Sequoia Brewing’s attempt to halt the sale of the Tower Theatre drew support in court on Wednesday, leaving open the possibility that the brewery could purchase the building that it is currently leasing on site.
Last July, Fresno County Superior Court Judge Rosemary McGuire ruled to expunge the lis pendens on the Tower Theatre property, which the brewery filed to place a stay on the sale.
But in an appeal, a three-judge panel with the Fifth District Court of Appeal ruled Wednesday to reverse McGuire’s decision.
The judicial panel – Judges Donald Franson, Bruce Smith and Mark Snauffer – ruled that Tower Theatre ownership acted in bad faith in its dealings with Sequoia Brewing by not disclosing the purchase price offered by Adventure Church for the theater.
According to the ruling, Tower Theatre Properties exaggerated the sale price of the whole property in an effort to induce Sequoia Brewing to not exercise its right of first refusal.
“Accordingly, the evidence indicates [Tower Theatre Properties] engaged in a pattern of overstating the price of the brewery premises while withholding the actual sale price of the Tower Theatre parcel,” the ruling reads.
The judicial panel found that Tower Theatre Properties did not disclose to the brewery that it was in escrow with Adventure Church “for months.”
If theater ownership ever moved to sell the property, it needed to inform Sequoia Brewing of its intent to sell, as the brewery’s right of first refusal terms state in the lease agreement.
The lease contract also notes that the brewery premises is not currently a separate parcel from the rest of the theater property that can be sold.
But the contract directs Tower Theatre Properties to undergo the process to create a separate parcel for the brewery in the event of a sale.
The purchase price for the brewery parcel must be equal or more favorable to theater ownership than terms offered by a third property.
In January 2021, theater ownership told the brewery that the Tower Theatre property was going to be sold for $6.8 million to Adventure Church with the brewery premises valued at $2.5 million.
Theater ownership later provided a formal written notice to Sequoia Brewing that the brewery premises would be sold at $1.268 million.
Wednesday’s ruling revealed that the actual price offered for the Tower Theatre parcel was $3.9 million, $850,000 less than an appraisal determined the total value to be, leading Sequoia Brewing to say that the matching value for the brewery’s parcel should be less than $1.268 million.
The court ruled that theater ownership did not provide Sequoia Brewing with a purchase price that complied with the terms of the lease.
“When reviewing the applicable law and evidence presented by the parties, we find the trial court’s ruling expunging the lis pendens was based on erroneous legal rulings and factual findings not supported by substantial evidence,” the ruling reads. “[Sequoia Brewing] has shown the probable validity of its real property claims and is entitled to the continued recordation of the lis pendens pending the outcome of this litigation.”
Per the ruling, Tower Theatre ownership has to pay Sequoia Brewing’s legal fees for this part of the lawsuit.
With the lis pendens set for the property, the overarching breach of contract lawsuit is scheduled for a jury trial in February of next year.
Adventure Church Pastor Anthony Flores told The Sun that he expected Wednesday’s ruling to go in the brewery’s favor against theater ownership.
“We expected that,” Flores said. “At the end of the day we’ll win. I’m not worried. It’s just going to be a longer process. We’ll see them in court.”
Flores was also not deterred by the ruling, noting that Adventure Church will give Sequoia Brewing the opportunity to buy the brewery parcel if the church completes the sale.
“We’re going to buy it no matter what,” Flores said. “I’m not worried.”
