Spahi v. Stone CA2/7

Filed 3/18/14 Spahi v. Stone CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not
been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

OMAR SPAHI et al., B240611

Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC445123)
v.

RICHARD STONE et al.,

Defendants and Respondents.

APPEAL from an order of the Superior Court of Los Angeles County, Robert L.
Hess, Judge. Reversed and remanded.
Verdi Law Group and Alfred J. Verdi for Plaintiffs and Appellants.
Law Offices of Alan S. Gutman, Alan S. Gutman and John Juenger for Defendants
and Respondents.
______________________
 Omar Spahi, individually and as trustee of the Occidental Trust and the Gelato
Trust, Dorothea Schiro as trustee of the Penthouse Trust, John Spahi, Janet Fuladian,
Siavosh Khajave as trustee of the KN Trust, Richard Houseman and Patrick Ambrose
(collectively Spahis) sued Richard Stone, Isen Investments, Inc. and Stuart Isen
(collectively Isens) for trade libel/disparagement of property and several other tort claims
and for breach of contract. The trial court sustained the Isens’ demurrers to the complaint
without leave to amend and dismissed the action. We reverse. Although the demurrer
was properly sustained without leave to amend as to the breach of contract cause of
action, the Spahis adequately pleaded their various tort causes of action and are entitled
to proceed against the Isens on those liability theories.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Spahis’ Operative Fourth Amended Complaint
The dispute underlying the Spahis’ lawsuit relates to efforts to sell or lease units in
a 317-unit, luxury, residential cooperative building in Santa Monica, commonly known as
Ocean Towers, which is owned and managed by Ocean Towers Housing Corporation
(OTHC). The Spahis own a number of units at Ocean Towers.
Believing the Isens were improperly attempting to exploit Omar Spahi’s financial
difficulties to obtain Ocean Tower units at artificially depressed prices, the Spahis sued
the Isens in September 2010. Following several rounds of successful demurrers, which
had focused primarily on the generality and vagueness of the Spahis’ allegations, on
September 23, 2011 the Spahis filed a fourth amended complaint asserting causes of
action for trade libel/disparagement of property, defamation, interference with contract,
interference with prospective economic advantage and breach of contract.
In this final iteration of their complaint the Spahis alleged Omar Spahi had filed a
petition for protection under Chapter 11 of the Bankruptcy Code in December 2009.
Upon learning of the bankruptcy petition the Isens and Dale Pearson1 formed a

1
The fourth amended complaint also named Pearson as a defendant. The Spahis’
claims against Pearson were not dismissed, and he is not a party to this appeal.
2
“syndicate” to purchase the Spahis’ Ocean Towers units at the lowest price possible. In
pursuit of that objective and allegedly acting as co-conspirators and/or each other’s agent,
the Isens and Pearson made false and defamatory statements about the Spahis and their
units to disrupt the Spahis’ efforts to sell or lease their properties. Specifically, in
paragraph 39 of the fourth amended complaint the Spahis alleged each of the Isen parties
made the following false statements, “verbatim or in substance”: The Spahis were
thieves, crooks and swindlers; the Spahis never returned security deposits to individuals
who rented their units or everyone who rented from the Spahis lost their security
deposits; the Spahis were not paying the secured loans on their units; the bank was after
the Spahis for “fraud”; the Spahis did not pay the homeowners association fees on their
units; and the Spahis’ units were being or would soon be auctioned off by the bankruptcy
court.
The Spahis alleged these statements, which were incorporated into each cause of
action, caused damage and harmed their reputations by accusing them of improper and
illegal conduct, including fraud and dishonesty. In particular, in paragraphs 42 through
46 the Spahis alleged tenants renting five different units from the Spahis were
approached by Stone, Isen or Pearson and told the Spahis would not be returning security
deposits, their rental of the unit was illegal or other, similar disparaging comments. As a
result, the tenants in all those units terminated their leases and moved out, causing the
Spahis to lose expected rental fees. The names of the specific tenants, the units, the
amount of rent each had been paying, the dates they moved out and the speakers and
substance of the comments were identified in the pleading. The Spahis further alleged,
the “statements were couched as fact and not opinion, and the existing and prospective
tenants and buyers understood the statements to be statements of fact.”
The fourth amended complaint also alleged that Omar Spahi entered into a written
contract for the sale of unit 1809 P to Arnold Abramovicz for $2.2 million. Pursuant to
the Isens and Pearson’s scheme, Pearson told Abramovicz not to purchase the unit
because the Spahis were crooks, the bank was after them for fraud, the property would
3
soon be subject to foreclosure and Abramovicz would be able to purchase it at a lower
price through the bankruptcy court or in the foreclosure sale. Although Abramovicz had
been ready to purchase the property, as a result of Pearson’s statements, the sale was not
completed.
The operative pleading alleged Stone had a history of personal animus toward
John Spahi dating back to 2006. Stone had previously attempted to remove John Spahi
from the OTHC board, and a prior lawsuit had been filed against Stone and others
alleging that Stone had published false statements relating to John Spahi on his website.
According to the Spahis, the Isens intended to induce other parties, including
prospective buyers and tenants, not to deal with the Spahis. Moreover, the Isens were
aware of the harm to the Spahis that would result from the false statements and intended
to cause such harm. The Isens did not have a good faith belief their statements about the
Spahis were true or accurate, but either knew the statements were false when made or
willfully and wantonly disregarded the truth.
Finally, the complaint alleged the Isens’ actions violated paragraph 9.10 in the
“proprietary lease,”2 a contract between OTHC and the Isens that provided,
“Cooperation. Tenant covenants that he will preserve and promote the cooperative
ownership principles upon which Ocean Towers Housing Corporation has been founded,
abide by the Rules and Regulations of the Board and any amendments thereto, and by his
acts of cooperation with other tenants bring about a high standard in home and
community conditions.”
2. The Isens’ Demurrer and the Order of Dismissal
The Isens again demurrered to the Spahis’ complaint, arguing each of the five
causes of action failed to allege facts sufficient state a claim (Code Civ. Proc., § 430.10,
subd. (e)) and was uncertain (Code Civ. Proc., § 430.10, subd. (f)). Following briefing
and argument, the trial court sustained the demurrers without leave to amend based on

2
An unsigned exemplar of the proprietary lease was attached as exhibit A to the
fourth amended complaint.
4
the pleading’s continued lack of specificity: “You don’t tell me when things occurred,
You don’t tell me when these statements were made. And you use the generic
defendants. . . . Who made which statements?”
The court explained in its minute order sustaining the demurrers: “Plaintiffs have
been given five opportunities to plead the complaint. Plaintiffs have repeatedly failed to
separate out and specify the particular statements made by the various defendants or
precisely to whom they were made or when. The problem is exemplified by
Paragraph 39, which apparently attributes all six statements to all defendants.” In the
court’s view, the specific references to statements and conduct involving the five tenants
identified elsewhere in the complaint (paragraphs 42 through 46) were not sufficient to
support the four tort causes of action the Spahis had attempted to plead. The court
concluded the tort causes of action were fatally uncertain and the fifth cause of action
was both uncertain and failed to state a claim because the Spahis had not identified a
specific contract obligation that had been breached.
In light of its prior orders permitting the Spahis to amend their complaint to
remedy its deficiencies (“[f]ive attempts are enough”), the court sustained the demurrers
without leave to amend and dismissed the action. The Spahis filed a timely notice of
appeal.3

3
The notice of appeal filed on April 12, 2012 by Alfred J. Verdi of Verdi Law
Group, PC listed only Omar Spahi as the appellant. Although that notice identified
Mr. Verdi as counsel for Omar Spahi et al., and Mr. Verdi expressly designated the
record on behalf of Omar Spahi et al. the following week, the Isens argue only the order
of dismissal as to Omar Spahi, and not the other plaintiffs, is properly before this court.
We reject that argument and construe the notice of appeal to include all the Spahis.
A notice of appeal must be liberally construed, and it is sufficient if it identifies
the particular judgment or order being appealed. (Cal. Rules of Court, rule 8.100(a)(2).)
In the absence of prejudice to the respondents, and particularly when the issues as to the
appealing party and the omitted parties are identical, courts have liberally construed an
otherwise sufficient notice of appeal to include omitted appellants. (Beltram v. Appellate
Dept. (1977) 66 Cal.App.3d 711, 715 [construing notice of appeal filed by city to also
encompass the city employee whose liability was the basis of the city’s liability];
Boynton v. McKales (1956) 139 Cal.App.2d 777, 787-788 [notice of appeal filed by
5
 DISCUSSION
1. Standard of Review
A demurrer pursuant to Code of Civil Procedure section 430.10, subdivision (e),
tests the legal sufficiency of the factual allegations in a complaint. We independently
review the superior court’s ruling on the demurrer and determine de novo whether the
complaint alleges facts sufficient to state a cause of action or discloses a complete
defense. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Aubry v. Tri-
City Hospital Dist. (1992) 2 Cal.4th 962, 967.) We assume the truth of the properly
pleaded factual allegations, facts that reasonably can be inferred from those expressly
pleaded and matters of which judicial notice has been taken. (Evans v. City of Berkeley
(2006) 38 Cal.4th 1, 20; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
We liberally construe the pleading with a view to substantial justice between the parties.
(Code Civ. Proc., § 452; Schifando, at p. 1081.)
Demurrers for uncertainty under Code of Civil Procedure section 430.10,
subdivision (f), are disfavored and are to be sustained only if the pleading is so
incomprehensible that a defendant cannot reasonably respond. (See Lickiss v. Financial
Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.) “A demurrer for
uncertainty is strictly construed, even where a complaint is in some respects uncertain,
because ambiguities can be clarified under modern discovery procedures.” (Khoury v.
Maly’s of California Inc. (1993) 14 Cal.App.4th 612, 616.)
2. The Spahis Adequately Pleaded a Cause of Action for Trade Libel
Trade libel is an intentional disparagement of the quality of services or product of
a business that results in pecuniary damage to plaintiff. (City of Costa Mesa v. D’Alessio

employer construed to cover an employee as well when defendants could not have been
prejudiced as they must have understood plaintiff would not appeal the new trial order as
to the employer only]; Cromwell v. Cummings (1998) 65 Cal.App.4th Supp. 10, 15
[because there was no prejudice to the respondent, notice of appeal of sanctions award by
plaintiffs was deemed to include an undesignated attorney who was found jointly and
severally liable for sanctions].)
6
Investments, LLC (2013) 214 Cal.App.4th 358, 375-376; Leonardini v. Shell Oil Co.
(1989) 216 Cal.App.3d 547, 572 (Leonardini).) Like defamation, trade libel requires a
false statement of fact, not an expression of an opinion. (Mann v. Quality Old Time
Serv., Inc. (2004) 120 Cal.App.4th 90, 104; ComputerXpress, Inc. v. Jackson (2001)
93 Cal.App.4th 993, 1010.) Disparagement “may consist of the publication of matter
derogatory to the plaintiff’s title to his property or its quality, or to his business in
general.” (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73; accord, Atlantic Mutual Ins.
Co. v. J. Lamb, Inc. (2002) 100 Cal.App.4th 1017, 1035; Nichols v. Great American Ins.
Companies (1985) 169 Cal.App.3d 766, 773.) To constitute trade libel the statement
must be made with actual malice, that is, with knowledge it was false or with reckless
disregard for whether it was true or false. (Melaleuca, Inc. v. Clark (1998)
66 Cal.App.4th 1344, 1350.) The plaintiff must also plead and prove it actually suffered
some pecuniary loss. (Mann, at p. 109.)
The Isens contend the Spahis did not properly allege actual malice; the alleged
disparaging statements were not demonstrably false or concerned future events and thus
were nonactionable opinion; and the statements were directed at the Spahis themselves,
rather than their property, and thus are not actionable as trade libel. Although some of
the Isens’ critique of the Spahis’ allegations is accurate, the Spahis nonetheless
adequately pleaded a cause of action for trade libel.
a. The fourth amended complaint alleged statements disparaging the Spahis’
property as well as their reputation
Statements actionable as trade libel because they disparage an individual’s title to
property or its quality or his or her business in general may also harm that individual’s
reputation, for example, by implying dishonesty or incompetence. For example, in
Atlantic Mutual Ins. Co. v. J. Lamb, Inc., supra, 100 Cal.App.4th 1017, the court
considered a trade libel claim in the context of a dispute concerning an insurer’s duty to
defend. The court found statements charging a claimant with unlawfully violating
defendant’s patents disparaging to both the claimant itself and its products. (Id. at

7
pp. 1034-1035.) The court reasoned that the statements “amounted to a denigration of
[claimant’s] products” because they “clearly stated that [claimant’s] products were
burdened with a legal infirmity that would place a [] customer in legal jeopardy if it
purchased and used or resold the product.” (Id. at p. 1037.)
Here, the statements alleged by the Spahis certainly impugned their personal
reputations with accusations of dishonesty and improper and illegal conduct such as
withholding security deposits. But those same statements also potentially disparaged the
quality of the Spahis’ title to the Ocean Towers units and the nature of their leasing
services, indicating the units were facing foreclosure or subject to assessments for unpaid
homeowners association fees and suggesting tenants and prospective buyers would not be
dealt with fairly by their landlord or would likely confront additional legal and financial
issues when renting or purchasing the Spahis’ units. (See Polygram Records, Inc. v.
Superior Court (1985) 170 Cal.App.3d 543, 548-550 [false statement suggesting
dishonesty and lack of quality may both defame individual business owner and disparage
his or her product or services]; see generally Rest.2d Torts, § 623A, com. g, pp. 340-341
[explaining, although the torts of injurious falsehood and defamation protect different
interests, they may overlap if a statement not only reflects upon the quality of what the
plaintiff has to sell or the character of his or her business but also implies the plaintiff is
dishonest or lacks integrity].)
b. The fourth amended complaint alleged demonstrably false statements
of fact
In evaluating a demurrer to a cause of action for trade libel, the court must
determine whether a reasonable fact finder could conclude the statements imply a
provably false factual assertion rather than an opinion. (Melaleuca, Inc. v. Clark, supra,
66 Cal.App.4th at p. 1353.) The Spahis alleged the Isens told Ocean Towers tenants and
others, among other things, that the Spahis were thieves, crooks and swindlers who never
returned their tenants’ security deposits, the Spahis were in default on the secured loans
on their units and tenants would soon be evicted and the bank was after the Spahis for

8
fraud. As the Isens argue, some of the allegedly false statements challenged by the
Spahis are predictions of future events (“tenants will be evicted” and units “will soon be
auctioned off by the Bankruptcy Court”) and are not actionable. Other of the statements,
however, such as the purported failure to make loan payments, concern past and present
events and are capable of verification as true or false. To whatever extent some of the
statements are unclear and may be reasonably interpreted as asserting or suggesting a
provably false statement of fact, that is a question for a jury to determine. (See GetFugu,
Inc. v. Patton Boggs, LLP (2013) 220 Cal.App.4th 141, 156 [“[t]he critical question is not
whether a statement is fact or opinion, but ‘“whether a reasonable fact finder could
conclude the published statement declares or implies a provably false assertion of
fact”’”]; Franklin v. Dynamic Details, Inc. (2004) 116 Cal.App.4th 375, 385 [in claims
for both trade libel and defamation, dispositive question is whether fact finder could
reasonably conclude the statement declares or implies a provably false assertion of fact; it
is for a jury to decide how the statement was understood].)
c. The Spahis sufficiently pleaded actual malice
As discussed, actual malice is an element of a claim for trade libel. (Melaleuca,
Inc. v. Clark, supra, 66 Cal.App.4th at p. 1350.) The Spahis have pleaded the Isens “had
no good faith belief that their statements as herein alleged were true and/or accurate,” and
they “knew that such statements were false when made, and/or willfully and wantonly
disregarded the truth.” Nothing more is required at the pleading stage. (Cf. Quelimane
Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 47 [“‘[I]t is not the ordinary
function of a demurrer to test the truth of the plaintiff’s allegations or the accuracy with
which he describes the defendant’s conduct. . . . “[T]he question of plaintiff’s ability to
prove these allegations, or the possible difficulty in making such proof does not concern
the reviewing court.”’”].)
d. The cause of action for trade libel is not fatally uncertain
A demurrer for uncertainty should not be sustained when the facts forming the
basis for the ambiguous or unclear allegations are presumptively within the knowledge of
9
the demurring party. (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 30; Smith v.
Kern County Land Co. (1958) 51 Cal.2d 205, 209; Fanucchi v. Coberly-West Co. (1957)
151 Cal.App.2d 72, 82-83.) “If, as the complaint alleges, defendants repeated and
published statements ‘to numerous other persons unknown to plaintiff but known to
defendants,’ then plaintiff obviously cannot particularize; and her positive allegations that
other statements were made at ‘various times and places to numerous persons’ are
matters which are patently within the superior knowledge of defendants.” (Schessler v.
Keck (1954) 125 Cal.App.2d 827, 836.) Particularly when a civil conspiracy has been
alleged, “because of the very nature of a conspiracy, ‘its existence must often be
inferentially and circumstantially derived from the character of the acts done, the
relations of the parties and other fact and circumstances suggestive of concerted action.’”
(Arei II Cases (2013) 216 Cal.App.4th 1004, 1022.)
Contrary to the ruling of the trial court that the Spahis had once again “failed to
separate out and specify the particular statements made by the various defendants or
precisely to whom they were made or when . . . ,” in their fourth amended complaint the
Spahis pleaded specific disparaging statements had been made to five named tenants and
identified which defendant—Isen, Stone or Pearson, all of whom had allegedly conspired
with each other—had made the statements. At the very least, the detail contained in these
paragraphs is sufficient to apprise the Isens of the nature of the allegations against them,
giving them adequate opportunity to answer the allegations and to proceed to discovery.
(See Khoury v. Maly’s of California Inc., supra, 14 Cal.App.4th at p. 616.) In sum, the
court erred in sustaining the demurrer to the first cause of action for trade libel.
3. The Spahis Adequately Pleaded a Cause of Action for Defamation
“Defamation constitutes an injury to reputation; the injury may occur by means of
libel or slander. (Civ. Code, § 44.) In general, . . . a written communication that is false,
that is not protected by any privilege, and that exposes a person to contempt or ridicule or
certain other reputational injuries, constitutes libel. (Civ. Code, § 45; [citation].) A false
and unprivileged oral communication attributing to a person specific misdeeds or certain
10
unfavorable characteristics or qualities, or uttering certain other derogatory statements
regarding a person, constitutes slander. (Civ. Code, § 46; [citation.]” (Shively v.
Bozanich (2003) 31 Cal.4th 1230, 1242.) To be defamatory, an oral or written
communication “must contain a false statement of fact.” (Gregory v. McDonnell
Douglas Corp. (1976) 17 Cal.3d 596, 600.)
Because a defamatory statement “‘“must contain a provable falsehood, courts
distinguish between statements of fact and statements of opinion for purposes of
defamation liability.”’” (Summit Bank v. Rogers (2012) 206 Cal.App.4th 669, 695.)
However, a statement phrased as an opinion may nonetheless imply false and defamatory
facts (Milkovich v. Lorain Journal Co. (1990) 497 U.S. 1, 20-21); and it may be
actionable depending on its context. (See Carver v. Bonds (2005) 135 Cal.App.4th 328,
346; Copp v. Paxton (1996) 45 Cal.App.4th 829, 837, 839.)
“Though mere opinions are generally not actionable [citation], a statement of
opinion that implies a false assertion of fact is . . . .” (Hawran v. Hixson (2012)
209 Cal.App.4th 256, 289.) The “inquiry is not merely whether the statements are fact or
opinion, but ‘“whether a reasonable fact finder could conclude the published statement
declares or implies a provably false assertion of fact.”’” (Ibid.; see Summit Bank v.
Rogers, supra, 206 Cal.App.4th at p. 696 [“where an expression of opinion implies a
false assertion of fact, the opinion can constitute actionable defamation”]; Franklin v.
Dynamic Details, Inc., supra, 116 Cal.App.4th at p. 385 [“the question is not strictly
whether the published statement is fact or opinion,” but “[r]ather, the dispositive question
is whether a reasonable fact finder could conclude the published statement declares or
implies a provably false assertion of fact”].) “Whether a statement declares or implies a
provably false assertion of fact is a question of law for the court to decide [citations],
unless the statement is susceptible of both an innocent and a libelous meaning, in which
case the jury must decide how the statement was understood.” (Franklin, at p. 385; see
Baker v. Los Angeles Herald Examiner (1986) 42 Cal.3d 254, 260.)

11
 As discussed, defamation differs from trade libel because it is directed at personal
reputation, while trade libel is directed at “the goods a plaintiff sells or the character of
his other business, as such.” (Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473,
479.) In addition, if the statements are not directed at public officials or figures or pertain
to a matter of public interest, a presumption of falsity applies in defamation cases, placing
the burden on defendants to prove the truth of their statements as a defense to the claim.
(See Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364, 375.)
Repeating the arguments advanced with respect to the Spahis’ trade libel claim,
the Isens insist the allegations of defamation in the fourth amended complaint are
uncertain. For the reasons discussed, we disagree with that characterization of the
specific derogatory statements made to tenants by Stone, Isen and Pearson and identified
by the Spahis—statements that not only disparaged the legal title and quality of the units
owned by the Spahis and the leasing services they provided but also impugned their
personal integrity. The defamation cause of action is not uncertain.
Even if not uncertain, the Isens contend the alleged defamatory statements are all
nonetheless nonactionable because they are not demonstrably false or, alternatively,
simply constitute opinion or predictions about future events. Even if we were to agree
that labeling someone a “crook” or a “swindler” was intended only as a statement of low
esteem (see, e.g., Vogel v. Felice (2005) 127 Cal.App.4th 1006, 1019-1020 [statement
that plaintiffs were “top-ranking ‘Dumb Asses’ cannot survive application of the rule that
in order to support a defamation claim, the challenged statement must be found to convey
‘a provably false factual assertion’”]; Copp v. Paxton, supra, 45 Cal.App.4th at p. 838
[statement by defendant that plaintiff was a “booby” could “be understood only as a
vague expression of low esteem”]), a reasonable fact finder could conclude the terms
imply the existence of undisclosed fact indicating the Spahis were actually guilty of
fraud, theft or other criminal behavior. Moreover, the statement that the Spahis never
returned security deposits constitutes a verifiable statement of fact occurring in the past
and present rather than the future. Given both the presumption of falsity and the
12
allegation that the statements are, indeed, false, the Spahis have adequately pleaded the
elements of a cause of action for defamation. It was error to sustain the demurrer to the
fourth cause of action for defamation.
4. The Spahis Adequately Pleaded a Cause of Action for Interference with
Contract
The elements of a cause of action for intentional interference with contract are:
(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this
contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the
contractual relationship; (4) actual breach or disruption of the contractual relationship;
and (5) resulting damage. (Quelimane Co. v. Stewart Title Guaranty Co., supra,
19 Cal.4th at p. 55; Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d
1118, 1126; Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1047.)
The Isens contend the Spahis’ allegations are impermissibly vague, making it
“impossible to determine which contracts, if any, were interfered with.” Similarly, the
court suggested this cause of action was uncertain because it conflated wholly distinct
instances of supposed misconduct into a single cause of action. Although the Spahis’
approach to pleading this tort leaves much to be desired, it is minimally sufficient to
survive the Isens’ demurrer.
Regardless of the manner in which a plaintiff elects to organize his or her claims
within the body of the complaint, whether the allegations of wrongful conduct assert one
or more causes of action depends on whether it alleges invasion of one or more primary
rights. “The primary right theory is a theory of code pleading that has long been
followed in California. It provides that a ‘cause of action’ is comprised of a ‘primary
right’ of the plaintiff, a corresponding ‘primary duty’ of the defendant, and a wrongful act
by the defendant constituting a breach of that duty. [Citation.] The most salient
characteristic of a primary right is that it is indivisible: the violation of a single primary
right gives rise to but a single cause of action.” (Crowley v. Katleman (1994) 8 Cal.4th
666, 681.) “As far as its content is concerned, the primary right is simply the plaintiff’s

13
right to be free from the particular injury suffered. It must therefore be distinguished
from the legal theory on which liability for that injury is premised.” (Ibid.) “[I]f a
plaintiff states several purported causes of action which allege an invasion of the same
primary right he has actually stated only one cause of action. On the other hand, if a
plaintiff alleges that the defendant’s single wrongful act invaded two different primary
rights, he has stated two causes of action, and this is so even though the two invasions are
pleaded in a single count of the complaint.” (Skrbina v. Fleming Companies (1996)
45 Cal.App.4th 1353, 1364; accord, Hindin v. Rust (2004) 118 Cal.App.4th 1247, 1257.)
Here, in a single count the Spahis pleaded multiple instances of alleged
interference by the Isens with separate contracts they had entered into with different
parties at different times. That is, they have alleged violation of several different primary
rights: As discussed, in paragraphs 42 through 46 the Spahis identified five tenants who
had terminated their leases allegedly as a result of derogatory statements by the Isens.
Damages in the form of lost rent from those tenants was specifically alleged. In
paragraph 49 the Spahis pleaded the Isens’ statements prevented completion of a sale of
unit 1809 P to Abramovicz for $2.2 million. These separable causes of action for
interference with contract, although perhaps unnecessarily confusing because grouped
together, are not uncertain. The trial court erred in sustaining the demurrer to the second
cause of action for interference with contract.
5. The Spahis Adequately Pleaded a Cause of Action for Interference with
Prospective Economic Advantage
The elements of a cause of action for interference with prospective economic
advantage are: (1) an economic relationship between the plaintiff and a third party, with
the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge
of the relationship; (3) the defendant’s intentional and wrongful conduct designed to
interfere with or disrupt this relationship; (4) interference with or disruption of this
relationship; and (5) economic harm to the plaintiff proximately caused by the
defendant’s wrongful conduct. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937,

14
944; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153-1154.)
The plaintiff must also plead and prove “the interference was wrongful, independent of
its interfering character.” (Edwards, at p. 944; accord, Della Penna v. Toyota Motor
Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.) An act is independently wrongful “if it is
unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common
law, or other determinable legal standard.” (Korea Supply Co., at p. 1159.)
The Isens’ sole challenge to the Sphais’ claim for interference with prospective
economic advantage is the purported failure to allege any independent wrongful conduct
constituting the interference.4 However, the Spahis have adequately alleged the Isens
made derogatory statements constituting both trade libel and defamation. The Spahis
additionally allege those same statements were intended to, and did, interfere with the
likely renewal of leases by existing tenants and the probability of economic benefit from
new leases with prospective tenants. The Spahis further allege the Isens induced
prospective buyers not to purchase their units by publishing false statements regarding
the units and the Spahis themselves. The Spahis have thus adequately pleaded the
predicate independently wrongful acts necessary for this cause of action. It was error to
sustain the demurrer to the third cause of action for intentional interference with
prospective economic advantage.

4
We acknowledge, as the Isens point out, the Spahis’ opening brief does not
expressly address the cause of action for interference with prospective economic
advantage. However, the basis for sustaining the demurrer to this claim—uncertainty—
was identical to that for the other three tort causes of action; and the purported
uncertainty as to the allegations supporting this cause of action was predicated on the
uncertainty of the trade libel and defamation allegations, which were addressed at length
in the Spahis’ opening brief. Under these circumstances, and because the Isens fully
briefed the merits of the order sustaining the demurrer to this cause of action, we exercise
our discretion to consider this portion of the trial court’s order. (See Locke v. Warner
Bros. (1997) 57 Cal.App.4th 354, 368 [appellate court has discretion to consider issue not
raised in opening brief on showing of good cause]; Scott v. CIBA Vision Corp. (1995)
38 Cal.App.4th 307, 322 [same].
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 6. The Demurrer for Breach of Contract Was Properly Sustained Without Leave
To Amend
A plaintiff alleging a cause of action for breach of contract must plead: (1) the
existence of a contract between the parties; (2) the plaintiff’s performance or excuse for
nonperformance; (3) the defendant’s failure to perform (breach); and (4) resulting
damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; Reichert v.
General Ins. Co. (1968) 68 Cal.2d 822, 830.) In an action based on a written contract,
although a plaintiff need not plead the precise language of the contract, he or she must set
forth the contract’s legal effect by stating the substance of its relevant terms.
(Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189,
199; see 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, §§ 518-519, pp. 650-651.)
The Spahis contend the Isens violated paragraph 9.10 of the proprietary lease,
attached as an exhibit to the fourth amended complaint, by engaging in the various
wrongful acts alleged. They do not assert they are parties to the proprietary lease
executed by the Isens, but argue they are intended beneficiaries of the Isens-OTHC
agreement.
“‘California law permits third party beneficiaries to enforce the terms of a contract
made for their benefit.’” (Spinks v. Equity Residential Briarwood Apartments (2009)
171 Cal.App.4th 1004, 1021-1022; see Civ. Code, § 1559 [“[a] contract, made expressly
for the benefit of a third person, may be enforced by him at any time before the parties
thereto rescind it”].) A contract has been made for the benefit of a third person if the
terms of the contract necessarily require the promisor to confer a benefit on the third
person, but “it is not enough that the third party would incidentally have benefited from
performance.” (Spinks, at p. 1022.) “‘A putative third party’s rights under a contract are
predicated upon the contracting parties’ intent to benefit’ it. [Citation.] Ascertaining this
intent is a question of ordinary contract interpretation. [Citation.] Thus, ‘[t]he
circumstance that a literal contract interpretation would result in a benefit to the third
party is not enough to entitle that party to demand enforcement.’ [Citation.] [¶] Under

16
long-standing contract law, a ‘contract must be so interpreted as to give effect to the
mutual intention of the parties as it existed at the time of contracting, so far as the same is
ascertainable and lawful.’ [Citation.] Although ‘the intention of the parties is to be
ascertained from the writing alone, if possible’ [citation], ‘[a] contract may be explained
by reference to the circumstances under which it was made, and the matter to which it
relates’ [citation]. ‘However broad may be the terms of a contract, it extends only to
those things . . . which it appears that the parties intended to contract.’” (Hess v. Ford
Motor Co. (2002) 27 Cal.4th 516, 524; accord, Markowitz v. Fidelity Nat. Title Co.
(2006) 142 Cal.App.4th 508, 527.)
The Isens’ agreement with OTHC to preserve and promote its “cooperative
ownership principles” and to act in cooperation with other tenants may have provided
some incidental benefit to the Spahis, who are among the broad class of “other tenants”
referred to generically in paragraph 9.10 of the proprietary lease. But the proprietary
lease itself, which consists in the main of standard provisions found in many landlord-
tenant agreements, does not express any intention to benefit the Spahis or other
nonsignatory tenants; and nothing in the language of the agreement even remotely
suggestions any such intent. Nor have the Spahis alleged the existence of any related
documents or surrounding circumstances that would indicate they (or other tenants) were
intended beneficiaries of the Isens’ promise to OTHC to cooperate with other tenants.
“When the facts are undisputed, as they are deemed to be in connection with a
demurrer, the interpretation of a contract, including the resolution of any ambiguity, is a
question of law.” (Sprinkles v. Associated Indemnity Corp. (2010) 188 Cal.App.4th 69,
76; see Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1134
[when extrinsic evidence is not in conflict, interpretation of a contract is a question of
law].) The trial court properly reviewed the contract to evaluate the Spahis’ claim to
third-party beneficiary status and correctly ruled they lacked standing to enforce the
promise of cooperation in the Isens-OHTC lease agreement. The demurrer to the fifth
cause of action for breach of contract was properly sustained without leave to amend.
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 DISPOSITION
The order dismissing the action is reversed. On remand the trial court is directed
to vacate its order sustaining the demurrers without leave to amend with respect to the
first, second, third, and fourth causes of action, to enter a new order sustaining the
demurrer to the fifth cause of action (breach of contract) without leave to amend and
otherwise overruling the demurrers, and to conduct further proceedings not inconsistent
with this opinion. The Spahis are to recover their costs on appeal.

PERLUSS, P. J.

We concur:

WOODS, J.

SEGAL, J.*

*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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