Pacific First Bank v. New Morgan Park Corp. ( 1994 )

FADELEY, J.,

dissenting.

In a decision reminiscent of the actions of the landlord in an 1890’s melodrama twirling his moustache while exclaiming “but you must pay the rent,” the majority cancels a tenant’s rights and forfeits the remaining decades of the term of a 50-year lease. No default has occurred, either under the literal terms of the lease or the implied-by-law promise to deal fairly and in good faith. All rent is paid. No diminution of the tenant’s assets or financial responsibility has occurred.

The majority seizes on a technicality¹ to forfeit by termination the substantial remaining term of years. That the tenant dispossessed by this imagined technicality is a banking corporation rather than a widow and her orphaned offspring, such as the melodrama’s landlord abused, does little to persuade me that the tenant here has violated the lease at all, let alone committed such a violation as to justify termination, forfeiting half or so of the 50-year lease term (including the two automatic 10-year extensions as unequivocally promised).²

Merger is not a ground for declaring default in the lease. The majority, however, says it is because they believe that the parties expected a “transfer by operation of law,” such as would be governmental condemnation of the assets involved, to include mergers even where, as here, the merger enhances the ability of the tenant to pay the promised rent. I cannot agree and dissent for that reason as well as for the reasons demonstrated in the dissent of Unis, J., which I join.

1 And a technicality of its own creation at that, not from the lease. In its act of creating the technicality, the court finds facts about the expectation of the parties that are contrary to facts found and entered by the trial court. No discussion of why the factfinder’s findings of fact do not control may be located in the majority opinion.

2 If a contract is reached, damages, not specific performance of some forfeiture provision, is the usual result. Here no damages were suffered. The rent is paid, and will be from the same assets as the landlord had in mind since the inception of the lease.