BRE DDR BR Whittwood CA v. Farmers & Merchants etc., B272168

Tenant (Breckenridge Group) entered a 15-year restaurant lease (2006); landlord later became BRE DDR BR Whittwood CA LLC (Landlord).
Tenant granted a construction deed of trust to Farmers & Merchants Bank of Long Beach (Farmers & Merchants) securing a loan; the deed of trust referenced a recorded memorandum of lease and assigned tenant’s lease rights to the lender as security.
Tenant defaulted; Farmers & Merchants foreclosed, purchased the leasehold at trustee’s sale, and conveyed it to related LLCs (Whittier Carino’s, then Whittier JC). Those transfers did not comply with lease consent/financial qualifications.
Landlord alleged unconsented transfers and sued Farmers & Merchants for breach of lease, seeking rent for the full term; Landlord moved for summary adjudication that Farmers & Merchants assumed the lease upon foreclosure because foreclosure documents referenced the lease and the lease required assignees to assume obligations.
Trial court granted summary adjudication for Landlord and entered judgment; Farmers & Merchants appealed, arguing no express assumption and thus liability only while in possession.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether foreclosure and deed documents that reference the lease constitute an express assumption of lease obligations	Foreclosure documents identified the lease and the lease contemplated a mortgagee succeeding to tenant’s interest; therefore Farmers & Merchants assumed full lease obligations	No written or signed assumption by Farmers & Merchants; mere purchase/possession is a "naked assignment" binding only while in possession	Reversed: referencing the lease in foreclosure documents is not an express assumption; no privity of contract shown, so liability extends only while in possession (unless an express assumption exists)

Vallely Investments v. BancAmerica Commercial Corp., 88 Cal.App.4th 816 (describes privity of estate vs privity of contract for leases)
Enterprise Leasing Corp. v. Shugart Corp., 231 Cal.App.3d 737 (assignee of real property lease must expressly assume contractual obligations to be bound beyond possession)
Bank of Am. Nat. Tr. & Sav. Assn. v. Moore, 18 Cal.App.2d 522 (written assignment expressly stating assumption creates privity of contract)
Realty & Rebuilding Co. v. Rea, 184 Cal. 565 (distinguishes bare assignment from express assumption; express written agreement creates privity of contract)
Treff v. Gulko, 214 Cal. 591 (no express signed acceptance — assignee bound only while in possession)
Kelly v. Tri-Cities Broadcasting, Inc., 147 Cal.App.3d 666 (possession without express assumption binds assignee only for period of possession)
Hartman Ranch Co. v. Associated Oil Co., 10 Cal.2d 232 (assumption in writing binds assignee for full term)
First Nat. Bank v. Aldridge, 33 Cal.App.2d 485 (signed assumption language can create liability beyond occupancy)