Outh Sutter, LLC v. LJ Sutter Partners, L.P.

• Decision Date: 16 March 2011
• Docket Number: Nos. C058206,C059554.,s. C058206
• Citation: 11 Cal. Daily Op. Serv. 3213,123 Cal.Rptr.3d 301,2011 Daily Journal D.A.R. 3852,193 Cal.App.4th 634
• Court: California Court of Appeals Court of Appeals
• Parties: SOUTH SUTTER, LLC, Plaintiff and Appellant, v. LJ SUTTER PARTNERS, L.P., et al., Defendants and Respondents. South Sutter, LLC, Plaintiff and Appellant, v. Anderson West, LLC, Defendant and Respondent.

193 Cal.App.4th 634

123 Cal.Rptr.3d 301

11 Cal. Daily Op. Serv. 3213

2011 Daily Journal D.A.R. 3852

SOUTH SUTTER, LLC, Plaintiff and Appellant,

v.LJ SUTTER PARTNERS, L.P., et al., Defendants and Respondents.

South Sutter, LLC, Plaintiff and Appellant,

v.Anderson West, LLC, Defendant and Respondent.

Nos. C058206, C059554.

Court of Appeal, Third District, California.

March 16, 2011.

Freidberg & Parker, Edward Freidberg, Port J. Parker, Sacramento, Suzanne M. Alves, and Danny A. Barak for Plaintiff and Appellant.

Neasham & Kramer, William C. Neasham and Patricia Kramer, Gold River, for Defendants and Respondents.

NICHOLSON, Acting P.J.

Plaintiff in these actions, South Sutter, LLC (South Sutter), owned an option to acquire a large tract of land from defendant Odysseus Farms. South Sutter claimed the option agreement also gave it an exclusive interest in other lands owned by Odysseus Farms and a right of first refusal should Odysseus Farms acquire additional property and enter into a joint venture with third parties regarding the new property.

When Odysseus Farms entered into an agreement with defendant LJ Sutter Partners, L.P. (LJ Sutter), optioning its other lands, and when Odysseus Farms allegedly formed a joint venture with defendant Anderson West, LLC, regarding new property it had acquired, South Sutter sued. It alleged contract and tort causes of action.

South Sutter voluntarily dismissed the complaint, however, after LJ Sutter and its owners filed a special motion to strike the complaint under Code of Civil Procedure section 425.16, more commonly known as an anti-SLAPP motion. ¹ LJ Sutter was later awarded its attorney fees for bringing its motion. In awarding fees, the trial court determined on the merits that South Sutter's first complaint was a SLAPP. It arose from the defendants' exercise of constitutional rights of speech and petition regarding governmental development entitlements both South Sutter and LJ Sutter had sought to obtain, and South Sutter failed to prove it would have prevailed on the merits of its complaint.

South Sutter appealed the trial court's attorney fees order to our court. We subsequently dismissed the appeal at South Sutter's request, as the parties had settled their dispute. The parties did not, however, seek a stipulated reversal of the trial court's order.

Meanwhile, shortly after dismissing its first complaint, South Sutter filed a second complaint, which is the subject of these appeals. South Sutter sued Odysseus Farms and its owners for breach of contract, and it sued Odysseus Farms and its owners, LJ Sutter and its owners, and Anderson West for declaratory relief. South Sutter omitted all of the tort causes of action it had alleged in the first complaint.

LJ Sutter and its owners again filed an anti-SLAPP motion. They claimed the second complaint's lack of new facts established that South Sutter's second complaint arose out of the defendants' exercise of constitutional rights. They also argued South Sutter was not likely to succeed on the merits of its complaint. The trial court agreed with LJ Sutter and its owners, granted the motion, and dismissed the complaint against those defendants.

Anderson West filed a demurrer to South Sutter's complaint. It argued South Sutter could not allege facts sufficient to state a cause of action against it. The trial court agreed with Anderson West and sustained the demurrer without leave to amend.

South Sutter appeals from both judgments against its second complaint. It claims the trial court erred in granting LJ Sutter's anti-SLAPP motion as the motion was not filed timely, there was insufficient evidence the complaint arose from the defendants' exercise of constitutional rights, and there was sufficient evidence South Sutter was likely to succeed on the merits of the complaint.

South Sutter also claims the trial court erred in sustaining Anderson West's demurrer without leave to amend, as it allegedly pleaded sufficient facts to state a cause of action against Anderson West.

We consolidated the appeals for purposes of argument and decision. After we consolidated the appeals, South Sutter informed us it had settled with Odysseus Farms and its owners, who were not parties to this appeal, and it had dismissed them from this action. LJ Sutter and Anderson West then requested we dismiss these appeals as moot.

At oral argument, South Sutter conceded its settlement with Odysseus Farms had rendered the appeal against Anderson West moot. We therefore dismiss case No. C059554 against Anderson West, and we will not discuss that appeal in this opinion.

As to case No. C058206 against LJ Sutter and its owners, we deny the request to dismiss the appeal and we affirm the judgment. We conclude the trial court did not err in granting LJ Sutter's anti-SLAPP motion. The trial court's determination in the attorney fees order that South Sutter's cause of action arose from LJ Sutter's exercise of constitutional rights acts as a direct estoppel and precludes relitigation of that issue here. Even if there was no direct estoppel, the evidence demonstrates South Sutter's cause of action against LJ Sutter arises from the latter's exercise of constitutional rights.

Additionally, the evidence demonstrates it is unlikely South Sutter will succeed on the merits of its complaint against LJ Sutter and its owners. A condition precedent on South Sutter's interest in Odysseus Farms's other lands, which interest serves as the basis for South Sutter's complaint, has not been satisfied.

FACTS

A. Option Agreement between South Sutter and Odysseus Farms

In the mid–1990s, Sutter County (the County) designated in its general plan some 10,500 rural acres located in Sutter County's southeast corner as Industrial/Commercial Reserve. The area became known as the Industrial Reserve. This designation allowed for employment-related development to occur on the land.

Defendant Odysseus Farms owns approximately 3,800 acres in the Industrial Reserve. Odysseus Farms is a general partnership. Defendant Leal Family Trust is its general partner, and defendant Robert Leal is the trustee of the Leal Family Trust. (We refer to these three defendants collectively as the Leal defendants.)

In 2002, Odysseus Farms granted to LNR California Investments, Inc., the predecessor in interest to South Sutter, an exclusive option to purchase 2,700 acres of its Industrial Reserve land (the Option Agreement).² The parties refer to the land optioned under the Option Agreement as the Option Property. The Option Agreement generally calls for South Sutter to acquire parcels of the Option Property in phases over a 20–year term.

During the term of the Option Agreement, South Sutter has the exclusive right under section 9.1 of the Option Agreement to seek the approval of all governmental entitlements necessary or desirable for its contemplated development of the Option Property. Such entitlements include a specific plan, the resolution of endangered species mitigation issues required for compliance with the Natomas Basin Habitat Conservation Plan, any development agreements with the County, and the recordation of parcel maps and final tract maps for the Option Property. Odysseus Farms agrees to reasonably cooperate with South Sutter and do all that is necessary for South Sutter to obtain or seek approval of development entitlements. In addition, Odysseus Farms agrees not to execute any agreement that would “materially and adversely affect the intended development of the [Option] Property by [South Sutter].”

The Option Agreement also addresses other property owned by Odysseus Farms that exists both within and outside of the Industrial Reserve and that surrounds the Option Property. The Option Agreement refers to this property as the Other Property. Under the Option Agreement, the Other Property could possibly be used by South Sutter to fulfill environmental mitigation requirements imposed on it for developing the Option Property. Section 12.1 of the Option Agreement in general states that, provided Odysseus Farms and South Sutter successfully negotiate a conservation easement in favor of a government agency to satisfy South Sutter's mitigation requirements, South Sutter will have exclusive rights to purchase that conservation easement on the Other Property. The parties anticipated that such an easementwould consist of one-half of an acre of the Other Property for every acre of the Option Property South Sutter developed.

Other than to allege the Other Property exists both within and outside of the Industrial Reserve, nothing in the Option Agreement or, for that matter, the record on appeal identifies all of the Other Property or describes its size or specific location.

Odysseus Farms also agreed in the Option Agreement to extend to South Sutter a right of first refusal should Odysseus Farms decide to sell or enter into a joint venture regarding any real property Odysseus Farms acquires within the “specific plan area” for south Sutter County. Under section 13.1 of the Option Agreement, any contract for such a sale or joint venture by Odysseus Farms must be forwarded to South Sutter, which then can determine whether to purchase the property or enter into the joint venture being negotiated. If it chooses not to purchase the property or enter into the joint venture, Odysseus Farms is free to proceed with the sale or joint venture.

B. Measure M

In 2004, South Sutter began meeting with County officials to investigate developing the Option Property. At the request of South Sutter and other landowners in the Industrial Reserve, the County Board of Supervisors agreed to place on the ballot an advisory measure for the voters to state whether they approved developing 7,500 acres of the Industrial Reserve. The ballot measure, known as Measure M, proposed developing the land with various uses, including residential and commercial uses, and building the infrastructure needed for that development. The group of...