Harbor Marina v. Golden Hills Properties CA4/3

FACTS AND PROCEDURAL HISTORY

The parties’ predecessors in interest, County of Orange as lessor and Thomas A. Cox as lessee, entered into the ground lease (Lease) in 1964. Later, Plaintiff exercised an option (Extension Option) which extended the Lease term through 2018. An amendment (Amendment) to the Lease gave the lessor an option (Purchase Option) to purchase the lessee’s leasehold interest during the last five years of the extended Lease term. Paragraph 11(c) (Paragraph 11(c)) of the Amendment stated: “During the last five years of the [Extension] Option period, [Defendant] shall have the option to purchase [Plaintiff’s] leasehold estate and improvements at the fair market value existing on the date such [Purchase Option] is exercised.”

2 The fair market value was to be determined by an appraisal. Paragraph 11(c) provided: “Fair market value for this purpose means the cash price a willing purchaser would pay and a willing seller would accept for the leasehold estate and improvements in an arms-length transaction in which the parties have comparable bargaining positions, calculated on the basis of the then present value of all net operating revenues (before debt service)…