California Court of Appeals, Second District, Sixth Division
ROD E. GIETZEN et al., Plaintiffs and Appellants,
COVENANT RE MANAGEMENT, INC., Defendant and Respondent.
Superior Court County of Ventura No.
56-2012-00413479-CU-CO-VTA Kent M. Kellegrew, Judge
& Seltzer, Barak Lurie, Michele A. Seltzer and Brent A.
Kramer for Plaintiffs and Appellants.
Cook & Thel, Francis T. Donohue; Sheppard, Mullin,
Richter & Hampton, Aaron J. Malo and Karin Dougan Vogel
for Defendant and Respondent.
OPINION FOLLOWING REHEARING
GILBERT, P. J.
effect of an uncollected judgment may change through
circumstances occurring after judgment. The judgment holder
may suffer a loss or in this case gain a benefit.
again, we visit the judgment arising from Yolanda’s
Inc.’s (Yolanda’s) action against its landlord.
This time the issue is whether a third party beneficiary of a
contract has more rights than the promissee. A shopping
center lease contains a provision limiting the lessor’s
liability for breach of the lease to the lessor’s
interest in the shopping center. Yolanda’s, the lessee,
obtained a judgment against its lessor, a limited
partnership. Yolanda’s moved to amend the judgment to
add the general partner of the limited partner lessor as a
judgment debtor. The trial court denied the motion on the
ground that the general partner is a third party beneficiary
of the provision limiting liability.
reverse. By virtue of a foreclosure, the lease was assigned
to the foreclosing lender. The assignment terminated the
lessor’s rights under the lease. The termination of the
lessor’s rights also terminated the rights of the third
party beneficiary general partner.
continue to chronicle Yolanda’s odyssey to collect its
judgment. Yolanda’s owns and operates restaurants. It
entered into a lease with K&G/Seabridge II, LLC (K&G)
and Rocklin Covenant Group, LP (Rocklin) to operate a
restaurant at the Seabridge Shopping Center in Oxnard.
Yolanda’s president Rod Gietzen personally guaranteed
lease negotiations, K&G and Rocklin failed to inform
Yolanda’s that they were in negotiations to lease
another space in the shopping center to a gym. The
gym’s customers monopolized the parking spaces in the
shopping center’s common parking lot, resulting in a
loss of business for Yolanda’s.
March 2012, Yolanda’s sued K&G, Rocklin, and their
agent, Kahl and Goveia Commercial Real Estate (KGCRE),
alleging, among other causes of action, fraud and breach of
lease. Yolanda’s obtained judgment for breach of the
lease in the amount of almost $2 million plus attorney fees
and costs. On the first appeal, we reversed the judgment
against KGCRE because it was not a party to the lease. We
otherwise affirmed. (Gietzen v. Goveia (March 30,
2016, B255925) [nonpub. opn.].) On remand, the trial court
awarded KGCRE almost $500, 000 in attorney fees as the
lessors lost their interest in the shopping center through
foreclosure. Thereafter, in June 2017, Yolanda’s
brought the instant motion to amend the judgment to add KGCRE
and Covenant Real Estate Management, Inc. (CREM) as judgment
debtors. Yolanda’s alleged that KGCRE is an alter ego
of K&G and that CREM is an alter ego of Rocklin.
Yolanda’s also alleged that CREM is the general partner
of a limited partnership of which Rocklin is a limited
partner; thus, CREM is liable for Rocklin’s obligations
pursuant to Corporations Code section 15904.04, subdivision
and CREM denied they are alter egos and asserted they have no
liability per article 39 of the lease. Article 39 provides:
“The liability of Landlord under this Lease shall be
limited to Landlord’s interest in the Shopping Center.
Tenant agrees to look solely to Landlord’s interest in
the Shopping Center for the satisfaction of any liability,
duty or obligation of Landlord with respect to this Lease, or
the relationship of Landlord and Tenant hereunder, and no
other assets of Landlord shall be subject to any liability
therefor. In no event shall Tenant seek, and Tenant does
hereby waive, any recourse against shareholders and/or
constituent partners of Landlord and the partners, directors,
officers or shareholders thereof, or any of their respective
personal assets for such satisfaction.”
attached as an exhibit to its moving papers portions of an
earlier action it brought in the Orange County Superior Court
against K&G, Rocklin, KGCRE, CREM, and others. That
action alleged the fraudulent transfer of personal property.
The defendants moved for summary judgment because they
believed that article 39 limited satisfaction of the judgment
to the shopping center assets, and that they no longer had an
interest in the shopping center due to their lender’s
response, Yolanda’s argued that article 39 is merged
into the judgment; that a determination of an Orange County
Superior Court on the applicability of article 39 is res
judicata; and that the benefit of article 39 was assigned
with the lease to Rocklin’s lender in foreclosure.
trial court in the Orange County action denied the motion for
summary judgment. The court ruled that the article 39 defense
was not available because it had been merged into the
Ventura Trial Court’s Ruling on Yolanda’s ...