The California Court of Appeal recently affirmed a ruling that found Norik Barseghian and his wife, Rita Gharibians, to be guarantors of a commercial lease. This decision stems from a dispute involving a lease agreement for a property owned by Ricardo Canales, who sought damages after Ideal Kitchen Supply, Inc. breached the lease. The ruling clarifies the responsibilities of guarantors in commercial leases and emphasizes the importance of understanding contractual obligations.
The case, Canales v. Barseghian, was filed under docket number B344117 in the Los Angeles County Superior Court. The court ruled that the trial court did not err in its findings regarding the appellants' status as guarantors. This ruling is significant for landlords and tenants alike, as it reinforces the enforceability of personal guarantees in lease agreements.
Background
Ricardo Canales is the trustee of the Canales Family 1987 Trust, which owns a warehouse located at 701 W. Broadway in Glendale, California. In 2018, Canales listed the property for rent, and Barseghian, acting on behalf of his company, Ideal Kitchen, expressed interest in leasing the property. The lease negotiations included a personal guarantee from all principals of Ideal Kitchen, which meant that Barseghian and Gharibians would be personally liable for the lease obligations.
The lease was executed in July 2018, with a term of five years and a monthly rent of $13,275. Both Barseghian and Gharibians were identified as guarantors in the lease agreement. However, they did not sign the designated signature block on the second page of the guaranty, which later became a point of contention in the legal proceedings.
In May 2019, Canales initiated an unlawful detainer action against Ideal Kitchen for breach of the lease. The court ruled in favor of Canales, establishing Ideal Kitchen's liability for breaching the contract, but did not determine the amount of damages at that time. Subsequently, Canales filed a complaint for damages against Barseghian and Gharibians, asserting that they were guarantors of the lease.
The Ruling
The trial court conducted a two-day bench trial, during which it found no ambiguity in the lease agreement and ruled that Barseghian and Gharibians were indeed guarantors. The court noted that the personal guaranty was a clear condition of the lease agreement, and the absence of signatures on the guaranty page did not negate their obligations. The court stated, "The most reasonable interpretation of the lease agreement is that appellants signed as guarantors."
The court also found Barseghian's testimony not credible, noting that he could not escape liability simply by claiming he did not read the documents he signed. The trial court emphasized that failing to read a contract does not allow one to avoid the effects of that contract. The ruling was made by Judge Ashfaq G. Chowdhury, who affirmed the trial court's decision that the appellants were liable as guarantors.
Impact
This ruling has important implications for both landlords and tenants in California. It underscores the necessity for individuals involved in lease agreements to fully understand their obligations, especially when personal guarantees are involved. The court's decision reinforces that personal guarantees in commercial leases are enforceable, even if the guarantors do not sign every page of the guaranty document.
The court's ruling also clarifies that a lease and its guaranty can be interpreted as one cohesive agreement, even if the guaranty is not signed in the designated area. This sets a precedent that could affect future commercial lease agreements and the enforceability of personal guarantees in similar situations.
What's Next
The appellants have the option to appeal the decision, but details were not available in the court filing regarding any pending related cases. The court's ruling stands as a significant interpretation of commercial lease agreements and the responsibilities of guarantors.