Judge: Gary Y. Tanaka, Case: 21TRCV00893, Date: 2022-09-12 Tentative Ruling
Case Number: 21TRCV00893 Hearing Date: September 12, 2022 Dept: B
LOS ANGELES SUPERIOR COURT – SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka Monday, September 12, 2022
Department B Calendar No. 9
PROCEEDINGS
Chase Packaging, LLC v. Air Fayre CA, Inc., et al.
21TRCV00893
Air Fayre CA Inc. and Darryl Terrell’s Demurrer to Complaint
Chase Packaging, LLC’s Demurrer to Cross-Complaint
Chase Packaging, LLC’s Motion to Strike Portions of Cross-Complaint
Journey Group Limited’s Motion to Quash Service of Summons and Complaint
John W. McCauley’s Application to Appear as Counsel Pro Hac Vice
Alan W. Nicgorski’s Application to Appear as Counsel Pro Hac Vice
TENTATIVE RULING
Air Fayre CA Inc. and Darryl Terrell’s Demurrer to Complaint is overruled, in part, and sustained with 20 days leave to amend, in part.
Chase Packaging, LLC’s Demurrer to Cross-Complaint is overruled.
Chase Packaging, LLC’s Motion to Strike Portions of Cross-Complaint is denied.
Journey Group Limited’s Motion to Quash Service of Summons and Complaint is continued.
John W. McCauley and Alan W. Nicgorski’s Applications to Appear as Counsel Pro Hac Vice are granted.
Background
Plaintiff filed the Complaint on November 2, 2021. Plaintiff alleges the following facts. Plaintiff made and delivered meals to Defendant Air Fayre CA Inc. to be provided to its airline customers. Air Fayre’s purchase orders commonly omitted the price for the meals it ordered. Therefore, the parties used a system, designed and maintained by Air Fayre, to set the prices it owed to Chase. Air Fayre and Defendant Darryl Terrell manipulated the pricing system and underpaid Chase. Defendants also induced Chase to purchase a new, larger facility in reliance on Defendants’ promises of increasing future business. However, Air Fayre abruptly terminated the parties’ relationship. Plaintiff alleges the following causes of action: (1) Breach of Contract; (2) Intentional Interference with Contract; (3) Unjust Enrichment; (4) Promissory Estoppel (meal production); (5) Promissory Estoppel (new facility); (6) Intentional Interference with Prospective Economic Advantage; (7) Intentional Misrepresentation; (8) Unfair Competition.
Defendant Air Fayre CA filed a Cross-Complaint on February 17, 2022. Cross-Complainant alleges the following facts. Air Fayre stopped sending Chase business via purchase orders after American Airlines terminated its contract with Air Fayre based on Chase’s substandard performance as an in-flight meal caterer. Rather than being coerced into buying a new facility, Chase willingly abandoned its old facility to move into a new facility that was not FDA approved. Thus, in-flight meals prepared in those facilities could not be accepted by any airline. Cross-Defendants made numerous assurances that it would perform its services properly and in reliance on those assurances Cross-Complainant continued its business relationship with Cross-Defendants which ultimately damaged Cross-Complainants’ business and contractual relationships with third parties. Cross-Complainant alleges the following causes of action: 1. Fraud; 2. Fraud by Omission; 3. Breach of Contract; 4. Intentional Interference with Contract; 5. Negligent Interference with Prospective Economic Relations; 6. Unjust Enrichment.
Meet and Confer
Defendants submitted a meet and confer declaration in sufficient compliance with CCP § 430.41. (Decl., Spencer Persson, ¶¶ 1-3.)
Cross-Defendants submitted meet and confer declarations in sufficient compliance with CCP 430.41 and CCP 435.5. (Decls., Alan W. Nicgorski.)
Demurrers
A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing the sufficiency of the complaint, the court must assume the truth of (1) the properly pleaded factual allegations; (2) facts that can be reasonably inferred from those expressly pleaded; and (3) judicially noticed matters. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The Court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.App.4th 634, 638.) Because a demurrer tests the legal sufficiency of a complaint, the plaintiff must show that the complaint alleges facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. (C.C.P., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.App.4th 1112, 1126.)
Sufficient facts are the essential facts of the case "with reasonable precision and with particularity sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.) "Whether the plaintiff will be able to prove the pleaded facts is irrelevant to ruling upon the demurrer." (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.) Under Code Civil Procedure § 430.10(f), a demurrer may also be sustained if a complaint is “uncertain.” Uncertainty exists where a complaint’s factual allegations are so confusing they do not sufficiently apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.)
Motion to Strike
The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. CCP § 436(a). The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. CCP § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. CCP § 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. CCP § 437.
Demurrer of Air Fayre CA Inc. and Darryl Terrell
Defendants demur to the Complaint and each cause of action on the ground that the causes of action fail to state facts sufficient to constitute a cause of action.
First Cause of Action for Breach of Contract
Defendant Air Fayre CA Inc.’s demurrer to the first cause of action is overruled. Plaintiff states facts sufficient to state a cause of action.
“The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” Coles v. Glaser (2016) 2 Cal.App.5th 384, 391(internal quotations omitted).
Plaintiff alleges facts to satisfy the first element – the existence of a contract. Plaintiff alleges that the contract took the following form – the parties entered into an agreement wherein Defendant would provide purchase orders to Plaintiff and Plaintiff would perform pursuant to the purchase orders. At times, the agreed price and other essential terms were included in the purchase orders, but, on other occasions, the price and other essential terms were determined through other means including statements, both written and/or oral, and implied by conduct. (Complaint, ¶¶ 60-62.) Specifically, Plaintiff alleges that Defendant was “obligated to pay CHASE the prices approved by the airlines and supposedly reflected in the cost spreadsheet or, later on, the Scorpio system. Moreover, these prices were supposed to be sufficient to cover CHASE’s costs and margin, and to the extent they were not, AIR FAYRE was to seek timely approval from the airlines to update the approved prices.” (Complaint, ¶ 63.) Plaintiff has alleged its performance of the contract. (Complaint, ¶ 64.) Plaintiff has alleged Defendant’s breach of the contract “by not paying the prices approved by the airlines, by paying less than the price in the cost file or Scorpio, by not seeking to update prices with the airlines, and by failing to pay prices sufficient to cover CHASE’s costs and margin.” (Complaint, ¶ 65.) Plaintiff has alleged resulting damages. (Complaint, ¶ 67.)
Therefore, the demurrer to the first cause of action is overruled.
Second Cause of Action for Intentional Interference with Contract
Sixth Cause of Action for Intentional Interference with Prospective Economic Advantage
Defendant Terrell’s demurrer to the second and sixth causes of action are sustained with 20 days leave to amend. Plaintiff fails to state facts sufficient to state a cause of action.
“The elements of an action for tortious interference [with contract] 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. It has been repeatedly held that a plaintiff, seeking to hold one liable for unjustifiably inducing another to breach a contract, must allege [and prove] that the contract would otherwise have been performed.” Hahn v. Diaz-Barba (2011) 194 Cal.App.4th 1177, 1196 (internal citations and quotations omitted).
The elements of Intentional Interference with Prospective Economic Advantage are: (a) An economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (b) The defendant's knowledge of the relationship; (c) Intentional acts by the defendant designed to disrupt the relationship; (d) Actual disruption of the relationship; (e) Economic harm to the plaintiff proximately caused by the acts of the defendant; (f) Conduct that was wrongful by some legal measure other than the fact of interference itself. Della Penna v. Toyota Motor Sales, U.S.A. (1995) 11 Cal.4th 376, 378.
Plaintiff has failed to plead facts of an economic relationship with a “third party” and/or a valid contract between Plaintiff and a “third party.” “There is an important limitation to the use of this tort as a remedy for the disruption of contractual relationships. It can only be asserted against a stranger to the relationship. “[C]onsistent with its underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship, the tort cause of action for interference with a contract does not lie against a party to the contract. It is obvious that if an action is brought for interference with contractual relationship by one party to a contract against another who is also a party to that same contract, the grievance of the plaintiff is, in essence, breach of contract; and, in such case, plaintiff is entitled to recover all damages flowing from the breach. In such an instance to allow the plaintiff to sue under the tort theory of wrongful interference with contractual rights would not only be superfluous, but also would enable him to recover tort damages (e.g., punitive damages, damages for mental suffering) to which he is not entitled under California law.” Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242, 262.
Here, Plaintiff has specifically alleged that Defendant Terrell was an agent of the contracting party, Air Fayre CA Inc. (Complaint, ¶ 11.) In fact, he is not identified simply as an agent, but the allegations of the Complaint reveal that he was, for the most part, one of the primary individuals that Plaintiff communicated with on behalf of Defendant throughout the parties’ contractual relationship. Thus, Plaintiff has failed to allege facts to support an essential element of the cause of action – interference with a contract with a third party. Further, there are no facts to show that Terrell was acting outside the course and scope of his employment.
Plaintiff argues that it has a right to plead alternative theories of recovery. While this is true, affirmative allegations of inconsistent facts are not permitted. “[A] pleader cannot blow hot and cold as to the facts positively stated.” Manti v. Gunari (1970) 5 Cal.App.3d 442, 449.
Thus, the demurrer to the second and sixth causes of action is sustained with 20 days leave to amend.
Third Cause of Action for Unjust Enrichment
The demurrer to the third cause of action is overruled. Plaintiff states facts sufficient to state a cause of action.
Unjust Enrichment is not a cause of action. See, Hill v. Roll Int'l Corp. (2011) 195 Cal.App.4th 1295, 1307. The Court may, however, recognize a cause of action based on quasi-contract to obtain the remedy of restitution. See, McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490. "The elements of an unjust enrichment claim are the receipt of a benefit and [the] unjust retention of the benefit at the expense of another." Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593-94. “The term ‘benefit’ denotes any form of advantage. Thus, a benefit is conferred not only when one adds to the property of another, but also when one saves the other from expense or loss. Even when a person has received a benefit from another, he is required to make restitution ‘only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.’” Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51 (internal citations and quotations omitted).
The facts set forth within the first cause of action for Breach of Contract state facts to support a claim for quasi-contract based on the receipt of a benefit by Defendant and the unjust retention of that benefit at the expense of Plaintiff. Here, the principle of pleading alternative theories of recovery, based on the same facts do apply, and, thus, Plaintiff may plead the third cause of action to support a quasi-contract cause of action, in the event that Defendant may be able to prove that no enforceable contract exists between the parties.
Therefore, the demurrer to the third cause of action is overruled.
Fourth Cause of Action for Promissory Estoppel
Fifth Cause of Action for Promissory Estoppel
The demurrer to the fourth and fifth causes of action is overruled. Plaintiff states sufficient facts to state the causes of action.
“[T]he doctrine of promissory estoppel is used to provide a substitute for the consideration which ordinarily is required to create an enforceable promise.... The purpose of this doctrine is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange....” Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 230–231 (internal citations and quotations omitted). “The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727, 734.
Plaintiff pleads sufficient facts to meet the elements of promissory estoppel. Plaintiff pleads clear and unambiguous promises: 1. “[T]o pay CHASE the price approved by the airlines, to request timely updates to the approved price, to reflect the approved prices in the cost file or other system, and to pay enough to cover CHASE’s costs and margin[;]” (Complaint, ¶ 82.) 2. Promises of increasing volume and business, and, thus the need for expansion and a larger space for Plaintiff. (Complaint, ¶¶ 30-36.) Plaintiff alleges that it reasonably and foreseeably relied upon these promises and continued to maintain its business relationship with Defendant, through purchase orders, and purchasing and upgrading a new facility. (Complaint, ¶¶ 83, 90.) Plaintiff alleges that it was damaged by the reliance on these promises by not obtaining full payment for services rendered and by incurring the cost of purchase and renovation of the new facility. (Complaint, ¶¶ 87, 92.)
Defendants’ demurrer to the fourth and fifth causes of action is overruled.
Seventh Cause of Action for Intentional Misrepresentation
Defendants’ demurrer to the seventh cause of action for Fraud is sustained with 20 days leave to amend. Plaintiff fails to state facts sufficient to state a cause of action.
“A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816. “Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157. Plaintiff must state facts which “show how, when, where, to whom, and by what means the representations were tendered.” Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.
The alleged damages are the same as the Breach of Contract. The economic loss rule prohibits recovery of tort damages in a breach of contract case. See, Robinson Helicopter, Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988. “[T]he economic loss rule prevent[s] the law of contract and the law of tort from dissolving one into the other.” Id. “[A] contractual obligation may create a legal duty and the breach of that duty may support an action in tort. This is true; however, conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.” Erlich v. Menezes (1999) 21 Cal.4th 543, 551 (internal citations and quotations omitted). Here, Plaintiff has failed to identify a duty that was independent of the contract. Instead, the allegations of the fraud cause of action simply reiterate the same facts and contractual duties with respect to Defendants’ setting of the pricing structure, and the manner in which the contractual duties were breached, as already outlined in the first cause of action.
Thus, the demurrer to the seventh cause of action is sustained with 20 days leave to amend.
Eighth Cause of Action for Unfair Competition
Defendant’s demurrer is overruled. Plaintiff states facts sufficient to state a cause of action.
“California Business and Professions Code Sections 17000, et seq., and 17200, et seq., states [sic] that unfair competition shall mean and include unlawful, unfair or fraudulent business practices.” Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 618–19. “By proscribing ‘any unlawful’ business act or practice, the UCL “borrows” rules set out in other laws and makes violations of those rules independently actionable. [Citation.] However, a practice may violate the UCL even if it is not prohibited by another statute.” Los Angeles Memorial Coliseum Com. v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 835. “The unfair competition law is independent of the Unfair Practices Act and other laws. Its remedies are “cumulative ... to the remedies or penalties available under all other laws of this state” (§ 17205), but its sanctions are less severe than those of the Unfair Practices Act. Prevailing plaintiffs are generally limited to injunctive relief and restitution. (§ 17203; see ABC Internat. Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247, 1268 [61 Cal.Rptr.2d 112, 931 P.2d 290].) Plaintiffs may not receive damages, much less treble damages, or attorney fees.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179.
For the reasons outlined in the Court’s ruling to the first, third, fourth, and fifth causes of action, Plaintiff has identified an unlawful or unfair business practice committed by demurring Defendant. In addition, Plaintiff has alleged facts demonstrating economic loss as required by Business and Professions Code Section 17204.
Therefore, the demurrer to the eighth cause of action is overruled.
Demurrer of Chase Packaging, LLC and Francis Chase
Cross-Defendants demur to the first, second, fourth, and fifth causes of action of the Cross-Complaint for failure to state sufficient facts to state a cause of action.
First Cause of Action for Fraud
Second Cause of Action for Fraud by Omission
Cross-Defendants’ demurrer to the first and second causes of action is overruled. Cross-Complainant states facts sufficient to state the causes of action.
“A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816. “Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157. Plaintiff must state facts which “show how, when, where, to whom, and by what means the representations were tendered.” Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.
“[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he has known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.
First, Cross-Defendants argue that the first, second, fourth, and fifth causes of action are barred by the economic loss rule. The Court will not repeat the applicable legal authority which has already been stated above.
Based on the allegations of the Cross-Complaint, Cross-Complainant fails to demonstrate that the pleading reveals a bar with respect to the first, second, fourth, and fifth causes of action based on the economic loss rule. The first, second, fourth, and fifth causes of action are not based on the same contractual duties as the third cause of action for Breach of Contract. Instead, a separate duty of care may arise depending on the existing business relationship wherein there are transactions between the parties. LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337. In addition, Cross-Complainant is not alleging the same facts with respect to the breaches of contractual duties. Here, the third cause of action is based on the alleged breach of contract wherein Cross-Defendant failed to provide adequate meals to Cross-Complainant. The first and second causes of action are premised upon Cross-Defendants’ alleged numerous assurances that it would improve its performance and Cross-Complainants alleged reliance on these assurances, as well as Cross-Defendants’ alleged concealment of material facts with respect to Cross-Defendants’ decision to change to a non-FDA compliant location. The fourth and fifth causes of action are based on assurance of performance by Cross-Defendants which allegedly ultimately disrupted contractual and economic relationships with third parties.
The Court notes the contrast between Plaintiff’s own fraud cause of action and Cross-Complainant’s fraud causes of action. Plaintiff’s fraud cause of action is based on the specific manner in which Defendants allegedly breached the contract – Defendants alleged pricing manipulation in contravention with the manner in which the contract allegedly stated prices should be fixed. However, Cross-Complainant’s causes of action are not based on contractual duties but instead separate duties in which Cross-Defendants allegedly continued to make assurances of performance thus inducing Cross-Complainant to continue in this business relationship to its detriment.
In addition, as to the first and second causes of action, Cross-Complainant has alleged the specific facts as to who made the representations or concealment, to whom they were made, when, where, how, and by what means they were made. (Cross-Complaint, ¶¶ 56, 57, 64-67.) Cross-Complainant alleged the requisite specific facts of knowledge of the falsity, intent to induce reliance, justifiable reliance, damages, concealment of a material fact, intent to conceal, unawareness of the material fact, and resulting damages. (Cross-Complaint, ¶¶ 56-71.)
Fourth Cause of Action for Intentional Interference with Contract
Fifth Cause of Action for Negligent Interference with Prospective Economic Advantage
Cross-Defendants’ demurrer to the fourth and fifth causes of action are overruled. Cross-Complainant states facts sufficient to state the causes of action.
“The elements of an action for tortious interference [with contract] 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. It has been repeatedly held that a plaintiff, seeking to hold one liable for unjustifiably inducing another to breach a contract, must allege [and prove] that the contract would otherwise have been performed.” Hahn v. Diaz-Barba (2011) 194 Cal.App.4th 1177, 1196 (internal citations and quotations omitted).
“The tort of negligent interference with prospective economic advantage is established where a plaintiff demonstrates that (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship.” Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1078.
The same analysis with respect to the economic loss rule applies here and the Court will not repeat it.
As to the fourth cause of action, Cross-Complainant has alleged facts to meet each element of the cause of action. (Cross-Complaint, ¶¶ 77-83.) Cross-Complainant has alleged extensive facts with respect to Cross-Defendants’ alleged actions in interfering with contracts with JetBlue and United. (Cross-Complaint, ¶¶ 1-55.) In addition, Cross-Complainant has alleged extensive facts outlining Cross-Defendants’ alleged negligent interference with the economic relationship between Cross-Complainant and American Airlines. (Cross-Complaint, ¶¶ 1-55.) In addition, extensive facts have been set forth to meet the elements of each cause of action, including knowledge of the contract and/or economic relationship, intentional acts designed to breach the contract, negligent acts to interference with the economic relationship, and resulting damages. (Cross-Complaint, ¶¶ 78-92.)
As to individual Cross-Defendant Frances Chase, she is alleged to be the director of Chase Packaging with the specific authority to make decisions and representations on behalf of Chase Packaging. Directors and officers may incur personal liability for torts committed when they participate or direct the wrongful conduct. United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal. 3d 586, 595.
Motion to Strike
The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. CCP § 436(a). The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. CCP § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. CCP § 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. CCP § 437.
Civ. Code, § 3294 states, in relevant part:
“(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.
(b) An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.
(c) As used in this section, the following definitions shall apply:
(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.
(2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.
(3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”
To state a claim for punitive damages, Plaintiffs must allege specific facts rather than conclusions that Defendant’s conduct constitutes oppression, fraud, or malice. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.
Cross-Defendants move to strike the following portions of the Cross-Complaint: Paragraph 84 and the Prayer for Relief, page 19, line 10 - “For punitive and exemplary damages.”
The motion to strike the prayer for punitive damages is denied because the properly stated fraud causes of action may support a prayer for punitive damages. As to paragraph 84, the allegations which attempt to support a prayer for punitive damages based on the fourth cause of action Intentional Interreference with Contract are adequately stated. These allegations support the necessary facts of malice – conscious disregard for the rights of Cross-Complainant - to support a prayer for punitive damages.
Therefore, Cross-Defendants’ motion to strike is denied.
Cross-Defendants are ordered to file and serve an Answer within 10 days of this date.
Motion to Quash
Defendant Journey Group Limited (“Journey”) moves for an order quashing service of the summons and complaint pursuant to Code of Civil Procedures section 418.10(a)(1). Defendant asserts that it is an English corporation and lacks minimum contacts with California for this Court to exercise personal jurisdiction.
Plaintiff has the burden to show that sufficient minimum contacts exist between Defendant and California to establish personal jurisdiction. See, Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710; See, also, Edmunds v. Superior Court (1994) 24 Cal.App.4th 221, 230-31. Plaintiff must meet this burden by a preponderance of the evidence. See, Ziller Elec. Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232.
General Jurisdiction
A non-resident defendant may be subject to the forum state’s general jurisdiction if the defendant’s contacts are substantial, continuous, and systematic. See, Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445. Plaintiff must provide competent evidence to establish that Defendant’s connections with California are sufficiently continuous and systematic to impose general jurisdiction. See, Int’l Shoe Co. v. Wash., 326 U.S. 310, 317 (1945).
Specific Jurisdiction
“When determining whether specific jurisdiction exists, courts consider the relationship among the defendant, the forum, and the litigation. A court may exercise specific jurisdiction over a nonresident defendant only if: (1) the defendant has purposefully availed himself or herself of forum benefits; (2) the controversy is related to or arises out of the defendant's contacts with the forum; and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice.” Snowney v. Harrah’s Ent., Inc. (2005) 35 Cal.4th 1054, 1062 (internal citations and quotations omitted).
Jurisdictional Discovery
The Court finds that Plaintiff has submitted grounds to show that Plaintiff is entitled to a continuance to conduct jurisdictional discovery to attempt to meet Plaintiff’s burden to establish the existence of jurisdiction. See, Ziller Elec. Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1234. “The plaintiff has the right to conduct discovery with regard to the issue of jurisdiction to develop the facts necessary to sustain this burden.” Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710.
Thus, the motion to quash is continued to December 12, 2022.
Any supplemental opposition and/or reply are to be filed and served per CCP § 1005(b).
Applications to Appear Pro Hac Vice
Cal. Rules of Court, Rule 9.40 states, in relevant part:
“(d) The application must state:
(1) The applicant's residence and office address;
(2) The courts to which the applicant has been admitted to practice and the dates of admission;
(3) That the applicant is a licensee in good standing in those courts;
(4) That the applicant is not currently suspended or disbarred in any court;
(5) The title of each court and cause in which the applicant has filed an application to appear as counsel pro hac vice in this state in the preceding two years, the date of each application, and whether or not it was granted; and
(6) The name, address, and telephone number of the active licensee of the State Bar of California who is attorney of record.
(e) An applicant for permission to appear as counsel pro hac vice under this rule must pay a reasonable fee not exceeding $50 to the State Bar of California with the copy of the application and the notice of hearing that is served on the State Bar.”
The applicants have met all the requirements mandated in Rule 9.40.
Therefore, the Applications to be admitted as counsel pro hac vice are granted.
John W. McCauley and Alan W. Nicgorski are admitted as counsel pro hac vice in the pending matter.
Plaintiff is ordered to give notice of this ruling.