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Economy Rentals Inc. v. Garcia9/24/1991
ng the disfavor in which restraints on alienation are viewed, the lessor's interest to be protected by refusing consent must relate to the ownership and operation of the leased property, not the lessor's general economic interest. See Kendall, 40 Cal. 3d at 501, 220 Cal. Rptr. at 826, 709 P.2d at 845 ("'The clause is for the protection of the landlord in its ownership and operation of the particular property--not for its general economic protection."') (emphasis omitted) (quoting Ringwood Associates, 153 N.J. Super. at 303, 379 A.2d at 512, and Krieger, 62 N.J. at 423, 302 A.2d at 129)).
It is not necessary for us to decide whether any of Economy's professed reasons for refusing consent to the Garcia-American sublease were reasonable under the foregoing standard. At least one of those reasons--the short term of the sublease in relation to the remaining term of the prime lease, along with the probable discontinuation of a new-car dealership on the premises--would appear to fall within the concern reflected in the standard for the lessor's legitimate interests in maintaining the value of the leased property. However, the trial court found, as we read its findings, that this was not the real or predominant motivation behind Economy's refusal; the real or primary motivation was the forbidden one of increasing the economic benefit from the lease. As such, it was unreasonable. Economy's consequent termination of the lease was therefore wrongful, and Economy thereby breached the lease. We affirm the trial court's decision on this point.
III. Relief
A. Compensatory Damages for the Sublease Period
Economy vehemently argues that, even if the trial court properly ruled that it had unreasonably withheld consent to the sublease, there was no basis for the court's award of damages to Garcia of $180,000, which represented the monthly sublease rent of $7,500 for the twenty-four months from April 1985 through March 1987. Economy particularly attacks the court's imposition of a judgment decreeing that Economy was jointly and severally liable with American for this $180,000 (plus, as will be discussed below, $91,125 of prejudgment interest). Its argument, however, on this point is rather scant; its sum and substance is: "The Court's Conclusions of Law Nos. 4 and 9 [holding Economy jointly and severally liable for Garcia's compensatory damages] transform the admitted liability of American Toyota on its promissory notes into a joint and several liability of Economy Rentals along with American Toyota. Strange alchemy!"
Analytically, the court may have incorrectly measured the damages sustained by Garcia from Economy's breach of the lease. In the absence of other elements of damage, the tenant is entitled to recover from the landlord the reasonable rental value of the leased premises, less the rent payable to the landlord. See ; Restatement (Second) of Property 10.2(1) (1976). Here, the reasonable rental value of the premises was not the $7,500 per month payable by American under the sublease (plus the $3,000 per month that American agreed to pay directly to Economy), because the sublease covered both the Economy property and the Rogers property. Thus, the trial court arguably should have determined the reasonable rental value of the Economy property alone and used that as the measure of the rental value of which Garcia was deprived by Economy's wrongful termination of the lease.
However, the trial court found that Garcia suffered an additional element of damage besides the loss of the property's rental value--namely, "American's non-payment of sublease rental to Garcia." The court found that Economy's termination of t
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