Fulfillco v. LC&K Investment CA1/3

Filed 7/14/23 Fulfillco v. LC&K Investment CA1/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

FULFILLCO, INC., Plaintiff and Appellant, A165189 v. LC&K INVESTMENT, LLC, (Alameda County Defendant and Respondent. Super. Ct. No. HG21104667)

Fulfillco, Inc. (plaintiff) sued LC&K Investment, LLC (defendant), and the trial court later granted defendant’s special motion to strike the complaint. (Code Civ. Proc., § 425.16; undesignated statutory references are to this code.) Plaintiff appeals, and we affirm. BACKGROUND In 2018, defendant leased its Union City warehouse to Conway Ventures, Inc. (Conway) in exchange for monthly rent of $51,748.1 Paragraphs 12.2 and 12.3 of the lease authorized Conway to — under certain conditions — assign the lease and sublease the property; if Conway failed to pay rent, defendant could seek payment from the assignee or subtenant. In 2019, Conway assigned the lease to plaintiff, which began paying rent to defendant. Soon thereafter, plaintiff entered into a written agreement with

Our factual recitation is not intended to be exhaustive, but rather to 1

place the issues before us in context. 1

Choice Logistics, Inc. (Choice) whereby plaintiff would provide logistical services — storage, warehousing, and transportation — for a fee. Choice could terminate the agreement for any reason with 30-days’ notice. Around May 2020, plaintiff stopped paying rent. Several months later, defendant filed an unlawful detainer action against plaintiff and Conway seeking $545,337 in unpaid rent. (Choice eventually learned about the lawsuit.) Plaintiff failed to answer the complaint, and defendant requested entry of default; while waiting for the trial court to enter plaintiff’s default, defendant learned of plaintiff’s agreement with Choice.2 Defendant believed Choice was plaintiff’s subtenant, that the lease permitted it to collect rent from a subtenant in the event of the tenant’s failure to pay rent, and that plaintiff would continue failing to pay rent. Defendant was also “[l]ooking for a way to mitigate its damages.” In January 2021, defendant’s counsel sent Choice a letter asserting plaintiff and Conway had breached the lease by failing to pay more than $500,000 in rent. The letter demanded Choice — as plaintiff’s sublessee — send payments associated with its occupancy of the warehouse to defendant under paragraph 12.3 of the lease. If Choice failed to do so, defendant would seek to hold Choice liable for the payments. After receiving the letter, Choice agreed to send payments to defendant. But when the trial court set aside plaintiff’s default in the unlawful detainer action, Choice reneged on its promise. In February, Choice terminated its agreement with plaintiff. Three months later, defendant filed a lawsuit against plaintiff and Choice for breach of contract stemming from the unpaid rent.