Eucasia Schools Worldwide, Inc. v. DW August Co.

Filed 7/24/13 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

EUCASIA SCHOOLS WORLDWIDE, 2d Civil No. B238399 INC., (Super. Ct. No. CV100445) (San Luis Obispo County) Appellant,

v.

DW AUGUST CO., et al. ,

Respondents.

Eucasia Schools Worldwide, Inc., appellant, sued its landlord, DW August Company (DW), and Wendle Schoniger, respondents. The judgment was entered after a jury returned a special verdict in favor of respondents. The judgment awarded DW attorney fees of $124,997. The sole contention is that the trial court erroneously denied its motion for a directed verdict on a cause of action for breach of contract. The theory is that DW breached the lease as a matter of law because it failed to give proper notice of its intent to inspect the leased property. As we shall explain, a lease notice provision can be modified by the lessee's direction to give notice to the lessee's counsel. Factual and Procedural Background We summarize the evidence in the light most favorable to respondents, resolving all conflicts in their favor. (See, e.g. Joaquin v. City of Los Angeles (2012) 202 Cal.App.4th 1207, 1218.)

DW leased real property (the premises) to appellant, which operated a private elementary school. Respondent Wendle Schoniger was the president and chief executive officer of DW. The relationship between appellant and respondents was strained. In November 2009 DW filed an unlawful detainer action against appellant. In April 2010 DW filed an action for injunctive relief against appellant. Starting in 2009, respondents usually communicated with appellant through DW's counsel, Ogden & Fricks. Starting in April 2010, respondents always communicated with appellant through DW's counsel. In April 2010 DW listed the premises for sale with a real estate broker. To facilitate the sale, Schoniger decided to have the premises inspected by a building inspector. Schoniger testified that she wanted to "find out all the things that may or may not be wrong with [the premises], and have them repaired so when a buyer came, the building would be in tiptop shape." The lease provided that DW had the right to inspect the premises "at reasonable times after reasonable notice." The lease provided that all notices to appellant must be in writing and delivered or mailed to the premises. In March 2010 DW's counsel wrote a letter to appellant concerning the security deposit and guarantor of the lease. Pursuant to the notice provision of the lease, the letter was mailed to appellant at the premises. At that time appellant was represented by Attorney Dennis Balsamo. In reply to the letter from DW's counsel, on March 16, 2010, Balsamo's legal assistant wrote to respondents: "Please have NO DIRECT CONTACT with our client without the express permission of this office." Balsamo knew that, since October or November 2009, DW's counsel had been acting as property manager of the premises. On April 13, 2010, DW's counsel wrote a letter to Balsamo noting that DW had the right to inspect the premises at reasonable times after reasonable notice. DW counsel's inquired: "Please advise who we are to contact regarding property