Procedural Posture

Procedural Posture

Appellant subtenant sued respondent city after the city evicted the subtenant from a commercial property after the primary lease was deemed rejected by the sublessor/master tenant in the master tenant’s bankruptcy proceedings. The Alameda County Superior Court (California) granted the city’s nonsuit and dismissed the subtenant’s claims. The subtenant appealed.

California Business Lawyer & Corporate Lawyer, Inc. is a Corporate Compliance Attorney

Overview

The subtenant leased premises from the sublessor, the master tenant, wherein it operated a movie theater. The lessor on the property was the city. The master tenant filed for bankruptcy. During the bankruptcy proceedings, the master tenant was ordered to vacate the premises once the bankruptcy court denied the master tenant’s trustee’s motion to assume the master lease. The subtenant was not notified of the bankruptcy proceedings, but was advised that once the master tenant was ordered to vacate the premises, the lease between the subtenant and the master tenant was terminated. The subtenant filed an action against the city after it was evicted. The subtenant claimed that as an intended beneficiary of the lease between the master tenant and the city, it had a right to remain in possession of the property. The instant court rejected the subtenant’s claim. The court held that under California law, a subtenant’s rights were dependent upon and subject to the sublessor’s rights. Rights under the sublease stood or fell with those of the sublessor. The court also held that the subtenant, as a third party beneficiary, could not assert greater rights than that of the master tenant.

Outcome

The judgment of nonsuit was affirmed.

Tags:

admin

admin

Top