Dover Mobile Estates v. Fiber Form Products, Inc.

Appellant Dover Mobile Estates filed suit to recover rent from respondent Fiber Form Products, Inc. A court trial resulted in judgment in favor of Fiber Form. In its appeal, appellant argues that (1) a trustee’s sale did not terminate Fiber Form’s lease; (2) Fiber Form breached the covenant of good faith and fair dealing; and (3) the trial court erred in denying its motion to tax costs. We affirm.

Facts and Procedural Background

In 1985, tenant Fiber Form entered into a five-year lease with landlord Old Town Properties, Inc. The lease provided that it was subordinate to any deeds of trust or mortgages placed on the property unless the mortgagee or beneficiary elected to have the lease be superior.

Old Town subsequently encumbered the property with a second deed of trust to Saratoga Savings & Loan Association. Old Town defaulted. Saratoga Savings & Loan foreclosed and, at a December 3, 1986, trustee’s sale, Income Property Investments, Inc. (hereafter Dover) purchased the property. Dover knew of Fiber Form’s lease before it purchased the property. In fact, the lease was of “supreme importance to its decision to purchase.” A trustee’s deed was recorded on December 5,…