Judge Lisa K. Sepe-Wiesenfeld, Case Number: 20SMCV00479, Date: 2025-01-10 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 20SMCV00479, Date: 2025-01-10 Tentative Ruling

The allegations are as follows: Mr. Schwenker formed TOE to produce music festivals, specifically an annual festival called the One Love Festival. (Complaint, ¶¶ 1, 11.) In May 2018, TOE hired Mr. Loomstein to be the Music Director for the 2018 festival, with specifically defined and limited responsibilities. (Id., ¶ 9, Exh. A.)

Plaintiff alleges that on June 9, 2018, Mr. Schwenker secured financing for the 2018 festival from two independent parties, Mr. Pearson and Mr. Sess. This financial agreement was finalized in a written document (the “Agreement”), which stated that Mr. Pearson and Mr. Sess were “prepared to provide $350,000 to TOE in the form of a Loan….” (Id., ¶ 10, Exh. B, p. 1.)

Plaintiff alleges that Mr. Loomstein became unhappy with his position and, at a creative team meeting for the festival on June 22, 2018, made false, inflammatory, and injurious statement regarding Mr. Schwenker. (Id., ¶ 11.) Following the meeting, Mr. Loomstein communicated these same defamatory statements regarding Mr. Schwenker to Mr. Pearson in private text communications. (Id., ¶ 12.) Plaintiff alleges that Mr. Pearson contacted Mr. Schwenker personally and confirmed that Mr. Loomstein had sent the defamatory messages. (Id., ¶ 13.) Plaintiff alleges that Mr. Loomstein’s private communications with Mr. Pearson caused him to repudiate the Agreement on June 26, 2018, and enter an amendment with Plaintiff reducing the funding commitment from $350,000 to $125,000 (the “Amendment”). (Id., ¶¶ 14-15.)

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure 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.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) “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 the cause of action or a defense thereto.” (Ibid.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c, subd. (c).)

In support of these argument, Defendant forwards legal authority where the Court of Appeal granted summary judgment on defamation claims because all but one challenged statement were inactionable opinion because they were “broad, unfocused and wholly subjective comment[s]” about an instructor of a conference canceled by its sponsors. (Copp v. Paxton (1996) 45 Cal.App.4th 829, 834-37, 845-46 (“Copp”); see also Moyer v. Amador Valley J. Union High School Dist. (1990) 225 Cal.App.3d 720, 725.) The Court of Appeal also found that the plaintiff’s claims for interference with prospective advantage and interference with contract were both barred because they were based on the same speech that was entitled to constitutional protection. (Copp, supra, at p. 848, citing Blatty v. New York Times Co. (1986) 42 Cal.3d 1033, 1045; Hofmann Co. v. E.I. Du Pont de Nemours & Co. (1988) 202 Cal.App.3d 390, 401-408, abrogated in part on other grounds as recognized in Kahn v. Bower (1991) 232 Cal.App.3d 1599, 1606-1608.)

Defendant also claims that Plaintiff failed to present admissible evidence demonstrating the truth of Mr. Loomstein’s comments regarding Mr. Schwenker to Mr. Pearson. Defendant forwards legal authority that, when statements are of public concern, the burden of proof shifts to the non-moving party to show that the assertions made were in fact false. (Philadelphia newspapers, Inc. v. Hepps (1986) 475 U.S. 767, 772-778.) Further, “[m]erely making unflattering factual statements about someone, without more, does not give rise to a cause of action …. There must be some proof not only that they tended to impute a lack of professional ability, but also that the objected-to statements were false; obviously a true statement of fact is not defamatory.” (Aisenson v. American Broadcasting Co. (1990) 220 Cal.App.3d 146, 155.)

Putting aside that Plaintiff’s claims are not for defamation, the Court is not satisfied that Mr. Loomstein’s statements to Mr. Pearson regarding Mr. Schwenker are either non-actionable opinion, or that it is Plaintiff’s burden to establish the truth of the statements. In its opposition, Plaintiff argues that the Court of Appeals opinion issued regarding the Anti-SLAPP ruling in this case is dispositive of the issue, noting that the Court found “defendant failed to establish plaintiff’s claim arise from ‘conduct in furtherance of the exercise of … the constitutional right of free speech in connection with a public issue or an issue of public interest.’ (§ 425.16, subdivision (e)(4).)” (Appellate Opinion, p. 24.) Although this finding is not dispositive, as the Court of Appeals’ interpretation was centrally focused on the connection of the speech to an issue of public interest. However, it is persuasive that the Court’s opinion was centered on a finding that “[t]he complaint’s allegations and the evidence presented in connection with defendant’s special motion to strike confirm that plaintiff has sued defendant for making personally disparaging remarks about its managing member’s integrity in private text exchanges with plaintiff’s chief financial backer ….” (Appellate opinion, p. 20; see also Schwenker Decl., ¶¶ 13-14, Exhs. 6-7.)

Against this backdrop, Defendant’s assertion that his statements were “broad, unfocused and wholly subjective comment[s]” about Mr. Schwenker that should be construed as constitutionally protected opinion is unmeritorious. (Copp, supra, 45 Cal.App.4th at p. 837.) Rather, Plaintiff’s evidence of Defendant’s text communications with Mr. Pearson, already in evidence with this action, demonstrate that Mr. Loomstein made targeted, direct accusations about Mr. Schwenker’s professional capacity, professional incompetence, and lying to Mr. Pearson. (See Schwenker Decl., ¶ 13, Exh. 6.) Further, these disparaging communications continued, even after Mr. Loomstein quit his position at TOE. (See Schwenker Decl., ¶ 14, Exh. 7.)

Further, Defendant’s argument that it is Plaintiff’s burden to provide substantial evidence demonstrating the veracity of these statements is specious. Defendant inserts his argument regarding the burden-shifting mechanism for speech regarding public concern is inserted in a footnote. Further, Defendant has failed to demonstrate that the statements made are of public concern. On the contrary, the evidence demonstrates that the communications were made strictly privately in a text conversation between Defendant and Mr. Pearson. (See Schwenker Decl., ¶¶ 13-14, Exhs. 6-7.)

The elements of 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 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.) “[C]ases have pointed out that while the tort of inducing breach of contract requires proof of a breach, the cause of action for interference with contractual relations is distinct and requires only proof of interference.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1129.)

Defendant contends that there is no evidence proving a causal nexus between Mr. Loomstein’s statements and Mr. Pearson’s decision to decrease funding that would demonstrate an intent to interfere with Plaintiff’s contractual relationship with Mr. Pearson. To this point, Defendant provides testimony of Mr. Pearson stating that his communication with Mr. Loomstein did not impact his decision to decrease funding. (Pearson Decl., ¶ 4.)

In opposition, however, Plaintiff points out that during Mr. Pearson’s deposition he testified that Mr. Loomstein’s comments did concern him. (Pearson Depo., p. 56:6-10.) Further, Mr. Pearson testified that re-negotiation of the original Agreement occurred from “day one” of Mr. Loomstein quitting his position at TOE, which coincided with the days Mr. Loomstein was communicating with Mr. Pearson. (Pearson Depo., p. 68: 5-7.)

Defendant claims that he is entitled to summary adjudication of Plaintiff’s second cause of action for intentional interference with prospective economic advantage, as well as Plaintiff’s third cause of action for negligent interference with prospective economic advantage, as a matter of law.

The elements of a claim for 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 or negligent 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.” (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404 (cleaned up) (“Crown Imports”).)

The elements of a claim for negligent interference with prospective economic advantage are almost identical, but as to the third element for the defendant’s interference, the defendant must have “knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care[,]” and the defendant must have failed “to act with reasonable care.” (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1005.)

In either case, “the alleged interference must have been wrongful by some measure beyond the fact of the interference itself. For an act to be sufficiently independently wrongful, it must be unlawful, that is, it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Crown Imports, supra, 223 Cal.App.4th at p. 1404; see also National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 439-440 (independently wrongful requirement applies to negligent interference claims).)

Defendant’s sole contention is that Plaintiff failed to demonstrate the independently wrongful nature of Defendant’s actions that allegedly interfered with Plaintiff’s prospective economic advantage. In opposition, Plaintiff correctly points out, however, that defamation is an independently actionable claim. Plaintiff asserts that Mr. Loomstein’s statements regarding Mr. Schwenker constitute defamation per se, in that they accuse Mr. Schwenker of fraud and professional incompetence.

As reviewed above, Defendant’s contention that his statements are constitutionally protected is incorrect. Accordingly, the question of whether Mr. Loomstein’s statements to Mr. Pearson regarding Mr. Schwenker constitute defamation demonstrates a genuine issue of material fact, and Defendant’s motions for summary adjudication of Plaintiff’s second and third causes of action are DENIED.

The elements of a claim for inducing breach of contract are (1) a valid, existing contract with a third party, (2) defendant’s knowledge of the contract, (3) defendant intended to induce its breach, (4) the contract was in fact breached, (5) the breach was caused by defendant’s unjustified or wrongful conduct, and (6) resulting damages. (Shamblin v. Berge (1985) 166 Cal.App.3d 118, 122-123.)

As above, Defendant contends that there is no causal nexus between Mr. Loomstein’s statements and Mr. Pearson’s decision to decrease funding that demonstrates an intent to induce Mr. Pearson’s breach of his contract with Plaintiff. As found above, this is an issue of fact, and Defendant has not carried his burden to demonstrate no triable issue of fact.

Defendant also contends, however, that Plaintiff failed to demonstrate evidence of a breach of the Agreement. Defendant contends that Mr. Pearson’s decision to re-negotiate the terms of the Agreement and reduce the financing for the 2018 festival from $350,000 to $125,000, memorialized in the Amendment, was a novation that abrogated the parties’ responsibilities under the Agreement. (Katrinak Decl., ¶ 11, Exh. D.) Because Mr. Pearson fully funded the $125,000 promised under the Amendment, Defendant contends that Plaintiff has no evidence of breach.

In opposition, however, Plaintiff contends the Amendment was not a novation that abrogated the parties’ responsibilities under the Agreement, but an attempt by Plaintiff to mitigate his damages based on economic duress. “The doctrine of ‘economic duress’ can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract.” (CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 644.)

Plaintiff contends that Mr. Loomstein’s wrongful interference, described more fully above, caused the financiers to be unwilling to proceed with their original financing, so Plaintiff’s only options were to accept the terms of a new deal from Mr. Pearson, or lose all financing entirely. Accordingly, Defendant’s assertion that Plaintiff’s agreement to the Amendment releases Defendant’s liability from his tortious conduct is not well founded.

In reply, Defendant relies upon the assertion that Plaintiff failed to demonstrate any evidence of Defendant’s wrongful conduct because Plaintiff failed to show a genuine dispute of triable fact as to his interference with Plaintiff’s contractual relations. As demonstrated above, however, whether Defendant’s actions constituted interference with Plaintiff’s contractual relations or caused Mr. Pearson to breach is a question of fact, and Defendant has not established a prima facie case of no triable issue of material fact. Accordingly, the cases Defendant cites for the proposition that Plaintiff did not experience economic duress are distinguishable.

Based on the foregoing, there is a genuine dispute of material fact regarding whether Mr. Loomstein’s statements induced Mr. Pearson to breach his contract with Plaintiff. Accordingly, Defendant has failed his burden to demonstrate no triable issue of material fact, and Defendant’s motion for summary adjudication of Plaintiff’s fourth cause of action is DENIED.

Defendant claims that Plaintiff’s claims for lost profits are entirely speculative because Plaintiff has not realized profit for any festival produced by Plaintiff from 2016 to the present. (Katrinak Decl., ¶¶ 3-10, Exh. A-C; see Vestar Dev. II, LLC v. Gen. & Dynamics Corp. (9th Cir. 2001) 249 F.3d 958, 960; Jones v. San Bernadino Real Estate Board (1959) 168 Cal.App.2d 661, 665; Parlour Enter. Inc. v. Kirin Group (2007) 152 Cal.App.4th 281, 289-90.) Defendant also claims that Plaintiff has not shown any damages for the decrease in financing from $350,000 to $125,000 because the form of financing was a loan (Complaint, ¶ 10, Exh. B), and any potential obligations under the original Agreement were abrogated by the Amendment.

In opposition, Plaintiff points out that, although the financing agreement was titled a “Loan,” its actual terms represented that the financing agreement was more similar to an investment agreement because the money lent was not absolutely repayable. (Complaint, ¶ 10, Exh. B, Additional Facts E and F.) However, Plaintiff did experience actual damages from the change in financing because Plaintiff lost the payment of a fee to TOE totaling $50,000 for Mr. Scwhenker’s producing services, as well as aggregate sums of money to help pay off TOE’s debt totaling $74,000. Accordingly, Plaintiff contends that it has evidence of actual damages from Mr. Pearson’s decision to change his financial commitment to the 2018 festival totaling $124,000. (Schwenker Decl., ¶¶ 16-17.)

The Court is satisfied that the evidence Plaintiff presented is sufficient to demonstrate $124,000 of actual damages based on the change of financing for the 2018 festival. This creates a genuine dispute of material fact regarding whether Defendant’s actions were the cause of these damages, based on the causes of action alleged above. Accordingly, Defendant’s motion for summary judgment on this basis is DENIED.