Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners

• Decision Date: 10 February 1997
• Docket Number: No. D021960,D021960
• Citation: 60 Cal.Rptr.2d 830,52 Cal.App.4th 867
• Court: California Court of Appeals Court of Appeals
• Parties: , 97 Cal. Daily Op. Serv. 998, 97 Daily Journal D.A.R. 1427 BED, BATH & BEYOND OF LA JOLLA, INC., Plaintiff and Appellant, v. LA JOLLA VILLAGE SQUARE VENTURE PARTNERS et al., Defendants and Respondents.

Page 830

60 Cal.Rptr.2d 830

52 Cal.App.4th 867, 97 Cal. Daily Op. Serv. 998,

97 Daily Journal D.A.R. 1427

BED, BATH & BEYOND OF LA JOLLA, INC., Plaintiff and Appellant, v. LA JOLLA VILLAGE SQUARE VENTURE PARTNERS et al., Defendants and Respondents.

No. D021960.

Court of Appeal, Fourth District, Division 1, California.

Feb. 10, 1997.

Allan B. Weiss & Associates, Allan B. Weiss and Jock R. Davidson, Long Beach, for Plaintiff and Appellant.

Brobeck, Phleger & Harrison, Daniel G. Lamb, Chris A. Knudsen and Mary Kathryn Kelley, San Diego, for Defendants and Respondents.

JONES, Associate Justice. ^*

Plaintiff Bed, Bath & Beyond negotiated for a lease of retail space in a shopping center owned by La Jolla Village Square Venture Partners. ¹ The negotiated terms of the lease were reduced to a written agreement which was signed by plaintiff but never by La Jolla. Instead, La Jolla leased the subject premises for higher rent than that negotiated by plaintiff to defendant Linens 'N Things, Inc., a retail business in direct competition with plaintiff. ² Plaintiff filed an On appeal plaintiff contends: (1) the alleged lease agreement between plaintiff and La Jolla is not rendered unenforceable by the statute of frauds; 2) even if the alleged lease agreement is unenforceable due to the statute of frauds, it nevertheless can be the subject of a cause of action for intentional interference with a contractual relationship; (3) the court erred by ruling the "fair competition" privilege defeats plaintiff's cause of action for interference with prospective economic advantage as a matter of law; and (4) the court erred by entering judgment before filing a formal order after the hearing on Linens 'N Things' motion for summary adjudication of plaintiff's cause of action for interference with prospective economic advantage and in signing such order after plaintiff filed the instant appeal. We affirm.

action against La Jolla and Linens 'N Things, asserting causes of action for specific performance, breach of contract and fraud against La Jolla and causes of action for interference with contractual relations and prospective economic advantage against Linens 'N Things. The court granted summary adjudication against plaintiff on each of its causes of action except the one for fraud, concluding the alleged lease agreement was within the statute of frauds and Linens 'N Things' "fair competition" privilege was a complete defense to plaintiff's claim for interference with prospective economic advantage. Plaintiff later voluntarily dismissed its fraud cause of action.

FACTUAL AND PROCEDURAL BACKGROUND

From May 1992 through January 1993 plaintiff negotiated with representatives of La Jolla for a lease of retail space in La Jolla Village Square, a shopping center La Jolla was then in the process of building. In February 1993 La Jolla's legal representative in the negotiations presented plaintiff with four copies of a proposed written lease agreement and guaranty agreement to be executed by plaintiff and its guarantor, plaintiff's parent corporation. The cover letter accompanying these documents requested they be executed by plaintiff and its guarantor and returned to La Jolla's legal representative for "execution by the Landlord." Plaintiff signed the lease and its parent corporation signed the guaranty. The documents were then returned to La Jolla for execution.

La Jolla never executed the lease. In late March 1993 the representative of La Jolla who negotiated the proposed lease with plaintiff informed plaintiff that La Jolla intended to lease the subject premises to Linens 'N Things, plaintiff's competitor. Prior to that communication plaintiff was unaware that La Jolla had been negotiating with Linens 'N Things.

In April 1993 plaintiff filed its complaint in the instant action and later filed a first amended complaint. The first amended complaint included causes of action for specific performance, breach of contract, and fraud against La Jolla and causes of action for intentional interference with "economic relationship" and intentional interference with "prospective business agreement" against Linens 'N Things. The first amended complaint also included a cause of action for injunctive relief against all defendants, seeking to enjoin La Jolla from leasing the subject premises to Linens 'N Things.

Plaintiff's claims were challenged by two separate motions for summary adjudication. First, La Jolla and Linens 'N Things jointly moved for summary adjudication as to plaintiff's first, second, third and fifth causes of action for specific performance, breach of contract, injunctive relief, and intentional interference with contractual relations, respectively. The court granted defendants' motion, concluding: "The Statute of Frauds, as set forth in Civil Code sections 1091 and 1624[, subdivision (d) ] and Code of Civil Procedure section 1971, requires that the lease alleged by plaintiff be in writing, duly subscribed by the party to be charged. The factual predicate to each of the causes of action [challenged by defendants' motion] is a valid, enforceable lease."

Linens 'N Things then filed a separate motion for summary adjudication of plaintiff's sixth cause of action for intentional interference with prospective economic advantage. Linens 'N Things argued the undisputed facts established the "competition Shortly after the court granted Linens 'N Things' second motion for summary adjudication, plaintiff dismissed its only remaining cause of action, the fourth cause for fraud against La Jolla. Consequently, the court entered judgment in favor of defendants and against plaintiff.

privilege" was a complete defense to plaintiff's sixth cause of action. Plaintiff filed a cross-motion for summary adjudication on the ground there was no defense to its sixth cause of action. The court granted Linens 'N Things' motion and denied plaintiff's, concluding Linens 'N Things established each of the elements of the competition privilege as a matter of undisputed fact. ³

DISCUSSION

On appeal from a ruling on a motion for summary judgment, the appellate court conducts its own independent review of the moving and opposition papers and applies the same standard as the trial court in determining whether the motion was properly granted. The appellate court is not bound by the trial court's stated reasons for its ruling on the motion, as the appellate court reviews only the ruling and not its rationale. (California Aviation, Inc. v. Leeds (1991) 233 Cal.App.3d 724, 730-731, 284 Cal.Rptr. 687.)

I. Statute of Frauds

Plaintiff's principal contention on appeal is that the trial court erred by ruling the lease between plaintiff and La Jolla is subject to the statute of frauds. We conclude the trial court correctly ruled the statute of frauds renders the alleged lease agreement unenforceable. ⁴

Three different "statutes of fraud" apply to bar enforcement of the alleged lease agreement in this case. Civil Code section 1624, subdivision (d) specifies, as a type of contract which is invalid unless it is in writing and subscribed by the party to be charged, "[a]n agreement ... to lease real estate for a longer period than one year...."

Civil Code section 1091 provides: "An estate in real property, other than an estate at will or for a term not exceeding one year, can be transferred only by operation of law, or by an instrument in writing, subscribed by the party disposing of the same, or by his agent thereunto authorized by writing."

Similarly, Code of Civil Procedure section 1971 provides, in pertinent part: "No estate or interest in real property, other than for leases for a term not exceeding one year, ... can be created, granted, assigned, surrendered, or declared, otherwise than by operation of law, or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring the same, or by his lawful agent thereunto authorized by writing." (Italics added.)

Thus, Civil Code section 1624, subdivision (d) requires that an agreement to lease property for a term longer than one year be in writing and signed by the "party to be charged" while Civil Code section 1091 and Code of Civil Procedure section 1971 more specifically require that a lease of property for a term longer than one year be in writing and signed by the lessor. (See Kevich v. R.L.C., Inc. (1959) 173 Cal.App.2d 315, 321, 343 P.2d 402.) Whether viewed as an oral agreement or written agreement, plaintiff's alleged lease agreement is unenforceable because it is undisputed that La Jolla, the lessor and "party to be charged," never signed the draft instrument that plaintiff signed. (Tabata v. Murane (1944) 24 Cal.2d 221, 228, 148 P.2d 605 [agreements which are invalid under Civil Code section 1624 are unenforceable].)

Plaintiff contends the lease agreement is not subject to the statute of frauds because it possibly could have been performed within one year from the date of its making. Plaintiff's argument rests on two provisions in the unexecuted written lease. Article 3, subdivision (b) of the lease provided the tenant could terminate the lease before the rental term commenced if the landlord failed to begin certain preparatory work on the leased premises by June 1, 1993, or substantially complete that work by December 31, 1993. Article 3, subdivision (c) gave the landlord the right to terminate the lease before commencement of the rental term if the landlord was unable to obtain the various governmental permits and approvals required for construction of the premises despite exercising diligence and good faith in attempting to do so.

As authority for its position that these provisions take the lease out of the statute of frauds, plaintiff relies primarily on Fisher v. Parsons (1963) 213 Cal.App.2d 829, 29 Cal.Rptr. 210. In Fisher, the plaintiff lessor sued the defendant lessee for breach of an oral lease agreement under which the...