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Property Law Keyed to Kurtz
Kendall v. Ernest Pestana, Inc.
Citation:
709 P.2d 837 (Cal. 1985)
ProfessorTodd Berman
CaseCast™ – "What you need to know"
Facts
The City of San Jose leased hangar space at the San Jose Municipal Airport to Irving and Janice Perlitch, who in turn assigned their interest to Ernest Pestana, Inc. Prior to this assignment, the Perlitches entered into a 25-year sublease with Robert Bixler commencing on January 1, 1970, with four 5-year renewal options. The sublease provided for rental increases every 10 years proportionate to increases in the master lease. In 1981, Bixler agreed to sell his airplane maintenance business to Kendall and the O’Haras, including the equipment, inventory, improvements, and the existing lease. The proposed assignees had stronger financial qualifications than Bixler and were willing to be bound by the original lease terms. The lease required the lessor’s written consent for assignment. When Bixler requested consent from Pestana, the company refused unless the rent was increased and other terms were modified, claiming it had an absolute right to refuse any assignment request arbitrarily. The prospective assignees sued, seeking a declaration that Pestana’s refusal was unreasonable and an unlawful restraint on alienation.
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