West v. Henderson

• Decision Date: 28 February 1991
• Docket Number: No. C007537,C007537
• Citation: 227 Cal.App.3d 1578,278 Cal.Rptr. 570
• Court: California Court of Appeals Court of Appeals
• Parties: Sylvia WEST, Cross-Complainant and Appellant, v. Ron HENDERSON, et al., Cross-Defendants and Respondents.

Page 570

278 Cal.Rptr. 570

227 Cal.App.3d 1578

Sylvia WEST, Cross-Complainant and Appellant, v. Ron HENDERSON, et al., Cross-Defendants and Respondents.

No. C007537.

Court of Appeal, Third District, California.

Feb. 28, 1991.

Rehearing Denied March 26, 1991.

Burger & Flaherty, Michael Flaherty, Karen R. Leder, Sacramento, and Kevin P. Whiteford, for cross-complainant and appellant.

Robert J. Binns, Sacramento, for cross-defendants and respondents.

NICHOLSON, Associate Justice.

Sylvia West's sandwich shop failed, and she moved out of the Sunray Plaza pad she had leased. The owner of Sunray Plaza sued for breach of the lease, and West cross-complained against the owner and The Henderson Group (Henderson), the leasing agent. Her cross-complaint was dismissed after the court determined West had not brought her action within the six-month limitation period provided for in the lease. On appeal, she argues the contractual limitation of actions is inapplicable because she seeks to rescind the lease based on Henderson's fraud in the inducement. In the alternative, she contends the six-month limitation of actions is unconscionable and should not be enforced.

We affirm the judgment against West. The parol evidence rule prevents her rescission of the lease because Henderson's alleged fraudulent misrepresentations are contradicted in the subsequent written lease. Furthermore, for reasons discussed later, the six-month limitation of actions was not unconscionable. Since the contractual limitation of actions was enforceable, the court properly concluded it barred West's action.

FACTS

In early 1985, West decided to open a sandwich shop in the Sunrise area of Sacramento. She found Sunray Plaza under construction and contacted Henderson about leasing a pad. Henderson gave West a draft of the lease and notified her she would need a guarantor for the lease. Henderson eventually gave West a final lease which she took home and signed. She contacted her friend and former employer, James Johnston, who agreed to guarantee the lease. He also signed the lease as a principal. West finally returned the signed lease to Henderson. Although encouraged to do so by a prominent admonition in the lease, she did not consult an attorney concerning the terms of the lease before signing it.

The lease included a six-month limitation period for any action brought by West: "Any claim, demand, right or defense of any kind by Tenant which is based upon or arises in any connection with this Lease or the negotiations prior to its execution, shall be barred unless Tenant commences an action thereon, or interposes in a legal proceeding West opened the sandwich shop on August 28, 1985. However, the business was not profitable and closed on October 31, 1986.

a defense by reason thereof, within six (6) months after the date of the inaction or ommission [sic ] or the date of the occurrence of the event or of the action to which the claim, demand, right or defense relates, whichever applies."

On September 30, 1988, the owner of Sunray Plaza commenced an action against West and Johnston for unpaid rent. West cross-complained against Henderson and others alleging fraud and other causes of action. The court granted summary judgment in favor of Henderson on West's cross-complaint. ¹ This appeal challenges only the judgment entered against West on her cross-complaint. ²

DISCUSSION

West's main contention on appeal is the court erred by applying the six-month limitation of actions found in the lease to bar West's causes of action in her cross-complaint. West contends the limitation is unenforceable because she seeks to rescind the contract based on fraud in the inducement and because the limitation of actions provision is unconscionable under Civil Code section 1670.5 which gives courts authority to refuse to enforce or limit enforcement of unconscionable contracts or provisions in contracts.

A. Standard of Review

The trial court may grant a motion for summary judgment only "if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ.Proc., § 437c, subd. (c).) "[A] defendant moving for summary judgment has the burden of negating every alternative theory of liability presented by the pleadings...." (Bell v. Industrial Vangas, Inc. (1981) 30 Cal.3d 268, 271, fn. 1, 179 Cal.Rptr. 30, 637 P.2d 266.) Any doubts as to whether the motion should be granted must be resolved in favor of the party opposing the motion. (Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 874, 191 Cal.Rptr. 619, 663 P.2d 177.) On appeal, we review the motion independently applying the same standard under Code of Civil Procedure section 437c the trial court must apply. (ITT Telecom Products Corp. v. Dooley (1989) 214 Cal.App.3d 307, 311, 262 Cal.Rptr. 773.)

B. Fraud in the Inducement

Viewing the facts most favorably to West, Henderson misrepresented three facts which West relied on in signing the lease. First, the lease would be for five years with two five-year options, rather than fifteen years. Second, Johnston would be a guarantor, rather than a primary obligor. And third, Henderson would erect a sign near the street with the names of the businesses on the sign. Contrary to these representations, the term of the lease West signed was 15 years and included Johnston as a tenant, not a guarantor. In addition, West alleges the promised sign could not be erected because it would have violated a county ordinance. Alleging fraud in the inducement, West seeks to rescind the lease, including the limitation of actions provision. However, Henderson asserts West cannot show fraud in the inducement because the parol evidence rule prevents introduction of the representations made before West signed the lease.

"Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement." (Code Civ.Proc., § 1856, subd. (a).) The fraud exception to this parol evidence rule states: "This section does not exclude other evidence ... to establish illegality or fraud." (Code Civ.Proc., § 1856, subd. (g).) Despite this pronouncement concerning the inapplicability of the parol evidence rule to evidence of fraud, the California Supreme Court has declared the fraud exception does not apply if the evidence is offered to show a promise contradicting the written agreement. (Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263, 48 P.2d 659.) The Pendergrass decision, though criticized at times by some districts of the Court of Appeal, remains the law. (Continental Airlines, Inc. v. McDonnell Douglas Corp. (1990) 216 Cal.App.3d 388, 418-421, 264 Cal.Rptr. 779.)

The lease includes an integration clause stating no prior agreement on any matter covered in the lease shall be effective. ³ The lease names Johnston as a tenant and sets the term at 15 years. These provisions contradict the prior agreements for a five-year lease with Johnston as a guarantor. The lease also prohibited any sign not approved in writing by the landlord. West's claim the prior agreement was for Henderson to put a sign near the street at the landlord's expense contradicts the lease provision stating West would pay for all signs. Furthermore, the lease gives West the obligation of obtaining "all necessary permits and approvals" for signs which West did not do.

West cites our decision in Cobbledick-Kibbe Glass Co. v. Pugh (1958) 161 Cal.App.2d 123, 326 P.2d 197, as support for the admissibility of her evidence of fraud. In Cobbledick-Kibbe, a glass supplier sold glass to a florist for a refrigerated floral display. The supplier told the florist there would be no problem with condensation on the glass display. However, on the back of the contract, the supplier disclaimed responsibility for condensation problems. The court, failing to acknowledge the Pendergrass rule, admitted the prior representations because the action was for fraud, not breach of contract. (Id. at p. 126, 326 P.2d 197.) Under the Pendergrass rule, the prior representations are admissible only if they are independent of or consistent with the written agreement. ( Pendergrass, supra, 4 Cal.2d at p. 263, 48 P.2d 659; Simmons v. Cal. Institute of Technology (1949) 34 Cal.2d 264, 274-275, 209 P.2d 581.) In Cobbledick-Kibbe, the oral representations directly conflicted with the supplier's disclaimer of responsibility for condensation. Since Cobbledick-Kibbe conflicts with Pendergrass, the Supreme Court's decision in Pendergrass prevails. ⁴

West's evidence of the three prior representations made by Henderson to induce her signing of the lease are not admissible. Having concluded West cannot prove fraud in the inducement, no further analysis is necessary as to whether rescission is available. Accordingly, the trial court properly found West could not rescind the lease due to fraud in the inducement. ⁵

C. Unconscionability of the Limitation of Actions Provision

West next claims the limitation of actions provision of the lease is unconscionable and, therefore, should not be enforced. (Civ.Code, § 1670.5.) While this alleged unconscionability merits our consideration, we first recognize the courts have deemed similar provisions "reasonable." (Capehart v. Heady (1962) 206 Cal.App.2d 386, 23 Cal.Rptr. 851 [three-month limitation]; Beeson v. Schloss (1920) 183 Cal. 618, 192 P. 292 [six-month limitation]; Tebbets v. Fidelity and Casualty Co. (1909) 155 Cal. 137, 99 P. 501 [three-month limitation].)

In Capehart, the lessee sued the lessor for damages arising from the lessor's breach of the lease. As a defense, the lessor pointed out the provision in the lease limiting the period during which the lessee could bring an action to three months from the offending act. The trial court enforced...