California Court of Appeals, Fourth District, Third Division
VALUEROCK TN PROPERTIES, LLC, et al., Plaintiffs and Respondents,
PK II LARWIN SQUARE S.C. LP, et al., Defendants and Appellants.
from an order of the Superior Court of Orange County, No.
30-2016-00878748Craig L. Griffin, Judge.
Blackmar, Principe & Schmelter, Gerry C. Schmelter, Peter
J. Attarian, Jr., and Timothy D. Principe for Defendants and
O'Melveny & Myers, Marc F. Feinstein and Andrew J.
Weisberg for Plaintiffs and Respondents.
an appeal from an order denying a special motion to strike
under the anti-SLAPP (strategic lawsuit against public
participation) statute. (See Code Civ. Proc., § 425.16
(§ 425.16).) The case arises from a landlord's
repeated refusal to consent to the proposed assignment of a
ground lease for the anchor space in a shopping center. The
plaintiffs are the entities that wish to assign the leasehold
interest and the entities that agreed to take the assignment;
the defendants are the landlord and its parent company.
their original and first amended complaints, the plaintiffs
alleged the landlord unreasonably withheld consent to the
plaintiffs' lease assignment request. While the
litigation was pending, the plaintiffs made an amended lease
assignment request, which the landlord similarly rejected. In
their second amended complaint, the plaintiffs asserted the
same five causes of action as before, but added allegations
about the landlord's refusal to consent to their amended
landlord filed an anti-SLAPP motion to strike the second
amended complaint, contending the plaintiffs' amended
assignment request and the landlord's response to that
request were settlement communications and statements made in
litigation, and therefore constituted protected activity. The
trial court denied the motion, finding the landlord's
rejection of the amended assignment request was not a
settlement communication or litigation-related conduct, but
rather an ordinary business decision. We agree and affirm the
order denying the anti-SLAPP motion.
following facts are taken from the pleadings, the
declarations, and other evidence submitted on the special
motion to strike.
PK II Larwin Square S.C. LP (Larwin) is the owner and
landlord of Larwin Square, a community shopping center
located in Tustin. Defendant Kimco Realty Corporation (Kimco)
is a real estate investment trust that holds an indirect
minority interest in Larwin.
1978 until 2015, the anchor tenant for the Larwin Square
shopping center was a Vons supermarket. Vons entered into a
30-year ground lease for the space in 1977 and later extended
the lease term to 2021. The lease prohibited Vons from
transferring or assigning the lease without the
landlord's prior written consent, but further provided
the landlord's “consent shall not be unreasonably
The Assignment of the Lease to Haggen
2015, as part of the planned merger between Albertsons and
Vons' parent company, and per the divestiture terms
imposed by the Federal Trade Commission, many Vons stores -
including the Larwin Square store - were sold to Haggen, a
small grocery chain in the Northwest.
anticipation of the merger, Larwin approved the assignment of
Vons's Larwin Square lease to Haggen Opco South. In May
2015, Haggen notified Larwin that Vons was instead assigning
the lease to a different Haggen entity, plaintiff Haggen
Property Holdings III, LLC (HPH III). Larwin did not object
to the change. A few months later, without Larwin's
knowledge or consent, HPH III “secretly” assigned
the lease to plaintiff Haggen Property South, LLC (Propco).
operated a supermarket in Larwin Square for just a few
months, from June to October 2015. The space has been vacant
ever since, but Propco has continued to pay rent and other
expenses for the premises.
The First Request for Larwin's Consent to an
Assignment to ValueRock
February 2016, Propco sold its interest in the ground lease
to plaintiff ValueRock Investment Partners, LLC (ValueRock
IP), a commercial real estate investment firm. ValueRock IP
in turn assigned its rights in the lease to its affiliate,
plaintiff ValueRock TN Properties, LLC (ValueRock TN), a
special purpose entity created to acquire the lease.
2016, Propco asked for Larwin's approval of the
assignment to ValueRock. During a preliminary telephone
conversation between representatives for Larwin and Propco,
Larwin expressed concern that according to its records, HPH
III was actually the tenant, Larwin had no record of any
transfer to Propco, and the lease required the tenant to
request landlord consent before making any assignment. Larwin
then sent Propco the May 2015 lease assignment from Vons to
HPH III, noted that was “inconsistent” with
Propco's claim to be assignee of the lease, and explained
the inconsistency was “causing our legal team [to]
question if we are dealing with the Tenant here.”
Despite those concerns, Larwin requested additional
information to evaluate the request for consent, such as
ValueRock TN's financials, experience, and plans for the
complied in part. It provided general information about
ValueRock and its leadership team, but it refused to provide
detailed financial information on ValueRock TN because Kimco
(Larwin's parent), like ValueRock TN, was also a real
estate investor and developer. As for ValueRock's plans
for the premises, Propco replied that while nothing in the
ground lease required the space to be used as a ...