Facts

A property located at 2828 Monterey Road in San Jose was 67 percent owned by the Jarvis Holding Trust, whereas the other 33 percent was owned by the Nixon Lucille Holding Trust. Jane Vei-Chun Sun, Edmund Sun, John Shey-Tsuane Sun, Christopher Shey-Tau Sun were co-trustees or beneficiaries of the trusts and were the officers of Cherry Blossom S-Corporation. In 2015, ASNM LLC and Cherry Blossom S-Corporation, along with its owners and trustees, entered into a lease agreement for 2828 Monterey Road in San Jose. ASNM was owned by Najmeh Mostafavi. Mostafavi leased the property in order to improve it and sublease it as an auto dealership.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that they, as tenants, leased a three-acre parcel of land from the defendant landlord Cherry Blossom to utilize for a wholesale retail car lot. Plaintiffs contended that Cherry Blossom was the alter ego of the individual defendants--Jane Sun, Edmund Sun, Chris Sun, and John Sun. Plaintiffs improved the leased property, expending considerable time, effort and nearly $1 million. In 2018, brokers inquired about subletting and plaintiffs began negotiations with potential sublessees including Auto Company XXII, Inc., Hertz, AVIS, and Paul Blanco. Defendants delayed and in other cases rejected plaintiffs' multiple requests to sublease the property even though plaintiffs provided the appropriate paperwork. Plaintiffs contended that defendants did not have a commercially reasonable excuse for delaying or refusing consent. Plaintiffs continually tried to work with defendants on obtaining any sort of sublease agreement given their expenditure on the improvements, but defendants refused and plaintiffs sustained lost profits. Plaintiffs would later learn that defendants had received a $6 million purchase offer for the property in the same timeframe and wanted to terminate the sublease in order to sell it.

DEFENDANTS' CONTENTIONS: Defendants generally and specifically denied all contentions and allegations.

Result

On September 14, 2022, a jury found that defendants had unreasonably delayed and withheld consent for one sublease, and completely withheld consent for others, claiming that the use under the subleases was illegal. Defendants were ordered to pay a total of $11.664 million for breach of lease agreement, breach of covenant of good faith and fair dealing, brach of covenant of quiet enjoyment and intentional interference with prospective economic relations with two separate companies: Hertz and Auto Company XXII. Plaintiffs were awarded $2.664 million in compensatory damages. The jury also concluded that Jane Sun, individually and in her official capacity with the corporation, acted with malice or fraud against plaintiffs. At the punitive damages phase of the trial, the jury awarded plaintiffs $9 million.

Other Information

Defendants filed a complaint against plaintiffs with the City of San Jose and filed three unlawful detainer actions against them, all of which were voluntarily dismissed.

Deliberation

Three hours - compensatory damages; 40 minutes - punitive damages stage.

Poll

Unanimous

Length

10 days