Duty to 'Perform' Improvements Includes Duty to Pay for Them

What Happened: The following clause, which refers to California Title 24 requiring buildings to meet specific energy efficiency standards, was at the center of a dispute between a landlord and its optical components manufacturing tenant:

Landlord shall be responsible to perform all work to the Premises and/or Building necessary to comply with Title 24 which may be required as a result of the Landlord's Work or Tenant's Work.

The tenant did the work necessary to bring the property up to Title 24 and asked the landlord for reimbursement. The landlord refused. Its reasoning: The clause just says that we’ll “perform” the work, not that we’ll pay for it. The jury wasn’t impressed and awarded the tenant the nearly $500,000 it spent on the Title 24 work.

Decision: The California court refused to set the verdict aside.   

Reasoning: There was plenty of evidence for the jury to conclude that, while the lease didn’t expressly say it, the parties understood the duty “to perform” clause as including the duty to pay:  

• The evidence showed that the sides negotiated and ultimately agreed that the landlord was responsible for the cost of Title 24 compliance;
• The tenant told the landlord it was doing the work as part of its tenant improvement project; and
• The landlord neither objected to the tenant’s plans nor offered to “perform” the work itself—in fact, it participated by reviewing the design drawings.

• Macrotron Sys. v. & Alto: 2020 Cal. App. Unpub. LEXIS 1627