Opinion
E079140
01-16-2024
SHIH LIN HSU et al., Plaintiffs and Appellants, v. KACHINA RANCH, LLC., Defendant and Respondent.
Tamer Law and Steven Michael Tamer for Plaintiffs and Appellants. Klinedinst and Gregor A. Hensrude for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. RIC1905255. Harold W. Hopp, Judge.
Tamer Law and Steven Michael Tamer for Plaintiffs and Appellants.
Klinedinst and Gregor A. Hensrude for Defendant and Respondent.
OPINION
MILLER J.
Plaintiffs and appellants Shih Lin Hsu (Dr. Hsu) and Dr. Hsu Organic Group (collectively, Plaintiffs) appeal the judgment entered in favor of defendant and respondent Kachina Ranch LLC (Kachina Ranch) regarding property Plaintiffs leased for organic farming. In July 2015, Hsu entered into a lease agreement with Kachina Farms for 20 acres of farmland (Property) expiring in December 2018 (Lease). Hsu and Kachina Farms renewed the Lease in 2018. Plaintiffs grew organic crops on the Property and created their own fertilizer that was used in the soil of the Property.
In 2019 Plaintiffs entered into an agreement with Meso Babies LLC and Meso Babies Farm LLC (collectively, Meso) to use 10 acres of the Property for farming hemp. Meso defaulted on its payment to Plaintiffs. As a result, Plaintiffs alleged they were unable to pay rent to Kachina Ranch, and were served with a five-day notice to pay rent or surrender possession of the Property. Plaintiffs failed to pay their rent. Kachina Ranch entered into a new lease agreement with Meso. An unlawful detainer judgment was entered against Plaintiffs removing them from the Property and they were ordered to pay damages to Kachina Ranch. Plaintiffs filed a complaint against Kachina Ranch and Meso raising numerous causes of action including forcible detainer, interference with prospective economic advantage and a violation of Business and Professions Code section 17200. After a bench trial, the court found in favor of Kachina Ranch.
Plaintiffs only appeal as to the causes of action against Kachina Farms.
In this appeal, Plaintiffs claim (1) the trial court erred by finding against them on the cause of action of intentional interference with economic advantage as Kachina Ranch engaged in wrongful conduct by removing them from the Property and entering into a new lease with Meso; (2) the judgment should be reversed because Kachina Ranch engaged in unfair, unlawful and/or fraudulent business practices under Business and Professions Code section 17200; and (3) the judgment should be reversed because Kachina Ranch is liable to Plaintiffs for forcible detainer.
FACTUAL AND PROCEDURAL HISTORY
A. COMPLAINT
Plaintiffs filed their complaint on October 18, 2019, against Kachina Ranch, Chris Wyborny, Meso and Christopher Sheridan (Complaint). Wyborny was alleged to be the owner and vice president of Kachina Ranch; Sheridan was the owner of Meso.
Plaintiffs alleged causes of action for breach of contract, assault, negligence, intentional infliction of emotional distress, negligent infliction of emotional distress, conversion, forcible entry/detainer, unfair competition, intentional interference with business relationships (economic advantage), and intentional interference with contractual relations.
Plaintiffs alleged that they entered into the Lease with Kachina Ranch and Wyborny. Plaintiffs grew organic crops on the Property that were sold to Chinese consumers and Japanese markets. Plaintiffs alleged that they developed a special fertilizer that was excellent for plant growth and soil improvement. The fertilizer that was produced on the Property sold for $10 for a 26-pound bag. Meso contacted Plaintiffs in March 2019 and proposed an agreement that they lease 10 acres of the Property in order to grow hemp seed. Meso agreed to pay $6,000 each month to Plaintiffs with three months paid upfront. Meso stopped paying rent to Plaintiffs in May 2019. Plaintiffs also alleged that Meso interfered with their farming operations, and therefore, they were unable to pay rent to Kachina Ranch in May 2019. Plaintiffs also alleged that Meso contacted Kachina Ranch and entered into a lease agreement directly with Kachina Ranch for the Property (Commercial Lease Agreement). Plaintiffs insisted they were forcibly removed from the Property and suffered damages exceeding $25,000.
Relevant here, for the cause of action of intentional interference with prospective economic advantage, Plaintiffs alleged that their Lease renewal continued through 2020 and that they received substantial revenue from the business they conducted on the Property. Kachina Ranch had knowledge of Plaintiffs' farming business and knew that they had numerous customers who purchased the produce grown on the Property. Kachina Ranch intentionally acted to disrupt Plaintiffs' business relationships by signing the Commercial Lease Agreement in order to remove Plaintiffs from the Property, and such actions intentionally interfered with Plaintiffs' business relationships. Plaintiffs lost significant revenue in their farming business resulting in substantial damage to them. Plaintiffs sought general, special and punitive damages, and costs of the suit.
For the cause of action pursuant to Business and Professions Code section 17200, Plaintiffs alleged that Kachina Ranch and Meso significantly interfered with their farm operations. Plaintiffs were threatened and their farm equipment was damaged. Intimidating tactics were used to force them out of the Property. Meso and Kachina Ranch entered into the Commercial Lease Agreement in order to remove Plaintiffs from the Property. As a result, Plaintiffs lost possession of the Property, and valuable farm soil and farming equipment. Plaintiffs sought damages, a temporary restraining order, a preliminary injunction and a permanent injunction preventing Kachina Ranch from continuing their actions. Plaintiffs also sought attorney fees.
Finally, Plaintiffs' cause of action for forcible detainer against Kachina Ranch alleged that Kachina Ranch entered into the Commercial Lease Agreement with Meso while it still had a three-year lease with Plaintiffs. Plaintiffs alleged Kachina Ranch and Wyborny threatened them, damaged farming equipment and used intimidating tactics to force them out of the Property. Plaintiffs insisted that Kachina Ranch acted with conscious disregard for their right to be free from conduct calculated to depose them from their place of business Plaintiffs sought general, special and punitive damages, attorney fees, and costs of the suit.
Kachina Ranch and Wyborny filed an Answer denying all the claims and raising numerous affirmative defenses. Meso also filed an Answer. Meso filed a crosscomplaint for damages against Plaintiffs. Plaintiffs filed an answer to the crosscomplaint.
Attached to the cross-complaint was a letter agreement between Dr. Hsu and Meso dated April 23, 2019. It showed that Meso was "leasing" land from Dr. Hsu for the cultivation of hemp. Meso had already paid money to Dr. Hsu for the lease, workers and water repair. It agreed to pay $6,000 each month. Dr. Hsu was given 6.5 percent ownership of Meso. The agreement did not create a partnership between Dr. Hsu and Meso. It was signed by Sheridan and Dr. Hsu.
B. BENCH TRIAL
Most of the testimony at trial pertained to the agreement between Meso and Dr. Hsu. Sheridan, CEO of Meso, testified he signed the letter of agreement with Dr. Hsu. Meso was to pay $6,000 per month in rent. Meso did not pay rent to Plaintiffs in May 2019. Sheridan also signed the Commercial Lease Agreement between Meso and Kachina Ranch on June 1, 2019. Sheridan believed that $8,000 was paid to Kachina Ranch around June 2 or June 3, 2019. Meso paid $8,000 each month to Kachina Ranch to rent the Property until August 2021. Sheridan had contacted Kachina Ranch when he became aware that Hsu had failed to pay the rent in May 2019.
Sheridan believed that Plaintiffs were planting vegetables on one acre of the Property and the crops were abandoned when Plaintiffs left the Property. Sheridan did not interfere with any of Plaintiffs' operations and instructed his employees not to bother Plaintiffs. Sheridan began discussions with Wyborny from Kachina Ranch in late May 2019 about the new lease. Sheridan believed that Plaintiffs would continue to farm on their own 10 acres even with the Commercial Lease Agreement.
Dr. Hsu testified. He had two companies including Brothers Farm and Dr. Hsu Organic Group. Most of the money received from his farming on the Property went into Brothers Farm. He first rented the Property from Kachina Ranch in 2015 for a three-year term. There was a renewal of the Lease for another three-year period, set to expire on December 14, 2021. He first started negotiating with Meso in 2018. Meso were interested in the Property because they wanted to do organic farming. Dr. Hsu signed an agreement with Meso on April 21, 2019. Dr. Hsu never received the agreed-upon $6,000 monthly rent from Meso in May 2019.
Dr. Hsu claimed to have mailed a check to Kachina Ranch for $6,000 on May 24, 2019, but Kachina Ranch indicated they were refusing any payment and that they were evicting him. He had no proof of mailing the check. Dr. Hsu acknowledged receiving the five-day notice to quit on May 21, 2019. Dr. Hsu discovered that Meso and Kachina Ranch had entered into their own agreement on June 24, 2019. He believed that Meso made an agreement to use the entire Property and accused them of tearing down his greenhouses. Dr. Hsu acknowledged that he was evicted from the Property and there was a judgment against Plaintiffs. He was unable to continue his farming operations.
Plaintiffs made approximately $15,000 each month and also made more from selling fertilizer. Dr. Hsu insisted the soil improvements with his fertilizer to the Property were worth one million dollars.
Dr. Hsu agreed that the Lease precluded subleasing. He believed that the agreement with Meso was permissible because he did not consider it a sublease. Meso paid Plaintiffs $26,800 when first executing the agreement for the Property. Plaintiffs stopped planting crops in July 2019 because Kachina Ranch advised them they were being removed from the Property.
Wyborny testified. Wyborny signed the Commercial Lease Agreement between Kachina Ranch and Meso on June 1, 2019. Wyborny had discussions with representatives from Meso about the lease agreement during the last few days of May 2019; he believed it was after the unlawful detainer action had been filed. Wyborny "imagined" he received payment from Meso on June 1, 2019, but would have to look at the entire agreement in order to determine the payments. Wyborny informed Meso that an unlawful detainer action had been filed against Plaintiffs and that it would "have to run its course." Wyborny never received a check from Plaintiffs for the May 2019 rent. Wyborny did not recall that he advised Plaintiffs that they were in default due to an impermissible sublease; the reason for the breach was nonpayment of rent. Plaintiffs were already in breach of the Lease when Wyborny began negotiating with Meso.
Several exhibits were admitted including the Lease executed on July 15, 2015, for the Property (Exhibit 1). The term was for three years and the rent was $2,000 each month Rent was due on the 15th day of each month. The Lease included Article 8- Default. Under Article 8.1, subdivision (a), Plaintiffs would be in default if they failed to pay rent and such default continued after a five-day written notice. Article 8.1, subdivision (e) provided for default if "Tenant purports to assign this Lease, or sublet all or a portion of the Premises, in violation of the terms hereof." Plaintiffs could seek permission to sublet or assign the Lease but had to seek permission from Kachina Ranch first and it had the right of refusal. As its remedy, Kachina Ranch could terminate the Lease and was entitled to damages. The Lease was signed by Dr. Hsu and Wyborny.
The unlawful detainer action filed on May 30, 2019, by Kachina Ranch against Plaintiffs was admitted. Kachina Ranch filed the unlawful detainer based solely on the nonpayment of rent. The Lease renewal between Plaintiffs and Kachina Ranch executed on June 22, 2018, was admitted. The Lease was extended to December 14, 2021; the rent was increased to $6,000 a month; and Plaintiffs leased additional acreage. The five-day notice to quit was provided to the court. Plaintiffs were served for nonpayment of rent from May 15, 2019, to June 14, 2019, and the action was signed by Kachina Ranch on May 21, 2019. The judgment on the unlawful detainer was admitted. The trial court found in favor of Kachina Ranch and awarded it damages in the amount of $15,278.66 for rent and holdover damages.
Another exhibit admitted was a photograph of the first page of the Commercial Lease Agreement dated June 1, 2019, between Kachina Ranch and Meso. The commencement of payment of rent was June 1, 2019, in the amount of $8,000. The Commercial Lease Agreement was signed by Wyborny and Sheridan. Tax returns were also admitted. Brothers Farm in 2017 had a profit of $174,112; in 2018 $144,996; and in 2019 a gross profit of $88,250. The amount in 2019 was less because of being removed from the Property.
The trial court ordered that each of the parties submit closing briefs referencing the evidence that was presented during the trial and how it related to the claims in the Complaint. The parties were to provide legal authority. The parties submitted the written briefing; Plaintiffs did not include the briefs in the record on appeal.
C. TRIAL COURT RULING
The trial court issued a written ruling after the bench trial. It acknowledged it relied on evidence presented at the bench trial, and the briefing submitted by the parties. A motion for nonsuit that was brought by Wyborny as an individual was granted. No party asked for a statement of decision.
Some of the causes of action in Meso's cross-complaint were stricken but they are not relevant to the issues on appeal.
The trial court found in favor of Kachina Ranch on the Complaint. It found, "Regardless of why Dr. Hsu failed to pay the rent due in May 2019, he failed to pay it." The trial court rejected that it reconsider the judgment in the unlawful detainer action. It also held, "There was no evidence that Kachina Ranch evicted Dr. Hsu prior to the judgment in the unlawful detainer action, when, of course, it was entitled to do so." It further held, "Nor was it a breach of the obligations Kachina Ranch owed to Dr. Hsu under the lease or otherwise to negotiate a lease with [Meso] that would grant them possession of the leased premises once Dr. Hsu's tenancy was terminated. Kachina Ranch did not engage in wrongful conduct by negotiating a lease with a subsequent tenant and doing so does not support the cause of action for intentional interference with prospective economic advantage. Kachina Ranch was under no obligation to refrain from seeking-through the unlawful detainer action-to regain possession of the leased property and to obtain a judgment forfeiting the lease. That it did so or that it entered into a lease with [Meso] that would give them possession after Dr. Hsu was no longer entitled to it does not constitute intentional interference with prospective economic advantage. The actions of Kachina Ranch do not constitute a violation of Business and Professions Code section 17200 and even if they did, there is no benefit conferred onto Kachina Ranch that would require restitution to Dr. Hsu. Kachina Ranch's successful bringing of an unlawful detainer action cannot constitute forcible detainer against Dr. Hsu. Because of its findings as stated herein, the Court need not reach the issues argued by Kachina Ranch that Dr. Hsu cannot recover damages because he breached the lease by making the agreement with [Meso]. Therefore, the Court finds in favor of Kachina Ranch and against Dr. Hsu on all causes of action." Plaintiffs were successful against Meso. The trial court found, "[F]ailing to pay the May rent and then leasing the subject property without terminating the agreement with Dr. Hsu constitutes intentional interference with Dr. Hsu's prospective economic advantage and unfair competition as well as breach of the contract." Plaintiffs were awarded $388,803 in lost profits and $8,000 damage to equipment on the Property to be paid by Meso.
DISCUSSION
Initially, we note that Plaintiffs have failed to provide the standard of review on appeal. Here, although the trial court provided a written ruling, neither party requested a statement of decision. "Where, as here, no statement of decision was requested, all intendments will favor the trial court's ruling and it will be presumed on appeal that the trial court found all facts necessary to support the judgment." (Schubert v. Reynolds (2002) 95 Cal.App.4th 100, 104 (Schubert).)
A. INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE
Plaintiffs first claim that the trial court erred by denying their claim as to the cause of action of intentional interference with prospective economic advantage. Plaintiffs claim that Kachina Ranch engaged in wrongful conduct by negotiating a new lease with Meso while they were still entitled to possession of the Property. Kachina Ranch was unlawfully enriched by collecting double rent on the Property for at least two months.
Intentional interference with prospective economic advantage requires"' "(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant." '" (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.) "To establish a claim for interference with prospective economic advantage . . . a plaintiff must plead that the defendant engaged in an independently wrongful act." (Id. at p. 1158.) "[S]pecific intent is not a required element of the tort of interference with prospective economic advantage. While a plaintiff may satisfy the intent requirement by pleading specific intent, i.e., that the defendant desired to interfere with the plaintiff's prospective economic advantage, a plaintiff may alternately plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action." (Id. at p. 1154.)
The trial court rejected Plaintiffs' claim as it found that Kachina Ranch was entitled to negotiate a lease with Meso for the Property for when it regained possession. The trial court held, "that [Kachina Ranch] entered into a lease with [Meso] that would give them possession after Dr. Hsu was no longer entitled to it does not constitute intentional interference with prospective economic advantage." Hence, the trial court rejected that Kachina Ranch was leasing the Property to Meso prior to regaining possession. There was evidence that Meso actually paid rent to Kachina Ranch commencing on June 1, 2019. There was also evidence that Wyborny advised Meso that an unlawful detainer action had been filed against Dr. Hsu and that it would have to run its course. The trial court also found that Plaintiffs were not evicted prior to the unlawful detainer action. Plaintiffs had full use of the Property until the unlawful detainer judgment. The fact that Kachina Ranch was also leasing a portion of the Property to Meso and receiving rent did not interfere with Plaintiffs' economic advantage with Meso or its customers. Plaintiffs were removed from the Property due to nonpayment of rent and an unlawful detainer judgment which was not appealed.
The trial court could reasonably conclude that none of the actions by Kachina Ranch constituted interference with Plaintiffs' prospective economic advantage as they did not engage in wrongful conduct. Kachina commenced unlawful detainer proceedings prior to negotiating a new lease with Meso, and Plaintiffs were removed from the Property due to the nonpayment of rent. There was no evidence that Kachina Ranch's lease with Meso was the cause for Plaintiffs not being able to use the Property or economic losses. The trial court properly denied the claim.
B. BUSINESS AND PROFESSIONS CODE SECTION 17200
Plaintiffs claim that Kachina Ranch engaged in unlawful, unfair, or fraudulent business practices in violation of Business and Professions Code section 17200. Plaintiffs' claim appears to be based on Kachina Ranch negotiating the Commercial Lease Agreement with Meso, which they insist resulted in them being evicted. Meso remained on the Property and Kachina Ranch increased its rental income. Plaintiffs further insist that Kachina Ranch injured its customers by forcing them off the Property and preventing them from fulfilling the expectations of their customers to be able to purchase their goods. The trial court disposed of the claim, finding that the actions of Kachina Ranch did not constitute a violation of Business and Professions Code section 17200, and even if they did, there is no benefit conferred onto Kachina Ranch. We must presume the facts support this conclusion. (Schubert, supra, 95 Cal.App.4th at p. 104.)
Business and Professions Code section 17200 et seq. prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. "Written in the disjunctive, Business and Professions Code section 17200 establishes 'three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent.'" (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th 719, 730.) Accordingly, "the plaintiff must establish that the practice is either unlawful (i.e., is forbidden by law), unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is likely to deceive members of the public)." (Albillo v. Intermodal Container Services, Inc. (2003) 114 Cal.App.4th 190, 206.) Prevailing plaintiffs are generally limited to injunctive relief and restitution. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1144.)
Plaintiffs fail to provide any relevant legal authority that negotiating a new lease with a tenant when the existing tenant is being evicted is somehow unfair, fraudulent or unlawful. "To demonstrate error, appellant must present meaningful legal analysis supported by citations to authority . . ., conclusory claims of error will fail." (In re S.C. (2006) 138 Cal.App.4th 396, 408 (S.C.).) Plaintiffs bald assertion that negotiating a new lease during the unlawful detainer action was unlawful, unfair, or fraudulent does not support a claim under Business and Professions Code section 17200.
For the first time in the reply brief, Plaintiffs claim that Kachina Ranch's actions of leasing the Property to Meso prior to the unlawful detainer judgment prevented Meso from paying rent to Plaintiffs which led to the unlawful detainer judgment. Leasing to Meso prior to the judgment in the unlawful detainer was an "unfair or fraudulent business act" that established liability for unfair competition. We do not consider arguments raised for the first time in the reply brief which could have been raised in the opening brief. (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 158)
Moreover, Plaintiffs defaulted on the Lease by failing to pay rent, and Kachina Ranch served Plaintiffs with a five-day notice to pay or quit prior to negotiating with Meso. When Plaintiffs failed to pay, Kachina Ranch commenced unlawful detainer proceedings based on the nonpayment of rent. The nonpayment of rent by Meso to Plaintiffs had nothing to do with the Commercial Lease Agreement between Meso and Kachina Ranch. There was no unlawful, unfair, or fraudulent business practice by Kachina Ranch in bringing the unlawful detainer action. Moreover, the trial court found that Plaintiffs were not evicted prior to the unlawful detainer judgment and that it could negotiate the lease with Meso for when Plaintiffs were removed from the Property. Again,,we must presume that the trial court found facts sufficient to support this conclusion. (Schubert, supra, 95 Cal.App.4th at p. 104.)
There was nothing unlawful, unfair, or fraudulent about Kachina Ranch's actions. Moreover, any injury to Plaintiffs' business and customers was due to the unlawful detainer brought for nonpayment of rent, which was already decided against Plaintiffs and to which Plaintiffs never appealed. Plaintiffs failed to establish any unfair, fraudulent or unlawful business practice engaged in by Kachina Ranch, and the claim was properly denied by the trial court.
C. FORCIBLE DETAINER
Plaintiffs finally claim that this court should reverse the trial court's ruling in favor of Kachina Ranch on the cause of action of forcible detainer and award restitution.
Plaintiffs contend that at the beginning of May 2019, they were in "peaceful" existence on the Property until the "conduct" of Kachina Ranch caused them to be "turned out of the" Property.
A forcible detainer occurs when a person either "by force, or by menaces and threats of violence, unlawfully holds and keeps the possession of any real property, whether the same was acquired peaceably or otherwise," or "Who, in the night-time, or during the absence of the occupant of any lands, unlawfully enters upon real property, and who, after demand made for the surrender thereof, for the period of five days, refuses to surrender the same to such former occupant." (Code of Civ., Proc., § 1160, subd. (a)(1) &(2).) "On the trial of any proceeding for any forcible entry or forcible detainer, the plaintiff shall only be required to show, in addition to the forcible entry or forcible detainer complained of, that he was peaceably in the actual possession at the time of the forcible entry, or was entitled to the possession at the time of the forcible detainer." (Code of Civ. Proc., § 1172.)
Plaintiffs' argument is inadequate. Plaintiffs fail to identify what evidence was introduced at the bench trial supporting force, menace or threats of violence that were exhibited by Kachina Ranch in order for it to take "unlawful possession" of the Property. "To demonstrate error, appellant must present meaningful legal analysis supported by citations to authority and citations to facts in the record that support the claim of error. [Citations.] When a point is asserted without argument and authority for the proposition, 'it is deemed to be without foundation and requires no discussion by the reviewing court.' [Citations.] Hence, conclusory claims of error will fail." (In re S.C., supra, 138 Cal.App.4th at p. 408.) Plaintiffs' three paragraph argument without proper citation to the record of the threats or menace by Kachina Ranch, or its unlawful possession, forfeits the claim on appeal.
Moreover, Kachina Ranch initiated unlawful detainer proceedings against Plaintiffs which resulted in their removal from the Property. As stated, the basis of Plaintiffs' removal from the Property was the unlawful detainer, not due to Kachina Ranch using force, menace or threats of violence. Kachina Ranch was in lawful possession of the Property based on Plaintiffs' breach of the lease and the judgment in the unlawful detainer. The trial court properly denied Plaintiffs' claim of forcible detainer.
DISPOSITION
The judgment is affirmed in full. Kachina Ranch is awarded their costs on appeal as the prevailing party.
We concur: RAMIREZ P. J., McKINSTER J.