Syufy Enterprises v. City of Oakland

After a master tenant rejects a nonresidential real estate lease in bankruptcy, does a subtenant who is an intended beneficiary of the lease have a right to remain in possession of the property? The trial court in this case decided the answer is “no.” Accordingly, the court granted a nonsuit and dismissed all claims by Syufy Enterprises, L.P. (Syufy) against the City of Oakland arising from Syufy’s eviction from a property near the Oakland Airport, where Syufy had operated a movie theater. The court found Syufy lost its right to possession of the property, which Syufy occupied under a sublease, after the primary lease was “deemed rejected” by the sublessor tenant in the sublessor’s bankruptcy proceedings. In a companion unlawful detainer action, an appellate division of the superior court had previously decided the legal issue concerning the effect of a “deemed rejection” in Syufy’s favor; therefore, Syufy contends the trial court erred in failing to give this decision preclusive effect. Syufy also claims the court’s decision was substantively wrong because Syufy was entitled to possession as a third party beneficiary of the primary lease. We conclude the litigation was…

I concur in the thorough and thoughtful majority opinion, but wish to express a single caveat, with respect to the reason for which the decision of the Appellate Division of the Alameda County Superior Court in the prior unlawful detainer action is not conclusive in this litigation. The majority undoubtedly is correct that, under current authority, the voluntary dismissal of that case deprived the decision of the appellate division of finality for the purpose of applying collateral estoppel. Yet, in my view, *892 there is much to be said for the sentiment expressed in Justice Haerle’s concurrence in Lombardo v. Huysentruyt (2001) 91 Cal.App.4th 656, 676 [ 110 Cal.Rptr.2d 691 ], suggesting the appropriateness of expanding the concept of judicial finality to encompass situations that come within the spirit, if not the current letter, of this concept. Had the appellate division rendered a decision unequivocally determining the legal consequences of the deemed rejection of the “Master Lease” to the parties in this case, there would be good reason to conclude that the Port of Oakland did not preserve the ability to relitigate this issue in another case by the expedient of dismissing…

After a master tenant rejects a nonresidential real estate lease in bankruptcy, does a subtenant who is an intended beneficiary of the lease have a right to remain in possession of the property? The trial court in this case decided the answer is "no." Accordingly, the court granted a nonsuit and dismissed all claims by Syufy Enterprises, L.P. (Syufy) against the City of Oakland arising from Syufy's eviction from a property near the Oakland Airport, where Syufy had operated a movie theater. The court found Syufy lost its right to possession of the property, which Syufy occupied under a sublease, after the primary lease was "deemed rejected" by the sublessor tenant in the sublessor's bankruptcy proceedings. In a companion unlawful detainer action, an appellate division of the superior court had previously decided the legal issue concerning the effect of a "deemed rejection" in Syufy's favor; therefore, Syufy contends the trial court erred in failing to give this decision preclusive effect. Syufy also claims the court's decision was substantively wrong because Syufy was entitled to possession as a third-party beneficiary of the primary lease. We conclude the litigation…