Court Opinion

ID: 9726183
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:36:07.024664+00
Date Added: 2024-06-11T18:25:23.933512
License: Public Domain

STANIFORTH, J.
I respectfully dissent.
The trial court, in granting the challenged partial summary judgment, violated these elemental procedural rules governing the granting or denial of a summary judgment: (1) The trial court failed to discern a multitude of factual issues that precluded granting of the summary judgment; (2) The trial court overlooked binding precedent, a long-established rule of law pronounced by this court and instead relied upon a factually nonapplicable, legally questionable, criticized noncontrolling decision; and (3) In finding a cause of action, it created a radical innovation in substantive California tort law, discarded sound conceptual premises without authority or persuasive reason to justify the departure.
I
The precise question presented by this appeal is whether there has been an erroneous granting of a partial summary judgment. Whether substantial evidence supports the award of damages or the earlier granting of the partial summary judgment has no legal relevance where the error complained of is an erroneous granting of the motion for partial summary judgment. These were bifurcated proceedings. An erroneous grant of summary judgment does not become subject to the substantial evidence rule albeit followed by a contested trial on the issue of damages. The error committed in the granting of the motion for summary judgment infected the whole proceeding. Thus, the evidence offered on the summary judgment motion is not to be viewed in a light most favorable to the judgment. Rather, it is elementary law that the motion for summary judgment should be denied if the papers submitted show there is a triable issue of fact (Code Civ. Proc., § 437c; Daugherty Co. v. Kimberly-Clark Corp., 14 Cal.App.3d 151, 156 [92 Cal.Rptr. 120]), and if an issue of fact is present the trial court abuses its discretion in granting such a motion (Robinson v. City and County of San Francisco, 41 Cal.App.3d 334, 337 [116 Cal.Rptr. 125]). The *84function of the trial court is “issue finding,” not “issue determination” (Walsh v. Walsh, 18 Cal.2d 439, 441 [116 P.2d 62]), and, in reading the papers filed, those of the moving party are to be strictly construed, while those of the opposing party are to be liberally construed. (Slobojan v. Western Travelers Life Ins. Co., 70 Cal.2d 432, 437 [74 Cal.Rptr. 895, 450 P.2d 271].)
Next, and of critical importance here, is the rule applicable to summary proceedings declaring that where the matter in issue is the meaning of the language of a written contract, where the intent of the parties is uncertain or ambiguous or doubtful “‘‘and parol evidence is introduced in aid of its interpretation [italics ours], the question. . .is one of fact. . . (Walsh v. Walsh, supra, 18 Cal. 2d 439, 444.) Such a dispute cannot be resolved by the summary judgment processes. The summary judgment was not intended to provide a substitute for a trial on the merits of such fact issue. (Ibid.)
A fair and candid examination of the documents and declarations submitted in support as well as in opposition to the motion for partial summary judgment here, points to one conclusion: a multitude of factual contentions abound, leap forth and require a taking of evidence, a weighing of evidence and a resolution of dispute by trial. For example, plaintiff Richardson’s declaration recites facts concerning the actual construction given by the parties to the lease by acts and words of the parties. Contrary to Richardson’s position, the declaration of defendant Martinez asserts that his understanding of the disputed term “occupancy” was consistent with “all of my personal discussions with Mr. Richardson and others.... ” Acts, declarations of the parties in construing the lease provision are clearly factual matters requiring the taking of evidence. Mr. Bomze, on behalf of the lessee, asserts as a matter of fact there has been no change in the occupancy of the premises. The lessor disputes this assertion both as a legal and as a factual matter. Defendants have set forth at some length their expressed intent in the use of the language in question; they intended not only to prohibit an assignment of the lease, but also any change in the physical occupancy. Richardson’s position is to the contrary. In light of these clear, plain and unmistakable factual disputes as to the intent of the parties, and as to meaning of these words, and in view of the contradictory evidence tendered on these issues, the granting of the motion for partial summary judgment was inappropriate, in fact an abuse of discretion.
*85II
The trial court, in granting the motion for partial summary judgment, ignored this factual dispute as to the meaning of the lease language and concluded that the decision in Ser-Bye Corp. v. C. P. & G. Markets, 78 CaI.App.2d 915 [179 P.2d 342], was the controlling law. Ser-Bye held that a sale of stock of a corporation did not constitute an assignment of the lease. The Ser-Bye decision is neither good law nor applicable factually to the situation at bar. Ser-Bye involved a judgment on the pleadings in an unlawful detainer action in favor of the corporate lessee. The Ser-Bye pleadings charged that the lease contained a covenant to the effect that the lessee would not “assign the leasehold estate.. .without the written consent of the plaintiff first obtained.” (Id. at p. 918.) Here, factually to the contrary, the covenant in dispute provides not only against assignment of the lease without written consent, but prohibits occupancy by anyone contrary to the terms thereof without the written consent of the lessor. Thus, the critical language here was not in any way involved in Ser-Bye. Further, from the face of the lease provisions, as well as from the hot contentions made by the parties, different meanings are in fact to be found and can be reasonably argued from these words. Thus, Ser-Bye is factually inapplicable.
Moreover, Ser-Bye is not sound law. The learned scholar Witkin criticized the Ser-Bye decision in this fashion: “This case, while stressing the equitable rule against forfeitures, appears to give inadequate consideration to the equally important rule that the court will disregard the corporate entity when it is used to circumvent an obligation. [Citations.]” (3 Witkin, Summary of Cal. Law (8th ed.) § 493, p. 2172.) Witkin makes reference to a line of cases holding that even where there is no fraud on creditiors to be shown, “the corporate entity may be disregarded if its recognition would permit individuals to evade ordinary contractual obligations.” (6 Witkin, Summary of Cal. Law (8th ed.) § 8, pp. 4320-4321; italics added; Kohn v. Kohn, 95 Cal.App.2d 708, 718 [214 P.2d 71]; Wilson v. Stearns, 123 Cal.App.2d 472, 484 [267 P.2d 59]; Claremont Press Pub. Co. v. Barksdale, 187 Cal.App.2d 813, 817 [10 Cal.Rptr. 214]; Talbot v. Fresno-Pac. Corp., 181 Cal.App.2d 425, 431 [5 Cal.Rptr. 361]; Paul v. Palm Springs Homes, 192 Cal.App.2d 858, 862 [13 Cal.Rptr. 860].)
In the Kohn case, supra, the “defendant husband, by a property settlement, agreed to pay plaintiff wife 30% percent of his net income *86from certain property. Defendant and two others formed a corporation which defendant dominated, one purpose being to minimize payments under the agreement. [The appeal court held] the trial judge erred in failing to disregard the corporate entity in this action for an accounting. ‘The essence of the formation of this corporation was to transfer the property of a joint venture to a corporation owned by the joint adventurers (and the other joint adventurer’s wife) and thereby attempt to avoid this solemn obligation, and though the corporate form may be continued, if desired, for other purposes, it will not be recognized by the court for the purpose here in question. The law of this state is that the separate corporate entity; will not be honored where to do so would be to defeat the rights and equities of third persons' (95 C.A.2d 719.)” (6 Witkin, Summary of Cal. Law (8th ed.) § 8, p. 4321; italics added.)
Ser-Bye failed to examine the more fundamental problem analyzed by this court in Sexton v. Nelson, 228 Cal.App.2d 248 [39 Cal.Rptr. 407]. Sexton involved a claimed breach of covenant in the lease against assignment. This court, speaking through Justice Coughlin, said; “A clause prohibiting the assignment of a lease does not foreclose every transfer of the lessee’s rights thereunder. [Citation.] Where a transfer results merely from a change in the legal form of a business and does not affect the interests of the party protected by the nonassignable provisions of the lease, a breach of that provision does not occur. [Citation.] In accord with the foregoing general rule, it has been held that a lessee’s transfer of his lease to a corporation formed and wholly owned by him, does not violate a provision thereof against assignment. [Citations.] In the case at hand, the evidence establishes without conflict that the defendant owned all of the stock in the subject corporation; continued to operate and manage the business occupying the leased premises; and used the corporate structure only as a tax advantage device. Under the facts here, any transfer of the lease from the defendant to his corporation was a transfer in form only and not in substance. The interest of the plaintiff was not affected thereby.. . . Under the facts here, in effect, the defendant continued in the exclusive use of the leased premises after he formed his corporation; continued to control, operate and manage the business occupying these premises; and, because he was exclusive owner of the corporation’s shares of stock, his control was tantamount to ownership of the business. The decision in Weintraub v. Weingart..., cited by plaintiff, is not in conflict with the foregoing conclusions as in that case there was evidence supporting an implied finding that the corporation to which the transfer had been *87made was not wholly owned by the lessee.” (Sexton v. Nelson, supra, 228 Cal.App.2d 248, 258-260; italics added.)
A further case resolving the same fundamental problem is Standard etc. Bldg. Co. v. Carpenter, 79 Cal.App.2d 330 [180 P.2d 53]. Witkin regards the Carpenter case as taking a different view than that in SerBye but feels a questionable result was reached. Witkin analyzes the case in this fashion: “The corpus of a charitable trust consisted solely of the stock of a corporation, which was lessee of valuable business property under a 99-year lease made in 1912, and which paid the income to the trustee, after deducting rent and other expenses. This method of earning money for the trust through the medium of the lessee corporation proved expensive, and, to avoid the waste of funds for corporation taxes and other such costs, an attempt was made by the lessee corporation to assign the lease to the trustee. [The appeal court held] the assignment could not be enforced, for the lease provided that an assignee must assume the obligation to pay rent, and the trust had no assets which could be used to pay rent in the event that the leased property failed to earn the bare rental. The court said: ‘We are not unmindful of the fact that the present relationship of the lessor and lessee differs in no respect from that which would exist if the assignment were made to the trustee, because the corporation has no assets other than its ownership of the leasehold interest. However, this situation was not the result of judicial decree. Under the facts of this case, the judgment of the trial court assumes a power to impair the obligation of a contract, and may not stand.’ (79 C.A.2d 332.)” (3 Witkin, Summary of Cal. Law (8th ed.) § 493, p. 2172.) Witkin then observes: “The court’s view seems unrealistic; the lessor could only have been benefited, not injured, by the elimination of the wasteful operation through the corporation as a conduit', and the possibility of business property in downtown Los Angeles not earning enough to pay rent under a 1912 lease was too remote to deprive the court of power to recognize the substance rather than the form of the transaction.” {Op. cit. supra', italics added.)
When we distill the essence from Sexton v. Nelson, Weintraub v. Weingart, 98 Cal.App. 690 [277 P. 752], and Standard etc. Bldg. Co., as well as from those cases which as a broad legal premise prohibit the use of the corporate device to violate a contractual obligation, this conclusion emerges: If the transfer results merely in a change in the legal form of a business and does not affect the interests of the party protected by the nonassignability provisions of the lease, a breach of that *88provision does not occur. (Trubowitch v. Riverbank Canning Co., 30 Cal.2d 335, 344 [182 P.2d 182].)
The converse of this rule is: If the transfer results in a change in form that does adversely affect the interests of the party to be protected, to wit the lessor, then a breach of that provision does occur. Thus, Sexton and Trubowitch and like cases teach that a trial court must look to the facts, to the substance of the transaction where the corporate device is used as a means of avoiding the effect of a flat prohibition against assignment to determine whether the interest of the parties to be protected—the lessor—is harmed. Here the trial court did not in any way treat with, conform to these underlying rules before extinguishing the contractual rights of the lessor. Rather, the trial court, misled by the general, the erroneous assertions contained in Ser-Bye, supra, 78 Cal.App.2d 915, summarily violated the lessor’s contractual rights.
The trial court made no examination into the substance of the transaction proposed by the lessee to ascertain whether the lessor’s contract rights were in fact adversely affected by the device suggested and used. In any event, the summary judgment procedure would be totally inapposite for such a determination. The foregoing reasons, factual and legal, require this matter be reversed, remanded for retrial.
Ill
A second and further set of rules requires the case must be reversed with direction to dismiss the proceedings. Here, the lessor is required to respond in damages because he had the temerity to contend—and on basis of sound legal advice which sustained him in his contention—that the attempted assignment was in violation of express terms of the lease prohibiting assignment or a change -in occupancy without written consent. The proposed opinion offers no case, no scholarly authority to indicate that in these conceded factual circumstances the landlord does not have a right, a legally protected interest in making a good faith attempt to enforce the express terms of his lease. Certainly a lessor may protect an express right reserved to him in his lease by refusing to accede to the lessee’s attempt to subvert that right by resorting to a legal fiction. Ser-Bye, supra, does not involve a question of damages for an intentional interference with a contractual relationship but rather involved an action for unlawful detainer. If Ser-Bye is good law, yet wholly different public policy considerations are present here. We have not yet reached a state in this society where either a landlord or tenant *89may not advance a position in good faith as regards an interpretation of a document between them. There is a right and a duty upon the part of the landlord or tenant if they in good faith believe that the other party is breaching their lease to maintain that position to defend it stoutly.
The cases cited in the majority opinion involve an unjustified inter-meddling with another’s contractual relationships or expectancies. They authorize recovery on a tort basis from a “malicious interloper.” (Buckaloo v. Johnson, 14 Cal.3d 815, 823-827 [122 Cal.Rptr. 745, 537 P.2d 865].) This is not a case of an officious intermeddler. Here the lessor and lessee have a valid, subsisting lease contract which clearly prohibits assignment without consent. The lessor has attempted to enforce in good faith the terms of his contract. Such a fact setting conceptually bears no relationship to the tort of interference with the prospective economic advantage. (1 Harper & James, Torts (1956) pp. 510-514.) In such species of interference with another’s contractual relationship, the “intentional” character of the interferences, the “motive,” becomes legally significant. The conceded facts here establish justification. The lessor’s motives for asserting his legal rights are totally irrelevant.
As the learned authority Prosser states; “The defendant’s breach of his own contract with the plaintiff is of course not a basis for the tort.” (Prosser on Torts (4th ed. 1971) p. 934, and cases cited in fn. 9.) And Prosser further states at pages 944-945: “Where the defendant acts to further his own advantage, other distinctions have been made. If he has a present, existing economic interest to protect, such as the ownership or condition of property, or a prior contract of his own, or a financial interest in the affairs of the person persuaded, he is privileged to prevent performance of the contract of another which threatens it; and for obvious reasons of policy he is likewise privileged to assert an honest claim, or bring or threaten a suit in good faith, to exercise the right of petition to public authorities, or to settle his own case out of court.” (Fns. omitted.)
I would reverse and remand the cause with directions to dismiss proceedings.
Appellants’ petition for a hearing by the Supreme Court was denied January 17, 1980. Bird, C. J., and Tobriner, J., were of the opinion that the petition should be granted.