Judge Michael P. Linfield, Case 21STCV30368 2023-04-18 Tentative Ruling

Judge: Michael P. Linfield, Case: 21STCV30368, Date: 2023-04-18 Tentative Ruling

The Court often posts its tentative several days in advance of the hearing. Please re-check the tentative rulings the day before the hearing to be sure that the Court has not revised the ruling since the time it was posted.

Please call the clerk at (213) 633-0154 by 4:00 pm. the court day before the hearing if you wish to submit on the tentative.

SUBJECT: Motion for Summary Judgment or, in the Alternative, Summary Adjudication of Issues

Moving Party: Defendants Best Energy Solutions & Technology Corporation, George Sturges, A Transport Corporation, and Best Energy Holdings, LLC

SUBJECT: Motion to Seal Portions of Defendants’ Motion for Summary Judgment, Separate Statement of Undisputed Material Facts, and Exhibits B, C, D, E, F, G, K, and QQ

Moving Party: Defendants Best Energy Solutions & Technology Corporation, George Sturges, A Transport Corporation, and Best Energy Holdings, LLC

SUBJECT: Motion to Seal Documents Filed in Opposition to Defendants’ Motion for Summary Judgment or in the Alternative Summary Adjudication

SUBJECT: Motion to Seal Reply and Concurrently Filed Documents in Support of Motion for Summary Judgment

Moving Party: Defendants Best Energy Solutions & Technology Corporation, George Sturges, A Transport Corporation, and Best Energy Holdings, LLC

The Court DENIES Defendants’ Motion for Summary Judgment, or in the Alternative, Summary Adjudication.

The Court ADVANCES the May 1, 2023 hearing on the other two motions to this date.

On August 17, 2021, Plaintiff California Fueling, LLC filed its Complaint against Defendants Best Energy Solutions & Technology Corporation and George Sturges on causes of action of breach for contract, fraud, and interference with prospective economic advantage.

On November 1, 2021, Defendants Best Energy Solutions & Technology Corporation and George Sturges filed their Answer to the Complaint.

On November 15, 2021, Defendants Best Energy Solutions & Technology Corporation and George Sturges filed their First Amended Answer to the Complaint.

On March 24, 2022, Plaintiff amended its Complaint to substitute Doe 1 with A Transport Corporation.

On June 6, 2022, Defendant A Transport Corporation filed its Answer to the Complaint.

On June 14, 2022, Plaintiff amended its Complaint to substitute Doe 2 with Best Energy Holdings, LLC.

On July 1, 2022, Defendant Best Energy Holdings, LLC filed its Answer to the Complaint.

On January 31, 2023, Defendants Best Energy Solutions & Technology Corporation, George Sturges, A Transport Corporation, and Best Energy Holdings, LLC (“Defendants”) filed their Motion for Summary Judgment or, in the Alternative, Summary Adjudication of Issues (“MSJ”). Defendants concurrently filed: (1) Notice of Lodging Documents Conditionally Under Seal; (2) Declaration of Andrew J. Bedigian; (3) Declaration of George Sturges; (4) Exhibits B, C, D, E, F, G, K, and QQ; (5) Separate Statement; and (6) Proposed Order.

Also on January 31, 2023, Defendants filed their Motion to Seal Portions of Defendants’ Motion for Summary Judgment, Separate Statement of Undisputed Material Facts, and Exhibits B, C, D, E, F, G, K, and QQ (“Defendants’ First Motion to Seal”). Defendants concurrently filed: (1) Declaration of George Sturges; and (2) Proposed Order.

On April 4, 2023, Plaintiff filed its Memorandum of Points and Authorities in Opposition (“Opposition”). Plaintiff concurrently filed: (1) Notice of Lodging Conditionally Under Seal; (2) Declaration of Patrick J. McDuff; (3) Declaration of Andrew V. Jablon; (4) Declaration of Prisca Thomas; (5) Appendix of Exhibits; (6) Response to Defendants’ Separate Statement; (7) Evidentiary Objections to the Declaration of George Sturges; (8) Evidentiary Objections to the Declaration of Andrew J. Bedigian; and (9) Request for Judicial Notice.

On April 5, 2023, Plaintiff filed its Motion to Seal Documents Filed in Opposition to Defendants’ Motion for Summary Judgment or in the Alternative Summary Adjudication (“Plaintiff’s Motion to Seal”). Plaintiff concurrently filed its Proposed Order.

On April 13, 2023, Defendants late filed their Reply to the MSJ. Defendants concurrently late filed: (1) Declaration of Andrew Bedigian; (2) Reply to Separate Statement; (3) Evidentiary Objections; and (4) Notice of Lodging.

Also on April 13, 2023, Defendants filed their Motion to Seal Reply and Concurrently filed Documents in Support of Motion for Summary Judgment (“Defendants’ Second Motion to Seal”). Defendants concurrently filed: (1) Declaration of George Sturges; and (2) Proposed Order.

First, Plaintiff requests that the Court deny the MSJ on a variety of procedural grounds. The issues cited (e.g., failure to authenticate) are minor issues that would resolvable if the Court continued the hearing. However, it would be a waste of judicial economy for the Court to continue the hearing, particularly as trial in this matter is scheduled for May 15, 2023. The Court instead reaches the merits of the MSJ below.

Second, replies to motions are due “at least five court days before the hearing.” (Code Civ. Proc., § 1005, subd. (b).) The hearing in this matter is scheduled for April 18, 2023; five court days before the hearing was April 11, 2023. Defendants filed their Reply and papers submitted in support of their Reply on April 13, 2023. Pursuant to California Rules of Court, rule 3.1300, subdivision (d), the Court declines to consider the late file Reply and the papers submitted in support of their Reply. (See Kapitanski v. Von’s Grocery Co. (1983) 146 Cal.App.3d 29, 32 [“The court here, in strict adherence to its local rules, could have summarily rejected [the party’s] untimely declaration.”].)

Finally, Plaintiff’s Motion to Seal and Defendants’ Motion to Seal are both scheduled for a hearing on May 1, 2023. No oppositions have been filed to the motions, nor have oppositions been filed to any such motions in this matter. In the interest of judicial economy, the Court ADVANCES the May 1, 2023 hearing on the motions to the April 18, 2023 hearing on the MSJ and Defendants’ First Motion to Seal. If either party wishes to continue these motions further to allow for further briefing, they may request such relief at the April 18, 2023 hearing.

Plaintiff filed an evidentiary objection to the Declaration of George Sturges. The Court OVERRULES this evidentiary objection.

Plaintiff also filed 84 evidentiary objections to the Declaration of Andrew J. Bedigian. The following are the Court’s rulings on these evidentiary objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED
6		OVERRULED
7		OVERRULED
8		OVERRULED
9		OVERRULED
10		OVERRULED
11		OVERRULED
12		OVERRULED
13		OVERRULED
14		OVERRULED
15		OVERRULED
16		OVERRULED
17		OVERRULED
18		OVERRULED
19		OVERRULED
20		OVERRULED
21		OVERRULED
22		OVERRULED
23		OVERRULED
24		OVERRULED
25		OVERRULED
26		OVERRULED
27		OVERRULED
28		OVERRULED
29		OVERRULED
30		OVERRULED
31		OVERRULED
32		OVERRULED
33		OVERRULED
34		OVERRULED
35		OVERRULED
36		OVERRULED
37		OVERRULED
38		OVERRULED
39		OVERRULED
40		OVERRULED
41		OVERRULED
42		OVERRULED
43		OVERRULED
44		OVERRULED
45		OVERRULED
46		OVERRULED
47		OVERRULED
48		OVERRULED
49		OVERRULED
50		OVERRULED
51		OVERRULED
52		OVERRULED
53		OVERRULED
54		OVERRULED
55		OVERRULED
56		OVERRULED
57		OVERRULED
58		OVERRULED
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60		OVERRULED
61		OVERRULED
62		OVERRULED
63		OVERRULED
64		OVERRULED
65		OVERRULED
66		OVERRULED
67		OVERRULED
68		OVERRULED
69		OVERRULED
70		OVERRULED
71		OVERRULED
72		OVERRULED
73		OVERRULED
74		OVERRULED
75		OVERRULED
76		OVERRULED
77		OVERRULED
78		OVERRULED
79		OVERRULED
80		OVERRULED
81		OVERRULED
82		OVERRULED
83		OVERRULED
84		OVERRULED

The Court finds that virtually all of the objections filed to the Bedigian Declaration are frivolous. As in Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, the “litigants file[d] blunderbuss objections to virtually every item of evidence submitted. This is hardly good advocacy, and it unnecessarily overburdens the trial court.” (Id. at p. 254, fn. 3; see also Id. at fn. 6.)

(1) Portions of the original Regulations for the Commercialization of Alternative Diesel Fuels;

(2) Portions of the amended Regulations for the Commercialization of Alternative Diesel Fuels;

(3) State of California Air Resources Board (CARB) Executive Order G-714-ADF01 for VESTA® 1000;

(10) Complaint in the matter of California Fueling, LLC v. Best Energy Solutions and Technology Corp., case number 18STCV08474;

(12) The August 3, 2020 dismissal of the Cross-Complaint filed in 18STCV08474; and

(13) Complaint in People of the State of California ex Rel. California Air Resources Board v. Best Energy Solutions & Technology Corp., et al.

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 850.)

“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Id.; Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1474 [summary judgment standards held by Aguilar apply to summary adjudication motions].)

Further, in line with Aguilar v. Atlantic Richfield Co., “[o]n a motion for summary adjudication, the trial court has no discretion to exercise. If a triable issue of material fact exists as to the challenged causes of action, the motion must be denied. If there is no triable issue of fact, the motion must be granted.” (Fisherman's Wharf Bay Cruise Corp. v. Super. Ct. (2003) 114 Cal.App.4th 309, 320.)

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839 [cleaned up].)

Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true. Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Id. at p. 840 [cleaned up]; see also Weiss v. People ex rel. Dep’t of Transp. (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

This case arises from alleged violations of a settlement agreement signed by Plaintiff, Defendant Best Energy Solutions and Technology Corporation (“Defendant Best”), and Defendant George Sturges. (Plaintiff’s Appendix of Exhibits, Exh. 14, p. 11.)

The main points of the settlement agreement were that Defendant Best needed to (1) pay Plaintiff a specified amount, (2) stop selling a certain fuel additive, and (3) not allow or enable stockpiling of that fuel additive past the end of 2020. Plaintiff agreed to (1) dismiss its then-pending claims against Defendant Best, (2) disclaim further claims against Defendant Best, and (3) adopt certain discovery procedures regarding certain investigations of Defendant Best by the California Air Resources Board (CARB). (Id. at pp. 3–9.)

Plaintiff is now suing Defendants on allegations that Defendants breached the settlement agreement, committed fraud, and intentionally interfered with Plaintiff’s prospective economic advantage.

Defendants move for summary judgment, or in the alternative summary adjudication, on each of Plaintiff’s causes of action: (1) breach of contract; (2) fraud; and (3) interference with prospective economic advantage. (MSJ, pp. 2:9–20, 28:14–16.)

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis W. Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)¿

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.” (Constr. Prot. Serv., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–99.)¿

Defendants argue that the first cause of action for breach of contract fails because: (1) Defendants did not materially breach the settlement agreement; and (2) Plaintiff cannot show damages. (Opposition, pp. 20:13–15, 22:6.)

Defendants discuss the evidence that is in their favor, breaking down by individual third parties why there is allegedly no breach and no damages. (Id. at pp. 10–16.)

Regarding the issue of breach, the evidence submitted includes emails to and from Defendant Sturges, which were sent to various purchasers of its fuel additive, BC-EC1c. In relevant part, these emails stated: (1) that Defendant Best was not selling the additive past December 31, 2020; (2) that Defendant Best was not allowing or participating in stockpiling of additive prior to yearend 2020; but (3) that Defendant would accommodate ratable deliveries throughout the remainder of 2020 to meet the purchasers’ regular demand and inventory requirements. (Decl. Bedigian, Exhs. U, Z, FF, GG, HH, II, JJ, KK, LL, MM, NN). These emails also include evidence that Defendant Best allowed at least one purchaser to return the fuel additive for a refund when the demand exceeded that needed through December 2020. (Id., Exh. AA.) The evidence is sufficient for Defendants to meet their initial burden in arguing that the first cause of action fails because they did not breach the settlement agreement.

Regarding the issue of breach, the evidence submitted includes emails to and from Plaintiff, which were sent to these same fuel additive purchasers. In relevant part, these emails include various questions that the purchasers had about potential purchases of Plaintiff’s product (named Vesta), including price, handling, and quantity. (Decl. Bedigian, Exhs. O, P, R, T.) There is also evidence from depositions that Vesta was not a completely identical fuel additive to BC-EC1c; for example the “dose rate” required different injecting equipment for the two additives. (Id., Exh. I, p. 31:17–25.) The evidence is sufficient for Defendants to meet their initial burden in arguing that the first cause of action fails because there were no damages resulting from Defendants’ actions.

Plaintiff disagrees with Defendants, arguing that the MSJ should be denied as to the first cause of action because: (1) Defendants failed to meet their burden; (2) there is substantial evidence of breach by Defendants; and (3) a jury could ascertain reasonable damages. (Opposition, pp. 14:4–5, 14:12, 14:16, 20:2.)

The Court already determined in the previous subsection that Defendants met their initial burden.

Regarding the issue of breach, the evidence submitted shows the amount of BC-EC1c fuel Defendant Best sold in the eighteen months prior to the end of December 2020. The primary evidence submitted for this is Defendant George Sturges’ response to Plaintiff’s Special Interrogatory No. 13, which lists the monthly sales of BC-EC1c fuel from June 2019 to December 2020. (Plaintiff’s Appendix of Exhibits, Exh. 23, pp. 17:28, 18:1, 19:3–10.) The figures are assembled into a chart, which shows a large year-over-year increase in volume of sales of the additive for the months of September, November, and December 2020. (Opposition, p. 11.) The evidence shows that Defendant Best sold 2,115 gallons of BC-EC1c fuel from September through December 2019, and 6,911.76 gallons of that fuel from September to December 2020 — a year-over-year increase of more than 225%. A comparison of just December 2019 (712 gallons sold) with December 2020 (3,365.97 gallons sold) shows a year-over-year increase of 372%. A possible explanation for this rapid increase is that stockpiling occurred. At this same time, deposition evidence shows that the purchasers of this additive fuel were concerned about CARB’s upcoming changes to regulations and that this caused changes to the purchasing history. (Decl. Bedigian, Exh. I, pp. 18:12–25, 19:1–3.) Taken in the light most favorable to Plaintiff, the evidence is sufficient for Plaintiff to meet its subsequent burden of demonstrating that there is a triable issue of material fact regarding whether Defendants breached the settlement agreement by allowing the purchasers of the BC-EC1c fuel to stockpile the fuel.

Regarding the issue of damages, Plaintiff argues that “[d]uring the relevant time period, only two NOx mitigants were commercially available — Plaintiff’s NOx mitigant, sold at various concentrations under the VESTA® tradename, and [Defendant] Best’s NOx mitigant, sold under the name BC-EC1c. Accordingly, for all intents and purposes, Biodiesel Blends in California contained either Plaintiff’s VESTA® or [Defendant] Best’s BC-EC1c.” (Opposition, p. 9:9–13.) The primary evidence submitted in support of this assertion are the judicially-noticed CARB Executive Orders, which show only three additive fuels being allowed for the purposes at issue: (1) VESTA (in various dilutions); (2) BC-EC1c (in various dilutions); and (3) CATANOX (an additive fuel made by Non-Party Targray, Inc.). (Plaintiff’s Request for Judicial Notice, Exhs. 3–9.) Plaintiff submits further evidence: (1) testimony from Plaintiff’s CEO, who declares that these were the three fuels allowed by CARB (Decl. McDuff, ¶¶ 4–6); and (2) deposition testimony from Brett Maclean, the person most knowledgeable for Non-Party Targray, Inc., who stated that Targray, Inc. stopped making CATANOX in June 2018 and never restarted production of that additive fuel (Plaintiff’s Appendix of Exhibits, Exh. 55, pp. 28:1–25, 29:1–16, 63:13–18, 112:6–12, 126:16–25, 127:1–23.) Taken in the light most favorable to Plaintiff, the evidence is sufficient for Plaintiff to meet its subsequent burden of demonstrating that there is a triable issue of material fact regarding whether Plaintiff was damaged by Defendants’ alleged breach of the settlement agreement.

The evidence submitted sufficiently demonstrates that there are triable issues of material facts regarding breach and damages. The Court DENIES summary adjudication to the first cause of action for breach of contract.

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)¿¿¿

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)¿¿¿

To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)¿¿

Defendants argue that the second cause of action fails because: (1) the litigation privilege bars this cause of action, citing Navarro v. IHOP Props., Inc. (2005) 134 Cal.App.4th 834; and (2) Defendants’ alleged nonperformance of the settlement agreement cannot serve as a basis for Plaintiff’s fraud claim, citing Tenzer v. Superscope (1985) 39 Cal.3d 18. (MSJ, pp. 17:15–17, 18:23–24.)

“A privileged publication or broadcast is one made . . . (b) In any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure, except as follows: [listing exceptions involving marital dissolution or legal separation, destruction or alteration of physical evidence, concealment of insurance policies, recordation of lis pendens, and communications with law enforcement agencies].” (Civ. Code, § 47, subd. (b).)

This protection is termed “the litigation privilege,” and “[n]umerous courts have held that statements relating to settlements also fall within the privilege, including those made during settlement negotiations.” (Navarro, supra, at 843–44, citations omitted.) “[T]he absolute litigation privilege of Civil Code section 47, subdivision (b), bars derivate tort actions and ‘applies to all torts other than malicious prosecution, including fraud, negligence and negligent misrepresentation.’” (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1147, quoting Harris v. King (1998) 60 Cal.App.4th 1185, 1188.) The litigation privilege “places the obligation on parties to ferret out the truth while they have the opportunity to do so during litigation.” (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 30, emphasis in original.)

Plaintiff argues that the litigation privilege does not insulate Defendants from liability. (Opposition, p. 24:11.) Specifically, Plaintiff argues, inter alia, that the litigation privilege defense is not properly before the Court because it is an unpled affirmative defense and thus the privilege is waived. (Id. at pp. 23:27, 24:11, 25:5.)

The Court agrees with Plaintiff’s first argument regarding waiver of the litigation privilege.

“The litigation privilege is broad, but it has its limits. Like any statute, section 47(b) is subject to the rule of statutory construction that a particular provision prevails over a general one.” (People ex rel. Alzayat v. Hebb (2017) 18 Cal.App.5th 801, 807, citing Civ. Code, § 3534 (“Particular expressions qualify those which are general.”).)

The litigation privilege is an affirmative defense. (Ramalingam v. Thompson (2007) 151 Cal.App.4th 491, 494; accord Chabak v. Monroy (2007) 154 Cal.App.4th 1502, 1513.)

“If the party against whom a complaint or cross-complaint has been filed fails to object to the pleading, either by demurrer or answer, that party is deemed to have waived the objection unless it is an objection that the court has no jurisdiction of the subject of the cause of action alleged in the pleading or an objection that the pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.80, subd. (a).)

“The affidavits on a motion for summary judgment do not constitute a second set of pleadings in the action. Their purpose is only to show whether the issues apparently made by the formal pleadings are genuine, whether each party has competent evidence to offer which tends to support his side of the issue. On the hearing of such a motion no issues are tried, but the inquiry is limited to the question whether there is an issue to be tried. . . . If either party finds, on the hearing of such a motion, that his pleading is not adequate, either by way of allegation or denial, the court may and should permit him to amend; but in the absence of some request for amendment there is no occasion to inquire about possible issues not raised by the pleadings.” (Gardenswartz v. Equitable Life Assurance Soc. (1937) 23 Cal.App.2d Supp. 745, 752–53.)

Put more simply: “The pleadings determine the issues to be addressed by a summary judgment motion.” (Oakland Raiders v. Nat’l Football League (2005) 131 Cal.App.4th 621, 629, citations omitted.)

Here, Defendants never pleaded the affirmative defense of the litigation privilege. Civil Code section 47, subdivision (b) does not appear anywhere in any of Defendants’ respective Answers. Nor do Defendnats raise this issue in either their Demurrer filed September 15, 2021 or the Demurrer filed May 3, 2022 — even though both of those filings demurred to the second cause of action for fraud. Defendants never moved the Court to amend their Answers to include this affirmative defense. Plaintiff appears to be correct in noting that Defendants are bringing up this issue for the first time in the MSJ. But doing so is procedurally incorrect, and Plaintiff is within its right to object on the grounds of waiver.

Under both the relevant statute (Code Civ. Proc., § 430.80, subd. (a)) and the common law (see, e.g., Gardenswartz, supra, at pp. 752–53), the Court finds that Defendants waived any litigation privilege they may have had pursuant to Civil Code section 47, subdivision (b).

The Court does not reach further arguments about whether the litigation privilege applies in cases of extrinsic fraud or whether the litigation privilege extends to the defendants who did not participate in the previous litigation.

The Court already determined that there are multiple triable issues of material fact regarding the cause of action for breach of contract. At least one of these triable issues of material fact is implicated in the second cause of action for fraud, which requires a finding on damages. More to the point, Plaintiff’s allegations are not that Defendants merely failed to perform under the settlement agreement (e.g., by not paying the money due under the settlement agreement); Plaintiff’s allegations are that Defendants knowingly made misrepresentations during the settlement negotiations so that Plaintiff would rely on those misrepresentations and settle with Defendants, which caused damages to Plaintiff. Tenzer, a case about nonperformance, does not help Defendants on this point. Since, as indicated above, there is no legal bar to the cause of action for fraud, then the previously-noted triable issues of material fact would lead the Court to deny summary adjudication on this cause of action.

Because the Court has determined that there are triable issues of material fact regarding the second cause of action for fraud, the Court DENIES summary adjudication to this cause of action.

(It is not immediately clear based upon the title of the cause of action what legal standard the Court should cite. The Court uses the legal standard for “intentional interference with prospective economic advantage” rather than the legal standard for “negligent interference with prospective economic advantage” because Plaintiff alleges in its Complaint regarding this cause of action that Defendants’ actions “were intentional, fraudulent and malicious”. (Complaint, ¶ 37.))

The elements of a claim for intentional interference with prospective economic advantage include “(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, citations, brackets, and quotation marks omitted.)¿¿

Further, “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.” (Id., citation, ellipsis, and quotation marks omitted.)¿

Defendants argue that the third cause of action for interference with prospective economic advantage must fail because: (1) Plaintiff cannot show an existing relationship with a majority of the customers at issue; (2) Plaintiff cannot prove that Defendants knew of Plaintiff’s prospective economic relationships; and (3) Defendants did not intentionally disrupt any actual business relationships or proximately cause harm to Plaintiff. (MSJ, pp. 23:11–12, 23:20–21, 24:24–25, 25:19–20.)

Plaintiff directly refutes these assertions, arguing: (1) there is evidence of existing economic relationships; (2) Defendants knew of prospective economic relationships; and (3) Defendants caused harm by intentionally disrupting the relationships. (Opposition, pp. 25: 21, 26:2, 26:12.)

First, there is no legal requirement that Plaintiff had an existing relationship with most of the prospective customers, and Defendants do not cite any authority for that proposition. Even the existence of one economic relationship will suffice as a matter of law. Defendants cite evidence earlier in their brief that one of the customers, Renewable Energy Group, purchased Plaintiff’s VESTA fuel in 2020. (MSJ, pp. 14:28, 15:1–4.) Thus, Defendants do not meet their burden on this argument.

“[Plaintiff] assumes that customers only have two choices, BC-EC1c or Vesta. That is not the case. Numerous emissions compliance strategies and products exist in California beyond the NOx mitigants offered by [Plaintiff and Defendant]. [Citation omitted.] Moreover, some customers were receiving and losing exemptions from CARB, adding to the uncertainty—that is, the need to use a NOx additive. [Citation omitted.] Finally, renewable diesel was becoming a popular alternative to NOx mitigants in early 2021. Customers considered and did purchase renewable diesel after [Defendants’] exit from the market, instead of relying on traditional NOx mitigating additives (BC-EC1c or Vesta). [Citation omitted.]”

(MSJ, p. 25:9–18.) This is sufficient for Defendant to meet its initial burden on this argument.

However, considering the judicially-noticed Executive Orders of CARB, whether customers only had two choices or more is a triable issue of material fact. And if Plaintiff can show at trial that customers did only have two choices — or even that the customers for Plaintiff’s product would have believed that there were only two choices — then a trier of fact could conclude that Defendants knew of Plaintiff’s prospective economic relationships because the exit of Defendants’ additive would have left the customers with only one choice – i.e., to use Plaintiff’s additive. Thus, whether Defendants knew of Plaintiff’s prospective economic relationships is also a triable issue of material fact, and Plaintiff meets it subsequent burden on this argument.

Finally, Defendants argue that it cannot be the case that Defendants actually disrupted the prospective relationships or that Defendants’ actions were the proximate cause of harm because: (1) there was no reasonable certainty about the prospective economic relationships; and (2) there were other, significant market forces at play. (MSJ, pp. 25:19–20, 26:14, 27:3.) In consideration of Defendants’ evidence previously discussed, Defendants meet their initial burden on this argument. However, in consideration of Plaintiff’s evidence previously discussed, Plaintiff also meets its subsequent burden on this argument. Issues of reasonable certainty of the prospective economic relationships and proximate causation of damages to such relationships are triable issues of material fact, not questions of law that are appropriate for summary adjudication.

The Court DENIES summary adjudication to the third cause of action for interference with prospective economic advantage.

The Court DENIES Defendants’ Motion for Summary Judgment, or in the Alternative, Summary Adjudication.

A party that requests that a record or portion of a record be filed under seal must file a motion or an application for an order sealing it. The motion must be accompanied by a supporting memorandum and a declaration containing facts sufficient to justify the sealing. (Cal. Rules of Court, rule 2.551(b)(1); Savaglio v Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th 588, 597-601.) All parties that have appeared in the case must be served with a copy of the motion or application. Unless the judge orders otherwise, a party that already possesses copies of the records to be sealed must be served with a complete, unredacted version of all papers as well as a redacted version. (Cal. Rules of Court, rule 2.551(b)(2).)

The moving party must lodge the record with the court in a separate envelope when the motion or application is made, unless good cause exists for not lodging it or it has been lodged previously. (Cal. Rules of Court, rule 2.551(b)(4) and (d).) The lodged record is conditionally under seal pending the judge's determination of the motion or application. (Cal. Rules of Court, rule 2.551(b)(4).)

Pursuant to California Rules of Court, rule 2.550(d), a judge may order that a record be filed under seal only if the judge expressly finds facts that establish all the following:

(1) There exists an overriding interest that overcomes the right of public access to the record.

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed.

(5) No less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, rule 2.550(d).)

In ruling on a motion to seal, the court must weigh the competing interests and concerns. This process necessitates (1) identifying the specific information claimed to be entitled to protection from public disclosure, (2) identifying the nature of the harm threatened by disclosure, and (3) identifying and accounting for countervailing considerations. (H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 894.) Therefore, to prevail on his or her motion, the moving party must present a specific enumeration of the facts sought to be withheld and the specific reasons for withholding them. (Id. at p. 904.)

The California Supreme Court has held that the First Amendment provides “a right of access to ordinary civil trial and proceedings.” (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1212.) The court further noted its belief that “the public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system.” (Id., at 1210.) There is a presumption of openness in civil court proceedings. (Id., at 1217.) This presumption may apply to seemingly private proceedings. (Burkle v. Burkle (2006) 135 Cal. App.4th 1045, 1052 (divorce proceedings).) Therefore, it is up to this Court to determine if that presumption has been overcome.

Courts must find compelling reasons, prejudice absent sealing and the lack of less-restrictive means, before ordering filed documents sealed. (Hurvitz v. Hoefflin (2000) 84 Cal.App.4th 1232, 1246; NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1208-1209 n. 25; Champion v. Superior Court (1988) 201 Cal.App.3d 777, 787.) A compelling reason could include to protect confidential trade secrets, which “have been recognized as a constitutionally protected intangible property interest.” (DVD Copy Control Assn., Inc. v. Bunner (2003) 31 Cal.4th 864, 878, internal citations omitted.)

A proposed sealing must be narrowly tailored to serve the overriding interest, such as by sealing portions of pleadings or redacting text. (In re Marriage of Burkle (2006) 135 Cal.App.4th 1045, 1052, 1070.) An application to seal must be accompanied by a declaration containing facts sufficient to justify sealing. (Cal. Rules of Court, Rule 2.551(b)(1).)

A “contractual obligation not to disclose can constitute an overriding interest” is sufficient to justify sealing the requested documents so long as the moving party establishes that disclosure of the information will result in substantial prejudice. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal. App. 4th 1273, 1283-1284.)

The parties request that many of the items that were previously sealed by the Court be sealed again, this time by motions from both sides of the litigation. Other items are also appropriate to be sealed for the same reasons.

Regarding the items the Parties’ respectively request to be sealed, the Court finds: (1) that there exists an overriding interest that overcomes the right of public access to the record; (2) that the overriding interest supports sealing the record; (3) that a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) that the proposed sealing is narrowly tailored, and (5) that no less restrictive means exist to achieve the overriding interest.