Unit 5 v. J.T. McKinney Co. CA4/1

── Unit 5 v. J.T. McKinney Co. CA4/1 ── Court: California Court of Appeal Date: April 22, 2026 Category: General Filed 4/22/26 Unit 5 v. J.T. McKinney Co. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA UNIT 5, L.P., D085422, D086455 Plaintiff and Appellant, v. (Super. Ct. No. 37-2024- 00009722-CU-UD-CTL) J.T. MCKINNEY CO., INC., Defendant and Appellant. CONSOLIDATED APPEALS from a judgment and a postjudgment order of the Superior Court of San Diego County, Michael T. Smyth, Judge. Reversed and remanded. Bradley L. Jacobs for Plaintiff and Appellant. Klein & Wilson, Mark B. Wilson, and Manoah S. Marton for Defendant and Respondent. I INTRODUCTION Unit 5, L.P. (Unit 5) leased a parcel of commercial property to J.T. McKinney Co., Inc. (McKinney), and provided McKinney an option to renew the lease for five years beyond the original term. The option was subject to a condition precedent requiring McKinney to be in full possession of the leased premises. Near the end of the lease term, McKinney attempted to exercise the option. However, Unit 5 rejected the attempted exercise of the option on the basis that McKinney had subleased a portion of the premises to another entity, divesting McKinney of full possession of the premises. McKinney remained on the premises after the end of the original lease term and Unit 5 filed an unlawful detainer action against McKinney. After a one-day bench trial, the trial court found the sublease deprived McKinney of full possession of the premises. However, the court found the lease required Unit 5 to provide McKinney with notice and an opportunity to cure its failure to satisfy the full possession condition. Because Unit 5 did not give McKinney notice and an opportunity to cure before it rejected McKinney’s exercise of the option, the court ruled the exercise of the option was effective and McKinney was entitled to continued possession of the premises. Unit 5 appealed the judgment in favor of McKinney, and McKinney cross-appealed,. Unit 5 also appealed a postjudgment order awarding costs to McKinney as the prevailing party in the unlawful detainer case. In its appeal, Unit 5 argues the trial court misapplied the parol evidence rule by excluding extrinsic evidence probative of the parties’ understanding of the lease and related lease documents, the court erred in finding McKinney was entitled to notice and an opportunity to cure its failure to satisfy the full possession condition, and the court improperly ruled on McKinney’s affirmative defenses, which the parties had reserved for a separate phase of trial to be tried before an empaneled jury. McKinney contests these arguments and claims in its cross-appeal that the parties nullified or 2 superseded the full possession condition by amending the lease, and at any rate, its sublease did not deprive it of full possession of the premises. We agree with Unit 5 that the trial court erred in finding that the lease required Unit 5 to provide McKinney with notice and an opportunity to cure its failure to satisfy the option condition requiring full possession of the premises. We also reject the arguments McKinney asserts in its cross-appeal. Therefore, we reverse the judgment a