## Facts

- A restaurant corporation (Breg) operated under a long-term commercial lease containing a clause prohibiting subletting or assignment without the lessor’s written consent.
- Breg agreed to sell restaurant assets to a buyer (Bomze), contingent on the lessor’s consent to a lease assignment.
- The lessor refused consent and sought to use its position to obtain more favorable lease terms (including higher rent and other concessions).
- To avoid the claimed consent requirement, Breg’s shareholders restructured the transaction as a sale of all corporate stock to Bomze, leaving Breg as the tenant of record and keeping the lease in the same corporate entity.
- The lessor asserted the stock sale was an improper circumvention of the consent clause and threatened lease termination/foreclosure if the deal proceeded.
- The stock sale closing was delayed for over a month, and the tenant and shareholders claimed losses caused by the lessor’s conduct.
- The trial court granted partial summary judgment declaring no landlord consent was required for the stock sale and, after trial, awarded damages for intentional interference with contractual relations.

## Issues

1. Whether a sale of all stock of a corporate tenant constitutes a “letting,” “underletting,” “sale,” or “assignment” of the lease (or prohibited “occupancy”) requiring the landlord’s written consent under the lease.
2. Whether the landlord and its principal intentionally interfered with the tenant’s contract with the purchaser by asserting a consent right, refusing to recognize the stock-sale structure, and threatening termination/foreclosure.
3. Whether the landlord’s asserted good-faith belief (including reliance on counsel and economic self-interest) justified or privileged its interference.

## Decision

- The Court of Appeal affirmed.
- A sale of all stock of the corporate lessee did not assign, transfer, or sublet the lease and did not violate the lease’s occupancy restrictions; landlord consent was not required.
- Substantial evidence supported liability for intentional interference with contractual relations based on threats and pressure that delayed performance of the tenant–purchaser agreement.
- The landlord’s claimed good faith, reliance on counsel, and economic interest did not justify interference where the landlord asserted a consent power not granted by the lease and used it to seek better lease terms.

## Legal Principles

- Absent lease language specifically addressing changes in corporate ownership or control, transfer of stock in a corporate tenant does not itself constitute an assignment or transfer of the lease because the corporate lessee remains the same legal entity.
- Intentional interference with contractual relations requires: (1) a valid contract, (2) defendant’s knowledge, (3) intentional acts designed to induce breach or disruption, (4) actual breach or disruption, and (5) resulting damages.
- A defendant’s economic interest or asserted legal rights may provide only a qualified privilege; no privilege applies when the defendant pressures contracting parties by asserting a contractual power it does not possess and threatens adverse action to extract new benefits.

## Conclusion

The court held that the landlord had no contractual right to condition a corporate tenant’s stock sale on consent and affirmed damages for intentional, unjustified interference where the landlord used threats to delay the transaction in an effort to obtain more favorable lease terms.


Richardson v. La Rancherita of La Jolla, Inc., 98 Cal. App. 3d 73, 159 Cal. Rptr. 285 (Ct. App. 1979)