Judge: Michael J. Strickroth, Case: 2022-01287601, Date: 2023-08-21 Tentative Ruling
Demurrer to Complaint
Defendant MGP XII College Plaza, LLC’s Demurrer to the 3rd, 4th and 5th causes of action to Plaintiff’s Complaint is OVERRULED.
Defendant’s request for judicial notice of the complaint and stipulation for entry of judgment in unlawful detainer case 2022-01261437 is granted. Plaintiff’s request for judicial notice of the lease agreement between Defendant and non-party SPK Corporation dba Pokeworks (Pokeworks) is granted.
The Complaint alleges Plaintiff is a T-Mobile dealer which operated on premises owned by Defendant. (¶¶ 6-7.) Plaintiff and Defendant executed a License Agreement allowing Plaintiff to operate on the premises between 2/1/22 and 4/30/22. (Complaint, Ex. A.) Plaintiff discovered that in November 2021, Defendant entered into a lease agreement with non-party Pokeworks. (¶ 8.) Plaintiff reached an agreement with Pokeworks wherein Pokeworks would assign its lease to Plaintiff so Plaintiff could continue operating on Defendant’s premises. (¶ 9.) Plaintiff alleges Defendant unreasonably withheld consent to the assignment and instituted an unlawful detainer action against Plaintiff in May 2022. (¶¶ 10, 11.)
Defendant’s Shopping Center Lease Agreement (Lease) with Pokeworks stated the effective date of the lease was 11/30/21 with a term commencement date of, “The date Landlord delivers the Premises to Tenant.” (Plaintiff’s Request for Jud. Notice, Ex. 1 [Lease], pp. 1, 3.) Section 12.1 of the Lease between Defendant and Pokeworks states in part, “Tenant shall not transfer, assign, sublet, enter into any franchise, license or concession agreements, change ownership or voting control, mortgage, encumber, pledge or hypothecate all or any part of this Lease, Tenant’s interest in the Premises or Tenant’s business (collectively, ‘Transfer’) without first obtaining Landlord’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed, except that Landlord’s consent to a proposed mortgage, encumbrance, pledge or hypothecation of this Lease or Tenant’s interest in the Premises may be granted or withheld in Landlord’s sole and absolute discretion.” (Lease, p. 22.)
The Lease further states under “Permitted Use” that “The Premises shall be used solely for the operation of a ‘Pokeworks’ fast casual restaurant…” (Lease, p. 2.)
Defendant demurs to Plaintiff’s third cause of action for interference with contractual relations, fourth cause of action for intentional interference with prospective economic relations, and fifth cause of action for negligent interference with prospective economic relations.
Defendant’s demurrer contends Plaintiff lacks standing to pursue its claims as an assignee, but in reply Defendant concedes for purposes of this motion that Plaintiff has standing to pursue its claims as an assignee under Don Rose Oil Co., Inc v. Lindsley (1984) 160 Cal.App.3d 752. Therefore, the Court does not address this argument.
3rd COA – Intentional Interference with Contractual Relations
“To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148.
Here, Defendant contends it was justified in refusing consent to the assignment because Plaintiff intended to operate a T-Mobile store on the premises, contrary to the Lease’s “Permitted Use” – operation of a restaurant.
“An action (in tort) will lie for the intentional interference by a third person with a contractual relationship either by unlawful means or by means otherwise lawful when there is a lack of sufficient justification.” H & M Associates v. City of El Centro (1980) 109 Cal.App.3d 399, 405. “Privilege or justification for the interference is an affirmative defense, not an element of plaintiff's cause of action, and thus may not be considered in support of the trial court's action in sustaining a demurrer unless apparent upon the face of the complaint.” Id. “Whether defendants' conduct of interfering with existing contracts with third persons was justified under the circumstances and thus privileged, comprises a factual issue which should properly be placed before the trier of fact. [Citations] It involves the application of a test which balances the social and private importance of the objective advanced by the interference against the importance of the interest interfered with, considering all the circumstances including the nature of the actor's conduct and the relationship between the parties.” Id. at 409.
In Richardson v. La Rancherita (1979) 98 Cal.App.3d 73, 80-83, the appellate court held that factual issues precluded summary judgment as to the plaintiff’s cause of action against the defendant landlord for interference with a lease assignment.
Here, based on the allegations on the face of the complaint, the Court cannot say Defendant was justified in refusing its consent to the assignment as a matter of law based on the factors set out in H & M Associates v. City of El Centro, supra. Therefore, the demurrer is overruled as to the third cause of action.
4th COA – Intentional Interference with Prospective Economic Relations
“The elements of a claim of interference with economic advantage and prospective economic advantage are: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. A plaintiff must also show that the defendant's conduct was independently unlawful, that is, ‘proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.’” Winchester Mystery House, LLC v. Global Asylum, Inc. (2012) 210 Cal.App.4th 579, 596.
Here, Defendant contends Plaintiff fails to plead the element of independent wrongfulness.
Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404–1405, further explains the independent wrongfulness element as follows:
“The independently wrongful act must be the act of interference itself, but such act must itself be independently wrongful. That is, a plaintiff need not allege the interference and a second act independent of the interference. Instead, a plaintiff must plead and prove that the conduct alleged to constitute the interference was independently wrongful, i.e., unlawful for reasons other than that it interfered with a prospective economic advantage. [¶] It is the plaintiff's burden to plead and prove that the defendant's conduct is independently wrongful in order to recover. The fact that the defendant's conduct was independently wrongful is an element of the cause of action itself. [¶] The question has arisen as to whether, in order to be actionable as interference with prospective economic advantage, the interfering act must be independently wrongful as to the plaintiff. It need not be. There is no sound reason for requiring that a defendant's wrongful actions must be directed towards the plaintiff seeking to recover for this tort. The interfering party is liable to the interfered-with party even when the independently tortious means the interfering party uses are independently tortious only as to a third party.”
Here, the fourth cause of action is viable based on Plaintiff’s allegation that Defendant interfered with its assignment agreement with third party Pokeworks, based on Defendant’s allegedly wrongful conduct in violation of section 12.1 of the Lease that Defendant shall not unreasonably withhold consent to Pokeworks’ assignment thereof. Whether Defendant’s refusal was reasonable is an evidentiary issue which cannot be resolved at this stage.
5th COA – Negligent Interference with Prospective Economic Relations
In support of its demurrer to the fifth cause of action, Defendant relies on the arguments regarding justification and independent wrongfulness discussed above. The demurrer to the fifth cause of action is therefore overruled for the reasons set out above.
The demurrers to the 3rd, 4th and 5th causes of action are denied. Plaintiff to give notice.
Case Management Conference
Regardless whether the parties submit to the tentative above, counsel for the parties are required to attend the Case Management Conference, either in person or remotely.