Judge: Mark H. Epstein, Case: BC622437, Date: 2023-05-10 Tentative Ruling

Case Number: BC622437    Hearing Date: May 10, 2023    Dept: R

This case has gone around the block a few times, and the court acknowledges that it has a much better understanding of the case than it once had.

The following are thoughts on defendants’ motion for nonsuit.

Fraud.  Without doubt, fraud sounds in law, not in equity.  Thus, it is for the jury, not the court, if the elements can be placed at issue.  The court sees no real dispute as to whether a nonsuit ought to be granted as to any element other than two.  The first is reliance.  Plaintiffs will need to articulate the detrimental reliance due to the alleged fraud.  The complaint alleged money spent in surveys and the like, but none of that came out in the trial.  The second is damages.  The court believes that fraud damages are in the nature of out-of-pocket damages rather than benefit of the bargain damages.  Plaintiffs will need to articulate the damages that they suffered due to their reliance on the alleged promise of a 20 year lease, and it cannot be that the lease would have been really profitable.  If they can articulate damages in any amount, the matter will go to the jury.

Promissory Estoppel.  Without doubt, this sounds in equity, not law.  (C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1.)  As such, it would go to the court.  Because this is an equitable matter, the court can weigh the evidence.  The court has little trouble finding that the matter should go forward as to most elements.  The issue becomes damages.  The law is a bit unclear as to the measure of damages.  The weight of authority is that benefit of the bargain damages are sparingly given, and only if an injustice cannot otherwise be avoided.  Usually, it is the reliance harm that is the measure.  But that said, there are a number of cases that award benefit of the bargain damages.  The theory is that the promise and the reliance thereon substitute for consideration, and therefore a contract is formed.  The other theory is that because this is not a true contract, and the promise is binding only due to the reliance, reliance damages are the better measure.  The court will hear argument on this.  However, for today’s purposes, the court is unlikely to grant the motion.  The question is whether this goes to the jury.  The court is inclined to let the jury decide as an advisory jury.  That might not have been the court’s first instinct had it known then what it knows now (so to speak).  And defendants did try to argue this earlier.  But the jury has sat through six days of testimony.  The court would, frankly, value the jury’s input on this.  But that said, the jury’s verdict would be advisory only; the court believes itself to be free to disregard it if the court disagrees with it.

Interference.  Plaintiffs do have a problem.  The complaint speaks of interference with the JV—meaning the joint venture between plaintiffs and Herbal Cure.  But the arbitrator found the JV to be void ab initio, and due to plaintiffs’ own misconduct.  As such, no interference cause of action will lie where the interference is with the JV.  A fair reading of the complaint alleges no other business relationship.  But even going beyond the complaint, interference requires a specific business relationship.  Plaintiffs’ attempt to bootstrap the relationship between themselves and the vendors or customers fails.  First, it is not even clear that a particular vendor was identified.  Second, there is no reason to believe that the vendors were so tied to the Pico location that they would not continue doing business across the street.  Third, there is no evidence of any specific harm plaintiff suffered as a result of that interruption.  As to customers, that is code for lost profits.  While lost profits are a viable form of damages for this tort, again there has to be a specific business relationship.  It is not sufficient to say that the relationship is with the customers as a whole.  The court would need to know which customers and would need to know that moving across the street is what disrupted the relationship.  There is no evidence to that effect at all.  The court has no evidence that the customers loyal to Grace were unwilling to go across the street to the new Grace.  And there is no evidence that defendants even knew of any of the specific customers.  This is just a code for breach of contract or perhaps promissory estoppel.  These damages will need to be recovered there or not at all.  Plaintiffs might be able to recover out of pocket damages for this tort, but the court would need to have plaintiffs articulate it.

Negligent Interference.  Same analysis, essentially.

Declaratory Relief.  That is essentially moot.  The court does not know the declaration being sought, nor would it go to the jury.

Unjust Enrichment.  This is plainly equitable.  The court is trying to figure out the unjust enrichment that would be tied directly to the promissory estoppel, as that is the only unjust thing alleged here.  Plaintiffs would need to articulate it.  If they can, the court might allow the jury to render an advisory opinion on this as well.