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U.S. National Leasing, LLC v. Northern California Construction and Training

November 30, 2011

U.S. NATIONAL LEASING, LLC, PLAINTIFF AND APPELLANT,
v.
NORTHERN CALIFORNIA CONSTRUCTION AND TRAINING, INC., DEFENDANT AND RESPONDENT.



(Super. Ct. No. 34200800029412CUBCGDS)

The opinion of the court was delivered by: Duarte , J.

U.S. National Leasing v. No. Cal. Construction

CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Defendant Northern California Construction and Training, Inc. (NCCT) leased space from U.S. National Leasing, LLC (USNL) and operated a charter school in that space. When the charter school closed, NCCT gave notice of termination of the lease and eventually abandoned the space and stopped paying rent. USNL sued NCCT for breach of contract.

After a court trial, the court declined to decide the issue of whether there was a breach. Instead, it found there were no damages as USNL failed to mitigate its damages because it unreasonably rejected an offer to rent the space from a woman formerly affiliated with NCCT who was starting her own business. Judgment, including attorney fees and costs, was entered in favor of NCCT.

USNL appeals, contending substantial evidence does not support a finding that USNL failed to mitigate all its damages. Specifically, USNL contends the testimony of NCCT's one witness on mitigation of damages was too vague and speculative to constitute substantial evidence. We agree and shall reverse.

FACTUAL AND PROCEDURAL BACKGROUND

I

The Parties and the Lease

The Depot Park is a mixed use industrial business park of over 300 acres containing more than three million square feet of improved properties. Among these properties is Building 300, which contains about 12,000 square feet. The building has ten to twelve-foot ceilings and concrete walls, some two-feet thick. There is only one set of bathrooms in the building.

Effective April 1, 2005, NCCT leased Building 300, as well as Building 215, from USNL.*fn1 The lease was for three years. The base rent was $8,479 a month. With additional rent for common expenses, known as CAMS, the total rent was $10,330.36 a month.

NCCT is a nonprofit corporation that provides programs for teaching at-risk youths the construction trades and work skills. William Meehan is its president. Shortly after the lease took effect, Meehan wrote Richard Fischer, the owner of USNL, indicating that NCCT's Board of Directors had approved the lease "with a stipulation that in the event we lost all our funding that you would be willing to accept a 90 [day] notice to vacate the premises." The Board's concern was personal liability. Meehan attached a list of current funding and indicated NCCT was pursuing additional funding. The funding list noted: "We have been in business for over 10 years and have never [de]faulted on any bill or debt." Dennis Wertz, the project manager for USNL, wrote Meehan, agreeing to accept a 90-day notice to vacate if NCCT lost all its funding.

NCCT decided to start a charter school for high school students, the Northern California Polytechnic Academy, and to use Building 300 for the school. As required under the lease and by the Sacramento County Office of Education (SCOE), NCCT obtained written consent to use Building 300 for the school. The school opened in July 2005, although at that time there were no students in the school--only recruitment and interviewing were occurring.

The school had a difficult relationship with SCOE, failed to obtain a loan from the state, and closed after one year. In mid-March 2006, NCCT sent USNL notice that it would vacate Building 300 by the end of June. This notice was pursuant to the letter agreement permitting NCCT to vacate upon 90-days notice if it lost its funding. Fischer did not accept the notice because there was no evidence NCCT had lost its funding and would cease to operate. When ...


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