Cohen v. Ratinoff

147 Cal. App. 3d 321, 195 Cal. Rptr. 84 (1983)

 

RULE:

The duty of good faith and fair dealing, which is implicit in the lease entered into between plaintiff and defendant, therefore, militates against the arbitrary or unreasonable withholding of consent to an assignment. A breach by the lessor of his duty constitutes a breach of the lease agreement.

FACTS:

Plaintiff lessee and defendant lessor signed a written lease for the rental of a building. The lease contained a clause that the lessee could not assign without the lessor’s consent. Plaintiff requested defendant to consent to the assignment of the lease on several occasions. Defendant refused to consent. Plaintiff filed an action for breach of contract bad faith breach of contract against defendant. Defendant filed a motion for judgment on the pleadings. The trial court granted defendant's motion and recovery of costs and ordered that plaintiff take nothing on his complaint ruling that defendant had an unqualified right to refuse to consent to plaintiff's attempted assignment.

ISSUE:

Did the lessee sufficiently plead causes of action for breach of contract and bad faith breach of contract against the lessor?

ANSWER:

Yes.

CONCLUSION:

The court ruled that plaintiff sufficiently pleaded causes of action for breach of contract and bad faith breach of contract based upon defendant's unreasonable refusal to consent to plaintiff's attempted assignment. The court held that where the lease provides for assignment or subletting only with the prior consent of the lessor, the lessor may refuse consent only where he has a good faith reasonable objection to the assignment or sublease, even in the absence of a provision prohibiting the unreasonable or arbitrary withholding of consent to an assignment of a commercial lease. The court reversed and remanded the case for further proceedings.

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