Julius Castle Restuarant, Inc. v. Payne
216 Cal. App. 4th 1423
Cal. Ct. App.2013Background
- J Julius Castle, a historic San Francisco restaurant, operated by Stinson and Bonjean under a lease with TOTRC and Payne.
- Lease and a bulk sales agreement (BSA) were negotiated; integration clause and ‘as is’ language limited reliance on outside promises.
- Plaintiffs alleged multiple misrepresentation theories (fraud, negligent misrepresentation, etc.) tied to condition of premises, equipment, and permits.
- Evidence showed post-signing repair promises and subsequent conduct disputed by Payne, including alleged failure to obtain permits and slow repairs.
- A preliminary injunction barred sale of the liquor license; jury later awarded fraud damages and breach-of-contract cross-claim damages.
- Riverisland decision overruling Pendergrass led to admissibility of parol evidence for fraud despite an integrated writing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Parol evidence for fraud after Riverisland | Riverisland allows fraud-based parol evidence despite integration. | Pendergrass bars parol evidence directly contradicting written terms. | Parol evidence admissible under fraud exception (Riverisland overruling Pendergrass). |
| Damages for lost profits | Established business could recover lost profits from disruption caused by defendant. | Lost profits too speculative or uncertain. | Substantial evidence supports lost-profit damages. |
| Damages on termination of injunction | Bond-damages award should stand. | Notice and procedural requirements not satisfied; bond damages improper. | Award for $15,000 reversed due to procedural timing issues. |
| Attorney fees under contract | Lease language broad enough to reward fees to prevailing contract party. | Fees should be limited to contractual prevailing party. | Plaintiffs awarded attorney fees; prevailing-party determination affirmed. |
| Damages on cross-claim and party status | Stinson/Bonjean status ok under alter ego analysis; entities and individuals may recover. | Cross-claim damages improperly calculated; who is prevailing unclear. | Court affirmed cross-claim damages; plaintiffs prevailed overall on contract-related claims. |
Key Cases Cited
- Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn., 55 Cal.4th 1169 (Cal. 2013) (overruled Pendergrass; fraud exception to parol rule admissible)
- Pendergrass v. Bank of America, 4 Cal.2d 258 (Cal. 1935) (fraud exception limited; later overruled by Riverisland)
- Casa Herrera Ins. v. Beydoun, 32 Cal.4th 336 (Cal. 2004) (parol evidence as to integrated writings discussed)
- Small v. Fritz Companies, Inc., 30 Cal.4th 167 (Cal. 2003) (fraud pleading standards; reliance concerns)
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (mutuality of contract-based attorney fees)