Filed 5/28/20 San Vicente Investment, LP v. Trammell Crow etc. CA2/1

Opinion following rehearing

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION ONE

SAN VICENTE INVESTMENT, LP,

Plaintiff and Appellant,

v.

TRAMMELL CROW SANTA MONICA DEVELOPMENT, LLC,

et al.,

Defendants and Respondents.

B291720

(Los Angeles County

Super. Ct. No. SC120042)

APPEAL from a judgment of the Superior Court of Los Angeles County, Lawrence H. Cho and Mitchell L. Beckloff, Judges. Affirmed.

Vivoli Saccuzzo and Michael W. Vivoli for Plaintiff and Appellant.

Glaser Weil Fink Howard Avchen & Shapiro, Garland A. Kelley, Amin Al-Sarraf and Elizabeth G. Chilton for Defendants and Respondents.

_________________________

INTRODUCTION

In the go-go days of 2007, San Vicente Investment, LP (SVI) and Trammell Crow Santa Monica Development, LLC (TCSMD) formed a limited liability company named 301 Ocean Development, LLC (the Company) to redevelop a coastal property in Santa Monica. Although redevelopment efforts were pursued once the Great Recession hit, the permits necessary to break ground were never issued and construction never commenced. In 2013, TCSMD (who was the Company’s managing member) ended up selling the property to a third party.

SVI then filed a lawsuit against TCSMD and the Company alleging causes of action including breach of contract, breach of fiduciary duty, and fraud. SVI claimed TCSMD reneged on its obligation to obtain the final building permits for the project, failed to make a required capital contribution to the Company (which if made would have been distributed to SVI), improperly took out a loan secured by the property, and wrongfully sold the undeveloped property “to cover its tracks and make a fast get away.”

TCSMD asserted that it complied with its obligations, and expended close to $11 million of its own money in efforts to develop the property. When the process became prohibitively expensive, and the project’s viability uncertain due to the significant downturn in the real estate market, TCSMD exercised its right as managing member for the Company to call it quits, and put the property on the market.

SVI’s claims were eventually resolved against it through motions for summary adjudication and nonsuit. SVI now appeals from the judgment entered after those rulings. For the reasons set forth below, we affirm.

BACKGROUND

A. Factual Background

SVI owned real property at 301 Ocean Avenue, Santa Monica, California (the Property). It sought to tear down the existing apartment building on the Property and redevelop the land. To that end, SVI partnered with Trammel Crow, a real estate development firm.

1. The Letter of Intent

In January of 2007, a Trammel Crow affiliate named Trammel Crow Acquisition, Inc. (TCA) and SVI’s principal, Michael Rahimi, executed a letter of intent (LOI). The LOI expressed the intent of TCA or its affiliates to enter into a business venture with Rahimi to acquire the Property and to develop the “land with either (a) a 29-unit condominium project (involving 22 ‘ultra luxury’ units and 7 ‘low income’ units, which may be held for rental), or (b) a two-tower project containing approximately 126 senior living apartments and 44 high-end condominiums [(the Project)].”

The LOI stated the parties would form a new limited liability entity (the Ownership Entity), and that TCA would serve as its general partner or managing member. The LOI further provided that capital contributions to the Ownership Entity would be made as follows: Rahimi would contribute the land and current improvements (which, for purposes of the LOI, the parties agreed was valued at $50 million, but which was subject to revision after further appraisals), and TCA would contribute $25 million, or half of the final appraisal value, in cash. Rahimi would receive an immediate distribution of $25 million from the Ownership Entity.

The LOI concluded by disclaiming that “no binding agreement shall exist between the parties . . . unless and until the definitive agreement described above has been fully executed by both parties.”

2. The Agreement

On May 31, 2007, SVI and TCSMD entered a definitive Amended and Restated Limited Liability Company Agreement (the Agreement). The Agreement provided that SVI and TCSMD formed the Company, a Delaware limited liability company (LLC), whose business purpose was “to acquire (or continue to own) the Property and other related assets, and to own, operate, manage, mortgage, encumber, develop, redevelop, rebuild, rehabilitate, construct improvements upon, and sell or otherwise dispose of, and otherwise deal with the Property and other Company Assets, for the production of income and profit . . . .” The Agreement provided TCSMD was to be the Company’s managing member, with exclusive management powers over all its business and affairs. The Agreement expressly acknowledged, in section 7.6.9, that the managing member was to act in the best interest of the Company, rather than in the best interest of either of the members individually.

Of the Agreement’s many provisions, only a few are pertinent to the dispute before us. We summarize them below.

(a) Capital Contributions

As initial capital contributions, TCSMD was to contribute $18.75 million in cash, and SVI was to contribute the Property, which now had an established agreed value of $50 million, plus $250,000 in cash.

In addition, section 4.1.2(a) of the Agreement provided that “[w]ithin three (3) Business Days after the Company has received the ‘Primary Building Permits’ (as defined herein) from the City of Santa Monica, TCSMD will make an Additional Capital Contribution to the Company, in cash, in the amount of $6,500,000. As used herein, the Primary Building Permits means the permits for the following: removal (of tenants); demolition grading, and construction of the building shell, including foundations, framing, and all major systems therein, such as plumbing, electrical, sewer, life safety and HVAC.”

If the managing member determined further additional capital contributions beyond that provided in section 4.1.2(a) were needed, SVI and TCSMD were each to contribute 50 percent of the capital call, capped at certain restrictions not relevant here.

(b) Distributions

Section 5.2 of the Agreement provided: “Immediately upon the contribution to the Company of the Initial Capital Contributions of the Members, a Distribution shall be made to SVI in the amount of Eighteen Million Five Hundred Thousand Dollars ($18,500,000).” Furthermore, “[w]ithin three (3) Business Days after TCSMD has made the Additional Capital Contributions under Section 4.1.2(a), a Distribution shall be made to SVI in the amount of Six Million Five Hundred Thousand Dollars ($6,500,000).”

Thereafter, distributions were to be made first to TCSMD, until TCSMD’s unpaid preferred return and unrecovered contribution (which constituted the initial capital contribution of $18.75 million and the additional capital contribution of $6.5 million after the permits were secured) was reduced to zero, and then pro rata to SVI and TCSMD per their contribution percentages.

(c) Loans

The Agreement defined “Loan” as “any construction loan or any permanent loan made by a Lender to the Company to finance the development of the Property.” Section 3.2 granted the Company the power “to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes described herein and for the protection and benefit of the Company.” Section 3.3 provides: “The Company may take out one or more Loans to finance the construction and development of the Property.”

(d) Right of First Offer

Section 8.4 of the Agreement provided the Company had to provide SVI with a right of first offer if the managing member elected to sell the Property, stating: “Notwithstanding the unrestricted power and right of the Managing Member to sell or otherwise dispose of the Property, or any part thereof, if the Managing Member elects to sell the Property . . . , before the Property is listed for sale or otherwise exposed to the marketplace, the Managing Member shall give notice to the Members (the ‘Sale Notice’) which Sale Notice shall contain the proposed selling price and any terms or conditions of the proposed sale. SVI shall have a ‘right of first offer,’ on the terms and condition[s] set forth herein, to purchase the Property from the Company on the same terms and conditions set forth in the Sale Notice. SVI shall give notice to the Managing Member (with copies to all other Members) of its election to exercise its right of first offer within ten (10) days after receipt of the Sale Notice, and the failure of SVI to give such notice within such time period shall be deemed an election not to exercise the right of first offer. If SVI does not elect to exercise the right of first offer, the Company may list, market and sell the Property on substantially the same (or better, from the Company perspective) terms and conditions set forth in the Sale Notice, but if any of such terms or conditions are materially changed (so that they are more favorable to a buyer), then SVI shall be given another right of first offer with respect thereto. . . .”

(e) Choice of Law and Integration Clause

The Agreement provided that it was to “be construed in accordance with and governed by the laws of the State of Delaware without regard to the principles of conflicts of law.” The Agreement also contained an integration clause, stating “[t]he Agreement constitutes the entire agreement among the parties with respect to the matters contained herein” and “may not be modified or amended in any manner other than” a specified process involving a written vote of the members, or in some limited circumstances unilateral action by the managing member.

3. The First Amendment to the Agreement

In October 2007, the Company entered into a $14 million loan with Essex Property Financial Corporation (the Essex Loan). The Essex Loan was secured by, among other things, a first lien deed of trust on the Property and a pledge of TCSMD’s membership interest in the Company.

On January 14, 2009, the Essex Loan was modified. In connection with the modification of the Essex Loan, the lender required that the Company amend the Agreement to include single-purpose entity provisions. On January 27, 2009, in accordance with section 14.1.2(c) of the Agreement, which allowed TCSMD, as the managing member of the Company, to unilaterally amend the Agreement “ ‘to conform to any single-purpose entity requirements of any lender, without the consent of any other Member,’ ” TCSMD amended the Agreement to include single-purpose entity provisions (the First Amendment). The First Amendment also stated that the value of the Property at the time of the Agreement was retroactively reduced from $50 million to $25 million.

4. The Second Amendment to the Agreement

A few days later, on January 30, 2009, SVI and TCSMD executed a second amendment to the Agreement, altering a variety of sections throughout the Agreement (the Second Amendment). As pertinent here, the Second Amendment amended section 5.2 (the section delineating distributions), added a new section specifying which sections were to apply if the Property was sold before the Company obtained the permits, and acknowledged the Essex Loan.

While it kept much of the same language as the original Agreement’s section 5.2, the Second Amendment’s section 5.2 deleted the language from the original Agreement concerning SVI’s entitlement to the additional $6.5 million capital contribution after the Company obtained the Primary Building Permits. Instead, the Second Amendment added section 16, which provided: “Notwithstanding anything to the contrary in this Second Amendment, if the Property is sold by the Company at any time after the Effective Date but prior to that date the Company has received the Primary Building Permits (as defined in Section 4.1.2(a) of the Agreement), then . . . the provisions of original Section 5.2 of the Agreement shall apply . . . .”

Additionally, section 15 of the Second Amendment acknowledged that the Company had entered into the Essex Loan, and that the net proceeds from the Essex Loan were paid directly to TCSMD and were deemed to have been a contractually authorized distribution to TCSMD.

5. TCSMD Decides to Sell the Property

On July 9, 2012, TCSMD sent SVI a Sale Notice (July 2012 Sale Notice), informing SVI it would be taking the Property to market for a sale price of $34,139,590 in cash to seller. The Sale Notice stated: “As you know, you have ten (10) days from receipt of this Sale Notice to notify [TCSMD] of your election to exercise the right of first offer.” SVI did not exercise its right of first offer. Though the parties contest the price at which TCSMD ultimately listed the Property, and whether or not TCSMD sufficiently marketed the Property, it is uncontested that, following SVI’s rejection of the July 2012 Sale Notice, TCSMD sought to sell the Property to a third party.

On January 24, 2013, TCSMD sent SVI another Sale Notice (January 24 Sale Notice), stating that TCSMD had received an offer on the Property for $18.5 million, with $1 million immediately nonrefundable and a closing to take place within 60 days of mutual execution of a sale contract, and that TCSMD intended to accept the offer. The Sale Notice stated, “As you know, you have ten (10) days from receipt of this Sale Notice to notify [TCSMD] of your election to exercise the right of first offer/refusal.”

Four days later, on January 28, 2013, at approximately 4:25 p.m., TCSMD sent SVI a letter revoking the January 24 Sale Notice, and issuing a new Sale Notice in its place (January 28 Sale Notice). The notice stated it was revoking “the Prior Sale Notice” and delivering a “revised additional formal notice.” The January 28 Sale Notice said TCSMD had now received a bona fide offer on the Property for $20 million, with $2 million immediately nonrefundable and a closing to take place within 60 days of mutual execution of a sale contract, and that TCSMD intended to accept the offer. The Sale Notice concluded, once again, by stating: “As you know, you have ten (10) days from receipt of this Sale Notice to notify [TCSMD] of your election to exercise the right of first offer/refusal.”

About thirty minutes after receiving the January 28 Sale Notice, SVI faxed TCSMD its acceptance of the January 24 Sale Notice. It is unclear what communications occurred between SVI and TCSMD after SVI’s purported acceptance of the January 24 Sale Notice, but SVI eventually accepted the January 28 Sale Notice instead, and then ultimately assigned its right of first offer to a third party in return for cash consideration.

At the time the Property was sold to a third party, TCSMD had not yet obtained the requisite Primary Building Permits and had not made an additional capital contribution of $6.5 million. In turn, SVI had not received the additional distribution of $6.5 million it was to receive after the Primary Building Permits were secured.

B. Procedural Background

1. SVI’s Complaint and First Amended Complaint

On February 11, 2013, SVI filed a complaint against TCSMD and the Company for specific performance, breach of contract, breach of fiduciary duty, fraud, and declaratory relief. First, SVI alleged TCSMD breached the Agreement by taking out the Essex Loan, which SVI contended was not permitted by the Agreement (Essex Loan Claim). Second, SVI alleged TCSMD, acting as the Company’s managing member, deliberately refrained from obtaining the Primary Building Permits to avoid making its additional capital contribution of $6.5 million (Primary Building Permits Claim). Lastly, SVI contended that it accepted the January 24 Sale Notice before TCSMD sent the January 28 Sale Notice, and that TCSMD lied about having had a $20 million offer before it sent the January 28 Sale Notice (Sale Claim). SVI further alleged as part of the Sale Claim that TCSMD did not receive the $20 million offer until after it sent the January 28 Sale Notice, and thus committed fraud.

On May 13, 2013, SVI filed a first amended complaint, dismissing its claim for specific performance, since, after filing its initial complaint, SVI had accepted the January 28 Sale Notice and then entered into an agreement with a third party that acquired the Property.

2. Defendants’ Motion for Summary Judgment, or

in the Alternative, Summary Adjudication

In July 2014, TCSMD and the Company filed a motion for summary judgment or, in the alternative, summary adjudication, to SVI’s first amended complaint. Defendants argued that none of SVI’s claims were viable because (1) the Agreement did not impose an obligation on TCSMD to obtain the permits, and SVI’s receipt of $6.5 million was conditioned on the permits being obtained, (2) the Agreement allowed TCSMD to obtain the Essex Loan, and, regardless, SVI signed the Second Amended Agreement, ratifying the Essex Loan, and (3) TCSMD revoked the January 24 Sale Notice before SVI accepted it, which it was authorized to do by law.

On January 27, 2015, Judge Lawrence Cho denied the motion for summary judgment and partly denied and partly granted the motion for summary adjudication. Judge Cho granted summary adjudication as to the Primary Building Permits Claim, agreeing with defendants that the Agreement did not impose a duty on TCSMD to obtain such permits. Judge Cho also granted summary adjudication as to the Essex Loan Claim, finding TCSMD took out the Essex Loan in conformance with the Agreement and with the parties’ intent.

Judge Cho denied summary adjudication, however, as to the Sale Claim. First, Judge Cho found that, pursuant to section 8.4 of the Agreement, TCSMD had to send SVI a Sale Notice “ ‘before the Property is listed for sale or otherwise exposed to the marketplace,’ ” and “[t]he fact that a third party purchaser made a $20 million offer could lead a fact finder to conclude that [TCSMD] had ‘exposed [the Property] to the marketplace’ before providing SVI with a [right of first offer, or] ROFO.” Moreover, Judge Cho found, section 8.4 did not contain a rescission provision, and so it appeared that SVI had 10 days within which to accept the ROFO regardless of the Company receiving any additional, better offers in the interim.

3. Second Amended Complaint

In August 2015, SVI was granted partial leave to file a second amended complaint, but only to add two more parties SVI alleged were alter egos of TCSMD. SVI filed its second amended complaint in September 2015, adding Trammell Crow Company and TCA as defendants.

SVI was denied leave to add another claim for breach of contract and to “clean up, clarify, and conform” other allegations because SVI filed its second motion for leave to amend the complaint two and a half years after it commenced the action and three weeks before the trial date.

4. Status Conferences

At a hearing held on March 9, 2017, Judge Beckloff held the right of first offer was revocable. SVI thereafter clarified that the only remaining breach of contract claim involved the alleged failure to comply with the right of first offer. However, prior to the final status conference, SVI filed a motion asking Judge Beckloff to reconsider Judge Cho’s summary adjudication of the Primary Building Permits Claim and the Essex Loan Claim.

At the final status conference on February 22, 2018, Judge Beckloff held he lacked authority to reconsider Judge Cho’s order granting summary adjudication. All that was left to be tried, Judge Beckloff found, was the Sale Claim, which fell under four legal theories: breach of contract, breach of fiduciary duty, fraud, and declaratory relief.

5. Defendants’ Motion for Nonsuit

Because, by this point in the proceedings, SVI acknowledged it had received the January 28 Sale Notice before it accepted the January 24 Sale Notice, Judge Beckloff’s ruling that the January 24 Sale Notice was revocable effectively resolved the Sale Claim. SVI expressed its desire to appeal the entire case. After some discussion, the parties agreed SVI would submit a written opening statement and defendants would respond by filing a motion for nonsuit.

SVI filed its opening statement on April 11, 2018. Defendants filed their motion for nonsuit a few days later, contending there were only two issues left for trial: “(1) under [SVI]’s declaratory relief cause of action, whether Defendants are liable to [SVI] based upon the timing of Defendants’ revocation of a sale notice [SVI] purported to accept; and (2) under [SVI]’s fraud cause of action, whether Defendants are liable to [SVI] based on their representation to [SVI] that they had an offer for $20 million before they issued the revocation.”

With respect to the first issue, defendants requested a judgment of nonsuit because SVI admitted it mailed out its acceptance of the January 24 Sale Notice after it had received the January 28 Sale Notice. As to the second issue, defendants conceded there was a factual dispute, and asked for a very short bench trial to resolve it, alleging they had evidence that showed they received the entire offer before sending SVI the January 28 Sale Notice.

Because defendants conceded there was at least one triable issue of fact, Judge Beckloff denied the motion for nonsuit. However, at a hearing on May 7, 2018, to avoid trial and expedite its ability to appeal, SVI struck its allegation that defendants did not actually have a $20 million offer before they sent SVI the January 28 Sale Notice. Accordingly, on May 18, 2018, the court granted defendants’ motion for nonsuit.

Judgment was entered on June 11, 2018. SVI thereafter timely appealed.

DISCUSSION

A. Standard of Review

We review the order granting summary adjudication de novo. (Case v. State Farm Mutual Automobile Ins. Co., Inc. (2018) 30 Cal.App.5th 397, 401.) With regard to a motion for nonsuit, we look to see whether there is “ ‘some substance to plaintiff’s evidence upon which reasonable minds could differ’ ”; if there is, we reverse. (Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 839.) In reviewing both orders, we evaluate the evidence in the light most favorable to the plaintiff. (Ibid. [review of order granting nonsuit]; Stewart v. Superior Court (2017) 16 Cal.App.5th 87, 109 [review of order granting summary adjudication].)

“ ‘The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute. [Citation.] As such, the summary judgment statute (Code Civ. Proc., § 437c), ‘provides a particularly suitable means to test the sufficiency of the plaintiff’s prima facie case and/or of the defendant’s [defense].’ [Citation.] A summary judgment motion must demonstrate that ‘material facts’ are undisputed. (Code Civ. Proc., § 437c, subd. (b)(1).)” (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 629.) The same standard applies to motions for summary adjudication. (Code Civ. Proc., § 437c, subd. (f)(2) [“A motion for summary adjudication . . . shall proceed in all procedural respects as a motion for summary judgment”].) “[T]he moving party’s burden on summary adjudication is to establish evidentiary facts sufficient to prove or disprove the elements of a claim or defense.” (Oakland Raiders v. National Football League, supra, 131 Cal.App.4th at p. 629; see Code Civ. Proc., § 437c, subd. (f).)

B. The Trial Court Was Permitted to Grant Summary Adjudication

Before addressing the substance of the trial court’s rulings, SVI initially contends it was procedurally improper to grant summary adjudication of discrete issues that did not completely dispose of causes of action. This argument pertains only to the Primary Building Permits and Essex Loan Claims, as the Sale Claim was resolved through the motion for nonsuit and not summary adjudication.

Code of Civil Procedure section 437c, subdivision (f)(1) provides that “[a] party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages . . . or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Although the Legislature has limited the reach of summary adjudication by “prohibit[ing] the summary adjudication of general ‘issues’ and required instead that a summary adjudication motion dispose of one or more causes of action, affirmative defenses, claims for damages, or issues of duty” (Raghavan v. Boeing Co. (2005) 133 Cal.App.4th 1120, 1136), the issues that the trial court summarily adjudicated here all fall under the statute. They involved issues of duty (whether TCSMD had duties to obtain permits or to pay $6.5 million to SVI, and whether the Essex loan breached any duty owed SVI), and an affirmative defense of ratification with regard to the Essex loan. The court was permitted to address these issues of duty and TCSMD’s affirmative defense of ratification through the summary adjudication procedure, even if they did not entirely dispose of a cause of action. (Code Civ. Proc., § 437c, subd. (f)(1); see also Silva v. See’s Candy Shops, Inc. (2016) 7 Cal.App.5th 235, 257; Linden Partners v. Wilshire Linden Associates (1998) 62 Cal.App.4th 508, 522.)

C. Summary Adjudication of the Primary Building Permits Claim and the Essex Loan Claim Was Proper

In interpreting the Agreement, we attempt to ascertain the parties’ intent from the writing alone whenever possible. (Civ. Code, § 1638; Costa Serena Owners Coalition v. Costa Serena Architectural Com. (2009) 175 Cal.App.4th 1175, 1199; GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P. (Del. 2012) 36 A.3d 776, 779 (GMG Capital).) We “interpret clear and unambiguous terms according to their ordinary meaning,” and note that “[a] contract is not rendered ambiguous simply because the parties do not agree upon its proper construction.” (GMG Capital, supra, at p. 779.) Furthermore, “[i]f a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract or to create an ambiguity.” (Eagle Industries, Inc. v. DeVilbiss Health Care, Inc. (Del. 1997) 702 A.2d 1228, 1232.) The parties’ written expressed objective intent governs; their unexpressed subjective intent is irrelevant. (Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 686; Leeds v. First Allied Connecticut Corp. (Del.Ch. 1986) 521 A.2d 1095, 1097.)

Accordingly, if the sections of the Agreement discussing the Primary Building Permits Claim and the Essex Loan Claim were clear and the facts surrounding the claims undisputed such that there was nothing left for a court or jury to try, summary adjudication was appropriate. However, if we find that “a contractual provision is susceptible of two or more reasonable constructions,” we turn to the extrinsic evidence presented to try to ascertain the parties’ intent. (Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 847; see also GMG Capital, supra, 36 A.3d at p. 780.) We consider “all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports.” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)

1. Primary Building Permits Claim

SVI alleges the trial court erred in granting summary adjudication that TCSMD had no duty to obtain the Primary Building Permits because the Agreement in fact imposed such a duty. SVI further contends the Agreement’s plain language required TCSMD to make (and SVI to receive) the additional $6.5 million capital contribution if the Property was sold regardless of whether the Company obtained the permits. SVI alternatively argues the Agreement was ambiguous on both these points, making summary adjudication inappropriate.

(a) Contractual Duty

To assess whether TCSMD had a contractual duty to obtain the Primary Building Permits, we look first to the language of the Agreement. If a contract’s plain language “is unambiguous, a court may not ‘read into’ the document additional terms in order to conform its meaning to what the court’s ‘intuition’ tells it the parties must have intended. Rather, the court ‘is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted . . . .’ ” (PV Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210 Cal.App.4th 132, 152.)

SVI points to the Agreement’s language discussing the permits, found in section 4.1.2(a), which reads: “Within three (3) Business Days after the Company has received the ‘Primary Building Permits’ . . . from the City of Santa Monica, TCSMD will make an Additional Capital Contribution to the Company . . . in the amount of $6,500,000.” This language states only what is to happen after permits are obtained—it imposes no obligation on TCSMD to obtain the permits. SVI points to no other contractual language it asserts imposes an obligation on TCSMD to obtain the permits. The parties here are sophisticated business entities, and certainly could have included language imposing such an obligation if they intended to impose such a duty on TCSMD, for example a provision stating that TCSMD would use its best efforts to obtain the Primary Building Permits. They did not. Moreover, the Agreement elsewhere discusses what is to happen “if the Property is sold by the Company at any time after the Effective Date [of the Agreement] but prior to that date the Company has received the Primary Building Permits”—in other words, contemplating the possibility that TCSMD would not obtain permits. That possibility cannot be reconciled with a requirement that TCSMD obtain the permits.

Given the clear language of the parties’ contract, the trial court correctly held TCSMD had no contractual duty to obtain the permits. As the Agreement does not impose an obligation on TCSMD to obtain Primary Building Permits, we may not read such an additional term into the Agreement.

We turn next to whether TCSMD had a contractual duty to pay the $6.5 million in additional capital contributions if the Property was sold before obtaining the permits. The Second Amendment provided that, if the Property was sold before the permits were obtained, the original Agreement’s section 5.2 applied. The original section 5.2 states SVI was to receive a distribution in the amount of $6.5 million within three business days after TCSMD had made the additional capital contribution pursuant to section 4.1.2(a). Section 4.1.2(a), as explained above, stated that the $6.5 million capital was payable only after the Company had received the permits.

The Agreement (including the Second Amendment to the Agreement) therefore unambiguously provided that the $6.5 million was payable only after the Primary Building Permits were obtained. Those permits not having been obtained, TCSMD had no duty to pay $6.5 million to the Company for distribution thereafter to SVI. Even if we considered this provision ambiguous, the undisputed parol evidence supports our interpretation. SVI puts forth a single e-mail supporting its claim that section 16 of the Second Amendment was intended to provide that SVI would receive the $6.5 million regardless of any permit issuance. In that e-mail, which was sent on December 10, 2008 during the negotiation of section 16, TCSMD told Rahimi and SVI’s counsel that the language ultimately included in section 16 needed “to [be] put . . . in to context through review of the original agreement, [and] the following language sets forth the language we would propose to address your concern about immediate sale of the property.” Although the e-mail says the parties were addressing what would happen if the Property was sold prior to the issuance of permits, it provides no insight on the meaning of the contractual terms negotiated to cover that event.

Following this December 10, 2008 e-mail, the parties continued negotiating and exchanged e-mails clarifying the circumstance under which SVI’s distribution would occur. In a January 29, 2009 e-mail, TCSMD sent an e-mail to Rahimi and SVI’s counsel, stating, “[W]e cannot narrowly define the Project, as it may change[.] The point is that whatever the project is, when we pull the permits, Michael [Rahimi] gets paid.” (Italics added.) The next day, TCSMD again e-mailed Rahimi and SVI’s counsel, stating: “[T]he agreement is to pay the $6.5 [million] to SVI when the building permit is obtained. So regardless of the nature of the project, that is the trigger.” In other words, the triggering event for payment of the $6.5 million was obtaining the Primary Building Permits. That is exactly what the contractual language states—that payment was due only after permits were obtained.

Because we hold TCSMD had no duty to obtain permits, we reject SVI’s argument that the prevention doctrine precluded summary adjudication of whether TCSMD had a duty to pay the $6.5 million. “The ‘prevention doctrine’ provides that a party may not escape contractual liability by reliance upon the failure of a condition precedent where the party wrongfully prevented performance of that condition precedent.” (Mobile Communications Corp. of America v. MCI Communications Corp. (Del.Ch. Aug. 27, 1985) 1985 WL 11574 at p. *4.) “The key operative language in the definition of the prevention doctrine is the term ‘wrongfully prevented.’ If, as here, defendant’s alleged ‘prevention’ is authorized by the contract, then naturally it does not constitute a breach and cannot be considered ‘wrongful.’ ” (A.I.C. Ltd. v. Mapco Petroleum, Inc. (D.Del. 1989) 711 F.Supp. 1230, 1238, fn. 24.)

Nor did the implied covenant of good faith and fair dealing impose on TCSMD a contractual duty to obtain permits. Under Delaware law, “[t]he implied covenant of good faith and fair dealing involves a ‘cautious enterprise,’ inferring contractual terms to handle developments or contractual gaps that the asserting party pleads neither party anticipated.” (Nemec v. Shrader (Del. 2010) 991 A.2d 1120, 1125, fn. omitted.) Indeed, “[t]he implied covenant only applies to developments that could not be anticipated, not developments that the parties simply failed to consider . . . .” (Id. at p. 1126, fn. omitted.) Here, of course, the parties did anticipate the possibility the property would be sold without permits and drafted contractual language in the Second Amendment covering that possibility. “[T]he implied covenant ‘does not apply when the contract addresses the conduct at issue,’ but only ‘when the contract is truly silent’ concerning the matter at hand. Even where the contract is silent, ‘[a]n interpreting court cannot use an implied covenant to re-write the agreement between the parties, and “should be most chary about implying a contractual protection when the contract could easily have been drafted to expressly provide for it.” ’ ” (Oxbow Carbon Hldgs v. Crestview-Oxbow Acq. (Del. 2019) 202 A.3d 482, 507, fns. omitted.)

The parties here negotiated the Agreement and Second Amendment at arm’s length. Because the language of the Agreement and the Second Amendment is clear that the $6.5 million was not due and payable unless and until the Primary Building Permits were obtained, TCSMD had no duty to pay that amount where it was undisputed those permits were not obtained. Nor did TCSMD have a contractual duty to obtain the permits. Summary adjudication was therefore appropriate as to these issues of duty.

(b) Fiduciary Duty

SVI next asserts that TCSMD acted in bad faith and breached its fiduciary duty by purposefully refusing to obtain the permits so that TCSMD could evade section 4.1.2(a)’s requirement of making a $6.5 million additional capital contribution.

Before the trial court, and in its appellate briefing, SVI claimed TCSMD owed a fiduciary duty to SVI, and breached that duty. The Agreement, however, provided that TCSMD owed fiduciary duties only to the Company, and not individual members. In light of our initial opinion’s observation that the Agreement disclaimed the fiduciary duty SVI asserted was owed to it, SVI changed course and argued on rehearing that TCSMD owed a fiduciary duty to the Company, breached this duty by failing to obtain permits that would have increased the Property’s value prior to sale, and that SVI had standing to pursue this breach of fiduciary duty to the Company. SVI is not permitted to change its position and adopt a new and different theory at such a late stage in the proceedings. (Expansion Pointe Properties Limited Partnership v. Procopio, Cory, Hargreaves & Savitch, LLP (2007) 152 Cal.App.4th 42, 54-55.) We accordingly examine SVI’s breach of fiduciary duty claim as originally articulated.

Under Delaware law, “[i]t is a well-settled principle that where a dispute arises from obligations that are expressly addressed by contract, that dispute will be treated as a breach of contract claim. In that specific context, any fiduciary claims arising out of the same facts that underlie the contract obligations would be foreclosed as superfluous.” (Nemec v. Shrader, supra, 991 A.2d at p. 1129, fn. omitted.) Delaware’s Limited Liability Company Act similarly provides that “[u]nless otherwise provided in a limited liability company agreement, a . . . manager . . . shall not be liable to a limited liability company or to another member . . . for breach of fiduciary duty for the . . . manager’s . . . good faith reliance on the provisions of the limited liability company agreement.” (6 Del.C., § 18-1101(d).)

As discussed above, TCSMD did not have a duty to obtain permits. It instead had the flexibility to make decisions about the business of the Company, including selling or disposing of the Property without developing it. While such a decision to sell might have been deleterious to SVI, TCSMD did not owe any fiduciary duty to SVI—TCSMD’s fiduciary duty was only to the Company.

2. Essex Loan Claim

We turn next to SVI’s argument that the trial court erred in granting summary adjudication of the Essex Loan Claim. SVI contends TCSMD took out the Essex Loan to “line its pockets,” rather than to develop or construct the Property, which SVI asserts was prohibited by the Agreement. SVI further asserts TCSMD’s conduct with regard to the Essex Loan breached its fiduciary duty as managing member.

(a) The Agreement’s Language Regarding Loans

The Agreement provided the Company’s purpose included to “mortgage, [and] encumber” the Property. The Agreement further provided that the Company may take out loans “to finance the construction and development of the Property.” The managing member was authorized to “do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purpose described herein and for the protection and benefit of the Company,” and had “full power and authority to do all things deemed necessary or desirable by them to conduct the business of the Company,” which includes “the assumption . . . of, or other contracting for, indebtedness and other liabilities.”

When forming the Company, SVI and TCSMD each contributed $250,000 towards working capital. Accordingly, the Company had $500,000 with which to begin development. As the parties expected this amount would be insufficient for all purposes, the Agreement required that “before the Managing Member calls for Required Additional Capital Contributions, it shall use commercially reasonable efforts to arrange for the necessary funds to be borrowed by the Company.”

The Agreement further stated that the execution of any agreement by the managing member permitted under the Agreement “shall not constitute a breach by the Managing Member of any duty that the Managing Member may owe . . . under this Agreement or of any duty stated or implied by law or equity.”

(b) Contractual Duty

In 2009, the parties both signed the Second Amendment. Section 15 of that amendment acknowledged that the Company had taken out the Essex Loan, that the loan’s net proceeds were paid directly to TCSMD, and that the proceeds were deemed to have been a distribution to TCSMD pursuant to section 5.2 of the Agreement.

In granting summary adjudication, the trial court concluded there was no factual issue in dispute that the Essex Loan was taken out in 2007, and that the only issue was whether the loan complied with the terms of the Agreement. The court concluded that, “[i]n reviewing the Agreement, the correspondence and other evidence submitted regarding the parties’ communications regarding [the Essex Loan], . . . the loan was in conformity with the written Agreement and the intent of the parties.” We agree with this assessment.

In October 2007, before TCSMD took out the loan, TCSMD sent Rahimi the term sheet, which stated that the loan’s purpose was in part to repay TCSMD a portion of its existing equity investment and in part for costs associated with the Project. In sending Rahimi the loan’s term sheet, TCSMD said, “Before we get too far along in the negotiation of the loan documents, [we] wanted to make sure that you are in accord with this.” Rahimi responded and asked TCSMD to forward the Essex Loan term sheet to SVI’s attorney. TCSMD promptly did that.

In his 2014 deposition, Rahimi acknowledged the existence of e-mails TCSMD had sent him alerting him of the loan, as well as e-mails confirming he had participated in a conference call regarding the loan, when confronted with them. He asserted, however, that he did not remember receiving the e-mails or what was said on the call. In a later declaration submitted in opposition to the motion for summary adjudication, Rahimi sought to establish a triable issue of fact by contradicting the contemporaneous documentation, and stating the Essex loan was obtained without his knowledge or consent.

Rahimi’s declaration, however, does not defeat summary adjudication because it is undisputed that SVI ratified the borrowing after it was undisputedly aware of the loan. In 2009, SVI signed the Second Amendment, which explicitly acknowledged that TCSMD had taken out the Essex Loan and confirmed that the net proceeds from the loan were paid directly to TCSMD as a distribution pursuant to the Agreement. In addition to receiving the proceeds as a distribution, TCSMD presented evidence it made payments thereafter exceeding $8 million in furtherance of developing the Project.

Ratification “provides[,] after the fact, the grant of authority that may have been wanting at the time of the [Managing Member]’s act.” (Lewis v. Vogelstein (Del.Ch. 1997) 699 A.2d 327, 334-335.) Alternatively, one can “view the ratification as consent or as an estoppel by [SVI] to deny a lack of authority. [Citation.] In either event the effect of informed ratification is to validate or affirm the act . . . .” (Id. at p. 335.) Here, SVI was aware of the loan, and that the proceeds were paid to TCSMD as a distribution. SVI thereafter signed the Second Amendment consenting to that borrowing, which bars SVI from now complaining the loan was unauthorized.

To attempt to avoid ratification, Rahimi’s declaration stated he was “threatened” into agreeing to the Second Amendment, because TCSMD said it otherwise would sell the Property. However, SVI did not present any evidence that it was denied the opportunity to negotiate the terms of Second Amendment or that it was in fact coerced. To the contrary, there is abundant evidence the parties negotiated the amendment and traded revised copies of it several times before the parties signed it.

Proof of duress requires a wrongful act “sufficiently coercive to cause a reasonably prudent person to be faced with no reasonable alternative but to ‘succumb.’ ” (CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 645.) Here, the allegedly threatened act was not wrongful but lawful—TCSMD had the right as the managing member to sell the property. A triable issue of material fact exists “if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield (2001) 25 Cal.4th 826, 850.) A conclusory assertion that one party was threatened, when the supposed “threat” was to take a lawful action explicitly authorized by the Agreement, fails to meet that standard.

(c) Fiduciary Duty

SVI also asserts TCSMD breached its fiduciary duty in obtaining the Essex Loan, because it was done in bad faith. The only evidence SVI put forth in support of this argument was an e-mail from June 2007 between TCSMD and the brokerage company supplying the loan, in which a TCSMD employee said, “[P]lease keep our engagement confidential as I know Mark McClellan is working with Michael Rahimi, our JV partner, on several other engagements and although we have complete control and the right to finance the property, we’d prefer not to overtly throw our reduction of equity exposure in Rahimi’s face. Secondly and due to the desire to be less than obvious about the loan, can you ask lenders to quote on placing a lien on the property as well as just on our equity interest?”

While we give all reasonable inferences from this e-mail in SVI’s favor, the e-mail reflected matters as of 2007. TCSMD thereafter informed SVI about the loan, and SVI ratified the borrowing in 2009. The e-mail therefore fails to raise a triable issue of fact.

SVI finally argues that one Delaware case suggests ratification cannot extinguish a duty of loyalty claim, citing In re Wheelabrator Tech. Shareholders Lit. (Del.Ch. 1995) 663 A.2d 1194, 1204-1205 (Wheelabrator). The Wheelabrator court noted that Delaware law was conflicted on this point (id. at pp. 1200-1204), but we need not resolve which of the various courts to address this issue have the better view.

First, although SVI argues that TCSMD owed SVI a duty of loyalty, the Agreement (as permitted by Delaware law) plainly provides to the contrary—the only fiduciary duty TCSMD owed was to the Company. Second, Wheelabrator discusses the duty of loyalty in the corporation/shareholder context—not in the context of an LLC such as the one formed here between two savvy business entities. SVI cites no authority applying the antiratification rule of Wheelabrator to an LLC. We find that omission unsurprising, because Delaware gives much greater authority to LLC members to limit or eliminate fiduciary duties in their LLC agreement. (See 6 Del.C., § 18-1101.) Given Delaware law’s express mandate “to give the maximum effect to the principle of freedom of contract,” (id., subd. (b)), including permitting parties to restrict or eliminate fiduciary duties that would otherwise exist in law or equity (id., subd. (c)), Wheelabrator’s analysis is not persuasive in the LLC context.

D. The Court Did Not Err in Granting Defendants’ Motion for Nonsuit

SVI contends the motion for nonsuit was improperly granted because TCSMD breached the Agreement, and breached its fiduciary duties, by revoking the January 24 Sale Notice before SVI had had 10 days to accept, and issuing the January 28 Sale Notice in its place.

1. Breach of Contract

The Agreement provided that if the Company wished to sell the Property, SVI had a ROFO. When a preemptive purchase right takes the form of a ROFO, “ ‘the seller, upon deciding to market its property, must first make an offer to the grantee of the right of first offer. If the grantee does not accept that offer, the seller is then free to sell to anyone else on the terms rejected by the grantee or on terms which are better—but not worse—for the seller; in other words, no other buyer can get a better deal than that which was presented to the grantee.’ ” (Bill Signs Trucking, LLC v. Signs Family Limited Partnership (2007) 157 Cal.App.4th 1515, 1523.)

SVI first argues that TCSMD breached the Agreement by marketing the Property before first offering it to SVI. We reject this argument. The record shows TCSMD sent SVI the July 2012 Sale Notice before ever placing the Property on the market. In any event, SVI failed to show any potential damages from this alleged breach; SVI was given its ROFO, chose not to exercise it and TCSMD subsequently put the Property on the market. At some point before January 24, 2013, TCSMD received an offer for the Property from a third party for $18.5 million, and, because that offer was better for the potential buyer than the offer provided to SVI in the July 2012 Sale Notice, TCSMD had to provide SVI with a subsequent Sale Notice and opportunity to buy the Property on those more favorable terms. It did so.

SVI next argues TCSMD could not revoke the January 24 Sale Notice before SVI’s 10 days to accept it expired, or that the language was at a minimum ambiguous on this point. Neither party identifies, nor have we unearthed, any Delaware or California case addressing whether a sale notice pursuant to a ROFO is revocable. A ROFO is not an option contract, which “ ‘gives the optionee the irrevocable right to buy under specified terms and conditions . . . .’ ” (Steiner v. Thexton (2010) 48 Cal.4th 411, 420.) We therefore find cases discussing options inapposite.

Because it persuasively discusses a closely analogous situation, we apply the analysis in Kaplan v. Beach Development Corp. (Del.Ch. May 23, 1988) 1988 WL 55324 (Kaplan).) Kaplan dealt with a right of first refusal (ROFR), rather than a ROFO, but for purposes of our analysis that is a distinction without a difference. The primary difference between the two is whether the offer to the holder of the preemptive purchase right is made before the seller puts the property on the market (ROFO), or after it puts the property on the market and has a bona fide offer from a third party (ROFR). (See Bill Signs Trucking, LLC v. Signs Family Limited Partnership, supra, 157 Cal.App.4th at p. 1523.) In either case, the seller extends to the holder of the preemptive purchase right the right to buy the property at a certain price if it accepts the offer within a certain period of time. (See ibid.) Any differences between ROFO’s and ROFR’s are particularly unimportant here, as the January 24 and January 28 Sale Notices were sent because of third party offers made after the Property was on the market (and thus more akin to a ROFR). Indeed, in both the January 24 and January 28 Sale Notices, TCSMD referred to the exercise of the “right of first offer/refusal.”

Kaplan held that notice of a ROFR is revocable because the holder of a ROFR, unlike the holder of an option, “has no power to compel an unwilling seller to convey the property to him.” (Kaplan, supra, 1988 WL 55324 at p. *4.) It reasoned that while “[a]n ordinary option gives the optionee the power to compel the owner of the property to sell [the property] at a stipulated price, whether he be willing to part with ownership or not[,] . . . a privilege of first refusal or preemption does not give the pre-emptioner the power to compel the owner to sell; it merely requires the owner, when and if he decides to sell, to offer the property first to the person entitled to the preemption, at the stipulated price, and the pre-emptioner may then elect whether he will buy.” (Ibid.; see also Bill Signs Trucking, LLC v. Signs Family Limited Partnership, supra, 157 Cal.App.4th at p. 1522 [a ROFO or ROFR “is a grant from a landowner that gives the grantee the first opportunity to purchase the property if the landowner decides to sell”].) The Kaplan court concluded that even if the seller gives the buyer notice of the ROFR with a specified price, absent consideration for the sale, the notice is just a normal offer, “revocable at the pleasure of the offeror.” (Kaplan, supra, at p. *5; see also Civ. Code, § 1586 [“A proposal may be revoked at any time before its acceptance is communicated to the proposer, but not afterwards”].)

The Agreement here provided that “SVI shall give notice to the Managing Member . . . of its election to exercise its right of first offer within ten (10) days after receipt of the Sale Notice, and the failure of SVI to give such notice within such time period shall be deemed an election not to exercise the right of first offer.” This language is not, as Kaplan held, an option promising to hold the offer open for 10 days. Nor was it in any way ambiguous. Rather, it was a notice to SVI that if it did not accept the outstanding offer within 10 days, the Property would be sold to someone else. As a matter of law the offer was revocable, and “all applicable laws in existence when an agreement is made necessarily enter into the contract and form a part of it, without any stipulation to that effect, as fully as if they were expressly referred to and incorporated in its terms.” (Grubb v. Ranger Ins. Co. (1978) 77 Cal.App.3d 526, 529.)

Because we conclude TCSMD could revoke a Sale Notice pursuant to a ROFO, the motion for nonsuit was properly granted as to the breach of contract claim.

2. Breach of Fiduciary Duty

As discussed above, TCSMD had “no obligation to consider the separate interests of the Members” when making decisions in the best interest of the Company. Obtaining the highest price possible for the Property was clearly in the best interest of the Company. Therefore, revoking the January 24 Sale Notice because of a higher offer for the Property was in furtherance of, and not a breach of, TCSMD’s fiduciary duty as managing member.

DISPOSITION

The judgment is affirmed. Defendants are awarded their costs on appeal.

NOT TO BE PUBLISHED

WEINGART, J.*

We concur:

ROTHSCHILD, P. J.

BENDIX, J.