Chung v. Kaonohi Center Company

618 P.2d 283 (1980)

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Nature of the Case

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Facts

Ps negotiated with D for a ten-year lease on a Chinese fast-food outlet as one component of an international kitchen to be constructed by Ds at the Pearlridge Mall. Ps were a stockbroker and a restaurant operator who ran the House of Dragon, a Chinese restaurant in the Pearl City Shopping Center. A lease contract was executed. In anticipation of operating the Chinese kitchen, Ps arranged for financing, ordered equipment and furnishings, hired chefs and workers, advertised in the yellow pages of the telephone book for the to-be-built kitchen, and incurred other expenses. P and D were in frequent contact after the lease was signed. Whenever Ps inquired about an opening date, they were told to be patient and were assured that they would be notified as soon as a firm date was set. D was negotiating with other parties about leasing the Chinese kitchen. D had given a right of first refusal to a Ms. Liza Chong and were also negotiating with a Mr. Sergio Battistetti, whose partnership eventually obtained the lease on the entire international kitchen operation. Ps were never informed of these other negotiations. They discovered the dealings from a newspaper article naming Battistetti as the lessee of the international kitchen. D sent a letter to Ps informing them that the landlords of Pearlridge Shopping Center had decided not to pursue Ps' lease of the Chinese kitchen. Ps' check for $1,666, the amount of Ps' deposit, was returned. Ps sued D for emotional distress and lost profits. Ps sought specific performance of the lease agreement. P's key witness on anticipated profits was Don Voronaeff, a real estate and business appraiser. Voronaeff valued the proposed Chinese kitchen using three different valuation approaches -- a reproduction cost analysis, a comparative market analysis, and an income stream analysis. Voronaeff relied primarily on his income stream analysis but included both the reproduction cost analysis and comparative market analysis as a check on that figure. Voronaeff looked at the actual gross income of the Chinese kitchen in the Pearlridge International Kitchen run by Mr. Battistetti. P was to establish its business at the identical location and serve the same type of food to the same type of clientele as current restaurant. The jury awarded $50k for emotional distress and $175K for lost profits. D moved for j.n.o.v. or a new trial. The motion was denied. D appealed.