Elqare Enterprises v. Red Whale CA1/3

Filed 6/29/23 Elqare Enterprises v. Red Whale CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE

ELQARE ENTERPRISES, INC., Plaintiff and Respondent, A166085 v. RED WHALE, LLC, (Marin County Super. Ct. No. CIV Defendant and Appellant. 2200151)

In 2019, Red Whale, LLC (Red Whale or the company) leased commercial space from Elqare Enterprises, Inc. (Elqare). During the COVID- 19 pandemic, the company failed to pay all rent due, prompting Elqare to file an unlawful detainer complaint against the company and its manager, Sean Boyd. After an unreported bench trial, the court entered judgment against the company, concluding it failed to prove the affirmative defense of frustration of purpose. We affirm. BACKGROUND In May 2019, Elqare leased space in a commercial building in Mill Valley to Red Whale, a coffee company.1 Red Whale intended to remodel the

In lieu of a reporter’s transcript, Red Whale filed a modified settled 1

statement containing the parties’ respective summaries of the evidence

1

premises before opening, so Elqare offered it a six-month grace period. The five-year lease — which began in October 2019 and had two five-year options to renew — gave the company the right to use the premises to operate a coffee shop “and for no other purpose” without Elqare’s “prior written consent.” An addendum to the lease permitted the company to use the premises for “other products typically sold in a majority of [the company]’s stores, subject to exclusive uses granted” to the building’s other tenants, and it allowed the company to sell certain company apparel and food items. The lease does not contain a force majeure provision. Red Whale was unable to acquire permits and open for business before the pandemic began in early March 2020. In November, the company opened for takeout. Over the next year, the company intermittently paid partial rent or no rent at all. By March 2022, the company owed nearly $180,000 in unpaid rent. After serving a notice to pay or quit, Elqare filed an unlawful detainer action and sought possession of the premises, past-due rent, and damages. Red Whale’s answer raised several affirmative defenses, including frustration of purpose. The matter proceeded to trial. In its trial brief, Red Whale relied on the frustration of purpose defense — it asserted an emergency proclamation issued by Governor Newsom in March 2020 precluded it from using the “premises for any purpose, specifically the intended use in the Lease as a coffee shop” and, as a result, its obligation to pay rent was excused for periods of time “when no use of the premises was allowed.” The company urged the trial court to take judicial notice of Governor Newsom’s Executive Order No. N-33-20, known