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Contracts Keyed to Fuller
Kendall v. Ernest Pestana, Inc.
Citation:
709 P.2d 837 (1985)Facts
The City of San Jose owned property at the San Jose Municipal Airport, which it leased to Irving and Janice Perlitch, who later assigned their interest to defendant Ernest Pestana, Inc. Prior to this assignment, the Perlitches had entered into a 25-year sublease with Robert Bixler commencing on January 1, 1970, covering an original five-year term plus four 5-year options to renew. The sublease provided that the rental rate would increase every 10 years proportional to increases in the master lease. Bixler operated an airplane maintenance business on the premises until 1981, when he agreed to sell the business to plaintiffs, including an assignment of the lease. The proposed assignees had stronger financial statements and greater net worth than Bixler and were willing to be bound by the lease terms. The lease required written consent from the lessor before assignment, which Bixler requested from Pestana. Pestana refused consent, claiming an absolute right to refuse arbitrarily, and demanded increased rent and more onerous terms as a condition of consent.
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