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Stump's Market, Inc v. Plaza De Santa Fe Limited

January 11, 2013


APPEAL from a judgment of the Superior Court of San Diego County, Robert P. Dahlquist, Judge. (Super. Ct. No. 37-20009-00052809- CU-CO-NC)

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


Affirmed as modified.

Plaza de Santa Fe Limited, LLC (Plaza) and Stump's Market, Inc. (Stump's Market) have enjoyed a long contractual relationship in which Plaza leases certain commercial property in a shopping center to Stump's Market. Stump's Market operates a grocery store on the leased premises. Unfortunately, after a dispute regarding the calculation of rent, the existence of an option to extend the lease, and the payment of repairs to the parking garage in the shopping center, the parties found themselves embroiled in litigation. At trial, both the jury and the court found in favor of Stump's Market on the majority of its claims, both legal and equitable.

Plaza now appeals the judgment, raising three issues, but leaving the majority of the judgment unchallenged. Plaza disputes the factual finding of the validity of two options extending its lease with Stump's Market, one covering December 1, 2019 to November 30, 2024 (the 2019-2024 option) and another covering December 1, 2024 to November 30, 2029 (the 2024-2029 option). Plaza maintains that neither option is supported by consideration. Plaza also argues the 2024-2029 option violates the statute of frauds.

In the unpublished portion of this opinion, we determine Plaza never disputed the existence of the 2019-2024 option prior to or at trial. Accordingly, it waived the issue for appeal. We also conclude that substantial evidence supports the finding that the 2024-2029 option is valid. The evidence showed it was supported by consideration, and we agree with the trial court that equitable estoppel prevents the application of the statute of frauds.

In the published portion of this opinion, we address Plaza's claim that the court's retention of jurisdiction to enforce the judgment was improper. After granting specific performance as well as other equitable remedies, the court retained jurisdiction "to make further orders, including injunctions, if necessary in the future to effectuate and or enforce the Court's judgment." Although a court may retain jurisdiction to assure compliance with its judgment (Dawson v. West Side Union High School Dist. (1994) 28 Cal.App.4th 998, 1044 (Dawson)), such an exercise of jurisdiction is "exceptional and limited to special situations." (2 Witkin, Cal. Procedure (5th ed. 2008) Jurisdiction, § 420, p. 1070.) We are concerned with the court retaining jurisdiction for the life of the lease, which may continue for another 17 years, and interjecting itself into a contractual relationship between two business entities to resolve future, hypothetical disputes. In addition, we note the trial court resolved all the issues between the parties and there appears to be little need for the court to be involved with the administration of the lease until its end. Therefore, we conclude the court's unlimited retention of jurisdiction after judgment is improper and strike that portion of the judgment. We otherwise affirm the judgment as modified.


The Parties

Plaza is the owner and operator of a shopping center located in Rancho Santa Fe, California. Roger Woolley owned and managed Plaza.*fn2 Stump's Market owns and operates Village Market, the grocery store tenant in Plaza's shopping center. Stump's Market is a small, family-owned business managed primarily by James Stump.

The Lease

The shopping center was constructed in 1974. Big Bear Super Market No. 3 (Big Bear) leased space in the shopping center from Hubert G. Larson. Big Bear operated a grocery store on the leased premises. The term of the lease, executed on May 23, 1974, was for 20 years with three additional five-year option periods. If all options were exercised, the tenancy would continue until November 30, 2009.

The rent due under the lease was 1.75 percent of Big Bear's gross sales over $1 million, with a monthly minimum (base) rent of $2,250. If the percentage rent exceeded $2,250 per month, Big Bear would pay the difference on an annual basis. The lease provided that the monthly minimum rent would be automatically increased every five years during the 20-year base term, and every five years after the base term (at the beginning of each option period), using a specific cost of living index.

In June 1974, Larson transferred his interest in the lease to "Gilman Ordway and Roger S. Woolley." Through a series of subsequent transfers, the lessor under the lease became Plaza, and Plaza's interest in the lease as the lessor was not disputed at trial.

In 1980, five years into the tenancy, the parties negotiated a substantial change to the lease (the 1980 amendment). The 1980 amendment increased the monthly minimum rent from $2,250 to $3,632 for the balance of the lease term. It also increased the percentage rent from 1.75 percent of gross sales over $1 million, to 1.88 percent of all gross sales, less the monthly minimum rent. In addition, the parties agreed that the references to cost of living adjustments to minimum rent in the lease were deleted.

In 1994, at the end of the 20-year term of the tenancy, Big Bear exercised the first five-year option to extend its tenancy. Shortly thereafter, Big Bear assigned its rights under the lease to Stump's Market. In connection with the transfer of the tenancy, the lessor and lessee negotiated further changes to the lease during early 1995.

By letter dated June 7, 1995, signed by Woolley and countersigned by Stump's Market, Plaza agreed that in addition to the current option, Stump's Market would be granted five additional five-year options. Per this 1995 agreement, Stump's Market agreed to pay an increased percentage rate of 2 percent of gross sales, due quarterly, less the minimum monthly rent of $3,632 per month.

In 1999 and 2004, Stump's Market exercised the available five-year options to extend its tenancy. In both instances, Stump's Market sent a brief letter to Plaza stating its desire to exercise the option. On behalf of Plaza, Woolley countersigned the letters.

On March 1, 2005, in response to Stump's Market's written request, Woolley, on behalf of Plaza, provided Stump's Market with a letter stating that the remaining three options under the lease were as follows: December 1, 2009 to November 30, 2014; December 1, 2014 to November 30, 2019, and December 1, 2019 to November 30, 2024.

Damage to the Parking Garage at the Shopping Center

In September 2008, Stump met with Woolley at Woolley's house to discuss damage to the parking garage below the Village Market premises at the shopping center. Woolley believed the damage was caused by condensation from the Village Market's freezer units. Stump, however, testified that part of the damage had occurred from a leak in 2001 that he brought to Woolley's attention. Woolley informed Stump that the previous owner knew about the leak, but never repaired it.

Both Woolley and Stump received estimates from engineers to repair the damage. Woolley and Stump ultimately agreed that Stump's Market would proceed with the repairs proposed by Stump's Market's engineer, which included replacing a laminated wood structural beam with a steel beam, a slightly more costly and arguably superior option than the repair suggested by Plaza's engineer. The lease called for Stump's Market to maintain and repair the premises, but there was evidence that the parties disagreed who was responsible for the damages. Stump told Woolley that he believed that Plaza "ha[d] some responsibility" for the damage and asked Plaza to pay for some of the repair costs. Woolley agreed that Plaza would pay for one-third of the total cost of the repairs with Stump's Market advancing Plaza's share of the expense by deducting Plaza's one-third share from its quarterly percentage payments. Stump agreed that Stump's Market would advance Plaza's share of the repair costs after Woolley told him he was having cash flow problems. Woolley then offered Stump an additional five-year option for Stump's Market for the period of December 1, 2024 to November 30, 2029.*fn3

Also, during the September 2008 meeting, Stump's Market exercised its option for the period of December 1, 2009 to November 20, 2014 by giving Woolley a letter to that effect, which he countersigned.

A few days after the meeting, Stump sent a letter to Woolley memorializing their agreement. Woolley did not respond to the letter.

The Dispute

After Stump's Market proceeded with the repairs, it sent a quarterly report to Plaza specifying the deduction from the third quarter 2008 percentage rent payment as agreed. Woolley then hired an accountant to audit the repair cost and monitor his cost sharing, requesting that the accountant verify whether Plaza's cost sharing split was 25 percent or 30 percent. Stump's Market calculated the balance of Plaza's share of the cost of the repairs in its January 2009 quarterly report and rent payment. Woolley, however, on behalf of ...

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