Procedural Posture

Appellant, the assignee of a corporation's rights under a purchase and sublease agreement, sought review of a decision by the Superior Court of San Mateo County (California), which granted summary judgment in favor of respondent, the buyer and sublessor under the agreement, in appellant's action for damages on a breach of contract theory.

 

Overview

Respondent purchased a café and the sublease for the café premises from a corporation. Respondent defaulted on the agreement and appellant, as assignee of the corporation's rights, commenced a breach of contract action. Respondent moved for summary judgment on the grounds that the corporation's powers had been suspended for nonpayment of taxes, the purported assignment from the corporation to appellant was ineffective, and that the sale and sublease agreements between the corporation and respondent were, therefore, voidable by respondent. Can I Sue My Landlord? y landlord takes your security deposit illegally, rental unit is inhabitable. The trial court granted respondent's motion for summary judgment. In affirming, the court rejected appellant's argument that respondent failed to produce evidence that the purported suspension of the corporation complied with the statutory provisions. Furthermore, the court concluded that restoration of the corporation's powers did not override respondent's right to treat his contractual obligations with the corporation as voidable. Lastly, the court rejected appellant's claim that equitable estoppel existed as a triable issue, because appellant offered no evidence that respondent was aware of the corporation's disability.

 

Outcome

The court affirmed the trial court's summary judgment ruling against appellant, the assignee of a corporation's rights under a purchase and sublease agreement. The court held that the agreement between appellant and respondent, the buyer and sublessor under the agreement, was voidable at the option of respondent, because the corporation's powers were suspended due to its failure to pay taxes at the time the parties entered into the agreement.