Veggie Creations, Inc. v HBK-Willow, LLC

APPA Valley Farms Real Estate Partnership (APPA) (defendant) was a general partnership with four partners, brothers Thom and Michael Rindt, their father Klaus Rindt, and Jeffrey Knowles. APPA’s partnership agreement stated that the managing partner had sole control over the partnership’s business operations, including sole authority to lease, buy, or sell real property, which was the partnership’s line of business. Although the original partnership agreement named Thom as the managing partner, a 2007 amendment made Klaus the managing partner. APPA leased one of its California commercial properties to Veggie Creations, Inc. (VCI) (plaintiff) under a long-term lease. In June 2015, VCI expressed interest in purchasing the property. In an email exchange, Klaus expressly stated that he was APPA’s managing partner and had ultimate authority over partnership decisions. No purchase occurred. In February 2016, Klaus agreed to sell the property to HBK-Willow, LLC (HBK) (defendant), executing a sale agreement that stated APPA would not enter any new leases on the property pending the sale’s closing. During a conference call in March 2016, HBK notified VCI that it had purchased the property, that HBK would not be entering a new lease with VCI, and that VCI needed to vacate the premises. APPA partners Thom and Michael, who were on the call, told VCI that since the sale to HBK had not yet closed, they could give VCI a new two-year lease. HBK objected. However, two days later, Thom and Michael executed a new lease with VCI. HBK learned of the lease one day before the sale’s closing. VCI sued HBK and APPA. Against HBK, VCI sought a declaratory judgment that the new lease was valid and asserted quiet-title and intentional-interference-with-prospective-economic-advantage claims. HBK moved for summary judgment.