Property Controllers, Inc. v. Shewfelt

• Citation: 54 Cal.Rptr. 218,245 Cal.App.2d 755
• Parties: PROPERTY CONTROLLERS, INC., a California corporation, Plaintiff and Appellant, v. Leonard R. SHEWFELT, Derrell H. Harline, Yolande L. Harline, Patrick R. McAtee, Mary Lou McAtee et al., Defendants and Respondents. Civ. 29922.
• Decision Date: 20 October 1966
• Court: California Court of Appeals

Page 218

54 Cal.Rptr. 218

245 Cal.App.2d 755

PROPERTY CONTROLLERS, INC., a California corporation, Plaintiff and Appellant, v. Leonard R. SHEWFELT, Derrell H. Harline, Yolande L. Harline, Patrick R. McAtee, Mary Lou McAtee et al., Defendants and Respondents.

Civ. 29922.

District Court of Appeal, Second District,

Division 2, California.

Oct. 20, 1966.

Thatcher & Rouse, by Jerome Zamos, Palos Verdes Estates, for appellant.

Guy T. Graves, Los Angeles, for respondents.

ROTH, Presiding Justice.

This is an appeal from a summary judgment.

Appellant, Property Controllers, Inc., initiated this action for specific performance of a written lease, executed on October 8, 1962, between appellant and American Engineers and Contractors Corporation, its lessor. The lease provided for the construction of the premises demised in a shopping center to be built on land owned by American. The lease was never recorded. The shopping center was not built. Obviously, appellant at no time was in possession of the premises demised.

This action is not against lessor. It is against Leonard R. Shewfelt, Derrell H. Harline, Yolande L. Harline Patrick R. McAtee and Mary Lou McAtee, successors in interest to lessor, who on August 6, 1963, purchased that part of the land from lessor upon which the proposed building, of which the demised premises were a part, was to be constructed.

The complete basis upon which appellant predicates its action against respondents is set forth in its complaint as follows:

'* * * (A)t the time of the execution * * * of the deed * * * to * * * (respondents), * * * each of them had actual knowledge of the lease * * *. * * * (S)aid deed to * * * (respondents) was subject to the * * * lease * * * and subject to * * * rights * * * acquired by (appellant) * * *, pursuant to said lease * * *.

'* * * (U)pon ascertaining the fact of the execution * * *, (appellant) * * * promptly made demand upon * * * (respondents), * * *, to comply with the terms and conditions of said lease * * * and to commence construction pursuant to said lease * * *; * * * (respondents) * * * have failed and refused to provide (appellant) with any reasons for the delay in construction * * * or to communicate with (appellant) about the matter at all.'

In support of their motion for summary judgment, respondents filed two declarations. Appellant filed none. Among other things, respondents declare as follows:

'* * * (American) * * * by Grand Deed dated August 6, 1963 delivered and recorded on the 6th day of September, 1963 (to respondents the deed to the land purchased by respondents). The original of said Deed is attached hereto marked Exhibit 'C' * * *.'

The deed referred to contains no suggestions, direct, remote or otherwise, to the lease in question.

The declarations further state:

'4. Prior to August 6, 1963 declarant and his co-purchasers of the real property described in Exhibit 'C' were orally advised by * * * seller that seller had tentative unrecorded leases on portions of the proposed structure which were being held in suspension and could be affirmed or rejected by return of the deposits held by seller. Said representation was relied upon by declarant and his co-purchasers * * *.

'Paragraph 2 of the opening escrow instructions dated August 6, 1963 signed by (respondents) and seller is as follows:

"2. It is understood and agreed that the Buyers reserve the right to reject the existing leases on the subject property within 10 days of the above date, hence: August 16, 1963.'

'In the Escrow instructions signed by Seller and all buyers on August 23, 1963 it was provided:

"4. That it is hereby * * * agreed that buyers are not accepting the existing leases, and that the Seller will refund all lease deposits.'

'Relying upon said representations and said escrow instructions declarant and his co-purchasers believed that all existing leases had been surrendered and cancelled and the depots (sic) thereon returned by the seller to said prospective lessees.

'The declarant and his co-(respondents) were not aware that said lease of (appellant) had not been cancelled and terminated until on or about the 31st day of March, 1964 when declarant and his co-(respondents) learned of the filing of a Notice of Lis Pendens by (appellant) * * * against the property * * * on or about the 24th day of February, 1964 in an action for specific performance filed on September 27, 1963 in action No. SOC 6469, Superior Court of Los Angeles County, by Property Controllers, Inc., a corporation, as plaintiff vs. American Engineers and Contractors, a corporation, defendant, in which action neither declarant nor any of his co-owners was named as defendant. None of the (respondents) in this cause was served with process or notified in any way of the pendency of said action SOC 6469 or the recording of any of the notices of Lis Pendens therein, notwithstanding they had been the owners of record of the land described therein since the 6th day of September, 1963.

'At no time prior to March 31, 1964 did (appellant) or anyone on its behalf assert or claim to declarant or any of his co-owners an interest in said property or demand that said lease be performed in any respect.

'5. Declarant and his co-owners or any of them never at any time in writing or otherwise executed said lease * * * and never at any time in writing or otherwise assumed or agreed or undertook to perform said lease * * *.

'6. The lease referred to * * * has never been recorded and declarant and his co-(respondents) in this cause were unaware that (appellant) asserted any claim or right thereunder until on or about March 31, 1964.

'Relying upon the representations of seller and the provisions of the escrow instructions heretofore set out in paragraph 4 hereof, and the failure of (appellant) to assert any claim or right under said lease, (respondents) did on September 6, 1963 acquire said real property described in Exhibit 'C', at a total cost of $192,350 and in addition thereto did pay to Capital Lands Corp., a California Corporation, and Louis Thomas Hiller the sum of $6,000 on or about the 21st day of February, 1964, for the purpose of obtaining the dismissal of that certain action filed June 3, 1963 as action Number 819623, Superior Court of Los Angeles County. * * *

'* * *e p

'Had (respondents) known of (appellant's) claims they would not have purchased said property.

'7. For the purpose of showing the date of filing and the contents thereof the complaint on file in action S.O.C. 7817 and Exhibit A attached thereto is by reference made a part hereof. Said complaint was filed April 8, 1964 and is an action to compel specific performance by the defendants of an unrecorded lease in writing executed by American Engineers & Contractors Corporation, a corporation, as lessor and (appellant) herein as lessee. Said lease is dated the 8th day of October, 1962, purports to cover a space 15 feet by 64 feet in a building proposed to be constructed by the lessor, said building to be commenced by lessor immediately upon lessee's approval of preliminary plans and outline of specifications (Sec. 2.02) which said approval was given by (appellant) on October 15, 1962. (Complaint, Paragraph VII.)

'No notice of the commencement of said action or the filing of said Notice of Lis Pendens has ever been given to (respondents) or any of them.

'No summons or complaint or process of any kind or nature has ever been served on (respondents) or any of them.

'* * *mon

'By the First Amended Complaint filed and entered September 30, 1964 in said action S.O.C. 6469 (appellant) therein abandoned its cause for specific performance against the lessor of said lease and now asserts a cause of action against said lessor for damages in the amount of $634,570.00 dollars.

'Said action no longer pertains to or involves title or possession to real property.

'Said action S.O.C. 6469 never has named these (respondents) or any of them as party or parties to said cause.

'9. Attached hereto, made a part hereof and marked Exhibit 'H' is a full, true and correct copy except for signatures of the promissory note of these (respondents) payable to Chester M. Miller and Victoria P. Miller in the amount of $90,000 which note is secured by a First Trust Deed recorded September 6, 1963 on the real property described in Exhibit C.

'Said note is past due, the owners thereof have refused to extend or renew the same, have served a notice and declaration of default, and are about to proceed to a foreclosure sale thereof.

'The existence of said action S.O.C. 7817 and the Notice of Lis Pendens Exhibit 'G' creates a cloud on the title of said property which prevents (respondents) from refinancing said loan. Unless this motion is granted and the Notice of Lis Pendens stricken from the record (appellant) will lose said property and will be liable for any deficiency arising from said foreclosure sale.'

It is clear from the probative facts quoted, none of which are refuted by anything in the record, even by suggestion, that there was no triable...