Judge Daniel M. Crowley, Case Number: 23STCV17456, Date: 2024-12-23 Tentative Ruling

All parties are urged to meet and confer with all parties concerning this tentative ruling to see if they can reach an agreed-upon resolution of their matter.  If you are able to reach an agreement, please notify the courtroom staff in advance of the hearing if you wish to submit on the tentative ruling rather than argue the motion by notifying the court by e-mailing the court at: SMCDEPT71@lacourt.org. Do not click on the email address, either copy and paste it or type it into your email. Include the word "SUBMITS" in all caps and the Case Number in the Subject line. In the body of the email, please provide the date and time of the hearing, your name, your contact information, the party you represent, and whether that party is a plaintiff, defendant, cross-complainant, cross-defendant, claimant, intervenor, or non-party, etc.

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Defendant Arakelian Enterprises, Inc. dba Athens Services (“Athens”) (“Defendant”) demurs to each cause of action in Plaintiff WasteXperts, Inc.’s (“WasteXperts”) (“Plaintiff”) complaint (“Complaint”). (Notice Demurrer, pg. 2; C.C.P. §430.10(e).)

Defendant’s 10/25/24 request for judicial notice of the franchise agreement between Athens and the City of Los Angeles (“City”), titled “Personal Services Contract Between the City of Los Angeles and Arakelian Enterprises, Inc.

dba Athens Services for Exclusive Franchise to Provide Collection, Transfer, Processing, and Disposal Services for Solid Resources to Commercial Establishments and Applicable Multifamily Establishments in the West Los Angeles, North Central and Harbor Zones,” dated January 1, 2017, as amended (“Agreement”) is granted. (D-RJN, Exh. A.)

On June 15, 2022, Plaintiff filed the operative Complaint against Defendant and the City[1] alleging five causes of action: (1) declaratory relief; (2) tortious interference with contract; (3) tortious interference with prospective economic advantage; (4) unfair competition in violation of Business and Professions Code §§17200 et seq.; and (5) trade libel.

Defendant filed the instant motion on October 25, 2024. Plaintiff filed its opposition on December 10, 2024. Defendant filed its reply on December 16, 2024.

Before filing a demurrer, the demurring party must meet and confer in person, by telephone, or by video conference with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading and obviate the need for filing the demurrer. (C.C.P. §430.41(a), emphasis added.)

The demurring party shall file and serve with the demurrer a declaration stating either of the following: (A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer. (B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith. (C.C.P. §430.41(a)(3).)

Defendant’s counsel declares that on October 22, 2024, he met and conferred with Plaintiff’s counsel via Zoom for the purpose of discussing the instant demurrer and the parties could not reach an agreement. (See Decl. of Turovsky ¶2.) Defendant’s counsel’s declaration is sufficient under C.C.P. §430.41(a). Therefore, the Court will consider Defendants’ demurrer.

Plaintiff alleges it provides a variety of services on the premises of a customer that include sorting waste into compostable, and recyclable items in a manner that is environmentally sound, and which creates cost efficiencies for its customers. (Complaint ¶13.) Plaintiff alleges it provides a range of maintenance support that includes operating compactors, together with managing and pressure washing areas where waste is stored and maintained. (Complaint ¶13.) Plaintiff alleges that rather than only provide a curbside nexus to its customers, it provides a holistic waste solution across a variety of services that is integrated into the operations of the customer, on the customer’s premises. (Complaint ¶13.)

Plaintiff alleges it currently offers services in Reno, NV; San Francisco, San Jose, Martinez, Hayward and Los Angeles, CA; and Kirkland, WA. (Complaint ¶14.) Plaintiff alleges there are current plans for it to expand its operations into several other states and regions. (Complaint ¶14.)

Plaintiff alleges the illegal acts and wrongdoings by Defendant that are herein complained of took place in the City of Los Angeles. (Complaint ¶15.) Plaintiff alleges it has been operating successfully within Los Angeles and currently has numerous customers in the Los Angeles area. (Complaint ¶15.) Plaintiff alleges it has been able to successfully grow its operations in Los Angeles while providing its clients, and the community at large, with the economic and environmental benefits of its services. (Complaint ¶15.)

Plaintiff alleges that on December 27, 2021, it received a letter from attorneys for Defendant making numerous fanciful claims about the WasteXperts business in Los Angeles. (Complaint ¶16.) Plaintiff alleges that subsequent to sending its letter to WasteXperts, Defendant commenced a campaign of harassment against the clients of WasteXperts. (Complaint ¶16.) Plaintiff alleges the “cease and desist” letter from Defendant alleges that WasteXperts’ onsite services (i.e., moving and staging containers) “are tampering with Athens’ property.” (Complaint ¶16.) Plaintiff alleges the letter alleges WasteXperts has damaged Athens’ enclosures and placed them in the wrong locations, both of which “threaten public health and safety.” (Complaint ¶16.) Plaintiff alleges the letter also claims that WasteXperts’ actions are in violation of the Los Angeles Municipal Code. (Complaint ¶16.) Plaintiff alleges Defendant’s letter wrongfully threatened legal action against WasteXperts for: (1) interference with Defendant’s existing and prospective business relations; (2) trespass; (3) negligence; (4) interference with contract (i.e., Athens’ performance of the Franchise); and (5) violation of LAMC Sections 66.00.21 (defining solid waste hauler) and 66.32.1 (requiring permits for solid waste haulers). (Complaint ¶16.)

Plaintiff alleges that in January 2022, it responded to Defendant’s letter explaining that the services it provides are wholly appropriate. (Complaint ¶17.) Plaintiff alleges the January 2022 letter from Plaintiff to Defendant requested details about Defendant’s broad allegation that Plaintiff damaged Defendant’s containers, placed them in the wrong location, and/or otherwise created a health and safety risk. (Complaint ¶17.) Plaintiff alleges that Defendant has not responded. (Complaint ¶19.)

Plaintiff alleges Defendant’s cease-and-desist letter constitutes the first in a series of attempts to wrongfully weaponize the franchise agreement with the City. (Complaint ¶20.) Plaintiff alleges Defendant has a traditional collection and processing business model—focused on curbside trash collection through agreements with governmental entities. (Complaint ¶21.) Plaintiff alleges that during or about February of 2017, the City entered into a Personal Services Contract with Defendant for an Exclusive Franchise to Provide Collection, Transfer, Processing, and Disposal Services for Solid Resources to Commercial Establishments and Applicable Multifamily Establishments in the West Los Angeles, North Central and Harbor Zones, Contract Number C-128879 (“Original Contract”). (Complaint ¶21.) Plaintiff alleges that in or around March of 2019, the City and Defendant entered a First Amendment to Personal Services Contract C-128879-1 (“First Amendment”). (Complaint ¶21.) Plaintiff alleges The Original Contract and First Amendment are collectively referred to herein as the “Franchise Agreement.” (Complaint ¶21.)

Plaintiff alleges Section 7.4 of Defendant’s Original Contract outlines “Extra Services” that Defendant “shall offer their CUSTOMERS.” (Complaint ¶22.) Plaintiff alleges that one of those “Extra Services” is “distance charges” — i.e., charges to move containers from their permanent location(s) to the collection location and back. (Complaint ¶22.) Plaintiff alleges Section 3.1 of the Original Contract purports to give Defendant an “exclusive franchise” to provide “EXTRA SERVICES to each COMMERCIAL ESTABLISHMENT and applicable MULTIFAMILY ESTABLISHMENT[s] in the FRANCHISE ZONE(s).” (Complaint ¶22.)

Plaintiff alleges Defendant’s distance charges are $25-$35 per container, per collection event. (Complaint ¶23.) Plaintiff alleges these hidden charges can add up dramatically and are neither in the best interests of customers or cost efficient. (Complaint ¶23.)

Plaintiff alleges that its services are onsite only. (Complaint ¶24.) Plaintiff alleges the services it provides to its clients are different and additive, complementing the services provided by solid waste haulers. (Complaint ¶24.) Plaintiff alleges they are not the kind of services that a local governmental agency can franchise under the California Integrated Waste Management Act of 1989, Public Resources Code Section 40000 et seq. (CIWMA). (14 C.C.R. § 18984.9(c).) (Complaint ¶24.)

Plaintiff alleges in or around January of 2022, a representative from WasteXperts spoke with Daniel K. Meyers (“Meyers”), the Division Manager for LA Sanitation’s Solid Resources Commercial Franchise Division. (Complaint ¶25.) Plaintiff alleges the position of the City, concerning this matter, as enunciated by Meyers, was jumbled and inconclusive, but Meyers in part reportedly acknowledged that a property owner could decide who stages containers owned by the property owner. (Complaint ¶25.) Plaintiff alleges as stated in the “Frequently Asked Questions” section of the RecycLA website (www.lacitysan.org), customers can “mitigate those [distance fee’s] costs, such as moving bins closer to the street and removing distance fees.” (Complaint ¶25.) Plaintiff alleges that on January 18, 2022, it requested that the City clarify its position through a letter to Meyers. The City has not responded. (Complaint ¶25.)

Plaintiff alleges that subsequent to sending WasteXperts the cease-and-desist letter on December 27 (and perhaps before), Defendant commenced and continued an aggressive course of conduct designed to harass and intimidate Plaintiff’s customers. (Complaint ¶26.) Plaintiff alleges Defendant suddenly made it difficult or impossible for Plaintiff’s customers to schedule the pick-up and hauling of trash. (Complaint ¶27.) Plaintiff alleges Sections 3.1.5 and 4.4 of the Los Angeles municipal franchise under which Defendant provides trash hauling services, specifically mandates and requires Defendant to provide service to its customers on a schedule that meets the customers’ needs. (Complaint ¶27.) Plaintiff alleges Section 3.9 of the franchise requires Defendant to provide services to customers up to six days a week (Monday through Saturday), as well as Sunday, if requested. (Complaint ¶27.) Plaintiff alleges Section 4.5.5 requires Defendant to accommodate service changes requested by customers. (Complaint ¶27.)

Plaintiff alleges that since approximately December 20, 2021, Plaintiff has been attempting to implement a service change with Defendant on behalf of its customer, AIR Communities, for two properties located in the City of Los Angeles: Palazzo East located at 348 Hauser, and Palazzo West located at 6220 W 3rd. (Complaint ¶28.) Plaintiff alleges Defendant requested that service for both properties be changed from Tuesday, Thursday, and Saturday to Monday, Wednesday, and Friday. (Complaint ¶28.) Plaintiff alleges that on or about December 28, 2021, WasteXperts’ representative spoke with two of Defendant’s representatives (Louis Castro and Albert Pacheco). (Complaint ¶28.) Plaintiff alleges Defendant’s representatives indicated that Monday would be difficult to accommodate, but there would be no issue providing service on Tuesday, Wednesday, and Friday as an alternative. (Complaint ¶28.) Plaintiff alleges it then sent a written follow-up request again seeking Monday, Wednesday, and Friday service; but, in an effort to be accommodating, agreeing to accept services on Tuesday, Wednesday, and Friday, if Monday was problematic. (Complaint ¶28.) Plaintiff alleges Defendant denied the request on the basis that it does not have the resources to provide services on either Monday or Wednesday. (Complaint ¶28.) Plaintiff alleges this conduct on the part of Defendant was clearly designed as harassment and retaliation against a client of WasteXperts. (Complaint ¶28.)

Plaintiff alleges that on or about January 31, 2022, WasteXperts sent the City a letter to the applicable department of the City of Los Angeles requesting that the City: (i) authorize AIR Communities to contract with another solid waste enterprise to provide the services which Defendant is unable or unwilling to perform pursuant to the provisions of the Franchise Agreement – including Section 3.17.4; or (ii) notify Defendant that it is in breach of the Franchise Agreement and give it any required opportunity to cure prior to termination pursuant to Article 15 of the Franchise Agreement; or (iii) impose liquidated damages as pursuant to Article 11 of the Franchise; or (iv) any combination of the above. (Complaint ¶29.) Plaintiff alleges The City has failed to respond. (Complaint ¶29.)

Plaintiff alleges Defendant has also been sending correspondence to Plaintiff’s customers making false claims and allegations against Plaintiff and its business—accusing WasteXperts of acting illegally. (Complaint ¶30.) Plaintiff alleges Defendant demands that the customers force WasteXperts to “cease immediately.” (Complaint ¶30.) Plaintiff alleges Defendant’s conduct constitutes, among other things, illegal interference and trade libel. (Complaint ¶30.)

Defendant demurs to the 1st, 2nd, 3rd, 4th, and 5th causes of action on the basis they fail to state facts sufficient to constitute causes of action against them. (Demurrer, pgs. 1-2.) Defendant also demurs to the 2nd, 3rd, 4th, and 5th causes of action that they are barred by Civil Code §47(b). (Demurrer, pgs. 1-2.)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

“To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909, quotation marks and brackets omitted.)

Plaintiff alleges an actual, justiciable controversy has arisen between Plaintiff and Defendant relating to the legal rights and duties of the parties. (Complaint ¶32.) Plaintiff alleges that pursuant to C.C.P. §1060, WasteXperts seeks a judicial declaration that:

(i) the Defendant City of Los Angeles does not have the legal or Constitutional authority to prohibit a property owner from contracting with a company of its own choosing for its own onsite waste management;

(ii) The City is not authorized to confer an exclusive franchise to enter multifamily and other commercial properties to move and stage Athens-owned containers and charge customers associated “distance changes”;

(iii) The CIWMA and associated regulations do not authorize a City to require franchise agreements for onsite management of solid waste and recycling programs;

(iv) The Franchise Agreement does not grant Athens an exclusive franchise for onsite waste and recycling management;

(v) The City did not confer an exclusive franchise to Athens to enter commercial and applicable multifamily properties to move and stage Athens-owned containers and charge customers associated “distance charges”;

(vi) Customers are not required to accept Athens’ “offer” to move and stage containers and charge “distance charges”; and

(vii) Whether Athens violated the Franchise Agreement by declining residential communities’ requests for service changes.

Plaintiff alleges it understands that Defendant disputes these contentions—disputes that are resulting in actions by Defendants that threaten immediate and ongoing financial harm to Plaintiff creating an immediate justiciable controversy that is ripe for declaratory determination. (Complaint ¶32.)

Plaintiff sufficiently alleges a cause of action for declaratory relief. Plaintiff seeks a judicial declaration regarding whether Plaintiff has the right to provide onsite distance services to its clients, notwithstanding the CIWMA and the Franchise Agreement entered pursuant thereto. (See generally Complaint ¶¶16-30.)

The elements of a cause of action for intentional interference with contractual relations are “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 289; see CACI 2201 [“1. That there was a contract between [name of plaintiff] and [name of third party]; 2. That [name of defendant] knew of the contract; 3. That [name of defendant]’s conduct prevented performance or made performance more expensive or difficult; 4. That [name of defendant] [intended to disrupt the performance of this contract/ [or] knew that disruption of performance was certain or substantially certain to occur]; 5. That [name of plaintiff] was harmed; and 6. That [name of defendant]’s conduct was a substantial factor in causing [name of plaintiff]’s harm.”].)

Plaintiff alleges Defendant has directly contacted customers of Plaintiff in a wrongful attempt to cause them to discontinue utilization of the Plaintiff’s service, including by directly contacting Plaintiff’s customers, telling them to “cease immediately,” and accusing Plaintiff of engaging in illegal activities. (Complaint ¶34.) Plaintiff alleges Defendants’ conduct is not protected speech or litigation privileged. (Complaint ¶34.)

Plaintiff alleges the purpose of contacting Plaintiff’s customers was to damage the relationship between Plaintiff and its customers and to interfere with such relationship in so serious a manner so as to cause the customer to halt the utilization of the services of Plaintiff. (Complaint ¶35.)

Plaintiff alleges Defendant’s actions in interfering with the relationship between Plaintiff and its customers did and will cause Plaintiff to sustain damages in a sum according to proof at the time of trial. (Complaint ¶36.)

Plaintiff fails to allege a valid contract between plaintiff and a third party and defendant’s knowledge of this contract. Plaintiff merely alleges that it provides services to clients but does not allege the existence of a valid contract with a third party, and defendant’s knowledge of the contract. (See Complaint ¶24 [“The services WasteXperts provides to its clients are different and additive, complementing the services provided by solid waste haulers.”]; ¶26 [“Subsequent to sending WasteXperts the cease-and-desist letter on December 27 (and perhaps before), Athens commenced and continued an aggressive course of conduct designed to harass and intimidate WasteXperts’ customers.”]; ¶28 [“Since approximately December 20, 2021, WasteXperts has been attempting to implement a service change with Athens on behalf of its customer, AIR Communities, for two properties located in the City of Los Angeles: Palazzo East located at 348 Hauser, and Palazzo West located at 6220 W 3rd.”].)

Accordingly, Defendant’s demurrer to the 2nd cause of action is sustained with 20 days leave to amend.

Intentional Tortious Interference with Prospective Economic Advantage (3rd COA)

“Intentional interference with prospective economic advantage has five elements: (1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant’s action.” (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)

The interfering conduct must be wrongful by some legal measure other than the fact of the interference itself. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.) This conduct must fall outside the privilege of fair competition. (PMC, Inc. v. Saban Entertainment, Inc. (1996) 45 Cal.App.4th 579, 603, disapproved on other grounds in Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159 n.11.)

“With respect to the third element, a plaintiff must show that the defendant engaged in an independently wrongful act. It is not necessary to prove that the defendant acted with the specific intent, or purpose, of disrupting the plaintiff’s prospective economic advantage. Instead, ‘it is sufficient for the plaintiff to plead that the defendant “[knew] that the interference is certain or substantially certain to occur as a result of his action.”’ ‘[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.’ ‘[A]n act must be wrongful by some legal measure, rather than merely a product of an improper, but lawful, purpose or motive.’” (San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545, internal citations omitted.)

Plaintiff alleges on or about December 27, 2021, Defendant commenced a campaign and illegal course of conduct designed and intended to interfere with Plaintiff’s legitimate and ongoing business operations, including by directly contacting WasteXperts’ customers, telling them to “cease immediately” and accusing WasteXperts of engaging in illegal activities. (Complaint ¶38.) Plaintiff alleges the subject course of conduct was intended to interrupt, hamper, and render impossible Plaintiff’s business operations. (Complaint ¶38.) Plaintiff alleges Defendants’ conduct is not protected speech or litigation privileged. (Complaint ¶38.)

Plaintiff alleges that at no time did Defendant have the right to interfere with the business operations of Plaintiff by threatening Plaintiff or by contacting Plaintiff’s customers. (Complaint ¶38.)

Plaintiff alleges Defendant’s actions in performing the acts complained of herein wrongfully interfered with Plaintiff’s economic advantage in an amount according to proof at time of trial. (Complaint ¶40.)

Plaintiff fails to allege the actual disruption of an alleged relationship it had with a third party that had probable future economic benefit to Plaintiff. Regarding Plaintiff’s allegations involving AIR Communities, Plaintiff does not allege an actual disruption of its relationship with AIR Communities, nor does Plaintiff allege an independently wrongful act related to this allegation. (See Complaint ¶28.) Further, Plaintiff merely alleges that Defendant sent correspondence to WasteXperts’ “customers” in which Defendant accused Plaintiff of acting illegally, but Plaintiff does not allege an actual disruption of any relationship. (See Complaint ¶30.)

Accordingly, Defendant’s demurrer to the 3rd cause of action is sustained with 20 days leave to amend.

To set forth a claim for a violation of Business and Professions Code §17200 (“UCL”), a plaintiff must allege: (1) a business practice; (2) that is “unlawful, unfair or fraudulent”; and (3) an authorized remedy. (Bus. & Prof. Code §17200.)

“An ‘unlawful’ practice requires violation of another statute, and a business practice may be ‘unfair’ even if not otherwise proscribed by statute as long as the practice is not expressly authorized by law.” (People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1016.)

“The phrase ‘any unlawful . . . business act or practice’ in effect ‘borrows’ rules set out in other laws and makes violations of those rules independently actionable.” (California Medical Association v. Aetna Health of California Inc. (2023) 14 Cal.5th 1075, 1085, quoting Bus. & Prof. Code §17200 and Zhang v. Superior Court (2013) 57 Cal.4th 364, 370.)

A private plaintiff has UCL standing only if that plaintiff “has suffered injury in fact and has lost money or property.” (California Medical Association, 14 Cal.5th at pg. 1087, quoting Bus. & Prof. Code §17204.) A showing of economic injury requires only that the plaintiff allege or prove “a personal, individualized loss of money or property in any nontrivial amount.” (Id. at pg. 1088, quoting Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 325.)

Plaintiff alleges Defendants engaged in unlawful, unfair, and/or fraudulent conduct under the California UCL, California Business & Professions Code §§17200, et seq., by interfering with Plaintiffs’ business relationship by intentionally and falsely misleading Plaintiff’s customers as to Plaintiff’s right and ability to perform its business enterprise. (Complaint ¶43.)

Plaintiff alleges Defendants’ conduct is unfair in that it offends established public policy and/or is immoral, unethical, unscrupulous, and/or substantially injurious to Plaintiff. (Complaint ¶45.) Plaintiff alleges the harm to it arising from Defendant’s conduct is disastrous to Plaintiff’s professional reputation. (Complaint ¶45.) Plaintiff alleges Defendant’s conduct undermines and violates the stated spirit and policies underlying the UCL and other public policy concerns indicated herein. (Complaint ¶45.)

Plaintiff alleges as a direct and proximate result of Defendant’s violations, Defendant has been unjustly enriched by said conduct. (Complaint ¶48.) Plaintiff alleges it seeks relief in the form of: (a) payment of attorneys’ fees and costs pursuant to C.C.P. §1021.5; (b) interest at the highest rate allowable by law; and (c) restitution. (Complaint ¶48.)

Plaintiff fails to allege “a personal, individualized loss of money or property in any nontrivial amount.” (California Medical Association, 14 Cal.5th at pg. 1088.) Plaintiff merely alleges “the harm to it arising from Defendant’s conduct is disastrous to Plaintiff’s professional reputation.” (Complaint ¶45.) Plaintiff therefore fails to establish it has standing to assert a UCL cause of action.

Accordingly, Defendant’s demurrer to Plaintiff’s 4th cause of action is sustained with 20 days leave to amend.

“A cause of action for trade libel thus requires (at a minimum): (1) a publication; (2) which induces others not to deal with plaintiff; and (3) special damages.” (Nichols v. Great American Insurance Companies (1985) 169 Cal.App.3d 766, 773.)

“Trade libel is the publication of matter disparaging the quality of another’s property, which the publisher should recognize is likely to cause pecuniary loss to the owner. [Citation.] The tort encompasses ‘all false statements concerning the quality of services or product of a business which are intended to cause that business financial harm and in fact do so.’ [Citation.] [¶] To constitute trade libel, a statement must be false.” (City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376; see CACI 1731 [“1. That [name of defendant] made a statement that [would be clearly or necessarily understood to have] disparaged the quality of [name of plaintiff]’s [product/service]; 2. That the statement was made to a person other than [name of plaintiff]; 3. That the statement was untrue; 4. That [name of defendant] [knew that the statement was untrue/acted with reckless disregard of the truth or falsity of the statement]; 5. That [name of defendant] knew or should have recognized that someone else might act in reliance on the statement, causing [name of plaintiff] financial loss; 6. That [name of plaintiff] suffered direct financial harm because someone else acted in reliance on the statement; and 7. That [name of defendant]’s conduct was a substantial factor in causing [name of plaintiff]’s harm.”].)

“To constitute trade libel the statement must be made with actual malice, that is, with knowledge it was false or with reckless disregard for whether it was true or false.” (J-M Manufacturing Co., Inc. v. Phillips & Cohen LLP (2016) 247 Cal.App.4th 87, 97.)

Plaintiff alleges Defendant, without privilege to do so, has made false statements that disparaged Plaintiff’s services. (Complaint ¶50.) Plaintiff alleges Defendants made the false, and misleading statements concerning Plaintiff to Plaintiff’s customers. (Complaint ¶51.) Plaintiff alleges Defendants knew that the statements were untrue, or at the very minimum acted with reckless disregard about the truth of the statement. (Complaint ¶52.)

Plaintiff alleges Defendants knew or should have recognized that customers of Plaintiff might rely on the statement to the Plaintiffs’ financial detriment. (Complaint ¶53.) Plaintiffs has and will suffer direct financial harm due to reliance on the defendants’ false statements. (Complaint ¶54.) Plaintiff alleges Defendants’ conduct was a substantial factor in causing the Plaintiffs’ injury. (Complaint ¶55.) Plaintiff alleges that as a result of Defendants’ statements, Plaintiffs suffered economic harm in an amount according to proof at trial. (Complaint ¶56.) Plaintiff alleges as a result of Defendants’ conduct, Plaintiffs have also incurred consequential damages for the harm to Plaintiffs’ reputation in an amount to be proven at trial. (Complaint ¶57.)

Plaintiff fails to allege that the publication at issue induced others not to deal with Plaintiff. (Nichols, 169 Cal.App.3d at pg. 773.) Plaintiff only alleges that Defendant knew or should have recognized that customers of Plaintiff might rely on the statement to the Plaintiffs’ financial detriment, and that Plaintiff has and will suffer direct financial harm due to reliance on the defendants’ false statements. (Complaint ¶¶52-54.)

Accordingly, Defendant’s demurrer to Plaintiff’s 5th cause of action is sustained with 20 days leave to amend.

Defendant’s demurrer to Plaintiff’s 1st cause of action is overruled. Defendant’s demurrer to Plaintiff’s 2nd, 3rd, 4th, and 5th causes of action is sustained with 20 days leave to amend.

Hon. Daniel M. Crowley

Judge of the Superior Court

[1] The City was dismissed from this matter on December 6, 2024. (12/5/24 Request for Dismissal.) Therefore, the only remaining Defendant is Athens.