Opinion
B288744
02-21-2020
VICO, LLC, Plaintiff and Appellant, v. COUNTY OF LOS ANGELES, Defendant, Cross-complainant, and Appellant; YOONG SOO LEE et al., Cross-defendants and Respondents.
Daniel E. Park Law Corporation, Daniel E. Park, Christopher C. Cianci; Morganthaler Law Group and Alisa M. Morgenthaler for Plaintiff and Appellant. Mary C. Wickham, County Counsel, Elaine M. Lemke, Assistant County Counsel, and Dusan Pavlovic, Deputy County Counsel, for Defendant, Cross-complainant and Appellant. Daniel E. Park Law Corporation, Daniel E. Park, Christopher C. Cianci; Morganthaler Law Group and Alisa M. Morgenthaler for Cross-defendants and Respondents.
ORDER MODIFYING OPINION
[NO CHANGE IN JUDGMENT]
THE COURT:
It is ordered that the opinion filed herein on February 21, 2020, be modified as follows:
On page 9 of the opinion, footnote 4, replace the final word in the footnote, the word appeal, with the word opinion, so that the sentence reads: Accordingly, the money judgment in favor of the County on its cross-complaint is outside the scope of this opinion.
[There is no change in judgment.] /s/_________
JONES, J. /s/_________
EDMON, P.J. /s/_________
LAVIN, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC520700) APPEALS from a judgment of the Superior Court of Los Angeles County. Barbara A. Meiers, Judge. Affirmed in part and reversed in part. Daniel E. Park Law Corporation, Daniel E. Park, Christopher C. Cianci; Morganthaler Law Group and Alisa M. Morgenthaler for Plaintiff and Appellant. Mary C. Wickham, County Counsel, Elaine M. Lemke, Assistant County Counsel, and Dusan Pavlovic, Deputy County Counsel, for Defendant, Cross-complainant and Appellant. Daniel E. Park Law Corporation, Daniel E. Park, Christopher C. Cianci; Morganthaler Law Group and Alisa M. Morgenthaler for Cross-defendants and Respondents.
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INTRODUCTION
The case involves leases for two public golf courses: Whittier Narrows Golf Course (Whittier Narrows), and The Links at Victoria Golf Course (Victoria). The County of Los Angeles (County) has a long-term leasehold interest in and owns a portion of these golf courses. The County signed long-term leases of these golf courses and, in 2006, agreed to a lease assignment of these two golf courses to VICO, LLC (VICO).
There are two issues presented here. The County appeals the trial court's entry of judgment in favor of four VICO corporate officers—cross-defendants Yoong Soo Lee, Brian Whang, Jong Sik Chi and Christopher Kim (Corporate Officers). The County asserts that the trial court abused its discretion in denying a continuance of the Corporate Officers' motion for summary judgment so that necessary discovery could be completed. The County also complains that because there were triable issues of fact as to the involvement of the Corporate Officers and their individual liability, the court erred as a matter of law in granting summary judgment.
VICO cross-appeals the trial court's grant of summary judgment in favor of the County on VICO's complaint for breach of contract, breach of the covenant of good faith and fair dealing, and negligent misrepresentation. VICO argues that it presented triable issues of material fact on these causes of action and, therefore, summary judgment in the County's favor was erroneously granted.
Regarding the County's appeal, we reverse the trial court's determination that there were no triable issues of fact regarding the liability of VICO's Corporate Officers. These cross-defendants did not meet their initial burden when they submitted four identical, conclusory declarations that did not negate any aspect of the County's causes of action. In fact, the Corporate Officers' declarations included admissions of fact that support a reasonable inference that they knew that VICO owed the County millions of dollars in back rent and property taxes and yet consented to or authorized VICO to remain in possession of Whittier Narrows after receiving eviction notices. Further, additional facts adduced by the County in opposition are sufficient to support a reasonable inference that not only were the Corporate Officers aware of having defaulted on the lease, but thereafter engaged in a course of unprotected conduct intended to interfere with the County's efforts to lease Whittier Narrows to another operator. A corporate officer's knowing consent to or approval of unlawful acts is a sufficient basis for individual liability. Further, the County adduced competent evidence to create a triable issue as to the alter ego liability of the Corporate Officers, including the absence of corporate meetings, the preparation and submission of false financial reports, and the unauthorized distribution of rental profits.
As for VICO's cross-appeal, we affirm the trial court's grant of summary judgment in favor of the County. The alleged oral promise on which VICO's breach of contract rests is inconsistent with the terms of the Whittier Narrows lease agreement. That lease expressly describes the nature of the tenancy and how a holdover tenant shall be treated after the expiration of the initial term. VICO failed to adduce any evidence of fraud in the inducement sufficient to allow the admission of parol evidence to contradict these terms. Under the clear and unambiguous terms of the lease agreement, VICO's nonpayment of monthly contractual obligations provided the County with the right to terminate. As for VICO's second cause of action for breach of the implied covenant of good faith, it simply restates the claim for breach of contract. For the reasons just enumerated, therefore, the second cause of action fails. Finally, the third cause of action for negligent misrepresentation is legally defective because VICO did not adduce a triable dispute of fact on the issue of justifiable reliance. The option under which the lease could be extended by the County Department of Parks and Recreation never came into effect and was not in effect when VICO assumed the lease. Thus, any extension could have been accomplished only by written amendment approved by the Board of Supervisors. VICO failed to adduce a triable issue of fact on its claim to have justifiably relied on a County employee's opinion that the lease on Whittier Narrows would be extended by the Board of Supervisors for at least 10 years. Any alleged promise as to what the Board of Supervisors might approve, assuming it was made, constituted a claim of a future event which, as mere opinion, is nonactionable.
BACKGROUND FACTS
The County has leasehold and ownership interests in Whittier Narrows and Victoria.
A. The Lease, Assignment and Re-Lease of the Golf Courses
In March 1987, the County leased Whittier Narrows to National Golf and Tennis, Inc., which later changed its corporate name to Whittier Narrows Golf, LLC (WNG). The 20-year agreement provided for the management, maintenance and operation of Whittier Narrows (WN Lease). The WN Lease provided for an extension of the original 20-year term at the discretion of the Director of the County Department of Parks and Recreation (Department) for an additional period of up to 10 years. The WN Lease conditioned the availability of an extension on the occurrence of three events taking place within the first four years of the effective date of the lease, including WNG getting approvals from the County and U.S. Army Corps of Engineers and constructing additional restaurant facilities at Whittier Narrows. WNG did not meet these conditions. WNG never obtained the requisite approvals nor did they construct additional restaurant facilities.
The WN Lease also stated that once the original 20-year term expired, any holdover would not constitute an extension of the lease. Rather, it would only create a month-to-month tenancy subject to the terms of the lease. In addition, the WN Lease provided that the lease "may be modified only by further written agreement between the parties" and, in the case of the County, any such modifications to the lease would not be effective until approved by the Board of Supervisors.
In 1985, the County and the same operator signed a long-term lease for Victoria. As with the WN Lease, in the event that the operator held over beyond the term, the tenancy would be month-to-month subject to the existing terms of the lease.
In 2006, the County consented to an assignment of the WN Lease and the Victoria lease to VICO. At the time of this assignment, Whittier Narrows had six months remaining on the original lease and Victoria had a 29-year term remaining. After the expiration of the WN Lease, VICO occupied and managed Whittier Narrows on a month-to-month tenancy.
VICO operated the two golf courses through two limited liability companies: Whittier Narrows Golf, LLC, and Victoria Public Golf, LLC, and VICO was the sole member of these two entities.
During the negotiations of the lease assignment, the Department's golf operations manager, Faith Parducho, met with VICO's representatives to ascertain whether the company had the qualifications and financial ability to take on the leases. VICO asserts that during these negotiations, Parducho promised that the WN Lease would be extended if VICO would agree to assume the leases of both Victoria and Whittier Narrows. Parducho was not authorized by the Department to make any such representations; nor was she a member of or associated with the Board of Supervisors.
At the time of these meetings, Parducho's last name was San Diego. Although Parducho denies that any promises were made to VICO, for the purposes of the County's motion for summary judgment, we assume that she made some statement regarding a lease extension on Whittier Narrows.
In 2007, VICO started falling behind on its rent payments. The Department notified VICO that it was in breach of the leases and demanded that it cure the default. VICO tendered partial payments through January 2011. Thereafter, VICO refused to pay rent and other past due charges.
As of January 31, 2016, VICO owed the County approximately $5.2 million dollars for back rent, capital improvement fees, golf course improvement fees, junior golf fees, late fees and property taxes.
More than two years later, in March 2013, the County began a public bidding process to find a new operator for Whittier Narrows. The Department posted online public bid information on the County website seeking proposals from qualified bidders. The Department also notified VICO of the online bid information notice. VICO never submitted a bid in response to the Department's public request.
Instead, in September 2013, VICO filed an action alleging that the County had breached an oral promise to VICO that the WN Lease would be extended by 10 years after the original term expired in March 2007. VICO later amended its complaint, days before the events set forth in the next paragraph, to ask that any contract for the operation of Whittier Narrows between the County and American Golf be voided and to add American Golf of Glendale (American Golf) as a codefendant.
At a public hearing on January 14, 2014, the County awarded a new lease agreement for the operation of Whittier Narrows to American Golf. The new Whittier Narrows lease was for a period of 22 years and five months, and the annual rental value of the American Golf lease was higher than under the earlier WN Lease.
Shortly thereafter, on January 16, 2014, the County gave VICO a written termination notice requesting that it vacate Whittier Narrows within 30 days to allow American Golf to begin operations. VICO refused to vacate Whittier Narrows. VICO continued to occupy Whittier Narrows without paying the required rental obligations until March 6, 2015.
On February 19, 2014, the County filed an unlawful detainer action against VICO. The lawsuit sought to recover possession of Whittier Narrows. VICO successfully moved to consolidate the actions. As a result of that ruling and subsequent reassignment of the case, the trial on the unlawful detainer action was continued until March 9, 2015.
In November 2014, the County filed a cross-complaint against VICO and its four corporate officers for tortious interference with the American Golf lease and for breach of the Whittier Narrows and Victoria leases. American Golf also filed a cross-complaint against VICO.
On the eve of the County's unlawful detainer trial, VICO agreed to transfer possession of Whittier Narrows to the County, which resulted in a settlement of the unlawful detainer action. On April 10, 2015, as part of that settlement, the parties dismissed American Golf and all conflict of interest allegations and causes of action against the County in exchange for American Golf's dismissal of its cross-complaint against VICO. On March 6, 2015, VICO vacated Whittier Narrows.
On April 29, 2015, the County amended its cross-complaint to add additional allegations, to which the four VICO corporate officers demurred. After the demurrer was resolved, the case proceeded on VICO's breach of contract complaint against the County and the County's cross-complaint for breach of contract and tortious interference with the contract against VICO and four corporate officers.
The County ultimately obtained a $7,326,794 judgment on its cross-complaint against VICO. The notice of appeal filed by VICO on April 20, 2018, embraces that judgment in favor of the County on the cross-complaint. However, due to a bankruptcy filing by VICO, on November 7, 2018 this court stayed that aspect of the appeal. Accordingly, the money judgment in favor of the County on its cross-complaint is outside the scope of this appeal.
On October 1, 2015, the County negotiated a reassignment of the Victoria lease from VICO to a third party operator.
B. VICO's Corporate Officers' Motion for Summary Judgment.
In February 2016, VICO's Corporate Officers filed a motion for summary judgment on the County's cross-complaint.
In that motion, the Corporate Officers argued that there was no factual basis to hold them individually liable. They were not parties to the lease agreements and they could not be held liable for breach and, as they were not holdover tenants, they could not be held liable for any disruption or interference with the County's contract with American Golf. Nor, they argued, was there an alter ego relationship between these Corporate Officers and VICO. Nor were the Corporate Officers involved in wrongful conduct.
The Corporate Officers each submitted a declaration. These declarations were nearly identical. Each cross-defendant averred that he was a member of VICO and knowledgeable of its operations and handling of its assets and liabilities, but failed to explain their individual roles in the enterprise. Cross-defendant Lee claimed not to have personal control of VICO's finances or bank accounts, but the other three defendants did not. The manner in which the three remaining cross-defendants had personal control over VICO's finances or bank accounts was never explained. And while all the cross-defendants denied having siphoned off revenue "for my personal enrichment or to keep VICO in a perpetual state of insolvency," they did not deny having siphoned off revenue for other purposes. Further, all four cross-defendants averred that they did not cause or seek to cause VICO to fail to abide formalities of corporate existence. And, as with the other cross-defendants, cross-defendant Whang averred that at no time did he "in my individual or personal capacity, actively participate in, direct, and/or authorize the operations of VICO."
In opposition, the County requested a continuance pursuant to Code of Civil Procedure section 437c, subdivision (h) based on the failure by the Corporate Officers to appear timely for deposition and to provide responses to court-ordered discovery. Specifically, after a delay of almost a year, the court had finally ordered the Corporate Officers to appear for deposition but those depositions had not yet taken place. In addition, the County had scheduled a hearing for four weeks after the opposition was filed on five additional motions to compel compliance with the court's October 27 and November 15, 2016 discovery orders.
The County also opposed the summary judgment motion on the merits. The County argued that the Corporate Officers' declarations failed to meet their burden on summary judgment. (Code Civ. Proc., § 437c, subd. (p)(2).) The County further argued there was sufficient evidence to create triable issues for the breach of contract and the implied covenant of good faith and fair dealing. The County provided evidence that the Corporate Officers dominated and controlled VICO's operations, that VICO was a mere shell or conduit for these Corporate Officers' individual affairs, that VICO was inadequately capitalized and failed to abide corporate formalities, and that the Corporate Officers used VICO's assets as their own. For example, contradicting the declarations of the Corporate Officers, VICO failed to hold annual corporate meetings and made unauthorized and unreported distributions of corporate assets. VICO's accounting records contained false entries. VICO's records reflect payment of real estate taxes and rents when, in fact, no such payments were made. Additionally, cross-defendant Whang authorized fund transfers from Whittier Narrows to Victoria—even though that meant that Whitter Narrows failed to pay the rent owed to the County. These facts, the County argued, supported a reasonable inference of individual liability for the Corporate Officers under an alter ego theory.
As for the intentional interference causes of action, the County submitted evidence that these Corporate Officers directed employees to ignore the County's 30-day lease agreement termination notice and, thereafter, instructed VICO to remain in possession of Whittier Narrows for 13 months after the February 16, 2014 deadline without paying any of the obligations under the lease. As a result of these directions—which flatly contradicted the conclusory statements in the declarations—the Corporate Officers remained in possession of Whittier Narrows and made it impossible for the County to realize over 13 months of profits on the new American Golf lease agreement. By knowingly consenting to or approving these unlawful acts, the Corporate Officers were directly liable for the commission of intentional interference with contract.
In reply, the Corporate Officers rejected the County's argument that the motion should be continued. Specifically, they claimed that the depositions had taken place and documents had been produced. Further, resting on their original declarations, the Corporate Officers claimed that the operating agreement did not require annual member meetings, and the claimed failure to pay property taxes was not supported by competent evidence. Further, the Corporate Officers asserted that they did not actively participate in the operation of VICO. Finally, although found to be inadmissible by the trial court, counsel for these Corporate Officers attempted to recharacterize the testimony of VICO's accountant, Sue Jung.
C. County's Motion for Summary Judgment
On February 29, 2016, the County filed a motion for summary judgment to VICO's causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and negligent misrepresentation.
Specifically, the County argued that the unambiguous terms of the WN Lease precluded any oral modification of its duration. Where, as here, the writing was intended to be an integration, any preexisting oral discussions that vary or rewrite the terms of the WN Lease are prohibited under the parol evidence rule. Further, even if such a representation could be considered, the statute of frauds prevents the enforcement of such an oral promise to extend the WN Lease for more than one year. As there was not a breach of contract, VICO's second cause of action for breach of the covenant of good faith and fair dealing similarly fails. Finally, VICO could not adduce a triable factual issue on the question of whether VICO justifiably relied on any such representation. The representation claimed by VICO was a mere promise, made by an unauthorized person, to extend the WN Lease beyond its express term. Any claim of reliance in light of these undisputed facts was, as a matter of law, unreasonable.
In opposition, VICO argued that it relied on the "promises and assurances" made by a Department employee to extend the length of the WN Lease. Further, VICO argued that the 2008 amendment to the WN Lease, which imposed new costs on VICO, "implied a lease extension would be granted." Further, because VICO was induced to enter into the lease assignment because it reasonably relied on this oral promise, parol evidence is admissible. As for the statute of frauds, VICO argued that it partially performed on the WN Lease agreement. Finally, VICO claimed to have relied reasonably on the promises made by Parducho and, therefore, a triable issue of fact existed on the negligent misrepresentation cause of action.
In reply, the County asserted that certain facts remained uncontroverted: (1) the option to extend the term contained in the original WN Lease was not operative when VICO assumed the obligations; and (2) neither Parducho nor any other employee of the Department had the authority to promise or extend the term of the WN Lease, even assuming such an option were available. The only way in which a lease extension could be obtained was to be in writing and authorized by the Board of Supervisors. And, this event never occurred.
D. Court's Rulings on the Motions
The trial court heard the motions on February 22, 2017. The court found that the option to extend the WN Lease was not in effect when VICO assumed the lease in August 2006 and that, when assumed, the WN Lease was for a term of seven months, and thereafter on a month-to-month tenancy. Further, the court found that it was undisputed that VICO failed to perform as required by the WN Lease. The WN Lease was an integrated contract and, therefore, any evidence contradicting these terms was barred by the parol evidence rule. And, the trial court also found that VICO failed to adduce any evidence to raise a material issue as to reliance. And, as VICO failed to set forth any evidence of fraud, the fraud exception to the parol evidence rule did not apply. Moreover, any claim as to future events was not actionable as a matter of law. Accordingly, the court granted the County's motion for summary judgment.
The trial judge also granted the summary judgment motion of the Corporate Officers. Specifically, the trial court held that the County had failed to produce factual support sufficient to meet the requirements for the individual liability of the Corporate Officers, and had failed to adduce a triable issue of alter ego liability.
Timely appeals were taken from the court's judgment.
DISCUSSION
A. Standard of Review
A defendant (or cross-defendant) meets his or her burden upon a motion for summary judgment or adjudication if that party has proved "one or more elements of the cause of action . . . cannot be established." (Code Civ. Proc., § 437c, subd. (p)(2).) The defendant need not conclusively negate an element of the plaintiff's cause of action but must only show that one or more of its elements cannot be established. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853 (Aguilar).) To shift the burden to the plaintiff, the defendant's evidence must "persuade the court that there is no material fact for a reasonable trier of fact to find." (Id. at p. 850, fn. 11, italics omitted.) The defendant also bears a burden of production "to make a prima facie showing of the nonexistence of any triable issue of material fact." (Id. at p. 850.) A prima facie showing is "one that is sufficient to support the position of the party in question." (Id. at p. 851.)
Once the defendant has met that burden, the burden shifts to the plaintiff (or cross-complainant) to show that a triable issue of one or more material facts exists. (Code. Civ. Proc., § 437c, subd. (p)(2).) In opposing the motion, the plaintiff must set forth specific facts showing that a triable issue of fact exists. (Ibid.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of party opposing the motion in accordance with the applicable standard of proof. (Aguilar, supra, 25 Cal.4th at p. 850.)
On appeal from the grant of summary judgment, we exercise an " ' "independent assessment of the correctness of the trial court's ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law." ' " (Davis v. Kiewit Pacific Co. (2013) 220 Cal.App.4th 358, 365.) We identify the issues framed by the pleadings and then determine whether " ' "the moving party's showing has established facts which justify a judgment in movant's favor." ' " (Stokes v. Baker (2019) 35 Cal.App.5th 946, 956.) If the moving party has made that showing, we then determine whether the opposition has demonstrated " ' "the existence of a triable, material factual issue." ' " (Ibid.) In making that determination, we keep in mind that the party opposing the motion is entitled to have any reasonable inferences from the facts drawn in its favor. (American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 1239, 1245.)
B. VICO's Corporate Officers' Motion for Summary Judgment Was Improperly Granted.
As part of its underlying cross-complaint against VICO for breach of contract and for intentionally interfering with the release of Whittier Narrows, the County named four VICO Corporate Officers as cross-defendants. Although these cross-defendants moved for summary judgment in early 2016, discovery as to their roles in VICO and the operations of the two golf courses was incomplete.
Throughout 2016 and 2017, the parties engaged in a series of discovery disputes, ultimately resulting in the County filing more than 20 motions to compel the cross-defendants to appear for depositions, to produce necessary documents and to request sanctions. Before the hearing on those motions, the cross-defendants entered into a stipulation in October 2016 and January 2017 ordering further discovery responses, production of documents and compelling the appearance of the Corporate Officers at depositions. Three of the four Corporate Officers were deposed on February 13 and February 15, 2017, which was five days after the County filed its opposition to the corporate officer cross-defendants' motion for summary judgment. Certain documents were never produced, despite the October 27, 2016 discovery order and the County, as a result, filed five motions for issue sanctions on February 15, 2017, and set them for a hearing on March 10, 2017.
The trial court denied the County's request for a continuance, citing a lack of diligence in prosecuting the action. While the County appeals that ruling, arguing that it constitutes an abuse of discretion given the County's "laborious efforts to obtain the needed discovery," we need not reach that issue here. While we are not commending the Corporate Officers' failure to provide opposing counsel with necessary discovery, we need not rely on that noncompliance for our decision. Rather, on the merits, the Corporate Officers' motion for summary judgment failed to establish a prima facie case sufficient to shift the burden to the County to oppose, thus rendering any inability by the County to obtain necessary discovery nonprejudicial. Second, even the meager discovery that the Corporate Officers provided and that was presented to the trial court was sufficient, assuming arguendo that the burden shifted to the County, to raise triable issues of fact as to the liability of the Corporate Officers.
1. Corporate Officers' Declarations Fail to Shift the Burden on the Tortious Interference Claim.
To establish a cause of action for intentional interference, the County would have to prove the following facts: (1) a valid contract existed between the County and a third party; (2) the Corporate Officers were not parties to that contract; (3) the Corporate Officers knew of the existence of the contract; (4) the Corporate Officers intended to interfere with the contract or knew that disruption was certain or substantially certain to occur; (5) the County breached the contract with the third party; (6) the Corporate Officers caused breach of the contract; and (7) the County suffered damages. (Quelimane Co. v. Stewart Title Guaranty Co (1998) 19 Cal.4th 26, 55; Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal.App.4th 945, 964.)
The Corporate Officers' motion for summary judgment rests on general denials set forth in nearly identical declarations submitted by all four men. Each of the Corporate Officers asserts generally that he has knowledge of VICO's operations and the handling of its assets and liabilities, but fails to explain how. Each declarant avers that he did not "actively participate in, direct, and/or authorize the operations of VICO," but fails to explain who did. None of the declarants explain what they did with regard to VICO; rather, they simply aver that they conducted the operations of VICO in concert with the other Corporate Officers.
Conclusory and vague declarations, of the type submitted in this case, fail to meet the Corporate Officers' initial burden on summary judgment. (Callahan v. Chatsworth Park, Inc. (1962) 204 Cal.App.2d 597, 601 [affidavits of the moving party are to be strictly construed and generalities and conclusions will not suffice]; Ahrens v. Superior Court (1988) 197 Cal.App.3d 1134, 1141 ["Mere conclusions of law or fact are insufficient to satisfy the evidentiary requirements of the summary judgment statute."]; Brown v. Ransweiler (2009) 171 Cal.App.4th 516, 525-526 [" 'an issue of fact is not raised by "cryptic, broadly phrased, and conclusory assertions" . . . or mere possibilities' "].) The Corporate Officers' generalized statements fail to negate any elements of the County's tort cause of action, and thus did not satisfy the initial burden of showing an absence of a triable issue of material fact. (Y.K.A. Industries, Inc. v. Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 353, citing Aguilar, supra, 25 Cal.4th at p. 851.) Because the Corporate Officers failed to meet their initial burden, the County was not required to controvert anything. (Y.K.A., at p. 353 ["The defendant cannot simply challenge the plaintiff to prove his case by opposition."].) For this reason alone, the Corporate Officers' motion for summary judgment on the tortious inference causes of action ought to have been denied.
2. If Declarations of Corporate Officers Are Considered, Triable Issues of Fact Supporting Tortious Interference Claim Exist.
If, however, one were to consider these declarations as sufficient evidence, they would have supported, rather than negated, the County's tort causes of action. The limited discovery that the County did obtain, taken in conjunction with the admissions contained in these declarations, construed liberally, support an inference that these Corporate Officers knew that VICO owed the County millions of dollars in back rent and property taxes when the eviction notice was served. Each Corporate Officer declared that he had knowledge of the operations and VICO's handling of its assets and liabilities. As established by the County's golf director's declaration and the deposition of Sue Jung, VICO's controller/bookkeeper during the relevant period, VICO owed the County back rent and unpaid property taxes. A reasonable inference from this circumstantial evidence is that the Corporate Officers were aware of the nonpayment of rent and property taxes by VICO when it was served with its eviction notice.
Further, the declarations go on to aver—once the double negatives are removed—that these four Corporate Officers jointly conducted the operations of VICO in conjunction with others. The deposition of Jung also established that she understood that the 30-day termination notice of the WN Lease from the County meant "new owners coming. So leave." Brian Whang (one of the named Corporate Officers) told her not to "worry about it at all." As Jung testified, "I was told [by Whang] [that] nothing is going to happen." Thereafter, Jung understood that VICO was going to remain in possession of Whittier Narrows, despite the termination of the lease. The possession continued even though no rent was paid.
The County also adduced evidence that established that it awarded a new lease agreement for the operation of Whittier Narrows to American Golf on January 14, 2014. None of the Corporate Officers or VICO were parties to the contract. In what could be reasonably inferred to be an attempt to postpone the termination of the WN Lease, the Corporate Officers directed VICO to file a lawsuit against the County for an alleged breach of oral contract. Further, once the County initiated an unlawful detainer action against VICO, the Corporate Officers directed VICO to continue to withhold lease payments during the pendency of that litigation and to remain in possession of Whittier Narrows. These facts support a reasonable inference that the Corporate Officers knew that by withholding possession of Whittier Narrows, they were necessarily interfering with the County's contract with American Golf to operate that golf course and the County's receipt of 13 months of rents and profits. Such facts and the reasonable inferences to be drawn therefrom, if proved at trial, would support a claim for intentional interference. (See Ramona Manor Convalescent Hospital v. Care Enterprises (1986) 177 Cal.App.3d 1120, 1133.) And, the Corporate Officers' knowledge, approval and participation in the wrongful holdover of Whittier Narrows are sufficient to establish liability. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 505; Michaelis v. Benavides (1998) 61 Cal.App.4th 681, 683 [corporate officers incur personal liability when they participate in the wrong or authorize or direct that it be done]; PMC, Inc. v. Kadisha (2000) 78 Cal.App.4th 1368, 1381 [The rule imposing liability on an officer for participation in or authorization of tortious conduct has its roots in agency law. Officers are agents of the corporate principal.].)
The litigation privilege does not bar the County's action for tortious interference with contract because it is based on the Corporate Officers' knowledge and participation in a wrongful holdover of Whitter Narrows, not their communicative acts during the litigation. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 345; Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1249.)
3. Triable Issues Exist on the County's Breach of Contract Claim Against Corporate Officers Under Alter Ego Doctrine.
The evidence submitted by the County in opposition to the motion also established triable issues of fact regarding the liability of the Corporate Officers for VICO's breach of contract under the alter ego doctrine. When a corporation is used by an individual or individuals to perpetrate fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, a court may disregard the corporate entity and treat its acts as if they were done by the individuals who are, in fact, controlling the corporation. (Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1106-1107.) The essence of the doctrine is to accomplish justice. (Messler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300-301.)
Whether a party is liable under an alter ego theory is normally a question of fact. (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811.) Although each case is considered on its own facts, certain factors are regularly considered by courts in ascertaining alter ego liability. (Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1071; Zoran, at pp. 811-812.) These include comingling of funds and other assets and a failure to segregate funds of the separate entities or the unauthorized diversion of funds to other than corporate uses, the failure to adequately capitalize a corporation, the disregard of formalities, including the failure to maintain an arm's-length relationship among related entities, and the diversion of assets from a corporation to another entity to the detriment of creditors. (Zoran, at pp. 811-812.),
In this case, assuming arguendo that the declarations submitted by the Corporate Officers were sufficient to establish that they were not the alter egos of VICO, the County adduced admissible evidence to support a reasonable inference to the contrary. Specifically, VICO failed to hold annual corporate meetings and failed to maintain corporate books, as required by its operating agreement with the County. VICO submitted false financial and accounting reports and concealed its financial position from the County. VICO failed to pay its property taxes, as it was statutorily and contractually required to do. VICO also made unauthorized distributions of its rental profits from Whittier Narrows to Victoria, instead of properly paying Whittier Narrows' obligations to the County.
The trial court erred in granting the Corporate Officers' motion for summary judgment. Accordingly, judgment in favor the Corporate Officers is reversed.
C. The County's Motion for Summary Judgment.
The WN Lease that the County assigned to VICO in 2006 contained certain express provisions. As agreed to by WNG and the County in March 1987, the term of the lease was 20 years. Section 3.03 of the WN Lease allowed for an extension of the 20-year term by the Director of the Department, but only if the conditions set out in subsections 3.03.01 through 3.03.03 were met within the first four years. These stated provisions were never met by WNG. Therefore, the WN Lease that VICO acquired in 2006 could not be extended at the discretion of the Director of the Department. Instead, under section 3.02 of the WN Lease, a holdover would not constitute an extension of the lease, but would be a month-to-month tenancy subject to the terms of the lease. The WN Lease also includes an integration clause, which states that the lease constitutes the entire agreement between the lessee and the County and that any promises not contained in the lease are expressly revoked.
VICO and the County amended the WN Lease in 2008 to allow a percentage of play fees to be allocated into a fund for capital improvements. That amendment did not contain a provision extending the lease. It did, however, include an integration and ratification clause that reaffirmed the relevant terms of the original lease.
Despite the clear and unambiguous terms of this agreement, VICO argues that an oral promise was made to them by the Department's golf operations manager during their negotiations for the assignment of the WN Lease. Specifically, VICO asserts that they were promised that if they accepted the assignment of the Victoria lease also, they would receive a 10-year extension of the lease for Whittier Narrows. It is against this backdrop that VICO sued the County for breach of contract, breach of the covenant of good faith and fair dealing, and negligent misrepresentation.
VICO's causes of action predicated on a claimed oral modification of the WN Lease based on a claimed "promise" from a Department manager fails as a matter of law for several reasons.
In general, the parol evidence rule prohibits the introduction of any extrinsic evidence to alter, vary or add to the terms of an integrated written agreement. (Julius Castle Restaurant, Inc. v. Payne (2013) 216 Cal.App.4th 1423, 1438-1439.) The rule is codified in Civil Code section 1625 and Code of Civil Procedure section 1856. (Julius Castle, at p. 1438.) Under the rule, the terms of a writing intended by the parties as a final expression of their agreement cannot be contradicted by evidence of either a prior agreement or a contemporaneous oral agreement. (Id. at p. 1439.) "The parol evidence rule is a long-standing, well-known principal that promotes fairness and predictability by encouraging parties to specify the entirety of their agreements in writing." (Ibid.) The policy is " 'based on the assumption that written evidence is more accurate than human memory' " and " 'the fear that fraud or unintentional invention by witnesses interested in the outcome of the litigation will mislead the finder of facts.' " (Ibid., citation omitted.)
In this instance, the claimed oral promise of a 10-year extension of the WN Lease is clearly inconsistent with the express representations in that contract. Thus, the crux of VICO's entire action rests upon the admissibility of what would otherwise be impermissible parol evidence.
Code of Civil Procedure section 1856, subdivision (f) establishes a broad exception to the operation of the parol evidence rule: "Where the validity of the agreement is the fact in dispute, this section does not exclude evidence relevant to that issue." Thus, the parol evidence rule, which is intended to protect the terms of a valid written contract, should not bar evidence challenging the validity of the agreement itself. (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1174 (Riverisland).) Evidence that the instrument is void or voidable for mistake, fraud, duress or other invalidating cause is admissible because it does not contradict the terms of an effective integration. (Id. at p. 1175.) Rather, this evidence shows that the purported instrument has no effect at all. (Ibid.) The fraud exception is expressly stated in section 1856, subdivision (g): "This section does not exclude other evidence . . . to establish . . . fraud."
The rule that permits parol evidence of fraud to establish the invalidity of the instrument is that it " 'must tend to establish some independent fact or representation . . . and not a promise directly at variance with the promise of the writing.' " (Riverisland, supra, 55 Cal.4th at p. 1175). Further, fraud entails more than a showing of an unkept promise or mere failure of performance. (Id. at p. 1183.) Rather, "[a] fraudulent misrepresentation is one made with the knowledge that it is or may be untrue, and with the intention that the person to whom it is made act in reliance thereon." (Seeger v. Odell (1941) 18 Cal.2d 409, 414 (Seeger).)
Fraud also requires a showing of justifiable reliance on the misrepresentation. (Riverisland, supra, 55 Cal.4th at p. 1183.) One may not justifiably rely on mere statements of opinion, unless the person expressing the opinion purports to have expert knowledge concerning the matter or occupies a position of confidence and trust. (Seeger, supra, 18 Cal.2d at p. 414.)
In the present case, VICO failed to present competent evidence sufficient to establish the right to the parol evidence exception based on fraudulent misrepresentation. First, the claimed oral promise is not an independent fact or representation; in this case VICO asserts merely a promise by Parducho that is directly at variance with the terms of the writing. Even accepting VICO's version of her statement, Parducho did not promise to get an amendment through the Board of Supervisors—rather she simply said that the WN Lease would be extended for at least 10 years. Such a statement flatly contradicted the unambiguous terms of the agreement.
Moreover, VICO adduced nothing more than a promise made to them by Parducho that was not kept. There was no evidence adduced from which it could be inferred that Parducho knew that statement was untrue or might have been untrue when made, or that she made it with the intention of having VICO rely on it. As such, VICO failed to establish triable issues as to key elements of its claim of fraudulent inducement. (See Seeger, supra, 18 Cal.2d at p. 414.)
Further, VICO failed to establish a factual dispute on the issue of justifiable reliance. For the purposes of this motion, we accept that Parducho opined, per the lease agreement, that the Board of Supervisors would approve a future extension of the WN Lease if both golf courses were leased by VICO. Nonetheless, that statement of opinion is nonactionable. (Neu-Visions Sports v. Soren/McAdam/Bartells (2000) 86 Cal.App.4th 303, 309 [representations of future facts are merely opinions and are not actionable as a matter of law].) Predictions as to future events, or statements as to future events by some third party are generally deemed opinions, and not are not actionable fraud. (Borba v. Thomas (1977) 70 Cal.App.3d 144, 152.)
There are exceptions to this general rule: (1) where a party holds himself out to be specially qualified and the other party is so situated as to reasonably rely on the former's superior knowledge; (2) where the opinion is by a fiduciary. (Blankenheim v. E.F. Hutton (1990) 217 Cal.App.3d 1463, 1475; Borba, supra, 70 Cal.App.3d at p. 153.) VICO adduced no facts to establish a relationship under which Parducho's opinion was expressed in such a way as to imply a superior knowledge of the operations of the Board of Supervisors or the likelihood that an amendment to the contract would be approved.
As VICO has failed to establish an exception to the parol evidence rule, the claimed oral promise to a 10-year lease extension cannot contradict the bargained-for terms of the WN Lease. Thus, the trial court correctly granted summary judgment on VICO's cause of action for breach of contract and, on the same grounds, the cause of action for the breach of the covenant of good faith and fair dealing. If, as in this case, the allegations supporting a cause of action for a breach of the covenant of good faith and fair dealing do not go beyond the statement of a mere contract breach, and rely on the same facts, summary judgment as to breach of contract will necessarily resolve the second cause of action as well. (Cf. Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)
For the same reason that the parol evidence rule applies in this instance, VICO's third cause of action for negligent misrepresentation fails. "The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage." (Ragland v. U.S. Bank Nationalsss Assn. (2012) 209 Cal.App.4th 182, 196.)
As noted above, VICO adduced no evidence from which it could be inferred that Parducho's representation was to a past or existing fact, or that it was made without a reasonable ground for believing that it was true and made with the intent to induce VICO's reliance on that misrepresentation. As noted by Brian Whang in his declaration, Parducho represented that VICO "would receive the 10-year extension on the lease, per the lease agreement . . . ." Under the terms of the lease, any modification to the term of the lease required the approval of the Board of Supervisors. It is uncontroverted that Parducho did not have the power to bind the Board of Supervisors. No government, whether state or local, is bound to any extent by an officer's acts in excess of her authority. (Burchett v. City of Newport Beach (1995) 33 Cal.App.4th 1472, 1479.) One who deals with the public officer stands presumptively charged with a full knowledge of that officer's power, and is bound at his peril to ascertain the extent of her power to bind the government. (Ibid.) In the circumstance presented here, therefore, the law precludes a claim of reliance on an unauthorized County employee.
Based on the foregoing, we affirm the trial court's judgment in the County's favor.
DISPOSITION
The judgment in favor of the County is affirmed, and the judgment in favor of the Corporate Officers is reversed. The County shall receive its costs. The matter is remanded for further proceedings consistent with this opinion.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
EDMON, P.J.
LAVIN, J.