Preview
3/24/2020
1 Dennis M. Wilson (State Bar No. 43877)
Wilson Law Firm, A Professional Corporation
2 50 Iron Point Circle, Suite 115
Folsom, California 95630
3 Telephone: (916) 608-8891
Facsimile: (916) 608-8892
4
Attorneys for HK Deluxe, LLC
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6
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8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 IN AND FOR THE COUNTY OF BUTTE
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No. 19CV01079
11 CPI cmco BENEFICIARY LLC and TA
12 cmco LLC,
Defendant HK Deluxe, LLC's, Points and
13 Plaintiffs, Authorities in Support of Motion to Strike
14 vs.
Dept: 1
HK DELUXE, LLC, Date: April 22, 2020
15
Time: 9:00
Defendant.
16 Judge: Hon. Tamara Mosbarger
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And Related Cross-Action
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions oJ
Plaintiffs' Amended Complaint
TABLE OF CONTENTS
1
INTRODUCTION............................................................................................................. 5
2
3 IAW: THECOURTMAYSTRIKEANYFALSE, IRRELEVANT, REDUNDANT,
4 IMMATERIAL, OR IMPROPER ITEM FROM PLAINTIFFS' COMPLAINT .................... 5
5 FACTS: PLAINTIFFS HAVE AMENDED THEIR COMPLAINT SO THAT IT CONfAINS
6 FALSE, IMMATERIAL, AND IMPROPER ITEMS ....................................................•......6
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I. Plaintiffs Now Contend that Defendant's Conduct Caused Harm to the Economic ....•......6
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Vitality of Plaintiffs and the City of Chico............................•......•.•.....•.•.•......•..............•.•. 6
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2. Defendant Has Not Sat on its Hands Since August 2018 and Did Not Refuse to Allow a
11 Lease Modification............................................................•....................•.•.....................
12 PLAINTIFFS AMENDED COMPLAINf FALSELY AND IMPROPERLY
13 CHARACTERIZES THEIR OWN EFFORTS AS DILIGENT AND DEFENDANT'S
14 CONDUCT AS A CALCULATED OBSTRUCTION.................................................•......... 8
1
5 PLAINTIFFS' REQUEST FOR TERMINATION WAS NOT A REQUEST FOR
16 MODIFICATION .............................................................................................................9
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PLAINTIFFS CLAIM THAT DEFENDANT'S ACTIONS HAVE MADE IT IMPOSSIBLE
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FOR PLAINTIFF TO FIND A NEW SUBTENANT FOR THE PREMISES....................•. I
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PLAINflFFS FALSELY CLAIM THAT PLAINfIFFS CAN TERMINATE ANY
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SUBLEASE AND THAT THE SUBLEASE DOES NOT PROVIDE ANY RIGHTS TO
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DEFENDANT. ............................................................................................................... 1
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23 PLAINTIFFS HAVE NOT PROVIDED ANY SUPPORT FOR THEIR CONfENTION
24 THAT DEFENDANT'S REFUSAL TO CONSENf TO THE TERMINATION OF THE
25 SUBLEASE REDUCED THE VALUE OF THE LEASED PREMISES............................. 1
26 PLAINTIFFS' REQUEST FOR TERMINATION SPECIFICALLY STATED THAT THEY
27 WOULD RECEIVE A TERMINATION FEE, NOT ACCELERATED RENf.................... 1
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 PLAINTIFFS' PRAYER FOR RELIEF ASKS FORA JUDGMENf THAT DIRECTLY
2 CONTRADICTS THIS COURT'S ORDER ON THE MOTION FORJUDGMENf ON THE
3 PLEADINGS.................................................................................................................. 13
4 THE FOLWWING PORTIONS OF THE COMPLAINT SHOULD BE STRICKEN:........ 14
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1. Paragraph 6 of the Amended Complaint Should be Stricken in its Entirety as
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False, Irrelevant, and Improper.................................................................................. 14
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2. Paragraph 9 of the Amended Complaint Should be Stricken in its Entirety as
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False, Irrelevant, and Improper.................................................................................. 1
9
10 3. Paragraph 18 of the Amended Complaint Should be Stricken in its Entirety as
11 False. .......................................................................................................................... 14
12 4. Paragraphs 39 of the Amended Complaint Should be Stricken in Their Entirety
13 as False and Improper ................................................................................................ 1
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5. Paragraph 40 of The Amended Complaint Should Be Stricken in its Entirety as
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False and Improper .................................................................................................... 15
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6. Paragraphs 41 and 42 of the Amended Complaint Should be Stricken in Their
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Entirety as False ......................................................................................................... 15
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19 7. Paragraphs 31, 33, 36, 38, 51, 52 and 57 of the Amended Complaint Should be
20 Stricken in Their Entirety as False and not in Conformity with the Court's Order...... 1
21 8. Paragraphs 24, 60, 61, 62, 63, 67, and 68 of the Amended Complaint Should be
22 Stricken in Their Entirety as False and Improper....................................................... 1
23 9. Paragraphs 1 and 5 of the Prayer for Relief in the Amended Complaint Should
24 Be Stricken in Their Entirety as False, Redundant, and Improper ............................. 1
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THE COURT SHOULD STRIKE THE ENTIRE AMENDED COMPLAINT UNDER THE
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SHAM PLEADING DOCTRINE ..................................................................................... 16
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CONCLUSION ............................................................................................................... 1
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 TABLE OF AUTHORITIES
2
Page(s
3 Cases
4
Arnold v. Hibernia Savings & Loan Soc.,
5 (1944) 23 Cal. 2d 741 ...............................................................................................................6
Korea Supply Co. v. Lockheed Martin Corp.,
6
{2003) 29 Cal. 4th 1134 ............................................................................................................8
7 Lyons v. Wickhorst,
{1986) 42 Cal. 3d 911 ...............................................................................................................6
8 Marchese v. Standard Realty and Dev. Co.,
74 Cal.App.3d 142,141 Cal.Rptr. 370{1977) ......................................................................... 12
9 Neal v. Bank ofAmerica Nat. Trost & Savings Ass 'n,
10 (1949) 93 Cal. App. 2d 678 ................................................................................................ 6, 17
Shook v. Pearson,
11 (1950) 99 Cal. App. 2d 348 ......................................................................................................7
12
Westside Center Associates v. Safeway Stores 23, Inc.,
(1996) 42 Cal. App. 4th 507 .....................................................................................................8
13 Z.akk v. Diesel,
(2019) 33 Cal. App. 5th 431 ............................................................................................... 6, 18
14
15 Statutes
16 Cal. Civ. Proc. §435(b)(1 )...........................................................................................................6
Cal. Civ. Proc. §436 ...................................................................................................................6
l7 Cal. Civ. Proc. § 437 (a) .............................................................................................................6
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19
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25
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 INTRODUCTION
2 This action involves a dispute between plaintiffs, CPI Chico Beneficiary LLC and T
3 Chico LLC, and defendant, HK Deluxe, LLC, arising out of a dispute related to a commercial
4 ground lease between the parties to this action and a sublease between plaintiffs and Walgreen Co.
5 Defendant filed a motion for Judgment on the Pleadings on November 15, 2019, and the matte
6 was heard on January 22, 2020. Honorable Judge Tamara Mosbarger granted the Motion ti
7 Judgment on the Pleadings and granted plaintiffs leave to amend the complaint to allege alternativ
8 contractual interpretations. The Amended Complaint added false and improper facts and i
9 essentially a restatement of the exact same causes of action alleged in their original complaint
10 Accordingly, Defendant's Motion to Strike should be granted.
11 I.AW: THE COURT MAY STRIKE ANY FAISE, IRRELEVANf, REDUNDANf,
12 IMMATERIAL, OR IMPROPER ITEM FROM PLAINTIFFS' COMPI.AINT
13 Section 435 of the Code of Civil Procedure provides, in relevant part, that: "Any
14 party, within the time allowed to respond to a pleading may serve and file a notice of motion
15 strike the whole or any part thereof..." (Cal. Civ. Proc. §435{bXl).) Section 436 of the Code o
16 Civil Procedure states that: "The court may, upon motion made pursuant to Section 435, or at an
17 time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, o
18 improper matter inserted in any pleading (b) strike out all or any part of any pleading not dra
19 or filed in conformity with the laws of this state, a court rule, or an order of the court" (Cal. Civ.
20 Proc. §436.) The grounds for a motion to strike shall appear on the face of the challenged pleadin
21 or from any matter of which the court is required to take judicial notice. (Ca/. Civ. Proc. § 43
22 (a).) There are several specific paragraphs, sentences, and phrases that the court should strike
23 false, irrelevant, or improper.
24 The court should also consider striking the entire complaint under the Sham Pleadin
25 Doctrine. A trial court has authority to completely strike sham pleadings or those not filed i
26 conformity with the court's prior ruling. (Lyons v. Wickhorst (1986) 42 Cal. 3d 911, 915.)
27 determining defendant's motion, the court is fully justified in examining and considering th
28 original complaint. (Neal v. Bank ofAmerica Nat. Trust & Savings Ass 'n (1949) 93 Cal. App. 2
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 678, 682.) Under the Sham Pleading Doctrine, if a party files an amended complaint and attemp
2 to avoid the defects of the original complaint by either omitting facts which made the previo
3 complaint defective or by adding facts inconsistent with those of previous pleadings, the court ma
4 take judicial notice of prior pleadings and may disregard any inconsistent allegations." (Zakk v.
5 Diesel (2019) 33 Cal. App. 51h 431, 447.) Before the court can strike a complaint as sham, it mus
6 clearly appear the complaint's allegations are false or that the action is without merit, and the co
7 must resolve all reasonable doubts in the pleader's favor. (Arnold v. Hibernia Savings & Lo
8 Soc. {1944) 23 Cal. 2d 741, 744.)
9 FACTS: PLAINTIFFS HAVE AMENDED THEIR COMPLAINT SO THAT IT
10 CONTAINS FAISE, IMMATERIAL, AND IMPROPER ITEMS
11 1. Plaintiffs Now Contend that Defendant's Conduct Caused Harm to the Economic
12 Vitality of Plaintiffs and the City of Chico
13 Paragraph 6 and paragraph 9 include a new allegation that Defendant caused
14 particular harm and damage to the city of Chico. They argue that both the city of Chico and
15 Plaintiffs have been deprived of economic vitality. This allegation is false and improper. The
16 city of Chico is not a party to this action. The City of Chico is also not a third-party beneficiary
17 of leases and any harm to the City of Chico's economic vitality as a result of Defendant not
18 consenting to the termination of the Sublease is irrelevant, unfounded, and extremely attenuated.
19 More importantly, harm to the economic vitality of these entities is not available as a remedy for
20 causes of actions for breach of contract and tortious interference with a prospective economic
21 advantage. Damages for breach of contract are limited to General and Special Damages. "The
22 facts as to special damages must be stated with particularity. The amount of such damages must
23 be given, and the means of occasioning them must be set forth. When such damages depend on
24 proof of different circumstances from the general damages, the grounds of each claim should be
25 alleged." (Shookv. Pearson (1950) 99 Cal. App. 2d 348, 352.) "Consequential damages are
26 'extraordinary in that they do not directly flow from the breach and are recoverable only upon a
27 showing that they were foreseeable and within the contemplation of the parties at the time the
28 contract was made"' (Speirs v. BlueFire Ethanol Fuels, Inc. (2015) Cal. App. 41h 969, 989.)
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 Harm to plaintiffs' economic vitality was not foreseeable or within contemplation at the
2 time the contract was made. Defendant has never prohibited Plaintiffs from acquiring a new
3 subtenant and has never prohibited them from terminating the sublease with Walgreens once a
4 new subtenant is acquired. Defendant has fully complied with all its contractual obligations and
5 provided Plaintiffs and Walgreens with all rights and benefits owed to them under the lease
6 agreements. Defendant has simply maintained the position that Defendant had an expectation
7 that Walgreens or another would sublet the property for the initial term of the lease and Plaintiffs
8 must acquire a new suitable subtenant before terminating the Sublease with Walgreens.
9 Defendant allowed Plaintiffs' predecessors in interest to demolish its then existing hotel and
10 develop a Walgreens Store. Walgreens has had complete and exclusive possession of the
11 property for the entire term of the sublease. If the property's economic vitality has degraded, it is
12 a result of Walgreens discontinuing the operation of the store several years ago and leaving the
13 premises vacant, plus Plaintiffs' failure to acquire a suitable new subtenant. Plaintiffs always
14 have the right under the lease and sublease to find a suitable subtenant to take the place of
15 Walgreens.
16 A claim for loss of economic vitality is also not a recoverable damage for
17 interference with economic advantage. For this cause of action, Plaintiff must "show that the
18 economic harm it suffered was proximately caused by the acts of the defendant." (Korea Supply
19 Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1166.) "The law precludes recovery for
20 overly speculative expectancies by initially requiring proof the business relationship contained
21 'the probability of future economic benefit to the plaintiff."' (Westside Center Associates v.
22 Safeway Stores 23, Inc. (1996) 42 Cal. App. 4th 507, 522.) Damages for harm to plaintiffs' and
23 to the City of Chico's economic vitality are overly speculative. Damages to the City of Chico
24 also are not damages to the plaintiff. This claim should be stricken as false and improper.
25 2. Defendant Has Not Sat on its Hands Since August 2018 and Did Not Refuse to Allow a
26 Lease Modification.
27 Defendant has not sat on its hands since August 2018; rather Defendant has been
28 defending itself in this lawsuit. Defendant's alleged misconduct stems from Defendant's decision
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 to maintain the position that it would not consent to the extremely early termination of the 25-
2 year sublease with Walgreens. Defendant has communicated a reasonable request that Plaintiffs
3 comply with the terms of the lease agreements and find a new qualified subtenant before the
4 sublease with Walgreens is terminated, which Plaintiffs have not done or attempted to do. This
5 characterization of Defendant is false, inflammatory, improper, and immaterial.
6 Defendant also did not refuse to allow "a modification or termination to which Plaintiff is
7 entitled." The letter that Plaintiffs' lawyer sent to defendant on August 31, 2018 specifically
8 stated: "As you know, the Tenant has not operated at the Leased premises for several years. The
9 Tenant has requested termination of the Sub-Lease and Ground Lessee has agreed to a
10 termination subject to Tenant paying to Ground lessee a termination fee." (Amended Complaint,
11 Ex. D.) This was clearly a request for a termination of the sublease, not a request for
12 modification. This Court has directly ruled on this issue and determined that plaintiffs' request
13 was unambiguously a request for early termination rather than for a modification. (Order on
14 Motion for Judgment on the Pleadings [Order], Request for Judicial Notice, Ex. A, 2:2-3.)
15 PLAINTIFFS AMENDED COMPLAINT FALSELY AND IMPROPERLY
16 CHARACTERIZES THEIR OWN EFFORTS AS Dil..IGENT AND
17 DEFENDANT'S CONDUCT AS A CALCULATED OBSTRUCTION
18 Plaintiffs did not engage in diligent efforts to convince Defendant to allow for a
19 productive use of the demised premises. Plaintiffs do not provide evidence of any effort to try to
20 work with defendant to find a solution after Defendant communicated that it would not consent
21 to the termination of the Sublease. Contrary to the allegations of the Amended Complaint,
22 Plaintiffs have had years to find a new tenant to take over the sublease, have done nothing to find
23 a replacement subtenant, and have relentlessly and adamantly tried to terminate the sublease
24 with Walgreen Co. prior to making any legitimate attempt to replace Walgreens with a qualified
25 subtenant
26 Furthermore, Defendant's decision not to consent to the termination of the sublease was
27 not "a calculated obstruction." Defendant was validly exercising its rights under the contractual
28 agreements. Moreover, Defendant's refusal to agree to termination of the sublease does not
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 obstruct Plaintiffs from fmding a subtenant that meets the requirements of the Ground Lease.
2 This sentence must be stricken as false and improper.
3 PLAINTIFFS' REQUEST FOR TERMINATION WAS NOT A REQUEST FOR
4 MODIFICATION
5 Plaintiffs did not make any substantive changes in their Amended Complaint The causes
6 of actions and the basis for these causes of action remain identical to the original complaint The
7 only noticeable changes in the Amended Complaint are in relation to how they characterize their
8 request on August 31, 2018. In their original complaint they explicitly referred to the request as
9 a request for "termination." Throughout the Amended Complaint Plaintiffs now refer to this
10 request as a request for a "modification" of the Sublease. Plaintiffs argued in the original
11 complaint that their request for termination of the sublease was a request for a "material
12 amendment'' of the sublease and therefore their request was pursuant to section 4 of the CND
13 Agreement This provision imposes a duty on Defendant to not unreasonably withhold consent
14 to a "material amendment'' and states that a material amendment includes a "modification."
15 (CND Agreement, § 4.) Plaintiffs' are now attempting to recharacterize their request for
16 termination as a request for a modification to fit within section 4. This is factually false and
17 directly contradicts this Court's ruling and the facts and allegations contained in the original
18 complaint The Court specifically ruled that "the parties did not intend "material amendment'' of
19 the sublease to include termination thereof." (Request for Judicial Notice, Ex, A, Order, 1:28 and
20 2: 1.) Despite this order, Plaintiffs persist in their argument that Defendant breached the contract
21 by unreasonably withholding consent to their request to end the Sublease with Walgreens. There
22 is absolutely no doubt that Plaintiffs requested Defendant's consent to the total termination of the
23 Sublease and did not request Defendant's consent to a mere modification.
24 Paragraph 18 states: "Walgreens has requested to modify the Sublease by reducing the
25 term of the Sublease (so that the term ends at or soon after the execution of the agreement to
26 modify the Sublease) in exchange for the acceleration of rent, payable by Walgreens to the
27 Plaintiffs (the "Accelerated Rent''). Walgreens has agreed to pay the Accelerated Rent pursuant
28 to a proposed modification agreement between Plaintiff and Walgreens." {Amended Complaint,
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs, Amended Complaint
1 118, 3:27-4:3.) This paragraph is in direct conflict with the true facts that Plaintiffs set forth in
2 the original complaint and in the attached exhibits to both complaints. Their agreement was
3 clearly to end the Sublease rather than reduce the term of the Sublease. They are only now
4 couching this phrase like that
5 PLAINTIFFS CLAIM THAT DEFENDANT'S ACTIONS HAVE MADE IT
6 IMPOSSIBLE FOR PIAINTIFF TO FIND A NEW SUBTENANT FOR THE
7 PREMISES.
8 Plaintiffs insist that they must be allowed to terminate the Sublease before finding a new
9 subtenant and because Defendant unreasonably withheld consent to their agreement with
10 Walgreens to terminate the Sublease, it is impossible to find a new subtenant. Yet, Plaintiffs do
11 not point to any provision in the Ground Lease or the Sublease or any fact that supports this
12 contention. In fact, both lease agreements allow Plaintiffs to sublease the premises to
13 "Walgreens, and perhaps to others." (Ground Lease, Art 8.3.) Plaintiffs have always had the
14 power to acquire a new subtenant before terminating the Sublease with Walgreens. Defendant's
15 refusal to consent to Plaintiff's request for early termination of the Sublease with Walgreens has
16 no effect on Plaintiff's ability to find a new subtenant and it certainly does not make it
17 impossible.
18 PLAINTIFFS FAI.SELY CLAIM THAT PLAINTIFFS CAN TERMINATE ANY
19 SUBLEASE AND THAT THE SUBLEASE DOES NOT PROVIDE ANY RIGHTS
20 TO DEFENDANT.
21 As discussed in more depth in Defendant's Demurrer, Plaintiffs' duty to sublet to
22 Walgreens is well-defined in the lease agreements. The parties contractually agreed that the
23 Ground Lease would commence on the Sublease date and both lease agreements created an
24 initial term of 25 years. The Ground Lease, the Sublease, and the CON Agreement do not
25 provide for early termination. The parties contractually agreed that the Leased Premises would
26 be used for the pwpose of subleasing to Walgreens or to others. (Amended Complaint, Ex. A,
27 Art 1.9.) After the Ground Lease, Sublease, and CND Agreement were signed, the plaintiffs
28 were contractually required to perform their duties as developer and sublessor for the initial term.
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 Defendant also contends that it is a third-party beneficiary of Walgreen Co.'s agreement
2 to pay the ground rent and the excess rent to defendant. (Civ. Code. § 1559; see Marchese v.
3 Standard Realty and Dev. Co., 74 Cal.App.3d 142, 147, 141 Cal.Rptr. 370 (1977), holding that a
4 subtenant is a third-party beneficiary of a lessor's covenant of quiet possession where the lessor
5 approved of the sublease.) Defendant expressly consented to the terms of the Sublease when it
6 signed the CND Agreement: "Ground Lessor hereby consents to the subleasing of the Leased
7 Premises to Tenant under the terms and conditions more particularly set forth in the Sublease."
8 (Amended Complaint, Ex. C., at p. 1, ,r 1) The Sublease also specifically provides that
9 Walgreens Co. will pay the "ground rent" and 50% of the "excess rent'' directly to defendant
10 instead of paying it to plaintiffs (Amended Complaint, Ex. B, atp. 2, Art 2(aXl) and2(b).) The
11 Ground Lease was created precisely for the demolition of plaintiff's building and construction of
12 a Walgreens store and for the sublease to Walgreen Co. (Amended Complaint, Ex. A, Art 1.9
13 and 2.2) The Ground Lease contains several provisions that specifically state that Plaintiffs will
14 sublet the premises to Walgreens and includes a site plan for a Walgreens store. (Amended
15 Complaint, Ex. A, Art. 1.9, 1.12, 2.2, 5.2.4, 8.3, 10.5, 10.6, and exhibit A-3.) Walgreen Co. is the
16 beneficiary of defendant's promise to allow the sublessee to occupy the property, and defendant
17 is the beneficiary of Walgreens Co.' s promise to pay ground rent and excess rent.
18 PLAINTIFFS HAVE NOT PROVIDED ANY SUPPORT FOR THEIR
19 CONTENTION THAT DEFENDANT'S REFUSAL TO CONSENT TO TIIE
20 TERMINATION OF TIIE SUBLEASE REDUCED TIIE VALUE OF TIIE
21 LEASED PREMISES.
22 Defendant's withholding of consent to the early termination of the Sublease has
23 absolutely no logical connection to the value of the property. In fact, it is Plaintiffs who are
24 contractually obligated to "maintain, in good order, condition and repair the Leased Premises an
25 Improvements ... on the Leased Premises." (Amended Complaint, Exhibit A, p. 5, Art 5.1.). Any
26 diminution in the condition or value of the premises is a result of Plaintiffs' failure to fulfill their
27 obligations under the Ground Lease and Sublease or Walgreens' decision to cease operations and
28 leave the premises vacant for years.
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Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 PLAINTIFFS' REQUFST FOR TERMINATION SPECIFICALLY STATED
2 THAT THEY WOULD RECEIVE A TERMINATION FEE, NOT
3 ACCELERATED RENT.
4 Plaintiffs amended the third cause of action by changing "Termination Fee" to
5 "Accelerated Rent." This is the first time that Plaintiffs have ever called this money "Accelerated
6 Rent." Walgreen Co. did not request to modify the sublease in exchange for the acceleration of
7 rent and neither the Ground Lease nor the sublease contains an Accelerated Rent clause.
8 Plaintiffs letter on August 31, 2018 stated: "The tenant... requested termination of the Sub-Lease
9 and Ground Lessee has agreed to a termination subject to Tenant paying to Ground Lessee a
10 Termination Fee." (Amended Complaint, Ex. D.) Therefore, recharacterizing "termination fee"
11 to "Accelerated Rent" is false and contradicted by Plaintiffs' own correspondence to Defendant
12 and their original complaint. All references to Accelerated Rent in the Third Cause of Action are
13 false statements of the facts. Paragraph 61 is false because Defendant could not have possibly
14 known about the "accelerated rent'' since Plaintiffs made a reference to accelerated rent for the
15 first time when they filed the Amended Complaint on February 21, 2020.
16 Paragraph 62 alleges that Defendant engaged in wrongful conduct to prevent plaintiff:
17 from receiving the accelerated rent by unreasonably withholding consent to the modification o
18 termination of the sublease. The court's ruling on the Motion for Judgment on the Pleading
19 specifically addressed this issue and determined that Plaintiffs' request for termination was not
20 request for a material amendment under Section 4 of the CND Agreement and therefore Defendan
21 was not subject to the requirements of Section 4. Defendant's conduct was not wrongful and th.er
22 is no support for Plaintiffs argument that Defendant withheld consent to the termination for th
23 specific purpose of preventing Plaintiffs from receiving a termination fee, accelerated rent, o
24 whatever Plaintiffs decide to call it next. This paragraph should be stricken.
25 Paragraph 63 is also false and improper. As previously discussed, plaintiffs originall
26 informed Defendant about a "termination fee," but the first time that plaintiffs informed defendan
27 about the "accelerated rent'' was when they served defendant with the Amended Complaint.
28 Defendant had absolutely no knowledge about an "accelerated rent'' until the Amended Complain
12
Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 was filed in February of 2020. Therefore, Defendant did not have knowledge that its actions woul
2 prevent payment of "Accelerated Rent'' when Defendant responded to the request it receive fro
3 Plaintiffs shortly after August 31, 2018.
4 Paragraph 67 is also a false statement of the facts. Plaintiffs allege that Walgreen Co. i
5 decreasing the "Accelerated Rent'' for every month it remains a subtenant. It is clear, however
6 that Walgreen Co. is simply decreasing the "termination fee," or "accelerated rent'' in proporti
7 to the amount of rent they are continuing to pay each month under the terms of the Ground Leas
8 and Sublease. (see Exhibit B, p. 2, §2(aXi-ii).) Plaintiffs are still receiving this rent, which is th
9 same amount of money as they were set to receive as the termination fee. The decrease in th
10 "accelerated rent'' is being offset by the actual rent that Walgreens has continued to pay under th
11 terms of the lease agreements. This paragraph is both false and improper and should be stricken.
12 Paragraph 68 is also false because Plaintiffs have not lost the benefits of the "Accelera
13 Rent." Rather, they have continued to receive the monthly rent owed under the lease agreements
14 which is actually more than the amount Walgreens has reduced the termination fee by. Plaintiff!
15 have therefore not lost any benefits, and this paragraph must be stricken because plaintiffs hav
16 not suffered any damages as a result of the decrease in the "accelerated rent"
17 PLAINTIFFS' PRAYER FOR RELIEF ASKS FORA JUDGMENT THAT
18 DIRECTLY CONTRADICTS THIS COURT'S ORDER ON THE MOTION FOR
19 JUDGMENT ON THE PLEADINGS.
20 Paragraph 1 prays for a declaration that Defendant's response to the Request constitutes
21 unreasonable withholding, conditioning, or delaying of consent under the CNDA and the Lease.
22 As previously discussed, the court specifically ruled on this issue when it granted the Motion fo
23 Judgment on the Pleadings. The court found that defendant's response did not was not a violatio
24 of the CND Agreement, because Plaintiffs unambiguously requested termination rather than
25 modification under Section 4 of the CNDA. This prayer for relief is therefore false and improper
26 Paragraph 5 claims that Plaintiffs suffered damages as a result of the reduction in the
27 accelerated rent/termination fee. Under the terms of the Sublease, Walgreens is currently paying
28 $52,032.75 in Ground Rent and Building Rent per month. (see page 2 of the Sublease provided
13
Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 as Exhibit B to the Amended Complaint for the breakdown of Ground Rent paid to Defendant
2 and Building Rent paid to Plaintiffs.) While Plaintiffs claim that Walgreens is decreasing the
3 termination fee by $50,000 per month, they have continued to pay $52,032.75 per month in rent
4 Therefore, Plaintiffs claim that they have suffered these damages is false. W algreens has fairly
5 decreased the termination fee each month in exact proportion to 1he rent they are paying each
6 month. Plaintiffs have not suffered any damages and their claim for $800,000 in damages is
7 false and lacks support This paragraph is false and improper.
8 THEFOLLOWINGPORTIONSOFTHECOMPLAINTSHOULDBE
9 STRICKEN:
10 1. Paragraph 6 ofthe Amended Complaint Should be Stricken in its
11 Entirety as False, Irrelevant, and Improper
12 As discussed in the first section above, Plaintiffs' allegation that Defendant's action
13 caused particular harm to the City of Chico is unsupported, false, irrelevant, and improper. Th
14 falsity of this allegation appears clearly on the face of the pleading. This paragraph should b
15 stricken in its entirety.
16 2. Paragraph 9 of the Amended Complaint Should be Stricken in its
17 Entirety as False, Irrelevant, and Improper
18 As discussed in the section related to Plaintiffs' diligence and Defendant's alleged
19 calculated obstruction, paragraph 9 states facts that are patently false, inflammatory, and do not
20 present or raise a material issue. This paragraph totally ignores the court's finding and asserts
21 1he same exact causes of action based on their earlier incorrect interpretation of Section 4 of the
22 CND Agreement Plaintiffs assert facts in paragraph 9 that are factually not true, not logical,
23 unreasonable, and improper. Therefore, this entire paragraph should be stricken.
24 The term "possible economic vitality" should be stricken as irrelevant, false, and
25 improper because defendant's conduct cannot conceivably be viewed with respect to possible
26 economic vitality of either Plaintiffs or the city of Chico.
27 3. Paragraph 18 of the Amended Complaint Should be Stricken in its
28 Entirety as False.
14
Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 Plaintiffs' request was clearly a request for termination of the Sublease rather than a
2 request for a modification with accelerated rent as discussed above. This paragraph should be
3 stricken from the Amended Complaint as false.
4 4. Paragraphs 39 of the Amended Complaint Should be Stricken in Their
5 Entirety as False and Improper
6 Defendant's actions have had no effect whatsoever on plaintiffs' ability to find a ne
7 subtenant. Plaintiffs' contention that defendant's actions have "made it impossible for Plaintiff
8 find a new subtenant'' is false. Plaintiffs have always had the power and ability to find a ne
9 subtenant to replace Walgreens. Paragraph 39 should be stricken as false and improper.
10 5. Paragraph 40 of The Amended Complaint Should Be Stricken in its
11 Entirety as False and Improper
12 Defendant has performed all of its obligations under the Ground Lease and even allow
13 Plaintiffs to demolish its then existing hotel to build the Walgreens store. As discussed above,
14 defendant's refusal to consent to the early termination does not have any logical or legal connectio
15 to any possible reduction in the value of the premises. This paragraph should be stricken as fals
16 and improper.
17 6. Paragraphs 41 and 42 of the Amended Complaint Should be Stricken in
18 Their Entirety as False
19 Defendant does in fact have rights as a third-party beneficiary to the Sublease. Furthermore
20 plaintiffs' duty to sublease is also established throughout the transaction documents. Thes
21 paragraphs should therefore be stricken as false.
22 7. Paragraphs 31, 33, 36, 38, 51, 52 and 57 of the Amended Complaint
23 Should be Stricken in Their Entirety as False and not in Conformity with
24 the Court's Order.
25 As discussed above, each of these paragraphs now alleges that their request for terminati
26 was actually a request for "modification" of the sublease. As discussed above, this Court foun
27 that Plaintiff's request was not for a modification or material amendment of the sublease
28 provided for in Section 4 of the CND Agreement. This is a false statement of the facts
15
Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 demonstrated by the exhibits to the Amended Complaint and facts alleged in the origin
2 complaint. It is also improper given the court's ruling on the Motion for Judgment on th
3 Pleadings. The court should strike these paragraphs as false and not filed in conformity with th
4 court's order.
5 8. Paragraphs 24, 60, 61, 62, 63, 67, and 68 of the Amended Complaint
6 Should be Stricken in Their Entirety as False and Improper
7 The term, "Accelerated rent," was never mentioned prior to filing this Amend
8 Complaint. These paragraphs contradict the facts previously asserted in the original complain
9 and stated in the exhibits supporting the original complaint and the amended complaint.
10 paragraphs should be stricken as false and improper.
11 9. Paragraphs 1 and 5 of the Prayer for Relief in the Amended Complaint
12 Should Be Stricken in Their Entirety as False, Redundant, and Improper
13 Paragraphs I and 5 should be stricken in their entirety because they contain a false
14 statement of fact and it improperly contradicts this Court's prior ruling.
15 THE COURT SHOULD STRIKE THE ENTIRE AMENDED COMPLAINT
16 UNDER THE SHAM PLEADING DOCfRINE
17 It is clear from a plain reading of the original Complaint and the Amended Complaint th.a
18 the allegations and facts to support those allegations are essentially the same. These ne
19 allegations are clearly false and still lack merit. Plaintiffs' Amended Complaint consists solely o
20 a mere reiteration of the causes of action and facts in the original complaint with slight changes t
21 individual words. (Neal v. Bank ofAmerica, supra at 681.) Here, the 'amended' complaint is n
22 better than the original complaint. Plaintiffs made no attempt to state new facts, or to state th
23 facts more fully; they simply changed certain words to avoid the defects identified in this Court'
24 Order on the Motion for Judgment on the Pleadings; yet they have not effectively done so. Th
25 Court allowed plaintiffs to amend their Complaint "to allege alternative contrac
26 interpretations." (Request for Judicial Notice, Ex. A, Order, 2:4-6.) Plaintiffs, however, did no
27 allege alternative contractual interpretations. These causes of action are stillentirely based o
28 plaintiffs' incorrect contention that defendant could not "unreasonably withhold consent" to th
16
Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o
Plaintiffs' Amended Complaint
1 request for early termination of 1he sublease wi1h Walgreens. Plaintiffs' Amended Complaint i
Preview
3/24/2020 1 Dennis M. Wilson (State Bar No. 43877) Wilson Law Firm, A Professional Corporation 2 50 Iron Point Circle, Suite 115 Folsom, California 95630 3 Telephone: (916) 608-8891 Facsimile: (916) 608-8892 4 Attorneys for HK Deluxe, LLC 5 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 IN AND FOR THE COUNTY OF BUTTE 10 No. 19CV01079 11 CPI cmco BENEFICIARY LLC and TA 12 cmco LLC, Defendant HK Deluxe, LLC's, Points and 13 Plaintiffs, Authorities in Support of Motion to Strike 14 vs. Dept: 1 HK DELUXE, LLC, Date: April 22, 2020 15 Time: 9:00 Defendant. 16 Judge: Hon. Tamara Mosbarger 17 And Related Cross-Action 18 19 20 21 22 23 24 25 26 27 28 1 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions oJ Plaintiffs' Amended Complaint TABLE OF CONTENTS 1 INTRODUCTION............................................................................................................. 5 2 3 IAW: THECOURTMAYSTRIKEANYFALSE, IRRELEVANT, REDUNDANT, 4 IMMATERIAL, OR IMPROPER ITEM FROM PLAINTIFFS' COMPLAINT .................... 5 5 FACTS: PLAINTIFFS HAVE AMENDED THEIR COMPLAINT SO THAT IT CONfAINS 6 FALSE, IMMATERIAL, AND IMPROPER ITEMS ....................................................•......6 7 I. Plaintiffs Now Contend that Defendant's Conduct Caused Harm to the Economic ....•......6 8 Vitality of Plaintiffs and the City of Chico............................•......•.•.....•.•.•......•..............•.•. 6 9 10 2. Defendant Has Not Sat on its Hands Since August 2018 and Did Not Refuse to Allow a 11 Lease Modification............................................................•....................•.•..................... 12 PLAINTIFFS AMENDED COMPLAINf FALSELY AND IMPROPERLY 13 CHARACTERIZES THEIR OWN EFFORTS AS DILIGENT AND DEFENDANT'S 14 CONDUCT AS A CALCULATED OBSTRUCTION.................................................•......... 8 1 5 PLAINTIFFS' REQUEST FOR TERMINATION WAS NOT A REQUEST FOR 16 MODIFICATION .............................................................................................................9 17 PLAINTIFFS CLAIM THAT DEFENDANT'S ACTIONS HAVE MADE IT IMPOSSIBLE 18 FOR PLAINTIFF TO FIND A NEW SUBTENANT FOR THE PREMISES....................•. I 19 PLAINflFFS FALSELY CLAIM THAT PLAINfIFFS CAN TERMINATE ANY 20 SUBLEASE AND THAT THE SUBLEASE DOES NOT PROVIDE ANY RIGHTS TO 21 DEFENDANT. ............................................................................................................... 1 22 23 PLAINTIFFS HAVE NOT PROVIDED ANY SUPPORT FOR THEIR CONfENTION 24 THAT DEFENDANT'S REFUSAL TO CONSENf TO THE TERMINATION OF THE 25 SUBLEASE REDUCED THE VALUE OF THE LEASED PREMISES............................. 1 26 PLAINTIFFS' REQUEST FOR TERMINATION SPECIFICALLY STATED THAT THEY 27 WOULD RECEIVE A TERMINATION FEE, NOT ACCELERATED RENf.................... 1 28 2 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 PLAINTIFFS' PRAYER FOR RELIEF ASKS FORA JUDGMENf THAT DIRECTLY 2 CONTRADICTS THIS COURT'S ORDER ON THE MOTION FORJUDGMENf ON THE 3 PLEADINGS.................................................................................................................. 13 4 THE FOLWWING PORTIONS OF THE COMPLAINT SHOULD BE STRICKEN:........ 14 5 1. Paragraph 6 of the Amended Complaint Should be Stricken in its Entirety as 6 False, Irrelevant, and Improper.................................................................................. 14 7 2. Paragraph 9 of the Amended Complaint Should be Stricken in its Entirety as 8 False, Irrelevant, and Improper.................................................................................. 1 9 10 3. Paragraph 18 of the Amended Complaint Should be Stricken in its Entirety as 11 False. .......................................................................................................................... 14 12 4. Paragraphs 39 of the Amended Complaint Should be Stricken in Their Entirety 13 as False and Improper ................................................................................................ 1 14 5. Paragraph 40 of The Amended Complaint Should Be Stricken in its Entirety as 15 False and Improper .................................................................................................... 15 16 6. Paragraphs 41 and 42 of the Amended Complaint Should be Stricken in Their 17 Entirety as False ......................................................................................................... 15 18 19 7. Paragraphs 31, 33, 36, 38, 51, 52 and 57 of the Amended Complaint Should be 20 Stricken in Their Entirety as False and not in Conformity with the Court's Order...... 1 21 8. Paragraphs 24, 60, 61, 62, 63, 67, and 68 of the Amended Complaint Should be 22 Stricken in Their Entirety as False and Improper....................................................... 1 23 9. Paragraphs 1 and 5 of the Prayer for Relief in the Amended Complaint Should 24 Be Stricken in Their Entirety as False, Redundant, and Improper ............................. 1 25 THE COURT SHOULD STRIKE THE ENTIRE AMENDED COMPLAINT UNDER THE 26 SHAM PLEADING DOCTRINE ..................................................................................... 16 27 CONCLUSION ............................................................................................................... 1 28 3 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 TABLE OF AUTHORITIES 2 Page(s 3 Cases 4 Arnold v. Hibernia Savings & Loan Soc., 5 (1944) 23 Cal. 2d 741 ...............................................................................................................6 Korea Supply Co. v. Lockheed Martin Corp., 6 {2003) 29 Cal. 4th 1134 ............................................................................................................8 7 Lyons v. Wickhorst, {1986) 42 Cal. 3d 911 ...............................................................................................................6 8 Marchese v. Standard Realty and Dev. Co., 74 Cal.App.3d 142,141 Cal.Rptr. 370{1977) ......................................................................... 12 9 Neal v. Bank ofAmerica Nat. Trost & Savings Ass 'n, 10 (1949) 93 Cal. App. 2d 678 ................................................................................................ 6, 17 Shook v. Pearson, 11 (1950) 99 Cal. App. 2d 348 ......................................................................................................7 12 Westside Center Associates v. Safeway Stores 23, Inc., (1996) 42 Cal. App. 4th 507 .....................................................................................................8 13 Z.akk v. Diesel, (2019) 33 Cal. App. 5th 431 ............................................................................................... 6, 18 14 15 Statutes 16 Cal. Civ. Proc. §435(b)(1 )...........................................................................................................6 Cal. Civ. Proc. §436 ...................................................................................................................6 l7 Cal. Civ. Proc. § 437 (a) .............................................................................................................6 18 19 20 21 22 23 24 25 26 27 28 4 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 INTRODUCTION 2 This action involves a dispute between plaintiffs, CPI Chico Beneficiary LLC and T 3 Chico LLC, and defendant, HK Deluxe, LLC, arising out of a dispute related to a commercial 4 ground lease between the parties to this action and a sublease between plaintiffs and Walgreen Co. 5 Defendant filed a motion for Judgment on the Pleadings on November 15, 2019, and the matte 6 was heard on January 22, 2020. Honorable Judge Tamara Mosbarger granted the Motion ti 7 Judgment on the Pleadings and granted plaintiffs leave to amend the complaint to allege alternativ 8 contractual interpretations. The Amended Complaint added false and improper facts and i 9 essentially a restatement of the exact same causes of action alleged in their original complaint 10 Accordingly, Defendant's Motion to Strike should be granted. 11 I.AW: THE COURT MAY STRIKE ANY FAISE, IRRELEVANf, REDUNDANf, 12 IMMATERIAL, OR IMPROPER ITEM FROM PLAINTIFFS' COMPI.AINT 13 Section 435 of the Code of Civil Procedure provides, in relevant part, that: "Any 14 party, within the time allowed to respond to a pleading may serve and file a notice of motion 15 strike the whole or any part thereof..." (Cal. Civ. Proc. §435{bXl).) Section 436 of the Code o 16 Civil Procedure states that: "The court may, upon motion made pursuant to Section 435, or at an 17 time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, o 18 improper matter inserted in any pleading (b) strike out all or any part of any pleading not dra 19 or filed in conformity with the laws of this state, a court rule, or an order of the court" (Cal. Civ. 20 Proc. §436.) The grounds for a motion to strike shall appear on the face of the challenged pleadin 21 or from any matter of which the court is required to take judicial notice. (Ca/. Civ. Proc. § 43 22 (a).) There are several specific paragraphs, sentences, and phrases that the court should strike 23 false, irrelevant, or improper. 24 The court should also consider striking the entire complaint under the Sham Pleadin 25 Doctrine. A trial court has authority to completely strike sham pleadings or those not filed i 26 conformity with the court's prior ruling. (Lyons v. Wickhorst (1986) 42 Cal. 3d 911, 915.) 27 determining defendant's motion, the court is fully justified in examining and considering th 28 original complaint. (Neal v. Bank ofAmerica Nat. Trust & Savings Ass 'n (1949) 93 Cal. App. 2 5 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 678, 682.) Under the Sham Pleading Doctrine, if a party files an amended complaint and attemp 2 to avoid the defects of the original complaint by either omitting facts which made the previo 3 complaint defective or by adding facts inconsistent with those of previous pleadings, the court ma 4 take judicial notice of prior pleadings and may disregard any inconsistent allegations." (Zakk v. 5 Diesel (2019) 33 Cal. App. 51h 431, 447.) Before the court can strike a complaint as sham, it mus 6 clearly appear the complaint's allegations are false or that the action is without merit, and the co 7 must resolve all reasonable doubts in the pleader's favor. (Arnold v. Hibernia Savings & Lo 8 Soc. {1944) 23 Cal. 2d 741, 744.) 9 FACTS: PLAINTIFFS HAVE AMENDED THEIR COMPLAINT SO THAT IT 10 CONTAINS FAISE, IMMATERIAL, AND IMPROPER ITEMS 11 1. Plaintiffs Now Contend that Defendant's Conduct Caused Harm to the Economic 12 Vitality of Plaintiffs and the City of Chico 13 Paragraph 6 and paragraph 9 include a new allegation that Defendant caused 14 particular harm and damage to the city of Chico. They argue that both the city of Chico and 15 Plaintiffs have been deprived of economic vitality. This allegation is false and improper. The 16 city of Chico is not a party to this action. The City of Chico is also not a third-party beneficiary 17 of leases and any harm to the City of Chico's economic vitality as a result of Defendant not 18 consenting to the termination of the Sublease is irrelevant, unfounded, and extremely attenuated. 19 More importantly, harm to the economic vitality of these entities is not available as a remedy for 20 causes of actions for breach of contract and tortious interference with a prospective economic 21 advantage. Damages for breach of contract are limited to General and Special Damages. "The 22 facts as to special damages must be stated with particularity. The amount of such damages must 23 be given, and the means of occasioning them must be set forth. When such damages depend on 24 proof of different circumstances from the general damages, the grounds of each claim should be 25 alleged." (Shookv. Pearson (1950) 99 Cal. App. 2d 348, 352.) "Consequential damages are 26 'extraordinary in that they do not directly flow from the breach and are recoverable only upon a 27 showing that they were foreseeable and within the contemplation of the parties at the time the 28 contract was made"' (Speirs v. BlueFire Ethanol Fuels, Inc. (2015) Cal. App. 41h 969, 989.) 6 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 Harm to plaintiffs' economic vitality was not foreseeable or within contemplation at the 2 time the contract was made. Defendant has never prohibited Plaintiffs from acquiring a new 3 subtenant and has never prohibited them from terminating the sublease with Walgreens once a 4 new subtenant is acquired. Defendant has fully complied with all its contractual obligations and 5 provided Plaintiffs and Walgreens with all rights and benefits owed to them under the lease 6 agreements. Defendant has simply maintained the position that Defendant had an expectation 7 that Walgreens or another would sublet the property for the initial term of the lease and Plaintiffs 8 must acquire a new suitable subtenant before terminating the Sublease with Walgreens. 9 Defendant allowed Plaintiffs' predecessors in interest to demolish its then existing hotel and 10 develop a Walgreens Store. Walgreens has had complete and exclusive possession of the 11 property for the entire term of the sublease. If the property's economic vitality has degraded, it is 12 a result of Walgreens discontinuing the operation of the store several years ago and leaving the 13 premises vacant, plus Plaintiffs' failure to acquire a suitable new subtenant. Plaintiffs always 14 have the right under the lease and sublease to find a suitable subtenant to take the place of 15 Walgreens. 16 A claim for loss of economic vitality is also not a recoverable damage for 17 interference with economic advantage. For this cause of action, Plaintiff must "show that the 18 economic harm it suffered was proximately caused by the acts of the defendant." (Korea Supply 19 Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1166.) "The law precludes recovery for 20 overly speculative expectancies by initially requiring proof the business relationship contained 21 'the probability of future economic benefit to the plaintiff."' (Westside Center Associates v. 22 Safeway Stores 23, Inc. (1996) 42 Cal. App. 4th 507, 522.) Damages for harm to plaintiffs' and 23 to the City of Chico's economic vitality are overly speculative. Damages to the City of Chico 24 also are not damages to the plaintiff. This claim should be stricken as false and improper. 25 2. Defendant Has Not Sat on its Hands Since August 2018 and Did Not Refuse to Allow a 26 Lease Modification. 27 Defendant has not sat on its hands since August 2018; rather Defendant has been 28 defending itself in this lawsuit. Defendant's alleged misconduct stems from Defendant's decision 7 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 to maintain the position that it would not consent to the extremely early termination of the 25- 2 year sublease with Walgreens. Defendant has communicated a reasonable request that Plaintiffs 3 comply with the terms of the lease agreements and find a new qualified subtenant before the 4 sublease with Walgreens is terminated, which Plaintiffs have not done or attempted to do. This 5 characterization of Defendant is false, inflammatory, improper, and immaterial. 6 Defendant also did not refuse to allow "a modification or termination to which Plaintiff is 7 entitled." The letter that Plaintiffs' lawyer sent to defendant on August 31, 2018 specifically 8 stated: "As you know, the Tenant has not operated at the Leased premises for several years. The 9 Tenant has requested termination of the Sub-Lease and Ground Lessee has agreed to a 10 termination subject to Tenant paying to Ground lessee a termination fee." (Amended Complaint, 11 Ex. D.) This was clearly a request for a termination of the sublease, not a request for 12 modification. This Court has directly ruled on this issue and determined that plaintiffs' request 13 was unambiguously a request for early termination rather than for a modification. (Order on 14 Motion for Judgment on the Pleadings [Order], Request for Judicial Notice, Ex. A, 2:2-3.) 15 PLAINTIFFS AMENDED COMPLAINT FALSELY AND IMPROPERLY 16 CHARACTERIZES THEIR OWN EFFORTS AS Dil..IGENT AND 17 DEFENDANT'S CONDUCT AS A CALCULATED OBSTRUCTION 18 Plaintiffs did not engage in diligent efforts to convince Defendant to allow for a 19 productive use of the demised premises. Plaintiffs do not provide evidence of any effort to try to 20 work with defendant to find a solution after Defendant communicated that it would not consent 21 to the termination of the Sublease. Contrary to the allegations of the Amended Complaint, 22 Plaintiffs have had years to find a new tenant to take over the sublease, have done nothing to find 23 a replacement subtenant, and have relentlessly and adamantly tried to terminate the sublease 24 with Walgreen Co. prior to making any legitimate attempt to replace Walgreens with a qualified 25 subtenant 26 Furthermore, Defendant's decision not to consent to the termination of the sublease was 27 not "a calculated obstruction." Defendant was validly exercising its rights under the contractual 28 agreements. Moreover, Defendant's refusal to agree to termination of the sublease does not 8 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 obstruct Plaintiffs from fmding a subtenant that meets the requirements of the Ground Lease. 2 This sentence must be stricken as false and improper. 3 PLAINTIFFS' REQUEST FOR TERMINATION WAS NOT A REQUEST FOR 4 MODIFICATION 5 Plaintiffs did not make any substantive changes in their Amended Complaint The causes 6 of actions and the basis for these causes of action remain identical to the original complaint The 7 only noticeable changes in the Amended Complaint are in relation to how they characterize their 8 request on August 31, 2018. In their original complaint they explicitly referred to the request as 9 a request for "termination." Throughout the Amended Complaint Plaintiffs now refer to this 10 request as a request for a "modification" of the Sublease. Plaintiffs argued in the original 11 complaint that their request for termination of the sublease was a request for a "material 12 amendment'' of the sublease and therefore their request was pursuant to section 4 of the CND 13 Agreement This provision imposes a duty on Defendant to not unreasonably withhold consent 14 to a "material amendment'' and states that a material amendment includes a "modification." 15 (CND Agreement, § 4.) Plaintiffs' are now attempting to recharacterize their request for 16 termination as a request for a modification to fit within section 4. This is factually false and 17 directly contradicts this Court's ruling and the facts and allegations contained in the original 18 complaint The Court specifically ruled that "the parties did not intend "material amendment'' of 19 the sublease to include termination thereof." (Request for Judicial Notice, Ex, A, Order, 1:28 and 20 2: 1.) Despite this order, Plaintiffs persist in their argument that Defendant breached the contract 21 by unreasonably withholding consent to their request to end the Sublease with Walgreens. There 22 is absolutely no doubt that Plaintiffs requested Defendant's consent to the total termination of the 23 Sublease and did not request Defendant's consent to a mere modification. 24 Paragraph 18 states: "Walgreens has requested to modify the Sublease by reducing the 25 term of the Sublease (so that the term ends at or soon after the execution of the agreement to 26 modify the Sublease) in exchange for the acceleration of rent, payable by Walgreens to the 27 Plaintiffs (the "Accelerated Rent''). Walgreens has agreed to pay the Accelerated Rent pursuant 28 to a proposed modification agreement between Plaintiff and Walgreens." {Amended Complaint, 9 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs, Amended Complaint 1 118, 3:27-4:3.) This paragraph is in direct conflict with the true facts that Plaintiffs set forth in 2 the original complaint and in the attached exhibits to both complaints. Their agreement was 3 clearly to end the Sublease rather than reduce the term of the Sublease. They are only now 4 couching this phrase like that 5 PLAINTIFFS CLAIM THAT DEFENDANT'S ACTIONS HAVE MADE IT 6 IMPOSSIBLE FOR PIAINTIFF TO FIND A NEW SUBTENANT FOR THE 7 PREMISES. 8 Plaintiffs insist that they must be allowed to terminate the Sublease before finding a new 9 subtenant and because Defendant unreasonably withheld consent to their agreement with 10 Walgreens to terminate the Sublease, it is impossible to find a new subtenant. Yet, Plaintiffs do 11 not point to any provision in the Ground Lease or the Sublease or any fact that supports this 12 contention. In fact, both lease agreements allow Plaintiffs to sublease the premises to 13 "Walgreens, and perhaps to others." (Ground Lease, Art 8.3.) Plaintiffs have always had the 14 power to acquire a new subtenant before terminating the Sublease with Walgreens. Defendant's 15 refusal to consent to Plaintiff's request for early termination of the Sublease with Walgreens has 16 no effect on Plaintiff's ability to find a new subtenant and it certainly does not make it 17 impossible. 18 PLAINTIFFS FAI.SELY CLAIM THAT PLAINTIFFS CAN TERMINATE ANY 19 SUBLEASE AND THAT THE SUBLEASE DOES NOT PROVIDE ANY RIGHTS 20 TO DEFENDANT. 21 As discussed in more depth in Defendant's Demurrer, Plaintiffs' duty to sublet to 22 Walgreens is well-defined in the lease agreements. The parties contractually agreed that the 23 Ground Lease would commence on the Sublease date and both lease agreements created an 24 initial term of 25 years. The Ground Lease, the Sublease, and the CON Agreement do not 25 provide for early termination. The parties contractually agreed that the Leased Premises would 26 be used for the pwpose of subleasing to Walgreens or to others. (Amended Complaint, Ex. A, 27 Art 1.9.) After the Ground Lease, Sublease, and CND Agreement were signed, the plaintiffs 28 were contractually required to perform their duties as developer and sublessor for the initial term. 10 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 Defendant also contends that it is a third-party beneficiary of Walgreen Co.'s agreement 2 to pay the ground rent and the excess rent to defendant. (Civ. Code. § 1559; see Marchese v. 3 Standard Realty and Dev. Co., 74 Cal.App.3d 142, 147, 141 Cal.Rptr. 370 (1977), holding that a 4 subtenant is a third-party beneficiary of a lessor's covenant of quiet possession where the lessor 5 approved of the sublease.) Defendant expressly consented to the terms of the Sublease when it 6 signed the CND Agreement: "Ground Lessor hereby consents to the subleasing of the Leased 7 Premises to Tenant under the terms and conditions more particularly set forth in the Sublease." 8 (Amended Complaint, Ex. C., at p. 1, ,r 1) The Sublease also specifically provides that 9 Walgreens Co. will pay the "ground rent" and 50% of the "excess rent'' directly to defendant 10 instead of paying it to plaintiffs (Amended Complaint, Ex. B, atp. 2, Art 2(aXl) and2(b).) The 11 Ground Lease was created precisely for the demolition of plaintiff's building and construction of 12 a Walgreens store and for the sublease to Walgreen Co. (Amended Complaint, Ex. A, Art 1.9 13 and 2.2) The Ground Lease contains several provisions that specifically state that Plaintiffs will 14 sublet the premises to Walgreens and includes a site plan for a Walgreens store. (Amended 15 Complaint, Ex. A, Art. 1.9, 1.12, 2.2, 5.2.4, 8.3, 10.5, 10.6, and exhibit A-3.) Walgreen Co. is the 16 beneficiary of defendant's promise to allow the sublessee to occupy the property, and defendant 17 is the beneficiary of Walgreens Co.' s promise to pay ground rent and excess rent. 18 PLAINTIFFS HAVE NOT PROVIDED ANY SUPPORT FOR THEIR 19 CONTENTION THAT DEFENDANT'S REFUSAL TO CONSENT TO TIIE 20 TERMINATION OF TIIE SUBLEASE REDUCED TIIE VALUE OF TIIE 21 LEASED PREMISES. 22 Defendant's withholding of consent to the early termination of the Sublease has 23 absolutely no logical connection to the value of the property. In fact, it is Plaintiffs who are 24 contractually obligated to "maintain, in good order, condition and repair the Leased Premises an 25 Improvements ... on the Leased Premises." (Amended Complaint, Exhibit A, p. 5, Art 5.1.). Any 26 diminution in the condition or value of the premises is a result of Plaintiffs' failure to fulfill their 27 obligations under the Ground Lease and Sublease or Walgreens' decision to cease operations and 28 leave the premises vacant for years. 11 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 PLAINTIFFS' REQUFST FOR TERMINATION SPECIFICALLY STATED 2 THAT THEY WOULD RECEIVE A TERMINATION FEE, NOT 3 ACCELERATED RENT. 4 Plaintiffs amended the third cause of action by changing "Termination Fee" to 5 "Accelerated Rent." This is the first time that Plaintiffs have ever called this money "Accelerated 6 Rent." Walgreen Co. did not request to modify the sublease in exchange for the acceleration of 7 rent and neither the Ground Lease nor the sublease contains an Accelerated Rent clause. 8 Plaintiffs letter on August 31, 2018 stated: "The tenant... requested termination of the Sub-Lease 9 and Ground Lessee has agreed to a termination subject to Tenant paying to Ground Lessee a 10 Termination Fee." (Amended Complaint, Ex. D.) Therefore, recharacterizing "termination fee" 11 to "Accelerated Rent" is false and contradicted by Plaintiffs' own correspondence to Defendant 12 and their original complaint. All references to Accelerated Rent in the Third Cause of Action are 13 false statements of the facts. Paragraph 61 is false because Defendant could not have possibly 14 known about the "accelerated rent'' since Plaintiffs made a reference to accelerated rent for the 15 first time when they filed the Amended Complaint on February 21, 2020. 16 Paragraph 62 alleges that Defendant engaged in wrongful conduct to prevent plaintiff: 17 from receiving the accelerated rent by unreasonably withholding consent to the modification o 18 termination of the sublease. The court's ruling on the Motion for Judgment on the Pleading 19 specifically addressed this issue and determined that Plaintiffs' request for termination was not 20 request for a material amendment under Section 4 of the CND Agreement and therefore Defendan 21 was not subject to the requirements of Section 4. Defendant's conduct was not wrongful and th.er 22 is no support for Plaintiffs argument that Defendant withheld consent to the termination for th 23 specific purpose of preventing Plaintiffs from receiving a termination fee, accelerated rent, o 24 whatever Plaintiffs decide to call it next. This paragraph should be stricken. 25 Paragraph 63 is also false and improper. As previously discussed, plaintiffs originall 26 informed Defendant about a "termination fee," but the first time that plaintiffs informed defendan 27 about the "accelerated rent'' was when they served defendant with the Amended Complaint. 28 Defendant had absolutely no knowledge about an "accelerated rent'' until the Amended Complain 12 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 was filed in February of 2020. Therefore, Defendant did not have knowledge that its actions woul 2 prevent payment of "Accelerated Rent'' when Defendant responded to the request it receive fro 3 Plaintiffs shortly after August 31, 2018. 4 Paragraph 67 is also a false statement of the facts. Plaintiffs allege that Walgreen Co. i 5 decreasing the "Accelerated Rent'' for every month it remains a subtenant. It is clear, however 6 that Walgreen Co. is simply decreasing the "termination fee," or "accelerated rent'' in proporti 7 to the amount of rent they are continuing to pay each month under the terms of the Ground Leas 8 and Sublease. (see Exhibit B, p. 2, §2(aXi-ii).) Plaintiffs are still receiving this rent, which is th 9 same amount of money as they were set to receive as the termination fee. The decrease in th 10 "accelerated rent'' is being offset by the actual rent that Walgreens has continued to pay under th 11 terms of the lease agreements. This paragraph is both false and improper and should be stricken. 12 Paragraph 68 is also false because Plaintiffs have not lost the benefits of the "Accelera 13 Rent." Rather, they have continued to receive the monthly rent owed under the lease agreements 14 which is actually more than the amount Walgreens has reduced the termination fee by. Plaintiff! 15 have therefore not lost any benefits, and this paragraph must be stricken because plaintiffs hav 16 not suffered any damages as a result of the decrease in the "accelerated rent" 17 PLAINTIFFS' PRAYER FOR RELIEF ASKS FORA JUDGMENT THAT 18 DIRECTLY CONTRADICTS THIS COURT'S ORDER ON THE MOTION FOR 19 JUDGMENT ON THE PLEADINGS. 20 Paragraph 1 prays for a declaration that Defendant's response to the Request constitutes 21 unreasonable withholding, conditioning, or delaying of consent under the CNDA and the Lease. 22 As previously discussed, the court specifically ruled on this issue when it granted the Motion fo 23 Judgment on the Pleadings. The court found that defendant's response did not was not a violatio 24 of the CND Agreement, because Plaintiffs unambiguously requested termination rather than 25 modification under Section 4 of the CNDA. This prayer for relief is therefore false and improper 26 Paragraph 5 claims that Plaintiffs suffered damages as a result of the reduction in the 27 accelerated rent/termination fee. Under the terms of the Sublease, Walgreens is currently paying 28 $52,032.75 in Ground Rent and Building Rent per month. (see page 2 of the Sublease provided 13 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 as Exhibit B to the Amended Complaint for the breakdown of Ground Rent paid to Defendant 2 and Building Rent paid to Plaintiffs.) While Plaintiffs claim that Walgreens is decreasing the 3 termination fee by $50,000 per month, they have continued to pay $52,032.75 per month in rent 4 Therefore, Plaintiffs claim that they have suffered these damages is false. W algreens has fairly 5 decreased the termination fee each month in exact proportion to 1he rent they are paying each 6 month. Plaintiffs have not suffered any damages and their claim for $800,000 in damages is 7 false and lacks support This paragraph is false and improper. 8 THEFOLLOWINGPORTIONSOFTHECOMPLAINTSHOULDBE 9 STRICKEN: 10 1. Paragraph 6 ofthe Amended Complaint Should be Stricken in its 11 Entirety as False, Irrelevant, and Improper 12 As discussed in the first section above, Plaintiffs' allegation that Defendant's action 13 caused particular harm to the City of Chico is unsupported, false, irrelevant, and improper. Th 14 falsity of this allegation appears clearly on the face of the pleading. This paragraph should b 15 stricken in its entirety. 16 2. Paragraph 9 of the Amended Complaint Should be Stricken in its 17 Entirety as False, Irrelevant, and Improper 18 As discussed in the section related to Plaintiffs' diligence and Defendant's alleged 19 calculated obstruction, paragraph 9 states facts that are patently false, inflammatory, and do not 20 present or raise a material issue. This paragraph totally ignores the court's finding and asserts 21 1he same exact causes of action based on their earlier incorrect interpretation of Section 4 of the 22 CND Agreement Plaintiffs assert facts in paragraph 9 that are factually not true, not logical, 23 unreasonable, and improper. Therefore, this entire paragraph should be stricken. 24 The term "possible economic vitality" should be stricken as irrelevant, false, and 25 improper because defendant's conduct cannot conceivably be viewed with respect to possible 26 economic vitality of either Plaintiffs or the city of Chico. 27 3. Paragraph 18 of the Amended Complaint Should be Stricken in its 28 Entirety as False. 14 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 Plaintiffs' request was clearly a request for termination of the Sublease rather than a 2 request for a modification with accelerated rent as discussed above. This paragraph should be 3 stricken from the Amended Complaint as false. 4 4. Paragraphs 39 of the Amended Complaint Should be Stricken in Their 5 Entirety as False and Improper 6 Defendant's actions have had no effect whatsoever on plaintiffs' ability to find a ne 7 subtenant. Plaintiffs' contention that defendant's actions have "made it impossible for Plaintiff 8 find a new subtenant'' is false. Plaintiffs have always had the power and ability to find a ne 9 subtenant to replace Walgreens. Paragraph 39 should be stricken as false and improper. 10 5. Paragraph 40 of The Amended Complaint Should Be Stricken in its 11 Entirety as False and Improper 12 Defendant has performed all of its obligations under the Ground Lease and even allow 13 Plaintiffs to demolish its then existing hotel to build the Walgreens store. As discussed above, 14 defendant's refusal to consent to the early termination does not have any logical or legal connectio 15 to any possible reduction in the value of the premises. This paragraph should be stricken as fals 16 and improper. 17 6. Paragraphs 41 and 42 of the Amended Complaint Should be Stricken in 18 Their Entirety as False 19 Defendant does in fact have rights as a third-party beneficiary to the Sublease. Furthermore 20 plaintiffs' duty to sublease is also established throughout the transaction documents. Thes 21 paragraphs should therefore be stricken as false. 22 7. Paragraphs 31, 33, 36, 38, 51, 52 and 57 of the Amended Complaint 23 Should be Stricken in Their Entirety as False and not in Conformity with 24 the Court's Order. 25 As discussed above, each of these paragraphs now alleges that their request for terminati 26 was actually a request for "modification" of the sublease. As discussed above, this Court foun 27 that Plaintiff's request was not for a modification or material amendment of the sublease 28 provided for in Section 4 of the CND Agreement. This is a false statement of the facts 15 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 demonstrated by the exhibits to the Amended Complaint and facts alleged in the origin 2 complaint. It is also improper given the court's ruling on the Motion for Judgment on th 3 Pleadings. The court should strike these paragraphs as false and not filed in conformity with th 4 court's order. 5 8. Paragraphs 24, 60, 61, 62, 63, 67, and 68 of the Amended Complaint 6 Should be Stricken in Their Entirety as False and Improper 7 The term, "Accelerated rent," was never mentioned prior to filing this Amend 8 Complaint. These paragraphs contradict the facts previously asserted in the original complain 9 and stated in the exhibits supporting the original complaint and the amended complaint. 10 paragraphs should be stricken as false and improper. 11 9. Paragraphs 1 and 5 of the Prayer for Relief in the Amended Complaint 12 Should Be Stricken in Their Entirety as False, Redundant, and Improper 13 Paragraphs I and 5 should be stricken in their entirety because they contain a false 14 statement of fact and it improperly contradicts this Court's prior ruling. 15 THE COURT SHOULD STRIKE THE ENTIRE AMENDED COMPLAINT 16 UNDER THE SHAM PLEADING DOCfRINE 17 It is clear from a plain reading of the original Complaint and the Amended Complaint th.a 18 the allegations and facts to support those allegations are essentially the same. These ne 19 allegations are clearly false and still lack merit. Plaintiffs' Amended Complaint consists solely o 20 a mere reiteration of the causes of action and facts in the original complaint with slight changes t 21 individual words. (Neal v. Bank ofAmerica, supra at 681.) Here, the 'amended' complaint is n 22 better than the original complaint. Plaintiffs made no attempt to state new facts, or to state th 23 facts more fully; they simply changed certain words to avoid the defects identified in this Court' 24 Order on the Motion for Judgment on the Pleadings; yet they have not effectively done so. Th 25 Court allowed plaintiffs to amend their Complaint "to allege alternative contrac 26 interpretations." (Request for Judicial Notice, Ex. A, Order, 2:4-6.) Plaintiffs, however, did no 27 allege alternative contractual interpretations. These causes of action are stillentirely based o 28 plaintiffs' incorrect contention that defendant could not "unreasonably withhold consent" to th 16 Defendant's Points and Authorities in Support Notice of Motion and Motion to Strike Portions o Plaintiffs' Amended Complaint 1 request for early termination of 1he sublease wi1h Walgreens. Plaintiffs' Amended Complaint i