Kendall v. Ernest Pestana, Inc.

40 Cal. 3d 488, 709 P.2d 837, 220 Cal. Rptr. 818 (1985)

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Nature of the Case

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Facts

The City of San Jose leased hangar space at its airport to the Perlitches, who in turn assigned their interest to Ernest Pestana, Inc. (D). The City of San Jose was the owner of the property. Prior to assigning their interest to D, the Perlitches entered into a 25-year sublease with Bixler starting in January 1, 1970. The sublease covered the original five-year term plus four 5-year options to renew. The rental rate was to be increased every 10 years in the same proportion as rents increased in the master lease from the City of San Jose. Bixler was to use the premises for conducting his airplane maintenance business. Bixler operated the business until 1981 when he agreed to sell to Kendall (P). P had a stronger financial statement, and greater net worth than Bixler and P was willing to be bound by the terms of the lease. The lease provided that written consent of the lessor was required before the lessee could assign his interest, and that failure to obtain that consent rendered the lease voidable at the option of the lessor. P approached D, seeking permission to sublet. D denied P for no apparent reason and contended that it could arbitrarily refuse any such request. P sued for injunctive relief and damages claiming that D demanded an increased rent and other more onerous terms as a condition for consenting to Bixler’s request. D demurred to the complaint, the court sustained the demurrer, and the appellate court affirmed. P appealed. P contends that the consent provision is against public policy as an unreasonable restraint on alienation.