Filed 4/25/14 R City v. Security Building Loft Partners CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 

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publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

R CITY, INC.,

Plaintiff and Appellant,

v.

SECURITY BUILDING LOFT 

PARTNERS et al.,

Defendants and Respondents.

 B246119

 (Los Angeles County

 Super. Ct. No. BC441922)

APPEAL from a judgment of the Superior Court of Los Angeles County, 

Richard E. Rico, Judge. Affirmed.

The Moore Law Team, Thomas E. Moore III and Nicole V. Economou for 

Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, Jeffrey A. Miller, Brittany H. Bartold and 

Greta A. Katz for Defendants and Respondents.

* * * * * *
2

Plaintiff R City, Inc. (R City), appeals a final judgment in favor of defendants 

and respondents Security Building Loft Partners, L.P. (SBLP) and Simpson Housing, 

L.P. (together the Landlord Defendants), based on the trial court’s grant of summary 

adjudication on R City’s claims for intentional and negligent interference with 

economic relations and a directed verdict against R City on its remaining claims for 

conversion, theft, and negligence. We affirm.

BACKGROUND

This case arose on July 3, 2010, at 3:00 a.m., when R City was dispossessed of 

a wine bar it operated in downtown Los Angeles for a year and a half called “The 

Must Wine Bar.” Several years before R City moved in, SBLP entered into a lease 

with a tenant named Weeneez, LLC (Weeneez), which began operating two concepts 

in the space: a hot dog restaurant and an art gallery. Signed in June 2005, the lease 

was set to expire on January 31, 2012, with a five-year extension option Weeneez 

could exercise. As relevant to this appeal, the lease contained a provision voiding

any subleases entered without the prior written consent of SLBP: “Tenant shall not, 

voluntarily or by operation of law, assign, sell, convey, sublet or otherwise transfer 

all or any part of Tenant’s right or interest in this Lease, or all [sic] any other person 

or entity to occupy or use all or any part of the Premises (collectively called 

‘Transfer’) without first obtaining the written consent of Landlord, which consent 

shall not unreasonably be withheld, conditioned or delayed. Any Transfer without 

the prior written consent of Landlord shall be void and shall, at the election of the 

Landlord, be a Default.”

The lease defined a “transfer” to include “(a) an entity or person other than 

Tenant becoming the tenant hereunder by assignment, merger, consolidation, 

dissolution, or reorganization; (b) a transfer of any ownership interest in Tenant 

(unless Tenant is an entity whose stock is publicly traded) which (itself or in a 

combination with all previous Transfer [sic]) changes ownership in Tenant by 25% 
3

or more or results in a change in the current control of Tenant; (c) a grant of a 

license, concession, or other right of occupancy of any portion of the Premises; or (d) 

the use of the Premises by any party other than Tenant.” The lease also provided, in 

the event of a sublease or transfer, SLBP would be entitled to any rents collected by 

Weeneez exceeding its rent paid to SLBP; the option to extend the lease would be 

“null and void”; any sublease would be “subordinate and subject to” the provisions in 

the lease; and if the lease was terminated during the term of any sublease, SLBP had 

the right to treat the sublease as cancelled and repossess the premises or require the 

subtenant to pay the rental rate under the sublease while being subject to the terms of 

the lease.

Weeneez began looking for an investor in 2007. It first initiated a relationship 

with an individual named Michael Franz, who received a 10 percent ownership 

interest in Weeneez, but Franz abandoned the deal in September 2008. On 

November 5, 2008, Weeneez and R City entered into an agreement governing

R City’s right to occupy just over half of Weeneez’s leased space for operating The 

Must Wine Bar (hereafter the Operating Agreement). Under the Operating

Agreement, Weeneez granted R City “an exclusive, non-transferable, and non-sublicensable right” to operate The Must Wine Bar on the premises until January 31, 

2012, i.e., the end of the initial lease term. In exchange, R City paid Weeneez 

$30,000 for a 10 percent ownership interest in Weeneez, plus a $4,000 per month 

“working capital payment” that would increase in direct proportion to Weeneez’s 

rent under the lease. R City would keep its profits and pay a proportionate share of 

utilities. Further, if Weeneez exercised its option under the lease to extend its term, 

R City was given the opportunity to extend the Operating Agreement for the same 

period. If Weeneez did not exercise its extension option, R City had a right of first 

refusal to do so. Conversely, the Operating Agreement would “automatically 

terminate” upon any termination of the lease. The Operating Agreement declared the 

parties were “independent contractors. There is no relationship of agency, 
4

partnership, joint venture, employment, or franchise between the parties. Neither 

party has authority to bind the other or incur any obligation on behalf of the other.”

The Operating Agreement required Weeneez to modify its Alcoholic 

Beverage Control 41 license (the ABC 41 license) to support R City’s sales of beer 

and wine at The Must Wine Bar. In reliance on this provision, R City began buying 

beer and wine under Weeneez’s ABC 41 license. However, Weeneez never 

perfected an ABC 41 license covering The Must Wine Bar’s purchase and sales of 

alcoholic beverages, however.

The Operating Agreement did not refer to the parties’ relationship as a 

sublease and Meroojohn Ordubedgian, R City’s president at the time who negotiated 

the Operating Agreement, explained in a contemporaneous e-mail to Weeneez’s CEO 

Sid Carter, “The operating agreement is good for just getting around the lease. Other 

then [sic] that it will not hold up in a court of law if we are sued.” At trial, 

Ordubedgian testified Weeneez was experiencing financial difficulties and he 

believed Carter was trying to avoid a sublease so he would not have to give the 

Landlord Defendants some of the rents from a sublease. Carter testified he would 

never have created a subtenant relationship in “clear violation” of the master lease.

In anticipation of opening The Must Wine Bar, R City spent more than 

$250,000 on construction and furniture to improve the premises, with no contribution 

from Weeneez. The Must Wine Bar opened in January 2009 and by the middle of 

2009, it was consistently profitable, with revenues between $100,000 and $120,000 

per month from wine, beer, and food sales. 

In March 2009, Weeneez sent SLBP a partially executed copy of the 

Operating Agreement. Sharon Lee of SLBP1 wondered if the deal had already been 

completed and expressed confusion over whether the Operating Agreement might 

 

1

In July 2010, Sharon Lee changed her name from Sharon Reynolds. We will 

refer to her by her current name of Lee.
5

have created a sublease. She noted if a sublease was created, profits from it belonged 

to SLBP. She also pointed out the provision in the Operating Agreement allowing 

R City to exercise the extension option in Weeneez’s place was inconsistent with the 

terms of the lease declaring the extension option void in the event of a sublease. 

By June 2009, SLBP was still discussing the “sublease” situation and 

requested R City to list it as an additional insured on R City’s insurance. Rachel 

Thomas of R City also contacted SLBP, indicating it was “sublet[ting]” from 

Weeneez. Lee told Thomas R City was not allowed to sublease the space. 

According to Thomas, an SLBP representative visited The Must Wine Bar and saw it 

and the Weeneez restaurant operated in separate spaces.

In September 2009, Carter of Weeneez wrote to Lee requesting a lengthy 

extension of the lease. In response, Lee requested Weeneez provide proof of valid 

liquor liability insurance, and noted the insurance certificate SLBP recently received 

for The Must Wine Bar was not sufficient because “The Must Wine Bar is not our 

tenant.” Lee also asked whether The Must Wine Bar was “occupying space under 

Weenez, LLC [sic] or as a sub-lease tenant? A transfer of any kind is prohibited 

under your current lease agreement unless you have received prior written consent by 

landlord. It is imperative that we have a solid understanding of who Weenez, LLC 

[sic] is and what its current financial strength looks like in order to consider any 

extension of the term.” Lee later explained this discussion was intended to clarify the 

relationship among Weeneez, Franz (Weeneez’s former investor), and R City. 

Carter responded with a detailed justification for not considering R City a 

subtenant. He explained Franz had since terminated his participation in Weeneez and 

R City made an investment in Weeneez in exchange for 10 percent equity in the 

business. Thus, “R City is currently operating The Must [Wine Bar] under Weeneez 

LLC. Section 3 of the [Operating Agreement] clearly states that R City is an investor 

in Weeneez LLC, not a sub-tenant. The agreement between Weeneez and R City is 

unequivocal on this point.” Carter pointed out certain provisions in the Operating 
6

Agreement that would not have been included in a subtenant agreement, and he noted 

a sublease would have precluded Weeneez and R City from sharing a kitchen under 

Los Angeles County rules and regulations, which they were doing.

In late 2009, R City discovered online advertisements indicating Weeneez was 

selling a “turnkey restaurant and bar,” giving the mistaken impression R City’s 

business was for sale, and that Weeneez was showing the space to potential buyers. 

R City informed SLBP of the situation, but SLBP did not believe there was anything 

it could do. R City’s attorney wrote to Weeneez and demanded arbitration to stop 

Weeneez from showing the space to potential buyers and to resolve issues 

surrounding the liquor license, which had been ongoing. Thomas notified Lee of 

these issues and claimed R City was Weeneez’s subtenant. Lee asked for a copy of 

any subtenancy agreement, but Thomas only produced the Operating Agreement. 

Lee did not believe R City was a subtenant because SLBP did not consent to the 

sublease and there was no written sublease agreement. 

In early 2010, Weeneez contacted a business broker to sell its business and 

approached SLBP about terminating its lease early in favor of a proposed buyer, 

David McGrath and his company, D&M Restaurant Group, Inc. (D&M). SLBP 

asked whether The Must Wine Bar would continue to operate in the space and again 

wanted clarification whether Franz and R City had each terminated any “partnership”

with Weeneez. If not, SLBP wanted to know whether they were “on-board or against 

the sale of Weeneez” because SLBP was “not interested in getting tied up in the 

middle of a business dispute between partners in Weeneez, LLC.” SLBP eventually 

expressed significant concern about the relationship between R City and Weeneez, 

noting SLBP “cannot be placed in the position of solving [Weeneez’s] internal 

business issues with R City.” 

In response to these concerns, Weeneez explained its Operating Agreement 

with R City would expire on the execution of a new lease and McGrath did not intend 

to execute a new agreement with R City. Weeneez represented it was in settlement 
7

discussions with R City over its ownership interest. The proposed purchase 

agreement included all of Weeneez’s assets and excluded R City’s inventory.

A few weeks later, R City contacted SLBP about a battery that had occurred at 

The Must Wine Bar. SLBP told R City to provide an incident report to the site 

manager because one was required in order to notify SLBP’s insurer of the incident. 

Thomas believed this was necessary because SLBP regarded R City as a subtenant. 

After this incident, SLBP did not have further direct contact with R City.

Eventually, SLBP and Weeneez executed a lease termination agreement, in 

which Weeneez represented it had not assigned or conveyed any of its rights under 

the lease. In an initial draft of this agreement, the lease was scheduled to end on July 

3, 2010, with a default time of midnight. Weeneez requested the lease instead

terminate at 2:59 a.m. and D&M’s new lease start at 3:00 a.m.; it also explained there 

would be an “informal ‘transition period’ period from 3:00 a.m. until later that 

morning to allow Weeneez to remove personal property not included in the sale.” 

When SLBP inquired why that time was necessary, Weeneez explained that would be 

the best time to avoid parking issues and avoid interruption with the opening and 

closing of The Must Wine Bar, which stayed open until 2:00 a.m. SLBP and 

Weeneez also executed an agreement requiring Weeneez to indemnify SLBP against 

any claims by R City and requiring Weeneez to deposit $37,500 into an escrow 

account.2

SLBP executed a new lease with D&M as the tenant in the space occupied by 

the Weeneez restaurant and The Must Wine Bar. As part of that lease, the Landlord 

Defendants obtained “triple net” terms that shifted certain costs to D&M, which was 

not a feature of the lease with Weeneez.

At 3:00 a.m. on July 3, 2010, representatives of D&M and Weeneez removed 

 

2 D&M and Weeneez also executed an agreement whereby Weeneez would 

indemnify D&M against any claims by R City.
8

R City’s personal property from The Must Wine Bar and placed it in storage, posted 

certain notices, changed the locks, and padlocked the doors with other furnishings 

still inside. R City did not know The Must Wine Bar was going to be closed or its 

property removed.3

Based on these acts, R City filed a complaint against Weeneez, McGrath, the 

Landlord Defendants, and Lee, among others, for (1) conversion, (2) possession of 

personal property, (3) theft, (4) fraudulent concealment, (5) intentional interference 

with economic relationship, (6) negligent interference with economic relationship,

(7) trespass, (8) unfair competition against McGrath and (9) negligence. Because the 

Landlord Defendants did not personally participate in the removal of R City’s 

property, R City alleged the Landlord Defendants engaged in a conspiracy to keep 

the removal secret from R City and to participate in the planned conversion of 

R City’s property.

The Landlord Defendants filed a motion for summary adjudication of R City’s 

claims for intentional and negligent interference with economic relations, which the 

trial court granted. The court implicitly adopted the Landlord Defendants’ position 

R City’s damages for these claims were limited to lost profits, and the court found 

any lost profits were speculative on two grounds. First, R City did not offer 

sufficient evidence to establish it had a sublease because the undisputed facts 

demonstrated the lease required written consent for any sublease and the “purported 

notice to the Landlord and emails in which the Landlord inquired about the existence 

of a sublease are insufficient as a matter of law as they do not constitute written 

 

3 R City claims the Landlord Defendants’ staff at the building did not know the 

transition would take place, but the portion of the trial transcript R City cites does not 

support this point. At trial, Thomas testified the Landlord Defendants’ property 

manager was “surprised” the locks had been changed, but when she was asked 

whether he knew in advance of the planned removal of R City’s property, an 

objection to the question was sustained and Thomas did not answer. 
9

consent by the Landlord as required by” the lease. Second, R City did not have a 

valid liquor license and R City did not provide evidence that The Must Wine Bar

could have operated on food sales alone, without the sale of alcohol.

The Landlord Defendants later filed a motion for summary judgment or 

summary adjudication on the remaining claims, which the trial court granted in part 

and denied in part. It granted the motion on R City’s claims for trespass and 

fraudulent concealment based on R City’s concession it could not prove those claims 

in light of the court’s prior ruling that it had no sublease. The court also granted the 

motion as to Lee in her individual capacity. The court denied the motion on R City’s 

conversion, possession of personal property, and theft claims, listing a number of 

facts raising a triable issue whether the Landlord Defendants were aware R City’s 

inventory was going to be taken. Those facts included that the lease terminated at 

3:00 a.m.; Weeneez intended to remove personal property from premises not 

included in the sale, which would have included some of R City’s property; the 

Landlord Defendants knew R City had spent $250,000 on renovations; R City had 

complained Weeneez tried to sell The Must Wine Bar without R City’s consent; and 

the unusual prefunded indemnity agreement between the Landlord Defendants and 

Weeneez protecting the Landlord Defendants from any claims by R City. The court 

also denied the motion for R City’s negligence claim based on the same facts, 

reasoning the Landlord Defendants had a duty to refrain from participating in the 

plan to deprive R City of its property. The court found triable issues of fact on the 

Landlord Defendants’ claim R City was the wrong entity sued and rejected the 

Landlord Defendants’ unclean hands defense as unrelated to R City’s conversionbased claims.

A jury trial commenced on R City’s conversion, theft, and negligence claims. 

After the close of evidence, the trial court granted the Landlord Defendants’ motion 

for a directed verdict, concluding they owed no duty to R City and R City failed to 
10

put forward evidence of a conspiracy in which the Landlord Defendants participated. 

The court entered judgment against R City and R City timely appealed.

DISCUSSION

A. Directed Verdict

1. Legal Standard

“‘[A] motion for a directed verdict is in the nature of a demurrer to the 

evidence. [Citations.] . . . A directed verdict may be granted only when, 

disregarding conflicting evidence, giving the evidence of the party against whom the 

motion is directed all the value to which it is legally entitled, and indulging every 

legitimate inference from such evidence in favor of that party, the court nonetheless 

determines there is no evidence of sufficient substantiality to support the claim or 

defense of the party opposing the motion, or a verdict in favor of that party. 

[Citations.]’ [Citation.] On appeal we apply the substantial evidence standard of 

review.” (Eucasia Schools Worldwide, Inc. v. DW August Co. (2013) 218 

Cal.App.4th 176, 180-181.)

2. Conversion and Theft Claims

Because the Landlord Defendants did not personally convert R City’s 

property, R City’s theory of liability for conversion and theft against them rested on 

allegations of civil conspiracy.4 To impose liability on a theory of civil conspiracy, 

R City must prove (1) the formation and operation of a conspiracy, (2) wrongful 

conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful 

conduct. (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1581

(Kidron).) The conspirators must “‘agree[] to a common plan or design to commit a 

tortious act’” with “actual knowledge that a tort is planned and concur in the tortious 

 

4 The parties do not treat civil theft and conversion as different torts, nor shall 

we. 
11

scheme with knowledge of its unlawful purpose.” (Id. at p. 1582.) But actual 

knowledge alone is insufficient; conspirators must also intend to agree and intend to 

commit the target tort. (Id. at p. 1587.)

“While knowledge and intent ‘may be inferred from the nature of the acts 

done, the relation of the parties, the interest of the alleged conspirators, and other 

circumstances’ [citation], ‘“[c]onspiracies cannot be established by suspicions. 

There must be some evidence. Mere association does not make a conspiracy. There 

must be evidence of some participation or interest in the commission of the offense.”’ 

[Citation.] An inference must flow logically from other facts established in the 

action.” (Kidron, supra, 40 Cal.App.4th at p. 1582; see Choate v. County of Orange 

(2000) 86 Cal.App.4th 312, 333 [describing plaintiff’s burden to prove conspiracy as 

“weighty” and “‘[b]are’ allegations and ‘rank’ conjecture do not suffice for a civil 

conspiracy”].) However, “[t]acit consent as well as express approval will suffice to 

hold a person liable as a coconspirator.” (Wyatt v. Union Mortgage Co. (1979) 24 

Cal.3d 773, 785 (Wyatt).)

Civil conspiracy is not independently actionable; it simply imposes liability on 

individuals who do not commit a tort themselves but who share with the tortfeasors a 

common plan to commit a tort. (Kidron, supra, 40 Cal.App.4th at p. 1581; see 

Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) 

Here, R City based its conspiracy claim on conversion, which required R City to 

establish “(1) the plaintiff’s ownership or right to possession of the property; (2) the 

defendant’s conversion by a wrongful act or disposition of property rights; and (3) 

damages.” (Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066.) 

R City argues there was evidence of a “tacit” agreement between the Landlord 

Defendants and Weeneez and D&M to convert R City’s property based on the 

Landlord Defendants’ “wholesale adoption of Carter’s view that R City was a 

‘partner’ whose rights could be terminated, the Landlord Defendants’ acceptance of a 

prefunded indemnity agreement in lieu of a R City settlement, the silence about the 
12

pending transactions in the Landlord Defendants’ dealings with R City and the 

Landlord Defendants’ apparent failure to inform the on site manager . . . of the 

impending change in tenancy.” R City also points to the Landlord Defendants’ 

financial interest in terminating Weeneez’s lease for a more favorable “triple net” 

lease with D&M. 

This was not substantial evidence supporting an inference the Landlord 

Defendants knew Weeneez and D&M intended to convert R City’s personal property 

and intended to assist in the planned conversion during the lease transition. The 

Landlord Defendants certainly approved the termination of Weeneez’s lease at 3:00 

a.m. on July 3, 2010, knowing the Operating Agreement between Weeneez and R 

City would also terminate, and as a result, R City and The Must Wine Bar would 

almost surely be required to vacate the space. But that does not create an inference 

that the Landlord Defendants knew a conversion would occur and agreed to it. When 

R City’s property was removed, no representative from the Landlord Defendants was 

at the premises, and neither Weeneez nor D&M told the Landlord Defendants 

R City’s property would be removed at that time. At best, the Landlord Defendants 

knew Weeneez was selling all the assets of “Weeneez LLC” and Weeneez would be 

given an “informal ‘transition period’ period from 3:00 a.m. until later that morning 

to allow Weeneez to remove personal property not included in the sale.” Weeneez 

explained 3:00 a.m. would be the best time to avoid parking issues and avoid 

interruption with the opening and closing of The Must Wine Bar. To Lee, this 

seemed like a reasonable explanation, although she was annoyed for having to redraft 

the termination agreement and the new lease to state the new time. 

Both Carter of Weeneez and McGrath testified at trial they did not intend to 

convert R City’s property when they removed it. Even if the jury disbelieved them, 

Lee testified without contradiction that no one expressed to the Landlord Defendants 

a plan to take R City’s property. Nor was she ever told to conceal the lease 

negotiations with D&M from R City. She explained at trial she obtained the 
13

indemnity agreement from Weeneez because she was aware of the disputes between 

Weeneez and R City, not because she anticipated Weeneez and D&M might commit 

a tort against R City. Indeed, she was informed Weeneez and R City were in 

settlement negotiations over R City’s investment.

R City analogizes to Wyatt, but that case is readily distinguishable. There the 

Supreme Court found substantial evidence of a conspiracy among “a tightly knit, 

family-oriented business operation under [an individual appellant’s] close personal 

control,” and that appellant “owned all or a controlling interest in each of the 

affiliated corporations. Each of the other individual appellants was an officer or 

director of one or more of the corporations and each was active in some management 

position at some time during the years when the conspiracy is alleged to have 

occurred.” (Wyatt, supra, 24 Cal.3d at p. 785.) Likewise, all the corporate appellants 

were headquartered in the same building (id. at p. 786), and the evidence showed 

company-wide policies and instructions (id. at p. 785). 

Here, there was no such “tightly knit” operation and no policies or instructions 

from the Landlord Defendants to remove, let alone convert, R City’s property. 

Instead, R City’s theory that the Landlord Defendants entered a conspiracy to commit 

conversion rested on suspicions and speculation arising purely from the their 

involvement in the lease transition with Weeneez and D&M, not reasonable 

inferences drawn from the evidence. Thus, the trial court properly granted a directed 

verdict to the Landlord Defendants on R City’s conversion and theft claims.

3. Negligence

To prove negligence, a plaintiff must establish duty, breach, causation, and

damages. (Smith v. Freund (2011) 192 Cal.App.4th 466, 472.) The trial court’s 

directed verdict ruling and the parties’ arguments on appeal focus on whether the 

Landlord Defendants owed a duty of care to R City. The issue of duty is a question 

of law we review de novo. (Pedeferri v. Seidner Enterprises (2013) 216 Cal.App.4th 

359, 364 (Pedeferri).)
14

“Our first step is to articulate the duty at issue.” (Pedeferri, supra, 216 

Cal.App.4th at p. 364.) R City concedes the Landlord Defendants would not 

normally be liable for the torts committed by third parties, but argues the Landlord 

Defendants owed a duty to notify R City if they were “on notice that some other 

person will violate the law,” citing CACI No. 411 and Bigbee v. Pacific Tel. & Tel.

Co. (1983) 34 Cal.3d 49, 58 (Bigbee). CACI No. 411 states: “Every person has a 

right to expect that every other person will use reasonable care and will not violate 

the law, unless he or she knows, or should know, that the other person will not use 

reasonable care or will violate the law.” (Brackets omitted.) Stated somewhat 

differently, “‘[i]f the likelihood that a third person may act in a particular manner is 

the hazard or one of the hazards which makes the actor negligent, such an act 

whether innocent, negligent, intentionally tortious, or criminal does not prevent the 

actor from being liable for harm caused thereby.’ [Citations.]” (Bigbee, supra, at p. 

58.)5

A foundational requirement of R City’s theory is actual or constructive 

knowledge some other party would “violate the law.” R City argues the Landlord 

Defendants had “ample reason to know” Weeneez and D&M planned to violate the 

law because they “were seeking to close a fraudulent sale of R City’s business to 

McGrath, to dispossess R City and to convert its property.” But this formulation is 

too broad. In the trial court, R City did not seek to impose liability on the Landlord 

 

5 The Landlord Defendants offer a different formulation of duty, citing the rule 

that “[r]ecognition of a duty to manage business affairs so as to prevent purely 

economic loss to third parties in their financial transactions is the exception, not the 

rule, in negligence law. Privity of contract is no longer necessary to recognition of a 

duty in the business context and public policy may dictate the existence of a duty to 

third parties.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 

58 (Quelimane).) Quelimane then lists a number of factors to consider in 

determining whether a duty exists in a particular case. (Ibid.) We need not decide 

whether the Landlord Defendants’ formulation applies because, even assuming R 

City’s theory applies, it was not satisfied in this case.
15

Defendants based on a fraudulent sale of R City’s business. Instead, R City’s theory 

of duty rested on the Landlord Defendants’ actual or constructive knowledge of the 

planned conversion of R City’s property. In its complaint, R City alleged the 

Landlord Defendants, “having been put on notice of R City’s rights under the 

[Operating Agreement] as well as the desire of the Weeneez’ Principals to dispossess 

R City secretly and at night, owed R City a duty of reasonable care: (i) to investigate 

R City’s rights fully, (ii) to refrain from participating in any conduct that would 

infringe the rights for which they had notice, and (iii) to exercise due care with 

respect to the personal property.” In denying summary adjudication of this claim, the 

trial court explained, “Plaintiff is not arguing that Defendants had a duty of care to 

‘not enter into a new lease agreement,’ but that Defendants owed a duty of care to 

refrain from participating in conduct that would infringe on Plaintiff’s rights of which 

Defendants had notice. The alleged misconduct at issue is Defendants’ alleged 

participation in a conspiracy to deprive Plaintiff of possession of its personal 

property.” Likewise, in opening statements, R City argued its damages for both its 

negligence and conversion claims were “the value of the property that was taken, 

ruined, destroyed. And that would be in the neighborhood of $150,000.” And in the 

arguments regarding the directed verdict, the Landlord Defendants’ attorney stated 

the duty issue “comes down to what occurred on July 3, 2010, when the personal 

property of R City . . . was removed from the premises.” In response, R City’s 

attorney did not correct that statement, but argued the Landlord Defendants “either 

knew or should have known that Carter and McGrath were prepared to violate the 

law.”

With the relevant question properly framed, we find the Landlord Defendants 

owed no duty to R City because they had no reason to know Weeneez and D&M 

planned to violate the law by converting R City’s property. R City relies on the 

following facts: Thomas complained to the Landlord Defendants that Weeneez was 

trying to sell its business on a “turnkey basis”; the Landlord Defendants knew R City 
16

had invested $250,000 in The Must Wine Bar; Weeneez told the Landlord 

Defendants the Operating Agreement with R City would terminate when the lease 

terminated; R City did not know about the sale of Weeneez to McGrath and D&M; 

Weeneez prefunded an indemnity agreement with the Landlord Defendants; and 

Weeneez and D&M wanted to terminate the lease at 3:00 a.m. on July 3, 2010. As 

with R City’s conspiracy claim, none of these facts would have put a reasonable 

person in the Landlord Defendants’ position on notice that Weeneez and D&M 

planned to convert R City’s property while transitioning the lease. Without 

constructive knowledge of the impending violation of the law, the Landlord 

Defendants did not owe any duty to R City. Thus, the trial court properly granted a 

directed verdict on this claim.6

B. Summary Adjudication

“Summary judgment or summary adjudication is appropriate when no triable 

issue of material fact remains and the moving party is entitled to judgment or 

adjudication as a matter of law. [Citations.] A trial court’s decision on a motion for 

summary judgment or summary adjudication is reviewed de novo, viewing the 

evidence in the light most favorable to the nonmoving party. [Citations.]” (Conejo 

Wellness Center, Inc. v. City of Agoura Hills (2013) 214 Cal.App.4th 1534, 1548; see 

Code Civ. Proc., § 437c, subds. (c), (f).)

The trial court granted summary adjudication on R City’s claims for 

intentional and negligent interference with economic relations because it found 

R City’s damages were limited to lost profits and any lost profits were speculative on 

two grounds: R City did not have a sublease with the Landlord Defendants and 

 

6 R City argues its negligence claim would be stronger if it were a subtenant of 

Weeneez. As explained below, we find no triable issue of fact on that point, 

rendering this argument moot.
17

R City did not have a valid liquor license. We find summary adjudication proper on 

the first ground, so we need not address the second.

To establish intentional or negligent interference with economic relations, a 

plaintiff must prove economic harm caused by a defendant’s wrongful intentional or 

negligent conduct independent of the interference. (See Korea Supply Co. v. 

Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 [intentional interference]; 

Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1078 (Venhaus) [negligent 

interference].) Generally, the measure of damages for interference claims is “‘an 

amount that will reasonably compensate plaintiff for all loss or harm, provid[ed] [the 

jury] find[s] it was [or will be] suffered by plaintiff and caused by the defendant’s 

conduct.’” (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 

232.) One common form of damages for these kinds of business torts is lost profits. 

(See Parlour Enterprises, Inc. v. Kirin Group, Inc. (2007) 152 Cal.App.4th 281, 287 

[“‘Damage awards in injury to business cases are based on net profits,’” (Quoting 

Electronic Funds Solutions LLC v. Murphy (2005) 134 Cal.App.4th 1161, 1180.)]; 

see also Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 883.) Any damages 

must be reasonably certain and cannot be “‘speculative, remote, imaginary, 

contingent, or merely possible.’” (Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 

953, 989.)

To conclude R City’s lost profits damages were speculative, the trial court 

found no sublease existed because the master lease provided that any sublease 

without written consent of the Landlord Defendants was “void and shall, at the 

election of the Landlord, be a Default,” and no triable issue of material fact that the 

Landlord Defendants did not consent in writing to a sublease with R City. R City 

attempts to get around this conclusion with a two-step argument. First, it argues 

notwithstanding the terms of the master lease, the facts raised a triable issue whether 

the Landlord Defendants’ conduct created a landlord/subtenant relationship with 
18

R City. Second, because R City was a subtenant, the provision in the master lease 

declaring void any sublease without consent merely rendered the sublease voidable

as a matter of law, requiring the Landlord Defendants to affirmatively declare the 

sublease forfeited, which the Landlord Defendants did not do. (People v. Klopstock

(1944) 24 Cal.2d 897, 901 (Klopstock); Sexton v. Nelson (1964) 228 Cal.App.2d 248, 

258 (Sexton).) R City’s argument fails at both steps.7

R City cites the following evidence to argue a triable issue of fact existed over 

whether the Landlord Defendants’ conduct created a landlord/subtenant relationship: 

the Landlord Defendants were given a copy of the Operating Agreement a year 

before terminating the master lease; the Landlord Defendants expressed concern 

about whether the Operating Agreement was a sublease; R City identified itself as a 

subtenant; a representative of the Landlord Defendants observed The Must Wine Bar

and the Weeneez restaurant operating in separate spaces; the Landlord Defendants 

asked to be added to R City’s insurance, which spread the risk of any loss among the 

Landlord Defendants, Weeneez, and R City; the Landlord Defendants asked R City 

to submit an incident report and certificate of insurance following a battery on the 

premises; the Landlord Defendants did not declare a default against Weeneez in light 

 

7 According to R City, a landlord/subtenant relationship would have prevented 

the Landlord Defendants and Weeneez from voluntarily terminating the master lease 

without regard to R City’s rights. (See, e.g., Buttner v. Kasser (1912) 19 Cal.App. 

755, 758 [“[A] tenant, who has made a valid sublease, may not by a voluntary 

surrender of his term defeat or affect the term of his subtenant, who has not 

consented to such surrender.”]; see also Chumash Hill Properties, Inc. v. Peram 

(1995) 39 Cal.App.4th 1226, 1233 [“California law has long held that a tenant’s 

surrender of his estate to the landlord does not destroy the estate of the underlessee if 

the tenant has made an underlessee.” (Citing Buttner.)]) R City also argues a 

landlord/tenant relationship would have created a duty of good faith and fair dealing. 

(See, e.g., Northridge Hospital Foundation v. Pic ‘N’ Save No. 9, Inc. (1986) 187 

Cal.App.3d 1088, 1100-1101.) Because R City’s argument fails for other reasons, 

we assume, without deciding, a landlord/tenant relationship would have created these 

rights.
19

of the Operating Agreement; and the Landlord Defendants terminated the master 

lease when it suited them.

These facts, even if true, could not have created a de facto landlord/subtenant 

relationship between R City and the Landlord Defendants. The Landlord 

Defendants’ actions must be considered against the backdrop of the Operating 

Agreement, which plainly did not create a sublessor/sublessee relationship between 

R City and Weeneez, as Weeneez explained to the Landlord Defendants in detail. “It 

is well recognized that no particular legal terminology is required in the making of a 

lease, but it is essential that the instrument show an intention to establish the 

relationship of landlord and tenant.” (Beckett v. City of Paris Dry Goods Co. (1939) 

14 Cal.2d 633, 636.) While the Operating Agreement required monthly “working 

capital” payments similar to monthly rent and Weeneez once referred to R City’s 

payment as “rent,” the agreement itself did not identify R City as a tenant or 

subtenant and used no language to suggest it was creating a sublease. This was by 

design. The parties avoided creating a sublease in light of the forfeiture clause in the 

master lease. R City’s representative admitted the Operating Agreement sought to 

“get[] around the lease” and Weeneez would have never created a sublease in “clear 

violation” of the master lease. Nor did Weeneez or R City seek the Landlord 

Defendants’ written consent for a sublease, which itself is strong evidence they did 

not intend to create a sublease.

In light of these facts, the Landlord Defendants’ had no reason to question 

Weeneez’s representations that the Operating Agreement was not a sublease, and 

none of R City’s additional facts would be probative of a de facto landlord/subtenant 

agreement. The fact that the Weeneez restaurant and The Must Wine Bar operated in 

separate spaces is entirely consistent with R City being an investor in Weeneez. That 

the Landlord Defendants did not affirmatively declare a default under the master 

lease was unsurprising, since Weeneez represented no sublease had been created. 

And R City’s later claim it was a subtenant was self-serving and inconsistent with the 
20

Operating Agreement and both R City’s and Weeneez’s understanding of it. The 

only potentially probative fact was the Landlord Defendants’ request to be added to 

R City’s insurance and request for R City to submit an incident report and certificate 

of insurance following the on-premises battery, but again, against the backdrop of the 

Operating Agreement, these acts were entirely consistent with treating R City as a 

Weeneez investor operating The Must Wine Bar on the property. Because the 

Landlord Defendants’ conduct did not create a landlord/subtenant relationship, 

R City had no right to continue operating at the property and its lost profits damages 

were speculative.

Further, even if R City was a subtenant, its lost profits damages were still 

speculative. There was no dispute that, if R City had a sublease, it violated the 

master lease because the Landlord Defendants were not asked for, and did not give, 

written consent. Although the master lease declared all unauthorized subleases

“void,” R City cites Klopstock and Sexton to argue its alleged sublease was merely 

voidable at the election of the landlord, and here the Landlord Defendants did not 

take the extra step to declare the sublease forfeited. The Landlord Defendants argue 

Klopstock and Sexton do not apply because neither case involved a lease expressly 

declaring an unauthorized sublease “void,” as does the master lease here.

We need not resolve this disagreement because, even if R City’s purported 

sublease was voidable under Klopstock and Sexton, the Landlord Defendants could 

have at any time declared the sublease forfeited, extinguishing R City’s right to stay 

at the premises. (Klopstock, supra, 24 Cal.2d at p. 901 [“The restriction as to the 

condition of assignment is a personal covenant for the benefit of the lessor and until 

he elects to take advantage of the breach as authorized by law, the assignment 

remains a valid and binding conveyance of the leasehold interest as to all other 

parties.” (Italics added.)]; Sexton, supra, 228 Cal.App.2d at p. 258 [“The breach of a 

provision against assignment confers upon the lessor, at his election, the right to 

effect a forfeiture of the lease in the manner authorized by law.” (Italics added.)].) 
21

Because the Landlord Defendants had the right to evict R City from the property at 

any time as an unauthorized subtenant, R City’s lost profits were purely speculative.8

Absent a sublease, R City claims it had an irrevocable right to remain at the 

premises as a licensee under the Operating Agreement because it spent money on 

improvements for The Must Wine Bar. This argument fails because any alleged 

license was with Weeneez, not the Landlord Defendants, who were not parties to the 

Operating Agreement. (See Cooke v. Ramponi (1952) 38 Cal.2d 282, 286 

[explaining that, when a licensee has expended money in executing a license, the 

license “is declared to be irrevocable to prevent the licensor from perpetrating a fraud 

upon the licensee” (italics added)].)9

R City also argues it incurred other damages besides lost profits in the form of 

$250,000 in expenses for construction and furniture for The Must Wine Bar, which it 

claims it lost “as a result of the Landlord Defendants’ interference with R City’s 

business.” But R City offered no evidence the loss of these past expenses was caused 

by the Landlord Defendants’ alleged interference in R City’s prospective business. 

(See Venhaus, supra, 155 Cal.App.4th at p. 1078 [explaining interference claim 

requires proof defendant’s wrongful conduct “‘caused damage to plaintiff in that the 

relationship was actually interfered with or disrupted and plaintiff lost in whole or in 

part the economic benefits or advantage reasonably expected from the 

 

8

In its reply brief, R City suggests the Landlord Defendants waived their right 

to declare a forfeiture by accepting the benefit of R City’s insurance coverage. But 

the master lease provided “[t]he receipt of any payment by Landlord from a party 

other than Tenant will not constitute consent to a Transfer.” That sufficiently 

guarded against waiver here. (See Karbelnig v. Brothwell (1966) 244 Cal.App.2d 

333, 341-342 [no waiver of right to declare forfeiture for accepting rents after breach 

of no-assignment clause because lease also provided acceptance of rents did not 

waive breach].) 

9 R City also claims as a licensee it may sue for trespass, but its trespass claim 

was resolved against it on summary adjudication and it has not challenged that ruling 

on appeal.
22

relationship’”]; see also Parlour Enterprises, Inc., supra, 152 Cal.App.4th at p. 294 

[defining proximate cause as “a reasonable probability the lost economic advantage 

would have been realized but for the defendant’s wrongful acts”].) R City incurred 

those losses because Weeneez and D&M allegedly converted and otherwise 

improperly handled R City’s personal property from The Must Wine Bar. That had 

nothing to do with the Landlord Defendants’ alleged interference with any of

R City’s future business.

Thus, the trial court properly granted summary adjudication on R City’s 

interference claims.

DISPOSITION

The judgment is affirmed. Respondents are awarded costs on appeal.

FLIER, J.

WE CONCUR:

BIGELOW, P. J.

GRIMES, J.