Mr. Horwitz represented JV Soccer Center (“JVSC”) in a Declaratory Relief action against ADMA Associates (“ADMA”) seeking a determination that JVSC properly exercised its first 5 year option to extend its lease at one of ADMA’s properties. ADMA filed a cross-complaint against JVSC for breach of contract.
JVSC operates an indoor sports complex whose peak hours are from 4 p.m. until closing. In order to boost usage of the property, JVSC licensed the space to a private high school during the morning hours. ADMA had undervalued the option pricing, so, when JVSC attempted to exercise its first option to extend the lease, ADMA, seeking to obtain market value rents, claimed that as JVSC was not in “full possession” of the property – because the high school used it during the daytime, the lease prohibited JVSC from exercising the option. ADMA claimed various other breaches by JVSC also prevented the exercise of the option, including the fact that the Conditional Use Permit allowing the operation of a high school in an area otherwise zoned for heavy industry, had expired years earlier, and that JVSC had not been sharing any excess rent with ADMA.
The trial court concluded that JVSC had complied with the lease in “all manners that are material and relevant” and entered judgment in favor of JVSC on both the complaint and cross-complaint. The Court of Appeal affirmed the trial court’s decision, holding that “[n]either the terms of the lease or those of the agreements with [the high school], nor the undisputed facts support ADMA’s contention that JVSC was not in full possession of the property because JVSC subleased or licensed a small portion of the property to [the high school].” JVSC was awarded its attorney’s fees and costs at both the trial level and the appellate level.