700 Valencia Street LLC v. Farina Focaccia & Cucina Italiana, LLC et al

Filing 110

ORDER by Judge Joseph C. Spero granting in part and denying in part 104 Motion Entry of Judgment, Damages, Writ of Possession, Attorneys Fees and Costs and Other Relief and Staying Claims in Related Case. The Clerk is instructed to enter judgment in this action as set forth in the attached order.. (jcslc1S, COURT STAFF) (Filed on 8/11/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 700 VALENCIA STREET LLC, Plaintiff, 8 v. 9 10 FARINA FOCACCIA & CUCINA ITALIANA, LLC, Defendant. United States District Court Northern District of California 11 12 Case No. 15-cv-04931-JCS Related Case No. 15-cv-02286-JCS ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR ENTRY OF JUDGMENT, DAMAGES, WRIT OF POSSESSION, ATTORNEYS’ FEES AND COSTS, AND OTHER RELIEF AND STAYING CLAIMS IN RELATED CASE Re: Dkt. No. 104 13 14 I. 15 16 17 18 19 20 21 INTRODUCTION Following a bench trial, the undersigned found in favor of 700 Valencia Street LLC (“700 Valencia”) in this unlawful detainer action. Presently before the Court is 700 Valencia’s Motion For Entry of Judgment, Damages, Writ of Possession, Attorneys’ Fees and Costs, and Other Relief (“Motion”). A hearing on the Motion was held on Friday, August 11, 2017 at 9:30 a.m. The parties have consented to the jurisdiction of the undersigned United States magistrate judge pursuant to 28 U.S.C. § 636(c). For the reasons stated below, the Motion is GRANTED in part and DENIED in part. 22 II. 23 24 25 26 27 28 BACKGROUND In the Motion, 700 Valencia seeks the following relief: 1) entry of judgment and issuance of a writ of possession; 2) monetary damages for the fair market rental value of the property that is the subject of this action (“the Property”) from April 30, 2015 to the date of this order, at a rate of $395/day; 3) attorneys’ fees in the amount of $675,611.73; and 4) costs in the amount of 1 $25,855.71.1 Defendant Farina Focaccia & Cucina Italian, LLC (“Farina”) asks the Court to deny 700 2 3 Valencia’s requests for money damages and attorneys’ fees on equitable grounds, arguing that 4 when 700 Valencia takes possession of the Property, Farina will forfeit the $2 million it spent to 5 build out a restaurant in the space and 700 Valencia will be unjustly enriched. Even if the Court 6 awards damages, Farina argues that the monthly rental rate used to calculate the award should be 7 $8,400/month, that is, the amount set forth in the unlawful detainer complaint. Farina also argues 8 that the attorneys’ fees 700 Valencia seeks are excessive, both as to the rates charged and the time 9 billed, and that 700 Valencia’s fee request should be denied in any event because it did not properly meet and confer with Farina before bringing the instant motion. Finally, Farina objects to 11 United States District Court Northern District of California 10 certain specific costs requested by 700 Valencia. 12 III. ANALYSIS 13 A. 14 700 Valencia ask the Court to enter judgment in this action and issue a Writ of Possession Entry of Judgment and Issuance of Writ of Possession 15 pursuant to Rule 70(d) of the Federal Rules of Civil Procedure and California Code of Civil 16 Procedure sections 1174(a), 712.010 and 715.010. The Court has already found that “700 17 Valencia is entitled to judgment in its favor on its unlawful detainer action.” Findings of Fact and 18 Conclusions of Law, Dkt. No. 97 at 11. While it may also be entitled to a Writ of Possession, the 19 Court finds that the request is premature in light of the post-judgment motions Farina intends to 20 file. 21 Rule 70(d) provides that “[o]n application by a party who obtains a judgment or order for 22 possession, the clerk must issue a writ of execution or assistance.” Courts in this district look to 23 California law to supply the specific requirements governing the issuance of a writ of possession. 24 See United States v. SF Green Clean, LLC, No. 14-CV-01905 JSW (NC), 2014 WL 7638619, at 25 *2 (N.D. Cal. Nov. 12, 2014), report and recommendation adopted, No. C 14-01905 JSW, 2015 26 WL 237323 (N.D. Cal. Jan. 15, 2015), aff’d, 656 F. App’x 319 (9th Cir. 2016) (“Given that no 27 1 28 This amount was adjusted in 700 Valencia’s Reply brief and therefore does not match exactly the figure sought in the Motion for costs. 2 1 federal statute applies, and from an examination of other federal rules analogous to Rule 70, this 2 Court looks to the section of California law that provides for the return of real property to creditors 3 via a writ of possession in order determine the requirements the government must meet to obtain 4 such a writ.”). The provisions of California law that govern the issuance of a writ of possession 5 are found at California Code of Civil Procedure sections 712.010 and 715.010(a). 6 California Civil Procedure Code section 715.010 states that “[a] judgment for possession 7 of real property may be enforced by a writ of possession of real property issued pursuant to 8 Section 712.010.” Cal. Civ. Proc. Code § 715.010(a). Section 712.010, in turn, states that “[a]fter 9 entry of a judgment for possession or sale of property, a writ of possession or sale shall be issued by the clerk of the court upon application of the judgment creditor and shall be directed to the 11 United States District Court Northern District of California 10 levying officer in the county where the judgment is to be enforced.” Cal. Civ. Proc. Code § 12 712.010. Section 715.010(b) sets forth the specific requirements for a writ of possession. 13 700 Valencia has supplied a proposed Writ of Possession [Dkt. No. 104-8] that complies 14 with the requirements of California law. Nonetheless, the Court has found no authority suggesting 15 that it does not have the discretion to delay issuance of a writ of possession pending resolution of 16 post-judgment motions that may have implications for 700 Valencia’s right of possession. At oral 17 argument, 700 Valencia did not disagree with the Court’s suggestion that a delay in issuance of a 18 writ of possession until after post-judgment motions have been resolved is reasonable. Nor did it 19 point to any authority suggesting the Court does not have that authority. 20 Accordingly, the Court GRANTS 700 Valencia’s request for entry of judgment. The Court 21 will enter judgment in favor 700 Valencia in the unlawful detainer action. The Court denies 700 22 Valencia’s request for a Writ of Possession without prejudice to renewal of the request after 23 Farina’s post-judgment motions have been decided. 24 B. 25 As a general rule, “[t]he measure of damages to which a landlord is entitled for an Damages 26 unlawful detainer is the reasonable rental value of the property.” Superior Motels, Inc. v. Rinn 27 Motor Hotels, Inc., 195 Cal. App. 3d 1032, 1069 (1987) (citations omitted). “‘Ordinarily, it might 28 be said that the agreed rent is evidence of the rental value, but . . . such rental value may be greater 3 1 or less than the rent provided for in the lease.’” Id. (quoting Harris v. Bissell, 54 Cal. App. 307, 2 312-313 (1921)). Although the California Supreme Court “long ago recognized the broad scope 3 of equity in unlawful detainer actions,” the court’s equity authority “must be exercised pursuant to 4 the principle that equity follows the law.” Id. (citing Johnson v. Tago, Inc., 188 Cal. App. 3d 507, 5 518 (1986)). “A court of equity cannot grant relief which the law denies.” Johnson v. Tago, Inc., 6 188 Cal. App. 3d at 518. 7 The Court found at the conclusion of the bench trial that the current fair market rental value of the property is $12,000 per month. Findings of Fact and Conclusions of Law, Dkt. No. 9 97 at 3. Therefore, the Court concludes that a daily rate based on that monthly rental value, that is, 10 approximately $395/day, for each day of unlawful possession will provide a reasonable measure of 11 United States District Court Northern District of California 8 damages. The Court rejects Farina’s assertion that 700 Valencia is bound by the fair market rental 12 value stated in its Complaint. Farina has cited no authority for this proposition. Nor does the 13 Court find persuasive Farina’s argument that it must rely on the amount stated in the Complaint 14 because it used that amount in determining whether to remand the unlawful detainer action. See 15 Opposition at 6-7. It is not relevant that the Court relied on the amount stated in the original 16 unlawful detainer complaint when it ruled on the motion to remand because there, the applicable 17 legal standard required the Court to look to the face of the complaint to determine whether the 18 action had been improperly removed. See Dkt. No. 23 (Order Denying Motion To Compel 19 Arbitration and Dismiss Claims in Case No. 15-Cv-02286, Denying Motion to Remand in Case 20 No. 15-Cv-04931 and Denying Motion to Consolidate) at 10 (noting that “[w]here a defendant 21 removes an action to federal court on the basis of diversity, the burden on a plaintiff seeking 22 remand under 28 U.S.C. § 1447(c) depends on whether or not the amount in controversy is clear 23 from the face of the complaint.”). That standard has no bearing on the Court’s determination of 24 damages after a bench trial. 25 Furthermore, the only evidence in the record on this question supports the conclusion that 26 the fair rental value is $12,000/month. In particular, at trial, Mr. O’Connor testified that he signed 27 the unlawful detainer complaint prepared by his attorneys – which listed a daily rental value of 28 $280, based on a monthly rate of $8,400 – because he believed that the “fair rental value” was to 4 1 be based on the contractual rental rate. Trial Transcript at 340. He further testified that the actual 2 market rental value is $12,000/month and the Court credited that testimony. As Farina does not 3 challenge this amount as a factual matter, the Court concludes that it is the appropriate basis on 4 which to calculate 700 Valencia’s damages. 5 The Court also rejects Farina’s argument that the Court should exercise its equitable power 6 to deny 700 Valencia an award of damages (or attorneys’ fees) because 700 Valencia will be 7 unjustly enriched if it is allowed both to take possession of a much-improved property and also to 8 receive an award of damages and attorneys’ fees in this action. As a preliminary matter, the Court 9 made no factual findings on the value of the improvements in its Findings of Fact and Conclusions of Law. Consequently, the Court has no reasonable basis upon which to evaluate the amount of 11 United States District Court Northern District of California 10 unjust enrichment alleged by Farina. Even more problematic for Farina’s position is the fact that 12 the Lease Agreement expressly provides that: 13 All alterations, additions, fixtures and improvements, including without limitation all improvements made pursuant to a Scope of Work, whether temporary or permanent in character, made in or upon the Premises either by LANDLORD or TENANT, shall at once belong to LANDLORD and become part of the Premises and shall remain on the Premises without compensation of any kind to TENANT, unless LANDLORD requires their removal under the Provisions set forth below. 14 15 16 17 18 Lease at ¶ 24.2. In light of this provision, any exercise of the Court’s equity authority premised on 19 the conclusion that 700 Valencia will be unjustly enriched when it takes possession of the 20 improved Property would be contrary to the contractual agreement between the parties and 21 therefore would not be lawful. See Johnson v. Tago, Inc., 188 Cal. App. 3d at 518; Broken Heart 22 Venture, L.P. v. A & F Rest. Corp., 859 S.W.2d 282, 285 (Mo. Ct. App. 1993) (rejecting tenant’s 23 request for set-off against damages reflecting amount of improvements to rented property in 24 unlawful detainer action based, in part, on lease provision precluding such a set-off). 25 26 Therefore, the Court finds that 700 Valencia is entitled to an award of damages calculated at a daily rate of $395/day from April 30, 2015 to the date of actual possession of the Property. 27 C. 28 The undersigned has already found that this action is “an action on a contract” under Attorneys’ Fees and Costs 5 California Civi Code secti 1717. Dkt. No. 55 at 2. Therefo 700 Vale il ion t ore, encia is entit to an tled 2 aw ward of reason nable attorneys’ fees and costs unde that sectio The Court rejects Far d er on. rina’s 3 sug ggestion that fees and co should be denied for failure to m and con prior to f t osts b r meet nfer filing the 4 ins stant Motion. Therefore, the Court GRANTS the Motion to the extent th it finds th 700 , G e hat hat 5 Va alencia is ent titled to an aw ward of reas sonable attor rneys’ fees a costs. Th Court dec and he clines, 6 how wever, to determine the amount of re easonable fe and costs at this time as Farina’s postees s e 7 jud dgment motions will like result in additional re ely a ecoverable fe and costs. Therefore as to the fees e, 8 am mount of fees and costs to which 700 Valencia is entitled, the Motion is D s o e DENIED wit thout 9 pre ejudice to bri inging a mot tion for attor rneys’ fees a costs aft Farina’s p and ter post-judgme motions ent 10 hav been deci ve ided. Prior to filing that motion, the parties are i instructed to meet and co o onfer as to 11 United States District Court Northern District of California 1 the specific rates and amou sought by 700 Valen e unts b ncia. 12 IV. CONCLUSION For the reasons stat above, th Motion is GRANTED in part and DENIED in part. The ted he D d n 13 14 Cle is instruc to enter judgment in favor of 70 Valencia i Case No. C-15-04931 JCS stating erk cted n 00 in 1 g 15 tha 700 Valencia is entitle to possess at ed sion of the Pr roperty and damages in the amount of 16 $32 29,825.00 pl post-judg lus gment damag at a rate of $395/day for each da that Farin remains in ges y ay na n 17 pos ssession of the Property. The Court GRANTS th Motion a to 700 Val . he as lencia’s entit tlement to 18 an award of rea asonable fee and costs but DENIES the Motion without pre es b S n ejudice as to the amount 19 of fees and cos 700 Vale f sts. encia may re enew its requ as to the amount of fees and cos after the uest e f sts 20 Court decides Farina’s post-judgment motions. Sim F m milarly, the Court DENI 700 Val IES lencia’s 21 req quest for a Writ of Possession withou prejudice to renewal o the reques after the C W ut of st Court decides s 22 Far rina’s post-ju udgment mo otions. The affirmative c a claims that h have not been dismissed in Related 23 Case No. C-15-2286 are ST TAYED pen nding resolut tion of Farin post-jud na’s dgment motio in this on 24 act tion. 25 26 27 28 IT IS SO ORDER S RED. Da ated: August 11, 2017 t ___ __________ ___________ __________ ________ JO OSEPH C. SP PERO Ch Magistra Judge hief ate 6 United States District Court Northern District of California 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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