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Keywords

contractlawsuitbreach of contractdefendantappealtrialgood faiththird-party beneficiaryunjust enrichment
contractdefendanttrialsustained

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City of Oakland v. Oakland Raiders, 83 Cal.App.5th 458, 299 Cal.Rptr.3d 463, 2022 Daily Journal D.A.R. 9962

Facts

The City of Oakland brought a lawsuit against the NFL and its 32 member clubs after the Raiders football team relocated to Las Vegas. The City claimed that the defendants failed to follow the relocation process outlined in the NFL Constitution and related documents, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. The City argued that it had standing as a third-party beneficiary of the NFL Constitution and the Relocation Policy, which it claimed were designed to protect the interests of host cities.

The City alleged defendants did not comply with the process for approving club relocations set forth in the NFL Constitution and related documents.

Issue

Whether the City of Oakland was a third-party beneficiary of the NFL Constitution and the Relocation Policy, and whether it could state claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.

The City argues the trial court erred in ruling it was not a third party beneficiary of the NFL Constitution and related documents and therefore did not have standing to enforce those documents.

Rule

To qualify as a third-party beneficiary of a contract, the contracting parties must have a motivating purpose to benefit the third party, and permitting the third party to bring a breach of contract action must be consistent with the objectives of the contract and the reasonable expectations of the contracting parties.

Civil Code section 1559 provides, “A contract, made expressly for the benefit of a third person, may be enforced by him [or her] at any time before the parties thereto rescind it.”

Analysis

The court found that while the City alleged that a motivating purpose of the League's relocation policy was to benefit host cities, it ultimately ruled that the City was not a third-party beneficiary because the primary purpose of the policy was to protect the League's business interests. The court also determined that the City could not state a claim for unjust enrichment, as there was no enforceable contract between the City and the defendants.

The court ruled that “the NFL Constitution and Relocation Policy make clear that the purpose behind these documents is to protect and benefit [the League] and the [member] clubs; there is simply no reading of the purported agreements which would allow the trier of fact to conclude that a motivating purpose of the [League] and its member clubs in entering into the Relocation Policy was to provide a benefit to host cities such as Oakland.”

Conclusion

The Court of Appeal affirmed the trial court's judgment, concluding that the City was not a third-party beneficiary of the NFL Constitution or the Relocation Policy and could not state a claim for unjust enrichment.

Therefore, we affirm the judgment.

Who won?

Defendants (NFL and member clubs) prevailed because the court ruled that the City did not have standing as a third-party beneficiary and could not state valid claims.

The trial court sustained the demurrer without leave to amend.

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