Judge: Holly J. Fujie, Case: 21STCV34578, Date: 2023-03-10 Tentative Ruling

Case Number: 21STCV34578    Hearing Date: March 10, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTIES: Defendants Global 360 Protective Services (“Global”) and Darius Trugman (“Trugman”) (collectively, “Moving Defendants”)

RESPONDING PARTY: Plaintiff

The Court has considered the moving, opposition and reply papers.

BACKGROUND

            This action arises out of an employment relationship.  Plaintiff’s complaint (the “Complaint”) alleges: (1) breach of written agreement; (2) promissory fraud; (3) promissory estoppel; (4) violation of Labor Code section 2751; (5) violation of Labor Code section 1102.5; (6) wrongful termination; (7) interference with contractual relations; (8) interference with prospective business advantage; (9) unfair competition; (10) failure to pay wages; (11) breach of oral agreement; (12) unpaid overtime; (13) unfair business practices; (14) waiting time penalties; and (15) violation of Labor Code section 226.

            In relevant part, the Complaint alleges: Plaintiff worked for Moving Defendants for approximately 13 years.  (Complaint ¶ 5.)  During Plaintiff’s employment, Trugman, who is the founder and CEO of Global, orally represented to Plaintiff that Plaintiff would receive half of the profits generated by any new account that he brought to Moving Defendants.  (Complaint ¶¶ 5-6.)  In 2020, Plaintiff obtained an account with Bowlero (“Bowlero”) for Moving Defendants. (Complaint ¶ 7.)  Plaintiff requested that Trugman state in writing that Plaintiff would earn 50 percent of the profits from the Bowlero account.  (Complaint ¶ 8.)  Trugman told Plaintiff that he no longer wanted to proceed with the Bowlero account and that Plaintiff was free to take the account to another security provider.  (Id.)  Plaintiff thereafter associated with another security company to which he could transition the Bowlero account.  (Complaint ¶ 11.)  Despite Trugman’s representation that Plaintiff could take over the Bowlero account, Trugman contacted Bowlero without Plaintiff’s knowledge.  (See Complaint ¶ 13.)  On August 31, 2021, Plaintiff learned that Bowlero decided to continue its relationship with Global.  (Complaint ¶ 14.)

Moving Defendants filed a motion for summary adjudication (the “Motion”) to the first through ninth and eleventh causes of action in the Complaint in addition to the Complaint’s claim for punitive damages.

EVIDENTIARY OBJECTIONS

Plaintiff’s objection to the Declaration of Darius Trugman (“Trugman Decl.”) is OVERRULED.  Moving Defendants’ objections to the Declaration of David Rodriguez (“Rodriguez Decl.”) are OVERRULED.

DISCUSSION

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.)  California Code of Civil Procedure (“CCP”) section 437c, subdivision (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.)

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.  (CCP § 437c, subd. (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.) 

Evidence

Global and Bowlero entered into a contract for Global to provide security services on February 19, 2020 (the “Bowlero Agreement”).  (UMF 1.)  The Bowlero Agreement expired on February 18, 2021, but Bowlero continued to use Global’s services when it reopened in March 2021 after its COVID-19 pandemic-related closure without a further signed agreement.  (UMF 8.) 

On April 16, 2020, Plaintiff and Trugman communicated about Plaintiff’s percentage of profits on the Bowlero account.  (See UMFs 3-6.)  Plaintiff requested 50 percent of the profits generated by the Bowlero account, to which Trugman responded that Plaintiff’s share of the Bowlero profits would be 30 percent.  (UMF 5.)  Plaintiff texted Trugman that he was “cool to take the 30.”  (UMF 5; Declaration of Adam Y. Siegel (“Siegel Decl.”), Exhibit 15.)  When Bowlero reopened in 2021, Plaintiff revisited the topic of receiving 50 percent of the profits from the Bowlero account.  (See UMFs 9-12, 13-20.) 

On August 15, 2021, Plaintiff emailed Trugman with information about the Bowlero account, stating in part, “let’s finally get our contract in place.”  (See UMF 22, Rodriguez Decl., Exhibit 1.) 

On August 20, 2021, during a text conversation about the Bowlero account, Trugman told Plaintiff that “the time has come” and that Plaintiff should take the Bowlero account elsewhere.  (See UMFs 28-29, Rodriguez Decl., Exhibit 2.)

On August 22, 2022, Trugman sent Plaintiff an email regarding the future of the Bowlero account and Moving Defendants’ relationship with Plaintiff[1] (the “August 22 Email”) that stated, in part:

“1. Notification to Bowlero Corporate Points of Contact will take place on Friday August 27th at 0800 Pacific Time of your impending departure from Global 360. You are welcome to notify them sooner if you choose. If you do so, please include me on all emails as I will do the same.

2. In addition to the week I provided you, I will provide an additional week to fully transition. What that means is that our last week of payroll for Global 360 personnel assigned to Bowlero will be September 4th. All pay and invoices will be that of Global 360 through that date so business as usual until then. The checks and ACH will continue to be routed the same way to Global 360 for any expenses through that date.

3. We will share all liability for any employment or incidents that occur on or before September 4th and with regard to Bowlero. Conversely, all percentage checks will still be routed through you at the agreed upon rates up until we have received all payments for Bowlero through that September 4th date.

4. I am allowing you to convert all personnel associated with the account into employees of your new venture. I am allowing you to take over 100 percent of the operation, associated with the account.

5. After September 4th, all polos will be returned to Faith since you will have no utility for them.

6. After the September 4th date you will not interfere with my personnel, accounts, or any other gesture that would be considered as morally questionable or creating liability. I promise to do the same for your accounts.

7. The same will be true for DTLA Church/Pasadena (Harvest and Ambassador). I will allow you to take those as well.”  (See UMF 31; Siegel Decl., Exhibit 30.) 

The next day, August 23, 2021, Plaintiff contacted Bowlero’s Vice President of Loss Prevention, William Nichols (“Nichols”), to discuss his continued relationship with Bowlero and the future of the Bowlero account.  (See UMF 34.)  Nichols testified that based on his conversation with Plaintiff, he was under the impression that Global was unable to continue with the Bowlero account and was considering engaging Plaintiff’s new company to handle the account.  (See Siegel Decl., Exhibit E at 21:1-8.)

Trugman separately contacted Bowlero on August 23, 2021.  (See Siegel Decl., Exhibit 12.)  Trugman spoke to Bowlero’s legal department on August 24, 2021.  (UMF 38.)

On August 24, 2021, Trugman sent an email to Bowlero (and copied Plaintiff), stating:

“Dear Bowlero Leadership Team:

First and foremost, thank you for your partnership. We have very much enjoyed working on your behalf.

I understand you have spoken with David Rodriguez (copied within) related to his desire to leave Global 360 Protective Services. He has officially resigned and his last day with Global 360 Protective Services will be September 4th, 2021. I am very much grateful for his dedicated service to Global 360 Protective Services.

As such, he has requested that I release him from our existing Non-Compete Agreement and allow him to approach you to ascertain if he can provide for your security needs under a different Security company. I have agreed to this and have waived our Non-Compete Agreement to this limited scope as it applies to Bowlero. Because of his work on this account and his 10 years with Global 360 Protective Services, I have allowed him to approach you to ascertain your desire to move with him to the new company. Please note that I have no knowledge of the viability of the proposed new company and in no way endorse said company.

All I ask is that you provide me with written notice of your choice to terminate and release Global 360 Protective Services from providing security management at your Southern California locations and releasing us from liability and all agreements or issues arising after September 4th, 2021. Please be in touch with me as soon as possible on this matter as it takes some leg work with the Insurance carriers to cancel payroll as well as notifying our 50 or so employees of this change and securing our Polos/Uniforms.”  (Siegel Decl., Exhibit 31.) 

Nichols separately replied to Trugman’s August 24, 2021 email and asked to speak to Trugman over the phone.  (UMF 43.)  Nichols and Trugman spoke on August 25, 2021.  (UMF 44.)  Nichols expressed his frustration over Trugman and Plaintiff negotiating the fate of the Bowlero account without input from Bowlero.  (UMF 46.)  On August 24, 2021, Trugman emailed Nichols a contract with terms to govern Global’s services during the period during which Bowlero decided where it was taking its business.  (UMF 47.)  Plaintiff was not copied on this email and the agreement attached to this email provided for a one-year term.  (See Siegel Decl., Exhibit 16.)

On August 27, 2021, Nichols decided that it was in Bowlero’s best interest to continue retaining Global’s services.  (See UMF 49.)  Nichols testified that this decision was not influenced by Trugman.  (See id.)  

First Cause of Action: Breach of Contract

The elements of a breach of contract claim are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damage to plaintiff therefrom.  (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)  The elements of a breach of oral contract claim are the same as those for a breach of written contract: (1) a contract; (2) its performance or excuse for nonperformance; (3) breach; and (4) damages.  (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453.) 

            The first cause of action is based on Moving Defendants’ alleged breach of the terms stated in Trugman’s August 22 Email.  Moving Defendants argue that they are entitled to summary adjudication of this claim on the grounds that: (1) there is no basis for Trugman’s personal liability; (2) any agreement in the August 22 Email could not be enforced absent Bowlero’s approval; (3) Moving Defendants did not breach any of the August 22 Email’s terms; and (4) any agreement was not supported by consideration.

            The Court finds that there are triable issues of fact that preclude summary adjudication of the first cause of action with respect to both Moving Defendants.  As noted by Plaintiff’s opposition (the “Opposition”), the text of the August 22 Email was written in the first person by Trugman.  This language creates a factual dispute over Trugman’s intention to be bound by the August 22 Email’s terms in his individual capacity.  Second, contrary to Moving Defendants’ characterization of its terms, the August 22 Email includes obligations that precede Bowlero’s agreement to have Plaintiff handle its account under a separate security company, such as the provision obligating Moving Defendants and Plaintiff to include each other in communications with Bowlero before August 27, 2021.  The evidence shows that Trugman independently contacted Bowlero on August 23, 2021 without copying Plaintiff on the email.  There are therefore factual issues over whether the August 22 Email was breached.  Finally, the August 22, 2022 Email suggests that Moving Defendants were willing to part with the Bowlero account and mutually imposes obligations on Moving Defendants and Plaintiff, which raises issues regarding the sufficiency of the consideration.  The Court therefore DENIES the Motion as to the first cause of action. 

Second Cause of Action: Promissory Fraud

The elements of promissory fraud¿ are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promisee.  (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1498.) 

            Based on Trugman’s separate communication with Bowlero on August 23, 2021, there are factual issues as to whether Moving Defendants intended to honor the August 22 Email when it was executed.  The Court therefore DENIES the Motion with respect to the second cause of action.

Third Cause of Action: Promissory Estoppel

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.  (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 905.) 

For the reasons discussed above regarding the breach of contract claim, there are triable issues of fact regarding the promissory estoppel claim.  The Court therefore DENIES the Motion with respect to the third cause of action.

Fourth Cause of Action: Labor Code Section 2751

            Labor Code section 2751 details requirements for employment agreements involving commissions as a form of payment.  (See Labor Code § 2751.)  There is no private right of action for violations of Labor Code section 2751.  (Swafford v. International Business Machines Corporation (N.D. Cal. 2019) 383 F.Supp.3d 916, 934.)  Labor Code section 2751 claims may, however, serve as a predicate for claims brought under the Unlawful Competition Law (“UCL”).  (Id.)

            Plaintiff does not dispute Moving Defendants’ argument regarding his right to assert a cause of action under Labor Code section 2751, but requests leave to amend the Complaint to allow him to assert a UCL claim.  The Court thus GRANTS the Motion with respect to the fourth cause of action but grants Plaintiff 20 days leave to file an amended pleading including this underlying claim in its existing UCL claim. 

Fifth Cause of Action: Violation of Labor Code Section 1102.5

 Labor Code section 1102.5, subdivision (b) provides that an employer, or any person acting on behalf of the employer, shall not retaliate against an employee for disclosing information, or because the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee's job duties.  (Lab. Code § 1102.5, subd. (b).)

Moving Defendants argue that Plaintiff did not engage in any protected activity and that Plaintiff did not experience any retaliation or adverse employment action.  Construing the evidence in Plaintiff’s favor, the Court finds that there are triable issues of fact on both of these points.  First, although not explicitly stated in the evidence submitted with the Motion or Opposition, Plaintiff’s ongoing communications regarding the structure and allocation of the profits from the Bowlero account may be construed as a disclosure over potential Labor Code section 2751 claims.  Second, although Moving Defendants characterize Plaintiff’s separation from Global as a resignation, the evidence shows that it was ultimately Trugman who decided to sever ties with Plaintiff and told Plaintiff to handle the Bowlero account on his own.  There are thus triable issues of fact as to whether Plaintiff was terminated or whether the Parties mutually agreed to part ways.  The Court therefore DENIES the Motion with respect to the fifth cause of action.

Sixth Cause of Action: Wrongful Termination

            For the reasons discussed with respect to the fifth cause of action, there are triable issues of fact as to whether Plaintiff was terminated in violation in public policy.  The Court therefore DENIES the Motion with respect to the sixth cause of action.

Seventh Cause of Action: Interference with Contractual Relations

The elements of intentional interference with contractual relations are: (1) a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of this contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) an actual breach or disruption of the contractual relationship; and (5) resulting damage.  (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.) 

Regardless of Bowlero’s initial cooperation with Plaintiff, Plaintiff has not presented evidence that he ever entered into a formal contractual relationship with Bowlero.  Because there was no valid contract for Moving Defendants to interfere with, the Court GRANTS the Motion with respect to the seventh cause of action.

Eighth Cause of Action: Interference With Prospective Economic Advantage

The elements of intentional interference with prospective economic advantage are: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.  (Marsh v. Anesthesis Services Medical Group, Inc. (2011) 200 Cal.App.4th 480, 504.)  The defendant’s “intentional acts” must be independently wrongful.  (See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158.)  An 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.  (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1142.)

            There are triable issues of fact as to whether Moving Defendants wrongfully interfered with Plaintiff’s relationship with Bowlero based on Trugman’s separate communications with Bowlero that occurred after the August 22 Email was executed.  The Court therefore DENIES the Motion with respect to the eighth cause of action.

Ninth Cause of Action: UCL

The UCL prohibits any unlawful, unfair or fraudulent business act or practice.  (Bus. & Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th 605, 610.)  To show a violation of the UCL, a plaintiff must establish: (1) a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury; and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.  (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)  A business act or practice only needs to meet one of the requirements to be considered unfair competition under the UCL.  (Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1093.)

            The ninth cause of action is predicated on Trugman’s communications with Bowlero wherein Trugman represented that Plaintiff resigned from Global.  (See Complaint ¶¶ 61-62.)  Based on the factual disputes over whether Plaintiff resigned or was terminated and the potential breach of the August 22 Email, the Court finds that there are triable issues of fact regarding the ninth cause of action.  The Court therefore DENIES the Motion with respect to the ninth cause of action, subject to the ruling on the Fourth Cause of Action, supra.

Eleventh Cause of Action: Breach of Oral Contract

The elements of a breach of oral contract claim are the same as those for a breach of written contract: (1) a contract; (2) its performance or excuse for nonperformance; (3) breach; and (4) damages.  (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453.) 

            The eleventh cause of action is rooted in Moving Defendants’ alleged breach of Trugman’s oral promise that Plaintiff was entitled to 50 percent of the profits from the Bowlero account.  Although the Parties dispute whether Trugman ever truly agreed to evenly share the Bowlero account profits between Global and Plaintiff, the undisputed evidence demonstrates that as of at least April 2020, Trugman did not agree to this distribution.  Although Plaintiff repeatedly thereafter attempted to renegotiate his profits, the undisputed evidence demonstrates that on April 16, 2020, Plaintiff agreed to a 30 percent split of the profits.  (See Siegel Decl., Exhibit 15.)  There is no evidence that Trugman ever offered to share profits evenly after April 16, 2020.  Under Civil Code section 1697, a contract not in writing may be modified in any respect by consent of the parties, in writing, without a new consideration, and is extinguished thereby to the extent of the modification.  (Civ. Code § 1697.)  Thus, to the extent that there was ever an oral agreement to share Bowlero profits evenly, such agreement was modified as of at least April 16, 2020.  The Court therefore GRANTS the Motion with respect to the eleventh cause of action.

Punitive Damages

A plaintiff may recover punitive damages in an action for breach of an obligation not arising from contract when the plaintiff proves by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.  (Civ. Code § 3294, subd. (a).) 

Based on the factual disputes discussed above, the Court finds that there are triable issues of fact that preclude summary adjudication of Plaintiff’s entitlement to punitive damages.  The Court therefore DENIES the Motion with respect to punitive damages. 

            Moving party is ordered to give notice of this ruling.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.  If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person.  The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.  This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

       Dated this 10th day of March 2023