Baralat Development Co. v. Lighter

California Court of Appeal May 6, 1987 No. No. B019703Published

Before: Abbe

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Holding. The court held that a guarantor of a lease is not entitled to notice of the tenant's default in the absence of an express contractual provision requiring such notice, as California Civil Code sections 2807 and 2808 place the burden on the surety to discover defaults.

Issues

Whether a guarantor is entitled to notice of a principal's default on a lease in the absence of an express agreement requiring such notice.
Whether Civil Code sections 2807 and 2808 preclude the implication of a notice requirement for an unconditional guaranty.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“A surety who has assumed liability for payment or performance is liable to the creditor immediately upon the default of the principal, and without demand or notice.”

“Civil Code sections 2807 and 2808 place the primary burden on the surety to discover whether a default has occurred.”

[935]Opinion

ABBE, J. Burton Lichter (Lichter) appeals from a judgment against him after a nonjury trial awarding Baralat Development Company (Baralat) $26,074.92 together with $4,488.25 attorneys’ fees and costs. We affirm.

Facts

On or about April 30, 1979, Baralat leased certain commercial premises in Thousand Oaks to Conejo-Pacific, Ltd. (Conejo-Pacific), a California corporation. The initial term of the lease was for five years with two options exercisable by the lessee to extend the lease for an additional five years each. One of these options was exercised.

The lease was executed on behalf of Conejo-Pacific by Lichter and Jerald Fogel (Fogel) who were officers and shareholders of the corporation. Below their signatures as officers of the corporation, Lichter and Fogel signed their names individually after the word “guarantor.” The parties did not enter into any separate surety agreement.

In June of 1984 Lichter sold his interest in Conejo-Pacific to Fogel. Shortly thereafter Lichter requested Baralat to release him from his obligations under the lease, but Baralat refused to do so.

In the fall of 1984 Conejo-Pacific became delinquent in its rental payments. Lichter was unaware of the delinquency and received no demand or notice until Baralat made a demand in April of 1985. By that time there was due in excess of $12,000 rent plus attorneys’ fees and costs. From the time of the sale to Fogel in June of 1984 until Baralat’s demand in April of 1985, Lichter made no attempt to ascertain the status of the rental payments, even though the trial court found the information was readily available.

Conejo-Pacific was still in possession of the premises on April 25, 1985, when Baralat commenced an action against Lichter, Fogel and ConejoPacific for rent and attorneys’ fees. When Conejo-Pacific filed for bankruptcy, Baralat’s litigation proceeded against Lichter and Fogel individually as guarantors of the lease.

After a court trial judgment was rendered in favor of Baralat, and Lichter appeals.

Discussion

Lichter contends that because Baralat failed to notify him of Conejo-Pacific’s default within a reasonable time, Baralat is estopped from

Baralat Development Co. v. Lighter

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