Court Opinion

ID: 8208184
Source: CourtListenerOpinion
Date Created: 2022-09-21 20:02:02.170134+00
Date Added: 2024-06-11T16:41:30.056121
License: Public Domain

Filed 9/21/22 Sheldon Development v. SCG America Group CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

 SHELDON DEVELOPMENT, LLC,

      Plaintiff and Appellant,                                         G059833

           v.                                                          (Super. Ct. No. 30-2017-00901831)

 SCG AMERICA GROUP, INC., et al.,                                      OPINION

      Defendants and Respondents.

         Appeal from a judgment of the Superior Court of Orange County, Frederick Paul
Horn, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice
pursuant to art. VI, § 6 of the Cal. Const.) Reversed.

                   Knypstra Hermes & Zermeno, Bradley P. Knypstra, Grant Hermes and
Maggie R. Simoneaux-Cuaso for Plaintiff and Appellant.
                   Perkins Coie, Eudeen Y. Chang, Anne B. Beaumont and Oliver M. Gold
for Defendants and Respondents.
                                    INTRODUCTION
              A motion for summary judgment is properly denied where it does not
“refute tenable pleaded theories.” (Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 942.)
This is such a case.
              It centers on a real estate development project in the City of Garden Grove
(the City). The dispute is primarily between three parties who, at one time, joined forces
for purposes of securing rights to the project. But when things went south for them, their
dispute reached others. Plaintiff here discovered it had been cut out of the deal and has
sued not only the two other parties – alleging tortious interference theories – but also
some third-party entities who negotiated for and obtained an assignment of the
development rights from plaintiff’s former associates. It is plaintiff’s claims against
those third-party entities which are the focus of the summary judgment motion we now
review.
              It appears to us that the third parties moved for summary judgment on
theories they wanted to address rather than the theories plaintiffs plausibly alleged. And
the trial court, while producing a detailed and thoughtful ruling, nevertheless seems to
have weighed evidence and construed it in defendants’ favor (See pp. 10-13, infra). This
was error which we reverse.
                                          FACTS
                                        Background
              The parcel at issue, Site C, consists of five acres of land within the “Grove
District” at the corner of Harbor Boulevard and Twintree Lane in the City. In or around
2010, the City’s redevelopment agency, which owned Site C, was searching for a private
partner to develop it into a resort destination given its proximity to Disneyland.
Respondent Land & Design, Inc. (L&D) and its principal, Matthew Reid, sought to be
that partner. Reid brought in an associate, David Rose, a developer from Riverside
County. L&D, Reid, and Rose began pursuing talks with the City. At first, Reid and

                                              2
Rose were under the impression L&D had the deal in the bag. Later, however, they came
                                                                                                            1
to find out another major local player, McWhinney, was vying for the project as well.
The team was advised they would need to compete for the agency’s approval and then
negotiate and execute a development and disposition agreement (DDA) to procure the
development rights to Site C.
                 Reid and Rose felt they needed help in this regard. Rose told Reid to look
at bringing Steve Sheldon (Sheldon), a local developer, into the deal.
                        Sheldon Development and the Alleged Partnership
                 According to Sheldon, he was approached because L&D, Reid, and Rose
were an unknown quantity and had been unsuccessful in wooing the City on their own.
They needed someone with the connections to get them an exclusive negotiating
agreement (ENA) so they could get a foot in the door to negotiate a DDA and obtain the
development rights for the parcel. Sheldon says he had previous projects in the City and
had obtained ENA’s and DDA’s before, which gave him such expertise and relationships.
                 On or about October 19, 2010, Reid, Rose, and Sheldon met to discuss a
preliminary partnership agreement to allow them to share profits on the project. The
following day, Rose sent both of his counterparts a draft preliminary partnership
agreement (PPA), containing the following deal points: (1) Sheldon’s company, appellant
Sheldon Development, LLC (Sheldon Development), would become a partner of both
L&D and Rose’s company, E-Ticket Hospitality, LLC (E-Ticket), on the project; (2)
Sheldon Development would receive 10 percent of L&D and E-Ticket’s combined net
profits (including project development fees, refinancing, distributions, or sales proceeds

        1
                  In his deposition testimony, Rose vividly recalled how he and Reid obtained a meeting with the
City’s former mayor and expressed concern about their potential competition for the project. The former mayor was
very supportive of Reid and Rose’s bid until he heard their competition was McWhinney, at which time the mayor
“basically pushed back from the table.”

                                                       3
from the project); (3) if the project obtained a transient occupancy tax rebate of 75
                                                                                                         2
percent for at least 15 years, Sheldon Development could up its cut to 15 percent.
                 There is a dispute as to whether the PPA was ever consummated once the
draft was transmitted to Sheldon. Sheldon says he signed and returned the document to
Reid. Reid claims neither he nor Sheldon assented to the terms in the draft PPA and it
never came to fruition because he allegedly discovered Sheldon’s reputation with the City
was less than stellar. Based on this, he says L&D no longer pursued any sort of
partnership with Sheldon.
                                   L&D Obtains Rights to the Project
                 L&D signed an ENA with the City in December 2010. Sheldon says this
occurred after he had made numerous overtures to the City staff and elected officials on
behalf of the purported partnership. Rose testified that Sheldon did, in fact, do work in
this regard. On June 14, 2011, L&D executed a DDA with the City.
                 Later in 2011, however, the Legislature passed Assembly Bill Nos. IX 26
and IX 27, dissolving all redevelopment agencies in the state and transferring control of
the agency assets to successor agencies. (See California Redevelopment Assn. v.
                                                                       3
Matosantos (2011) 53 Cal.4th 231, 250 (Matosantos).) As a consequence, the existing
DDA had now to meet the approval of the California State Department of Finance.
                 That endeavor failed. The Department of Finance found the DDA was not
an enforceable obligation of the state. Still wanting to move forward, however, the City
and L&D got around the hurdle by executing a similar DDA on April 9, 2013. Reid by
this time desired to cut ties with Sheldon and told Rose he did not want Sheldon to know
about the new DDA.

        2
                 This last item was termed the “increased partnership interest potential.”
        3
                  These bills were passed in response to the state’s fiscal emergency declared in 2010. (Matosantos,
supra, 53 Cal.4th at p. 250.)

                                                         4
                    SCG’s Purchase of Development Rights from L&D
              After it procured the new DDA, L&D began marketing the project. Rose’s
broker connected L&D with respondent SCG America (SCG) as a potential buyer, and
they began negotiating over the potential assignment of L&D’s rights. L&D and SCG
had reached an understanding by November 2014.
              SCG contacted the City to get a report on the status of the DDA and the
City approvals for the project. On December 11, 2014, City Manager Matthew J. Fertal
sent the requested report via letter to SCG’s executive vice-president, YingFeng “Danny”
Wei, and its vice-president, Lorraina Pang. Fertal made clear in his letter that the City
would only be willing to consider assigning the DDA to SCG if SCG and L&D came to
their own agreement on the assignment terms “in a timely manner.”
              That agreement, however, was elusive. After SCG expressed concerns
about hotel and restaurant interest in the project as well as what it perceived to be
insufficient incentives for it to purchase the project, Reid terminated the L&D-SCG
memorandum of understanding on December 15, 2014.
              Even though negotiations with SCG were faltering, L&D’s new DDA
required the City to enter into a joint compensation agreement with all taxing entities
having jurisdiction over Site C, including the Orange County Water District (OCWD). It
just so happens that Sheldon sits on the board of directors of the OCWD. When the joint
compensation agreement came before him as a board member in early 2015, he notified
OCWD general counsel that there was a potential conflict of interest because he had an
interest in the project. The Orange County Board of Supervisors recognized the conflict
of interest and documented it in the May 5, 2015 Board of Supervisors meeting minutes.
              Reid knew this was a problem. If all taxing entities did not sign off on the
joint compensation agreement, “the deal would . . . die[].” Consequently, L&D, Reid,
and Rose contacted Sheldon to discuss the issue he raised. Sheldon proposed they meet
to “resolve [their] partnership issues[.]” Reid and Rose denied the existence of any

                                              5
partnership. But in the interest of moving things forward, they told Sheldon they wished
to “eliminate [his] potential conflict” with the project. They also asked Sheldon to refrain
from representing himself as a partner or a representative on the project.
                 From Sheldon’s perspective, Reid and Rose’s proposal was unacceptable.
What they wanted him to do was sell them his interest for what he believed was “pennies
on the dollar.” With the three former associates at an impasse, the City and L&D found a
workaround that would allow OCWD’s name to be removed from the joint compensation
agreement.
                 On March 25, 2016, SCG and L&D signed a new memorandum of
understanding, by which SCG would purchase L&D’s development rights for $7 million
and hire Reid as a development consultant on the project for four years. They agreed to
form a joint venture entity, correspondent Investel Garden Resorts, LLC (Investel), to
receive the assignment of the property and development rights. Investel came into
existence on June 7, 2016, and L&D had a minority, class B stake in it.
                 The City approved the assignment to Investel on or about June 28, 2016,
and two years later, on January 12, 2018, Investel entered into a development agreement
with the City which was recorded on January 17, 2018. Sheldon Development received
no funds or compensation for any work Sheldon performed.
                 Sheldon Development filed suit against – amongst others – L&D, Reid,
                               4
SCG, Investel, and Rose. For purposes of this appeal, however, we focus only on
Sheldon Development’s claims against the respondents, SCG and Investel. Sheldon
Development accused them of tortious interference, conspiracy, inducing breach of
contract, unjust enrichment, and aiding and abetting L&D, Reid, and Rose’s alleged

        4
                 Rose and Reid’s partnership eventually went belly-up as well when Reid decided to move forward
with SCG against Rose’s objection. Rose also filed suit against LD, Reid, SCG, and Investel. Rose’s lawsuit was
consolidated with Sheldon Development’s lawsuit, but the Rose lawsuit is not a subject of this appeal.

                                                       6
                                5
breach of fiduciary duty. The operative pleading alleged, in a nutshell, that SCG was
aware of Sheldon Development’s purported partnership with L&D, Reid, and Rose, and it
suppressed the value of the project and helped them divert profits to Investel where
Sheldon Development could not reach them.
                  SCG and Investel moved for summary judgment, or alternatively, summary
adjudication on all causes of action alleged against them. The trial court granted the
motion.
                                                 DISCUSSION
                  On appeal from a grant of summary judgment, “we independently examine
the record in order to determine whether triable issues of fact exist to reinstate the
action.” (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.)
Having done so, we conclude the motion was granted in error.
                                                                                                          6
                  SCG and Investel’s motion was posited on three main contentions. First,
SCG and Investel were not the cause of any rupture in Sheldon Development’s
relationship with L&D, Reid, and Rose. Second, neither SCG nor Investel had
knowledge or awareness of Sheldon Development’s purported interest in the project until
the lawsuit was filed. Third, Sheldon Development can point to no independently
wrongful act to support its tortious interference and unfair business practices claims.
Even where SCG and Investel met their moving burden as to these contentions, however,
Sheldon Development was able to adduce evidence to dispute material facts on which
they are based.

           5
                  Specifically, the causes of action against SCG and Investel were intentional interference with
prospective economic advantage (Eighth cause of action), negligent interference with prospective economic
advantage (Ninth cause of action), intentional interference with contractual relations (10th cause of action), inducing
breach of contract (11th cause of action), unlawful, unfair, and fraudulent business practices (12th cause of action),
unjust enrichment (13th cause of action), conspiracy (14th cause of action), and aiding and abetting breach of
fiduciary duty (15th cause of action).
           6
                  There are other contentions specific to individual causes of action, which we address later in the
opinion.

                                                          7
I.             L&D and E-Ticket’s Contractual Right to Sell/Lack of Causation
(Eighth through 15th Causes of Action)
               Causation is a necessary element of each of Sheldon Development’s causes
of action. In their summary judgment motion, SCG and Investel attempted to negate this
necessary element by pointing to a “flipping provision” in the PPA granting L&D and E-
Ticket an absolute right to sell the project. This provision states in pertinent part: “If in
the event that [L&D] and E-Ticket determine, in their absolute and sole discretion, that it
is in the Project’s best interest to sell or ‘flip’ the Project during the D.D.A. period . . .
then Sheldon shall be entitled to receive 10% of [L&D] and E-Ticket’s combined net
profits[.]” The provision immediately following states Sheldon Development’s right to
profit participation would cease if L&D and E-Ticket “decide[] to sell the Project[.]”
               SCG and Investel argue L&D merely exercised this contractual right, which
they were permitted to do “without any qualification.” (See Augustine v. Trucco (1954)
124 Cal.App.2d 229, 245-246.) Because L&D had the absolute right to sell the project to
them, SCG and Investel’s mere purchase of the development rights could not be the cause
of Sheldon Development’s harm.
               In our view, this argument reflects a fundamental misunderstanding of the
allegation. SCG and Investel were not sued on the basis of their purchase of development
rights. They were sued because they allegedly manipulated L&D and Reid into (a)
suppressing the project’s actual value, (b) forming a single-purpose entity (seemingly
unknown to both Rose and Sheldon) to divert the profits from the sale; and (c) paying
kickbacks to their executives in exchange for the purchase. If we assume Sheldon
Development had a valid and enforceable agreement with L&D and E-Ticket – a question
we have not been asked to resolve – each one of the above actions by SCG/Investel could
very conceivably have caused harm. SCG and Investel did not meet their moving burden
on the causation prong because their argument does not actually address the claim being
made.

                                                8
                 II.               SCG’s and Investel’s Awareness of Sheldon
Development’s Involvement (Eighth, Ninth, 10th, 11th, 14th and 15th Causes of
Action)
                 Another element integral to many of the claims is knowledge. Where a
claim is made for inducing breach of contract or interference with contract, a party is not
liable if he has “no knowledge of the existence of the contract . . . though an actual
breach results from his lawful and proper acts.” (Imperial Ice Co. v. Rossier (1941) 18
Cal.2d 33, 37.) Similarly, claims for interference with prospective economic advantage
require the plaintiff to show defendant knew interference was certain or substantially
certain to occur. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134,
1156-1157 (Korea Supply).)
                 SCG and Investel submitted declarations from executives who worked on
the deal, including Wei and Pang, and those individuals claimed they did not know
Sheldon Development had any involvement in the project until after the present lawsuit
was filed. In response, Sheldon Development pointed to Reid’s deposition testimony. At
least twice, Sheldon Development’s counsel asked Reid whether he expressed to SCG his
concerns over getting OCWD’s approval on the compensation agreement. Both times, he
                                                                       7
responded that SCG was already aware of the problem. In fact, Reid said he suggested

        7
                  When Sheldon Development’s counsel attempted to clarify this aspect of his testimony, Reid
(taking cues from his counsel’s objection) then said he did not know whether SCG was aware of the problem:
                  “Q.         Okay. So SCG knew that if they couldn’t get this compensation agreement done, that
they may not be able to go forward with the deal; is that correct?
                  “[¶] . . . [¶]
                  “THE WITNESS: Again, I’m not aware of what SCG was thinking or not thinking or their
attorneys.
         “BY MR. KNYPSTRA:
                  “Q.         But you just testified that SCG was aware of the compensation agreement, correct?
         “MR. ALLISON:                 Objection. Misstates the prior testimony.
         “BY MR. KNYPSTRA:
                  “[¶] . . . [¶]
                  “Q.         SCG was aware of the compensation agreement, correct?
         “MR. ALLISON:                 Objection. Lacks foundation.
                  “THE WITNESS:                  I don’t know if SCG was aware – was aware of that.”

                                                         9
to SCG that “they should move forward” with the deal in spite of the issue because
Sheldon “absolutely was not a partner in the project [and] had no interest in the
project[.]”
                 This testimony raises a triable issue of material fact as to whether SCG was
aware of Sheldon’s claimed conflict of interest well before it entered into a memorandum
of understanding with L&D. Additionally, the purported conflict of interest was
documented in public records like the Board of Supervisors meeting minutes. There is
sufficient evidentiary conflict to require a factfinder to resolve this issue.
III.             Independently Wrongful or Unlawful Act (Eighth, Ninth and 12th
Causes of Action)
                 A.               Intentional and Negligent Interference with Prospective
Economic Advantage (Eighth and Ninth Causes of Action)
                 “The tort of interference with prospective economic advantage protects the
same interest in stable economic relationships as does the tort of interference with
contract, though interference with prospective advantage does not require proof of a
legally binding contract. [Citation.] The chief practical distinction between interference
with contract and interference with prospective economic advantage is that a broader
range of privilege to interfere is recognized when the relationship or economic advantage
interfered with is only prospective. [Citations.]” (Pacific Gas & Electric Co. v. Bear
Stearns & Co. (1990) 50 Cal.3d 1118, 1126, fn. omitted.)
                 For both negligent and intentional interference claims, it is necessary for a
plaintiff to show the defendant’s conduct was wrongful in and of itself. (See National
Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 440.)
Similarly, for claims under Business and Professions Code section 17200, the conduct

       Reid’s ambiguous testimony here is best assessed by a factfinder who can assess credibility. On summary
judgment, neither we nor the trial court may do so.

                                                      10
alleged must be fraudulent, unlawful, or unfair. (Korea Supply, supra, 29 Cal.4th at p.
1143.)
              “The requirement that the defendant’s interference be independently
wrongful means that it is not enough for a plaintiff to show that the defendant interfered
with the plaintiff’s economic relationship with the third party (Della Penna [v. Toyota
Motor Sales, U.S.A. (1995)] 11 Cal.4th [376,] 378-379, 392-393; Ixchel [Pharma, LLC v.
Biogen, Inc. (2020)] 9 Cal.5th [1130,] 1142 [(Ixchel)]), even if the defendant did so with
an improper motive. [Citations.] To establish that the defendant’s interfering conduct
was independently wrongful, the plaintiff must instead prove that the conduct – whether
directed at the plaintiff or someone else – was ‘“proscribed by some constitutional,
statutory, regulatory, common law, or other determinable legal standard.”’ (Ixchel,
[supra, 9 Cal.5th] at p. 1142, quoting Korea Supply, [supra, 29 Cal.4th] at p. 1159;
Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152; Crown Imports [, LLC v. Superior Court
(2014)] 223 Cal.App.4th [1395,] [conduct need not be ‘independently wrongful as to the
plaintiff’]; accord, Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan &
Eisenberg (1989) 216 Cal.App.3d 1139, 1153-1154 [defendant’s conduct breached a
fiduciary duty; independently wrongful]; PMC, Inc. v. Saban Entertainment, Inc. (1996)
45 Cal.App.4th 579 [, 602-603] [defendant’s conduct violated ‘federal or state law or
unethical business practices,’ such as ‘defamation, trade libel or trade mark
infringement’; independently wrongful], disapproved on other grounds in Korea Supply,
[supra, 29 Cal.4th] at p. 1159, fn. 11.)” (Drink Tank Ventures LLC v. Real Soda in Real
Bottles, Ltd. (2021) 71 Cal.App.5th 528, 538-539).
              In their motion for summary judgment, SCG and Investel argued their
conduct violated “no law, legal obligation, or standard,” and Sheldon Development was
unable to identify any such law or standard. But Sheldon Development’s opposition, in
our view, convincingly contradicts this assertion. Rose testified in his deposition that
Pang and Wei told him and Reid that SCG would not move forward with the site C

                                             11
project unless they were paid a 10 percent kickback. Near the time the deal was reached,
a company was formed by Pang’s brother to receive the 10 percent payment in order to
                                 8
direct it to Pang and Wei.
                  SCG and Investel dismiss the kickback assertion as a non-issue because
Sheldon Development has “no evidence that the conduct was directed with the specific
intent to interfere with the alleged” PPA. But no such evidence is required for the claim,
as the California Supreme Court has expressly stated. (See Korea Supply, supra, 29
Cal.4th at p. 1154.) Rather, it is enough if the “defendant knew that the interference was
certain or substantially certain to occur as a result of its action.” (Ibid.) If SCG knew
Sheldon Development was claiming an interest in the project and a cut of the profits, it
would have realized its action of demanding kickbacks would reduce the amount
available to any of L&D’s partners.
                  SCG and Investel further argue that Sheldon Development is
mischaracterizing the payments: both they and the trial court observed that there is
evidence tending to show the payments were actually legitimate consulting fees. In
saying this, however, SCG and Investel are conceding the issue is triable. It is for a
finder of fact to decide what the evidence shows, not a court. The possibility of unlawful
conduct here is sufficient to send the matter to a jury.
                  B. Unlawful, Unfair, or Fraudulent Business Practices (12th Cause of
Action)
IV.               Unjust Enrichment (13th Cause of Action)
                  Sheldon Development’s unjust enrichment claim alleges Reid, Rose, L&D,
SCG and Investel all received a benefit from Sheldon’s work connecting the parties with
local decisionmakers, without paying for it. SCG and Investel attack this claim on the

         8
                  Because there is sufficient evidence in the record to cast doubt on the channeling of payments to
the entity, we need not take judicial notice of the entity’s history with the California Department of Real Estate as
requested by Sheldon Development.

                                                          12
basis that California law does not recognize a cause of action for unjust enrichment, and
even if it did, Sheldon Development presented no evidence to show any unjust
enrichment.
              The latter argument is simply inaccurate (and we respectfully disagree with
the trial court to the extent it found otherwise). All parties, including SCG and Investel,
presumably agree that an ENA to negotiate with the City was absolutely essential to the
project’s success. Indeed, this is where Sheldon Development alleges it provided value
added. Without the ENA, SCG and Investel would never have acquired the rights and
therefore, they benefited from Sheldon’s work – at least, so the theory goes. This kind of
theory has purchase (See, e.g., Professional Tax Appeal v. Kennedy-Wilson Holdings,
Inc. (2018) 29 Cal.App.5th 230, 239 [tax preparer was entitled to restitution from
developer for reducing delinquent taxes owed on foreclosure property]), and it will be up
to a trier of fact to decide how much.
              SCG and Investel’s other argument does not persuade us either. It is true
that, as we have stated, “[t]here is no freestanding cause of action for ‘restitution’ in
California.” (Munoz v. MacMillan (2011) 195 Cal.App.4th 648, 661 (Munoz), quoting
Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793.) But one must
be careful not to apply this principle in an overly technical way. “Common law
principles of restitution require a party to return a benefit when the retention of such
benefit would unjustly enrich the recipient; a typical cause of action involving such
remedy is ‘quasi-contract.’ (McBride v. Boughton (2004) 123 Cal.App.4th 379, 388–389;
see also Federal Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 346
[‘Whether termed unjust enrichment, quasi-contract, or quantum meruit, the equitable
remedy of restitution when unjust enrichment has occurred “is an obligation (not a true
contract [citation] ) created by the law without regard to the intention of the parties, and
is designed to restore the aggrieved party to his or her former position by return of the
thing or its equivalent in money”’].)” (Munoz, supra, 195 Cal.App.4th at p. 661.)

                                              13
              “Unjust enrichment is synonymous with restitution. (Dinosaur
Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1314.) [¶] ‘There are several
potential bases for a cause of action seeking restitution. For example, restitution may be
awarded in lieu of breach of contract damages when the parties had an express contract,
but it was procured by fraud or is unenforceable or ineffective for some reason.
[Citations.]’” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.)
              Should the finder of fact ultimately determine there was no enforceable
agreement between Sheldon Development, L&D and E-Ticket, all defendants would have
received the benefit of Sheldon’s services without payment. This is a situation for which
a quasi-contract theory would be appropriate. This is another issue for the trier of fact.
V.            Conspiracy (14th Cause of Action)
              Finally, SCG and Investel misapprehend Sheldon Development’s
conspiracy claim just as they have misapprehended its interference claims. The claim as
alleged is SCG, Investel, Reid, Rose and L&D conspired to conceal “the purchase” from
Sheldon Development.
              SCG and Investel correctly point out that their purchase of the project was
always public knowledge because it had to be approved by the City. But Sheldon
Development argues the terms of the purchase were concealed. Namely, SCG would be
taking a kickback and L&D would not have a voice in Investel’s management of the
project, which was a requirement for the City’s approval of the assignment to SCG. The
word “purchase” in the pleading, liberally construed, refers to the transaction as a whole,
including the terms of the purchase. Again, SCG and Investel have failed to negate a
tenable pleaded theory.

                                             14
                                               DISPOSITION
                                                                                      9
                 Summary judgment in respondents’ favor is reversed. Sheldon
Development shall recover its costs on appeal.

                                                             BEDSWORTH, ACTING P. J.

WE CONCUR:

SANCHEZ, J.

MARKS, J.*

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

        9
                  Because we reverse the trial court’s grant of summary judgment, we need not address Sheldon
Development’s contention its due process rights were violated by the motion being heard by a judge different from
the assigned judge.

                                                       15