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Turkey Creek, L.P v. Elizabeth Layn et al

February 25, 2011

TURKEY CREEK, L.P., PLAINTIFF AND APPELLANT,
v.
ELIZABETH LAYN ET AL., DEFENDANTS AND RESPONDENTS.



Super. Ct. No. SCV23876

The opinion of the court was delivered by: Robie J.

Creek v. Layn CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff Turkey Creek, L.P. (plaintiff) operates a golf course in Placer County on real property leased from defendants Elizabeth G. Layn and Jeannette W. Duff (collectively, defendants). In this action, plaintiff sued defendants for breach of contract, unfair competition, and declaratory relief arising out of defendants' proposal to develop adjacent property that defendants own. The essence of plaintiff's complaint was that under defendants' development proposal, a disproportionate amount of the open space required for the development would be situated on the property leased by plaintiff, thus interfering with plaintiff's rights under the lease by limiting plaintiff's ability to develop the leased premises in the future as something other than a golf course.

Defendants filed a special motion to strike the complaint under Code of Civil Procedure section 425.16.*fn1 The trial court granted the motion, concluding that because the development proposal did not "purport to change the status quo in any way," defendants could not "be held to have breached the lease or engaged in unfair competition by submitting their development application."

On plaintiff's appeal, we conclude the trial court did not err in granting the special motion to strike. By depicting the bulk of the leased premises as open space in connection with their proposed development of their own property, defendants did not breach any express term of the lease, violate the implied covenant of good faith and fair dealing, or engage in unfair competition. Accordingly, we will affirm the order granting the special motion to strike.

FACTUAL AND PROCEDURAL BACKGROUND

In 1994, defendants and their father, Edward A. Grey (since deceased), owned approximately 469 acres of real property in unincorporated Placer County.*fn2 In September 1994, they agreed to lease part of that property, consisting of approximately 320 acres, to Steele Family Partners, L.P. for the development of a golf course. Steele Family Partners, L.P. is the general partner of plaintiff. Sometime after the lease was signed, Steele Family Partners, L.P. assigned its interest in the lease to plaintiff.*fn3

Under the terms of the lease, the owners' property was to be divided into two legal parcels: (1) the golf course parcel, which would be leased to the lessee, and (2) the remaining parcel (also known as Walkup Ranch), over which the owners would retain full control (except that they could not use it for a golf course).

In a paragraph entitled "Permitted Uses," the lease provided that "[u]ntil such time as a separate legal parcel is created for the Golf Course Parcel . . . , Tenant shall only use the Leased Premises for agricultural purposes. Thereafter, it is Tenant's intention to construct an 18-hole public golf course on the Leased Premises. Said golf course may have all ancillary uses including pro shop, restaurant, driving range and maintenance facility."

The lease was for an initial term of 29 years, but also provided for seven automatic extension terms of 10 years each, so that the effective term of the lease was 99 years. Additionally, the lease provided the lessee with a right of first refusal and an option to purchase upon expiration of the lease.

Subsequently, the lessee developed about 130 acres of the golf course parcel as the Turkey Creek Golf Club, which has been in operation since approximately 1998; the other 190 acres remain undeveloped.

Both the golf course parcel and the remaining parcel are within the sphere of influence of the City of Lincoln (the city).*fn4 The city's general plan (most recently updated in March 2008) establishes seven village areas encompassing the land within the city's existing and proposed sphere of influence. The general plan requires a specific plan for each village area. Thus, any land use application for development of property within a village area must include a specific plan for the entire village.

Both the golf course parcel and the remaining parcel are located within the city's village 1 planning area, which consists of approximately 1,780 acres owned by approximately 38 separate owners.

Under the city's general plan, at least 40 percent of each village area must be reserved for open space. A golf course qualifies as open space. With respect to village 1 in particular, the general plan specifies that the specific plan for that village "should consider and address" "[c]are in designing around the existing golf course to avoid any land use conflicts."

In 2006, defendants entered into an agreement with Lake Development-Lincoln, LLC (Lake) to assist them in securing entitlements from the city for development of the remaining parcel. To that end, from May 2006 through May 2007 Lake worked to draft and refine a specific plan for village 1. This process included multiple public and private meetings with affected landowners. Consistent with the general plan, Lake designed the specific plan around the golf course. Thus, in the proposed specific plan defendants ultimately submitted to the city in May 2007, the golf course continued to be shown as a golf course and made up much of the open space required for the village 1 specific plan.

In November 2008, plaintiff filed a complaint against defendants for breach of contract, unfair competition, and declaratory relief. Plaintiff alleged that defendants had breached the lease, and engaged in unfair competition, "by attempting as part of their application to the City of Lincoln for approval of a specific plan to (a) annex the [golf course parcel] to the City of Lincoln over Plaintiff's objection, [and] (b) have a disproportionate amount of the required 'open space' within the specific plan area located within the [golf course parcel]." Plaintiff further alleged that defendants had breached the covenant of good faith and fair dealing by seeking "to improperly and unilaterally restrict the ...


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