49 Cal.App.5th 668
Cal. Ct. App.2020Background
- David Hester (a professional buyer from the TV show "Storage Wars") purchased the contents of a Public Storage unit at a lien auction, paying $11,800, signing the facility's Delinquent Tenant Sale Sign‑in Sheet and a Certification of Public Sale containing a clause reserving Public Storage’s right to "null and void" the sale.
- About 30 minutes after the sale, Public Storage learned a system error had mistakenly listed the unit for auction though the tenant had paid; Public Storage rescinded the sale immediately, refunded payment, removed Hester’s locks, and replaced them with its own.
- Hester refused the refund and sued for auctioneer misconduct, conversion, breach of contract, and breach of the covenant of good faith and fair dealing; Public Storage moved for summary adjudication on conversion, breach of contract, and breach of covenant grounds that its null-and-void clauses authorized rescission.
- The trial court granted summary adjudication for Public Storage; parties stipulated to entry of judgment and Hester appealed.
- The Court of Appeal affirmed, holding (1) the null-and-void clauses are not facially precluded by auction statute (U.C.C. § 2328) or the Self‑Service Storage Facility Act (Bus. & Prof. Code § 21711), (2) no triable economic‑duress issue existed, and (3) rescission was timely and extinguished Hester’s possessory rights (defeating conversion).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UCC § 2328 (auction rules) or B&P § 21711 preclude contractual "null and void" clauses allowing seller to rescind a completed lien‑sale auction | Hester: § 2328 makes an auction binding at the fall of the hammer and provides exclusive grounds for undoing a sale; § 21711 protects buyers and thus bars owners from voiding an erroneous sale | Public Storage: § 2328 governs auction process (bidding/reopening/retracting) and does not preclude post‑sale contractual rescission; § 21711 protects buyers from occupants' claims, not against owners rescinding erroneous sales | Court: Rejected Hester; neither statute facially precludes such contractual clauses and parties may vary UCC effects by agreement. |
| Whether Hester agreed to the clauses under economic duress | Hester: Acceptance was coerced because refusing would bar him from Public Storage sales and materially reduce his income | Public Storage: The clause is a routine contractual term uniformly applied; no wrongful act, bad‑faith threat, or lack of reasonable alternatives | Court: No triable duress issue; term is a standard business condition and Hester had reasonable alternatives. |
| Whether rescission here was an improper breach of contract or bad faith | Hester: Voiding the sale after the hammer fell was wrongful | Public Storage: It rescinded promptly, in good faith, after discovering a mistake, per the contract clause | Court: Rescission was timely, in good faith, and did not breach contract or implied covenant. |
| Whether unlawful detainer proceedings were required to retake unit contents or whether Hester had a conversion claim | Hester: Public Storage should have used unlawful detainer; conversion claim viable | Public Storage: Hester bought only contents (not real property); rescission extinguished his possessory rights, so unlawful detainer inapplicable | Court: Unlawful detainer applies to real property tenants only; rescission rendered sale void ab initio, defeating conversion. |
Key Cases Cited
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (summary judgment standard)
- Jones v. Lodge at Torrey Pines Partnership, 42 Cal.4th 1158 (statutory interpretation caution against inferring broad legislative intent)
- Nist v. Hall, 24 Cal.App.5th 40 (interpretation of § 21711 in context of occupant vs. buyer claims)
- Rich & Whillock, Inc. v. Ashton Development, Inc., 157 Cal.App.3d 1154 (economic duress framework)
- DuBeck v. California Physicians’ Service, 234 Cal.App.4th 1254 (rescission can render a sale void ab initio for conversion analysis)
- Storek & Storek, Inc. v. Citicorp Real Estate, Inc., 100 Cal.App.4th 44 (implying covenant of good faith to avoid illusory contractual discretion)