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Date: 07-04-2019
Case Style:
Thee Aguila, Inc. v. Century Law Group, LLP
Case Number: B289452
Judge: Chaney, Acting P.J.
Court: California Court of Appeals Second Appellate District, Division One on appeal from the Superior Court, County of Los Angeles
Plaintiff's Attorney: Guinevere M. Malley
Defendant's Attorney: Karen A. Larson
Description:
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Thee Aguila, Inc. appeals from a judgment entered in a
lawsuit involving proceeds awarded to its tenants, Edgar Fragoso
and Eva Meneses, as part of an eminent domain proceeding. The
trial court determined that the parties’ lease agreement did not
support Thee Aguila’s claims, and that Thee Aguila’s asserted
claims were collaterally estopped by the judgment in the eminent
domain proceeding. We agree with the trial court and affirm.
BACKGROUND
On February 1, 2008, Fragoso and his mother, Meneses,
signed a 15-year lease for commercial property located at 2800
Firestone Boulevard in South Gate to open the El Parral
Restaurant. Central to this dispute, the form lease provided:
“13. CONDEMNATION
“If the Premises or any portion thereof are taken by the
power of eminent domain, or sold by Landlord under the threat of
exercise of said power (all of which is herein referred to as
‘condemnation’), this Lease shall terminate as to the part so
taken as of the date the condemning authority takes title or
possession, whichever occurs first. . . . [¶] . . . [¶]
“All awards for the taking of any part of the Premises or
any payment made under the threat of the exercise of the power
of eminent domain shall be the property of the Landlord, whether
made as compensation for the diminution of the value of the
leasehold or for the taking of the fee or as severance damages;
provided, however, that Tenant shall be entitled to any award for
loss or damage to Tenant’s trade fixtures and removable personal
property.”
In 2009, the Los Angeles Unified School District (LAUSD)
filed a complaint in eminent domain seeking to have the property
condemned. (L.A. Super. Ct. No. BC416163.) The trial court
3
issued an order for prejudgment possession in favor of LAUSD in
November 2009.
LAUSD’s eminent domain complaint named, among other
interested defendants, El Parral, Edgar Fragoso individually and
doing business as El Parral, and Meneses and Fragoso’s El Parral
landlord, Thee Aguila.
In its answer to the eminent domain complaint, Thee
Aguila claimed “by assignment, each and every award herein for
the taking, including [El Parral’s] loss of good will, but not
including its[] trade fixtures.” Meneses, Fragoso, and El Parral
each claimed in their answers they were entitled to
“compensation for loss of business goodwill relating to the
operation of [El Parral] on the leased property.”
The trial court issued its judgment on the eminent domain
complaint and final order condemning the property on March 9,
2011. In that order, the trial court awarded Thee Aguila a total
of $6,198,100 for its interest in the property. Meneses, Fragoso,
and El Parral were awarded a total of $6,100,000 for their
interest in the property, including “any claims for leasehold
value, goodwill, fixtures and equipment, relocation benefits,
litigation expenses, interest and costs . . . .”
On January 6, 2014, Thee Aguila filed a complaint against,
among others, Meneses and Fragoso. The operative complaint at
the time of trial was the second amended complaint, filed May 28,
2014.1 The thrust of Thee Aguila’s complaint was that Meneses
1 The second amended complaint alleges causes of action for
breach of contract, conversion, breach of the implied covenant of
good faith and fair dealing, fraud, constructive trust, and
intentional interference with contractual relations. The
complaint alleges that of $350,000 in key money Meneses and
4
and Fragoso had agreed in their lease that any award they
received as a result of condemnation was to be remitted to Thee
Aguila, and if the lease could not be so construed, there was a
separate oral agreement by which Meneses and Fragoso had
promised Thee Aguila all of the proceeds awarded in the eminent
domain proceeding.2 As a fallback, the complaint alleged that
Meneses and Fragoso had never completed the transaction to
purchase rights to operate the El Parral, and that the prior
owners (the Orozcos) had assigned all of those rights back to Thee
Aguila.3
The trial court severed certain questions of law based on
input from the parties and conducted a two-day bench trial in
Fragoso were to pay, they still owed $200,000, and that Meneses
and Fragoso owed Thee Aguila $67,000 in unpaid rent. Fragoso
and Meneses cross complained against Thee Aguila and Henry
Aguila. The operative cross-complaint at the time of trial was the
third amended cross-complaint alleging causes of action for abuse
of process, fraud, breach of contract, breach of indemnification,
and declaratory relief.
2 The trial court summarized Thee Aguila’s complaint
succinctly: “Notwithstanding the stipulated judgment in [the
LAUSD eminent domain action, Thee Aguila], the lessor, lays
claim to El Parral’s entire condemnation award.”
3 On November 17, 2016, Thee Aguila filed a motion for
leave to amend a third amended complaint. The trial court
denied Thee Aguila’s motion for leave to amend. The trial court’s
order denying Thee Aguila’s motion is not part of the record on
appeal, and Thee Aguila does not challenge the trial court’s
denial of that motion on appeal.
5
April 2017.4 The trial court issued its rulings on August 29,
2017. It concluded, in pertinent part, that the lease’s
condemnation clause did not give Thee Aguila an interest in El
Parral or entitlement to monies awarded to El Parral in the
eminent domain judgment. The trial court also concluded that
the eminent domain judgment collaterally estopped Thee Aguila
from any of its various claims to the money awarded to El Parral
in the eminent domain judgment.
In December 2017, the trial court deemed its written
rulings a statement of decision. The trial court concluded that
there were no further issues for the trial court or for a jury to
consider, and entered judgment in favor of Meneses, Fragoso, and
the Century Law Group. Thee Aguila filed a motion for new trial,
which the trial court denied on March 29, 2018. Thee Aguila
timely appealed.
DISCUSSION
A. Condemnation Clause
Thee Aguila contends that the El Parral lease’s
condemnation clause gave Thee Aguila the exclusive right to
recover all moneys from any condemnation of the property
(except “loss or damage to . . . trade fixtures and removable
4 The trial court ordered the parties to meet and confer
regarding issues to be tried to the bench. After the parties did so,
they stipulated as to certain issues to be tried, and the trial court
issued an order based on the parties’ stipulation. Thee Aguila
has not provided us a copy of that order. Nevertheless, in a
minute order dated August 29, 2017, the trial court stated that it
had tried the issues identified in the order. The trial court
identified each of the issues in its rulings. Most of the issues
tried to the bench arose from the declaratory relief cause of action
in the third amended cross-complaint.
6
personal property”). As a result, Thee Aguila argues, it was
entitled to recover moneys awarded for loss of goodwill resulting
from LAUSD’s taking.5 We review questions of contract
interpretation de novo. (Employers Mutual Casualty Co. v.
Philadelphia Indemnity Ins. Co. (2008) 169 Cal.App.4th 340,
347.)
As Meneses and Fragoso point out, and as we have recently
explored, the owner of a business conducted on property taken by
eminent domain is entitled to compensation for loss of goodwill
resulting from the taking. (Code Civ. Proc., § 1263.510, subd. (a);
see Los Angeles County Metropolitan Transportation Authority v.
Yum Yum Donut Shops, Inc. (2019) 32 Cal.App.5th 662, 668.)
Absent a contractual provision to the contrary, Thee Aguila is not
entitled to compensation for El Parral’s goodwill. (See also City
of Vista v. Fielder (1996) 13 Cal.4th 612, 618 (Fielder).)
Thee Aguila cites a single case in support of its lease
agreement interpretation argument: Fielder. Thee Aguila points
to language in Fielder that explains that the general rule that
“[u]nder the Eminent Domain Law, a provision of a lease that
declares that the lease terminates if all the property subject
thereto is acquired for public use does not deprive the lessee of
any right he may have to compensation for the taking of his
leasehold or other property . . . may indeed be displaced by a
provision of a lease to the contrary.” (Fielder, supra, 13 Cal.4th
at p. 618.) Besides pointing out that parties may contract
5 Thee Aguila limits its contentions about interpretation of
the lease agreement to a discussion of El Parral’s goodwill. We
similarly limit our discussion.
7
between themselves to allocate eminent domain awards, Fielder
offers Thee Aguila no assistance.
Thee Aguila bases its contentions here on language in the
lease that states “any payment made under the threat of the
exercise of the power of eminent domain shall be the property of
the Landlord, whether made as compensation for the diminution
of the value of the leasehold or for the taking of the fee or as
severance damages . . . .” But Fielder expressly distinguishes the
lessee’s leasehold interest from lessee’s interest in goodwill “as
owner of a business.” (Fielder, supra, 13 Cal.4th at p. 617, fn. 1.)
Rejecting an argument that a tenant’s interest in its “leasehold
and goodwill stand or fall together” with respect to a contract
that provided for termination of the lease in the event of
condemnation, the Fielder court observed: “That is not the
case. . . . [G]oodwill can exist apart from a leasehold, and a
leasehold can exist apart from goodwill.” (Id. at p. 620, fn. 6.)
The Legislature has determined that a business owner’s
goodwill for a business operated on property taken by eminent
domain is compensable separate and apart from the parties’
interests in the property taken. The Supreme Court in Fielder
has likewise distinguished between property taken by eminent
domain and the goodwill held by the operator of a business
located on property taken by eminent domain. And neither the
language in the form lease nor Thee Aguila’s arguments give us
any reason to read the lease language more expansively or as
counter to Code of Civil Procedure section 1263.510.
B. Collateral Estoppel
Thee Aguila contends that the trial court erred by applying
the doctrine of collateral estoppel to all of its claims (including
goodwill and $267,000 in unpaid rent and key money) to moneys
8
awarded to Meneses and Fragoso in LAUSD’s eminent domain
proceeding.6
Thee Aguila argues that because it and El Parral, Fragoso,
and Meneses were all defendants in the eminent domain
6 The parties’ dispute about unpaid rent centers on rent
Thee Aguila claims was due it for December 2009 and January
2010. On November 6, 2009, the trial court issued in the eminent
domain proceeding an order for prejudgment possession of the
property subject to the parties’ lease in favor of LAUSD. By its
own terms, the lease terminated “as of the date the condemning
authority [took] title or possession, whichever occur[red] first.”
The lease also terminated as a matter of law; “[w]here all the
property subject to a lease is acquired for public use, the lease
terminates.” (Code Civ. Proc., § 1265.110.) That termination was
effective when “the plaintiff [was] authorized to take possession
of the property as stated in an order for possession.” (Code Civ.
Proc., § 1265.140.) Thee Aguila was not entitled to rent for
December 2009 and January 2010 after a prejudgment possession
order in favor of LAUSD was issued in November 2009. If
LAUSD wished to claim rent for those months, it could have done
so in its negotiations with Meneses and Fragoso, whom LAUSD
presumably allowed to holdover for the additional two months
they operated El Parral.
The dispute regarding so-called key money turns on
payments made pursuant to a lease addendum providing for
$200,000 in “additional rent” and another $150,000 Thee Aguila
contended was “accounted for outside the” parties’ lease
agreement. Any “additional rent” argument goes the way of Thee
Aguila’s unpaid rent argument. Thee Aguila’s complaint admits
that Meneses and Fragoso had paid $150,000 before LAUSD filed
its condemnation complaint. We could locate no evidence in the
record of any other payment of key money or “additional rent”
due before the lease terminated.
9
proceeding, they were not adversaries in that proceeding, and the
judgment in that action has no preclusive effect as between
defendants, but rather only as between LAUSD and any
defendant. “The trial court’s application of the doctrine of
collateral estoppel or issue preclusion is a question of law subject
to de novo review.” (Johnson v. GlaxoSmithKline, Inc. (2008) 166
Cal.App.4th 1497, 1507.)
“Collateral estoppel precludes relitigation of issues argued
and decided in prior proceedings. [Citation.] Traditionally, we
have applied the doctrine only if several threshold requirements
are fulfilled. First, the issue sought to be precluded from
relitigation must be identical to that decided in a former
proceeding. Second, this issue must have been actually litigated
in the former proceeding. Third, it must have been necessarily
decided in the former proceeding. Fourth, the decision in the
former proceeding must be final and on the merits. Finally, the
party against whom preclusion is sought must be the same as, or
in privity with, the party to the former proceeding.” (Lucido v.
Superior Court (1990) 51 Cal.3d 335, 341, fn. omitted.)
Although it appears to be the primary thrust of Thee
Aguila’s argument here, there is no hard and fast requirement
that the same parties to the current litigation were adverse in a
prior action. (Cf. City of Santa Cruz v. MacGregor (1960) 178
Cal.App.2d 45, 49 [codefendants in condemnation proceedings
“are, in substance, litigating against each other”].) The doctrine
requires only that the issue sought to be precluded from
relitigation was litigated to finality in the prior action with the
party (or its privity) against whom preclusion is sought.
In its answer to the eminent domain complaint, Thee
Aguila “claim[ed] by assignment, each and every award herein for
10
the taking, including the tenant’s loss of [goodwill], but not
including its[] trade fixtures.” In their answers to the eminent
domain complaint, Meneses, Fragoso, and El Parral claimed that
they were “entitled to compensation for loss of business goodwill
relating to the operation of [El Parral] on the leased property.”
In the eminent domain judgment, the trial court noted that Thee
Aguila “assert[ed], inter alia, just compensation for the property,
severance damages, precondemnation damages for loss of rental
income, a claim for the tenant’s loss of business goodwill, and for
litigation expenses and costs of suit.” The judgment also noted
that LAUSD and Thee Aguila had “agreed on a full and final
settlement of any and all issues in this matter . . . .” The
judgment continued: Meneses, Fragoso, and El Parral
“assert[ed], inter alia, just compensation for [the] leasehold
interest, loss of business goodwill, leasehold improvements, and
for litigation expenses and costs of suit.” Meneses, Fragoso, and
El Parral agreed with LAUSD “to a full and final settlement of
any and all of [their] claims, including without limitation any
claims for leasehold value, goodwill, fixtures and equipment,
relocation benefits, litigation expenses, interest and costs . . . .”
The question of what moneys were to be paid to Thee
Aguila and what moneys were to be paid to Meneses and Fragoso
for the condemnation, then, were issues decided in the eminent
domain proceeding.7 That includes moneys Thee Aguila would
have been entitled to had the lease continued in effect.
7 At his deposition in the eminent domain proceeding,
Henry Aguila and Thee Aguila’s attorney appear to have
acknowledged that the eminent domain proceeding was
conclusive as to the parties’ claims to moneys resulting from
condemnation. LAUSD’s attorney asked Aguila “Have you
11
Those issues were necessarily decided in the eminent
domain proceeding: “[W]here there are divided interests in
property acquired by eminent domain, the value of each interest
and the injury, if any, to the remainder of such interest shall be
separately assessed and compensation awarded therefor. . . .
[¶] . . . [¶] . . . The plaintiff may require that the amount of
compensation be first determined as between plaintiff and all
defendants claiming an interest in the property. Thereafter, in
the same proceeding, the trier of fact shall determine the respective
rights of the defendants in and to the amount of compensation
awarded and shall apportion the award accordingly.” (Code Civ.
Proc., § 1260.220, italics added.) Thee Aguila does not dispute
that the eminent domain judgment is final or that it was a party
in the eminent domain proceeding. We affirm the trial court’s
collateral estoppel conclusion.8
resolved your claim for compensation with El Parral on the
goodwill matter?” After an evasive response, LAUSD further
inquired: “So you are just withdrawing [your claim for loss of
business goodwill] altogether and you are not making a claim
even against El Parral?” Aguila’s attorney responded: “We are
not seeking to apportion any portion of the business operator’s
goodwill claim, if any.”
8 At argument, Thee Aguila fervently argued about an
alleged assignment it obtained in December 2012 (well after the
March 2011 condemnation order) from a couple (the Orozcos) who
ran El Parral before Meneses and Fragoso and purportedly
owned the temporary operating permit under which Meneses and
Fragoso operated. In the trial court and here, Thee Aguila
argued that the escrow for transfer of the temporary operating
permit never closed, and therefore the right to operate El Parral
never passed to Meneses and Fragoso. El Parral’s goodwill—
under this theory—belonged to the Orozcos, who assigned it to
12
C. Motion for New Trial
Although Thee Aguila appealed from the trial court’s order
denying its motion for new trial, Thee Aguila has presented
neither record citations nor authority for its argument that the
trial court abused its discretion. “It is the appellant’s
responsibility to support claims of error with citation and
authority; this court is not obligated to perform that function on
appellant’s behalf.” (Keyes v. Bowen (2010) 189 Cal.App.4th 647,
656.) We are presented here with an 18-volume clerk’s
transcript, four volumes of reporter’s transcript, and a single
paragraph of argument in Thee Aguila’s brief that does not even
assert an abuse of discretion, much less attempt to explain the
abuse. We will not attempt to divine an argument where Thee
Aguila failed to draft one.
Thee Aguila. While this theory does not appear from the record
to have been at issue in the bench trial, this argument fails for
the same reason the rest of Thee Aguila’s arguments fail.
Meneses and Fragoso were the business owners when LAUSD
took the property, regardless of whether the title to the
temporary operating permit ever exchanged hands. The Orozcos
were not operating El Parral at the time of the condemnation.
And if Thee Aguila believed El Parral’s goodwill claim in the
eminent domain proceeding belonged to someone other than
Meneses and Fragoso, the eminent domain proceeding was the
time to raise that issue. (See McFadden v. Los Angeles County
Treasurer & Tax Collector (2019) 34 Cal.App.5th 1072, 1079.)
Outcome: The judgment and the trial court’s order denying Thee Aguila’s motion for new trial are affirmed. Respondents are awarded costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
Comments: