a viable theory
under California law, however, Fitness International did not
show the doctrine excused its obligation to pay rent.
“The doctrine of frustration excuses contractual obligations
where ‘“[p]erformance remains entirely possible, but the whole
value of the performance to one of the parties at least, and the
basic reason recognized as such by both parties, for entering into
the contract has been destroyed by a supervening and unforeseen
event.”’ [Citation.] A party seeking to escape the obligations of
its lease under the doctrine of frustration must show: (1) the
purpose of the contract that has been frustrated was
contemplated by both parties in entering the contract; (2) the risk
33
of the event was not reasonably foreseeable and the party
claiming frustration did not assume the risk under the contract;
and (3) the value of counter-performance is totally or nearly
totally destroyed. [Citations.] Governmental acts that merely
make performance unprofitable or more difficult or expensive do
not suffice to excuse a contractual obligation.” (Poway Crossings,
supra, 87 Cal.App.5th at p. 895; see Lloyd v. Murphy (1944)
25 Cal.2d 48, 55; Dorn v. Goetz (1948) 85 Cal.App.2d 407, 410-
413.) Where the doctrine of frustration applies, “the ‘legal effect
. . . is the immediate termination of the contract.’” (Poway
Crossings, at p. 896; see Johnson v. Atkins (1942) 53 Cal.App.2d
430, 435; see also 20th Century Lites, Inc. v. Goodman (1944)
64 Cal.App.2d Supp. 938, 945 [“frustration brings the contract to
an end forthwith”].)
At least two courts have held California law does not
recognize “temporary” frustration of purpose, which ostensibly
excuses a party’s performance under a contract temporarily until
the cause of the frustration abates. (See Poway Crossings, supra,
87 Cal.App.5th at p. 896; 20th Century Lites, Inc. v. Goodman,
supra, 64 Cal.App.2d Supp. at p. 945.) This conclusion follows
from the legal effect of the frustration doctrine, which terminates
the contract. (Poway Crossings, at p. 896; 20th Century Lites, at
p. 945.) Fitness International cites Maudlin v. Pacific Decision
Sciences Corp. (2006) 137 Cal.App.4th 1001 for the proposition
California law does recognize temporary frustration of purpose,
but Maudlin addressed the doctrine of temporary impossibility or
impracticability, not temporary frustration of purpose. (See id. at
p. 1017.) In so doing, the court in Maudlin quoted the
Restatement Second of Contracts, section 269, which, contrary to
California law, conflates impossibility (and impracticability) of
34
performance and frustration of purpose. (Maudlin, at p. 1017;
see Glenn R. Sewell Sheet Metal, Inc. v. Loverde (1969) 70 Cal.2d
666, 678, fn. 13 [doctrine of frustration of purpose “may, in
consequence, appear to overlap” with doctrines such as
impossibility of performance, but it is “a separate doctrine”];
Autry v. Republic Productions, Inc. (1947) 30 Cal.2d 144, 148
[“although the doctrines of frustration and impossibility are akin,
frustration is not a form of impossibility of performance”]; Lloyd
v. Murphy, supra, 25 Cal.2d at p. 53 [“frustration is not a form of
impossibility”].)12 Thus, Maudlin does not stand for the
proposition California law recognizes temporary frustration of
purpose.
We need not decide this issue, however, because Fitness
International did not show temporary frustration of purpose
excused it from paying rent. Fitness International argues the
purpose of the lease “was to possess and use the Premises for the
. . . ‘operation of a health club and fitness facility.’” Fitness
International further argues “[t]his purpose was temporarily, but
completely, extinguished by . . . the Pandemic and government
orders.” Fitness International conveniently leaves out the
additional purpose it identified elsewhere in its opening brief and
in the trial court, which was “to renovate and then operate an
indoor gym at the leased Premises.” Fitness International did
not submit any evidence the COVID-19 pandemic or the
COVID-19 closure orders prevented it from completing the
12 The Restatement Second of Contracts states that
“[i]mpracticability of performance or frustration of purpose that is
only temporary suspends the obligor’s duty to perform while the
impracticability or frustration exists.” (Rest.2d Contracts, § 269,
italics added.)
35
renovations, which were necessary for Fitness International to
operate the premises as a gym or for other permitted uses under
the lease. Thus, Fitness International did not show the
COVID-19 pandemic or closure orders destroyed, even
temporarily, “‘“the whole value of the performance.”’” (Poway
Crossings, supra, 87 Cal.App.5th at p. 895; see Lloyd v. Murphy,
supra, 25 Cal.2d at p. 55.)
Fitness International argues that the lease is a “monthly
installment contract” and that each month it could not operate
the premises as a fitness facility frustrated the purpose of the
contract. Neither the pandemic nor the COVID-19 closure
orders, however, prevented Fitness International from reopening
the gym; the gym was under construction at the time the City
and County issued their closure orders, and Fitness International
never recommenced construction (even after the government
allowed gyms to reopen).
Moreover, as KB Salt Lake argues, frustration of purpose
did not excuse Fitness International from its obligation to pay
rent (even if the lease was an “installment contract”) because
Fitness International did not attempt to rescind the lease and
instead remained in possession of the premises. (See Poway
Crossings, supra, 87 Cal.App.5th at p. 896 [Fitness International
remained “obligated to pay rent while in possession of the
premises”].) As the court in Grace v. Croninger (1936)
12 Cal.App.2d 603 explained, “even where the sole business to
which premises are restricted by the terms of a lease becomes
unlawful, the lease is not terminated merely by the enactment of
the law declaring such business unlawful, but liability under the
lease continues as long as the lessee continues in possession.”
(Id. at p. 603.) The court in Grace relied on an opinion by the
36
Supreme Court denying rehearing in Industrial Development &
Land Co. v. Goldschmidt (1922) 56 Cal.App. 507, where the
Supreme Court stated a lessee could not “continue to hold
possession of the premises after the prescribed business became
unlawful, and escape payment of the rent on the ground of such
illegality, without surrendering to the lessor.” (Id. at p. 512; see
Grace, at p. 606.) As discussed, Fitness International remained
in possession of the premises at least until it answered KB Salt
Lake’s complaint on October 19, 2021 (well after the COVID-19
closure orders ended restrictions on indoor gyms). Thus, even if
California law recognized temporary frustration of purpose, and
even if the lease is an “installment contract,” Fitness
International still had to make rent payments under the lease.13
E. Temporary Impossibility or Impracticability Did Not
Excuse Fitness International from Paying Rent
Fitness International argues the trial court erred in
rejecting its affirmative defense based on temporary impossibility
or impracticability. The doctrine of impossibility includes “not
only cases of physical impossibility but also cases of extreme
impracticability of performance.” (Lloyd v. Murphy, supra,
25 Cal.2d at p. 53; accord, Dorn v. Goetz, supra, 85 Cal.App.2d at
13 For the first time in its reply brief, Fitness International
argues it did not remain in possession of the premises because
“[i]t was illegal for any Californian to leave their home” when the
COVID-19 closure orders were in effect. Even if Fitness
International had not forfeited this argument by failing to raise it
in its opening brief (see Doe v. McLaughlin, supra,
83 Cal.App.5th at p. 653), the argument is inconsistent with
Fitness International’s answer, which admitted Fitness
International remained in possession of the premises.
37
p. 412; see Kennedy v. Reece (1964) 225 Cal.App.2d 717, 724 [“The
enlargement of the meaning of ‘impossibility’ as a defense . . . to
include ‘impracticability’ is now generally recognized.”].)
“Impossibility is defined ‘as not only strict impossibility but [also]
impracticability because of extreme and unreasonable difficulty,
expense, injury, or loss involved.’ [Citations.] The defense of
impossibility may apply where, as here, a government order
makes it unlawful for a party to perform its contractual
obligations.” (Poway Crossings, supra, 87 Cal.App.5th at p. 893;
see Autry v. Republic Productions, Inc., supra, 30 Cal.2d at
pp. 148-149.)
In contrast to the doctrine of frustration, where
“performance remains possible,” the doctrine of impossibility or
impracticability excuses performance of a contractual obligation
when performance is impossible or extremely impracticable.
(Autry v. Republic Productions, Inc., supra, 30 Cal.2d at p. 148;
see 30 Williston on Contracts (4th ed. 2023) § 77:94
[impracticability “makes performance of the obligation impossible
or highly impracticable,” whereas frustration of purpose makes
performance of the promise “pointless”].) “‘“A thing is impossible
in legal contemplation when it is not practicable; and a thing is
impracticable when it can only be done at an excessive and
unreasonable cost.”’” (Habitat Trust for Wildlife, Inc. v. City of
Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336,; see
Mineral Park Land Co. v. Howard (1916) 172 Cal. 289, 293.)
Circumstances that “‘may make performance more difficult or
costly than contemplated when the agreement was executed do
not constitute impossibility.’” (Kashmiri v. Regents of University
of California (2007) 156 Cal.App.4th 809, 839; see Glendale Fed.
Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977)
38
66 Cal.App.3d 101, 154.) A party cannot “avoid performance
simply because it is more costly than anticipated or results in a
loss.” (Habitat Trust for Wildlife, at p. 1336; see Kennedy v.
Reece, supra, 225 Cal.App.2d at p. 725 [“increased difficulties and
heightened costs of a reasonable nature, even though originally
unforeseen, do not render the performance of a contract
‘impracticable’”].)
Fitness International argues the trial court erred in ruling
that, because it was neither impossible nor impracticable for
Fitness International to pay rent when the COVID-19 closure
orders were in effect, the doctrines of impossibility and
impracticability did not apply. Fitness International maintains
those doctrines excused its obligation to pay rent because “the
cost to Fitness [International] of paying rent ha[d] increased
exponentially.” In the trial court, however, Fitness International
did not submit any evidence of such exponential cost increases.
Thus, Fitness International failed to create a triable issue of
material fact on whether paying rent during the COVID-19
closure orders was impossible or impracticable. (See All Towing
Services LLC v. City of Orange, supra, 220 Cal.App.4th at p. 960;
Santa Ana Unified School Dist. v. Orange County Development
Agency, supra, 90 Cal.App.4th at p. 411.)
Moreover, the lease required Fitness International to pay
rent for at least 10 months while it renovated the premises
without collecting membership fees. Fitness International
presented no evidence paying rent for an additional six or seven
months (assuming the renovations were completed on schedule)
until indoor gyms reopened in March 2021 would amount to an
“‘“excessive and unreasonable cost”’” (Habitat Trust for Wildlife,
Inc. v. City of Rancho Cucamonga, supra, 175 Cal.App.4th at
39
p. 1336) sufficient to implicate the doctrines of impossibility and
impracticability. (See Kashmiri v. Regents of University of
California, supra, 156 Cal.App.4th at p. 839 [although a financial
crisis resulting in severe budget cuts to a university made
performance “more difficult or costly than contemplated when the
agreement was executed,” it did not support an impossibility
defense]; Kennedy v. Reece, supra, 225 Cal.App.2d at pp. 725-726
[“if a contractor agrees to build a structure and it is destroyed by
fire or other casualty when only partly completed, the contractor
is not relieved from his duty to rebuild merely because of the
additional expense he must incur or the added difficulties he
must overcome”].)
F. Section 1511 Did Not Excuse Fitness International
from Paying Rent
Section 1511 provides in relevant part: “The want of
performance of an obligation, . . . in whole or in part, or any delay
therein, is excused by the following causes, to the extent to which
they operate: (1) When such performance . . . is prevented or
delayed by . . . the operation of law, even though there may have
been a stipulation that this shall not be an excuse; (2) When it is
prevented or delayed by an irresistible, superhuman cause,
. . . unless the parties have expressly agreed to the contrary.”
Fitness International argues the trial court erred in ruling the
“force majeure clause overrode sections 1511(1) and (2).” The
trial court, however, also ruled Fitness International failed to
raise a triable issue of material fact concerning the application of
section 1511. The latter ruling was correct.
Section 1511, subdivision (1), did not apply because, as
discussed, the COVID-19 closure orders did not prevent or delay
40
Fitness International from paying rent. (See Poway Crossings,
supra, 87 Cal.App.5th at p. 894.) Section 1511, subdivision (2),
did not apply because the “irresistible, superhuman cause”
identified by Fitness International, the COVID-19 pandemic, did
not prevent Fitness International from performing its contractual
obligation to pay rent. (See Poway Crossings, at p. 894.) Fitness
International argues the purpose of section 1511 “is to excuse
performance under circumstances like these,” but Fitness
International cites no authority describing the purpose of section
1511, nor does Fitness International explain how the trial court’s
ruling was contrary to any such purpose.
DISPOSITION
The judgment is affirmed. KB Salt Lake is to recover its
costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J. FEUER, J.
41