Ilkhchooyi v. Best

In Ilkhchooyi v. Best (1995) 37 Cal.App.4th 395, Division Three of the Fourth District Court of Appeal addressed the same question we now face regarding the rights of a subtenant following the sublessor's deemed rejection of a lease. Westar Management Co. (Westar) leased a commercial space to two couples (both named Rosenblatt) who opened a drycleaning business. ( Id. at p. 400.) The Rosenblatts later subleased the premises to Ilkhchooyi and his partner. The sublease, which was approved by lessor Westar, stated it would terminate if the lease terminated for any reason. (Ibid.) One of the Rosenblatt couples later filed a bankruptcy petition (ibid.), and the lease with Westar was deemed rejected pursuant to 11 United States Code section 365(d)(4). ( Id. at p. 404.) The court stated: "Once the lease is rejected in bankruptcy, it is terminated as to all parties, including those with an interest derived from the bankrupt. " ( Ilkhchooyi v. Best, supra, at p. 404.) Thus, the court concluded the lease and Ilkhchooyi's sublease "were terminated by operation of law due to the bankruptcy of the Rosenblatts." ( Ilkhchooyi v. Best, supra, at p. 404.)