Horvitz & Levy obtained a reversal of summary judgment so that a commercial landlord can prove to a jury how a business attempted to terminate its lease prematurely.
Plaintiff Napolitano Holdings, LLC entered into a sublease with defendant Touchstone Climbing, Inc. with the hope that Touchstone would open a climbing gym on Napolitano’s premises in the City of Pasadena. After Touchstone learned that permitting the project was more difficult than expected, it purported to terminate the sublease so that it could pursue city approval rent free and at the same time renegotiate a better sublease with Napolitano. Napolitano sued for breach of a written lease and breach of the implied covenant of good faith and fair dealing. The trial court granted summary judgment in favor of Touchstone.
Napolitano retained Horvitz & Levy for its appeal. Horvitz & Levy convinced the California Court of Appeal that Napolitano was denied its right to have a jury decide whether Touchstone breached the sublease and its duty of good faith and fair dealing. The sublease provided that it “shall be cancelable” if a Pasadena-required permit was “unattainable with conditions acceptable” to Touchstone. Horvitz & Levy explained why this language did not give Touchstone the unfettered discretion to cancel the sublease, and why there were triable issues of fact as to whether the required permit was unattainable and whether Touchstone acted in good faith.