Judge: Frank M. Tavelman, Case: 23BBCV00248, Date: 2023-11-17 Tentative Ruling

REQUESTING ORAL ARGUMENT PER CRC 3.1308

The Court will attempt to post all Tentative Rulings at least the day prior to the hearing by 3:00 p.m.; however, the Court does not post Tentative Rulings for all matters.  

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Court will indicate in the Tentative Ruling whether the Court is requesting oral argument.  For cases where the Court is not requesting argument, then pursuant to
California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is
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Notice
may be given either by email at BurDeptA@LACourt.org or by telephone at (818)
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Notice of the ruling must be served as indicated in the tentative.  Remote appearances are permitted for all law and motion unless otherwise indicated by the Court.  

Case Number: 23BBCV00248    Hearing Date: December 6, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION FOR SUMMARY JUDGMENT

MP:     Playas de Nayarit, LLC (Defendant)

RP:     MAAS, Inc. (Plaintiff)

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS:

MAAS, Inc. (“MAAS”) brings this action against Playas de Nayarit, LLC (“Playas”) alleging Playas failed to pay for various deliveries of seafood in breach of contract. Playas is a restaurant with two locations and MAAS is a seafood distributor. MAAS alleges that over the course of several years they provided seafood to one of Playas’ locations but never received compensation.

MAAS’s Complaint contains causes of action for (1) Breach of Contract and (2) Breach of the Covenant of Good Faith and Fair Dealing.

Playas now moves for summary judgment. Playas argues the undisputed material facts show the company never formed a contract with MAAS. MAAS opposes the motion and also moves for summary judgement. MAAS argues the undisputed material facts show a contract was formed and breached.

EVIDENTIARY OBJECTIONS:

Playas’ evidentiary objections to the declaration of Antonio Monje are OVERRULED.  

ANALYSIS:

I.                    LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co.¿(2001) 25 Cal.4th 826, 843.) C.C.P.¿§ 437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to¿any material fact and that the moving party is entitled to judgment as a matter of law.”¿ (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)¿ “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”¿ (Juge¿v. County of Sacramento¿(1993) 12 Cal.App.4th 59, 67, citing¿FPI Development, Inc. v. Nakashima¿(1991) 231 Cal.App.3d 367, 381-382.)¿ 

¿ 

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (C.C.P.¿§437c(p)(2);¿Scalf v. D. B. Log Homes, Inc.¿(2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.)¿ 

¿ 

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v.¿Paetkau¿(1998) 68 Cal.App.4th 151, 166.)¿ 

II.                 MERITS

Facts

MAAS is a seafood distributor. (Mot. Exh. A.) Playas is a restaurant specializing in Mexican seafood. (Wejebe Decl. ¶ 3.) Playas was originally a single location restaurant located in El Monte, California and run by Ernesto Hernandez Sr (“Ernesto”). (Wejebe Decl. ¶¶ 4-5.) The restaurant was transferred to the sole ownership of Martha Wejebe in 2004. (Wejebe Decl. ¶ 6.) Wejebe formed the LLC in 2007 at which time it took full possession of the restaurant. (Wejebe Decl. ¶ 7.) Playas is a manager-managed LLC. (Wejebe Decl. ¶¶ 10-11.) Wejebe is the only manager of the LLC and Ernesto was never a manager. (Wejebe Decl. ¶ 12.)

Playas opened a second location in Fontana, California in 2016. (Wejebe Decl. ¶ 8.) Ernesto was the supervisor for this location. (Wejebe Dec. ¶ 9.) From a period of April 2018 to May 2020, MAAS issued a total of 22 separate invoices to Playas, reflecting a total amount of $81,354.71. (Playas Compendium, Exh. A.) These invoices reflect that they were billed and shipped to “Playas de Nayarit Restaurant 9817 Garvey Ave. El Monte, CA 91733”. (Id.) Not all of the invoices are signed, but those that are appeared to be signed for by “Ernesto”. (Id.) There are two invoices which reflect they were directed to NayMex rather than Playas. (Id. at pgs. 29, 31.) NayMex was a seafood distribution warehouse maintained by Ernesto independently of the restaurant. (Wejebe Decl. ¶ 25.) Ernesto passed away in 2019 and his son Ernesto Hernandez Jr. (“Ernie”) took over his position at the Fontana location. (Wejebe Decl. ¶ 19.)

It is unclear how the relationship between MAAS and Ernesto began. MAAS originally stated in their declaration and discovery that Playas contacted them initially in 2018 to place an order. (Monje Decl. ¶ 3; Playas Compendium Exh. C., SPROG No. 3.) However, MAAS’s supplemental responses to discovery state that they were contacted explicitly by Ernesto. (Playas Compendium Exh. B., SPROG No. 3.) MAAS states this relationship continued to 2020, whereby individuals from Playas would contact them to place orders. (Monje Decl. ¶ 4.) MAAS states all deliveries were all made to the El Monte location. (Monje Decl. ¶ 5.) MAAS states they mailed a copy of each invoice to the El Monte location after delivery and that Playas never contacted them disputing delivery. (Monje Decl. ¶¶ 6-7.) MAAS states the only payment they ever received was from an employee of Playas on May 21, 2020. (Monje Decl. ¶ 8.)

Playas states that MAAS only ever dealt with Ernesto and Ernie, who were not authorized to contract on Playas’ behalf. (Playas Compendium Exh. B., SPROG No. 3.) Playas further states that MAAS was unable to identify the individuals who formed these contracts on Playas’ behalf in discovery. (Id.) Playas states MAAS’s discovery responses also indicated some of the shipments were delivered and others were picked up. (Playas Compendium Exh. C., SPROG No. 6.) Playas disputes that it ever received any invoices from MAAS in the mail and was only made aware of the invoices in 2021, when Ernie informed MAAS that the restaurant was owned by Wejebe. (Playas Compendium Exh. B., SPROG No. 3.) MAAS was given this information after the Fontana location closed. (Id.)

A letter was sent to Playas from Magic Income Tax Services on March 31, 2021 detailing the outstanding invoices. (MAAS Compendium Exh. 3.) MAAS sent a similar letter to Playas on July 7, 2021. (MAAS Compendium Exh. 4.) Playas states Wejebe was unaware of the outstanding invoices until 2022, when MAAS sent a large man to her residence and the El Monte location demanding payment. (Wejebe Decl. ¶ 22.) Wejebe states she engaged in preliminary negotiations regarding the debt with MAAS, but never agreed to pay MAAS. (Wejebe Decl. ¶ 23.)

Breach of Contract

Playas first argues that no issue of fact exists as to whether a contract exists between the parties. Playas argues that by function of California Corporation Code (“Cal. Corp. Code”) § 17703.01(b), they cannot be found to have contracted with MAAS. Playas is correct that Cal. Corp. Code § 177703.01(b) does limit the authority of an LLC to enter into contracts to only managers of the company. However, the Court disagrees that the evidence Playas has produced indicates there is no triable issue of fact as to whether Playas can be held liable for the contract.

Playas states that Martha Wejebe is the only manager of Playas, as evidenced by its articles of incorporation. (Wejebe Decl., Exh. 1.) Playas further states that MAAS never contracted with Wejebe for the delivery of seafood. Playas argues that MAAS’s supplemental response to Special Interrogatory No. 3 reveals that the persons from Playas alleged to have contracted with MAAS were Ernesto and Ernie. (Playas Compendium Exh. B.) MAAS stated in its response that Ernesto initially contacted them to order food, or the restaurant and Ernie continued this relationship after Ernesto passed. (Id.)

Playas argues that because neither Ernesto nor Ernie were managers of the LLC, they did not have the authority to bind Playas to the contract. Playas further argues that the facts do not support that Ernesto or Ernie were ostensible agents of Playas.

Ostensible agency (alternatively referred to agency by estoppel) occurs when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him. (Cal. Civ. Code § 2300.) “The ostensible authority of an agent cannot be based solely upon the agent's conduct.” (Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 747.)

Here, the facts clearly indicate that Wejebe, as the only legal manager of Playas, never made any representations to MAAS because she never had contact with them. MAAS does not dispute this in their opposition. However, MAAS argues that agency may still be found by virtue of ratification.

Agency by ratification results from acceptance by the principal of the benefits of the acts of the purported agent. (Cal. Civ. Code § 2310.) A principal may ratify an agent’s act through either confirmatory conduct or conduct inconsistent with disapproval. (Dickinson v. Cosby (2019) 37 Cal.App.5th 1138, 1159 citing Gates v. Bank of America (1953) 120 Cal.App.2d 571, 576.) Here, the argument would be that Wejebe ratified the conduct of Ernesto through acceptance of the deliveries over a period of years without dispute.

The Court finds the evidence presented by both sides shows a triable issue of material fact as to whether Wejebe ratified the conduct of Ernesto. The evidence is disputed as to Wejebe’s knowledge of Ernesto’s activities at the Fontana location and Playa’s receipt of the invoices sent from MAAS. Further, no evidence is presented by Playas as to the extent of Ernesto’s supervisory role and what oversight Wejebe had over the location.

The parties evidence as to where these orders were delivered is at odds. Playas claims that the discovery responses indicate some of these orders were delivered while others were picked up. (Playas Compendium Exh. C., SPROG No. 5.) Playas asserts that MAAS’s statement that the invoices were signed for by the person that picked up the product creates uncertainty as to whether all the invoices reflected deliveries to the El Monte location as asserted by MAAS. (See Monje Decl. ¶ 5.) All of the invoices show a delivery to the El Monte location; however, MAAS admits they were contacted exclusively by Ernesto in 2018 and the evidence shows at that time Ernesto was operating out of the Fontana location. The evidence is clear that Ernesto was placing orders on behalf of Playas but is disputed as to the acceptance and use by Playas.

From the evidence presented, it cannot be determined which location the deliveries from MAAS were made from and where the product in those deliveries was used. MAAS’s evidence indicates delivery to the El Monte location, which was supervised by Wejebe. If this is correct, El Monte would receive each delivery from MAAS and Wejebe would certainly be aware of the invoices. The Court notes this does not explain the presence of Ernesto’s signature on the invoices, as he was purportedly located at the Fontana location at the time of the orders. 

On the other hand, Playas has presented no affirmative evidence that Ernesto did not place orders for the El Monte location or did not handle the ordering for that location. Playas states Ernesto was not a managing member bars his ability to legally bind Playas, but this does not defeat MAAS’s evidence that Ernesto was placing orders on behalf of Playas.

Further, the evidence is also disputed as to whether Playas was receiving mailed copies of these invoices. MAAS states it sent a copy of each invoice after delivery to Playas at the El Monte location, while Wejebe claims to have never received these letters. It also appears the parties engaged in some type of negotiations, though they dispute the veracity of the promises made by Wejebe to pay for the invoices.

In short, the evidence presented presents an incomplete picture of the relationship between MAAS and Playas such that summary judgement would be inappropriate. It appears many disputed material facts exist as to the delivery, receipt, and acknowledgement of these orders. As such, it remains possible that MAAS could show a contract was formed between the two by virtue of ratification. Whether MAAS will be able to prove Wejebe’s knowledge of Ernesto’s activity remains to be seen, but the evidence does not concretely establish her ignorance, nor does it concretely establish the existence of a contract. As such, both Playas and MAAS’s motions for summary judgment are DENIED.  Playas motion for summary adjudication as to this cause of action is similarly DENIED. 

Breach of Covenant of Good Faith

As Playas notes in their motion, an action for breach of this covenant is reliant upon the existence of a valid contract. (McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 799.) Playas presents no argument for summary adjudication aside from the lack of a valid contract.

As the Court has determined a triable issue of fact as to the existence of a contract, it finds summary adjudication of this cause of action would be inappropriate. Accordingly, summary adjudication as to this cause of action is DENIED.

Affirmative Defense of Statute of Limitations

“The burden on a defendant moving for summary judgment based upon the assertion of an affirmative defense is different than the burden to show that one or more elements of the plaintiff's cause of action cannot be established. Instead of merely submitting evidence to negate a single element of the plaintiff's cause of action or offering evidence such as vague or insufficient discovery responses that the plaintiff does not have evidence to create an issue of fact as to one or more elements of his or her case, the defendant has the initial burden to show that undisputed facts support each element of the affirmative defense. If the defendant does not meet this burden, the motion must be denied.” (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468.)

Playas’ argument for summary adjudication of this affirmative defense is unclear. Playas argues that, to the extent a contract exists, it was an oral contract limited by a statute of limitations of two years. Given the presentation of written invoices signed by Ernesto, the Court finds there exists a triable issue of material fact as to whether the contract was written or oral. Accordingly, the motion for summary judgment on this ground is DENIED.

RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Playas de Nayarit, LLC’s Motion for Summary Judgment came on regularly for hearing on December 6, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

PLAYAS DE NAYARIT’S MOTION FOR SUMMARY JUDGMENT IS DENIED.

PLAYAS DE NAYARIT’S MOTIONS FOR SUMMARY ADJUDICATION ARE DENIED.

MAAS, INC.’S CROSS-MOTION FOR SUMMARY JUDGMENT IS DENIED.

UNLESS ALL PARTIES WAIVE NOTICE, PLAYAS TO GIVE NOTICE.

IT IS SO ORDERED.

DATE:  December 6, 2023                              

_______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles