Filed 3/28/14 Singh v. Brar CA5




                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

JASBINDER SINGH et al.,
                                                                                           F065614
         Plaintiffs and Appellants,
                                                                           (Super. Ct. No. 10CECG04290)
                   v.

RAJINDER S. BRAR et al.,                                                                 OPINION
         Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of Fresno County. Alan M.
Simpson, Judge.
         Law Offices of Randolf Krbechek and Randolf Krbechek for Plaintiffs and
Appellants.
         Michael J.F. Smith, John L. Migliazzo and Anja M. Smith for Defendants and
Respondents Sterling Swartout and Swartout, Inc.
         Hager, Macy & Jensen and Paul R. Hager for Defendant and Respondent
Rajinder S. Brar.
                                                        -ooOoo-
        This is an appeal from a judgment of the Superior Court of Fresno County entered
in favor of respondents Rajinder Brar, Swartout, Inc., and Sterling Swartout (Swartout).
On September 13, 2010, Brar, a commercial tenant, defaulted in his rent payment. On
September 28, 2010, appellants Jasbinder Singh and Harbinder Kaur, the commercial
landlords, served a three-day notice to pay rent or quit the premises. Brar did neither. On
October 8, 2010, Singh and Kaur filed a complaint for unlawful detainer.1 According to
Brar, on November 2, 2010, he and Singh orally agreed to a month-to-month tenancy at
reduced rent.
        On December 14, 2010, Singh and Kaur sued Brar, Swartout, Inc., Swartout, and
Fred Howard for breach of contract. They alleged that Swartout, Inc. was liable as the
original lessee and Swartout and Howard were liable as Brar’s guarantors. Trial
commenced on October 12, 2011.2 In a statement of decision and findings of facts filed
May 1, 2012, the superior court ruled, inter alia, that appellants terminated the
commercial lease, orally agreed to a month-to-month tenancy, and overcharged Brar,
resulting in a credit offsetting any overdue rent, and respondents did not owe anything
under the terminated lease. Judgment was entered on May 18, 2012.3 Singh and Kaur
filed a notice of appeal on August 10, 2012.
        Appellants make the following contentions: (1) they did not terminate the
commercial lease by serving the three-day notice and filing a complaint for unlawful
detainer; (2) they did not terminate or otherwise modify the lease by orally agreeing to
accept reduced rent; (3) objective evidence demonstrates that Brar still owes damages;
(4) Swartout, Inc. remains liable as the original lessee; (5) Swartout remains liable as

1       The unlawful detainer action was dismissed without prejudice on January 25,
2011.
2       Prior to trial, appellants voluntarily dismissed their cause of action as to Howard.
3       The court denied appellants’ motions to vacate the judgment and for a new trial.



                                               2.
Brar’s guarantor; and (6) they did not exonerate Swartout’s guaranty by agreeing to
accept reduced rent.4
       We conclude that appellants terminated the lease. Moreover, whatever Brar may
have owed under the lease was negated by the overcharge. We therefore affirm the
judgment.
                                 FACTUAL HISTORY
       On April 27, 1994, DMP Development Corporation (DMP) and Swartout, Inc.
signed and executed an agreement to build and lease (1994 Lease). DMP agreed to
construct a gas station, convenience store, and car wash on property located on the
southeast corner of Tozer Street and Yosemite Avenue in Madera, California, and leased




4       Respondents filed a motion to dismiss the appeal on the basis that appellants relied
on the superior court’s judgment to recover possession of the property in a subsequent
unlawful detainer action. (See Lee v. Brown (1976) 18 Cal.3d 110, 114 [“[O]ne who
accepts the benefits of a judgment cannot thereafter attack the judgment by appeal.”].) In
the alternative, respondents asserted judicial estoppel. (See Minish v. Hanuman
Fellowship (2013) 214 Cal.App.4th 437, 448-449 [judicial estoppel precludes party from
obtaining an advantage by asserting one position and then seeking a second advantage by
asserting an incompatible position].)
        We deny the motion on both grounds. First, “[i]t is only in cases where an
appellant is shown to have received and accepted advantages from a judgment to which
such appellant would not be entitled in the event of a reversal of the judgment that [his
or] her acceptance thereof has been held to operate to defeat the appeal.” (Browning v.
Browning (1929) 208 Cal. 518, 525.) Here, in the event of a reversal, appellants would
still be entitled to possession of the property because Brar defaulted in his rent payment
under the commercial lease. (See Saberi v. Bakhtiari (1985) 169 Cal.App.3d 509, 514,
citing Code Civ. Proc., § 1161, subds. 1 & 2 [a tenant is guilty of unlawful detainer when
he or she continues in possession of the property after the expiration of a term or
termination of a periodic tenancy by notice or after default in the payment of rent, inter
alia].) Second, given that judicial estoppel is an “extraordinary” and “‘discretionary’”
remedy that must be “‘applied with caution and limited to egregious circumstances’”
(Minish v. Hanuman Fellowship, supra, 214 Cal.App.4th at p. 449), we find the doctrine
inapplicable.



                                             3.
the premises to Swartout, Inc. for a 25-year term. The 1994 Lease stated, in pertinent
part:

        “13. Default. In the event Lessee shall fail to pay the rent when due or
        shall fail to perform any of its other obligations under this Lease (after
        notice of such default or breach shall have been given as hereinbelow
        provided), Lessor may, a[s] its sole and exclusive remedy, elect either:

                “(i) to re-enter said premises by summary proceedings or otherwise
        and re-let the premises, using its best efforts therefore, and receiving the
        rent therefrom, applying the same first to the payment of rent accruing
        hereunder, the balance, if any, to be paid to Lessee; but, Lessee shall remain
        liable for the equivalent of the amount of all rent reserved herein less the
        receipts of re-letting, if any, and such amount shall be due and payable to
        Lessor as damages or rent, as the case may be, on the successive rent days
        hereinabove provided, and Lessor may recover such amounts periodically
        on such successive days; or,

              “(ii) to terminate this Lease and to resume possession of the
        premises wholly discharged from this Lease.

                “Such election shall be made by written notice to Lessee at any time
        on or before the doing of any act or the commencement of any proceedings
        to recover possession of the premises by reason of the default or breach
        then existing and shall be final. If Lessor shall elect to terminate this Lease,
        all rights and obligations whatsoever of Lessee and of [his] successors and
        assigns, so far as the same may relate to the unexpired portion of the term
        hereof, shall cease and within ten (10) days after receipt by Lessee of notice
        of election by Lessor to terminate this Lease, the parties shall, by an
        instrument in writing form for recording, cancel this Lease and the
        unexpired portion of the term thereof, and Lessee shall surrender and
        deliver up to Lessor the entire premises, together with all improvements
        and additions except trade fixtures and other personal property, and upon
        any default by Lessee in so doing, Lessor shall have the right forthwith to
        re-enter the demised premises either by summary proceedings or otherwise.
        [¶] … [¶]

               “18. Assignment or Transfer by Lessor or Lessee. … [¶] With
        the consent of Landlord, Lessee shall have the right to assign, sublet or
        transfer any or all of its rights and privileges under this Lease, provided
        however, that no such assignment, subletting or transfer shall operate to
        relieve Lessee of its obligations for the performance of all of the terms and
        conditions of this Lease, including the payment of the rent. [¶] … [¶]

                                               4.
              “20. Miscellaneous. [¶] … [¶] (h) No modification, alteration or
       amendment of this Lease shall be binding unless in writing and executed by
       the parties hereto, their heirs, successors or assigns.”
       Swartout, Inc. assigned its interest in the 1994 Lease to H&S Services (H&S), a
general partnership owned by Howard and Swartout. DMP approved the assignment on
the condition that “the continuity of [the] principals responsible under said Lease”
remained intact. Sometime after the gas station, convenience store, and car wash were
built, DMP transferred ownership to Yosemite Pointe Partners. Yosemite Pointe Partners
then sold the property to appellants in 2000.
       In 2001, H&S assigned its interest in the 1994 Lease to Gurdip Dhillon and
Tarlochan Jagpal. Appellants approved the assignment on the condition that Swartout
and Howard “personally and corporately guarantee … all sums due and owing as a result
of any default of the Assignee including all rents, common area expense, costs of
collection, attorneys fees, late charges, interest, or any other expense attributable to such
default by sublessee.” In June 2006, Dhillon and Japgal assigned their interest to Brar.5
       On July 16, 2008, appellants and Brar signed and executed an addendum to the
1994 Lease (2008 Addendum). Brar was identified as “the successor to Gurdip S.
Dhillon and Tarlochan Jagpal” and “the current tenant under the [1994] Lease,”
“assumed all rights, title, interest and obligations in and to the [1994] Lease,” and
“agree[d] to perform all of the terms, covenants, conditions and obligations of such
Lease, including making all of the rent payments.” (Unnecessary capitalization omitted.)
The “terms and conditions” of the 2008 Addendum were “hereby incorporated in and
made a part of” the 1994 Lease.

5       On March 23, 2007, Howard signed another agreement to “personally and
corporately guarantee to [appellants] all sums due and owing as a result of any default of
the Assignee, including all rents, common area expense, costs of collection, attorneys
fees, late charges, interest, or any other expense attributable to such default by
sublessee.” Swartout testified that he signed a separate, identical agreement and gave it
to Brar. Singh testified that he received Swartout’s agreement, but lost it.



                                                5.
       By September 2010, the monthly base rent amounted to $14,386.50, excluding
taxes, utilities, and other charges. On September 13, 2010, Brar paid $10,000. On
September 28, 2010, appellants served a three-day notice to pay the balance or quit the
premises:

               “[$6,502.41] is the estimated amount that is due and owing under the
       lease. YOU ARE HEREBY REQUIRED to pay in full the estimated sum
       of $6,502.41 within three (3) days or to remove from and deliver up
       possession of the above described premises. If you fail to do so, legal
       proceedings will be commenced against you to recover possession of the
       property, declare the forfeiture of the lease or rental agreement under which
       you occupy said premises, and to recover rents, punitive damages, court
       costs, and attorney’s fees, according to the terms of your lease or rental
       agreement. [¶] … [¶]

              “YOU ARE FURTHER NOTIFIED that if you fail to pay the
       estimated amount demanded by this Notice, Landlord will elect to declare
       the forfeiture of the written Addendum dated July 16, 2008 and your
       interests in the property .…

           “LANDLORD DOES NOT SEEK FORFEITURE OF THE
       ‘AGREEMENT TO BUILD AND LEASE’ DATED APRIL 27, 1994.
       LANDLORD ONLY SEEKS FORFEITURE OF THE WRITTEN
       ADDENDUM DATED JULY 16, 2008.

               “Notwithstanding anything to the contrary contained herein, this
       Notice shall not constitute a waiver of any rights which your Landlord has
       as to the collection of rents and damages which would otherwise be owing
       from you under the terms of your agreement through the end of the
       agreement term. The term of the lease agreement is for 25 years.…”
Brar neither paid the balance nor vacated the property. On October 8, 2010, appellants
filed a complaint for unlawful detainer and also sought, inter alia, $6,502 in overdue rent
and other charges, forfeiture of the 2008 Addendum, and fair rental value of $479 per day
for each day Brar remained in possession since October 1, 2010. Brar subsequently paid
$10,000 on October 14, 2010.
       Appellants filed a lawsuit for breach of contract on December 14, 2010, and trial
commenced on October 12, 2011. Brar testified that he attempted to renegotiate the rent


                                             6.
with Singh as far back as June 2010, but to no avail. Later, on November 2, 2010, Brar
and his representative met with Singh and his representative to settle the unlawful
detainer action. Brar detailed:

       “[W]e had shown and submitted all the—most of the paperwork, you know,
       Excel profit and loss sheets stating how much money we had lost.
       [¶] … [¶] And we discussed, you know, what we had presented. We had
       discussed … what we were willing to pay. And [appellant Singh] also
       made it very clear that he did not want the station back and that he wanted
       the station to stay open because … we had offered the keys back to him.
       [¶] And then the question about Valero lease and Valero contracts came up
       … and we said we’ll subsequently, you know, transfer everything back to
       you. And then we discussed those. [¶] And [appellant Singh] says, ‘All
       right. Pay me $10,000 a month’ lease—I mean, not lease. ‘Pay me
       $10,000 a month rent. Please keep the station open, and we will, you
       know, find a solution to it.’ And—and—and the term was on a month-to-
       month basis. [¶] So, basically, that’s what was agreed by us.”
       Brar also testified that, prior to the creation of the month-to-month tenancy,
appellants overcharged him. Dr. Sean Alley, an economics professor and appellants’
witness, testified that he reviewed the invoices since June 2006 and calculated a
substantial overcharge of $24,751.83 for common area maintenance, accounting, property
taxes, property management, and attorney fees.6
       On October 19, 2011, the superior court announced tentative findings:

               “It appears to me that from the point of November 2, 2010, to the
       present, the relationship between [respondent] Brar and [appellants] is a
       month-to-month tenancy. It appears that there was an oral modification.
       You can look at it a number of ways. The obligation to continue the lease,
       that the rent amount stated—the greater amount stated terminated on
       November the 2nd of 2010.

              “Once [respondent] Brar said, ‘I can’t pay it. I’m not going to pay it.
       Here are the keys,’ from that point on, there are various ways that one can
       look at the reason why his obligation became one to pay $10,000 a month.
       But regardless of which direction you go with that analysis, that’s the

6      Appellants do not dispute the fact or the amount of the overcharge.



                                             7.
       conclusion that one comes to. Up to that point, his obligation would be to
       pay the monthly rent amount.

               “So to the extent that he [p]aid $10,000 for a couple of months, one
       month or two months before November 2nd, 2010, he would actually owe
       the difference between the correct amount of rent and the $10,000 that he
       paid for those couple of months. But after November 2nd of 2010, it’s
       $10,000 a month.”
       On May 1, 2012, the superior court issued the following statement of decision and
findings of facts:

             “1.     The Court finds [appellants] Jasbinder Singh and Harbinder
       Kaur were owners and lessors of the subject real property and buildings
       which were leased to [respondent] Rajinder Brar in June of 2006,
       formalized in writing July 16, 2008 …, as an addendum to the 1994 lease.

             “2.    The Court finds that although [appellants] allege [respondent]
       Swartout guaranteed [respondent] Brar’s performance as le[s]see, said
       guaranty was never delivered to or relied upon by [appellants].

              “3.     The Court finds that under the [1994 lease’s default clause,
       appellants] terminated the lease by serving a written request for forfeiture
       on September 28, 2010 … and filing an unlawful detainer action October 8,
       2010 … whereby [appellants] verified [respondent] Brar owed $6,502.41.

               “4.    The Court finds that under the [1994 lease’s default clause,]
       all rights and obligations of lessee relating to the unexpired portion ceased
       on 9/28/10.

              “5.    The Court finds, based on [appellant] Singh’s and
       [respondent] Brar’s testimony that [respondent] Brar thereupon offered
       [appellant] possession and that on November 2, 2010 both agreed that
       [respondent] Brar would stay in possession and pay $10,000.00 per month
       rent for an unlimited time[,] thus creating a month-to-month tenancy.

             “6.   The Court finds that [respondent] Brar has paid the orally
       agreed monthly rent fully since termination of the written lease.

              “7.    The Court further finds, based on testimony and charts
       prepared by [appellants’] expert, Dr. Alley, and testimony of [respondent]
       Brar that prior to the termination of the lease, and since June of 2006[,
       appellants] had overcharged and collected rent for inflated CAM charges
       and share of taxes, and had collected unauthorized accounting,


                                             8.
       management, and attorney fees in the combined total amount of $24,751.83
       from [respondent] Brar which under [Code of Civil Procedure
       section] 431.70 and Construction Protective Services, Inc. v. T.I.G.
       Specialty Insurance (2002) 29 Cal.4th 189 fully offsets any rent obligation
       [respondent] Brar had under the lease.

               “8.   The Court specifically finds [appellant] Singh’s testimony
       that [respondent] Brar had underpaid invoices … is not credible and was
       contradicted by testimony of his son Jatinder Singh who, on cross-
       examination admitted disputed amounts would be restated in several
       monthly invoices until reconciled, and finds that [respondent] Brar had not
       underpaid the invoices.

              “9.     The court therefore finds that neither [respondent] Brar nor
       alleged [respondent] Swartout owes anything under the terminated lease
       and are entitled to attorney’s fees provided for in the lease .…

              “Based upon the above findings, Judgment is given in favor of
       [respondents] Brar and Swartout. [Appellants] shall take nothing and
       [respondents] shall have their costs and fees.”
                                      DISCUSSION
I.     Standards of review
       Under the general rules applicable to a trial court’s statement of decision, an
appellate court reviews the factual findings for substantial evidence. (Central Valley
General Hospital v. Smith (2008) 162 Cal.App.4th 501, 513; see also In re Marriage of
Schmir (2005) 134 Cal.App.4th 43, 49-50 & fn.11 [appellate court reviews entire record
as well as statement of decision to determine whether substantial evidence supports trial
court’s judgment].) In an earlier decision, we explained the substantial evidence rule:

       “‘“Where findings of fact are challenged on a civil appeal, we are bound by
       the ‘elementary, but often overlooked principle of law, that … the power of
       an appellate court begins and ends with a determination as to whether there
       is any substantial evidence, contradicted or uncontradicted,’ to support the
       findings below. [Citation.] We must therefore view the evidence in the
       light most favorable to the prevailing party, giving it the benefit of every
       reasonable inference and resolving all conflicts in its favor in accordance
       with the standard of review so long adhered to by this court.” [Citation.]’
       [Citations.] [¶] Moreover, we defer to the trier of fact on issues of
       credibility. [Citation.] ‘[N]either conflicts in the evidence nor “‘testimony


                                             9.
       which is subject to justifiable suspicion … justif[ies] the reversal of a
       judgment, for it is the exclusive province of the [trier of fact] to determine
       the credibility of a witness and the truth or falsity of the facts upon which a
       determination depends.’” [Citations.]’” (Lenk v. Total-Western, Inc.
       (2001) 89 Cal.App.4th 959, 968; see also In re Dakota H. (2005) 132
       Cal.App.4th 212, 228 [“We do not reweigh the evidence, evaluate the
       credibility of witnesses, or resolve evidentiary conflicts.”].)
Substantial evidence is reasonable, credible, of solid value, and of ponderable legal
significance. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627,
1633.) A judgment will be upheld if it is supported by substantial evidence, even if
substantial evidence to the contrary also exists and the trial court might have rendered a
different result had it believed this evidence. (In re Dakota H., supra, at p. 228; see also
In re Michael G. (2012) 203 Cal.App.4th 580, 589 [“The substantial evidence standard of
review is generally considered the most difficult standard of review to meet, as it should
be, because it is not the function of the reviewing court to determine the facts.”].)
       “Although a trial court’s findings of facts bind a reviewing court if substantial
evidence supports those findings, the trial court’s legal conclusions are not binding on
appeal. [Citation.] Legal questions must be reviewed de novo. [Citation.]” (PJNR, Inc.
v. Department of Real Estate (1991) 230 Cal.App.3d 1176, 1183; see also Ghirardo v.
Antonioli (1994) 8 Cal.4th 791, 799 [“When the decisive facts are undisputed, we are
confronted with a question of law and are not bound by the findings of the trial court.”];
ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266 [appellate
courts generally apply independent standard of review to conclusions of law pertaining to
construction of a lease].)




                                             10.
II.    Appellants terminated the 1994 Lease on October 1, 20107
       Appellants argue, as a matter of law, that they did not terminate the 1994 Lease by
serving the three-day notice and filing a complaint for unlawful detainer.8 We disagree.
       The 1994 Lease afforded the lessor one of two options as the “final,” “sole,” and
“exclusive” remedy in the event of default: (1) reenter and relet the premises or
(2) terminate the lease and resume possession of the premises “wholly discharged” from
the lease. (Ante, at p. 4.) After Brar made a partial payment for September 2010,
appellants served a three-day notice warning that failure to either pay the outstanding
balance or quit the premises would compel them to “elect to declare the forfeiture” of the
leasehold and the 1994 Lease.9 The notice did not indicate that appellants intended to

7      At the outset, we reject respondents’ assertion that the 2008 Addendum terminated
the 1994 Lease. “It must ‘“clearly appear” that the parties intended to extinguish rather
than merely modify the original agreement.’ [Citation.] Where novation is in the form of
a substitution of a new debtor for an old one, the release of the old debtor is sufficient to
constitute the requisite consideration for the new debtor’s promise. [Citations.]
Moreover, to constitute a novation, rather than a mere assignment, in the context of a new
debtor, the former debtor must be released of his obligation by consent of the former
debtor as well as the creditor. [Citations.]” (Wells Fargo Bank v. Bank of America
(1995) 32 Cal.App.4th 424, 432.)
       Here, the 2008 Addendum was “incorporated in and made a part of” the 1994
Lease and appellants did not expressly release the original lessee. (Ante, at p. 5.) In fact,
the 1994 Lease provided that “no such assignment, subletting or transfer shall operate to
relieve Lessee of its obligations for the performance of all of the terms and conditions of
this Lease, including the payment of the rent.” (Ante, at p. 4; cf. Wells Fargo Bank v.
Bank of America, supra, 32 Cal.App.4th at p. 432 [“[A] creditor may, in advance in the
underlying contract, assent to the substitution of a new debtor and discharge from liability
the old debtor, thus causing a novation.”].)
8       Appellants point out that the court’s statement of decision did not parallel its
tentative findings. Tentative findings are “not binding on the trial court and can be
modified or changed as the judge sees fit before entry of judgment.” (FLIR Systems, Inc.
v. Parrish (2009) 174 Cal.App.4th 1270, 1284, citing Cal. Rules of Court,
rule 3.1590(b).)
9      In the three-day notice, appellants stated that they retained their rights as to the
collection of rents and damages owed by Brar “under the terms of [his] agreement


                                              11.
relet the property. Brar did not pay the balance within the notice period, resulting in the
election of the termination remedy.
       Appellants’ election of the termination remedy does not end our analysis. An
option in a lease to terminate for nonpayment of rent is only a reservation of the right to
do so in the manner provided by law. (Standard Livestock Co. v. Pentz (1928) 204 Cal.
618, 630; Igauye v. Howard (1952) 114 Cal.App.2d 122, 126 (Igauye).) To properly
exercise this right, the lessor must bring an action for unlawful detainer. (See Sexton v.
Nelson (1964) 228 Cal.App.2d 248, 256, citing Code Civ. Proc., § 1161, subd. 2; Igauye,
supra, at p. 126, citing Civ. Code, § 791.) “The remedy of unlawful detainer is designed
to provide means by which the timely possession of premises which are wrongfully
withheld may be secured to the person entitled thereto.” (Knowles v. Robinson (1963) 60
Cal.2d 620, 625.) “Generally, in order to take advantage of this summary remedy, the
landlord must demonstrate strict compliance with the statutory notice requirements
contained in [Code of Civil Procedure] section 1161 et seq., including providing the
tenant with three days’ written notice to pay rent or quit the premises.” (Culver Center
Partners East #1, L.P. v. Baja Fresh Westlake Village, Inc. (2010) 185 Cal.App.4th 744,
749; accord, WDT-Winchester v. Nilsson (1994) 27 Cal.App.4th 516, 526 [regarding
commercial landlords]; see also Briggs v. Electronic Memories & Magnetics Corp.
(1975) 53 Cal.App.3d 900, 905 [three-day notice period under Code Civ. Proc., § 1161 is
a condition precedent to the filing of a complaint for unlawful detainer].) If the tenant
pays within the notice period, the right to possession remains in effect as if there had

through the end of the [25-year] agreement term,” but sought forfeiture of the 2008
Addendum only, not the 1994 Lease. In effect, they treated the 2008 Addendum as a
second, independent lease. We cannot countenance this proposition. “It is elementary
that two valid and enforceable leases cannot be outstanding on the same property for the
same term.” (Douglas v. Schindler (1930) 209 Cal. 616, 620.) As we previously
discussed, the 2008 Addendum was “incorporated in and made a part of” the 1994 Lease.
(Ante, at fn. 7.)



                                             12.
been no default. (Briggs v. Electronic Memories & Magnetics Corp., supra, at p. 905.)
Otherwise, the tenancy is terminated after the expiration of this period. (Highland
Plastics, Inc. v. Enders (1980) 109 Cal.App.3d Supp. 1, 7 (Highland Plastics); see also
Lamanna v. Vognar (1993) 17 Cal.App.4th Supp. 4, 7 [tenant has right to pay overdue
rent without being subject to termination of tenancy within three-day period under Code
Civ. Proc., § 1161].) An action for unlawful detainer cannot arise until after the tenancy
has been terminated. (Highland Plastics, supra, at p. 7; Bauer v. Neuzil (1944) 66
Cal.App.2d Supp. 1020, 1029.)
       Appellants provided the requisite three-day notice and afforded Brar the
opportunity to pay the balance or surrender the premises. Because Brar did neither, the
1994 Lease was terminated on October 1, 2010, after the expiration of the notice period.
(See Highland Plastics, supra, 109 Cal.App.3d Supp. at p. 7.)10 Therefore, appellants
properly initiated an unlawful detainer action. (See Markham v. Fralick (1934) 2 Cal.2d
221, 225; Briggs v. Electronic Memories & Magnetics Corp., supra, 53 Cal.App.3d at
p. 906 [unlawful detainer action inappropriate where premises surrendered before filing
of the complaint].)
       On appeal, appellants cite Grand Central Pub. Market v. Kojima (1936) 11
Cal.App.2d 712 (Grand Central) for the proposition that a lease is not terminated until an
unlawful detainer judgment is rendered.11 In that case, the plaintiff lessor and the

10     Because we find that the 1994 Lease was terminated on October 1, 2010,
appellants’ contention that they did not terminate or modify said lease by orally agreeing
to accept reduced rent on November 2, 2010, is rendered moot.
        To the extent appellants allege that Brar’s testimony cannot constitute substantial
evidence demonstrating that the parties orally agreed to a month-to-month tenancy, we
disagree. (See Lenk v. Total-Western, Inc., supra, 89 Cal.App.4th at p. 968 [“[W]e defer
to the trier of fact on issues of credibility.”]; In re Dakota, supra, 132 Cal.App.4th at
p. 228 [“We do not … evaluate the credibility of witnesses .…”].)
11     Appellants also cite Igauye, supra, 114 Cal.App.2d 122, as supporting authority.
That case, however, is inapposite. In Igauye, the appellate court simply held that a


                                            13.
defendant lessee entered into three separate agreements for certain stalls in the Grand
Central Market in Los Angeles, California. In December 1932, the lessor twice served a
three-day notice to pay rent or quit. The lessee did neither on both occasions. On
January 6, 1933, the lessor sued to recover rent for the month of January, but did not
request forfeiture of the leases or the lessee’s removal. On January 7, 1933, the lessee
vacated the premises. He subsequently contended that the lessor was not entitled to rent
for the month of January because the leases were terminated when he quit. (Id. at
pp. 714-716.) The trial court ruled in favor of the lessor and the appellate court affirmed
the judgment on appeal and rehearing. (Id. at pp. 713-714, 717, 718.) With regard to the
lessee’s argument, the appellate court explained:

       “‘The lease is terminated only if the notice is acted upon by one of the
       parties. If the lessor had brought an unlawful detainer suit based upon the
       notices to quit, as they were framed in this case, then the court trying such
       unlawful detainer action would, upon a proper showing, have the
       undoubted right to decree a forfeiture of the lease. [Citations.] Or, if the
       lessee within the three-day period specified in the notices had quit the
       premises, the respective lease would have been forfeited by agreement of
       the parties, since the lessee would be in the position of accepting lessor’s
       offer to terminate the same. [Citations.] Neither of these methods was
       followed or taken advantage of by either of the parties.’” (Id. at p. 717.)
       To the extent Grand Central can be read to suggest that a lease somehow remains
intact until an unlawful detainer judgment is rendered, we disagree. A landlord may only
commence an action for unlawful detainer against a tenant who wrongfully withholds
possession of demised property. Conversely, a landlord may not evict a tenant who has
permission to occupy said property. Thus, termination of the basis of possession, such as


provision of a lease conferring a right of reentry on lessor “[does] not ipso facto work a
forfeiture of the leasehold for the failure of the lessee to pay rent, but only [gives] the
lessor the right at his option to terminate, which … ‘amounts to no more than the right on
the part of the landlord to terminate the lease in the manner provided by law .…’” (Id. at
p. 126.)



                                            14.
a lease, is an essential prerequisite for an unlawful detainer action. (See Highland
Plastics, supra, 109 Cal.App.3d Supp. at p. 7.)
III.   Brar does not owe damages under the 1994 Lease
       Appellants argue that they are entitled to damages under the 1994 Lease for the
period of September 2010 to September 2011. We disagree.
       Brar defaulted in his September 2010 rent payment when he paid only $10,000.
His failure to pay the balance or surrender the property led to the termination of the 1994
Lease on October 1, 2010. Brar remained in possession of the premises through October
2010. However, on November 2, 2010, appellants and Brar orally agreed to a new
month-to-month tenancy. Thus, appellants may only claim damages under the 1994
Lease for September 2010 and October 2010.
       Appellants maintain that Brar owes $16,584.70 in unpaid rent and other charges
for September 2010 and October 2010. Assuming arguendo that appellants accurately
calculated the amount, the $16,584.70 debt is more than satisfied by the undisputed
$24,751.83 overcharge. Therefore, Brar does not owe damages under the 1994 Lease.12




12    Because appellants are not entitled to any damages, their contentions that
Swartout, Inc. and Swartout are liable for said damages are rendered moot.



                                            15.
                                     DISPOSITION
      The judgment of the superior court is affirmed. Costs on appeal are awarded to
respondents.


                                                               _____________________
                                                                      Kane, Acting P.J.
WE CONCUR:


 _____________________
Poochigian , J.


 _____________________
LaPorte, J.⃰




⃰       Judge of the Kings Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.



                                           16.
