Hemphill v. Levine

1. The Lease The Lease granted the Tenant the right, during the Lease term, to remove two specific categories of improvements: (1) the mezzanine and (2) the existing interior office structures, which included bathrooms constructed within those offices. Section 4.04(a) permitted removal of the mezzanine and required that, “At the end of the Lease, the tenant shall restore the mezzanine back to its original location.”

Section 4.04(b) permitted removal of the offices and required restoration of those offices “to its original condition” at the end of the Lease, with an option to restore them to an alternative location with the landlord’s prior written approval.

2. Breach of Lease The first issue addressed in the Award is whether Levine breached the Lease. The Arbitrator found: “In late 2018, with proper permit, Levine removed the offices, bathrooms and mezzanine. (T:108 L.14-17.) He did not restore them upon termination of the Lease or vacation of the premises and has not performed any restorations to date. Those facts are at the core of this dispute.” (Award, p. 2.) The Arbitrator stated it was Respondents’ position that Hemphill, with full knowledge, waived his right to performance; i.e., his restoration rights under the Lease, based on his conduct during the final months of the Lease term and following termination of the Lease.

Respondents argued that during those time periods Hemphill relisted the premises for lease “as is”; rented to another tenant; submitted an insurance claim for the loss of the offices; accepted reconstruction plans created by Levine; and, finally, waited more than two years before serving Levine with the Arbitration Demand and claiming damages. (Award, p. 3.) In reviewing the voluminous record presented to him, the Arbitrator determined respondent Levine breached the Lease based upon the provision therein that Levine was to restore the offices, bathrooms, and mezzanine to “its original condition upon the end of the lease.” (Award, p. 4.)

Levine was aware of that and “clearly expressed his intent not to comply.” (Id. p.5.)

3. Defense to Enforcement The Arbitrator next considered whether Levine had a viable defense to breach of the Lease. The Arbitrator considered a statute of limitations defense and stated that Levine raised the defenses of waiver and estoppel. (Award, p. 5.) The Arbitrator determined that Levine failed to meet his burden on the issues. The Arbitrator found: “Mr. Levine’s denial that Mr. Hemphill ever asked him to restore the mezzanine is not accurate. (T-l 1 12, 1113.)” (Award, p. 4.) “Hemphill repeatedly reminded Levine of his obligations under the Lease to restore or purchase the mezzanine. (For example, see Exh.46.)” (Ibid.)

These reminders occurred prior to Levine vacating the premises. The Arbitrator noted: “within 19 minutes of receiving the September 9, 2024, email from Levine stating, ‘I do not plan to undertake any construction’, Hemphill responded, ‘Thanks for the update but you have torn out my offices. You are responsible for this. You have also told me that you would rebuild. I cannot rent the building out without the offices.’ (Exh.32.) (See the 12: 18 p.m. email from Levine and Hemphill’s response at 12:37 p.m.).” (Award, pp. 5-6.)

The Arbitrator also found that Hemphill did not make any demands to Levine after the latter vacated the premises. The Arbitrator states: “The fact that neither party contacted nor communicated with the other after September 30, 2022, to discuss restoration or mitigation is troublesome and curious to the arbitrator.” (Award, p. 5.) Levine vacated the premises on September 30, 2022. (Ibid.) “[I]t is understandable Levine could have felt ‘blindsided’ when he eventually received the demand two years after termination.” (Ibid.)

The Arbitrator decided that, despite the two-year silence, Hemphill retained his right to pursue Levine for breach of contract; and, that Levine still had corresponding duties to fulfill his legal obligations under the Lease. (Ibid.) “There are no writings in evidence- texts, emails or otherwise - indicating Mr. Hemphill would waive his rights. Levine argues his email at 2:13 p.m. on September 9, 2022, noting in part, ‘If I can be released of any other liabilities, I can sign over the engineered set of plans for the project to use if that will help bring even more value to your new tenants.’ (Exh. 1 19 -0000193.)

There is no evidence that Hemphill ever responded to that email. The contention that Hemphill did not ‘disavow’ the proposal is neither acquiescence to releasing Levine of his liabilities nor 16

supportive of waiver. Simply put, there was no meeting of the minds between these parties that Hemphill agreed to release Levine from any liabilities under the Lease, in exchange for the plans or otherwise. Hence, defense number 19, Release of Obligation, fails. (Exh.9, page 3.) Moreover, the plans had already been provided to Hemphill on August 5, 2022, without any conditions placed on their use by Hemphill. (Exh.41.) On August 12, 2022, a set of final approved plans were sent to Hemphill via email, again without any conditions or reference to a release or waiver of Levine’s obligations under the Lease. (Exh.38-00768.)” (Award, p. 6.)

With respect to the issue of waiver, the Arbitrator wrote: “The same facts and lack of evidence convincing this arbitrator that waiver does not apply, serve to inform on estoppel and laches. Levine chose not to restore; he chose not to even address those obligations, other than, according to Hemphill, to state during the walk through, ‘I know I owe you for this’, which Levine adamantly denied. (T-1 8 1, 1 164) To the extent Levine argues he has been prejudiced by the passage of time and an increase in the cost to restore, he chose to ignore his responsibilities and had no communication with Hemphill after September 30, 2022. (T-l 165:3.).

He chose not to purchase the mezzanine for $60,000. While a tenant, he obviously knew the mezzanine materials were sitting in the parking lot, rusting. (T-l 1 14.) The record is void of any evidence to support a finding Levine was legally prejudiced by Hemphill waiting until October 2024 to pursue the claim.” (Award, p. 7.) The Arbitrator found that the arguments of surrender and abandonment were not applicable to the subject matter. (Ibid.) “Once Levine chose not to extend the Lease and notified Hemphill in May 2022, and the Lease terminated September 30, 2022, his tenancy ended.

There was no surrender, abandonment or change in the positions of Hemphill and Levine except their commercial landlord/tenant relationship ended. Levine no longer had any rights to the property or how it would or should be managed by Hemphill. The rights and duties of the parties set forth in the subject Lease and applicable contract law governed their relationship from that point forward. Hemphill rightly took possession of the premises and dealt with it as he saw fit, which included finding another tenant, seeking compensation from the insurance carrier, and ultimately obtaining refinancing to hire counsel.

At the same time, Levine’s corresponding duties to restore were not extinguished when the Lease ended. He further made no attempt to minimize his continuing exposure under the Lease.” (Award, p. 7.) In Respondents’ opposition and cross-petition, Levine again cites cases with different scenarios—where the tenant left prior to the end of the lease terms—and a different type of damages—the right to collect rent. In Dorcich v. Time Oil Co. (1951) 103 Cal.App.2d 677, the plaintiffs sued to recover the balance of rentals due under a lease of a gasoline service station.

The appellate court affirmed the trial court’s determination. After abandonment of the lease by defendant, when plaintiffs rented premises to a sub-lessee for the remainder of defendant’s lease term and accepted rent from the sublessee for four months without notifying defendant, and did not notify defendant until lease was executed, such acts were inconsistent with defendant's absolute dominion over leased premises and resulted in surrender by operation of law. In Rehkopf v. Wirz (1916) 31 Cal.App. 695, the lease was for three years.

Defendants paid rent in advance for one year and vacated the premises a few days prior to the end of the first year, informing the lessor of their intent to abandon the premises. The lessor accepted the premises back by taking possession and not informing the lessees of any planned course of action but, instead, finding a new lessee. To avoid a surrender, the landlord must notify the tenant that possession is retaken on behalf of the tenant and that the landlord intends to sublet to another on behalf of the tenant in order to mitigate damages. (Id., at p. 696; Dorchich, supra, at p. 683-684.)

This court finds no fault with the Arbitrator’s reasoning. In this case, the Lease terminated due to the end of its term. Hemphill recovered dominion over the premises due to the end of the contract period. Thus, the theories of surrender and abandonment do not apply. ii. Civil Code section 1951.2 Respondents argue Civil Code section 1951.2 provides a limited statutory exception to the common-law surrender doctrine, permitting recovery of certain damages following termination for breach if—and only if—the landlord terminates the lease for breach and satisfies the statute’s mitigation and damages requirements.

The statute does not apply automatically, and it does not apply where a lease simply expires by its own terms and the landlord accepts surrender without reservation. Civil Code section 1951.2 is inapplicable to this case. iii. Doctrine of Impossibility and Prevention of Performance – Mezzanine Damages Respondents argue, even assuming that any restoration obligation survived surrender, California law independently discharges performance where the obligee’s conduct renders performance impossible.

Civil Code sections 1511 and 1512 codify this principle. There is no mention of these doctrines in the Award and Respondents cite no evidence supporting finding that they raised this issue before the Arbitrator. Nor do they cite any evidence that Levine could not have complied with his contractual obligations within the time frame they were contemplated for under the Lease. Rather, the only evidence is that Levine informed Hemphill he would not do any construction on the premises. b. Arbitrator’s additions to Lease Respondents argue the Arbitrator rewrote the Lease by imposing restoration and reconstruction obligations that do not exist.

The gist of their argument is that despite Levine not complying with his obligations under the contract, Hemphill should be burdened with the extra cost of not only the delay in putting the building back to its original condition, but the added burdens imposed by the delay due to code compliance requirements. Respondents’ authority does not support this position. c. Speculative Damages Methodology; Material Evidence Respondents argue the Arbitrator applied an unlawful and speculative damages methodology because he rejected all estimates in the record and selected a damages figure untethered to any evidence or methodology rejecting expert testimony by Cantu, Gemperline, and Eschoo without a rationale for doing so.

Respondents argue that by disregarding all the rebuild estimates and substituting an unsupported figure, the Arbitrator effectively refused to consider material evidence central to the measure of damages, substantially prejudicing Respondents’ rights. Review of the Award shows the contrary. The Award dedicates six pages to Hemphill’s damages. It discusses expert testimony and the cost to make Hemphill whole. The Arbitrator did not wholeheartedly side with Hemphill. Rather, he correctly determined that Hemphill was not entitled to an upgrade of the offices, bathrooms, and mezzanine beyond what had been in place for 16 and 14 years, respectively; he was not entitled to loss rent based upon the lack of offices and bathrooms on the premises; and damages were offset by Levine’s security deposit.

This court finds the Arbitrator thoughtfully considered the testimony presented to come to a fair and reasonable damage calculation based upon correct legal standards. d. Attorney Fees Respondents argue that the November 25, 2025, Amended Final Award awarding attorney fees and costs is entirely derivative of the invalid merits award. Independently, they argue that the arbitrator failed to apply the California Evidence Code and the lodestar methodology required by California law. They argue that because the merits award must be vacated, the fee award necessarily falls with it. 18

As this court has upheld the Arbitrator’s findings, Respondents’ arguments regarding attorney fees fail. Moreover, no authority is provided that this court may override the Arbitrator’s discretion in determining the reasonable amount of attorney fees to award the prevailing party.

3. Conclusion and Order Based upon the foregoing, the Petition of Hemphill to confirm the arbitration Award is GRANTED. Respondents’ counter-petition to vacate the Award is DENIED. Petitioner’s counsel is directed to submit a written order to the court consistent with this ruling and in compliance with Cal. Rules of Court, Rule 3.1312.

9. 25CV08803, Capri Mobile Villa LLC v. City of Petaluma

Defendant City of Petaluma (“City”) demurs to the complaint filed by Plaintiff Capri Mobile Villa, LLC, (“Plaintiff”) on the grounds the cause of action for declaratory relief fails to allege facts sufficient to constitute a cause of action. Specifically, the City argues Plaintiff’s claims are not ripe because the City has charged only interim, nonfinal amounts to prepare an Impact Report, which Plaintiff has not yet paid, and the final amounts of which remain undetermined; Plaintiff cannot state a takings claim because the challenged fees are user fees imposed to recover the cost of government services and are noncompensable under the Fifth Amendment; Even if the fees were monetary exactions, they are not unconstitutional conditions because they satisfy the essential nexus and rough proportionality requirements of Nollan and Dolan; Plaintiff’s challenges to the fees are time-barred because Plaintiff failed to bring a reverse validation action within 120 days of their adoption; The fees are imposed for specific government services that are provided directly and solely to Plaintiff and do not exceed the reasonable costs to the City of providing those services; The charges are not “taxes” under article XIII C because they fall within the express fee exclusions; Article XIII A, section (3) applies to the State, not local governments; The fees do not deprive Plaintiff of opportunity to petition the government or to seek redress of grievances, which Plaintiff is actively doing through this lawsuit and otherwise; and, Plaintiff cannot state a claim under Section 1983 because there is no violation of a federally protected right.

1. Complaint On December 19, 2025, Capri Mobile Villa, Inc. (“Capri” or “Plaintiff”) filed a complaint for declaratory and injunctive relief. Capri owns a mobilehome park, Capri Mobile Villa, located at 717 N. McDowell Blvd., City of Petaluma, California (“Park”). Capri’s complaint seeks declaratory relief alleging that the City of Petaluma’s allegedly increasingly burdensome requirements on mobilehome parks has made Capri unable to continue to operate for profit. It therefore seeks to cease operations.

However, in order to do so, the City informed Capri that its application required the preparation of an Impact Report, at an estimated total cost of $239,050. That included $75,000 for appraisals of the mobile homes along with related administrative costs. The City required Plaintiff to deposit that amount before it would start on an Impact Report. Capri alleges it is unable to afford this payment and asserts a cause of action for declaratory relief under Code of Civil Procedure section 1060 and 42 U.S.C. section 1983.

Plaintiff alleges the Impact Report charges (1) are an unconstitutional exaction and taking under the Fifth Amendment; (2) burden its First Amendment right to petition; (3) are unlawful “taxes” under articles XIII A and XIII C of the California Constitution; and (4) are “unreasonable” under section 65863.7, subdivision (g). Plaintiff seeks a declaration that the charges are unlawful and seeks an injunction preventing the City from collecting the $239,050 as a precondition of processing Plaintiff’s application to cease operations.

2. City’s Arguments 19