Second District, Division 7 Finds Mutual Mistake Gave Rise to Rescission, Overturning a Landlord Win and Favorable Attorney’s Fees Award.
Here is another POOF!
The Second District, Division 7, in Howard v. Encino Group Retail LLC, Case No. B204865 (2d Dist., Div. 7 Mar. 18, 2009) (unpublished) reversed a summary judgment in favor of landlord, determining that dentist tenants were entitled to rescission of the lease based on mutual mistake given that the premises were subject to zoning restrictions preventing the space from being used for medical or dental purposes. The appellate panel rejected landlord’s argument that the tenants had contractually agreed to assume the risk that the space could not be used.
The POOF! aspect of the reversal is this: the trial court awarded landlord $66,654 in damages and $332,553.49 in fees under a lease fees clause. The reversal meant the fee award went tumbling, with summary judgment being entered in tenants’ favor on the mutual mistake defense. Tenants also won costs on appeal.