Electronically FILED by Superior Court of California, County of Los Angeles on 08/15/2019 04:36 PM Sherri R.

Carter, Executive Officer/Clerk of Court, by R. Perez,Deputy Clerk

19STCV28863
Assigned for all purposes to: Stanley Mosk Courthouse, Judicial Officer: Malcolm Mackey

1 RUSS, AUGUST & KABAT

Larry C. Russ, State Bar No. 082760
2 lruss@raklaw.com
Nathan D. Meyer, State Bar No. 239850
3 nmeyer@raklaw.com
12424 Wilshire Boulevard, 12th Floor
4 Los Angeles, California 90025
Telephone: (310) 826-7474
5 Facsimile: (310) 826-6991
6 Attorneys for Plaintiffs Rance’s Chicago Pizza, LLC
and BBCM USC, LLC
7
8 SUPERIOR COURT OF CALIFORNIA

9 COUNTY OF LOS ANGELES – CENTRAL DISTRICT

10
11 RANCE’S CHICAGO PIZZA, LLC, a Case No.
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California limited liability company; BBCM

12 USC, LLC, a California Limited Liability COMPLAINT FOR:
Company,
13 1. PROMISSORY FRAUD
Plaintiffs,
14 2. INTENTIONAL
vs. MISREPRESENTATION
15
UNIVERSITY OF SOUTHERN 3. NEGLIGENT
16 CALIFORNIA, a California non-profit public MISREPRESENTATION
benefit corporation; and DOES 1-10 inclusive
17 4. BREACH OF CONRACT
Defendant.
18
19 The University of Southern California (“USC”) through its Real Estate and Asset

20 Management (REAM) team deceived and defrauded tenants at the University Village in order to

21 induce them into signing leases at above market rates. USC accomplished this deception by

22 falsely representing to tenants that they would be able to accept USC meal cards (“USCards” or

23 “Meal Cards”), they would be part of a destination center servicing the local community, not just

24 USC, that the Village would be a reasonable mix of restaurants and retail, and fraudulently

25 concealed the fact that there would be an 8000 square foot dining hall at the USC village. On

26 information and belief, these representations were made not just to Plaintiffs, but to all of the

27 restaurant tenants at the Village. When USC REAM made these representations, it knew them to

28 be untrue.

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COMPLAINT
 1 In fact, USC never intended to and never permitted the tenants to accept USCards. Even

2 worse, USC constructed a massive dining hall in the middle of the Village that did accept
3 USCard. The planned construction of this dining hall was known to USC at the time of the

4 Leases but said highly material information was deliberately withheld from the tenants. USC
5 also nearly doubled the number of restaurants in the Village, and failed to market the Village to
6 non-USC customers within the surrounding local community.
7 The commercial tenants at the Village attempted numerous times to organize and address
8 the giant contrast between what was represented and what was delivered. As well, the tenants
9 attempted to notify non-REAM staff of these misstatements. At every attempt, the tenants were
10 met with threats of default and legal action by the REAM team. At this point in time, Plaintiffs
11 have no other choice than to initiate this lawsuit against USC in order to protect the investment
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12 of their friends and family.

13 Parties
14 1. Plaintiff BBCM USC, LLC is a California Limited Liability Company located in
15 Los Angeles, California owned by a husband and wife with some investment from family and
16 friends.
17 2. Plaintiff Rance’s Chicago Pizza, LLC is a California Limited Liability Company
18 located in Los Angeles, California owned by two childhood friends with investment from other
19 friends and family.
20 3. Rance’s and BBCM operate Rance’s Chicago Pizza and BBCM, respectively, at
21 USC Village, pursuant to leases (the “Leases”) with Defendant USC.
22 4. Defendant University of Southern California (“USC”) is a California non-profit
23 public benefit corporation.
24 5. Plaintiffs are presently unaware of the true names and capacities of defendants
25 Does 1 through 20, inclusive, and accordingly sues said defendants by such fictitious names.
26 Plaintiff will amend this complaint to set forth the true names and capacities of said defendants
27 when ascertained and as necessary.
28

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 1 6. Plaintiffs are informed, believe and based thereon allege that each Doe defendant

2 is responsible in some manner for the claims at issue in this complaint. Plaintiffs are informed,
3 believe and based thereon alleges that at all relevant times each Doe defendant was the agent,

4 servant, employee, conspirator and/or joint venturer of each of the other defendants, was acting
5 within the course and scope of one or more of such relationships and with the knowledge,
6 ratification, permission and/or consent of one or more of the other defendants.
7 Facts
8 7. USC Village (the “Village”) is a development encompassing much of the block
9 bounded by Hoover Street, Jefferson Boulevard and McClintock Avenue in Los Angeles.
10 8. A diagram of the Village as it exists today is attached hereto as Exhibit A.
11 9. The Village was marketed to Plaintiffs (and other tenants) as, among other things,
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12 (1) a place where Students would have the ability to use meal cards (also referred to here as
13 USCards); and (2) a center containing on the order of 25,000 square feet of restaurants (with the
14 remainder of the Village being retail and services) and (3) a “150,000 square foot retail lifestyle
15 shopping center”, a retail shopping and dining destination compared with 3rd Street Promenade,
16 Abbot Kinney, and Beverly Center containing consistent programing of events to draw in the
17 local community by activating the center. These representations were not true, a fact USC
18 representatives knew or should have known at the time.
19 The Meal Card Representations
20 10. The meal card representations were made at some length to Rance’s and BBCM
21 and other Village tenants, and are set forth at length below.
22 To BBCM:
23 11. In 2016 and 2017, Brian Wilson, the Executive Director of Real Estate
24 Development and Leasing at USC, stated to Ken Bernard, Jason Moon, and David Choi that one
25 of the benefits of the Village was access to USC Meal Cards on multiple occasions.
26 12. The first of these statements was a November 7, 2016 visit by Mr. Wilson to Chin
27 Chin Sunset Plaza. At the time, BBCM did not know what USC Meal Cards were. They
28 (Messrs. Choi and Bernard and Moon) were told (accurately) that the meal cards were cards that

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COMPLAINT
 1 parents could load with money, and that students could use to buy food at the University, and

2 parents would not have to worry about their kids spending the money on other things. Mr.
3 Wilson stated that the capacity to accept meal cards would be built into USC village and made

4 representations as to the significant boost such use would have on sales.

5 13. Mr. Wilson stated that other restaurants at USC did tremendous sales and that
6 they accepted the meal cards. One of the restaurants identified by Mr. Wilson was a restaurant
7 called Seeds. Upon request, Mr. Wilson’s associate, Richard Rizika, e-mailed BBCM with a
8 statement of Seed’s revenues. BBCM used the statement of revenue, and the assumption that
9 BBCM would be able to accept meal cards, to formulate their financial projections on which rent
10 was based.
11 14. Mr. Wilson repeated these statements to Mr. Choi, Mr. Bernard, and Jason Moon
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12 during USC site visits; Mr. Wilson re-explained the meal card concept to BBCM during these
13 visits.
14 To Rance’s:
15 15. As to Rance’s, the Meal Cards were first described by Brian Wilson to Rance
16 Ruiz and Aaron Tofani on June 2nd, 2016 at a meeting at Rance’s Costa Mesa restaurant. Aaron
17 Tofani raised concerns about affordability to students and Brian Wilson responded with the
18 promise that since the students would be able to use their Meal Cards that would not be an issue.
19 At the time, Aaron Tofani and Rance Ruiz did not know what meal cards were or that they
20 would have even been an option. Mr. Wilson reiterated that Rance’s would be able to accept
21 Meal Cards to Messrs. Tofani and Ruiz repeatedly during the following months telephonically.
22 16. In later correspondence USC representatives compared the Village meal card
23 program to a similar development at Loyola Marymount University (LMU), where meal cards
24 were accepted by local restaurants.
25 17. Rance’s relied on these statements and informed their investors that there would
26 be Meal Card use, and that revenue projections took meal card use into account.
27
28

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 1 18. In June of 2017, about five months before Rance’s opened, Mr. Tofani contacted

2 Mr. Wilson by phone, and asked who to speak with to set up payment systems for meal cards
3 through Rance’s point of sale (POS) system. Mr. Wilson said the system was still in progress.

4 19. The following month. Mr. Tofani called Mitch Hernandez at CBRE (USC’s
5 broker on the deal), who said he was informed that USC students would be able to use their Meal
6 Cards at Rance’s through a service called “Tapingo.” In reliance on this, Rance’s promptly
7 obtained a service proposal for “Tapingo” on July 13, 2017. Tapingo allows students at many
8 other universities throughout the country to purchase food from private companies using their
9 meal cards and seemed like progress had been made.
10 20. On or about November 11, 2017, (three weeks before opening) Rance’s finalized
11 the contract with Tapingo since the Point-of-Sale system was running and only then learned
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12 specifically that USC does not allow Tapingo for meal cards use at privately owned businesses,
13 only for USC’s own hospitality establishments. Rance’s has maintained the contract with
14 Tapingo in hopes of one day being added to the Meal Cards but experienced minimal sales in the
15 meantime just like other restaurants at the Village which have partnered with Tapingo and are
16 not permitted to accept the meal cards.
17 21. On or about November 11, 2017, Rance’s learned that USC does not allow
18 Tapingo for meal cards for private businesses, only USC owned hospitality operations.
19 22. On information and belief, similar Meal Card related comments were given by
20 Mr. Wilson to USC’s lease broker, CBRE.
21 23. Rance’s and other tenants in USC village have continued to follow up on phone
22 calls and in writing to the status and plead for meal card access but have been denied every time.
23 24. Based on the statements by USC REAM generally and Mr. Wilson in particular,
24 Rance’s and BBCM reasonably believed that Meal Cards would be accepted at the Village, and
25 relied upon these statements in agreeing to the Leases and formulating revenue projections upon
26 which rent was based.
27 25. These promises were false; USC has failed to enable Village tenants (including
28 Plaintiffs) to accept USC Meal Cards.

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COMPLAINT
 1 False Promises about Scale of Restaurant Competition

2 26. Separately from, but related to, the Meal Cards, USC represented the volume of
3 restaurant competition that Plaintiffs would face.

4 27. Attached to the Letters of Intent during the lease negotiation process and USC
5 REAM’s leasing brochure was a site plan showing what portions of the Village would be used
6 for restaurants versus services and other vendors. The site plan showed approximately 25,000
7 square feet of restaurant space.
8 28. A copy of the Site Plan from the leasing brochure and LOI is attached hereto as
9 Exhibit “B.”
10 29. The site plan, which showed the entire block, also failed to disclose the
11 construction of a brand new 8,000 square foot USC dining hall that (unlike the tenants at the
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12 Village) would be able to accept Meal Cards.

13 30. At the time of the lease negotiations, USC had already finalized permits for the
14 Dining Hall, so it should have been, but was not, disclosed at the time.
15 31. Rance’s and BBCM created revenue projections based in large part on the scope
16 of competition at the village (e.g. number of restaurants and absence of a dining hall) and the
17 promise of Meal Card access.
18 32. USC REAM also pitched catering to USC events as a potential revenue generator.
19 But USC REAM did not disclose that, on information and belief, competing catering businesses
20 operated by USC Hospitality (e.g. California Pizza Kitchen) offer upwards of a 50% discount,
21 making catering competitively impossible as a practical matter.
22 33. Based on these representations (and other representations, that though material,
23 were less central), Plaintiffs negotiated leases to open restaurants at the Village. Plaintiff’s
24 decision to enter into the leases were based on revenue projections, the calculation of which was
25 based on the meal card and total restaurant square footage assumptions, in addition to the
26 expectation that USC would activate the center and engage the local community.
27 34. None of these representations proved to be true:
28

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COMPLAINT
 - Instead, USC has opened a dining hall in the Village itself which exclusively accepts
1 meal cards. Had this dining hall with exclusive Meal Card access not been concealed
from Plaintiffs during Lease negotiations Plaintiffs would never had agreed to the leases.
2
- Contrary to the site plan attached to the original letter of intent, restaurants occupy 81%
3 more space in the Village than was promised, thus cannibalizing customers. Again, had
this not been concealed from Plaintiffs during Lease negotiations Plaintiffs would never
4 had agreed to the leases.
5 35. As a result of the Meal Card, dining hall, and excess restaurant competition false
6 representations, Plaintiffs (and the other tenants) have suffered massive losses on a continuous
7 basis.
8 Other False Promises
9 36. The fact that Plaintiffs have found themselves in a materially different
10 competitive situation than promised is the core reason they must seek relief. Adding insult to
11 injury however, USC made additional material misrepresentations about the nature of the Village
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12 which plaintiffs relied upon.

13 37. The site plan attached to the lease documents indicated there would be surface
14 parking and basketball courts at the Village that USC failed to provide.
15 38. USC stated that there would be concerts, farmer’s markets, tailgating, and other
16 events on regular basis in order to drive traffic and activate the shopping center. This same
17 information is listed on the USC property manager’s website to the time of this complaint. But
18 on information and belief, farmer’s markets are barred by USC’s agreement with a Trader Joe’s
19 in the Village, and the other events simply did not occur at the Village, despite tenants’ pleadings
20 from REAM.
21
39. During the lease negotiations, USC represented to Rance’s with confidence it
22
would create a “lay-by lane” that would enable customers to pick up food (very short-term
23
parking) or receive curbside pickup without needing to use a parking garage. Rance’s responded
24
to USC stating they would include this information in their projections. USC stated that where
25
the lay-by Lane “will go” and this was included in the investor package. This never materialized
26
and USC should have known the probability was extremely low at the time yet claimed they had
27
influence and would likely be approved.
28

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COMPLAINT
 1 40. One further attraction of the Village was a large gym that was to be open to and

2 marketed to both USC students and the community as a whole. This gym was clearly marked in
3 the Site Plan. USC represented that the gym would be a substantial draw from the community

4 (and students) and that it would be marketed to both. This did not happen. The gym, though
5 theoretically open to the public, is not listed on the Village website, does not advertise to the
6 public at all, and keeps hours inconsistent with serving a non-student population. It has very
7 short summer hours, it is closed for weeks during holidays and it only allows the public to sign
8 up at the beginning of each school year. All of which deter the local community from utilizing
9 this resource.
10 41. Further to this point, despite purporting to have a Center that caters to the local
11 community (not just USC), USC REAM closes its operations at the Center when school is not in
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12 session, while forcing the Tenants (including Plaintiffs) to stay open, causing further losses.
13 42. More generally, USC’s representatives promised that the structure of the Village
14 would be similar to a development near Loyola Marymount University, where, significantly, the
15 privately-owned restaurants are able to accept LMU meal cards.
16 43. The effect of all of the above was to render operation as originally agreed
17 essentially impossible.
18 USC Real Estate Team Retaliates when Tenants Attempt to Notify the University President
19 44. On information and belief, USC is a large bureaucracy.
20 45. On information and belief, the misstatements described above were not unique to
21 either Plaintiff or to Plaintiffs generally. When the tenants of the Village discovered these
22 common problems, they decided to reach out beyond the USC Real Estate team to the University
23 President.
24 46. At least two other tenants, working with over a dozen other tenants support,
25 drafted letters to USC management, and solicited signatures by the tenants more broadly,
26 including Plaintiffs. When Mr. Wilson discovered the first letter, he threatened via the property
27 manager that if Rance’s (and same was told to other tenants) signed the letter being circulated
28 and dated May 30th, 2018, “Brian [Wilson] would refuse to work with you and fully enforce the

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 1 lease.” Similar conduct occurred in connection with another letter that was circulated by another

2 tenant in early 2019. Tenants fear retaliation from REAM and have thus been very reluctant to
3 work together or be perceived as working together.

4 47. Plaintiffs have copies of the two draft letters, but are not attaching them to the
5 complaint in order to protect their privacy.
6 48. Complaints about USC REAM’s above-market CAM rates, which have been
7 drastically increased without notice, have also been met with threats of retaliation.
8 49. Plaintiffs are concerned they are being caught in the middle of an internal USC
9 dispute where the Real Estate team, the Hospitality team (which runs the dining hall) and
10 administration more generally, are not cooperating with each other.
11 50. This internal dynamic, on information and belief, may have led the Real Estate
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12 team to make representations on behalf of USC (upon which Plaintiffs reasonably relied) that
13 were simply not true in order to induce Plaintiffs’ to enter into leases.
14 FIRST CAUSE OF ACTION FOR PROMISSORY FRAUD
15 (Against All Defendants)
16 51. Plaintiff incorporates herein by reference the allegations set forth in paragraphs 1
17 through 49 above.
18 52. In or about 2016 and 2017, as set forth in detail above, representatives of USC,
19 specifically Brian Wilson, told, separately, both Rance Ruiz and Aaron Tofani of Rances and
20 David Choi, Ken Bernard and Jason Moon of BBCM that the restaurant tenants at the University
21 Village would be able to accept Meal Cards. Other tenants have expressed the exact same fact.
22 53. In connection with the lease execution, the site plan attached to the Letters of
23 Intent both Plaintiffs signed (1) showed less than 25,000 square feet of restaurants; and (2) did
24 not show the planned dining hall.
25 54. Based on the above, it is clear that USC intended restaurant tenants at the Village
26 to rely upon their representations that those tenants would (1) be able to accept meal cards; and
27 (2) only need to compete against a total of about 25,000 feet of restaurants in the village.
28 55. All of these promises were false, as described above.

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COMPLAINT
 1 56. Plaintiffs reasonably relied upon USC’s material misrepresentations as an

2 inducement to enter into a lease.

3 57. Plaintiffs reasonably relied upon USC’s promises by leasing the premises and

4 opening restaurants in the Village.

5 58. Plaintiffs have been harmed by Defendant’s failure to perform the above-
6 described promised acts. The Landlord has even stopped Tenants from reaching out to the
7 University President for assistance.
8 59. Plaintiffs have been harmed extensively by this fraud. Since opening in 2017,
9 Rance’s and BBCM have each suffered losses well in excess of $1 million to date that would not
10 have been suffered but for the false statements by USC, and were proximately caused by
11 Plaintiff’s reasonable reliance on USC’s statements.
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12 60. Plaintiffs’ reliance on Defendant’s above-described promises was a substantial

13 factor in causing Plaintiff’s harm.
14 SECOND CAUSE OF ACTION FOR FRAUD (INTENTIONAL
15 MISREPRESENTATION)
16 (Against All Defendants)
17 61. Plaintiffs incorporate by reference paragraphs 1-59 as if herein set forth in their
18 entirety.
19 62. As described above, USC made false and incomplete representations to induce
20 Plaintiffs to lease premises in the Village that USC knew were false when the representations
21 were made, or were made recklessly and without regard for their truth.
22 63. Defendants intended for Plaintiffs to rely on their false and incomplete
23 representations.
24 64. Plaintiffs reasonably and justifiably relied on their false and incomplete
25 representations and did not know them to be false and incomplete.
26 65. Had Plaintiffs known that their representations were false and incomplete, they
27 would not have entered into the Leases and expended hundreds of thousands of dollars and
28 countless hours opening and operating BBCM and Rance’s.

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 1 66. As a direct and proximate result of the foregoing, Plaintiffs have been damaged in

2 amounts to be proven at trial.

3 67. The acts of Defendants were willful, malicious, wanton, reckless, fraudulent and

4 oppressive, with the intent to harm and damage Plaintiffs, entitling Plaintiffs to an award of
5 punitive and exemplary damages to be determined by the trier of fact.
6 68. The Leases entered into between Plaintiffs and Defendants contain prevailing
7 party attorney’s fees and costs provisions. Plaintiffs are accordingly entitled to an award of
8 attorney’s fees and costs.
9 THIRD CAUSE OF ACTION FOR FRAUD (NEGLIGENT MISREPRESENTATION)
10 (Against All Defendants)
11 69. Plaintiffs incorporate by reference paragraphs 1-67 as if herein set forth in their
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12 entirety.
13 70. As described above, Defendants made false and incomplete representations, for
14 which they had no reasonable grounds to believe were true at the time the representations were
15 made, to induce Plaintiffs to lease premises in the Village.
16 71. Defendants intended for Plaintiffs to rely on their false and incomplete
17 representations.
18 72. Plaintiffs reasonably and justifiably relied on their false and incomplete
19 representations and did not know them to be false and incomplete.
20 73. Had Plaintiffs known that their representations were false and incomplete, they
21 would not have entered into the Lease and expended hundreds of thousands of dollars and
22 countless hours opening and operating their restaurants.
23 74. As a direct and proximate result of the foregoing, Plaintiffs have been damaged in
24 amounts to be proven at trial.
25 75. The acts of USC were willful, malicious, wanton, reckless, fraudulent and
26 oppressive, with the intent to harm and damage Plaintiffs, entitling Plaintiffs to an award of
27 punitive and exemplary damages to be determined by the trier of fact.
28

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COMPLAINT
 1 76. The Leases entered into between Plaintiffs and Defendants contain prevailing

2 party attorney’s fees and costs provisions. Plaintiffs are accordingly entitled to an award of
3 attorney’s fees and costs.

4 FOURTH CAUSE OF ACTION FOR BREACH OF LEASE AGREEMENT

5 (Against All Defendants)
6 77. Plaintiffs incorporate by reference paragraphs 1-75 as if set forth herein in their
7 entirety.
8 78. Plaintiffs did all, or substantially all, of the significant things that the Leases
9 required them to do.
10 79. Paragraph 1.4 of both Leases state that Landlord will generally adhere in a
11 manner substantially in accordance with the general layout of the [Village]” as described in
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12 Exhibit B to the Leases.

13 80. USC’s failure to perform consistently with Paragraph 1.4 of the Leases was a
14 substantial factor in causing Plaintiffs’ harm in amounts to be proven at trial.
15 PRAYER FOR RELIEF
16 WHEREFORE, Plaintiffs pray for judgment against the defendants, and each of them, as
17 follows:
18 1. For damages in excess of $5,000,000 or such sums as are proven at trial;
19 2. For costs of defense, settlement and judgement, by contract, strategy, agreement
20 and equity;
21 3. For punitive and exemplary damages of at least $20,000,000 as determined by the
22 trier of fact;
23 4. For rescission of the Leases;
24 5. For judgment in favor of Plaintiffs;
25 6. For the costs of this action, including reasonable attorneys’ fees expended by
26 Plaintiffs; and
27 7. For such other and further relief as the Court may deem just and proper.
28

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 1 DEMAND FOR JURY TRIAL

2 Plaintiffs hereby demand a trial by jury in this matter.

3

4 DATED: August 15, 2019 RUSS, AUGUST & KABAT

Larry C. Russ
5 Nathan D. Meyer
6
7 By: /s/ Larry C. Russ
Larry C. Russ
8 Attorneys for Plaintiffs Rance’s Chicago
Pizza, LLC and BBCM USC, LLC
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COMPLAINT
EXHIBIT A
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