Suburban Mobile Homes, Inc. v. Amfac Communities, Inc.

• Decision Date: 30 January 1980
• Citation: 161 Cal.Rptr. 811,101 Cal.App.3d 532
• Court: California Court of Appeals Court of Appeals
• Parties: , 1980-1 Trade Cases P 63,040 SUBURBAN MOBILE HOMES, INC., Plaintiff and Appellant, v. AMFAC COMMUNITIES, INC., et al., Defendants and Respondents. Civ. 40428.

Page 811

161 Cal.Rptr. 811

101 Cal.App.3d 532, 1980-1 Trade Cases P 63,040

SUBURBAN MOBILE HOMES, INC., Plaintiff and Appellant, v. AMFAC COMMUNITIES, INC., et al., Defendants and Respondents.

Civ. 40428.

Court of Appeal, First District, Division 2, California.

Jan. 30, 1980.

Hearing Denied April 17, 1980.

Carr, Smulyan & Hartman, Yale H. Smulyan, San Francisco, for plaintiff and appellant.

Gendel, Raskoff, Shapiro & Quittner, Los Angeles, for respondent AMFAC Communities, Inc.

Palmer, Grundstrom & Duckworth, Novato, for respondent Roberts & Aguirre Mobile Home Sales, Inc.

CALHOUN ^*, Associate Justice.

This is an appeal from a judgment of nonsuit rendered in favor of defendants in an action brought for violation of the California antitrust law (Cartwright Act, BUS. & PROF.CODE, S 16700¹, et seq.).

The parties to the lawsuit are plaintiff Suburban Mobile Homes, Inc. (hereafter Suburban or appellant) and four named defendants (hereafter respondents): AMFAC Communities, Inc. (AMFAC), Instant Housing Corp. (Instant), Roberts & Aguirre Mobile Home Sales, Inc. (R & A), and S & S Mobile Home Sales, Inc. (S & S). Suburban is a mobile home dealer with its principal place of business in South San Francisco. AMFAC is the owner and developer of a mobile home park known as "Franciscan Bay Mobile Country Club" (hereafter Franciscan), located in Dale City, California. The three other respondents are mobile home dealers, selling mobile homes in the San Francisco trading area and elsewhere.

The centerpiece of the present litigation is the use of mobile home sites in the Franciscan. As the relevant evidence reveals, the Franciscan was developed by AMFAC by about 1971. It had 501 mobile home sites capable of accommodating double-wide mobile homes sold by Suburban. While at the outset the Franciscan was an open park where home sites were available to all buyers irrespective of from which dealer they purchased their mobile homes, at the end of 1971 AMFAC entered into agreement with four mobile home dealers, including the three co-respondents here. In essence, these agreements and the amendments thereto, secured 288 spaces out of the 501 total for four named participating dealers who gained exclusive right to display their mobile homes in the Franciscan. In return for an exclusive right to display their merchandise and reservation of home sites in the park, the participating dealers were obligated to pay a certain sum of money to AMFAC. For instance, the park promotion agreement concluded between R & A and AMFAC provided that R & A shall contribute to the park promotion and advertising costs up to $1,200 per month, and also that R & A shall pay AMFAC $200 for each coach sold in the park in consideration for reserving space for the home sold. The evidence introduced at trial showed that until Fall 1972, R & A in fact paid AMFAC $500 for every coach sold in the Franciscan.

Since the sales of mobile homes are dependent upon the availability of suitable mobile home sites in the trading area, Suburban's business was seriously affected by the aforesaid restrictive agreements and the actual sales practice conducted pursuant thereto. The evidence adduced at the trial convincingly demonstrated that the older parks belonging to or surrounding the San Francisco trading area were already full prior to 1971, the opening date of the Franciscan. At the same time, it was shown that the Franciscan was an outstanding five-star park. It had large spaces and full recreational facilities, and was the only park close to San Francisco that had double-wide spaces available. The evidence as a whole leaves no doubt that the Franciscan was a unique park, both because of its location and superb facilities.

The record is replete with evidence that the exclusion of Suburban from the Franciscan resulted in considerable actual and/or potential loss of profit to appellant. Thus, it was shown that Suburban had a waiting list of customers for the Franciscan; that there were numerous prospects (half a dozen a week) who wanted mobile homes in the Franciscan; and that there were a number of concrete sales or potential sales which were lost because of the unavailability of mobile home sites in the Franciscan to the Suburban customers. In addition, it was statistically demonstrated that while Suburban filled 90 to 95 percent of the mobile home park vacancies in northern San Mateo County from 1971 to 1975, in the disputed period it could sell only six mobile homes of the total of 253 sales in the park.

Based upon the foregoing facts, appellant brought an action against respondents charging multiple violation of the Cartwright Act, including an illegal restraint of trade and an illegal tie-in arrangement ( §§ 16720, 16726, 16727). Upon the conclusion of Suburban's evidence, the trial court refused to submit the case to the jury and granted respondents' motion for nonsuit. In accordance therewith, judgment was entered as to all causes of action in favor of respondents. The appeal is taken from the judgment.

Appellant contends on appeal that the trial court erred in granting respondents' motion for nonsuit, because the evidence of record supports the elements of an illegal tie-in arrangement which constitutes a Per se violation of the Cartwright Act ( §§ 16720, 16726, 16727). In the alternative, appellant argues that the evidence is sufficient to prove a restraint of trade under the "rule of reason" standard ( § 16720; Standard Oil Co. v. United States (1911) 221 U.S. 1, 31 S.Ct.502, 55 L.Ed. 619; Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 930, 130 Cal.Rptr. 1, 549 P.2d 833), even if the preconditions of an unlawful tying arrangement or agreement are absent. We are persuaded that respondents' conduct, as reflected by the evidence, clearly amounts to an illegal tying arrangement which, under well established case law, constitutes a Per se violation of both the federal antitrust law (Sherman Act, 15 U.S.C. § 1, et seq.) and the California Cartwright Act ( §§ 16720, 16726). Accordingly, we are compelled to reverse the judgment.

Before discussing appellant's contention on the merit, we underline a few important preliminary matters. First is the legal principle under which a nonsuit may be granted. It has become the established law of this state that a nonsuit or directed verdict may be granted only where, disregarding conflicting evidence and giving to plaintiff's evidence all the value to which it is legally entitled, therein indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff (O'Keefe v. South End Rowing Club (1966) 64 Cal.2d 729, 733, 51 Cal.Rptr. 534, 414 P.2d 830; Morgenroth v. Pacific Medical Center, Inc. (1976) 54 Cal.App.3d 521, 530, 126 Cal.Rptr. 681). Neither the appellate court nor the lower court may weigh the evidence or consider the credibility of the witnesses (Lasry v. Lederman (1957) 147 Cal.App.2d 480, 305 P.2d 663). Plaintiff may rely on that portion of testimony which is favorable to him and disregard the unfavorable portions (Anthony v. Hobbie (1945) 25 Cal.2d 814, 155 P.2d 826). Unless it can be said as a matter of law that no other reasonable conclusion is legally deducible from the evidence, and that any other holding would be so lacking in evidentiary support that a reviewing court would be impelled to reverse it upon appeal, or the trial court to set it aside as a matter of law, the court is not justified in taking the case from the jury (Estate of Lances (1932) 216 Cal. 397, 400, 14 P.2d 768; Umsted v. Scofield Eng. Const. Co. (1928) 203 Cal. 224, 228, 263 P. 799).

The second point is that summary proceedings are not favored in antitrust suits. As the court put it in Poller v. Columbia Broadcasting (1962) 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." (See also Fortner Enterprises v. U.S. Steel (1969) 394 U.S. 495, 500, 89 S.Ct. 1252, 22 L.Ed.2d 495; Santa Clara Valley Distributing v. Pabst Brewing (9th Cir. 1977) 556 F.2d 942, 944-945.)

Finally, it has been widely recognized that sections 16720 and 16726 of the Cartwright Act were patterned after the Sherman Act (15 U.S.C., § 1, et seq.), and both statutes have their roots in the common law (Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 852, 94 Cal.Rptr. 785, 484 P.2d 953). Consequently, federal cases interpreting the Sherman Act are applicable to problems arising under the Cartwright Act (Marin County Bd. of Realtors, Inc. v. Palsson, supra, 16 Cal.3d 920, 925, 130 Cal.Rptr. 1, 549 P.2d 833; Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 315, 70 Cal.Rptr. 849, 444 P.2d 481; Sherman v. Mertz Enterprises (1974) 42 Cal.App.3d 769, 775, 117 Cal.Rptr. 188). With these preliminary considerations in mind, next we set out the legal principles governing the tying agreements or arrangements and apply them to the facts of the instant case.

Both the Sherman Act and its California equivalent, the Cartwright Act, prohibit every contract, combination or trust which is formed for the purpose of restraining trade or commerce. ² Although the statutory language prohibiting restraints on trade or commerce is couched in all-encompassing terms in both acts, each has been interpreted by the courts to ban only unreasonable restraints (Standard Oil Co. v. United States, supra, 221 U.S. 1, 60, 31 S.Ct. 502, 55 L.Ed. 619; People v. Building Maintenance etc. Assn. (1953) 41 Cal.2d 719, 727, 264 P.2d 31). However, as the United States Supreme Court put it in Northern Pac. R. Co. v. United States (1958) 356 U.S. 1, 5, 78 S.Ct. 514, 518, ...