147 Cal. App. 3d 321, 195 Cal. Rptr. 84 (1983)
Plaintiff Albert Cohen, doing business as Brentwood Carpet & Drapery, as lessee, and defendant Arthur S. Ratinoff, as lessor, entered into a four-year written lease.1 The lease commenced on September 1, 1977, and ended August 31, 1981.2 It covered the building located at 11159 Santa Monica Boulevard in Los Angeles, California.3 Plaintiff was to use the premises solely for the selling of carpets, drapery and furnishings.4 Paragraph 13 of the lease addressed assignment and subletting.5
On July 30, 1980, plaintiff entered into a sales agreement with Floormart Inc. of Glendale, California.6 Floormart agreed to purchase plaintiff’s assets for $35,000.7 The agreement was conditioned on plaintiff fully executing a written assignment of the lease and obtaining written acceptance from defendant.8 Plaintiff requested defendant to consent to the assignment on several occasions.9
On September 12, 1980, defendant’s attorney informed plaintiff that the lease did not provide for assignment and thus defendant might be as arbitrary as he chose.10 As a result of defendant’s refusal to consent, Floormart terminated its purchase agreement with plaintiff.11 On October 23, 1981, plaintiff filed his first amended complaint for damages containing five causes of action.12
By May 13, 1981, the date set for trial, the second and third causes of action had been settled and dismissed, and the fifth had been rendered moot.13 Only the first and fourth causes of action remained.14 Just prior to trial, defendant filed a motion for judgment on the pleadings.15 The trial court granted the motion as to the first and fourth causes of action.16 Judgment was entered on July 8, 1982, that plaintiff take nothing, and plaintiff appealed.17
Whether the trial court erred in granting defendant's motion for judgment on the pleadings?18
A motion for judgment on the pleadings is confined to the face of the pleading under attack.19 If the pleading sufficiently states a cause of action, the motion cannot be granted on the basis of extrinsic matters.20 Therefore, the facts properly pleaded are accepted as true and must be liberally construed in favor of the party against whom the motion is made. The ultimate question is whether, disregarding imperfections of form which could be cured by amendment, the facts pleaded and judicially noticed entitle the plaintiff to any relief.21
Yes. Plaintiff Albert Cohen's first amended complaint alleged that paragraph 13 of the lease provided in part that consent to assign or sublet shall not be unreasonably withheld.22 The complaint further alleged that defendant's attorney stated defendant may be as arbitrary as he chooses when deciding whether to consent to an assignment.23 The complaint also alleged that defendant acted in bad faith by purposely preventing plaintiff from receiving the benefits to which he was entitled under the lease and prayed for punitive damages.24
These allegations sufficiently state causes of action for breach of contract and bad faith breach of contract based on defendant's unreasonable refusal to consent to the assignment to Floormart Inc.25 The trial court granted the motion solely because it concluded defendant had an unqualified right to refuse consent.26 That conclusion was incorrect under the applicable standard.27 The motion admitted the pleaded facts that defendant gave no reason other than the ability to be arbitrary and that Floormart terminated the $35,000 purchase agreement as a result.28 Liberally construed, the complaint therefore entitled plaintiff to relief on the first and fourth causes of action.29
The trial court erred in granting defendant's motion for judgment on the pleadings as to the first and fourth causes of action, and the judgment must be reversed.30
Whether an absolute prohibition in a lease against assignment by the lessee constitutes an unreasonable restraint on alienation in violation of Civil Code section 711?31
Civil Code section 711 provides that conditions restraining alienation, when repugnant to the interest created, are void.32 Only unreasonable restraints on alienation are invalid.33 Because the lessor has an interest in the character of the proposed commercial assignee, an assignment provision requiring the lessor's consent is not inherently repugnant to the leasehold interest created.34 If such a provision is implemented so that its underlying purpose is perverted by arbitrary or unreasonable withholding of consent, an unreasonable restraint on alienation is established.35
No. Paragraph 13 of the lease does not contain an absolute prohibition against assignments.36 It provides that the lessee may not assign the lease without the prior written consent of the lessor.37 The consent to one assignment shall not be deemed consent to any subsequent assignment.38 The lease therefore does not present the question of whether a provision prohibiting without qualification the assignment of a commercial lease is an unreasonable restraint on alienation under Civil Code section 711.39
The court does not decide that broader question because the lease at issue requires only prior written consent rather than imposing an absolute bar.40
The contention that an absolute prohibition violates Civil Code section 711 is not presented by the facts of this lease and is not decided.41
Whether the trial court erred in refusing to permit parol evidence to aid in the interpretation of the lease?42
When a written instrument is attached to a pleading as an exhibit and incorporated by reference, the court may examine the exhibit and treat the pleader's allegations of its legal effect as surplusage.43 Plaintiff incorporated the lease into his first amended complaint by reference.44 We reject as meritless plaintiff’s contention that the trial court erred in refusing to permit parol evidence to be introduced to aid in its interpretation.45
No. Plaintiff incorporated the lease into the first amended complaint by reference. Paragraph 13 plainly distinguishes between assignments by operation of law, which require consent that shall not be unreasonably withheld, and voluntary assignments, which require prior written consent without an express reasonableness qualification in that clause.46 The trial court correctly refused to admit parol evidence to alter or supplement those express terms.
The trial court did not err in refusing to permit parol evidence to aid in interpretation of the lease.47
Whether defendant Ratinoff had substantial reasons for objecting to plaintiff's assignment of the lease?48
Where a lease provides for assignment or subletting only with the prior consent of the lessor, the lessor may refuse consent only where he has a good faith reasonable objection to the assignment or sublease, even in the absence of a provision prohibiting unreasonable withholding of consent.49 The duty of good faith and fair dealing implicit in every contract militates against arbitrary or unreasonable withholding of consent.50 The question of whether consent was unreasonably withheld is one of fact, but where the lessor admits stating he may be as arbitrary as he chooses and offers no other reason, the refusal is unreasonable as a matter of law.51
Yes. Defendant's attorney informed plaintiff that the lease does not provide for assignment and thus defendant may be as arbitrary as he chooses.52 Defendant gave no other reason for refusing consent to the assignment to Floormart Inc., another carpet business.53 No bases for good faith reasonable objection, such as financial irresponsibility, unsuitability of the premises, or intended unlawful use, were raised.54
The refusal therefore breached the implied covenant of good faith and fair dealing and constituted an unreasonable restraint on alienation.55 Because the motion for judgment on the pleadings admitted these facts, plaintiff sufficiently pleaded that defendant had no substantial reasons for objecting to the assignment.56
Defendant had no substantial reasons for objecting to the assignment, and his refusal breached the lease.57
Whether a lessor may refuse consent to an assignment only where he has a good faith reasonable objection, even absent an express clause prohibiting unreasonable withholding of consent?58
A lease constitutes both a conveyance and a contract containing an implied covenant that neither party shall do anything which will destroy or injure the right of the other to receive the fruits of the contract.59 This covenant imposes the duty to refrain from rendering performance impossible and to do everything the contract presupposes will be done to accomplish its purpose.60 Where the lease requires prior consent to assignment, the implied covenant requires that consent not be arbitrarily or unreasonably withheld.61
Yes. The lease between plaintiff Albert Cohen and defendant Arthur S. Ratinoff requires prior written consent for voluntary assignments but contains no express clause that consent shall not be unreasonably withheld for such assignments.62 Nevertheless, the implied covenant of good faith and fair dealing that exists in every contract, including this lease, prohibits the lessor from arbitrarily refusing consent.63
Defendant's statement that he could be as arbitrary as he chooses demonstrates a breach of that covenant.64 The lessor may therefore refuse consent only upon a good faith reasonable objection, such as the assignee's inability to fulfill lease terms or financial instability.65 No such objection was offered here.66
A lessor may refuse consent to an assignment only where he has a good faith reasonable objection, even absent an express reasonableness clause in the lease.67