Judge: Lee W. Tsao, Case: 19NWCV00083, Date: 2023-01-24 Tentative Ruling


Case Number: 19NWCV00083    Hearing Date: January 24, 2023    Dept: C

KELTERITE CORPORATION v. CITY OF SANTA FE SPRINGS

CASE NO.:  19NWCV0008

HEARING: 1/24/23 @ 1:30 PM

 

#5

TENTATIVE ORDER

 

I.             Plaintiffs Kelterite Corporation and Sialic Contractors Corporation’s motion for leave to file amended complaint is MOOT.

 

II.            Defendant Onward Engineering’s demurrer to Plaintiffs’ sixth amended complaint is OVERRULED.

 

III.          Defendant Onward Engineering’s motion to strike is DENIED.

 

IV.         Defendant Reyes’s demurrer to Plaintiffs’ sixth amended complaint is OVERRULED.

 

V.           Defendant Reyes’s motion to strike is DENIED.

 

Defendants Onward Engineering and Reyes are ORDERED to file and serve their Answers within 10 days.

 

Plaintiffs to give NOTICE.

 

 

I.             Leave to Amend

 

Plaintiffs Kelterite Corporation (“Kelterite”) and Sialic Contractors Corporation dba Shawnan move for leave to approve the already-filed Sixth Amended Complaint (“6AC”) or for leave to file a Seventh Amended Complaint (“7AC”) pursuant to CCP § 473.

 

“A court may, in furtherance of justice, and on such terms as may be proper, allow a party to amend any pleadings.” (CCP § 473(a)(1).)  Judicial policy favors resolution of all disputed matters between the parties in the same lawsuit. Thus, the courts discretion will usually be exercised liberally to permit amendments of the pleadings. (Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939.) 

Plaintiffs previously filed the 6AC to address the defects in the claims at the prior demurrer hearing.  The 6AC adds Shawnan as a party Plaintiff to the 1st and 3rd causes of action, and adds a 4th cause of action for Violation of B&P Code § 17200.

The court finds that judicial efficiency favors resolving all of the parties’ disputed matters in the same lawsuit.  

Accordingly, the court approves the previously-filed 6AC.  As approved, the motion for leave to amend is now MOOT.

 

II-V.   Onward Engineering and Reyes’s Demurrers and Motions to Strike

 

Defendants Onward Engineering and Reyes demur to the 1st – 4th causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action, and are uncertain.

 

6AC

 

The operative 6AC alleges that Defendant Onward Engineering is an agent of City of Santa Fe Springs.  Defendant Daniel Reyes is an employee of Onward Engineering.  Reyes, on behalf of himself and while acting in the course and scope of his employment with Onward Engineering as a project manager and agent for the City, wrongfully interfered with Plaintiff Kelterite Corporation’s business and contractual relationships by banning and preventing asphalt materials of Kelterite from being used on various projects undertaken by the City.  Based on these facts, the 6AC alleges causes of action for:

 

1.    Intentional Interference with Prospective Economic Advantage

2.    Negligent Interference with Prospective Economic Advantage

3.    Intentional Interference with Contract

4.    Violation of B&P Code § 17200

 

1st - 2nd CAUSES OF ACTION

 

To prevail on a cause of action for INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE, a plaintiff must plead: (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) the defendant’s intentional acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant’s acts. (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152, fn. 6.)  A plaintiff that chooses to bring a claim for interference with prospective economic advantage has a more rigorous pleading burden since it must show that the defendant’s conduct was independently wrongful, aside from the interference itself.  (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134; Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.)  “[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.”  (Reeves v. Hanlon (2004) 33 Cal. 4th 1140, 1152.)

 

NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS:  Negligent interference with prospective economic advantage is established where a plaintiff demonstrates that (1) an economic relationship existed between plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) 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 probable future economic benefit or advantage of the relationship; (3) 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 economic benefits or advantage reasonably expected from the relationship.  (J’Aire Corp. v
Gregory (1979) 24 Cal.3d 799; North American Chemical Co. v Superior Court (1997) 59 Cal.App.4th 764.)

 

¶ 16 alleges that an “economic relationship existed between Kelterite, Shawnan and third party contractors “including… Pavewest… Imperial Paving… and Century Paving, Inc…. the Third Parties entered into contracts with the City to perform paving projects for which Kelterite quoted and was intended to be the asphalt supplier and Shawnan the hauler of such asphalt materials.”

 

¶ 17 alleges that Defendant Reyes, “while acting in the course and scope of his employment with Onward Engineering as a project manager and agent for the City, wrongfully and without good cause interfered with the business of Plaintiffs and their prospective economic advantage, including contractual relationships with Third Parties by refusing to allow said Third Party contractors to use bids from Kelterite.”  ¶ 22 allege that “Defendants had knowledge of the economic relationships between Kelterite and Shawnan and with Kelterite and Gentry Brothers, Pavewest, Century Paving, and Imperial Paving, as well as other Third Parties.”   

 

¶ 20 alleges that Reyes was aware of Kelterite’s contract with Shawnan and Kelterite’s contracts with the Third Parties and wrongfully induced the Third Parties to breach their contracts with Kelterite.”

 

The 3rd and 4th causes of action allege independently wrongful acts, as explained below.  “[I]ntentionally interfering with an existing contract is ‘a wrong in and of itself[.]’ [Citation Omitted.]”  (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158.)  A violation of B&P Code § 17200 is an unlawful act that satisfies the independently wrongful act requirement.

 

Reyes argues that the “economic relationship” between Shawnan and the Third Parties are speculative and uncertain.  However, this is an issue reserved for a trier of fact, not an issue that can be resolved on the pleadings.

 

Accordingly, the demurrers are OVERRULED.

 

3rd CAUSE OF ACTION

 

INTENTIONAL INTERFERENCE WITH CONTRACT:  The elements are:  1) Plaintiff had a valid and existing contract with a third party; 2) defendant had knowledge of the contract; 3) defendant committed intentional and unjustified acts designed to interfere with or disrupt the contract; 4) actual interference with or disruption of the relationship; and 5) resulting damages.  (Shamblin v. Berge (1985) 166 Cal.App.3d 118, 123.)

 

¶ 36 alleges that a written contract existed between Plaintiff Kelterite and Plaintiff Shawnan to exclusively haul asphalt from Kelterite’s plant to its projects.

 

¶ 37 alleges that valid written contracts existed between Kelterite and third party contractors.  ¶ 38 alleges that Kelterite had knowledge about the Gentry and Pavewest Contracts and the Kelterite – Shawnan Contract.  ¶ 39 alleges that Defendants interfered with the Gentry and Pavewest contracts and Kelterite-Shawnan contract by banning the use of Kelterite asphalts on City projects.

 

Defendants contend that the Kelterite-Shawnan contract cannot form the basis for the 3rd cause of action because both Kelterite and Shawnan are party Plaintiffs.  However, Defendants failed to cite any legal authority that prohibits a Third Party (i.e. Shawnan) from thereafter joining the action as a party Plaintiff, as it did here.

 

Accordingly, the demurrers to the 3rd cause of action are OVERRULED.

 

4th CAUSE OF ACTION

 

UNFAIR BUSINESS PRACTICES: The Unfair Business Practices Act shall include “any unlawful, unfair or fraudulent business act or practice.” (B&P Code § 17200.)  A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.  (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)  Even a single incident - a one-time act that is unfair, unlawful or fraudulent - is sufficient to state a claim under 17200.  (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969 fn. 3.) 

 

¶ 47 and the 1st – 3rd causes of action allege Defendants’ unfair business practices.  The court finds the allegations are sufficient to withstand demurrer.

 

Accordingly, the demurrers are OVERRULED.

 

MOTIONS TO STRIKE

 

Defendants’ accompanying motions to strike are DENIED.  The court has approved the filing of the 6AC.