Case Notes

Solid Restaurant Ventures and Orozco sued Vornado and Cole, successors in interest to the initial contracting landlord, for fraud. Following a trial, the jury rendered verdicts that Vornado had committed the torts of intentional misrepresentation and concealment in the negotiation of the lease and awarded Solid Restaurant Ventures compensatory damages, primarily for lost profits.

All parties appealed, with landlords asserting there was insufficient evidence to hold it responsible for intentional misrepresentation.

Concerning the landlord's claim of lack of sufficient evidence, the court noted that: “A party presenting an argument of insufficient evidence may not simply reargue its version of the facts but rather has a duty to 'set forth the version of events most favorable to [respondents]'; indeed, '[w]here a party presents only facts and inferences favorable to his or her position, the “contention that the findings are not supported by substantial evidence may be deemed waived.”' (See, Schmidlin v. City of Palo Alto (2007).” Although the court found that the landlord failed in this regard by neglecting to include the tenant's side of many issues in the case, the court decided to deal with the merits of the argument.

The gist of the landlord's appeal was that the tenant did not prove he reasonably relied on assertions that no competing hot dog enterprises were being contemplated for The Plant because he was an experienced restaurateur who should have insisted on an exclusivity clause if he had wanted such, and also that he cannot claim he relied on the sale's agent's assurances when he did not even read the contract that he signed.

The court pointed out that failure to read a contract is not dispositive on the issue of fraud. The court stated: “The evidence heard by the jury contained substantial evidence that Orozco told [the leasing agent] multiple times about his culinary concept and asked her many times, including on the day he signed the lease on behalf of Solid Restaurant Ventures, whether restaurants with either competing concepts or products were being considered. Each time she told Orozco no. At trial, [the leasing agent] testified at times that she did not 'recall' such conversations, but she never denied they happened. Orozco further testified that he trusted [the leasing agent] given that she was a 'professional' and worked for a 'supposedly reputable company.' Based on this evidence, it appears clear that the jury found Orozco's testimony credible.” In addition, the tenant's failure to read the lease did not diminish the landlord's liability in this case because nothing in the lease would have told Orozco that the competing restaurant was going to be a co-tenant. Therefore, the jury's resolution of conflicting evidence upon the fact question of justifiable reliance was conclusive, the appeals court held, and it would not override the jury's conclusion.