Thrifty Payless v. The Americana at Brand CA2/1
218 Cal. App. 4th 1230
| Cal. Ct. App. | 2013Background
- Thrifty Payless, Inc. (Thrifty) leased retail space at Americana at Brand in Glendale from Americana at Brand, LLC.
- LOIs negotiated before lease execution included estimated pro rata shares of real property taxes, insurance, and CAM fees.
- Final LOI set Thrifty’s pro rata CAM at $14.50 per sq ft, with Thrifty cross-referencing to see line items; no fixed formulas in the lease.
- Americana later provided a detailed CAM budget showing 2.2% proportional share based on 450,000 sq ft, and stated costs were purely estimated.
- The 2009 actual CAM, taxes, and insurance charges to Thrifty were far higher than the LOI estimates, resulting in substantial overcharges; Thrifty sued for fraud, misrepresentation, mutual mistake, rescission, breach of lease, and breach of the implied covenant.
- The trial court sustained Americana’s demurrer; the appellate court reversed, allowing Thrifty to amend and proceed on several theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud/misrepresentation via estimates despite integration clause | Thrifty relied on Americana’s estimates under superior knowledge | Estimates are nonactionable and merged into the lease | Fraud/negligent misrepresentation may be pled with extrinsic evidence despite integration |
| Innocent misrepresentation and mutual mistake reformation | Extrinsic evidence shows mutual misunderstanding of cost allocations | No basis for reformation given contract terms | Sustaining demurrer improper; claims may seek reformation and rescission |
| Breach of contract and implied covenant from cost allocations | Americana exercised discretionary CAM allocation improperly | Costs allocated per lease discretion; no breach shown | Demurrer to fifth and sixth causes reversed; potential breach/covenant exist |
| Admissibility of prior negotiations to prove fraud under parol evidence rule | Riverisland fraud exception allows extrinsic evidence | Integration clause bars prior negotiations | Riverisland exception allows fraud evidence notwithstanding integration clause |
Key Cases Cited
- Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn., 55 Cal.4th 1169 (Cal. 2013) (fraud exception to parol evidence rule applies; extrinsic evidence admissible for fraud)
- McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784 (Cal. App. 2008) (landlord misrepresentation may be actionable despite contract terms)
- Furla v. Jon Douglas Co., 65 Cal.App.4th 1069 (Cal. App. 1998) (broker's misstatement of square footage may be actionable; reliance reasonable)
- Hinesley v. Oakshade Town Center, 135 Cal.App.4th 289 (Cal. App. 2005) (defendant cannot rely on nonbinding opinions to defeat fraud claims; factual issues may remain)
- Lazar v. Superior Court, 12 Cal.4th 631 (Cal. 1996) (elements of fraud and justifiable reliance; must plead with specificity)