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Inc. v. City of Alameda

California Court of Appeals, First District, Fourth Division

February 20, 2018

AREA 51 PRODUCTIONS, INC., Plaintiff and Respondent,
v.
CITY OF ALAMEDA et al., Defendants and Appellants.

         Alameda County No. RG-14-741702 Superior Court Hon. Stephen Pulido

          Farella Braun Martel, Kelly A. Woodruff, Thomas Mayhew, and Alexander M. Porcaro for Defendants and Appellants City of Alameda, John Russo, and Nanette Banks Mocanu.

          Seyfarth Shaw, Michael J. Burns, and Jason M. Allen for Defendants and Appellants PM Realty Group, Tiffany McClendon, and Maria-Delia Elgarico.

          Kyndra S. Miller for Plaintiff and Respondent.

          STREETER, J.

         Area 51 Productions, Inc. (Area 51), an event planning company, had a long-standing relationship with the City of Alameda (the City) to license the use of certain City property to Area 51 for events Area 51 helped plan and promote with third-party companies. The City relied on PM Realty Group, L.P. (PM) to assist it with managing these license arrangements. Due to various problems at or in connection with events put on by Area 51, the City decided to cease doing business with it in mid-2014.

         Because that left Area 51 on the hook to a number of third-party entities based on commitments undertaken in reliance on PM's previous confirmation of the City's willingness to license event space, Area 51 sued the City and various other parties who acted on the City's behalf, seeking damages. Sued along with the City were City Manager John Russo and Acting Assistant Community Development Director Nanette Banks Mocanu, as well as PM and three employees of PM, Stacey McCarthy, Tiffany McClendon and Maria Elgarico.[1]

         In response to the complaint, Defendants filed a general demurrer and a motion to strike all causes of action under Code of Civil Procedure[2] section 425.16, commonly known as the anti-SLAPP statute. Following the trial court's simultaneous denial of that motion and grant of the demurrer, Defendants appealed the adverse order on their anti-SLAPP motion, arguing that all of Area 51's claims arise from protected activity and are without merit. We shall reverse in part and affirm in part.[3]

         I. BACKGROUND

         A. Factual History

         Together with the facts alleged in the complaint, the declarations submitted in support of and against the anti-SLAPP motion reveal, in substance, the following circumstances. The City has leased a substantial amount of land from the federal government since at least 2000, including, as relevant here, the former Alameda Naval Air Station, also known as Alameda Point. According to the City, it “licenses specific areas of Alameda Point for private use, including an area known as the Northwest Territories (the ‘NWT') located on the former Naval Air Station runway.” The City established an elaborate licensing process for anyone who wants to use its property, and as part of that process has contracted with PM since 2004 to “manage[] the leasing and licensing of Alameda Point.”

         For over a decade, the City has licensed the NWT and other property to Area 51, an event promotion company, for various events the company has helped plan and promote on behalf of third-party companies. Apparently, however, this long-standing relationship has been periodically fraught with disputes surrounding Area 51's compliance with the City's rules. For instance, the two parties have sometimes disagreed on whether Area 51 properly disclosed its intended activities in some licensing applications; and sometimes other tenants have complained about Area 51's disturbances. Given these issues, around late 2013 the City encouraged Area 51 to work with Rock Wall, another of the City's tenants, but one with whom it has had few if any compliance issues. Thus, in September 2013 Area 51 and Rock Wall formed a new entity, Area 51 Enterprises, LLC (Enterprises). On September 23, 2013, Enterprises entered into a one-year standing licensing agreement with the City starting October 1, 2013. The agreement provided (1) it was “fully revocable at the sole option and discretion of” the City, and (2) prohibited transfers to anyone but Enterprises and the City.

         Only a few days later, on October 4, 2013, Rock Wall severed ties with Area 51 and withdrew from Enterprises. It seems no one informed the City of this development until January 2014, at which point PM notified Area 51 that “the current license agreement in place is no longer valid since the company has made legal changes with their stakeholders and the agreement is between the City and both companies.” Before and after finding out about Rock Wall's withdrawal from Enterprises, the City placed “soft holds” on the NWT property upon Area 51's request, for various events from May to December 2014. In February 2014, the City reminded Area 51 by email that it would need to obtain new license agreements; otherwise, it would “be unable to utilize the Northwest Territories for the events held on the calendar.” It is unclear whether Area 51 received, acknowledged, or responded to these emails.

         On March 10, 2014, Area 51 emailed PM to confirm the holds for its events later that year. The next day Elgarico replied for PM on behalf of the City, confirming the “soft holds” for the specified dates. The City then emailed Area 51 in late March to reiterate it needed to memorialize “licenses for those scheduled events, ” and PM emailed Area 51 in April with a draft license agreement for its May event and clarified that PM would “do a new [l]icense agreement for each of [Area 51's] events.” According to Area 51, this email exchange essentially serves as the communicated offer and acceptance of terms, producing a firm contractual commitment to license the NWT properties to Area 51 on the “soft hold” dates.

         Defendants allegedly breached this “agreement” in May, as evidenced by a May 19, 2014 email from Mocanu to Area 51, stating “I have spoken to the City Manager” and “the City's licensing relationship with Area 51 is over.” Nevertheless, the event in May took place as scheduled without a new license agreement, but gave rise to some compliance disputes which ultimately triggered the City's termination of the relationship on May 19. In her May 19 email to Area 51, Mocanu pointed to these compliance issues as an example of why the City had wanted Area 51 to work “under Rock Wall.”

         B. Procedural History

         Area 51 filed a notice of claim with the City, requesting use of the property on the dates requested or damages. The City denied this request, prompting Area 51 to file its complaint, naming as defendants the City, the Individual City Defendants, and the PM Defendants, and asserting six causes of action against all of them. In the complaint, Area 51 alleged on information and belief that each Defendant was an “agent, employee or representative of each of the... [other] Defendants and in doing the things mentioned herein, was acting in the course and scope of such agency and employment.” Attached to the complaint were numerous documentary exhibits detailing many of the facts summarized above.

         Area 51's six causes of action were: (1) breach of contract and breach of the implied covenant of good faith and fair dealing, based on its belief that Defendants had entered into a contract with Area 51 by virtue of confirming the holds on its events “on or about March 11, 2014”; (2) tortious interference with Area 51's third-party contracts; (3) intentional interference with prospective economic relations; (4) negligent interference with prospective economic relations; (5) unfair competition under Business and Professions Code section 17200; and (6) negligent misrepresentation, as to the “important fact... that their confirmed reservations of the [NWT] Property would be honored.”

         The City and the Individual City Defendants timely moved to strike all six causes of action under the anti-SLAPP statute, and the PM Defendants joined the motion. Area 51 opposed it, submitting the declaration of its Chief Executive Officer, John Walker, as the sole evidentiary showing in support of its claims. Without attaching and authenticating any of the various documents supplied as exhibits to the complaint, Walker's declaration reads, in its entirety, as follows:

         “1. I am the CEO of Area Productions, Inc., d/b/a Area 51 Enterprises, LLC, the Plaintiff if [sic] the above-captioned action.

         “2. In March of 2014 of 2014 [sic] the City and PM Realty, through its [sic] agents and employees[, ] confirmed and agreed on dates for four events. Two events, one for Volkswagen and one for BMW, occurred before the natural termination of a Long Term Agreement for leasing space with the City that was set to expire in September, 2014. The remaining events, for Bridgestone and Porsche, were set to occur on October 7-12, 2014 and November 4-10 2014, respectively. PM Realty knew that the Property must be unconditionally available before I could secure Third Party Agreements and attendance insurance, as was customary in our dealings for the prior two decades.

         “3. Area 51 Enterprises was formerly business partners with Rock Wall Wine, Inc.

         “4. When Area 51 Enterprises partnered with Rock Wall Wine, Inc., it introduced Rock Wall to the Property it had used to hold its events for the prior 18 years.

         “5. Up until September 2014 Area 51 and the City had a Long Term License Agreement that covered all of its individual events.

         “6. After September 2014 Area 51 confirmed its individual events with PM Realty before entering into Third Party Agreements.

         “7. Contrary to Defendants' assertion that it either (a) was ‘void 4 days after its execution' or (b) ‘in January 2014' when Defendant[s] allegedly became aware of potential grounds to void the Agreement, I never received any indication that the City or PM Realty prevent [sic] Area 51 from use of the Property.

         “8. In fact, up until May of, 2014, the City, PM Realty and the Individual Defendants continued to accept security deposits from Area 51 and never indicated that Area 51 should not enter into Third Party Agreements, after confirming their space, as they had in the 18 years prior.

         “9. Although the City and PM Realty have offered a number of excuses for failure to provide the Property as required, among them: (1) heavy trucks... (2) change in proportional shares of Area 51 and (3) licensing issues, the Defendants have neglected their obligations due to a personal issues [sic] the Defendants have with me, unrelated to business or any agreements we have entered.

         “10. Upon information and belief, the City, PM Realty, [and the] Individual Defendants conspired to force Area 51 out of the lease space and secure a more lucrative ...


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