Judge Olivia Rosales, Case VC067304 2022-12-13 Tentative Ruling

Judge: Olivia Rosales, Case: VC067304, Date: 2022-12-13 Tentative Ruling

Case Number: VC067304 Hearing Date: December 13, 2022 Dept: SEC

ROSS v. RAMOS, et al.

CASE NO.: VC067304

HEARING: 12/15/22 @ 1:30 PM

TENTATIVE RULING

I. Defendants Stephanie Ramos, Jonathan Sanchez, Jose Ramos, and Raav Corporation’s motion for summary adjudication is DENIED.

II. Defendants Wilson and Nodbeh Enterprises, Inc.’s motion for summary adjudication is DENIED.

Opposing Party to give NOTICE.

The operative Third Amended Complaint (“TAC”) alleges that in February 2016, Plaintiff met with ServPro Representatives regarding the operations of Plaintiff’s ServPro franchise. (TAC, ¶ 16.) Defendants Nodbeh Enterprises, Inc. and Nodbeh employee, Matthew Wilson, steered Plaintiff into a transaction with the Ramos family. (Id., ¶¶ 11-12, 17.) Defendants indicated that Jose Ramos wanted to purchase Plaintiff’s franchise. (Id., ¶ 17.) ServPro further advised Plaintiff not to pursue any other offers or interested buyers because the ServPro Representatives felt that Jose Ramos was his best option largely due to his financial resources, the proximity in location of Jose Ramos's franchise locations to Plaintiff s franchise territory, and the outstanding reputation that Jose Ramos has with the Franchisor. (Id., ¶ 19.)

Following preliminary negotiations of the March 2016 meeting, Plaintiff and the Defendants had agreed that, in consideration for selling Plaintiff s franchise: (1) the Ramos family would pay Plaintiff $ 220,000.00; (2) The Ramos family would pay a $ 10,000.00 transfer fee to the Franchisor; (3) The Ramos family would attempt to collect on Plaintiff s franchise's outstanding receivables to be forwarded to Plaintiff, in the amount of approximately $ 85,000.00; (4) Plaintiff would forward all new service calls to Jose Ramos's Whittier ServPro location and waive the usual referral fee; and (5) that Plaintiff could begin winding-up his business by selling his equipment to third parties, which was valued at approximately $20,000.00, terminating his lease, canceling his insurance, and laying off Plaintiff s staff. (Id., ¶ 27.) In reliance upon defendants’ representations and promises to buy his franchise, plaintiff, fired his staff, transferred his business records, gave over his computer server to the Ramos family, cancelled his insurance, sold off his business equipment when Defendants declined to purchase that equipment, leaving plaintiff unable to continue the business but giving confidential information and all business assets and customer lists to defendants, and each of them. (Id., ¶ 32, 59.) Plaintiff was advised by Matthew Wilson to sign the "Non-Binding Agreement" with Jonathan Sanchez so that Matthew Wilson could underreport financial information to the Franchisor in order to get the Ramos family approved to purchase Plaintiffs franchise territory. Matthew Wilson reassured Plaintiff that the initial agreement made between Plaintiff and the Ramos family would not be affected in any way in light of the "Non-Binding Agreement." (Id., ¶ 37.) On or about August 12, 2016, the Ramos family breached the contract by indicating via letter drafted by the Ramos family's counsel that the Ramos family was no longer interested in the transaction. (Id., ¶ 55.) Based thereon, the TAC asserts causes of action for:

1. Breach of Written Contract

2. Breach of Oral Contract

3. Breach of Contract— Promissory Estoppel

4. Intentional Misrepresentation of Fact

5. Negligent Misrepresentation

6. Promise Made Without Intent to Perform

7. Breach of Covenant of Good Faith and Fair Dealing

8. Conspiracy

9. Breach of Written Contract to Negotiate an Agreement

10. Professional Negligence

11. Intentional Interference with Prospective Economic Relations

12. Negligent Interference with Prospective Economic Relations (Count 1)

13. Negligent Interference with Prospective Economic Relations (Count 2)

I. Ramos, et al.’s MSA

Defendants Stephanie Ramos, Jose Ramos, Jonathan Sanchez and Raav Corporation (collectively, the “Ramos Defendants”) move for summary adjudication of issues pursuant to CCP § 437c.

Objections

Plaintiff’s objections, interposed in Plaintiff’s response to Defendants’ separate statements, are overruled because they do not comply with CRC § 3.1354.

Standard

A defendant moving for summary judgment/adjudication has met its burden of showing a cause of action has no merit if the defendant can show one or more elements of the plaintiff’s cause of action cannot be established. (CCP § 437c(p)(2).)

ISSUES 1-6

Defendants contend that Plaintiff cannot establish punitive damages by clear and convincing evidence, and therefore, the 4^th cause of action for Intentional Misrepresentation, 5^th cause of action for Negligent Misrepresentation, 6^th cause of action for Promises without Intent to Perform, 8^th cause of action for Conspiracy, 11^th cause of action for Intentional Interference with Prospective Economic Relations, and 12^th cause of action for Negligent Interference with Prospective Relations.

Defendants previously sought summary adjudication of the 4^th cause of action for Intentional Misrepresentation, 5^th cause of action for Negligent Misrepresentation, 6^th cause of action for Promises without Intent to Perform, 8^th cause of action for Conspiracy, 11^th cause of action for Intentional Interference with Prospective Economic Relations, and 12^th cause of action for Negligent Interference with Prospective Relations. (See Issues 4-6, 8, 10, and 11 of Defendants’ prior MSA.) This court already ruled that triable issues exist regarding these claims.

Further, Defendants previously submitted a motion for summary adjudication on the very issue of punitive damages. (See Issue 12 of Defendants’ prior MSA.) This court already ruled that triable issues exist as to punitive damages.

At the summary judgment/adjudication stage, a court should grant relief "unless it appears that actual malice [or fraud or oppression] may be proved at trial by clear and convincing evidence." (Basich v. Allstate Insurance Co. (2001) 87 Cal.App.4th 1112, 1119.) This standard applies to "any summary judgment motion involving a claim that must be proved by clear and convincing evidence, including a claim for punitive damages." (Id.) Rather than usurp the jury's role as the ultimate factfinder, courts must evaluate a plaintiffs evidence at the summary adjudication stage "with reference to the clear and convincing evidentiary burden" and "with the clear and convincing evidentiary standard in mind" (Id. at 1119-1120.)

Previously, this court noted under Issue 12 that the Ramos Defendants contended that Plaintiff cannot recover punitive damages because there is no “clear and convincing evidence” that Defendants have been guilty of oppression, fraud, or malice. However, this court ruled that a trier of fact could find that the Ramos Defendants acted with malice. “Defendants encouraged Plaintiff to under-report the purchase price to the franchisor (PSS 3-7), misrepresented their progress on performing their obligations to collect Plaintiff’s receivables and prepare the formal written contract (PSS 13, 14); misrepresented their intentions to honor the contract. On July 26, 2016, Sanchez told Plaintiff that the buyers had no intention of honoring the “true” sale price; the he was changing the deal because the only executed writing was the Non-Binding Term Sheet with the false lower price (PSS 15-19). On July 26, 2016, Sanchez told Plaintiff the buyers were going to pay him less than they had agreed to, and that "We talked to Matt [Wilson]. We're just going to screw you here. That's the way it is." (PSS 16; Leverone Decl., Ex. C, Plaintiff Depo 205:15-208:21.) Later that day, Hallauer, Wilson, and the buyers all understood that the buyers had a desire to purchase the franchise from corporate for much cheaper "after they take it back" from Plaintiff. (PSS 17-19.)”

Now, Defendants are improperly seeking summary adjudication of the same claims that were previously denied, by adding punitive damages to each claim in a piecemeal fashion.

“Although a claim for punitive damages is specifically set forth as an area which may properly be the subject of summary adjudication, in keeping with the purposes of Code of Civil Procedure section 437c, subdivision (f), a grant of summary adjudication in this area must cover the entire claim. The purpose of the enactment of Code of Civil Procedure section 437c, subdivision (f) was to stop the practice of piecemeal adjudication of facts that did not completely dispose of a substantive area.” (Catalano v. Superior Court (2000) 82 Cal. App. 4th 91, 97.)

Here, Defendants’ motion does not completely dispose of a substantive area. As discussed above, summary adjudication was previously denied as to each substantive area. Therefore, the request to determine punitive damages in such a piecemeal fashion is improper pursuant to Catalano v. Superior Court (2000) 82 Cal. App. 4th 91.

Even if properly requested, the court again finds, based on the evidence submitted, that a trier of fact could determine that the Ramos Defendants acted with malice by clear and convincing evidence. “Defendants encouraged Plaintiff to under-report the purchase price to the franchisor (Plaintiff’s Separate Statement (“PSS”) 3-7), misrepresented their progress on performing their obligations to collect Plaintiff’s receivables and prepare the formal written contract (PSS 13, 14); misrepresented their intentions to honor the contract. On July 26, 2016, Sanchez told Plaintiff that the buyers had no intention of honoring the “true” sale price; the he was changing the deal because the only executed writing was the Non-Binding Term Sheet with the false lower price (PSS 15-19). On July 26, 2016, Sanchez told Plaintiff the buyers were going to pay him less than they had agreed to, and that "We talked to Matt [Wilson]. We're just going to screw you here. That's the way it is." (PSS 16; Leverone Decl., Ex. C, Plaintiff Depo 205:15-208:21.) Later that day, Hallauer, Wilson, and the buyers all understood that the buyers had a desire to purchase the franchise from corporate for much cheaper "after they take it back" from Plaintiff. (PSS 17-19.)

Accordingly, summary adjudication of Issues 1-6 is DENIED.

II. Wilson and Nodbeh Enterprises, Inc.’s MSA

Defendants Wilson and Nodbeh Enterprises, Inc. (“Nodbeh”) move for summary adjudication of the issue of punitive damages pursuant to CCP § 437c.

Objections

Plaintiff’s objections, interposed in Plaintiff’s response to Defendants’ separate statements, are overruled because they do not comply with CRC § 3.1354.

Standard

The court finds that triable issues exist regarding whether Wilson/Nodbeh acted with malice by clear and convincing evidence based on Wilson/Nodbeh’s independent intentional misrepresentations as well as Wilson/Nodbeh’s conspiracy to commit fraud based on the Ramos Defendants’ intentional misrepresentations.

Triable issues exist regarding whether Nodbeh/Wilson intentionally misrepresented that the buyers had the financial means to purchase Plaintiff’s franchise license. The franchisor required the buyers to have not only the funds for a 50% down payment, but also for six (6) months of operating expenses. (PSS 4.) Wilson/Nodbeh were obligated under a “Trainer Responsibilities document for “verifying the completeness of: the [Request for Consideration] from prospective buyers, the non-binding term sheet, the acknowledgment of receipt of [Franchise Disclosure Document] and the income statements and balance sheet submitted for preliminary approval.” (PSS 36.) Wilson advised Plaintiff to go along with the buyer’s plan to under-report the purchase price to the franchisor in order to help them get approved. (PSS 3, 6, 7.) Wilson advised Plaintiff that he could count on the contract he had with the buyers. (PSS 10.)

Triable issues also exist regarding whether Wilson/Nodbeh conspired with the Ramos Defendants. The Ramos Defendants wanted to buy Plaintiff’s franchise territory, and Wilson/Nodbeh had Plaintiff on the “kill list” because his under-performing franchise was negatively impacting Nodbeh’s income. (PSS 31-32.) Wilson/Nodbeh set the transaction in motion by soliciting offers for Plaintiff’s business before ever proposing to Plaintiff that he should sell. (PSS 1). Wilson sent various texts to Jose Ramos saying “you DID NOT hear this from me, but [followed by inside information about Plaintiff’s expectations for the price]”, “call me and we will strategize”, and “I want you guys to have it obviously.” (Leverone Decl., Ex. N, text messages between Wilson and Mr. Ramos.) Once the Ramos Defendants expressed interest, Wilson/Nodbeh never advised Plaintiff to list the franchise for sale and consistently told him not to do so. (PSS 42.) Further, Wilson encouraged Plaintiff to go along with the buyers’ plan to under-report the purchase price to the franchisor. (PSS 6.) On July 26, 2016, Sanchez told Plaintiff the buyers were going to pay him less than they had agreed to, and that “We talked to Matt [Wilson]. We’re just going to screw you here. That’s the way it is.” (PSS 16; Leverone Decl., Ex. C, Plaintiff Deposition, 205:15-208:21.) On May 2 2016, Wilson wrote McMains, “You can usually avoid having to do shit for Kevin [of Servpro Industries] if you just get Josh to officially list it for sale with corporate.” (PSS 41). Wilson/Nodbeh never advised Plaintiff to list the franchise for sale with corporate and consistently advised him not to do so. (PSS 42.) Hallauer, Wilson, and the Ramos Defendants all understood that the buyers had a desire to purchase the franchise from corporate for much cheaper “after they take it back” from Plaintiff. (PSS 17-19.)

Based on this conspiracy, a trier of fact could also determine that Wilson/Nodbeh are liable for punitive damages based on the Ramos’s fraud. (See also the Ramos Defendants’ MSA, Issues 1-6.)

Wilson/Nodbeh had Plaintiff on the “kill list” because his under-performing franchise was negatively impacting Nodbeh’s income. (PSS 31-32.) Wilson/Nodbeh solicited offers for Plaintiff’s business before ever proposing to Plaintiff that he should sell. (PSS 1). Wilson sent various texts to Jose Ramos saying “you DID NOT hear this from me, but [followed by inside information about Plaintiff’s expectations for the price]”, “call me and we will strategize”, and “I want you guys to have it obviously.” (Leverone Decl., Ex. N, text messages between Wilson and Mr. Ramos.) The Ramos Defendants encouraged Plaintiff to under-report the purchase price to the franchisor (PSS 3-7), misrepresented their progress on performing their obligations to collect Plaintiff’s receivables and prepare the formal written contract (PSS 13, 14); misrepresented their intentions to honor the contract. On July 26, 2016, Sanchez told Plaintiff that the buyers had no intention of honoring the “true” sale price; the he was changing the deal because the only executed writing was the Non-Binding Term Sheet with the false lower price (PSS 15-19). On July 26, 2016, Sanchez told Plaintiff the buyers were going to pay him less than they had agreed to, and that "We talked to Matt [Wilson]. We're just going to screw you here. That's the way it is." (PSS 16; Leverone Decl., Ex. C, Plaintiff Depo 205:15-208:21.) Later that day, Hallauer, Wilson, and the buyers all understood that the buyers had a desire to purchase the franchise from corporate for much cheaper "after they take it back" from Plaintiff. (PSS 17-19.)

Therefore, based on the conspiracy and fraud, a trier of fact could determine that Wilson and/or Nodbeh acted with malice by clear and convincing evidence.

Accordingly, motion for summary adjudication is DENIED.