Bella Terra (a successor landlord) argued that under the provision, BCF’s obligation with respect to the property taxes, which BCF had agreed with the original landlord would be $133,500 for the first year, would increase thereafter in direct proportion to the percentage increase (if any) in the actual taxes levied and assessed against the parcel. BCF argued that the increase in its obligation would be limited, dollar-for-dollar, to the actual increase in the landlord’s tax bill. Under both side’s interpretations, BCF would end up paying the landlord more than the actual taxes on the parcel.
A jury returned a verdict for Bella Terra. BCF appealed, arguing for de novo review of the lease language in light of extrinsic evidence it offered at the trial.
In an unpublished opinion, the California Court of Appeal, Fourth Appellate District, Division Three, affirmed the judgment for Bella Terra. The court agreed with BCF that the lease provision in dispute was subject to de novo review on appeal. However, viewing the language of the provision in light of BCF’s extrinsic evidence, the court agreed with Bella Terra’s interpretation of BCF’s obligation to its landlord.
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