Civil Complaint filed

Cal. Super. - 5th Dist.August 6, 2021

WHITNEY THOMPSON& JEFFCOACH 1 Whitney, Thompson & Jeffcoach LLP Timothy L. Thompson, #133537 2 tthompson@wtjlaw.com Jacob S. Sarabian, #322108 3 jsarabian@wtjlaw.com 970 W. Alluvial Ave. 4 Fresno, California 93 711 Telephone: (559) 753-2550 5 Facsimile: (559) 753-2560 6 Attorneys for Plaintiffs CAMPUS POINTE COMMERCIAL, L.P. and KASHIAN 7 ENTERPRISES, L.P. 8 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF FRESNO, B. F. SISK COURTHOUSE 11 CAMPUS POINTE COMMERCIAL, L.P. a California limited partnership; KASHIAN 12 ENTERPRISES, L.P., a California limited partnership, 13 14 15 Plaintiff, V. CALIFORNIA STATE UNIVERSITY, 16 FRESNO ASSOCIATION, INC., a California corporation, DEBORAH ADISHIAN- 17 ASTONE, in her official capacity as president of California State University, Fresno 18 Association, Inc., and DOES 1 through 25, inclusive, Defendant. Case No. COMPLAINT FOR: (1) BREACH OF CONTRACT; (2) BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (3) SPECIFIC PERFORMANCE; AND (4) DECLARATORY RELIEF 19 20 21 Plaintiffs CAMPUS POINTE COMMERCIAL, L.P. a California limited partnership; 22 KASHIAN ENTERPRISES, L.P ., a California limited partnership, allege as follows: NATURE OF THE ACTION I 23 24 1. Plaintiffs Kashian Enterprises, L.P. ("Kashian Enterprises") and Campus Pointe 25 Commercial, L.P. ("Campus Pointe Commercial") (collectively, "Kashian") are developers who 26 design, construct, and create premier commercial and residential properties throughout Fresno 27 County and beyond. In or around August 2006 Kashian Enterprises entered into a Development 28 Agreement with California State University, Fresno Association, Inc. (the "Association"), a public 392.0 05534693.000 COMPLAINT FOR DAMAGES E-FILED 8/6/2021 5:42 PM Superior Court of California County of Fresno By: I. Herrera, Deputy 21CECG02302 WHITNEY THOMPSON& JEFFCOACH 1 benefit corporation and auxiliary of the Board of Trustees of the California State University 2 Fresno, for the development of the premises of what is now commonly referred to as Campus 3 Pointe, generally located on the northeast comer of Chestnut Street and Shaw A venue in Fresno, 4 California (the "Development Agreement"). 5 2. The Association entered into the Development Agreement with Kashian 6 Enterprises after the Association obtained the right to sublease the Campus Pointe land from the 7 Board of Trustees of the California State University (the "Trustees"). On or around June 28, 2006 8 the Trustees and the Association entered into a ground lease for Campus Pointe, which allowed 9 the Association to sublease the premises to a developer for commercial and residential 10 construction. 11 3. The purpose of the Development Agreement was to effectuate the "Master Plan" 12 for the development and generally delineates each party's respective obligations under the 13 Agreement. It obligates Kashian to develop the then vacant 44-acre parcel into a mixed use 14 commercial, residential, and hotel facility. In tum, the Association is obligated to provide the land 15 to Kashian and warrants to Kashian that there are no legal or regulatory restrictions for the uses 16 identified for the property. 17 4. Throughout the parties' extensive history in developing Campus Pointe the process 18 to obtain approval for a specific project required Kashian submit a letter identifying the planned 19 business along with related documentation for the proposed construction. Without issue, the 20 Association, through its president Deborah Adishian-Astone ("Astone1"), has dutifully complied 21 with its contractual obligations and approved, based on her sole discretion, the various businesses 22 that now populate the premises. 23 5. In 2018 Kashian approached the Association and Astone with a plan to construct a 24 Convenience Store on the premises that would include a maximum of 4 Multi Product Dispensers 25 aka gas pumps (hereinafter the proposed "Convenience Store"). The proposed location for the 26 Convenience Store was indisputably within what the Development Agreement refers to as the 27 28 1 All references to Astone are in her official capacity as president of the Association. 392.0 05534693.000 2 COMPLAINT FOR DAMAGES WHITNEY 1 "Commercial Parcel" and Kashian therefore expected the Association and Astone to comply with 2 their contractual obligations and approve the project. Astone worked with Kashian representatives 3 on the Convenience Store site plan and while doing so never stated the proposed business was not 4 allowed under the terms of the Development Agreement or violated any University policy. In 5 October 2019, however, Kashian learned of a letter to Astone, from Steve Relyea, Executive Vice 6 Chancellor and Chief Financial Officer, of the California State University. That letter informed 7 Astone that the "Chancellor's Office" intended to interfere with Astone's intent to approve the 8 Convenience Store. 9 6. Kashian, concerned to see the Chancellor's Office opining on a proposed 10 development submitted pursuant to a contract where it is not a party, provided additional 11 information as to why the Convenience Store's construction must be allowed and why the 12 Chancellor's position is inconsistent with the governing documents. Subsequently, Astone and the 13 Association denied the proposed Convenience Store construction. 14 7. On information and belief, Astone and the Association's denial is because of 15 pressure exerted by unknown senior officials within the Trustees, who are causing the Association 16 and Astone to knowingly breach their contractual obligation which requires Astone and the 17 Association approve the Convenience Store's construction. Kashian is therefore forced to seek 18 relief from this Court to compel the Association and Astone to comply with their contractual 19 obligations. Kashian has already entered into a lease for the construction of the Convenience 20 Store and expended more than $100,000 preparing the land for its development. The Association 21 and Astone's refusal to undertake their ministerial task of approving an allowable use for the land 22 has already caused Kashian damage and will continue to do so until remedied. 23 24 8. PARTIES Plaintiff CAMPUS POINTE COMMERCIAL, L.P. a California limited partnership 25 is, and at all times mentioned herein was and is a Limited Partnership organized and existing 26 under the laws of the State of California with its principal place of business in Fresno County, 27 California. 28 9. PlaintiffKASHIAN ENTERPRISES, L.P., a California limited partnership is, and THOMPSON & 392.0 05534693.000 3 JEFFCOACH COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 at all times mentioned herein was and is a Limited Partnership organized and existing under the 2 laws of the State of California with its principal place of business in Fresno County, California. 3 10. Defendant California State University, Fresno Association, Inc. was and is a 4 California public benefit corporation and auxiliary of the Board of Trustees of the California State 5 University Fresno with its principal place of business in Fresno County, California. 6 11. Defendant Debbie Astone, sued in her official capacity as President of the 7 Association, is, and at all times mentioned herein, a resident of Fresno County, State of California. 8 9 12. JURISDICTION AND VENUE Jurisdiction and venue are proper in the Superior Court of California, County of 10 Fresno because: (i) the Association entered into the Development Agreement and Commercial 11 Sublease in this judicial district; (ii) the Association is located in this judicial district and was 12 located in this judicial district when the parties entered into the contracts; and (iii) the agreement 13 between the parties, and the obligation contained therein, were to be performed in the County of 14 Fresno. (California Code of Civil Procedure sections 394, 395.) The amount in controversy 15 exceeds the jurisdictional minimum. 16 17 13. GENERAL ALLEGATIONS The Development Agreement, governs the relationship between Kashian 18 Enterprises and the Association and also provides the parameters for construction at Campus 19 Pointe. The Development Agreement allows Kashian to change plans to meet changing needs of 20 prospective tenants and their customers and the site is to be developed so that the end produced 21 will be a planned, cohesive and integrated development. The Development Agreement recognizes 22 Campus Pointe is a mixed-use facility and therefore split the project into five separate parcels: the 23 Commercial Parcel, the Hotel Parcel, the Senior Housing Parcel, and two Market Rate Apartment 24 Parcels. The Agreement requires Kashian develop an entity to sublease each of the respective 25 parcels and that the development of each is to be for "uses and improvements indicated by the 26 Parcel name." 27 14. The Development Agreement contains the Association's representations and 28 warranties to Kashian Enterprises. Under Section 5.5(d) of the Development Agreement, the 392.0 05534693.000 4 COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 Association represents and warrants that "the Master Plan and the uses permitted to the sub-lessee 2 in the Parcel Sublease are permitted under the land use controls applicable to the Project Site." 3 This provision creates a warranty from the Association to Kashian Enterprises that Kashian 4 Enterprises is allowed to develop each of the respective parcels for the uses permitted ( e.g. a hotel 5 can be constructed on the Hotel Parcel or a Convenience Store can be constructed on the 6 commercial parcel). 7 15. Section 9 .4 of the Development Agreement provides that "uses specified for a 8 Parcel shall include ancillary services and uses reasonably incidental to the uses specified." Thus, 9 the Development Agreement expressly approves of Kashian utilizing each of the parcel subleases 10 for not only the uses delineated therein, but also any ancillary services or reasonably incidental 11 uses. Finally, the Development Agreement broadly outlines the procedure by which Kashian must 12 conduct construction on the premises and requires he first obtain approval from the Association 13 before breaking ground on a project. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16. In June 2008 Campus Pointe Commercial, L.P. and the Association entered into a sublease for the Commercial Parcel, which then amended and restated in the commercial sublease dated February 28, 2012 (the "Commercial Sublease"). Under the Commercial Sublease, which involves the property at-issue in this lawsuit, a "Permitted Use" is defined to include, "office, commercial, (including retail, restaurant, entertainment but expressly excluding industrial and manufacturing uses) and/or residential uses and all incidental and ancillary uses not inconsistent with such specified uses." (Section 1.39.) (Emphasis supplied.) The Commercial Sublease further contains a warranty from the Association that the premises may be used and occupied "for the purposes of the Permitted Uses" and that the Association warrants and represents that they "are consistent with, and not in violation of, the uses for the Leased Land provided for in the Prime Lease and the Campus Master Plan." (Section 5.2.) 17. Consistent with, and in reliance on, the Development Agreement and the Commercial Sublease's independent acknowledgements that a permissible use on the Commercial Parcel includes incidental and ancillary uses to retail and restaurant, Kashian submitted his proposal for a construction of the Convenience Store to the Association and Astone in May, 2018. 392.0 05534693.000 5 COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 Kashian reasonably expected approval to be a mere formality. This is especially so in light of the 2 Fresno Municipal Code, which defines a "Regional Mixed Use" district to include, "medium-scale 3 retail, housing, office, civic and entertainment uses, and shopping malls with large format or 'big 4 box' retailed are allowed, as are such supporting uses such as gas stations, hotels, and residential 5 in mixed-use or single-use buildings." (Fresno Mun. Code§ 15-1101.) Further, Astone worked 6 with Kashian representatives on the Convenience Store site plan, asked for certain modifications 7 to be made with respect to how the Convenience Store and gas pumps would be situated on the 8 property and while doing so, never stated the proposed business was not allowed under the terms 9 of the Development Agreement or violated any University policy. 10 18. Despite the foregoing, Steve Relyea, Executive Vice Chancellor and Chief 11 Financial Officer, of the California State University, indicating the "Chancellor's Office" would 12 interfere with Astone's duty the installation of the Convenience Store. Relevant herein is that the 13 proposed Convenience Store development is fully within and already approved under the 14 Environmental Impact Report for Campus Pointe. The Convenience Store would also result in a 15 reduced transportation impact for purposes of the California Environmental Quality Act 16 ("CEQA") meaning the Association cannot maintain a justifiable environmental or regulatory 17 related concern. 18 19. On or around January 22, 2021 Kashian provided another letter to Astone again 19 requesting approval for the construction of the Convenience Store and supplying the requested 20 additional information. Shortly thereafter, the Association informed Kashian that it was reviewing 21 the renewed proposal and would advise. Then, in May 2021 the Trustees wrote Kashian a letter 22 explaining why they were denying approval of the Convenience Store . 23 24 25 FIRST CAUSE OF ACTION (Breach of Contract - Against The Association, Astone, and DOES 1 through 25) 20. Kashian incorporates by reference paragraphs 1 through 19 of this Complaint as 26 though the same were full set forth herein. 27 21. On or around April 26, 2007 the Association and Kash_ian Enterprises entered into 28 the Development Agreement. Section 6 of the Development Agreement outlines each party's 392.0 05534693.000 6 COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 respective obligations to propose and then proceed with a development. It requires, inter alia, 2 Kashian Enterprises to prepare a "Developer's Improvement Plan" and to submit such plan to 3 "Association for the review, comment, and approval of Association." 4 22. Kashian Enterprises has performed all the things required of it under the agreement, 5 including submitting the documents necessary for Association to review, comment, and approve 6 the plan. The Association and Astone, in her official capacity, have breached the Development 7 Agreement, however, by failing to provide its approval for the Convenience Store. The 8 Convenience Store is a permitted commercial use. 9 23. The Association has also breached its representations and warranties contained in 10 the Development Agreement, including, but not limited to, its representation that "the Master Plan 11 and the uses permitted to the Sublessee in the Parcel Sublease are permitted under the land use 12 controls applicable to the Project Site." Although the Association represented and warranted that 13 the uses identified in the Parcel Sublease are permissible, the Association is now claiming that a 14 permissible use, a Convenience Store, is in fact disallowed. Such position constitutes a breach of 15 the Association's representation and warranties to Kashian Enterprises. 16 24. With respect to the Commercial Sublease, Campus Pointe Commercial, has done 17 all the things required of it under the agreement. This includes submitting the plans for the 18 Convenience Store's construction under Section 3 of the parties' agreement. The Association and, 19 by extension, Astone, through Section 3, is to provide their consent to the planned improvement. 20 25. The Association and Astone have breached the Commercial Sublease by 21 improperly, arbitrarily, and in bad faith withholding consent for what indisputably qualifies as a 22 "Permitted Use" under the Commercial Sublease. 23 26. As a direct and proximate cause of the foregoing breaches by the Association and 24 Astone, Kashian Enterprises as well as Campus Pointe Commercial have been damaged. The 25 Association and Astone's refusal to provide consent for the Convenience Store's construction is 26 the direct and proximate cause ofKashian's damage, an amount in excess of $2,100,000, which 27 represents Kashian's lost profits from the Convenience Store together with Kashian's out of 28 pocket costs incurred to date, subject to proof at trial. 392.0 05534693.000 7 COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 2 3 4 SECOND CAUSE OF ACTION (Breach Of The Implied Covenant Of Good Faith And Fair Dealing - Against The Association, Astone, and DOES 1 through 25 ) 27. Kashian incorporates by reference paragraphs 1 through 26 of this Complaint as 5 though the same were full set forth herein. 6 28. Inherent in the Development Agreement and Commercial Sublease exists an 7 implied covenant of good faith and fair dealing. It requires each party to deal with the other party 8 to the contract in good faith to ensure each party obtains the benefit of the agreement. Kashian 9 Enterprises has done all the things required of them under the Development Agreement and 10 Commercial Sublease, including by seeking the approval of the Association and Astone before 11 beginning construction on the Convenience Store. The Association and Astone's duty of good 12 faith and fair dealing extends to approving projects that are plainly allowed for and contemplated 13 under the Development Agreement and Commercial Sublease. 14 29. The Association and Astone have breached this covenant of good faith and fair 15 dealing by arbitrarily and improperly withholding their consent on the development of the 16 Convenience Store. The Association and Astone's actions deprive Kashian Enterprises and 17 Campus Pointe Commercial of the bargain obtained through the Development Agreement and 18 Commercial Sublease, respectively. The Association and Astone's actions are unfair and its 19 decision to deny the Convenience Store was made in bad faith. And, as a direct and proximate 20 result of the foregoing, Kashian has been harmed in amount in excess of $2,100,000, which 21 represents Kashian's lost profits from the Convenience Store together with Kashian's out of 22 pocket costs incurred to date, subject to proof at trial. 23 24 25 30. THIRD CAUSE OF ACTION (Specific Performance -Against All Defendants) Plaintiff incorporates by reference paragraphs 1 through 29 of this Complaint as 26 though the same were full set forth herein. 27 31. The Development Agreement and Commercial Sublease are agreements of the type 28 which are specifically enforceable in that Kashian only requests the Association and Astone 392.0 05534693.000 8 COMPLAINT FOR DAMAGES WHITNEY THOMPSON& JEFFCOACH 1 provide their approval for a use allowed under the respective agreements. Each agreement 2 exchanges sufficient consideration as between the parties, requiring Kashian spend millions of 3 dollars to develop commercial real estate with no guaranteed return on investment. The 4 agreements also require Kashian pay to the Association hundreds of thousands of dollars in rent 5 each year. Despite the fair exchange of consideration, the Association and Astone have 6 wrongfully and unjustly withheld the consent it is obligated to provide under the Development 7 Agreement and Commercial Sublease. On information and belief, Astone and the Association 8 acknowledge the Convenience Store is a permissible use, but claim they are being prevented from 9 provided their obligatory consent because of persons within the Trustees exerting improper 10 influence and undue pressure over the Association and Astone. 11 32. Kashian's remedy at law for the Association and Astone's breach of the 12 Development Agreement and Commercial Sublease will be inadequate to protect Kashian's rights 13 under each agreement. The cooperation and good faith of the Association and Astone is vital to 14 Kashian' s continued development of Campus Pointe and the inclusion of each proposed use is 15 made pursuant to Kashian's global plan for the premises. The Association and Astone's bad faith 16 refusal to permit the installation of the Convenience Store jeopardizes not only this project, but 17 future ones in that the Association and Astone appear to have abandoned their representation and 18 warranties under the Development Agreement and plainly ignored the language of the Commercial 19 Sublease. 20 33. Kashian has done all that is required under the Development Agreement and 21 Commercial Sublease, yet the Association and Astone refuse to comply with their legal 22 obligations. Accordingly, Kashian requests the issuance of an order of specific performance 23 directing the Association and Astone to comply with its obligations under the Development 24 Agreement and Commercial Sublease. 25 I I I 26 I I/ 27 28 392.0 05534693.000 9 COMPLAINT FOR DAMAGES WHITNEY 1 2 3 34. FOURTH CAUSE OF ACTION (Declaratory Relief-Against All Defendants) Kashian incorporates by reference paragraphs 1 through 3 3 of this Complaint as 4 though the same were full set forth herein. 5 35. There exists an actual controversy as between the Association, Astone, and Kashian 6 as to whether a Convenience Store with gas pumps qualifies as either a permissible use under the 7 Commercial Sublease or an "ancillary service and use reasonably incidental to" a permitted use 8 under the Commercial Sublease. Further, there is an actual controversy as to whether the 9 Association and Astone have "reasonably cooperated" in helping Campus Pointe Commercial 10 obtain approval, as the Association and Astone are required to do under the Commercial Sublease. 11 36. Kashian desires to have a judicial determination of its rights and duties and a 12 declaration of the rights, duties, and responsibilities of the Association and Astone, as it relates to 13 both the Development Agreement and Commercial Sublease. There is no adequate remedy at law 14 to otherwise obtain the requested declaration. 15 16 17 18 WHEREFORE, Kashian prays for judgment as set forth below. PRAYER FOR RELIEF WHEREFORE, Kashian prays for judgment against defendants, as follows: 1. On the First and Third Causes Of Action, for damages in an amount not less than 19 $2,100,000, subject to proof at trial; 20 2. On the Fourth Cause Of Action, for an order requiring the Association and Astone, 21 in her official capacity as President of the Association, approve the construction of the 22 Convenience Store ; 23 3. On the Fifth Cause Of Action, for a declaration that a Convenience Store is a 24 permissible use under the Development Agreement and Commercial Sublease and for a 25 declaration that the Association and Astone have failed to reasonably cooperate in obtaining the 26 approval for the Convenience Store 's development; 27 4. For pre-judgment interest at the maximum rate allowed by law; 28 5. For reasonable attorney's fees; THOMPSON & 392.0 05534693.000 10 JEFFCOACH COMPLAINT FOR DAMAGES 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHITNEY THOMPSON & JEFFCOACH For costs of suit; 6. 7. For any other relief the court may deem just and proper. Dated: August_..6_, 2021 392.0 05534693.000 WHITNEY, THOMPSON & JEFFCOACH LLP By '/~ imothy L. Thompson Jacob S. Sarabian Attorneys for Plaintiffs CAMPUS POINTE COMMERCIAL, L.P. and KASHIAN ENTERPRJSES, A Limited Partnership 11 COMPLAINT FOR DAMAGES