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Ilkhchooyi v. Best

Court of Appeal of California
45 Cal. Rptr. 2d 766 (1995)


Facts

Javad Ilkhchooyi and Mohammad Bahar (Ilkhchooyi) (plaintiffs) were commercial tenants under a sublease with Westar Management, Inc. (Westar) (defendant). In 1989, Westar sent Ilkhchooyi a new lease on a take-it-or-leave-it basis, informing Ilkhchooyi that the new lease was the same as the previous sublease. The lease gave Westar the right to either terminate the lease or increase the minimum rent to market value upon an assignment by Ilkhchooyi. The lease also provided, in small print, that if Ilkhchooyi assigned the premises and received any consideration that was more than the rent under the lease, including consideration for Ilkhchooyi’s business or a covenant not to compete, Ilkhchooyi would pay Westar three-fourths of the excess consideration. Ilkhchooyi sold his business to Ramsin Zobalan, with $40,000 of the sales price intended for a non-compete covenant. Westar demanded $30,000 in exchange for consent to the assignment. Ilkhchooyi refused to pay, and Westar refused to consent to the assignment. Zobalan reduced the purchase price by $40,000 as a result. The trial court found that the profit-sharing clause in the new lease between Ilkhchooyi and Westar was unconscionable and entered judgment for general damages of $40,000 and punitive damages of $30,000 in favor of Ilkhchooyi. Westar appealed.

Rule of Law

Issue

Holding and Reasoning (Wallin, J.)

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