City Equities Anaheim, Ltd. v. Lincoln Plaza Development Co. (In re City Equities Anaheim, Ltd.)

Opinion by Judge SNEED.

This case involves a settlement agreement that contained a sublease and a “drop dead clause” whereby the defendant would automatically forfeit its sublease in the event of its default. Defendant defaulted, and the bankruptcy court enforced the settlement agreement according to its terms. The district court affirmed. We also affirm.

I.

FACTS AND PROCEEDINGS BELOW

Plaintiff Lincoln Plaza Development Co. (Lincoln) held a leasehold interest in 17 acres of commercial property in Anaheim, California. In 1984, Lincoln subleased the Anaheim property to Inner Cities Equity, which later assigned its sublease interest to defendant City Equities Anaheim, Ltd, (CEA).

CEA entered Chapter 11 reorganization proceedings in 1990. Thereupon, Lincoln challenged CEA’s sublease, contending that the assignment by Inner Cities Equity to CEA was invalid. After extensive litigation, CEA tried another tack and engaged Ameri-vest Workout Specialists (Amerivest) to negotiate a settlement.

This yielded some success. On May 9, 1991, CEA, Amerivest, and Lincoln entered into a Memorandum Agreement. Under this agreement, Amerivest and Mark Sandorf Properties, Inc. (Sandorf) would…