Monday, January 6, 2014

Gates Rubber Co. v. Ulman case brief

Gates Rubber Co. v. Ulman case brief summary
214 Cal. App. 3d 356 (1989)

CASE SYNOPSIS
Appellant company challenged an order of the Superior Court of Los Angeles County (California), which denied appellant specific performance of an unrecorded option agreement giving it the right to purchase certain property from respondent trustees in the 20th year of a 25-year lease of that property.

CASE FACTS
Appellant company possessed leased property and an option agreement providing for the right to purchase the property. Only a short-form lease was recorded prior to possession. Appellant notified respondent trustees of its exercise of the option, but respondents would not comply. Appellant brought suit against respondents seeking specific performance of the option agreement, and the lower court ruled in favor of respondents.

DISCUSSION

  • The court affirmed and held that appellant's act of selectively and incompletely recording the documents evidencing its rights had the effect of lulling subsequent purchasers into the false impression they had been given notice of all of appellant's rights. 
  • The court found that the additional option to purchase possessed by appellant did not confer a right to modify the existing lease, but instead granted rights wholly different from those created by the lease.

CONCLUSION
The court affirmed a decision to deny appellant company specific performance of an unrecorded option agreement, because by selectively recording documents appellant did not give notice to subsequent purchases of all of its rights, and the option did not confer a right to modify the lease.

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