Filed 8/17/22 MDR Boat Central v. County of L.A. CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County, Teresa A. Beaudet, Judge. Affirmed.

Jeffer Mangels Butler & Mitchell, Benjamin M. Reznik and Matthew D. Hinks for Plaintiffs and Appellants.

Glaser Weil Fink Howard Avchen & Shapiro, Andrew Baum and Craig H. Marcus for Defendants and Respondents.

Plaintiffs and appellants MDR Boat Central, L.P., and MDR Boat Central, LLC (collectively MDR), appeal from the summary judgment entered in favor of defendants and respondents County of Los Angeles and Board of Supervisors for the County of Los Angeles (Board)[1] in this breach of contract action concerning the development, lease, and operation of a boat storage facility on County land in Marina del Rey.

We affirm the judgment.

BACKGROUND

The parties

MDR is a developer whose principals are experienced in developing and operating marina facilities nationwide. The Department of Beaches and Harbors (DBH) is a subdivision of the County responsible for operating beaches and harbors, including Marina del Rey. The Board is the governing and decisionmaking body of the County.

Request for proposals and initial option agreement

In April 2003, the Board issued a request for proposals (RFP) for the development of a dry stack boat storage facility on County land in Marina del Rey (the project). The RFP specified that the developer selected for the project would bear the cost of procuring the necessary land use entitlements. In exchange, the selected developer would be granted a lease and the right to operate the facility for 60 years.

MDR submitted a proposal and was selected by the County to develop the project. On April 26, 2007, the Board approved a lease option agreement signed by MDR and the County for a 60-year lease (the Option Agreement). The option term was for a period of 18 months, and DBH was authorized to extend the term for two additional six-month periods. The Option Agreement required MDR to obtain all planning, zoning, and entitlement approvals for the project required by the applicable governmental authorities.

Save Tara v. City of West Hollywood

On October 30, 2008, during the initial term of the Option Agreement, the California Supreme Court issued its decision in Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116 (Save Tara). In that case, the Supreme Court held that the California Environmental Quality Act (CEQA) required completion of an environmental review before the City of West Hollywood could enter into an agreement committing the city to approve a public housing development project. (Id. at pp. 142-143.) The Supreme Court ruled that the city must be ordered to void its approval of development agreements for the project and to reconsider its decision following a legally adequate environmental review. (Id. at p. 144.)

The First extension

Because the Supreme Court’s decision in Save Tara potentially invalidated the Board’s approval of the Option Agreement, the parties restructured their deal and entered into an extension of and modification to lease option agreement (the First Extension) on November 10, 2009. The First Extension granted MDR the exclusive right to negotiate the terms of a new option agreement (New Option Agreement) with the County for a lease on substantially similar terms to a lease attached to the First Extension.

The County agreed to negotiate the New Option Agreement “in good faith.” With regard to the parties’ obligation to negotiate “in good faith,” the First Extension stated:

“The parties agree that each party’s duty to negotiate a New Option in good faith shall not be interpreted or construed to create any obligation or commitment to agree upon the New Option, an Option Agreement or any particular terms, conditions or provisions thereof or of any Lease, and that no past, current or future summary of terms, term sheets, drafts or forms of option agreement, drafts or forms of lease (including the Lease), or other oral or written indications of agreement, understanding or assent to the New Option or any particular terms, conditions or provisions thereof, even if such terms, conditions and provisions would otherwise constitute the essential terms of a binding option, shall be binding upon either party or create any obligation or liability on the part of either party, except for the full execution and delivery by both parties of a legally binding New Option Agreement that has been approved by the Board of Supervisors of County. Each party reserves the right to decline to enter into any New Option Agreement or other binding agreement with respect to the Project or the grant of a New Option. No unilateral modification or withdrawal by any party of any negotiated terms, conditions or provisions of the New Option prior to the full execution and delivery of such Option Agreement shall constitute the failure of a party to negotiate in good faith or otherwise create any liability hereunder.”

MDR agreed to satisfy “all applicable CEQA requirements” before a New Option Agreement could be presented to the Board for approval.

Second Extension, certification of EIR, and Third Extension

The parties entered into a second extension of and modification to lease option agreement (Second Extension) in November 2012. On April 23, 2013, the County’s Department of Regional Planning certified the environmental impact report (EIR) for the project. The EIR thereafter became final. The Second Extension expired on May 20, 2013. The parties entered into a third extension of and modification to lease option agreement (Third Extension) in May 2013 for the stated purpose of providing the parties additional time to negotiate a New Option Agreement.

Fourth Extension

The original Option Agreement required MDR to obtain a coastal development permit (CDP) as a condition to exercising the lease option. The County made issuance of the CDP a condition to further extend the option and issuance of the New Option Agreement. The parties entered into a fourth extension of and modification to lease option agreement (Fourth Extension) in November 2015.

The Fourth Extension contained the following provision:

“4. Exclusivity; No Commitment. County agrees that during the Agreement Term it shall not enter into negotiations with respect to the Premises, the Project or any other development of the Premises with any other person or entity that is not an agency or department of County or another governmental entity, other than Lessee, without the prior written consent of the Lessee. Notwithstanding any contrary term or provision of this Agreement, Lessee acknowledges and agrees that (a) nothing in the Existing Agreement or this Fourth Extension Agreement shall be construed or interpreted as a commitment by, or an obligation of, County to grant Lessee an option to lease or develop the Premises; (b) neither County, the Department, the Director or any agency, department, commission, committee, official, representative, agent or employee of County has made, and Lessee has not relied upon and is not relying upon, any representations, affirmations, commitments or agreements to grant Lessee an option to lease or develop the Premises; (c) except for the future approval and execution by County of a definitive option agreement, no negotiations or communications between County, the Department, the Director or any agency, department, commission, committee, official, representative, agent or employee of County shall constitute and Lessee shall not rely upon, any representation, affirmation, commitment or agreement to grant Lessee an option to lease or develop the Premises; (d) County has made no determination or commitment to lease or develop the Premises, and County has the right in its sole and absolute discretion to determine at any time not to proceed with the lease or development of the Premises to or by Lessee, and to discontinue negotiations with Lessee for an option to lease or develop the Premises at any time; and (e) subject to County’s obligation set forth in the first sentence of this Section 4, County shall be free to lease the Premises to any person or entity, or develop or use the Premises for any purpose.”

The Fourth Extension also contained an integration clause that states:

“5. Entire Agreement. This Fourth Extension Agreement sets forth the full and complete understanding of the parties relating to the subject matter hereof, and supersedes any and all agreements, understandings and representations made prior hereto with respect to such matters.”

DBH letter

The California Coastal Commission approved the CDP on January 9, 2015. DBH then conditioned approval of a New Option Agreement on issuance of a construction permit from the United States Army Corps of Engineers.

The Fourth Extension was set to expire on November 17, 2015. Instead of entering into a further extension, DBH told MDR that it would provide a letter stating the actions the County would take regarding the option and lease.

On December 2, 2015, DBH sent MDR a letter (the DBH letter) stating that although MDR’s exclusive negotiating rights for the development project expired on November 17, 2015, “[t]he County will continue to negotiate with you exclusively for the near term, as it appears we are very close to finalizing the deal.” The letter further stated:

“The County plans to submit the project to the Board of Supervisors for the Board’s approval of a grant of option as soon as:

“1. We have finalized all the outstanding issues relating to the development;

“2. All the exhibits relating to access to and through the property during construction have been reviewed and approved by the County;

“3. Both parties have agreed to a buyout price for termination of the County’s use of its existing docks on the property;

“4. The terms and conditions of the option and lease have been agreed upon, drafted, and signed by you; and

“5. All reimbursable expenses are paid.”

MDR obtained a provisional United States Army Corps of Engineers permit on August 23, 2016.

New Option Agreement

In 2016, MDR and the County reached agreement on the terms of the New Option Agreement. On October 18, 2016, the DBH submitted the New Option Agreement to the Board and recommended that the Board approve it. The Board continued the matter to October 25, 2016, and the New Option Agreement was placed on the agenda for the Board’s hearing that day. Before the October 25, 2016 hearing, Supervisor Kuehl’s office expressed concerns about the project’s design. MDR indicated its willingness to reduce the scale of the project and to work with DBH on proposed changes. Supervisor Knabe made a motion to refer the project back to DBH, which the Board unanimously approved.

After the project was referred back to DBH, the political winds shifted. Supervisor Knabe, the principal supporter of the project and in whose district the project was located, was replaced on the Board by Supervisor Hahn, who opposed the project. MDR’s efforts to gain Supervisor Hahn’s support were unsuccessful. Supervisor Hahn indicated she would block consideration of the New Option Agreement by the full Board. In March 2017, Supervisor Hahn’s deputy sent an e‑mail to DBH directing DBH to terminate the project. The New Option Agreement did not return to the Board for consideration.

PROCEDURAL HISTORY

MDR filed this action against the County on December 22, 2017, alleging breach of contract, fraud, and other claims. The County demurred, and the trial court sustained the demurrer, without leave to amend, as to the fraud, negligent misrepresentation, and quantum meruit causes of action.

On July 26, 2019, the County filed a motion for summary judgment on MDR’s remaining causes of action for breach of contract, breach of implied contract, breach of the covenant of good faith and fair dealing, declaratory relief, and promissory estoppel. The trial court granted the County’s motion as to the breach of contract, breach of implied contract, and promissory estoppel causes of action and ordered supplemental briefing on the claims for declaratory relief and breach of the covenant of good faith and fair dealing. Specifically, the trial court asked the parties to brief the following questions:

1. Was the Board of Supervisors legally obligated to ultimately make a decision regarding the project?

2. If so, what is the source of that obligation?

3. Did the County’s action in connection with the motion to refer the matter back to DBH on October 25, 2016, and its actions following the referral back constitute a decision of the Board on the New Option Agreement?

4. Are there triable issues of fact as to the causes of action for breach of the covenant of good faith and fair dealing or declaratory relief?

Following supplemental briefing, the trial court granted the summary judgment motion in its entirety. Judgment was subsequently entered in the County’s favor, and this appeal followed.

DISCUSSION

1. 1. 1. 1. Standard of review

Summary judgment is granted when a moving party establishes the right to entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) “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.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).)

A defendant moving for summary judgment bears the initial burden of proving that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038.) Once the defendant has made such a showing, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. (Aguilar, supra, 25 Cal.4th at p. 849.) If the plaintiff does not make such a showing, summary judgment in favor of the defendant is appropriate. In order to obtain a summary judgment, “all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action . . . . [T]he defendant need not himself conclusively negate any such element . . . .” (Id. at p. 853.)

On appeal from a summary judgment, an appellate court makes “an independent assessment of the correctness of the trial court’s ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law.” (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222.)

1. 1. 1. 2. Breach of contract

MDR contends the County breached its contractual obligation to negotiate a New Option Agreement in good faith by failing to have the Board vote to approve or disapprove the New Option Agreement. MDR further contends the County breached the obligation to negotiate in good faith by requiring MDR to obtain entitlements other than a CEQA review as a condition to entering into the New Option Agreement. MDR bases its breach of contract claim on (1) the First through Fourth Extensions, (2) the December 2, 2015 DBH letter; (3) an implied in fact contract arising from the parties’ course of dealing; and (4) the implied covenant of good faith and fair dealing. As we discuss, summary judgment was properly granted on the breach of contract claim under all of these theories.

1. 1. 1. 1. 1. First through Fourth Extensions

We reject MDR’s contention that the County’s agreement in the First Extension to “negotiate in good faith a new option agreement” included the obligation to bring the New Option Agreement to the Board for a vote. The obligation to “negotiate in good faith” is expressly delimited by the following language in the First Extension:

“Each party reserves the right to decline to enter into any New Option Agreement or other binding agreement with respect to the Project or the grant of a New Option. No unilateral modification or withdrawal by any party of any negotiated terms, conditions or provisions of the New Option prior to the full execution and delivery of such Option Agreement shall constitute the failure of a party to negotiate in good faith or otherwise create any liability hereunder.”

The County’s express disclaimer of any obligation to approve or grant a New Option Agreement to MDR is reiterated in the Fourth Extension:

“[MDR] acknowledges and agrees that . . . County has made no determination or commitment to lease or develop the Premises, and County has the right in its sole and absolute discretion to determine at any time not to proceed with the lease or development of the Premises to or by [MDR], and to discontinue negotiations with [MDR] for an option to lease or develop the Premises at any time . . . .”

MDR’s principal and person most knowledgeable, Thomas Hogan, testified in deposition that when the parties entered into the Fourth Extension, the County made no promise that it would grant an option or proceed with the project.

The language of the First and Fourth Extensions forecloses MDR’s claim that the County was contractually obligated to have the Board vote to approve or disapprove the New Option Agreement. That express contractual language distinguishes this case from Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal.App.4th 1251 (Baskin Robbins), which MDR cites as support for its position.

The court in Baskin Robbins found that the seller’s refusal, without excuse, to continue negotiating a separate yet-to-be-agreed-upon ice cream purchase agreement (known as a co-packing agreement) with the buyer of an ice cream manufacturing plant was a breach of the parties’ written agreement to do so.[2] (Baskin Robbins, supra, 96 Cal.App.4th at pp. 1259-1260.) The agreement to negotiate in that case did not accord the seller the express right to discontinue negotiations at any time in its sole discretion. The court in Baskin Robbins itself acknowledged there is no continuing obligation to negotiate in such circumstances: “When two parties, under no compulsion to do so, engage in negotiations to form or modify a contract neither party has any obligation to continue negotiating or to negotiate in good faith. Only when the parties are under a contractual compulsion to negotiate does the covenant of good faith and fair dealing attach, as it does in every contract.” (Id. at p. 1260, fns. omitted.) The parties in this case had no contractual obligation to negotiate or to enter into a New Option Agreement. To the contrary, the County had the express contractual right to discontinue negotiations at any time.

MDR’s contention that the County breached contractual obligations under the First, Second, Third, and Fourth Extensions not to condition entry of a New Option Agreement on MDR’s procurement of entitlements other than environmental clearance under CEQA[3] is precluded by its failure to plead this claim in its complaint. Claims framed by the pleadings limit the scope of the issues properly addressed in a summary judgment motion. (Howard v. Omni Hotels Management Corp. (2012) 203 Cal.App.4th 403, 421; see Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250 [pleadings set the boundaries of the issues to be resolved in a summary judgment proceeding].) A defendant moving for summary judgment has the burden of negating only those theories of liability alleged in the complaint; the moving party need not address theories not included in the pleadings. (Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261, 290 (Nativi); California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625, 637, fn. 3 [“A party may not oppose a summary judgment motion based on a claim, theory, or defense that is not alleged in the pleadings.”].) MDR maintains it addressed the County’s purported breach of the “No Entitlements” provision in opposition to the County’s motion for summary judgment; however, an opposition to a motion for summary judgment may not be used to raise additional theories of liability. (See Nativi, at p. 290.)

MDR further asserts that it properly pled a breach of contract claim by including “allegations regarding the proceedings before the Coastal Commission” and “very specific allegations concerning the Army Corps permit.” The complaint alleges no wrongdoing by the County, however, in connection with the California Coastal Commission and United States Army Corps of Engineers proceedings and permits. MDR’s assertion to the contrary is not supported by the record.

1. 1. 1. 1. 2. DBH letter

The County met its initial burden of establishing no breach of any obligation under the December 2, 2015 DBH letter, and MDR failed to raise any triable issue of material fact to the contrary.

The DBH letter states that the County “will continue to negotiate with [MDR] exclusively for the near term” and “plans to submit the project to the Board of Supervisors for the Board’s approval of a grant of option” upon the satisfaction of five enumerated conditions. The County presented evidence that it performed everything it agreed to do in the DBH letter. DBH presented the New Option Agreement to the Board and recommended that the Board approve it. At its October 25, 2016 hearing, the Board, on motion of Supervisor Knabe, voted unanimously to refer the matter back to DBH instead. Supervisor Knabe was the principal supporter of the project, but his term on the Board ended on November 30, 2016. He was replaced by Supervisor Hahn, who opposed the project and was against bringing the matter back to Board for consideration. MDR’s subsequent efforts to persuade Supervisor Hahn and other Board members to reconsider the matter, including hiring a public affairs consultant to lobby MDR’s position with the Board, were unsuccessful. The matter was never returned to the Board’s agenda.

MDR fails to raise any triable issue that the County breached any obligation under the DBH letter. DBH operated solely as a department of the County and lacked authority to enter into contracts on behalf of the County. MDR presented no evidence to support its claim that DBH had an ongoing contractual obligation to continue to resubmit the matter to the Board for a formal vote after the Board referred the matter back to DBH. The DBH letter imposes no such obligation. MDR’s person most knowledgeable, Thomas Hogan, testified in his deposition that the County did not fail to do anything it had agreed to do in the DBH letter.

We disagree with MDR’s characterization of the Board’s referral of the matter back to DBH as a failure to take formal action on the New Option Agreement. The referral back was a formal action by the Board after a unanimous vote on Supervisor Knabe’s motion to do so. The Board’s refusal to reconsider the matter after Supervisor Hahn communicated her opposition to MDR and DBH was not a breach of any contractual obligation under the DBH letter. Although MDR questions the propriety of Supervisory Hahn’s termination of the project, we find no breach of contract. Summary judgment was properly granted on MDR’s breach of contract claim premised on the DBH letter.

1. 1. 1. 1. 3. Implied in fact contract

MDR maintains the parties’ course of conduct created an implied in fact contractual obligation by the County to present the New Option Agreement to the Board for a formal vote. The integration clauses in each of the First through Fourth Extensions foreclose any breach of contract claim premised on this theory.

If a written instrument is intended by the parties as the final expression of their agreement with respect to the terms, those terms cannot be contradicted by evidence of any prior or contemporaneous agreement. (Code Civ. Proc., § 1856, subd. (a).) Similarly, a writing intended by the parties as a complete and exclusive statement of the terms of their agreement may not be explained or supplemented by evidence of other terms. (Code Civ. Proc., § 1856, subd. (b).) Extrinsic evidence of additional terms is excluded when (1) the additional term contradicts a written term that was intended to be final or (2) the additional term is merely explanatory of or supplemental to written terms intended to be complete and exclusive. (Lonely Maiden Productions, LLC v. GoldenTree Asset Management, LP (2011) 201 Cal.App.4th 368, 376.)

In this case, the integration clauses contained in the First through Fourth Extensions foreclose any implied in fact obligation by the County to have the Board formally vote to approve or disapprove the New Option Agreement. Implying such an obligation would also contradict the express terms of the First Extension, which accorded the County the right “to decline to enter into any New Option Agreement,” and with the terms of the Fourth Extension, which gave the County “the right in its sole and absolute discretion to determine at any time not to proceed with the lease or development of the Premises . . . and to discontinue negotiations with [MDR] for an option to lease or develop the Premises at any time.” An implied contract will not be recognized if it would be inconsistent with the terms of an express contract. (Series AGI West Linn of Appian Group Investors DE, LLC v. Eves (2013) 217 Cal.App.4th 156, 169.)

Summary judgment was properly granted on MDR’s breach of contract claim premised on an implied in fact obligation.

1. 1. 1. 1. 4. Implied covenant of good faith and fair dealing

MDR contends the implied covenant of good faith and fair dealing required the County to resubmit the New Option Agreement to the Board for reconsideration after the Board referred the matter back to DBH on October 25, 2016. Whether the implied covenant of good faith and fair dealing imposed such an obligation on the County is a question of law. (See Storek & Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 Cal.App.4th 44, 55.) As a matter of law, we conclude it did not.

“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made. . . . It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” (Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 349-350, citations omitted (Guz).) “It is of course a simple matter to determine whether given conduct is within the bounds of a contract’s express terms. For this it is enough that the conduct is either expressly permitted or at least not prohibited.” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373 (Carma).)

Requiring the County to resubmit the New Option Agreement to the Board for reconsideration after the Board referred the matter back to DBH on October 25, 2016, falls outside the bounds of the parties’ agreement because it contradicts the express terms of their written agreements. The Fourth Extension accorded the County the express “right in its sole and absolute discretion to determine at any time not to proceed with the lease or development of the Premises to or by [MDR], and to discontinue negotiations with [MDR] for an option to lease or develop the Premises at any time.” We reiterate what the California Supreme Court stated in Carma: “We are aware of no reported case in which a court has held the covenant of good faith may be read to prohibit a party from doing that which is expressly permitted by an agreement. On the contrary, as a general matter, implied terms should never be read to vary express terms. . . . ‘. . . As to acts and conduct authorized by the express provisions of the contract, no covenant of good faith and fair dealing can be implied which forbids such acts and conduct.’” (Carma, supra, 2 Cal.4th at p. 375, citations omitted.)

Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089 (Pasadena Live) and Locke v. Warner Bros., Inc. (1997) 57 Cal.App.4th 354 (Locke), on which MDR relies, are distinguishable. Pasadena Live involved an agreement by the lessee of a city-owned amphitheater to renovate the facility at its expense in exchange for the opportunity to apply to the city for approval of future live events at the facility. (Pasadena Live, at pp. 1092-1094.) The parties’ written agreement stated that the lessee “‘understands and agrees’ that the agreement ‘[did] not guarantee that any of its . . . Events will be approved’ . . . .” (Id. at p. 1093, fn. 1.) The city approved five concerts proposed by the lessee but thereafter stated it would not “authorize” any future events, effectively barring the lessee from submitting any future proposals. (Id. at pp. 1092, 1093.) The lessee sued, alleging that the city breached the implied covenant of good faith and fair dealing. The court in Pasadena Live held that the city’s conduct breached the implied covenant of good faith and fair dealing by depriving the lessee of the very opportunity specified in the parties’ written agreement—the opportunity to apply to the city for approval of live events. (Id. at pp. 1093-1094.) The court in Pasadena Live emphasized that “‘[t]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’” (Id. at p. 1094.)

Here, unlike Pasadena Live, the parties’ agreements contain no provision requiring the Board to approve or to vote on the New Option Agreement. Rather, those agreements expressly accord the County the right “in its sole and absolute discretion” not to proceed with the project at any time and to discontinue negotiations with MDR.

Locke is similarly distinguishable. The parties in that case had a two-part agreement for movie projects. In the first part, Warner Brothers agreed to pay Locke a fixed annual sum to submit any motion picture she was interested in developing before submitting it to another studio. Warner Brothers had 30 days to approve or reject a submission. The second part of the agreement gave Warner Brothers a “pay or play” option—to “play” the director by using the director’s services or pay the director her fee. (Locke, supra, 57 Cal.App.4th at p. 358.) Locke sued for breach of contract, among other claims. Warner Brothers moved for summary judgment, arguing it had considered all of Locke’s proposals and made a discretionary “creative decision” not to proceed with them. The appellate court found that Locke had presented evidence raising a triable issue as whether Warner Brothers categorically refused to consider any of her projects on the merits, thereby precluding summary adjudication of Locke’s breach of contract claim. (Id. at pp. 364-365.) The court stated: “While Warner was entitled to reject Locke’s proposals based on its subjective dissatisfaction, the evidence calls into question whether Warner had an honest or good faith dissatisfaction with Locke’s proposals . . . .” (Id. at p. 365.)

The parties’ agreements in this case did not require the Board to consider the New Option Agreement or to vote to approve or disapprove it. Rather, the agreements gave the County the right, in its sole and absolute discretion, not to proceed with the project and to discontinue negotiations with MDR at any time. Locke is accordingly inapposite. The court in Locke, moreover, reaffirmed certain principles that apply here: “‘“[T]he parties may, by express provisions of the contract, grant the right to engage in the very acts and conduct which would otherwise have been forbidden by an implied covenant of good faith and fair dealing.”’” (Locke, supra, 57 Cal.App.4th at p. 366.) “‘“As to acts and conduct authorized by the express provisions of the contract, no covenant of good faith and fair dealing can be implied which forbids such acts and conduct.”’” (Ibid.)

Summary judgment was properly granted on MDR’s breach of contract claim premised on breach of the implied covenant of good faith and fair dealing.

1. 1. 1. 3. Promissory estoppel

MDR contends the doctrine of promissory estoppel required the County to have the Board vote to approve or disapprove the New Option Agreement. The elements of a promissory estoppel claim are (1) a promise clear and unambiguous in it terms, (2) reliance by the party to whom the promise is made, (3) reliance that is both reasonable and foreseeable, and (4) injury resulting from such reliance. (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 901.) MDR’s promissory estoppel claim is based on the parties’ course of dealing and on alleged promises made by the County in the DBH letter.

To the extent MDR’s promissory estoppel claim is based on the parties’ course of dealing, it fails because MDR’s reliance was, as the trial court found, unreasonable as a matter of law given the parties’ written agreements. “‘“‘[W]hether a party’s reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts.’”’” (Murphy v. Twitter, Inc. (2021) 60 Cal.App.5th 12, 39.) The Fourth Extension expressly states that “[MDR] has not relied upon and is not relying upon, any representations, affirmations, commitments or agreements to grant [MDR] an option to lease or develop the Premises” and “[MDR] shall not rely upon . . . any representation, affirmation, commitment or agreement to grant [MDR] an option to lease or develop the Premises.”

The First Extension similarly states “no past, current or future summary of terms, term sheets, drafts or forms of option agreement, drafts or forms of lease (including the Lease), or other oral or written indications of agreement, understanding or assert to the New Option or any particular terms, conditions or provisions thereof . . . shall be binding upon either party or create any obligation or liability on the part of either party, except for the full execution and delivery by both parties of a legally binding New Option Agreement that has been approved by the Board of Supervisors . . . .”

MDR’s argument that the First and Fourth Extensions had expired at the time of the DBH letter is unavailing. The terms of those agreements governed not only the parties’ contractual relationship, but also the reasonable expectations arising out of that relationship. Throughout the parties’ course of dealing, MDR was well aware that while it expended time and money in anticipation of a New Option Agreement, the County had no binding obligation to enter into a New Option Agreement but had the unfettered right to decline to do so. The express terms of the First and Fourth Extensions preclude MDR from establishing reasonable reliance, a necessary element of its promissory estoppel claim. (See Malmstrom v. Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 318-319 [rejecting promissory estoppel claim because reliance on representations contradicting written agreement is not reasonable].)

To the extent MDR’s promissory estoppel claim is based on the DBH letter, it fails because there is no clear and unambiguous promise that the Board would vote to approve (or disapprove) the grant of an option. The County’s agreement to “continue to negotiate with [MDR] exclusively for the near term” is the only promise contained in the DBH letter. The DBH letter also informs MDR of the County’s “plans to submit the project to the Board of Supervisors for the Board’s approval of a grant of option” upon the satisfaction of five enumerated conditions but contains no clear and unambiguous promise to do so. DBH, in any event, did submit the New Option Agreement to the Board with a recommendation that the Board approve it. That the Board declined to do so was not a breach of any promise contained in the DBH letter.

Summary judgment was properly granted on MDR’s promissory estoppel claim.

DISPOSITION

The judgment is affirmed. The County shall recover its costs on appeal.

________________________

CHAVEZ, J.

We concur:

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LUI, P. J.

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HOFFSTADT, J.

[1] The County of Los Angeles and the Board are referred to collectively as the County.

[2] The written agreement stated that “Baskin Robbins would agree, subject to a separate co-packing agreement and negotiated pricing, to provide [Copeland] a three year co-packing agreement for 3,000,000 gallons in year 1, 2,000,000 gallons in year 2, and 2,000,000 in year 3.” (Baskin Robbins, supra, 96 Cal.App.4th at p. 1254.)

[3] The First Extension contains a provision stating that “the County shall not condition the entry into a New Option Agreement on [MDR’s] receipt of Entitlements, other than environmental clearance as provided in Section 1 of the [Option] Agreement (as modified by the Extension and Modification).” The Second, Third, and Fourth Extensions incorporate that provision by reference in a “No Other Modifications” provision that states: “All other terms and conditions of the Existing Agreement continue in full force and effect.” (Underscoring and boldface omitted.) The term “Existing Agreement” is defined in the Second, Third, and Fourth Extensions as the Option Agreement, as modified by subsequent extensions.