California Legal Brief

The Rule of Ashirwad, LLC v. Michael S. Bradbury et al. is that Civil Code section 1945's presumption of month-to-month tenancy renewal can be rebutted by objective evidence that parties did not mutually agree to continue the lease, even without proof of a new or different agreement, under circumstances where the parties' objective acts and words demonstrate lack of mutual assent despite payment and acceptance of rent.

Appeal from judgment after bench trial in Superior Court, San Bernardino County.

Defendant Appellants were Michael S. Bradbury and Jeannette Bradbury — commercial tenants who operated a salon and retired before lease expiration during COVID-19 shutdown.

Plaintiff Respondent was Ashirwad, LLC — the commercial landlord who claimed a month-to-month tenancy was created by rent payment.

The suit sounded in breach of contract for unpaid rent.

The key substantive facts leading to the suit were that the Bradburys' commercial lease expired March 31, 2020, during the COVID-19 stay-at-home order. Jeannette retired in February 2020 and tried to help find a replacement tenant. On March 30, 2020, the Bradburys paid $4,179 (one month's rent) with a handwritten note saying they were trying to "resurrect the salon." Ashirwad repeatedly assured them not to worry about salon equipment left on the premises due to the shutdown. The Bradburys paid an additional $2,100 in June but made no other payments and neither party discussed continuing the tenancy.

The procedural result leading to the Appeal: The trial court entered judgment for defendants after bench trial, ruling that the Bradburys rebutted Civil Code section 1945's presumption by demonstrating no reasonable person would find a contract existed between the parties after lease expiration.

The key question(s) on Appeal: 1. Whether the trial court erred as a matter of law by allegedly relying on subjective intent to rebut section 1945's presumption 2. Whether section 1945's presumption can be rebutted without finding a new or different agreement 3. Whether the trial court improperly placed the burden on plaintiff to prove the existence of a contract

The Appellate Court held that section 1945's presumption was properly rebutted where the trial court applied an objective reasonable person standard and found the parties' acts and words demonstrated lack of mutual agreement to continue the lease, including plaintiff's repeated assurances about equipment, absence of rent demands, and the payment's characterization as a gift between parties with a good personal relationship during unprecedented circumstances.

The case is inapplicable when there is clear objective evidence of mutual assent to continue a lease on the same terms, when parties explicitly discuss month-to-month continuation, or when landlords make clear demands for ongoing rent payments after lease expiration.

The case leaves open how section 1945 applies when payments are made before versus after lease expiration, and the specific weight to be given to various types of objective evidence in rebutting the presumption.