Court Opinion

ID: 9758002
Source: CourtListenerOpinion
Date Created: 2023-08-28 23:07:01.800898+00
Date Added: 2024-06-11T09:58:41.084229
License: Public Domain

Filed 8/28/23 Garland Connect v. Wells Fargo Bank CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                     DIVISION SEVEN

GARLAND CONNECT, LLC,                                              B316135

         Plaintiff and Appellant,                                  (Los Angeles County
                                                                   Super. Ct. No. 19STCV16050)
         v.

WELLS FARGO BANK et al.,

         Defendants and Respondents.

      APPEAL from a judgment of dismissal of the Superior
Court of Los Angeles County. Jon R. Takasugi, Judge. Affirmed.
      Greene Broillet & Wheeler, Scott H. Carr and
Christian T.F. Nickerson; Esner, Chang Boyer & Murphy,
Stuart B. Esner and Kathleen J. Becket for Plaintiff and
Appellant.
      Musick, Peeler & Garett, Dan Woods and Cheryl A. Orr for
Defendants and Respondents.
                                ________________________
                      INTRODUCTION

       Plaintiff Garland Connect, LLC (Garland Connect) appeals
from a judgment of dismissal in favor of defendants Wells Fargo
Bank, National Association (Wells Fargo Bank), Barbara Reeve-
Bailey, and Mark A. Ingram (collectively, Wells Fargo). The
action arises out of an operating agreement that Garland
Connect entered into with third-party Charter Garland MMR,
LLC (Charter Sub) as of March 7, 2011. Charter Sub held a
sublease to a portion of the Garland Center office building used
for telecommunications services. Pursuant to the operating
agreement, Charter Sub granted Garland Connect the right to
manage and operate a “meet-me room” (MMR) at the Garland
Center and to provide other telecommunications-related services.
An MMR is a physical space in a building that provides for the
interconnection of tenants, telecommunication carriers, and other
network service providers. In return, Garland Connect agreed to
pay an operator fee and to share the revenue from the operations.
       The initial term of the operating agreement expired on
February 28, 2019. The agreement granted Garland Connect
options to extend the term for two additional five-year periods,
subject to and conditioned on the extension of upstream subleases
and leases. The agreement expressly provided that Charter Sub
and the upstream lessors and lessees had no obligation to extend
the subleases and leases.
       The building was sold to HRRP Garland, LLC (HRRP), a
subsidiary of defendant Rising Realty Partners, LP. Charter Sub
assigned its rights and obligations under the operating
agreement to HRRP. The upstream leases and subleases were
extinguished as part of the sale. HRRP declined to extend the

                               2
term of operating agreement beyond the February 28, 2019
termination date. In a related action, Garland Connect sued
HRRP for breach of contract based on HRRP’s alleged failure to
honor the options and sought a declaration that the options were
still valid. The trial court entered judgment in favor of HRRP,
concluding HRRP was not required to extend the term. In an
unpublished decision, we affirmed the judgment. (Garland
Connect, LLC v. HRRP Garland, LLC (Apr. 27, 2021, B296192
[nonpub. opn.].)
       In this action, Garland Connect sued Wells Fargo and
others for intentional and negligent interference with contractual
relations and intentional and negligent interference with
prospective economic advantage. Garland Connect alleged Wells
Fargo intentionally structured the acquisition transaction in a
way that resulted in the termination of Garland Connect’s
extension options and intentionally induced HRRP to breach the
operations agreement. The trial court sustained Wells Fargo’s
demurrer to the first amended complaint without leave to amend
and entered a judgment of dismissal. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

A.    Leases and Subleases for the Garland Center Building and
      Land
      At the time Garland Connect entered into the operating
agreement, Wells Fargo Bank owned the land on which the
Garland Center was built. Wells Fargo Bank had leased the land
to Trumbull Associates Limited Partnership (Trumbull), which
owned the Garland Center building. Trumbull leased the land
and the building to RML Leasing Corporation (RML) pursuant to

                                3
a master lease agreement. RML subleased the land and building
to First Interstate Bank of California (First Interstate). Wells
Fargo Bank succeeded by merger to all rights, title, and interest
of First Interstate in the RML lease. Wells Fargo Bank assigned
its rights as tenant under the lease to its affiliate, Charter
Holdings, Inc. (Charter Parent).
       Charter Parent leased the portions of the building to be
used for the MMR and other telecommunications services to
Charter Sub for an initial term expiring February 28, 2019.

B.    Operating Agreement
      Charter Sub “desire[d] for an independent contractor to
operate and manage” the MMR and related facilities, and
Garland Connect “desire[d] to be the exclusive manager and
operator of” those facilities. Charter Sub granted Garland
Connect the sole and exclusive right to manage and operate the
MMR during the term of the agreement, and Garland Connect
agreed to so operate and manage the facilities. Garland Connect
was granted a license to occupy the property to provide these
services. Under the agreement, Garland Connect would charge
tenants and other customers for the services and would pay
Charter Sub operator fees plus a specified share of the revenues.
      The agreement set forth the respective rights and duties of
the parties in detail. Among other things, the agreement spelled
out which party was responsible for operating costs and for the
construction of improvements and upgrades. The agreement also
contained detailed provisions regarding the rates Garland
Connect could charge Garland Center tenants and other
customers for MMR services.

                                4
       The agreement provided the initial term would expire on
February 28, 2019, which was also the date the upstream leases
and subleases were set to expire. The operating agreement
provided: “[Garland Connect] acknowledge[d] that the term of
this [operating agreement] and all rights of [Garland Connect]
hereunder shall automatically terminate upon termination of a
Superior Lease, and [Garland Connect] acknowledge[d] that it
must vacate and surrender the MMR in the condition required
under the terms of this [operating agreement] by no later than
the Expiration Date” of February 28, 2019 (subject to the
extension options). The agreement further stated that Charter
Parent had covenanted to Charter Sub that Charter Parent
would not take any actions to terminate the RML lease before
February 28, 2019. Charter Sub agreed it would take any actions
required to ensure the RML lease would remain in effect through
the initial termination date of February 28, 2019.
       Charter Sub granted Garland Connect options to extend
the term for two five-year periods. Each of the extension options
was “expressly subject to, and conditioned upon (a) RML, in its
sole and absolute discretion, exercising its option to extend the
term of the Master Lease for the Land and the Building through
the applicable Option Term, and (b) Charter Parent, in its sole
and absolute discretion, exercising its option to extend the RML
Lease such that the RML Lease shall extend through the
applicable Option Term.” The agreement further provided: “No
Obligation to Extend. It is expressly understood and agreed that
Charter Sub shall have no obligation to take any action or make
any effort with respect to any extension or renewal of the RML
Lease or to otherwise attempt to secure any right to lease or

                                5
occupy all or any portion of the Building after February 28,
2019.”
      The agreement further provided: “For the purposes of this
Operating Agreement: (a) ‘Charter Sub’ means [Charter Sub] or
any successor in interest, but only for the time that any such
person is the sublessee to Charter Parent of the Premises in
accordance with and subject to the provisions of Section 23.4.”
Section 23.4 provides in part: “Transfers of Charter Sub’s
Interest. The covenants and agreements of Charter Sub under
this Operating Agreement following any transfer shall not be
binding on any person at any time holding the interest of Charter
Sub (including the original named Charter Sub) subsequent to
the transfer of that person’s interest in the Building. In the
event of such a transfer, the covenants and agreements of
Charter Sub thereafter shall be binding upon the transferee of
Charter Sub’s interest.”

C.      Sale of the Building to HRRP
        On June 3, 2016, Charter Parent sent Garland Connect a
letter notifying Garland Connect that Charter Parent, Wells
Fargo Bank, RML Leasing, and Trumbull had sold the property
to HRRP. Charter Sub’s rights and obligations under the
operating agreement were assigned to HRRP as part of the deal.
The letter stated: “As of the date hereof, Sellers’ interest in your
license has been assigned to Purchaser, and Purchaser has
assumed the obligations as landlord under your license. [¶] . . .
[¶] . . . Purchaser advises Licensee that Purchaser has acquired
all fee and leasehold interests in the Property, including the
interests in the RML Lease and Master Lease . . . and that, upon
the Closing, all such leasehold interests merged into the fee

                                 6
interest in the Property and all such agreements granting the
leasehold interests, including the RML Lease and Master Lease,
terminated in their entirety. . . . All rights contingent upon the
existence and renewal of the Master Lease and RML Lease,
including any extension rights, are hereby extinguished in
connection with and as a result of the termination of such
agreements as a result of the acquisition of the property.”
Garland Connect responded with a letter disputing HRRP’s
interpretation of the agreement.

D.    HRRP’s Initiation of Arbitration Regarding Garland
      Connect’s Alleged Breaches of Operating Agreement
      Soon after HRRP acquired the property, a dispute arose
between HRRP and Garland Connect. HRRP claimed Garland
Connect had materially breached provisions of the operating
agreement requiring Garland Connect to charge market rates
and to provide market research on rates to HRRP. On
January 13, 2017, HRRP declared Garland Connect to be in
default of the operating agreement. Both sides demanded
arbitration. HRRP sought a declaration that it was entitled to
terminate the agreement in light of Garland Connect’s alleged
material breaches.
      The arbitrator found in favor of Garland Connect,
concluding Garland Connect had not breached the operating
agreement. Although the operating agreement gave the
arbitrator the discretion to award attorney fees to the prevailing
party, the arbitrator declined to do so. The arbitrator issued her
award on July 16, 2018. The arbitration did not concern whether
the extension options were still in effect.

                                 7
E.    Garland Connect’s Attempt To Exercise Its Purported
      Options To Renew
      On September 7, 2017, Garland Connect sent a letter
purporting to exercise the option to extend the term of the
agreement for five years, from March 1, 2019 to February 29,
2024. HRRP responded that the purported exercise of the option
was invalid because the master lease and the RML lease were no
longer in existence.

F.     Garland Connect’s Lawsuit Against HRRP Seeking a
       Declaration That the Options Were Still Valid
       On February 6, 2018, Garland Connect sued HRRP in
Los Angeles Superior Court, Case Number BC692951. “Garland
Connect alleged that it had notified HRRP ‘of its intention to
exercise the first of its extension options,’ but HRRP claimed the
extension options had been extinguished. Garland Connect
sought a declaration that it ‘ha[d] the right to extend the
Operating Agreement for the two 5-year option periods,’ and
specific performance ‘of [the] options to extend the term of the
Operating Agreement.’” (Garland Connect, LLC v. HRRP
Garland, LLP, supra, B296192.)1 Garland Connect also asserted
claims for breach of contract and breach of the covenant of good
faith and fair dealing based on HRRP’s alleged “‘efforts to deprive
Garland Connect of the extension options.’” (Ibid.)

1     We cite our unpublished decision pursuant to California
Rules of Court, rule 8.1115(b), which provides: “An unpublished
opinion may be cited or relied on: [¶] (1) [w]hen the opinion is
relevant under the doctrines of law of the case, res judicata, or
collateral estoppel.” Garland Connect does not contest the
decision must be given collateral estoppel effect in this action.

                                 8
       The trial court sustained HRRP’s demurrer to the first
amended complaint without leave to amend and entered
judgment of dismissal on March 18, 2019.2 We affirmed,
reasoning: “The Operating Agreement had a 92-month term, ‘in
all events ending on February 28, 2019 . . . subject to the
Extension Options.’ The extension option provision states that
each extension option is ‘expressly subject to[] and conditioned
upon’ RML and Charter Parent exercising their options to extend
their respective leases. [¶] Garland Connect pleads no facts
suggesting that the plain terms of the extension options are
ambiguous or uncertain. The Operating Agreement
unequivocally states that Garland Connect had no right to extend
the agreement beyond February 28, 2019 unless RML and
Charter Parent exercised their respective extension options.
Garland Connect acknowledged the conditional nature of its
extension options in its first amended complaint, which alleges
that the agreement ‘state[s] that Garland Connect’s extension
options [are] conditioned on the corresponding extension of the
Master Lease and RML Lease through the extended term
granted by Garland Connect’s option.’ In the absence of any
factual allegations supporting Garland Connect’s claim of
ambiguity, the trial court did not err in concluding that the first
amended complaint did not allege facts sufficient to state causes
of action premised on an argument that Garland Connect’s
extension options were not conditional.” (Garland Connect,
LLC v. HRRP Garland, LLP, supra, B296192.) We further

2    On our own motion, we take judicial notice of the date the
judgment was entered.

                                9
concluded the court had not abused its discretion in denying
leave to amend.

G.     This Lawsuit
       On May 18, 2019, Garland Connect filed this lawsuit
against three groups of defendants: (1) Wells Fargo (i.e., Wells
Fargo Bank and its former vice presidents Reeve-Bailey and
Ingram); (2) Wells Fargo Bank’s wholly owned subsidiary Eastdil
Secured Broker Services, Inc. and its managing director Stephen
Somer (collectively, Eastdil defendants); and (3) HRRP affiliate
Rising Realty Partners, LP and its executive officers Christopher
Rising, Nelson Rising, Tyson Strutzenberg, and Matthew Ahrens
(collectively, Rising Realty defendants). The only claims at issue
in this appeal are those against Wells Fargo.3
       Garland Connect filed the operative first amended
complaint on June 26, 2019. Garland Connect alleged it had two
five-year options to extend the operating agreement beyond
February 28, 2019. Beginning in September 2015, during the
course of negotiations for the sale of the building, Wells Fargo
engaged in an “unlawful scheme to oust Garland Connect from its
role as the MMR Operator immediately after [HRRP] purchased
the Garland Center building and thereby deny Garland Connect
its negotiated Extension Options under the Operating
Agreement. . . . In furtherance of [its] unlawful scheme to oust
Garland Connect, [Wells Fargo] . . . specifically structured the
agreements for acquisition of the Garland Center in such a

3     Garland Connect dismissed its appeal against the Eastdil
defendants on August 11, 2022. The claims against the Rising
Realty defendants were dismissed with prejudice in the trial
court on March 25, 2022.

                               10
manner as to prevent the fulfillment of conditions precedent for,
and thereby attempt to preclude, Garland Connect’s exercise of
its Extension Options. [Wells Fargo] . . . also interfered with
Garland Connect’s contractual relationships with its customers
by contacting certain customers and making misrepresentations
and misleading statements to them in order to induce them not to
renew their contracts with Garland Connect.”
       Garland Connect further alleged that to induce prospective
buyers into acquiring the Garland Center, Wells Fargo
represented to prospective buyers (including HRRP) that it would
be able to terminate the operating agreement by acquiring the fee
interest of the Garland Center as well as the master and RML
leases. Wells Fargo conducted legal research into how the
operating agreement could be terminated and shared the
information with prospective buyers.
       In reliance on Wells Fargo’s legal research and
representations, HRRP’s parent, Rising Realty, planned to
remove Garland Connect as the MMR operator by filing a
“frivolous lawsuit” funded by Wells Fargo seeking to terminate
the extension options. Wells Fargo selected the buyer because it
agreed to Wells Fargo’s scheme to oust Garland Connect as
operator of the MMR. Wells Fargo Bank’s vice presidents Reeve-
Bailey and Ingram formulated the plan as part of a personal
vendetta against one of Garland Connect’s members.
       On or about June 3, 2016, HRRP purchased and acquired
the fee interest in the Garland Center property and also acquired
the upstream lease interests of Charter Parent and Charter Sub
under the Ground Lease Arrangements. The Operating
Agreement was assigned to HRRP as part of the purchase
transaction, and HRRP succeeded to Charter Sub’s rights and

                               11
obligations thereunder. Consistent with Wells Fargo’s plan,
HRRP took the position that it had no obligation to honor the
extension options.
       Garland Connect was harmed by Wells Fargo’s actions.
Garland Connect relied on the extension options in entering into
the operating agreement and investing over $2.5 million in
improvements. Because of Wells Fargo’s interference with the
extension options, Garland Connect has been unable to enter into
firm contracts with its customers for periods beyond February
2019; instead, any customer contracts are contingent on Garland
Connect’s ability to exercise the options.
       Garland Connect asserted claims for intentional
interference with contractual relations, intentional interference
with prospective economic advantage, and negligent interference
with prospective economic advantage against Wells Fargo and
other defendants. In the claim for intentional interference with
contractual relations, Garland Connect alleged that Wells Fargo
caused the acquisition agreements to be structured to make it
impossible for the conditions precedent to the extension options
to be fulfilled; induced HRRP to breach the operating agreement
by refusing to honor Garland Connect’s extension options; and
agreed to pay HRRP’s attorneys’ fees for litigation regarding the
issue.
       In the claims for intentional and negligent interference
with prospective economic advantage, Garland Connect alleged
that Wells Fargo interfered with Garland Connect’s ability to
enter into new contracts with its customers for the period beyond
February 28, 2019 by interfering with Garland Connect’s ability
to exercise its extension options. Garland Connect also alleged
that Reeve-Bailey and Ingram falsely told Rising Realty (HRRP’s

                               12
affiliate) that Garland Connect caused a prior tenant to file
bankruptcy by charging the prior tenant above-market rates, but
Garland Connect did not allege what harm allegedly flowed from
those misrepresentations. Garland Connect sought
compensatory and punitive damages.
       All defendants demurred. Wells Fargo incorporated by
reference the arguments made by the Rising Realty defendants.
The Rising Realty defendants argued the claim for intentional
interference with contractual relations failed because Garland
Connect had no right to exercise the extension options.
Specifically, “[w]hen Charter Parent and RML chose to sell their
interests to HRRP rather than exercise their extension options,
the conditions precedent to the exercise of GC’s extension options
failed.” The operating agreement expressly contemplated the
upstream leases might not be renewed and the options
extinguished. The defendants did not induce a breach or
disruption of the contract because there was no breach; rather
the agreement was terminated by its own terms. The Rising
Realty defendants further argued that the claims for intentional
and negligent interference with prospective economic advantage
failed because Garland Connect did not allege the defendants
engaged in any independently wrongful act.
       In opposition, Garland Connect argued the conditions
precedent were excused because HRRP caused their failure.
HRRP therefore breached the agreement by failing to extend the
term in accordance with Garland Connect’s options. The Wells
Fargo defendants induced that breach. Garland Connect argued
that it had sufficiently alleged independently wrongful conduct
because Garland Connect alleged Wells Fargo’s vice presidents
had made false statements regarding Garland Connect’s pricing.

                                13
Garland Connect also argued the court should stay the action and
defer ruling on the demurrer until after the appeal in Garland
Connect, LLC v. HRRP Garland, LLP, supra, B296192, was
resolved.
         Garland Connect filed a separate motion to stay the action
pending resolution of the appeal in Garland Connect LLC v.
HRRP Garland, LLP, supra, B296192, arguing that a final ruling
in that case would “determine all or some of the issues in this
case.” Specifically, Garland Connect argued: “The issue of
whether Garland Connect had the right to extend the [o]perating
[a]greement term beyond February 28, 2019 was the focus of
[Garland Connect, LLC v. HRRP Garland, LLP], which is now
pending on appeal. In order to avoid the possibility of conflicting
rulings and because final appellate resolution of [that matter]
would conclusively determine all or some of the issues in this case
. . . a stay of this case . . . is appropriate, pending final appellate
resolution [of Garland Connect, LLC v. HRRP Garland, LLP].”
The trial court granted the motion and stayed the matter.
         After we issued the remittitur in Garland Connect LLC v.
HRRP Garland, LLP, supra, B296192, the trial court lifted the
stay in this action. The parties filed supplemental briefs
regarding the effect of our decision. The defendants filed a joint
brief that reiterated their position that a defendant cannot
interfere with contractual rights a plaintiff does not have. In its
supplemental opposition, Garland Connect argued a defendant
could still be liable for tortious interference of a contract even if
the parties to the contract have a right to terminate it. Garland
Connect further argued that if the court were inclined to sustain
any portion of the demurrer, leave to amend should be granted.

                                  14
Garland Connect did not identify any additional facts it would
allege if leave to amend were granted.
      The court sustained the demurrers without leave to amend
as to Wells Fargo and the Eastdil defendants. As to the claim for
intentional interference with contractual relations, the court
concluded the operating agreement unambiguously provided the
upstream parties “might choose not to renew the upstream lease,
and [Garland Connect] had only a conditional right to the option.
This conclusion was confirmed on appeal. Given that the right to
renewal was ‘not absolute,’ the fact that [Garland Connect’s]
lease was not renewed is insufficient, on its own, to constitute
disruption.” As to the claim for intentional and negligent
interference with prospective economic advantage, the court
concluded Garland Connect “has not alleged any conduct by . . .
Wells Fargo . . . which could support this cause of action.” “[T]he
allegation that the Wells Fargo [d]efendants made
representations to Rising Realty is insufficient because [Garland
Connect] does not allege that the Wells Fargo [d]efendants
disrupted the probability of a future economic benefit from Rising
Realty. Rather, [Garland Connect] alleges disruption to its
relationship with customers, and [Garland Connect] does not
allege that Wells Fargo made any representation about [Garland
Connect’s] rates to customers.”
      The court entered a judgment of dismissal on October 6,
2021. Garland Connect timely appealed.

                                15
                         DISCUSSION

A.    Standard of Review
      A demurrer tests the legal sufficiency of the factual
allegations in a complaint. “In reviewing an order sustaining a
demurrer, we examine the operative complaint de novo to
determine whether it alleges facts sufficient to state a cause of
action under any legal theory. [Citation.] Where the demurrer
was sustained without leave to amend, we consider whether the
plaintiff could cure the defect by an amendment.” (T.H. v.
Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162;
accord, Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010.)
      We assume the truth of the properly pleaded factual
allegations and matters of which judicial notice has been taken.
(Lee v. Hanley (2015) 61 Cal.4th 1225, 1230; Evans v. City of
Berkeley (2006) 38 Cal.4th 1, 20; Schifando v. City of Los Angeles
(2003) 31 Cal.4th 1074, 1081 (Schifando); see Code Civ. Proc.,
§ 430.30, subd. (a).) We liberally construe the pleading with a
view to substantial justice between the parties. (Code Civ. Proc.,
§ 452; Schifando, at p. 1081.) “However, the assumption of truth
does not apply to contentions, deductions, or conclusions of law
and fact. [Citations.] Furthermore, any allegations that are
contrary to the law or to a fact of which judicial notice may be
taken will be treated as a nullity.” (C.R. v. Tenet Healthcare
Corp. (2009) 169 Cal.App.4th 1094, 1102.) “‘While the
“allegations [of a complaint] must be accepted as true for
purposes of demurrer,” the “facts appearing in exhibits attached
to the complaint will also be accepted as true and, if contrary to
the allegations in the pleading, will be given precedence.”’”

                                16
(Moran v. Prime Healthcare Management, Inc. (2016)
3 Cal.App.5th 1131, 1145-1146; accord, Ivanoff v. Bank of
America, N.A. (2017) 9 Cal.App.5th 719, 726.)
      We review the trial court’s decision to deny leave to amend
for an abuse of discretion. A trial court abuses its discretion by
sustaining a demurrer without leave to amend where “‘there is a
reasonable possibility that the defect can be cured by
amendment.’” (Loeffler v. Target Corp. (2014) 58 Cal.4th 1081,
1100; accord, City of Dinuba v. County of Tulare (2007) 41 Cal.4th
859, 865.) “‘The plaintiff has the burden of proving that [an]
amendment would cure the legal defect, and may [even] meet this
burden [for the first time] on appeal.’” (Sierra Palms
Homeowners Assn. v. Metro Gold Line Foothill Extension
Construction Authority (2018) 19 Cal.App.5th 1127, 1132; accord,
Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 971.)

B.     The Trial Court Did Not Err in Sustaining the Demurrer
       1.    To State a Claim for Interference with the Extension
             Options, Garland Connect Had To Allege an
             Independently Wrongful Act
       “California has traditionally recognized two economic
relations torts: interference with the performance of a contract
[citation] and interference with a prospective economic
relationship [citation]. Both of these torts protect the public
interest in stable economic relationships.” (Ixchel Pharma,
LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1142-1143 (Ixchel),
internal quotation marks and brackets omitted.) “The two torts
are related but distinct. Tortious interference with contractual
relations requires (1) the existence of a valid contract between
the plaintiff and a third party; (2) the defendant’s knowledge of

                                17
that contract; (3) the defendant’s intentional acts designed to
induce a breach or disruption of the contractual relationship;
(4) actual breach or disruption of the contractual relationship;
and (5) resulting damage. [Citations.] It is generally not
necessary that the defendant’s conduct be wrongful apart from
the interference with the contract itself. [Citation.].” (Id. at
p. 1141, internal quotation marks omitted.)
       “Tortious interference with prospective economic
advantage, on the other hand, does not depend on the existence of
a legally binding contract. A plaintiff asserting this tort must
show that the defendant knowingly interfered with an economic
relationship between the plaintiff and some third party, [which
carries] the probability of future economic benefit to the
plaintiff.” (Ixchel, supra, 9 Cal.5th at p. 1141.) Further, the
plaintiff “must plead as an element of the claim that the
defendant’s conduct was wrongful by some legal measure other
than the fact of interference itself.” (Id. at p. 1142, internal
quotation marks omitted.)
       We first consider whether Garland Connect was required to
allege that Wells Fargo interfered with the operating agreement
by means of an independently wrongful act in order to state a
valid claim. In the first cause of action for intentional
interference with contractual relations, Garland Connect relies
on two theories: (1) The Wells Fargo defendants induced HHRP
to breach the operating agreement by failing to honor the
extension options; and (2) the defendants interfered with the
operating agreement by causing the acquisition agreement to be
structured such that the conditions precedent to the extension
options could not be fulfilled.

                               18
       In light of our decision in Garland Connect, LLC v. HRRP
Garland, LLP, supra, B296192, Garland Connect does not argue
on appeal that its claim for intentional interference with
contractual relations is valid because Wells Fargo induced HRRP
to breach the operating agreement. Instead, Garland Connect’s
appeal is based on the second theory. Garland Connect argues
that a defendant who is not a party to an agreement can be held
liable for inducing the termination of an agreement “even if it is
the case that the other contracting party could itself terminate
the contract without being in breach.” Garland Connect argues
that a plaintiff making such a claim does not have to plead and
prove an independently wrongful act. We conclude that under
the specific factual circumstances here, Garland Connect was
required to plead an independently wrongful act based on the
reasoning in Ixchel, supra, 9 Cal.5th 1130.

             a.     The Ixchel Decision
      In Ixchel, the Supreme Court held that a claim for
interference with an at-will contract is treated as a claim for
interference with prospective economic advantage and requires
the plaintiff to plead and prove, among other elements, the
defendant engaged in an independently wrongful act that
actually disrupted the plaintiff’s relationship. (Ixchel, supra,
9 Cal.5th at p. 1148.)
      There, plaintiff Ixchel entered into an agreement with
Forward Pharma (Forward) to jointly develop a drug. Forward
had the right to terminate the agreement “at any time” so long as
it provided Ixchel 60 days’ notice. While the parties were
working together to develop the drug, Forward was negotiating
with defendant Biogen, Inc., another biotechnology company, to

                                19
settle a patent dispute. Forward and Biogen entered into an
agreement in which Biogen agreed to pay Forward $1.2 billion to
license certain Forward patents and other intellectual property,
and Forward agreed to terminate its agreement with Ixchel.
(Ixchel, supra, 9 Cal.5th at pp. 1138-1139.) Ixchel sued Biogen in
federal court, alleging, among other things, that Biogen
interfered with its contract with Forward. The district court
dismissed the case, concluding that Ixchel had failed to state a
claim for interference with prospective economic advantage or
interference with contractual relations because Ixchel did not
plead that Biogen engaged in an independently wrongful act. (Id.
at p. 1139.) Ixchel appealed, and the Ninth Circuit certified the
following question to the Supreme Court (as rephrased by the
Supreme Court): “Is a plaintiff required to plead an
independently wrongful act in order to state a claim for tortious
interference with a contract that is terminable at will?” (Id. at
p. 1140.)
       The Supreme Court answered the question in the
affirmative for primarily two reasons. First, “[l]ike parties to a
prospective economic relationship, parties to at-will contracts
have no legal assurance of future economic relations.” (Ixchel,
supra, 9 Cal.5th at p. 1147.) The court explained: “An at-will
contract may be terminated, by its terms, at the prerogative of a
single party, whether it is because that party found a better offer
from a competitor, because the party decided not to continue
doing business, or for some other reason. And the other party
has no legal claim to the continuation of the relationship. The
contracting parties presumably bargained for these terms, aware
of the risk that the relationship may be terminated at any time.
At-will contractual relations are thus not cemented in the way

                                20
that a contract not terminable at will is. The interest in
protecting the contract from interference more closely resembles
the interest in protecting prospective economic relationships than
the interest in protecting a contractual relationship that, by its
terms, is expected to continue on pain of breach.” (Ibid.)
      “Indeed, sometimes the only difference between an at-will
contract and a prospective economic relationship is the formality
of how a contractual relationship is structured. For example, a
buyer who regularly renews a one-time contract to purchase
goods has a prospective economic relationship with the vendor
with respect to future purchases of those goods. (See Shida v.
Japan Food Corp. (1967) 251 Cal.App.2d 864, 866 [interference
with yearly renewal of contract treated as interference with
prospective economic advantage].) But that same buyer would
have an at-will contractual relationship if it entered into a single
contract with the vendor to provide those goods at regular
intervals terminable at the buyer’s will. In both, the vendor has
no legal assurance of the buyer’s continued purchases.” (Ixchel,
supra, 9 Cal.5th at p. 1147.)
      Second, “allowing interference with at-will contract claims
without requiring independent wrongfulness risks chilling
legitimate business competition.” (Ixchel, supra, 9 Cal.5th at
p. 1148.) “Without an independent wrongfulness requirement, a
competitor’s good faith offer that causes a business to withdraw
from an at-will contract could trigger liability or at least subject
the competitor to costly litigation. In fact, even if a business in
an at-will contract solicits offers on its own initiative, a third
party that submits an offer could face liability if it knew that
acceptance of the offer would cause the soliciting business to
withdraw from its existing contract. Allowing disappointed

                                21
competitors to state claims for interference with at-will contracts
without alleging independently wrongful conduct may expose
routine and legitimate business competition to litigation.” (Ibid.)

            b.     The Claim Here Is Substantially Similar to a
                   Claim For Interference With an At-will Contract
      Garland Connect contends Wells Fargo interfered with the
extension options by structuring the sale of the building in a way
that caused the buyer of the building to acquire the leasehold
interests of RML and Charter Parent, thereby ensuring that the
conditions precedent to the operating agreement would fail. As
previously noted, the operating agreement provided that the
extension options were subject to and conditioned upon RML’s
and Charter Parent’s exercise of their options to extend the
upstream leases, that is, RML’s master lease with Turnbull for
the land and building, and Charter Parent’s sublease with RML.
The operating agreement stated that those entities had the sole
and absolute discretion to decide whether to exercise their
options to extend those leases. The operating agreement also
provided Charter Sub had no obligation to secure any right to
occupy the building after February 28, 2019. Thus, under the
express terms of the agreement, RML and Charter Parent had no
obligation to extend the upstream leases, and Garland Connect’s
extension options would terminate if RML and Charter Parent
did not extend them. Wells Fargo allegedly interfered with the
extension options by inducing or causing RML and Charter

                                22
Parent to sell or assign their leasehold interest to HRRP instead
of extending them.4
       At the time of the alleged interference (i.e., before HRRP
acquired RML’s and Charter Parent’s leasehold interests), the
operating agreement was not an at-will contract because Garland
Connect’s contracting partner, Charter Sub, did not have the
ability to control whether the conditions would be satisfied.5

4      The first amended complaint alleges Wells Fargo
“specifically structured the agreements for acquisition of the
Garland Center and the purported extinguishment of the Ground
Lease Arrangements in such a manner as to prevent the
fulfillment of conditions precedent for . . . Garland Connect’s
exercise of its extension options.” The “[g]round [l]ease
[a]rrangements” were extinguished because HRRP acquired the
upstream lease interests of RML, Charter Parent, and Charter
Sub. Upon the acquisition, HRRP sent a letter explaining
Garland Connect’s extension options had been terminated
because HRRP had acquired all fee and leasehold interests in the
property, including interests in the RML lease and master lease.
These allegations make clear that Wells Fargo’s alleged
interference consisted of causing or inducing Charter Parent and
RML to assign or sell their leasehold interests to HRRP instead
of exercising their options to renew the leasehold interests.
5     After the transaction with HRRP closed, the extension
options terminated, and HRRP, as Charter Sub’s successor, had
no obligation to renew the operating agreement after
February 28, 2019. (Garland Connect LLC v. HRRP Garland,
LLP, supra, B296192.) While HRRP could choose to extend the
operating agreement after that date, it had no obligation to do so.
Thus, after the close of the transaction, the agreement was, at
best for Garland Connect, an at-will contract for the period after
February 28, 2019.

                                23
However, the claim that Wells Fargo interfered with the
operating agreement by causing the failure of the conditions is
similar to a claim that a defendant interfered with an at-will
contract. Garland Connect’s rights under the extension options
were expressly subject to conditions that were in the control of
and at the will of third parties RML and Charter Parent. Wells
Fargo allegedly interfered with the extension options by inducing
or causing those third parties to sell or assign their leasehold
interests to HRRP instead of extending them, a decision that the
agreement acknowledged RML and Charter Parent had the right
to make.
      Accordingly, as to Garland Connect’s extension options, the
operating agreement was analogous to an at-will agreement, but
instead of being subject to termination rights of Garland
Connect’s contracting party Charter Sub, the options were
subject to conditions controlled by third parties RML and Charter
Parent. In effect, the Garland Connect’s extension options were
subject to termination rights held by RML and Charter Parent;
RML and Charter Parent had the right to decline to extend the
master lease and RML lease, resulting in a termination of the
extension options. Wells Fargo allegedly interfered with the
extension options by causing or inducing those third parties to
decline to extend their leasehold interests, resulting in the
termination of the options.
      In the typical claim for interference with an at-will
contract, the plaintiff alleges a third-party stranger to the
contract induced the plaintiff’s contracting partner to exercise his
or her right to terminate the contract. For example, in the
employment context, a plaintiff employer may allege the
defendant (a stranger to the contract) induced the at-will

                                24
employee to terminate his or her employment to take another job.
Similarly, in Ixchel, supra, 9 Cal.5th 1130, plaintiff Ixchel alleged
defendant Biogen induced Ixchel’s contracting partner Forward
to terminate the agreement with Ixchel and enter into a contract
with Biogen. In each case, the claim is that the allegedly
interfering stranger to the contract induced the plaintiff’s
contracting partner to take actions the contracting partner had
the right to take under the contract.
      Here, Garland Connect alleged Wells Fargo, as a stranger
to the contract, induced or caused third parties RML and Charter
Parent to exercise their rights to take actions that resulted in a
termination of the agreement. In both this case and the typical
case for interference with an at-will contract, the purportedly
interfering defendant is alleged to have induced a person who has
a right under the contract to take an action to actually take the
action. Further, in both this case and the typical case for
interference with an at-will contract, the alleged interference
resulted in a termination of the contract but not its breach.
      The reasons that the Ixchel court relied on in imposing a
wrongful act requirement apply here. As with an at-will contract,
Garland Connect had “no legal assurance of future economic
relations” after the initial termination date, and thus “[t]he
interest in protecting the contract from interference more closely
resembles the interest in protecting prospective economic
relationships than the interest in protecting a contractual
relationship that, by its terms, is expected to continue on pain of
breach.” (Ixchel, supra, 9 Cal.5th at p. 1147.) In a claim
involving a typical at-will agreement, the contracting party has
no legal assurance his or her contracting partner will not
terminate an agreement. Here, Garland Connect had no legal

                                 25
assurance that non-contracting third parties Charter Parent or
RML would extend their leasehold interests, thus allowing
Garland Connect to exercise its extension options.
       Further, if Garland Connect were allowed to proceed with
an interference claim without alleging an independently wrongful
act, the risk of chilling legitimate business activity would be
equal to that in Ixchel, supra, 9 Cal.5th 1130. In Ixchel, the court
reasoned that allowing a claim for interference with an at-will
contract without requiring an independently wrongful act would
chill competitors from making good faith offers to the party with
the right to terminate and would impair the ability of that party
to solicit legitimate alternative offers. (Id. at p. 1148.) The court
recognized a public policy against “chilling legitimate business
competition” and against “expos[ing] routine and legitimate
business competition to litigation.” (Ibid.)
       Thus, in Ixchel, supra, 9 Cal.5th 1130, the court was
concerned about imposing tort liability in a manner that would
unduly chill business opportunities available to a party to an at-
will agreement and those seeking to transact business with that
party. Here, imposing tort liability without proof of an
independently wrongful act would chill business opportunities
available to strangers to the contract, specifically RML and
Charter Parent. RML and Charter Parent had the right either to
extend the master lease and RML lease or to not to extend them.
Whether or not they chose to extend the leases could depend on
other business opportunities available to them; they could choose
not to extend their leases if a more attractive alternative
opportunity arose. But if a third party who induced them to
enter into the alternative transaction could be held liable for
interfering in Garland Connect’s operating agreement (as well as

                                 26
other contracts between downstream sublessees and their
licensees), the third party would be chilled from entering into the
alternate transaction, which in turn would restrict the
opportunities available to RML and Charter Parent. The public
policy against chilling business opportunities available to
strangers to the contract is at least as great as the public policy
against chilling business opportunities available to a party to the
contract. RML and Charter Parent did not enter into an
agreement with Garland Connect; their interests in being able to
pursue alternative business transactions is at least as strong as
the interest of a party to an at-will contract to do so. For those
reasons, we conclude Garland Connect had to plead and prove an
independently wrongful act to state a claim for interference.
      There are other reasons for requiring Garland Connect to
allege an independently wrongful act to state a claim for
interference. Garland Connect’s contracting partner Charter Sub
was a sublessee who granted Garland Connect a license to occupy
the building to run the MMR. Charter Sub’s and Garland
Connect’s rights to occupy the building were necessarily limited
by the scope of the Charter Sub’s sublease; a sublessee cannot
grant a licensee or subsublessee rights to occupy a building that
are greater than the sublessee’s own rights. (Syufy Enterprises v.
City of Oakland (2002) 104 Cal.App.4th 869, 883 [“[u]nder
California law, a subtenant’s rights are dependent upon and
subject to the sublessor’s rights. [Citations.] Rights under the
sublease stand or fall with those of the sublessor,” internal
quotation marks, ellipses, and brackets omitted].) Further,
Charter Parent could not grant Charter Sub rights to occupy the
building that were greater than the rights under its own sublease
agreement with RML, and RML could not grant Charter Parent

                                27
rights to occupy the building that were greater than the rights it
held under the master lease agreement with Turnbull. Garland
Connect’s rights were necessarily subject to the superior rights of
upstream owners, lessors, and sublessors (including Turnbull,
which owned the building and held an estate for years in the
land; RML, which held the master lease to the land and building;
and Charter Parent, which was a sublessee of RML).
       Garland Connect’s extension options were necessarily
dependent on RML and Charter Parent’s exercise of their options
to extend the leases and subleases. Allowing the claim for
interference to proceed without requiring Garland Connect to
plead and prove an independently wrongful act would, in effect,
allow Garland Connect, as a licensee to a sublessee, to restrict
the rights of the upstream lessors and lessees to pursue
alternatives to extending their leases and subleases. That is
because the potential contracting partners of upstream lessors
and lessees would be chilled by the threat of tort liability from
entering into the alternative transaction.
       In concluding Garland Connect had to plead an
independently wrongful act, we do not suggest a plaintiff must
plead and prove an independently wrongful act to state a valid
claim for interference any time a contract is subject to a condition
precedent that has not yet occurred. Our holding is limited to
circumstances in which (1) the contract was subject to a condition
precedent that depended on a third party taking a certain action;
(2) the contract expressly stated the third party had no obligation
to take the action, and whether or not to do so was within the
discretion of the third party; (3) the defendant allegedly
interfered with the contract by inducing or causing the third
party not to take the action, thereby causing a failure of the

                                28
condition; and (4) the alleged interference did not cause or induce
a breach of the agreement. When those conditions are met, the
claim for interference is similar enough to a claim for interference
with an at-will contract that the independently-wrongful-act
requirement applies.

            c.     The Cases Garland Connect Cites Do Not
                   Compel a Different Result
       Garland Connect cites several cases for the proposition that
a claim for interference with contractual relations can be based
on an at-will contract. To the extent Garland Connect suggests
that a plaintiff asserting such a claim does not have to allege an
independently wrongful act, Garland Connect’s position is
foreclosed by Ixchel, supra, 9 Cal.5th at p. 1148. The cases
Garland Connect cites were all decided prior to Ixchel.
       Further, contrary to Garland Connect’s argument, the
Supreme Court in Pacific Gas & Electric Co., supra, 50 Cal.3d
1118 did not hold that a plaintiff alleging a claim for interference
with an at-will contract may state a claim for interference with
contractual relations, as opposed to interference with prospective
economic advantage. As the Supreme Court explained in Ixchel,
“Pacific Gas expressly reserved the question of whether
interference with an at-will contract should be treated as a claim
of interference with contractual relations or as a claim of
interference with prospective economic advantage. Because the
alleged misconduct in that case did not constitute interference
with any economic relationship, contractual or otherwise, it was
unnecessary to resolve the question.” (Ixchel, supra, 9 Cal.5th at
p. 1144.) As discussed, Ixchel resolved the question and held that
a claim for interference with an at-will contract is treated as a

                                29
claim for interference with prospective economic advantage,
requiring proof that the defendant committed an independently
wrongful act. (Id. at p. 1148.)
       Garland Connect relies heavily on SCEcorp v. Superior
Court (1992) 3 Cal.App.4th 673 (SCEcorp), but the case does not
establish that Garland Connect can state an interference claim
without alleging an independently wrongful act. There,
San Diego Gas & Electric Company (SDG&E) and Tucson
Electric Power Company (Tucson) entered into a written merger
agreement that was conditioned on regulatory approval by
various governmental entities. The merger agreement was
approved by the parties’ respective boards of directors. Before
the parties were able to obtain the required regulatory approval,
defendant SCEcorp allegedly interfered with the contract by
making an unsolicited offer for SDG&E, improperly acquiring
SDG&E shares, and improperly inducing members of SDG&E’s
board of directors and management to abandon the proposed
merger with Tucson. (Id. at pp. 675-676.) Tucson sued SCEcorp
for intentional and negligent inference with contractual relations
and with prospective economic advantage. SCEcorp demurred.
The trial court overruled the demurrer. Tucson filed a petition
for writs of mandate and prohibition, and, following directions
from the Supreme Court, the Court of Appeal ultimately issued
an alternative writ.6 (Id. at pp. 676-677.)

6      The Court of Appeal initially summarily denied the writ
petition. The Supreme Court granted review and transferred the
matter back to the Court of Appeal with directions to vacate the
order denying mandate and to issue an alternative writ to be
heard by the Court of Appeal. The Court of Appeal then issued
an alternative writ. (SCEcorp, supra, 3 Cal.App.4th at p. 676.)

                                30
       The sole issue in the writ proceeding was “whether the
existence of regulatory approval as a condition precedent to
completion of the merger pursuant to the [m]erger [c]ontract
must, as a matter of law, deprive Tucson of its three causes of
action for tortious inference.” (SCEcorp, supra, 3 Cal.App.4th at
p. 678.) The court held that it did not. “Tucson had sufficient
‘expectancies’ arising out of its [m]erger [c]ontract which would
support its tortious interference claims.” (Id. at p. 679.)
       SCEcorp does not assist Garland Connect for several
reasons. First, unlike here, the claim there was not that SCEcorp
interfered with the contract by causing the failure of the
condition precedent; the alleged interference was unrelated to the
condition that the merger had to be approved by regulatory
authorities. The court did not directly address the standard that
would apply to a claim that a defendant caused the condition
precedent to fail, but the court suggested in dicta that SCEcorp
could take lawful actions to prevent the occurrence of the
condition without incurring liability for interference. For
example, the court stated: “SCE may very well be entitled to
intervene directly in the regulatory approval process so long as
its actions are within the normal parameters of such regulatory
procedures. Such action could include appearing before the
regulatory agencies during hearings and presenting evidence as
to why SCE believes the merger would not be in the public
interest or as to other factors which are of legitimate concern to
the regulatory agencies.” (SCEcorp, supra, 3 Cal.App.4th at
p. 681.) The decision thus does not support a blanket rule that a
defendant may be held liable for interference with contractual
relations when the defendant prevents the occurrence of a
condition precedent through lawful means.

                               31
       Second, unlike here, the alleged interference in SCEcorp
likely caused a breach of the merger agreement. Although the
issue is not explicitly addressed, the opinion does not imply that
SDG&E had the contractual right to abandon the merger
agreement before the regulatory process was complete or that
SDG&E’s abandonment did not constitute a breach. The case
thus provides no authority for the standards that apply to a claim
for interference that allegedly resulted in the termination of a
contract but not its breach.
       Third, the court in SCEcorp did not address, and would
have had no reason to address, whether the plaintiff had to plead
and prove an independently wrongful act to state a valid claim.
SCEcorp was decided before Della Penna v. Toyota Motor Sales,
U.S.A., Inc. (1995) 11 Cal.4th 376 (Della Penna). Before the
Della Penna decision, our high court “treated interference with
contractual relations and interference with prospective economic
advantage as two species of the same tort. [Citation.] Each tort
contained the same elements with the exception that interference
with contractual relations required the existence of a binding
contract. [Citation.] The primary difference between the two
torts was that the range of acceptable justifications—that is,
affirmative defenses—was broader when a defendant interfered
with an unconsummated prospective economic relationship.
[Citations] . . . [¶] That changed in Della Penna, when [the
court] ‘dr[e]w and enforce[d] a sharpened distinction between
claims for the tortious disruption of an existing contract and
claims that a prospective contractual or economic relationship has
been interfered with.’” (Ixchel, supra, 9 Cal.5th at pp. 1141-
1142.) Della Pena established, for the first time, that a plaintiff
seeking to recover damages for interference with prospective

                                32
economic advantage must plead an independently wrongful act as
an element of the claim. (Ibid.) SCEcorp thus provides no
guidance as to whether, under current law, a plaintiff asserting a
claim for interference of a contract subject to conditions precedent
that had not yet occurred would have to plead and prove an
independently wrongful act. We need not reach that question
here, and instead decide the issue on the narrow grounds
discussed above.
         In sum, the cases Garland Connect cites do not undermine
our conclusion that Garland Connect had to allege Wells Fargo
interfered with the agreement by committing an independently
wrongful act.
         2.     Garland Connect Did Not Adequately Allege Wells
                Fargo Committed an Independently Wrongful Act that
                Interfered with Garland Connect’s Extension Options
         “‘[A]n act is independently wrongful if it is unlawful, that
is, if it is proscribed by some constitutional, statutory, regulatory,
common law, or other determinable legal standard.’” (Ixchel,
supra, 9 Cal.5th at p. 1142; accord, Korea Supply Co. v. Lockheed
Martin Corp. (2003) 29 Cal.4th 1134, 1159 (Korea Supply Co.).)
“An act is not independently wrongful merely because defendant
acted with an improper motive.” (Korea Supply Co., at p. 1158.)
Such conduct must also be “independently actionable” (id. at p.
1159), which means the legal standards must “provide for, or give
rise to, a sanction or means of enforcement for a violation of the
particular rule or standard that allegedly makes the defendant’s
conduct wrongful.” (Stevenson Real Estate Services, Inc. v. CB
Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th
1215, 1223 (Stevenson Real Estate Services, Inc.).) Whether an
alleged act is independently wrongful is a legal question for the

                                 33
court. (Drink Tank Ventures LLC v. Real Soda in Real Bottles,
Ltd. (2021) 71 Cal.App.5th 528, 537-538.)
      “The independently wrongful act must be the act of
interference itself, but such act must itself be independently
wrongful. That is, ‘[a] plaintiff need not allege the interference
and a second act independent of the interference. Instead, a
plaintiff must plead and prove that the conduct alleged to
constitute the interference was independently wrongful, i.e.,
unlawful for reasons other than that it interfered with a
prospective economic advantage.’” (Crown Imports, LLC v.
Superior Court (2014) 223 Cal.App.4th 1395, 1404; see also Drink
Tank Ventures LLC v. Real Soda in Real Bottles, Ltd., supra,
71 Cal.App.5th at p. 538 [to prevail on a claim for intentional
interference with prospective economic advantage, a plaintiff
must prove, among other elements, “(a) the defendant engaged in
conduct that interfered with [plaintiff’s economic] relationship
[with a third party] and (b) the defendant’s conduct was
‘independently wrongful,’” italics added].)
      Here, Garland Connect alleged Wells Fargo “structured the
agreements for acquisition of the Garland Center and the
purported extinguishment of the [g]round [l]ease [a]rrangements
in such a manner as to prevent the fulfillment of conditions
precedent for, and thereby attempt to preclude, Garland
Connect’s exercise of its extension options.” In addition, Wells
Fargo allegedly “represented to Rising Realty and other
prospective buyers that it would be able to terminate the MMR
Operating Agreement by acquiring the fee interest of the Garland
Center as well as the Master Lease and RML Lease.” Wells
Fargo also allegedly “conducted extensive legal research and
formulated a specific strategy concerning how the [operating

                               34
agreement] could purportedly be terminated” and agreed to fund
litigation over the issue. “Rising Realty was selected as the buyer
of choice by [Wells Fargo] because it agreed to [Wells Fargo’s]
scheme to oust Garland Connect from its [l]ease at the Garland
Center.” Garland Connect alleged Wells Fargo took these actions
“as part of a personal vendetta against one of Garland Connect’s
members.”
       None of these actions constitutes an independently
wrongful act. Garland Connect does not identify any actionable
legal standard that these acts supposedly violated. Instead, the
allegations focused on Wells Fargo’s allegedly improper motive to
interfere with the agreement, which, again, is not sufficient.
(Korea Supply Co., supra, 29 Cal.4th at p. 1159.)
       Garland Connect also alleged Wells Fargo “funded . . . and
approved” an arbitration proceeding initiated by HRRP in which
HRRP attempted to terminate the operating agreement based on
Garland Connect’s purported material breaches of the agreement.
These allegations are not sufficient for at least two reasons.
First, inducing another person to bring a lawsuit and funding the
litigation cannot support an interference claim unless the
elements of malicious prosecution are satisfied. (Pacific Gas &
Electric Co., supra, 50 Cal.3d at pp. 1136-1137.) Garland
Connect did not allege facts sufficient to state a claim for
malicious prosecution against Wells Fargo for inducing and
funding the litigation. Second, Garland Connect did not allege
the funding and approval of the arbitration proceeding caused the
interference on which the claim was based. Garland Connect
alleged it was harmed because it was unable to exercise its
extension options and the agreement therefore terminated. But
the arbitration proceeding did not result in the termination of the

                                35
agreement; instead, the arbitrator concluded Garland Connect
had not materially breached the operating agreement and HRRP
did not have the right to terminate the agreement on that
ground. (See Stevenson Real Estate Services, Inc., supra,
138 Cal.App.4th at p. 1224 [“a plaintiff must plead and prove that
the conduct alleged to constitute the interference was
independently wrongful,” italics added].)
       Garland Connect also alleged Wells Fargo Bank’s former
vice presidents Reeve-Bailey and Ingram intentionally
misrepresented to Rising Realty that Garland Connect caused
Net2EZ, a prior tenant in the colocation business, to file
bankruptcy by charging Net2EZ above market rates. If
adequately alleged, defamation may constitute an independently
wrongful act on which an interference claim can be based.
(Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1006-
1007, disapproved on other grounds by Ixchel, supra, 9 Cal.5th at
p. 1145.) But here, again, Garland Connect did not allege that
the defamatory statements interfered with the extension options
or with the renewal of the agreement. Garland Connect did not
allege any connection between the allegedly defamatory
statements and the failure of the conditions precedent or the
termination of the agreement.
       Garland Connect also claimed Wells Fargo interfered with
Garland Connect’s prospective economic relationships with its
MMR customers because Garland Connect was unable to extend
its agreements with those customers beyond February 28, 2019.
Garland Connect alleged this interference flowed from Wells
Fargo’s interference with the extension options. This claim was
based on the same alleged conduct as previously discussed and
failed for the same reasons.

                               36
      Because Garland Connect did not adequately allege that
Wells Fargo engaged in an independently wrongful act that
interfered with the operating agreement or with its prospective
economic relations with its customers, the trial court did not err
in sustaining Wells Fargo’s demurrer.

C.    Garland Connect Has Not Demonstrated It Could Cure the
      Defects in the First Amended Complaint by Amendment
      In the trial court, Garland Connect did not identify any
additional facts it would allege if leave to amend were granted.
Accordingly, the court sustained the demurrer without leave to
amend. On appeal, Garland Connect urges us to reverse the
judgment to allow leave to amend based on new facts identified
for the first time on appeal.
      In reviewing a judgment entered after a demurrer was
sustained without leave to amend, we must determine whether
there is a reasonable possibility the plaintiff can cure the defect
in the operative complaint by amendment. The plaintiff bears
the burden of proving there is a reasonable possibility it may do
so. The burden is “not pro forma.” (Green Valley Landowners
Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 432 (Green
Valley Landowners Assn.).) “‘To satisfy that burden on appeal, a
plaintiff “must show in what manner he can amend his complaint
and how that amendment will change the legal effect of his
pleading.”’” (Hacala v. Bird Rides, Inc. (2023) 90 Cal.App.5th
292, 304.) “The plaintiff must clearly and specifically set forth
factual allegations that sufficiently state all required elements of
that cause of action. [Citations.] Allegations must be factual and
specific, not vague or conclusionary.” (Green Valley Landowners
Assn., at p. 432, internal quotation marks and ellipses omitted.)

                                37
       “[A]n appellant may rely on statements made for the first
time on appeal to show that there is a reasonable possibility that
the complaint can be amended to state a cause of action.”
(Eghtesad v. State Farm General Ins. Co. (2020) 51 Cal.App.5th
406, 414 (Eghtesad); accord, Code Civ. Proc., § 472c, subd. (a)
[“[w]hen any court makes an order sustaining a demurrer
without leave to amend the question as to whether or not such
court abused its discretion in making such an order is open on
appeal even though no request to amend such pleading was
made”]; Sierra Palms Homeowners Assn. v. Metro Gold Line
Foothill Extension Construction Authority, supra, 19 Cal.App.5th
at p. 1132 [plaintiff may carry burden of proving an amendment
would cure a legal defect for the first time on appeal];
Rubenstein v. The Gap, Inc. (2017) 14 Cal.App.5th 870, 881
[showing may be made to the reviewing court for the first time on
appeal].)
       Garland Connect asserts that if leave to amend is granted,
it will allege that Reeve-Bailey, acting on behalf of Wells Fargo,
falsely “represented to several of [Garland Connect’s] [c]ustomers
including AT&T, Wilshire Connection, Evocative and Cogent that
[Garland Connect] was charging more than ‘market rates’” for the
MMR services. It will further allege that “as a result of these
defamatory falsehoods [Garland Connect’s] relationships with
existing customers in the Garland Center were harmed before
[Garland Connect] was evicted.”
       Garland Connect has not identified any harm that allegedly
flowed from the alleged defamatory statements other than
inducing the customers not to renew the long-term agreements
beyond 2019. In the first amended complaint, Garland Connect
alleged the Rising Realty defendants made those same

                               38
misrepresentations to the same customers, which caused the
customers to decline to renew long term contracts beyond
February 2019. Such harm is not legally cognizable because
Garland Connect did not have the right to operate the MMR
beyond February 2019. Garland Connect does not identify any
other alleged interference or harm that flowed from the allegedly
defamatory statements. Garland Connect has thus not met its
burden to set forth specific factual allegations that sufficiently
state all required elements of the cause of action. (Hacala v. Bird
Rides, Inc., supra, 90 Cal.App.5th at p. 304 [describing what a
plaintiff must show to justify leave to amend based on facts
identified for the first time on appeal]; Green Valley Landowners
Assn., supra, 241 Cal.App.4th at p. 432.)
       Garland Connect also states that if given the opportunity to
amend, it will allege Wells Fargo interfered with the operating
agreement by fraudulently concealing that it “was actively
scheming to sell the building in a way that would make the
exercise of [the extension options] impossible.” “Wells Fargo
conspired with the other named defendants to keep this scheme a
secret, knowing that the expenses [Garland Connect] was
incurring would benefit them in the sale of the building by
making it more valuable.” Garland Connect alleges this harmed
it because it made improvements to the building it would not
have made had it known that Wells Fargo planned to sell the
building. Garland Connect also seeks leave to amend to assert a
separate claim for fraudulent concealment against Wells Fargo.
       Garland Connect has not raised a reasonable possibility
that it can state a valid claim for interference or fraud based on
Wells Fargo’s purported concealment. “‘The required elements
for fraudulent concealment are (1) concealment or suppression of

                                39
a material fact; (2) by a defendant with a duty to disclose the fact
to the plaintiff; (3) the defendant intended to defraud the plaintiff
by intentionally concealing or suppressing the fact; (4) the
plaintiff was unaware of the fact and would not have acted as he
or she did if he or she had known of the concealed or suppressed
fact; and (5) plaintiff sustained damage as a result of the
concealment or suppression of the fact.’” (Hambrick v. Healthcare
Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)
       Courts have identified “‘four circumstances in which
nondisclosure or concealment may constitute actionable fraud:
(1) when the defendant is in a fiduciary relationship with the
plaintiff; (2) when the defendant had exclusive knowledge of
material facts not known to the plaintiff; (3) when the defendant
actively conceals a material fact from the plaintiff; and (4) when
the defendant makes partial representations but also suppresses
some material facts.’” (LiMandri v. Judkins (1997)
52 Cal.App.4th 326, 336 (LiMandri).) In each case, however, the
nondisclosure is actionable only if there is “some other
relationship between the plaintiff and defendant in which a duty
to disclose can arise.” (Id. at pp. 336-337.)
       “As a matter of common sense, such a relationship can only
come into being as a result of some sort of transaction between
the parties. [Citations.] Thus, a duty to disclose may arise from
the relationship between seller and buyer, employer and
prospective employee, doctor and patient, or parties entering into
any kind of contractual agreement. [Citation.] All of these
relationships are created by transactions between parties from
which a duty to disclose facts material to the transaction arises
under certain circumstances.” (LiMandri, supra, 52 Cal.App.4th

                                 40
at p. 337; accord, Hoffman v. 162 North Wolfe LLC (2014)
228 Cal.App.4th 1178, 1187.)
       Garland Connect argues a duty to disclose arose because
Wells Fargo had exclusive knowledge of material facts that
Garland Connect did not know—specifically that Wells Fargo had
entered into negotiations for the sale of the Garland Center that
would extinguish RML and Charter Parent’s leasehold interests.
Garland Connect alleges Wells Fargo began marketing the
property for sale in September 2015. On June 3, 2016, on or
about the date the transaction closed, Charter Parent notified
Garland Connect that the property had been sold and that
“Purchaser has acquired all fee and leasehold interests in the
Property, including the interests in the RML Lease and Master
Lease . . . and that upon the Closing, all such leasehold interests
merged into the fee interest in the Property and all such
agreements granting the leasehold interests, including the RML
Lease and Master Lease terminated in their entirety. . . . All
rights contingent upon the existence and renewal of the Master
Lease and RML Lease, including any extension rights, are hereby
extinguished in connection with and as a result of the
termination of such agreements as a result of the acquisition of
the Property.” Thus, Garland Connect was informed of the
transaction and its effect on the extension options shortly after it
closed. Garland Connect’s theory is that Wells Fargo had a duty
to inform Garland Connect it had entered into negotiations for
the sale before the transaction closed.
       Garland Connect has not articulated any relationship with
Wells Fargo that would give rise to a duty to disclose. Wells
Fargo was not a party to the operating agreement; indeed, the
interference claim is necessarily premised on the contention that

                                41
Wells Fargo was a stranger to the agreement. (See PM Group,
Inc. v. Stewart (2007) 154 Cal.App.4th 55, 65 [contracting party
cannot be liable for interference].) Nor was Wells Fargo the
holder of the upstream leasehold interests identified in the
operating agreement; those parties were RML and Charter
Parent. Garland Connect is thus not entitled to leave to amend
to state a claim based on an alleged fraudulent concealment.

                         DISPOSITION

       The judgment of dismissal is affirmed. Wells Fargo’s
request for judicial notice is denied as not relevant. Wells Fargo
is to recover its costs on appeal.

                                      ESCALANTE, J.*
We concur:

      SEGAL, Acting P. J.

      FEUER, J.

*     Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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