Preview
1 Timothy M. Flaherty, Esq., SBN 99666
Christian P. Foote, Esq., SBN 240919
2 CLARK HILL LLP ELECTRONICALLY
3
505 Montgomery Street, 13th Floor F I L E D
San Francisco, CA 94111 Superior Court of California,
County of San Francisco
Telephone: (415) 984-8500
4 Facsimile: (415) 984-8599 04/14/2021
Clerk of the Court
TFlaherty@clarkhill.com BY: SANDRA SCHIRO
5
CFoote@clarkhill.com Deputy Clerk
6
Attorneys for Defendant/Cross-Complainant
7 ALICE PHELAN SULLIVAN CORPORATION
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 CITY AND COUNTY OF SAN FRANCISCO
10
WHITE HOUSE VENTURES, LLC, a Case No. CGC-20-582659
11 California limited liability company,
MOTION IN LIMINE NO. 6 TO EXCLUDE
12 Plaintiff, EVIDENCE OF CONSEQUENTIAL
13 DAMAGES; AND FOR JUDGMENT ON THE
v. PLEADINGS ON WHITE HOUSE
14 VENTURE'S THIRD CAUSE OF ACTION
ALICE PHELAN SULLIVAN FOR TORTIOUS INTERFERENCE WITH
CORPORATION, a California corporation; and CONTRACT AND FOURTH CAUSE OF
15
DOES 1-100, ACTION FOR TORTIOUS INTERFERENCE
16 WITH PROSPECTIVE ECONOMIC
Defendants.
ADVANTAGE
17
________________________________________
Complaint filed: February 3, 2020
18
ALICE PHELAN SULLIVAN
CORPORATION, a California corporation, Cross-Complaint Filed: May 29, 2020
19
20 Cross-Complainant,
21 v.
22 WHITE HOUSE VENTURES, LLC, a
California limited liability company, and ROES
23 1-10,
24 Cross-Defendants.
Defendant and Cross-Complainant Alice Phelan Sullivan Corporation (“APS”) brings this
25
Motion in Limine (“Motion”) to exclude evidence of consequential damages by Plaintiff and Cross-
26
1
MOTION IN LIMINE NO. 6 AND MOTION FOR JUDGMENT ON THE PLEADINGS
ClarkHill\62578\372310\262659079.v1-4/14/21
1 Defendant White House Ventures, LLC (“WHV”), and for Judgment on the Pleadings on the Third
2 and Fourth Causes of Action in the Complaint. This motion is brought pursuant Paragraph 12.1(e) of
3 the AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL
COMMERCIAL SINGLE-TENANT LEASE – NET (“Lease”) dated June 21, 2013 between the
4
parties, which limits damages from APS’s failure or refusal to consent to an assignment of the Lease
5
to “compensatory damages and/or injunctive relief.” This motion is further based on Evidence Code
6
sections 350 and 352 in that any evidence related to WHV's damage beyond compensatory damages
7
is not relevant, will be unduly time consuming, and will be prejudicial, confusing, and misleading to a
8
jury.
9
I. INTRODUCTION
10
This case revolves around one central question: Was APS’s refusal to consent to an
11
assignment of the Lease by WHV reasonable? Irrespective of whether APS is liable for refusing to
12
consent to an assignment, Paragraph 12(e) of the Lease explicitly limits the type of damages that
13
WHV could recover based on APS’s refusal to consent to an assignment to “compensatory damages
14
and/or injunctive relief.” But WHV has few, if any actual damages, so it now seeks to recover a
15
16 laundry list of speculative consequential damages by repleading its breach of contract claims under
17 theories of tort liability for interference with contract and interference with prospective economic
18 advantage. While APS has filed a separate motion in limine to exclude WHV’s consequential
19 damages based on their speculative nature, they should separately be excluded based on the terms of
20 the Lease.
21 II. ARGUMENT
22 A. Tort Damages Are Not Recoverable for Breach of Contract.
23 Paragraph 12.1 of the Lease sets forth the requirement that WHV obtain consent of APS to
24 assign the Lease. Furthermore, paragraph 12.1(e) states that “Lessee's remedy for any breach of
25
Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.”
26
2
MOTION IN LIMINE NO. 6
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1 Parties to a commercial lease are entitled to limit the scope of potential tort liability arising
2 from the performance or non-performance of the contract. (Frittelli, Inc. v. 350 North Canon Drive,
3 LP (2011) 202 Cal.App.4th 35, 43-47; Garcia v. D/AQ Corporation (2020) 57 Cal.App.5th 902, 910.)
4 Moreover, where the same facts and circumstances give rise to a potential breach of contract action
5
and an independent tort action, the limitation of liability contained in the contract prohibits liability in
6
tort for actions that gave rise to the cause of action for breach of contract. (CAZA Drilling
7
(California), Inc. v. TEG Oil & Gas U.S.A., Inc. (2006) 142 Cal.App.4th 453, 466.) Nor may a party
8
“recover in tort for the breach of duties that merely restate contractual obligations.” (Stop Loss Ins.
9
Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041; State Ready
10
Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227, 1232.)
11
Furthermore, California Evidence Code section 350 limits the introduction of evidence to only
12
relevant evidence, and California Evidence Code section 352, permits a court to enter an order
13
14 preventing counsel, witnesses or parties from mentioning certain facts which the finder of fact would
15 find to be more prejudicial than probative or which would necessitate an undue consumption of time
16 or would confuse the jury.
17 Here, WHV alleges that by refusing to consent to assign the Lease, APS tortuously interfered
18 with WHV’s potential contracts to sell the Lease to third parties (see Complaint at ¶ 35) or that APS
19 tortuously interfered with WHV’s “efforts to develop and maintain it’s relationships with the
20
potential purchasers of” the Lease (Complaint at ¶ 38). But the only factual basis WHV has alleged
21
for any tort liability by APS is that APS unreasonably refused to consent to WHV’s requests to assign
22
the Lease. This is insufficient as a matter of law to impose tort liability on APS.
23
Paragraph 12.1(e) limit’s WHV’s right to recover damages from any alleged breach APS’s
24
refusal to consent to an assignment to “compensatory damages and/or injunctive relief.” Despite the
25
limitations contained in paragraph 12.1(e), WHV seeks to recover damages on it’s third cause of
26
3
MOTION IN LIMINE NO. 6
ClarkHill\62578\372310\262659079.v1-4/14/21
1 action for tortious interference of contract and it’s fourth cause of action for tortious interference with
2 prospective advantage that include a (1) reduction in the resale value of the Lease, (2) damages for
3 lost profits or revenue from the potential sale of the Lease, and (3) losses related to the inability to
4 conduct a section 1031 exchange. None of those the damages WHV seeks are compensatory, they are
5
consequential.
6
Despite the fact the Lease limits WHV’s damages to actual, out of pocket, compensatory
7
damages, WHV is going to attempt to introduce evidence of damages that far exceeds any
8
compensatory damages it has allegedly sustained. The Court should not permit it to do so.
9
Because WHV is not entitled to recover any consequential damages, evidence of any
10
consequential damages WHV believes it may have suffered is not relevant. Although no relevant,
11
there is a risk that presenting evidence to the jury of consequential damages would confuse and or
12
prejudice jurors as to the facts that are at issue in this action.
13
14 B. APS Is Entitled to Judgment on the Pleadings on the Third and Fourth Causes of
Action in the Complaint Because WHV Cannot Establish the Elements of those
15 Claims as a Matter of Law.
16 WHV’s Third and Fourth Causes of Action sound in tort. The law imposes the obligation that
17 “every person is bound without contract to abstain from injuring the person or property of another or
18 infringing upon any of his rights.” (Sec. 1708, Civ. Code.) This duty is independent of the contract:
19 “A person may not ordinarily recover in tort for the breach of duties that merely restate contractual
20 obligations.” Aas v. Superior Ct., 24 Cal. 4th 627, 643, 12 P.3d 1125, 1135 (2000) (superseded by
21
statute on other grounds as explained in Rosen v. State Farm Gen. Ins. Co., 30 Cal.4th 1070, 1079-80
22
(2003). Further, “conduct amounting to a breach of contract becomes tortious only when it also
23
violates a duty independent of the contract arising from principles of tort law.” Aas, 24 Cal.4th at 643.
24
In this action, the only duty that APS is alleged to have owed to WHV in connection with
25
WHV’s 2017 and 2019 leasehold sale transactions was to grant consent pursuant to the Lease in a
26
4
MOTION IN LIMINE NO. 6
ClarkHill\62578\372310\262659079.v1-4/14/21
1 reasonable manner. APS is not alleged to have taken any action at all aside from its performance of
2 Lease obligations. This is insufficient. “An omission to perform a contract obligation is never a tort,
3 unless that omission is also an omission of a legal duty.” Erlich v. Menezes, 21 Cal. 4th 543, 551, 981
4 P.2d 978, 983 (1999); see also Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503,
5
515 (1994).
6
Because WHV cannot establish any basis for liability in tort, APS is entitled to judgment on
7
the pleadings on WHV’s two tort claims.
8
III. CONCLUSION
9
WHV cannot circumvent the bargained for terms of the Lease by asserting its breach of
10
contract claims as torts, and this court should not permit WHV to introduce evidence of consequential
11
damages it alleges it has suffered. In addition, the Court should grant APS judgment on the pleadings
12
on the Third and Fourth Causes of Action in the Complaint.
13
14
Dated: April 14, 2021 CLARK HILL LLP
15
16
17
By:
18
Timothy M. Flaherty
19 Christian P. Foote
Attorneys for Defendant/Cross-Complainant
20 ALICE PHELAN SULLIVAN
CORPORATION
21
22
23
24
25
26
5
MOTION IN LIMINE NO. 6
ClarkHill\62578\372310\262659079.v1-4/14/21
1 PROOF OF SERVICE
2 I, the undersigned, am employed in the County of San Francisco, State of California. I am
over the age of 18 and not a party to the within action; my business address is Clark Hill LLP, 505
3 Montgomery Street, 13th Floor, San Francisco, CA 94111.
4 On April 14, 2021, I served the following documents in the manner described below:
5 MOTION IN LIMINE NO. 6 TO EXCLUDE EVIDENCE OF CONSEQUENTIAL
DAMAGES; AND FOR JUDGMENT ON THE PLEADINGS ON WHV’S THIRD CAUSE OF
6 ACTION FOR TORTIOUS INTERFERENCE WITH CONTRACT AND FOURTH CAUSE
OF ACTION FOR TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC
7 ADVANTAGE
8 " BY ELECTRONIC SERVICE VIA FILE AND SERVE EXPRESS: Based on a court
order, I caused the above-entitled document(s) to be served through File & ServeXpress
9 at http://secure.fileandserveexpress.com addressed to all parties appearing on the
electronic service list for the above-entitled case. The service transmission was reported
10 as complete and a copy of the File & ServeXpress filing Receipt Page/Confirmation will
be filed, deposited or maintained with the original document(s) in this office.
11
On the following part(ies) in this action:
12
13 Gregory S. Cavallo, Esq. Attorneys for Plaintiff
Jeffrey W. Shopoff, Esq. WHITE HOUSE VENTURES, LLC
14 James M. Robinson, Esq.
SHOPOFF CAVALLO LLP
15 155 Montgomery Street, Suite 401
San Francisco, CA 94104
16 Telephone: (415) 854-0370
Facsimile: (415) 854-0370
17 Email: greg@shopoffcavallo.com
18
I declare under penalty of perjury under the laws of the State of California that the
19 foregoing is true and correct.
20 Executed on April 14, 2021, at San Francisco, California.
21
22
Teresa L. Steen
23
24
25
26
6
MOTION IN LIMINE NO. 6
ClarkHill\62578\372310\262659079.v1-4/14/21
Preview
1 Timothy M. Flaherty, Esq., SBN 99666 Christian P. Foote, Esq., SBN 240919 2 CLARK HILL LLP ELECTRONICALLY 3 505 Montgomery Street, 13th Floor F I L E D San Francisco, CA 94111 Superior Court of California, County of San Francisco Telephone: (415) 984-8500 4 Facsimile: (415) 984-8599 04/14/2021 Clerk of the Court TFlaherty@clarkhill.com BY: SANDRA SCHIRO 5 CFoote@clarkhill.com Deputy Clerk 6 Attorneys for Defendant/Cross-Complainant 7 ALICE PHELAN SULLIVAN CORPORATION 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 CITY AND COUNTY OF SAN FRANCISCO 10 WHITE HOUSE VENTURES, LLC, a Case No. CGC-20-582659 11 California limited liability company, MOTION IN LIMINE NO. 6 TO EXCLUDE 12 Plaintiff, EVIDENCE OF CONSEQUENTIAL 13 DAMAGES; AND FOR JUDGMENT ON THE v. PLEADINGS ON WHITE HOUSE 14 VENTURE'S THIRD CAUSE OF ACTION ALICE PHELAN SULLIVAN FOR TORTIOUS INTERFERENCE WITH CORPORATION, a California corporation; and CONTRACT AND FOURTH CAUSE OF 15 DOES 1-100, ACTION FOR TORTIOUS INTERFERENCE 16 WITH PROSPECTIVE ECONOMIC Defendants. ADVANTAGE 17 ________________________________________ Complaint filed: February 3, 2020 18 ALICE PHELAN SULLIVAN CORPORATION, a California corporation, Cross-Complaint Filed: May 29, 2020 19 20 Cross-Complainant, 21 v. 22 WHITE HOUSE VENTURES, LLC, a California limited liability company, and ROES 23 1-10, 24 Cross-Defendants. Defendant and Cross-Complainant Alice Phelan Sullivan Corporation (“APS”) brings this 25 Motion in Limine (“Motion”) to exclude evidence of consequential damages by Plaintiff and Cross- 26 1 MOTION IN LIMINE NO. 6 AND MOTION FOR JUDGMENT ON THE PLEADINGS ClarkHill\62578\372310\262659079.v1-4/14/21 1 Defendant White House Ventures, LLC (“WHV”), and for Judgment on the Pleadings on the Third 2 and Fourth Causes of Action in the Complaint. This motion is brought pursuant Paragraph 12.1(e) of 3 the AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL COMMERCIAL SINGLE-TENANT LEASE – NET (“Lease”) dated June 21, 2013 between the 4 parties, which limits damages from APS’s failure or refusal to consent to an assignment of the Lease 5 to “compensatory damages and/or injunctive relief.” This motion is further based on Evidence Code 6 sections 350 and 352 in that any evidence related to WHV's damage beyond compensatory damages 7 is not relevant, will be unduly time consuming, and will be prejudicial, confusing, and misleading to a 8 jury. 9 I. INTRODUCTION 10 This case revolves around one central question: Was APS’s refusal to consent to an 11 assignment of the Lease by WHV reasonable? Irrespective of whether APS is liable for refusing to 12 consent to an assignment, Paragraph 12(e) of the Lease explicitly limits the type of damages that 13 WHV could recover based on APS’s refusal to consent to an assignment to “compensatory damages 14 and/or injunctive relief.” But WHV has few, if any actual damages, so it now seeks to recover a 15 16 laundry list of speculative consequential damages by repleading its breach of contract claims under 17 theories of tort liability for interference with contract and interference with prospective economic 18 advantage. While APS has filed a separate motion in limine to exclude WHV’s consequential 19 damages based on their speculative nature, they should separately be excluded based on the terms of 20 the Lease. 21 II. ARGUMENT 22 A. Tort Damages Are Not Recoverable for Breach of Contract. 23 Paragraph 12.1 of the Lease sets forth the requirement that WHV obtain consent of APS to 24 assign the Lease. Furthermore, paragraph 12.1(e) states that “Lessee's remedy for any breach of 25 Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.” 26 2 MOTION IN LIMINE NO. 6 ClarkHill\62578\372310\262659079.v1-4/14/21 1 Parties to a commercial lease are entitled to limit the scope of potential tort liability arising 2 from the performance or non-performance of the contract. (Frittelli, Inc. v. 350 North Canon Drive, 3 LP (2011) 202 Cal.App.4th 35, 43-47; Garcia v. D/AQ Corporation (2020) 57 Cal.App.5th 902, 910.) 4 Moreover, where the same facts and circumstances give rise to a potential breach of contract action 5 and an independent tort action, the limitation of liability contained in the contract prohibits liability in 6 tort for actions that gave rise to the cause of action for breach of contract. (CAZA Drilling 7 (California), Inc. v. TEG Oil & Gas U.S.A., Inc. (2006) 142 Cal.App.4th 453, 466.) Nor may a party 8 “recover in tort for the breach of duties that merely restate contractual obligations.” (Stop Loss Ins. 9 Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041; State Ready 10 Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227, 1232.) 11 Furthermore, California Evidence Code section 350 limits the introduction of evidence to only 12 relevant evidence, and California Evidence Code section 352, permits a court to enter an order 13 14 preventing counsel, witnesses or parties from mentioning certain facts which the finder of fact would 15 find to be more prejudicial than probative or which would necessitate an undue consumption of time 16 or would confuse the jury. 17 Here, WHV alleges that by refusing to consent to assign the Lease, APS tortuously interfered 18 with WHV’s potential contracts to sell the Lease to third parties (see Complaint at ¶ 35) or that APS 19 tortuously interfered with WHV’s “efforts to develop and maintain it’s relationships with the 20 potential purchasers of” the Lease (Complaint at ¶ 38). But the only factual basis WHV has alleged 21 for any tort liability by APS is that APS unreasonably refused to consent to WHV’s requests to assign 22 the Lease. This is insufficient as a matter of law to impose tort liability on APS. 23 Paragraph 12.1(e) limit’s WHV’s right to recover damages from any alleged breach APS’s 24 refusal to consent to an assignment to “compensatory damages and/or injunctive relief.” Despite the 25 limitations contained in paragraph 12.1(e), WHV seeks to recover damages on it’s third cause of 26 3 MOTION IN LIMINE NO. 6 ClarkHill\62578\372310\262659079.v1-4/14/21 1 action for tortious interference of contract and it’s fourth cause of action for tortious interference with 2 prospective advantage that include a (1) reduction in the resale value of the Lease, (2) damages for 3 lost profits or revenue from the potential sale of the Lease, and (3) losses related to the inability to 4 conduct a section 1031 exchange. None of those the damages WHV seeks are compensatory, they are 5 consequential. 6 Despite the fact the Lease limits WHV’s damages to actual, out of pocket, compensatory 7 damages, WHV is going to attempt to introduce evidence of damages that far exceeds any 8 compensatory damages it has allegedly sustained. The Court should not permit it to do so. 9 Because WHV is not entitled to recover any consequential damages, evidence of any 10 consequential damages WHV believes it may have suffered is not relevant. Although no relevant, 11 there is a risk that presenting evidence to the jury of consequential damages would confuse and or 12 prejudice jurors as to the facts that are at issue in this action. 13 14 B. APS Is Entitled to Judgment on the Pleadings on the Third and Fourth Causes of Action in the Complaint Because WHV Cannot Establish the Elements of those 15 Claims as a Matter of Law. 16 WHV’s Third and Fourth Causes of Action sound in tort. The law imposes the obligation that 17 “every person is bound without contract to abstain from injuring the person or property of another or 18 infringing upon any of his rights.” (Sec. 1708, Civ. Code.) This duty is independent of the contract: 19 “A person may not ordinarily recover in tort for the breach of duties that merely restate contractual 20 obligations.” Aas v. Superior Ct., 24 Cal. 4th 627, 643, 12 P.3d 1125, 1135 (2000) (superseded by 21 statute on other grounds as explained in Rosen v. State Farm Gen. Ins. Co., 30 Cal.4th 1070, 1079-80 22 (2003). Further, “conduct amounting to a breach of contract becomes tortious only when it also 23 violates a duty independent of the contract arising from principles of tort law.” Aas, 24 Cal.4th at 643. 24 In this action, the only duty that APS is alleged to have owed to WHV in connection with 25 WHV’s 2017 and 2019 leasehold sale transactions was to grant consent pursuant to the Lease in a 26 4 MOTION IN LIMINE NO. 6 ClarkHill\62578\372310\262659079.v1-4/14/21 1 reasonable manner. APS is not alleged to have taken any action at all aside from its performance of 2 Lease obligations. This is insufficient. “An omission to perform a contract obligation is never a tort, 3 unless that omission is also an omission of a legal duty.” Erlich v. Menezes, 21 Cal. 4th 543, 551, 981 4 P.2d 978, 983 (1999); see also Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 5 515 (1994). 6 Because WHV cannot establish any basis for liability in tort, APS is entitled to judgment on 7 the pleadings on WHV’s two tort claims. 8 III. CONCLUSION 9 WHV cannot circumvent the bargained for terms of the Lease by asserting its breach of 10 contract claims as torts, and this court should not permit WHV to introduce evidence of consequential 11 damages it alleges it has suffered. In addition, the Court should grant APS judgment on the pleadings 12 on the Third and Fourth Causes of Action in the Complaint. 13 14 Dated: April 14, 2021 CLARK HILL LLP 15 16 17 By: 18 Timothy M. Flaherty 19 Christian P. Foote Attorneys for Defendant/Cross-Complainant 20 ALICE PHELAN SULLIVAN CORPORATION 21 22 23 24 25 26 5 MOTION IN LIMINE NO. 6 ClarkHill\62578\372310\262659079.v1-4/14/21 1 PROOF OF SERVICE 2 I, the undersigned, am employed in the County of San Francisco, State of California. I am over the age of 18 and not a party to the within action; my business address is Clark Hill LLP, 505 3 Montgomery Street, 13th Floor, San Francisco, CA 94111. 4 On April 14, 2021, I served the following documents in the manner described below: 5 MOTION IN LIMINE NO. 6 TO EXCLUDE EVIDENCE OF CONSEQUENTIAL DAMAGES; AND FOR JUDGMENT ON THE PLEADINGS ON WHV’S THIRD CAUSE OF 6 ACTION FOR TORTIOUS INTERFERENCE WITH CONTRACT AND FOURTH CAUSE OF ACTION FOR TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC 7 ADVANTAGE 8 " BY ELECTRONIC SERVICE VIA FILE AND SERVE EXPRESS: Based on a court order, I caused the above-entitled document(s) to be served through File & ServeXpress 9 at http://secure.fileandserveexpress.com addressed to all parties appearing on the electronic service list for the above-entitled case. The service transmission was reported 10 as complete and a copy of the File & ServeXpress filing Receipt Page/Confirmation will be filed, deposited or maintained with the original document(s) in this office. 11 On the following part(ies) in this action: 12 13 Gregory S. Cavallo, Esq. Attorneys for Plaintiff Jeffrey W. Shopoff, Esq. WHITE HOUSE VENTURES, LLC 14 James M. Robinson, Esq. SHOPOFF CAVALLO LLP 15 155 Montgomery Street, Suite 401 San Francisco, CA 94104 16 Telephone: (415) 854-0370 Facsimile: (415) 854-0370 17 Email: greg@shopoffcavallo.com 18 I declare under penalty of perjury under the laws of the State of California that the 19 foregoing is true and correct. 20 Executed on April 14, 2021, at San Francisco, California. 21 22 Teresa L. Steen 23 24 25 26 6 MOTION IN LIMINE NO. 6 ClarkHill\62578\372310\262659079.v1-4/14/21