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Month‐to‐Month Rights
by Michael Blahy

What rights exist when a long term lease transitions into a month-to-month agreement?

In 1993, Salima Multani entered into a five-year rental agreement with Evelyn Knight for a commercial unit in Long Breach California to operate a medical clinic. In 1998, the agreement was renewed for an additional five years. Beginning in 2003, Evelyn Knight accepted monthly rent payments from Salima Multani, thus the agreement changed to a month-by-month tenancy.

Prior to or during May 2011 Salima’s son Rahim Multani mentioned to Dr. Boniface Onubah that his mother is winding down her practice. Rahim and his brother Khaleel Multani, who made all business decisions regarding the clinic entered into a contract to sell the practice for $400,000. Even though notarized, Salima had no recollection of signing the contract on May 26, 2011. The sale was to close in January 2012, giving Onubah time to arrange accreditation in health plans and staff privileges in local hospitals.

Salima continued working in the clinic until July 2011, when she was experiencing knee problems. At the same time, monthly rent payments ceased. In early December 2011, Knight had “a three-day notice to pay rent or quit” posted on the premises, and mailed to Salima, without response. Knight filed an unlawful detainer action against Salima Multani on December 9, 2011. Salima defaulted and was evicted on May 17, 2012.

Sometime in late December 2011 and early January 2012, all the medical equipment, supplies and files were allegedly contaminated by raw sewage that backed up into the clinic. The May 26th agreement with Dr. Onubah could not be completed.

Nearing the end of 2013 Salima Multani ‘as “an individual d/b/a FAMILY HEALTH SERVICES MEDICAL CLINIC.” ’ filed a lawsuit against Knight “alleging claims for conversion, breach of the covenant of quiet enjoyment, nuisance, negligence/strict liability, contract interference, and violations of section 17200”.

Knight moved for summary judgement, but was granted summary adjudication to all of the claims except the contract interference claim, because Salima was unlawfully on the premises after July 1, 2011, and after December 9, 2011 was illegally on the premises, when the alleged sewage spill occurred.

The contract interference claim went to a jury trial. Rahim, Onubah, and Khaleel testified at the trial, where the May 26th agreement was presented as evidence. Rahim testified that he, Khaleel, and their father “were controlling the business or operating the business.” He explained that as Salima’s health got worse in 2011 “a decision was made to find a buyer” for the clinic.

Rahim also testified about entering the clinic on January 6, 2012 and discovering the alleged sewage spill … determined the sale could not go forward because all of the medical equipment was contaminated and could not be used in the care and treatment of patients.

Onubah testified that his primary interest in buying the practice was the patient population … it would have been worth it to him to pay $400,000 for the clinic even if he had to buy all new equipment.

Khaleel was asked, “Is it correct to say that your mother Salima Multani did not ever know that she was selling her practice to Boniface Onubah?” He responded, “We made all the business decisions on her behalf.”

Salima did not testify.

The trial court allowed the jury to submit questions and follow up questions of the witnesses. Khaleel was asked “Did you or Rahim then or now have your mother’s legal power of attorney?” Khaleel responded that Rahim had legal power of attorney. The jury followed up, asking, “As of what date?”with no direct reply. No power of attorney was entered into evidence, and the jury returned a verdict that no economic relationship existed between Salima Multani and Boniface Onubah.

On appeal, Salima contends the trial court erred by granting summary adjudication because a tenant who does not pay rent retains all legal rights of possession up until the time she is dispossessed following the successful conclusion of an unlawful detainer action. She also contends the jury’s verdict was not supported by substantial evidence.

The appeal courts main issue was Salima’s rights at the time of the alleged sewage spill since it was used in justifying all the summary adjudication rulings. Cited cases presented did not precisely address issues in this case. The appeal court’s research was unsuccessful in finding precedent, so basic landlord-tenant principles were applied.

[B]ecause Salima failed to tender rent, Knight could not accept it, and therefore the statutory presumption that the parties “have renewed the hiring on the same terms” (Civ. Code, § 1945) no longer applied. Thus, the implied month-to-month lease terminated when Salima failed to pay rent.

[E]ven if Salima’s failure to pay rent, in itself, did not terminate the statutorily-implied lease, it nevertheless constituted a material breach of the lease. And, when one party to a contract breaches a material term of the contract, the other party has the option to terminate the contract for cause.

Knight’s service of a three-day notice to pay rent or quit and her initiation of an unlawful detainer action when Salima failed to comply with the notice indisputably establishes Knight’s election to terminate the implied lease … and Salima’s legal right to possession of the premises.

[A] t the time of the events at issue in the lawsuit, she had no contractual relationship with Knight, and “ha[d] but ‘“naked possession”’” of the premises.

The appeals court reviewed all the claims settled by summary adjudication finding [“It is the responsibility of the appellant, here plaintiffs, to support claims of error with meaningful argument and citation to authority. … In addition, citing cases [or statutes] without any discussion of their application to the present case results in forfeiture”].

Salima states that “[t]hroughout the terms of [Salima’s] tenancy of 18 years, there were several problems with plumbing issues, all of which resulted in [Knight] arranging … inadequate repairs, but the only evidence presented was evidence of an incident in 2009 involving a backed-up drain in a single sink … and which Knight promptly remediated … [T]his single incident was not sufficient to show that Knight knew or had reason to know there was a significant plumbing problem.

As to the jury trial, Salima argues that the verdict was not supported by substantial evidence because there was such overwhelming evidence of a sales agreement between Salima and Onubah that no rational trier of fact could conclude there was no economic relationship between them that contained a reasonably probable future economic benefit or advantage.

Salima set forth the evidence presented at trial … the written contract; Rahim’s testimony about finding a buyer; … Onubah’s testimony confirming the agreement; and Khaleel’s testimony that the practice was sold. What Salima does not acknowledge … that Salima was unaware of the alleged sale; … Onubah testified that he spoke only with Rahim and/or Khaleel about the sale; … Khaleel testified that Salima was not involved in the decision to sell …

The cause of action was brought by Salima, as an individual doing business as Family Health Services Medical Clinic. The business was not a legal entity separate from Salima as an individual … Doing business under another name does not create an entity distinct from the person operating the business … Unless Rahim had Salima’s personal power of attorney to act on her behalf in selling her practice or the clinic, evidence of his agreement with Onubah is irrelevant … the jury apparently recognized this issue and sought evidence of such a power of attorney.

In short, we find that substantial evidence supports the jury’s verdict. The judgment is affirmed. Knight shall recover her costs on appeal.

(Multani v. Knight, (Los Angeles County Super. Ct. No. BC531587))

Decision: April 2018
Published: May 2018


 
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