C.H.E.G., Inc. v. Millennium Bank

Defendant Millennium Bank, formerly known as First IndoAmerican Bank (the bank), appeals from the judgment entered in favor of plaintiff C.H.E.G., Inc., doing business as Wall Street Properties (CHEG), on its complaint for breach of contract. The bank had purchased a commercial building in a bankruptcy sale free and clear of all interests and eventually sold the building to the tenant who had been occupying it under a lease with the bankrupt lessor, which lease contained a provision entitling CHEG to a commission upon sale to the tenant. The trial court found that the bank had assumed the unexpired lease and therefore was obligated to pay CHEG the commission. The bank contends that the bankruptcy court terminated CHEG’s right to a commission when it ordered the property transferred free and clear of all interests in the property, and that the bank did not thereafter assume a contractual obligation to pay CHEG a commission. We agree and therefore reverse the judgment.

Factual and Procedural History

CHEG is a general partner of Rivendell II Ltd., L.P. (Rivendell), a California limited partnership. Victor Catanzaro is the sole shareholder of CHEG and is the other general…