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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
DAVID D. JENNINGS et al.,
Plaintiffs and Respondents,
JEANNE B. SCHMIER,
Defendant and Appellant.
(Super. Ct. No. BC013745)
COURT OF APPEAL - SECOND DIST.
Jul 28 1997
Joseph A. Lane Clerk
APPEAL from a judgment of the Superior Court of Los Angeles County. Richard Montes, Judge. Affirmed.
Kaplan & Kaplan, Benjamin Elliot Kaplan, Nancy A. Aimola, Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional Corporation, and Richard C. Jacobs for Defendant and Appellant.
Hart & Waters, A Professional Corporation, and Thomas L. Waters for Plaintiffs and Respondents.
The case concerns a failed property trade between the parties. The parties signed an agreement, but reached an impasse when it came time for the trade to occur. The trial court found a breach of contract by one of the parties and awarded damages. We affirm.
The parties entered a two-page written agreement in June of 1986 (the Agreement). As indicated in the Agreement, appellant Jeanne Schmier owns an office building located at 2034 Cotner Avenue in Los Angeles (the Cotner Center), as well as Lot 25 in the same tract.(1) Schmier intended to build a parking structure on Lot 25 to provide off-street parking spaces required by the City of Los Angeles for tenants in the Cotner Center. Respondent David Jennings owns the real estate parcels adjacent to Lot 25, and he wanted to acquire Lot 25 for his own purposes, to construct a six-lot commercial project.
The parties agreed to effectuate a land swap whereby Jennings could acquire Lot 25 and Schmier could acquire an unspecified lot belonging to Jennings which would be the same size and configuration as Lot 25 and no more remote than Lot 25. Jennings would eventually designate which of his lots would be traded for Lot 25. The Agreement specifies that If no lot is designated by Jennings, then Schmier may construct [a parking structure] on Lot 25. If Jennings chose to designate a lot for trade, Such designated lot would be delivered free and clear of encumbrances and structures and will be graded and paved, however, there shall be no allowance for paving if said paving is waived by Schmier.
Pending Jennings's designation of a lot to exchange for Schmier's Lot 25, Jennings agreed to accept a parking covenant for 14 parking spaces which would allow Schmier's Cotner Center tenants to park on Jennings's Lot 23. It was expressly agreed that Schmier would rescind the parking covenant on Lot 23 within nine months after Jennings designated the lot he was trading for Lot 25. The 14 parking spaces in Lot 23 were provided by Jennings without any other consideration or fees until the rescission of said covenants or until the nine-month notice period expires or until nine months after the termination of the agreement whichever occurs first. The Agreement, by its own terms, expired five years after June 28, 1986. If not previously rescinded, Schmier promises to rescind all covenants put on Lot 23 for the benefit of the building at 2034 Cotner Avenue within nine (9) months of the termination of this agreement. With the parking covenant in place on Lot 23, Jennings was precluded from using Lot 23 for any other purpose.
On December 16, 1989, Jennings gave written notice that the land he was designating for the trade was Lot 26. He suggested that Schmier submit plans for a parking structure to be built on Lot 26 as soon as possible, and noted that the parking covenant on Lot 23 had to be removed by Schmier within nine months, per the parties' Agreement. Jennings indicated a willingness to extend for an additional nine-month periodonce a construction permit had issuedto allow time to demolish the existing building on Lot 26, which was a two-story, 3,000-square-foot brick structure.
Schmier initially told Jennings that she did not want him to demolish the existing structure on Lot 26; however, this left her with no parking spaces for the Cotner Center. In February of 1990, the parties met to discuss other alternatives, such as putting the parking for the Cotner Center into the project Jennings was planning to build nearby. Jennings made a proposal to this effect through his attorney, but Schmier did not respond to it.
Nine months passed without the land trade taking place. Midway through the nine-month period, Jennings's counsel twice requested confirmation that Schmier intended to proceed the land exchange, in March and April of 1990. Jennings asked Schmier several times to show him her engineering plans to build a parking structure, but Schmier told him she was not going to draw up plans or obtain a construction permit. Without proof of Schmier's construction plans and without assurances that the parking covenant on Lot 23 would be removed, Jennings was unwilling to raze the building on Lot 26.
On September 21, 1990, counsel for Jennings demanded that Schmier remove the parking covenants on Lot 23 and enter into escrow to complete the land trade. He also demanded that Schmier pay rent for the parking spots on Lot 23, and threatened to sue for specific performance if there were further delays. Schmier did not remove the parking covenants nor enter into an escrow to exchange Lot 25 for Lot 26. This lawsuit was then instituted. Further, Jennings constructed barriers on Lot 23 to force the payment of rent to him for use of the parking spaces. This inconvenience caused Schmier's tenants to vacate the Cotner Center.
In mid-1989, Schmier had obtained a loan for $1.1 million from First Professional Bank. The loan was secured by Schmier's Cotner Center building. Schmier did not inform the bank that some of the required parking for the Cotner Center was on Jennings's Lot 23 as a result of the parking covenant, and the bank was unaware of the parking covenant. The parties' side agreement regarding the land swap had never been recorded.
The dispute went to trial in January of 1994. The issues before the court were Jennings's breach of contract, trespass, and interference with contract claims, as well as Jennings's request for injunctive relief and to quiet title and cancel the parking covenant. In addition, the court had to address Schmier's cross-claim for interference with contract, fraud, emotional distress and equitable indemnity. Jennings asserted that he was damaged by Schmier's refusal to go forward with the land swap contemplated by the Agreement because he was unable to develop his multi-lot project without Schmier's Lot 25 after incurring preparatory costs for his project. In addition, Lot 23 was rendered valueless to Jennings because he was unable to make any use of it with Schmier's parking easement on it. Jennings testified that Lot 23 was worth $336,000.
The trial court gave judgment to Jennings on his complaint, finding that appellant breached the parties' contract by refusing to remove the parking covenant from Lot 23. However, the court noted, the covenant could no longer be removed because of the bank loan Schmier obtained: the court found that the bank was a good faith encumbrancer whose secured interest could not be impaired. The court awarded Jennings damages of $336,000 for his loss of use of Lot 23 as a result of Schmier's breach of the parties' Agreement.
The trial court signed and filed a modified statement of decision on March 18, 1994, after Schmier made objections to the court's earlier statement of decision filed in February. The court subsequently signed and filed a judgment in favor of Jennings on April 26, 1994.
Respondent Jennings has moved to dismiss this appeal. He argues that the appeal is taken from a nonappealable order, and is untimely. He also contends that appellant Schmier has waived her right to appeal.
1. Timeliness and Sufficiency of Notice of Appeal
In her notice of appeal, appellant referred only to the original statement of decision filed in February of 1994, and omitted to mention the April 26 judgment. As respondent observes, a statement of decision is not, by itself, an appealable order. (Garat v. City of Riverside (1991) 2 Cal.App.4th 259, 279, disapproved on other grounds in Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 743, fn.11.) The notice of appeal should have referred to the judgment entered in April rather than to the statement of decision which preceded the judgment. However, this defect in the notice is not fatal to the appeal. When appeal is taken from a nonappealable order which has been superseded by an existing, appealable judgment, the courts have interpreted the notice of appeal as referring to the judgment: `[A]lthough the notice of appeal incorrectly describes the judgment as a minute order, and erroneously gives the date of the minute order rather than the date of the judgment, we will treat the appeal as being from the appealable judgment.' (Vibert v. Berger (1966) 64 Cal.2d 65, 68.)
A treatise on appellate procedure states, [I]f there is an existing appealable judgment, and appellant's error was merely in specifying the wrong document (i.e., a nonappealable preliminary order) in the notice of appeal, the appellate court should construe the appeal as being from the judgment. To refuse to exercise this `saving power' would be hypertechnical and contrary to the policy favoring appellate disposition on the merits. (Eisenberg, Horvitz & Wiener, Cal. Practice Guide, Civil Appeals and Writs (The Rutter Group 1996) § 2:264a.)
Respondent has not attempted to show that he was misled or prejudiced by the erroneous reference in the notice of appeal to the statement of decision rather than to the existing judgment. `No one was misled. No prejudice to the respondent appears. Respondent is simply trying to take advantage of a mistake made by appellant . . . . [and] this court should not aid respondent unless compelled to do so by controlling principles of law.' (Vibert v. Berger, supra, 64 Cal.2d at p.69.) No principle of law requires us to ignore the final judgment that was entered before the notice of appeal was filed. Respondent has made no showing that the notice of appeal was not timely filed following entry of judgment. (Cal. Rules of Court, rule 2.)
Respondent asserts that appellant has sought and received the benefits of the Judgment in this case and has sued Respondent JENNINGS in another case for failing to comply with the Judgment. Respondent reasons that appellant has waived her right to appeal because she cannot accept the benefits of a Judgment and at the same time appeal from that Judgment. Such acts are mutually exclusive.
Exhibit 1 to respondent's motion to dismiss shows that on October 19, 1995, appellant sued respondent in a separate action alleging that respondent has damaged appellant by refusing to comply with the trial court's judgment in this case, which requires respondent to give appellant access to the disputed Lot 23 (the enforcement action). Appellant seeks a restraining order and an injunction preventing respondent from interfering with appellant's right to use the parking lot, plus general and punitive damages. Appellant also seeks a judicial declaration that respondent's failure to allow access to the lot constitutes a waiver of any monetary judgment had under the Judgment in this action. In response to the enforcement action, respondent claims to have reopened access to parking on Lot 23 to appellant on November 25, 1995. Use of Lot 23 confers a substantial benefit on appellant, who would not otherwise be able to keep her certificate of occupancy for the Cotner Center.
[A]s a general proposition, one who accepts the benefits of a judgment cannot thereafter attack the judgment by appeal . . . . `The right to accept the fruits of a judgment, and the right of appeal therefrom are not concurrent. On the contrary, they are totally inconsistent. An election to take one of these courses is, therefor[e], a renunciation of the other.' (Lee v. Brown (1976) 18 Cal.3d 110, 114.) No waiver of the right to appeal occurs, however, in those cases in which appellant is concededly entitled to the accepted benefits, and his right to them is unaffected by the outcome of the case on appeal. [Citation.] Stated another way, one may appeal from a portion of a severable and independent judgment while accepting the benefits of the unaffected remainder of the judgment. (Id. at p. 115; Gudelj v. Guldelj (1953) 41 Cal.2d 202, 214.)
In this instance, respondent did not cross-appeal from the portion of the order finding that appellant has a valid encumbrance on respondent's Lot 23 in the form of a parking easement which, in the trial court's opinion, meets all of the requirements of a covenant running with the land. Although he did not appeal from the finding that appellant has an easement on his land, respondent has attempted to bar appellant from exercising her easement rights by fencing in Lot 23 and preventing appellant's tenants from parking there. This resulted in the lawsuit seeking to enforce appellant's parking rights.
We do not find an inconsistency between the two lawsuits. Appellant is attempting to secure parking for her tenants somewhere near the Cotner Center. The trial court concluded that the parking should be on respondent's Lot 23. Appellant argues on appeal that the parking should be on respondent's Lot 26. While this dispute is being sorted out, it is clear that because of First Professional Bank's secured interest in the Cotner Center, the property cannot be deprived of parking, without which there can be no certificate of occupancy. This appeal will resolve which of respondent's two lots will provide parking for appellant.
Appellant argues that the trial court erred when it effectively rewrote the parties' Agreement, forcing Schmier to purchase the covenant on Lot 23. Basically, the court gave appellant parking rights on Lot 23 in perpetuity for the sum of $336,000. Appellant argues in her brief that the parties never contemplated such an arrangement. Rather, appellant's parking on Lot 23 was supposed to be temporary, and she was supposed to obtain (through the land swap) permanent parking on Lot 26, another property owned by respondent which is closer to appellant's office building. The obstacle which prevented this trade from occurring was, according to appellant, Jennings's failure to perform certain conditions precedent; specifically, he failed to demolish the building on Lot 26, grade and pave Lot 26, and complete the exchange.
Appellant maintains that the correct result would have obtained had the trial court read the Agreement as a whole and given effect to the parties' mutual intentions. (Civ. Code, §§ 1636, 1641.)
One of the main problems the parties encountered is that the Agreement does not specify which of them is responsible for opening escrow to effectuate the actual exchange of Lot 25 for Lot 26. Nor does the Agreement specify a time frame during which escrow must be opened. From the testimony, it appears that the concept of opening escrow was never discussed during the meetings between the parties. What is clear is that the Agreement states unequivocally that Schmier must rescind all covenants on Lot 23 within nine months after Jennings designates a particular lot to trade for Lot 25. Because of the nine-month time frame designated in the Agreement, the onus was on Schmier to take all necessary measures to either find alternative paid parking in the vicinity or start escrow to speed through the exchange and ensure parking on Lot 26.
Although there was an existing building on Lot 26, the Agreement mandates that Jennings deliver the lot free of any structures. The Agreement does not require that Jennings clear and grade Lot 26 immediately upon designating it as the exchange lot. Nor does the Agreement require that Jennings clear the lot before escrow could be opened; rather, he had to clear and grade it before delivery upon the close of escrow. Because no escrow or other formal mechanism for completing the trade had started, Jennings was under no obligation to demolish the existing building.
There is no evidence that Jennings was attempting to unilaterally withdraw from the contract, as Schmier argues. If Jennings did not want to go through with the land swap, all he had to do was not designate an exchange lot. In this scenario, the Agreement would simply terminate automatically in five years without an exchange taking place. Having designated an exchange lot, Jennings evinced an intent to go forward, not an intent to withdraw from the contract. After evincing this intent to proceed, however, Jennings was not compelled to start escrow within a set period of time because none was specified in the Agreement. The only real deadline Jennings faced was completing the exchange before the Agreement expired in 1991.
There was no requirement in the Agreement that the exchange occur within nine months. There is no testimony to support a finding that the parties intended to complete the swap within nine months. The only event that had to happen within nine months under the Agreement was Schmier's removal of the parking covenant on Lot 23. The Agreement states that within the nine months, Schmier (1) could build a parking structure or (2) she could find other parking at some unspecified location of her choosing. Because the swap did not occur within nine months, which prevented appellant from building a parking structure, appellant had to find other parking. By contrast, the parking covenant on Schmier's Lot 25 did not have to be removed during the nine-month period: the parking covenant rescission on Lot 25 would occur when an exchange is effected.(2) Clearly, this language acknowledges the possibility that no exchange would occur within nine months.
For these reasons, the trial court correctly determined that Schmier breached the parties' Agreement when she refused to rescind the parking covenant on Lot 23 within nine months after Jennings designated Lot 26 for the property swap. Although Schmier blames Jennings for the parties' failure to open escrow, the Agreement does not impose any special burden on Jennings to take the initiative. Instead, the Agreement places a special burden on Schmier by requiring her to give up her parking rights on Lot 23 within nine months. If ever there was an incentive to move forward with alacrity, this was it. Yet Schmier chose to do nothing: she neither started escrow nor found other parking for her tenants in the vicinity. Then, she refused to rescind the parking covenant, as expressly required by the Agreement, which prevented Jennings from building the commercial project he had planned for Lot 23.
Even after breaching the contract, Schmier made no demonstration that she was willing or able to complete the land swap by opening escrow and showing her good faith development of plans to construct a parking structure on Lot 26. During the nine-month period, and after the nine months expired, Jennings repeatedly demanded performance by Schmier or assurances of her performance. No performance or assurances were forthcoming.
Appellant's breach of a material term of the Agreement, coupled with her lack of assurances of future satisfactory performance, was sufficient to excuse Jennings's continued performance under the Agreement. Although Schmier did not expressly repudiate the Agreement, her conduct justified Jennings's belief that future performance was either unlikely or would take place at Schmier's convenience. (See Asso. Lathing etc. Co. v. Louis C. Dunn, Inc. (1955) 135 Cal. App.2d 40, 51.) Jennings could not put his own development plans on hold indefinitely while Schmier blocked his use of Lot 23. Plaintiffs were not required to endure that uncertainty or to await that convenience and were therefore justified in treating defendants' nonperformance as a total breach of the contract. (Ibid.)
Appellant argues that the trial court impermissibly rewrote the parties' Agreement by awarding damages of $336,000 because the Agreement did not allow for this. Appellant does not seem to understand that once she breached the Agreement, all bets were off. Jennings was entitled to elect his remedies, including rescission and restitution, damages, specific performance, ejectment or quiet title. (1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 797, p. 720.) In his amended complaint, Jennings sought damages for the breach.
The reason the trial court forced Schmier to buy the 14 parking spaces in Lot 23 was because Schmier encumbered the Cotner Center in 1989 with a $1.1 million mortgage without disclosing the temporary nature of the parking covenant to the lender. The court had already found that the lender was a good faith encumbrancer; therefore, the bank's interest in the property could not be compromised by extinguishing the parking covenant on Lot 23. Without the parking, the office building would lose its certificate of occupancy and be worthless as a commercial enterprise. The result the court arrived at both protected the lender's secured interest by ensuring parking for the Cotner Center and compensated Jennings for his loss of the use of Lot 23. The court could not order that the property swap contemplated by the Agreement take place because Jennings did not sue for specific performance: the court could not order implementation of a remedy not sought or desired by the plaintiff. If Schmier really wanted Lot 26, she should have taken steps to open escrow and effectuate the trade as rapidly as possible. Instead, she sat on her rights under the Agreement and disregarded her responsibilities under that instrument.(3)
Schmier maintains that the damages awarded were too high. Jenningsas the owner of the propertytestified that Lot 23 was worth $336,000 with the parking covenant, and $425,000 without the parking covenant, a difference of $89,000. He also testified that the parking covenant precluded him from making any other use of Lot 23. The court awarded him $336,000. Nevertheless, Schmier asserts that Jennings still owns the lot and can make other uses of it, subject only to the parking covenant. Therefore, she reasons, he is only entitled to $89,000, which is the difference in value between the land with the covenant and the land without the covenant.
As respondent points out, appellant failed to raise in the trial court the argument that other uses could be made of Lot 23, including its air and mineral rights. Thus, the argument is waived and cannot be considered on appeal. In any event, there is no evidence proving what those other uses might be or how they might reduce Jennings's loss to only $89,000.
The trial court awarded prejudgment interest to Jennings at the rate of 10 percent per annum from September 16, 1990 to April 26, 1994. This amounted to $121,613. The court relied on Civil Code section 3289, subdivision (b), which states, in relevant part, that an obligation under a contract entered into after January 1, 1986, accrues interest at a rate of 10 percent per annum after a breach. The court concluded that the contract was breached on September 16, 1990, because the parking covenant on Lot 23 had to be removed by that date pursuant to the Agreement.
Appellant asserts that prejudgment interest was improper because respondent restricted her access to Lot 23 by constructing barricades to compel the payment of rent. However, once appellant breached the Agreement by failing to remove the parking covenant, respondent was not under an obligation to continue providing free parking for appellant's tenants on his Lot 23. Moreover, with the recorded covenant clouding his title, respondent could not build his planned six-parcel commercial project on Lot 23. The trial court did not abuse its discretion by awarding prejudgment interest under the circumstances.
Finally, appellant claims that the trial court erred by failing to award damages on her cross-complaint. As we have found, appellant was the party who breached the Agreement; therefore, she is not entitled to recover damages for her wrongdoing.
(1) The original parties to the Agreement were David Jennings and Michael Schmier. Michael Schmier was the husband and agent of appellant Jeanne Schmier. Michael Schmier quitclaimed his interest in the Cotner Avenue office building to appellant in June of 1989, and quitclaimed his interest in Lot 25 to her in October of 1990. As used in the opinion, Schmier refers to appellant. Return to body of text.
(2) There was a parking covenant on Schmier's Lot 25 to ensure adequate parking for the Cotner Center. This apparently was a condition of the city permit allowing Schmier to convert the Cotner Center from a warehouse into an office building.Return to body of text.
(3) If appellant had any doubts about the construction of the Agreement and the obligations it imposed, she should have brought an action for declaratory relief rather than simply ignoring the Agreement's obligation to remove the parking covenant within nine months.Return to body of text.
The judgment is affirmed.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS.
FUKUTO, J. NOTT, J.