Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Los Angeles County Super. Ct. No. BC392452 Rex Heeseman, Judge.
Dennis A. Winston, in pro. per., for Plaintiff and Appellant.
Perelman and Fink, Baret C. Fink; Palarz & Williams and Herman S. Palarz for Defendants and Respondents.
ASHMANN-GERST, J.
Dennis A. Winston (Winston) appeals the judgment against him on a breach of contract complaint prosecuted by Baret C. Fink, Randall C. Fink, Herman S. Palarz, Ronald J. Stauber and Cameron Williams (collectively the Fink parties). Because the trial court did not err, we affirm.
FACTS
In 2004, Winston was diagnosed with bone cancer. About three years later, Winston and the Fink parties entered into a five-year lease (lease) with Century Park for an office suite (Suite 315). The parties agreed that the term of the lease would begin on the later of March 1, 2008, or substantial completion of tenant improvements and facilities by Century Park. In an addendum, Article 40 of the lease provided: “If, during the term of this Lease, ... any [tenant]... become[s] disabled to the extent that he is projected to be unable to practice his profession for a period of at least six (6) months, ... that individual tenant may terminate his further obligation under this Lease by providing [Century Park] with written notice of such disability... and the [tenant’s] election to terminate the Lease. Said termination of the Lease shall apply only to the disabled... tenant.”
Effective February 12, 2008, Winston and the Fink parties entered into an operating agreement and thereby covenanted that each one of them was responsible for 16.6 percent of the lease. It also provided that the “[r]ent charged to each Tenant shall be calculated based on the square footage occupied by each Tenant.” Beyond the rent, the operating agreement established how the tenants would allocate expenses for a receptionist, photocopiers, the law library, parking, the postage meter, the telephone system and premises liability insurance. Regarding termination, article 1 of the operating agreement stated: “If a Tenant... desires to terminate the Tenant’s responsibility under the Lease, a Tenant may do so on obtaining [Century Park’s] consent (if required) as well as a substitute tenant with satisfactory financial ability to assure other Named Tenants that the released Named Tenant’s obligations under the Lease will be discharged. Substitution of a new tenant will require unanimous approval of the remaining Named Tenants.”
The operating agreement was also signed by lawyers who agreed to sublease space in Suite 315.
By April 11, 2008, Suite 315 was available for occupancy. Due to illness, Winston invoked Article 40 and vacated his equipment from Suite 315 and another office in the building. As of May 1, 2008, Century Park released Winston from any further obligation under the lease. He did not procure a replacement tenant approved by the Fink parties.
The Fink parties sent Winston a bill for rent in May and June 2008. In response, Winston filed a complaint for declaratory relief and rescission of the operating agreement. The Fink parties filed a cross-complaint for declaratory relief. The matter went to trial. The trial court entered judgment in favor of the Fink parties on both the complaint and cross-complaint. The Fink parties were awarded $19,224 in damages.
This timely appeal followed.
DISCUSSION
Winston argues that he was entitled to rescind the operating agreement under Civil Code section 1689, subdivisions (b)(3) and (b)(4) because the consideration either became entirely void or it failed in a material respect before it was rendered to him. In general, the question of whether a contract has been rescinded is a mixed question of law and fact. (Harriman v. Tetik (1961) 56 Cal.2d 805, 810.) But when as here the material facts are not in dispute, we exercise independent judgment. (Gallup v. Board of Trustees (1996) 41 Cal.App.4th 1571, 1582.)
The issues are parsed below.
1. The consideration for the operating agreement was not entirely void.
Winston suggests that the only consideration for signing the operating agreement was the lease and that it became entirely void once he obtained a release from Century Park. We interpret the facts differently.
The consideration for entering into the operating agreement included the covenant by the Fink parties to pay their agreed shares of rent and business expenses and procure replacement tenants if any of them wanted to opt out of the lease. (Civ. Code, § 1605 [consideration is any benefit given or detriment suffered by a person to induce another to make a promise].) In no respect was this portion of the consideration void. Indeed, the Fink parties’ promises are still extant.
2. The consideration for the operating agreement did not fail in any material respect before it was rendered.
The Fink parties’ promises were rendered to Winston as soon as the operating agreement was signed, and certainly no later than when Suite 315 was available for occupancy in April 2008. It cannot be said that this consideration failed in any material respect before it was rendered.
From Winston’s vantage, his rights under the lease were an additional material part of the consideration. For the sake of argument, we accept his view of the facts. The problem, however, is that he had the right occupy Suite 315 in April 2008, which was about a month before he was released by Century Park.
The case of Nelson v. Sperling (1969) 270 Cal.App.2d 194 is cited by Winston, but not with the desired effect. The defendant won an unassembled, prefabricated house in a raffle and sold the house to the plaintiff. When the manufacturer failed to deliver the house, the plaintiff sued for rescission. The defendant argued that “she should be entitled to keep the purchase price which plaintiff had paid her since where one of two innocent parties must suffer because of the conduct of a third person, he, whose negligence caused the loss, must suffer.” (Id. at p. 196.) The court declined to invoke this maxim because the plaintiff was not at fault. (Ibid.) The sticking point with this citation is that Winston is at fault because he breached the operating agreement by terminating the lease without obtaining a replacement tenant. Notably, it has been held that “[t]he right to rescind a contract rests only with the party who is without default.” (Nelson v. Spence (1960) 182 Cal.App.2d 493, 499.) Given his health, we have nothing but sympathy for Winston, and we fully understand that he may be unable to practice law in Suite 315. Nonetheless, we are duty bound to uphold the law and respect the contractual rights of the Fink parties.
3. The law cited by Winston does not change our analysis.
Underlying Winston’s position is his interpretation and application of the following cases: Simmons v. Cal. Institute of Technology (1949) 34 Cal.2d 264, 273 (Simmons), La Cumbre G. & C. Club v. Hotel Co. (1928) 205 Cal. 422 (La Cumbre), Pitts v. Fletcher (1959) 169 Cal.App.2d 858 (Pitts) and Lasher v. Faw (1930) 209 Cal. 726 (Lasher).
The facts in Simmons were these. Simmons was consulted by Clark, a faculty member at California Institute of Technology (Cal Tech), regarding a project known as “Impact Research” and suggested an invention using a strain sensitive element. Even though his invention was built and operated successfully, Simmons was not paid for his services. A few months later, Simmons became a part-time faculty member at Cal Tech and was eventually employed to work on Impact Research as a fellow. Simmons wanted Impact Research to continue, so he signed a contract (royalty agreement) agreeing that 60 to 100 percent of all royalties from his invention would be paid to Cal Tech. He was induced to make this agreement by Clark’s promise that the royalties would only be used on Impact Research. Simmons then signed a licensing agreement (licensing agreement) with Baldwin Locomotive Works (Baldwin) that also served as a third party beneficiary contract that purported to confer benefits on Cal Tech. Under the licensing agreement, Baldwin was required to pay Cal Tech 60 to 100 percent of the royalties. When Simmons discovered that the royalties were not being used for Impact Research, he sued to have the royalty contract rescinded and the licensing agreement declared void. (Simmons, supra, 34 Cal.2d at pp. 267–271.)
The trial court determined that Simmons was entitled to recover all royalties paid to Cal Tech because Simmons received no consideration for the royalty contract; he received no consideration for the licensing agreement insofar as it conferred rights on Cal Tech; Clark made fraudulent statements that Simmons relied upon; and Clark’s acts and representations were neither authorized nor ratified by Cal Tech. (Simmons, supra, 34 Cal.2d at pp. 270–271.)
On appeal, Cal Tech and Clark argued that there was insufficient evidence to support (1) the finding that there was no consideration given for the benefits conferred upon Cal Tech, and (2) the finding that the execution of the royalty contract and licensing agreement were induced by fraud. (Simmons, supra, 34 Cal.2d at p. 271.) But the purported consideration given by Cal Tech for the royalty contract was Simmons’s past employment. The reviewing court explained that past employment was inadequate consideration to support the making of the contract. Further, because the royalty contract was rescinded for lack of consideration, “the beneficiary provisions of [the licensing agreement], which were based thereon, [were] unsupported by consideration and [could] also... be rescinded.” (Id. at p. 273.)
The plaintiff in La Cumbre was a country club. It entered into a contract to provide golfing and other privileges to the guests of a hotel for $300 a month. Without fault on the part of the hotel, it was destroyed by fire and could no longer accommodate any guests. When the hotel did not make its monthly installment payment, the country club sued to recover the installments payments due under the contract and lost. The California Supreme Court affirmed based on precedent that whenever a contract requires for its performance a specific thing, the destruction of that thing excuses the promisor unless it clearly assumed the risk that the thing would continue to exist. (La Cumbre, supra, 205 Cal. at pp. 425–426.)
Pitts involved an appeal from a judgment rescinding a contract of sale, canceling a promissory note and awarding damages. The appellant claimed error because the trial court permitted the respondent to file an amended cross-complaint to conform to proof and found that the reasonable rental value of a business premises was $250 per month. The ground for rescission was not challenged. The court reversed to the extent that the amendment to conform to proof was unsupported by the evidence. (Pitts, supra, 169 Cal.App.2d at pp. 859–862.)
Finally, in Lasher, a business owner named Faw agreed to transfer his business and assign his rights under a lease to the plaintiff in exchange for real property. At first, the plaintiff did not know that Faw could not assign his lease without the lessor’s consent. Eventually, however, the plaintiff learned that the lessor would consent if, among other things, the plaintiff transferred some of his real property to the lessor instead of Faw. The plaintiff did so, but other conditions went unmet and the lessor never gave consent for assignment of the lease. Instead, the lessor sold the premises to a third party and declined to make the plaintiff whole. The plaintiff sued for rescission and prevailed, which precipitated an appeal by the lessor in which he claimed that there was no basis to rescind the transfer of the real property. The court disagreed, holding that Faw’s failure to perform by delivering an assignment of the lease was a failure of consideration. (Lasher, supra, 209 Cal. at pp. 727–736.)
Each case is distinguishable. Winston cannot find aid in Simmons because he received valid consideration for the operating agreement and the lease, and the appellant in Simmons did not breach the contract to be rescinded. Moving on, it cannot be disputed that the hotel in La Cumbre was in a far different position from Winston. Whereas the hotel was destroyed by fire through no fault of its own, Winston is responsible for forfeiting his lease rights, i.e., he asked for a release. Beyond that, the hotel in La Cumbre did not assume the risk that it would continue to have guests to patronize the country club. Winston, in contrast, assumed the risk that his obligations under the lease and the operating agreement would continue either in his name or the name of a replacement. Pitts did not analyze a failure of consideration issue and is moot. Lasher hinged on the failure of consideration due from a nonrescinding party to a contract and did not, as here, involve a party seeking to rescind after voluntarily negating the consideration for his promise.
DISPOSITION
The judgment is affirmed.
The Fink parties shall recover their costs on appeal.
We concur: BOREN, P. J., DOI TODD, J.