Judge Peter A. Hernandez, Case Number: 23PSCV00962, Date: 2023-11-17 Tentative Ruling

Plaintiff Moore Sweeping’s Motion for Summary Adjudication is DENIED in full.

Plaintiff and Defendant Guy F. Atkinson Construction, LLC (“Atkinson”) entered into a contract dated July 19, 2019 (“Contract”), whereby Plaintiff was to perform street sweeping services for Atkinson on State Route 60 pavement rehabilitation project in Los Angeles County (the “Project”). The Contract was subject to the Federal Disadvantaged Business Enterprise (“DBE”) program requirements and the State of California Department of Transportation’s “(CalTrans”) Disadvantaged Business Enterprise Policy. Plaintiff began work on the Project on December 29, 2019. At the outset, Atkinson did not request more than one DBE street sweeper for the Project. Plaintiff then became aware that Atkinson was using another company, Century Sweeping, Inc. (“Century”), for street sweeping on the Project in violation of the Contract terms. Plaintiff also became aware that Atkinson had engaged in two separate DBE violations: the illegal replacement of a DBE subcontractor and prompt payment violations. CalTrans investigated Atkinson’s alleged violations and, in or about April 2020, found that Atkinson had indeed committed same. Atkinson terminated the Contract without notice and without a justifiable reason immediately following the investigation, on the basis that Plaintiff had not obtained the required special shift letter from Atkinson’s union, the International Union of Operating Engineers, Local 12 (“Union”), to begin work at the time it was instructed to by Atkinson. Plaintiff was the only subcontractor out of several that had this special shift letter requirement. Atkinson and Union were complicit in preventing this letter from being obtained by Plaintiff. At the time of termination of the Contract, there remained outstanding to Plaintiff $759,739.23 left on the Contract price. Plaintiff filed a complaint with CalTrans regarding Atkinson’s termination of the Contract and filed a Stop Notice, but CalTrans found that Atkinson had good cause to replace Plaintiff.

On April 20, 2023, Plaintiff filed a “Amended Verified Complaint,” asserting causes of action against Atkinson, Union, Joseph Pacheco (“Pacheco”) and Does 1-10 for:

On November 16, 2023, the court related Case Nos. 22PSCV01040 and 23PSCV00962; Case No. 22PSCV01040 was designated as the lead case.

The Final Status Conference is set for September 24, 2024. Trial is set for October 8, 2024.

In July 2019, Plaintiff was hired as a subcontractor by Atkinson to perform street sweeping services for Atkinson on the Project. Pursuant to its subcontract with Atkinson, Plaintiff was required to hire only Union employees to work on the Project and to enter into a contract with the Union to procure the employees needed to perform Plaintiff’s contracted-for work on the Project. Plaintiff and the Union then entered into a Short-Form Collective Bargaining Agreement (“CBA”) which was subject to the terms of a Master Labor Agreement (“MLA”) incorporated therein.

In October 2019, Plaintiff contacted the Union to procure operators to perform work on the Project and was put in contact with business representative Pacheco. Pacheco made discriminatory requests of Plaintiff, asking for documents that were not required for Plaintiff to perform its work on the Project which delayed Plaintiff’s start time on the Project. Pacheco required only Plaintiff to obtain a bona fide special shift letter, intimidated one of Plaintiff’s employees into filing a baseless grievance, failed to follow grievance resolution procedures and stopped Plaintiff’s work on the Project. Perry Hawkins (“Hawkins”) was the district representative and/or treasurer for the Union and Pacheco’s superior and assisted Pacheco’s violations. Carl Mendenhall (“Mendenhall”) was the treasurer for the Union and assisted Pacheco’s violations.

On November 16, 2023, the court related Case Nos. 22PSCV01040 and 23PSCV00962; Case No. 22PSCV01040 was designated as the lead case.

On December 21, 2023, Plaintiff filed its Second Amended Verified Complaint (“SAC”), asserting causes of action against Union, Pacheco, Hawkins, Mendenhall (collectively, “Defendants”) and Does 1-10 for:

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. Atlantic 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 a judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119 [emphasis theirs].)

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one of more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).)

“On a motion for summary judgment[/adjudication], 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 plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) “Once the plaintiff or cross-complainant has met that burden, the burden shift to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).)

Plaintiff moves the court for an order granting summary adjudication in its favor and against Defendants on the following causes of action and affirmative defenses:

Issue No. 4: Fourth cause of action for Intentional Interference with Contractual Relations.

Issue No. 5: Fifth cause of action for Intentional Interference with Prospective Economic Advantage.

Plaintiff’s Request for Judicial Notice (“RJN”) is granted. “A court may properly take judicial notice of its own records. (Evid. Code, § 452, subd. (e).)” (Garcia v. Sterling (1985) 176 Cal.App.3d 17, 21.)

The court declines to rule on Defendants’ evidentiary objections, pursuant to Code of Civil Procedure § 437c, subdivision (q) (i.e., “[i]n granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion”).

On December 21, 2023, Plaintiff filed its SAC against Defendants for Breach of Contract, Unfair Business Practices (Bus. & Prof. C. §17200, Et Seq.), Fraud/Intentional Misrepresentation, Intentional Interference with Contractual Relations, Intentional Interference with Prospective Economic Advantage and Conspiracy to Commit Fraud. Plaintiff alleged therein as follows: In July 2019, Plaintiff was hired as a subcontractor by Atkinson to perform street sweeping services for Atkinson on the Project, which was owned by CalTrans. (SAC, ¶ 9). Per the subcontract, Plaintiff was required to hire only Union employees to work on the Project and to enter into a contract with the Union to obtain the employees needed to perform Plaintiff’s work on the Project. (Id., ¶ 10). Plaintiff and the Union entered into a CBA which stated that it was subject to, and incorporated all, terms of an MLA. (Id., Exh. 1) Plaintiff contacted the Union in approximately October 2019 to obtain operators to perform work on the Project and was put in contact with Pacheco, the business manager for the Union. (Id., ¶ 11). Pacheco made discriminatory requests of Plaintiff asking for documents that were not required for Plaintiff to perform its work on the Project, which delayed Plaintiff’s start time on the Project by two months. (Id.) After Plaintiff was allowed to begin work on the Project on December 30, 2019, Plaintiff was told it was required by the Union to submit a shift letter with start and end times of the regular established shift for Plaintiff’s employees. (Id., ¶ 12). Plaintiff submitted a shift letter with a start time of 10 pm and an end time of 6 am. (Id.) The Union accepted this letter and was required, per the terms of the CBA and MLA, to dispatch a qualified operator to the jobsite. (Id.) The Union-dispatched operator who arrived at the Project jobsite gave Plaintiff an Introduction Slip, which contained the start time and the rate of pay required by the Union for which all employees of Plaintiff were paid. (Id.)

The first operator sent by the Union was unqualified, so Plaintiff contacted the Union and requested another operator. (Id., ¶ 13). Although the Union stated that another operator would be dispatched, the Union sent the same operator that Plaintiff had just terminated. (Id.) The original operator and Pacheco knew each other which led Plaintiff to believe, in light of Pacheco’s earlier discriminatory comments and requirements of Plaintiff at the start of the Project, that there was collusion between them to sabotage Plaintiff’s work on the Project. (Id.) Plaintiff was required to alter its requirements for a sweeper operator in order to obtain its own operator. (Id., ¶ 14.) Arthur Martinez, a Union member, started working for Plaintiff on the Project on or about January 7, 2020, but he was continually harassed by Pacheco. (Id., ¶ 14.)

On or about January 15, 2020, Pacheco and the Union contacted Plaintiff and requested that it provide a bona fide special shift letter from Atkinson for the start times presented on the original shift letter. (Id., ¶ 15). Plaintiff advised the Union that this would cause problems with Atkinson, but the Union insisted that Plaintiff’s and Atkinson’s start times must match, even though the CBA and MLA were silent on this issue. (Id.) Martinez handed over his paystubs after being harassed by Pacheco. (Id., ¶ 16). Pacheco claimed Plaintiff was not properly paying Martinez and essentially forced Martinez into filing a grievance against Plaintiff. (Id.) Plaintiff asked the Union and Pacheco to put whatever alleged violation was being committed or why a bona fide special shift letter was required in writing, but they refused. (Id., ¶ 17). Plaintiff continued to pay Martinez the only rate stipulated in writing from the Union as shown on his Introduction Slip. (Id.) Martinez’s grievance was submitted by the Union and dated April 6, 2020. (Id., ¶ 18). Plaintiff never received notice of any meetings regarding or a hearing on the grievance with the Labor Management Adjustment Board as required by the MLA. (Id.) Pacheco never intended to follow the grievance procedure in the MLA because he knew the grievance was fraudulent; instead, on April 20, 2020 Pacheco showed up to the Project jobsite during a night shift with other Union members and ordered Martinez off the sweeper and to park it and lock the doors, arguing that Plaintiff was in violation of Union regulations and was being “shut down.” (Id., ¶ 19). Atkinson employees informed Plaintiff’s CEO/owner Moore that same night that Plaintiff was being targeted for discrimination, because Plaintiff was the only subcontractor on the Project out of several that the Union required to have this bona fide shift letter. (Id., ¶ 20).

The MLA states that the work of a contractor on the Project cannot be stopped under any circumstances, whether or not a union grievance is filed. (Id., ¶ 21, Exh. 3.) The Union and Pacheco violated the terms of the CBA by stopping Plaintiff’s work on the Project. (Id., ¶ 22). Pacheco’s superior and the Union’s District Representative and/or Treasurer, Hawkins, was aware of Pacheco’s contract violations committed by Pacheco and assisted in same by telling Moore that he was required to have the same shift as Atkinson and by giving Pacheco permission to physically shut Plaintiff’s work down at the Project. (Id., ¶¶ 4 and 23). Hawkins told Moore’s attorney at that time that Moore was “not going back out” to the Project without the bona fide special shift letter. (Id., ¶ 23) Moore spoke with Union Treasurer Carl Mendenhall (“Mendenhall”) twice for assistance. (Id., ¶¶ 5 and 23) Mendenhall was aware of all of Pacheco’s actions and Pacheco told Moore that Mendenhall approved all of his actions. (Id.) Mendenhall told Moore that Moore needed to get a shift letter from Caltrans when he knew Moore did not. and told Moore that Pacheco was entitled to go out to the Project site and shut Moore down. (Id.)

On April 23, 2020, Atkinson provided Plaintiff with a bona fide special shift letter. (Id., ¶ 24). The Union, though, subsequently told Plaintiff that the letter had to come from CalTrans, (Id.) On April 30, 2020, Moore notified CalTrans and Atkinson that he had been stopped from working and he believed he was being discriminated against, and asked for a bona fide special shift letter from CalTrans. (Id., ¶ 25). Moore spoke with the Resident Engineer of CalTrans, Sepand Minovi, who told him that CalTrans headquarters would not give him permission to write this letter. Minovi also said that the shift start time is decided by the Prime Contractor, not CalTrans. (Id.) Plaintiff became aware that Atkinson was using another company, Century Sweeping, Inc. (“Century”), for street sweeping on the Project and was not required by the Union to have a bona fide special shift letter. (Id., ¶ 26). When Moore asked Pacheco why Century did not have this requirement, Pacheco responded by saying “it’s none of your business!” (Id.)

The Subcontract was subject to DBE program requirements and Caltrans' Disadvantaged Business Enterprise Policy. (Id., ¶ 27). Plaintiff became aware that Atkinson had engaged in two separate DBE violations. (Id.) CalTrans investigated and found, in or about April 2021, that Atkinson had committed two DBE violations alleged and mentioned the Union four times in its review indicating that CalTrans believes the Union played a part in interfering with Plaintiff’s Subcontract. (Id.). Atkinson thereafter terminated the Subcontract while there remained outstanding to Plaintiff a significant amount of money left on the Subcontract price. (Id., ¶ 28).

CalTrans conducted an audit on Plaintiff’s payroll and found no MLA violations. (Id., ¶ 29). The Union never provided anything in writing regarding the bona fide special shift letter because it knew such a requirement was false. (Id., ¶ 35). Also, while the Union claims that the grievance filed by Martinez was settled, the Union has no evidence to support this claim and Plaintiff was never involved in any of the required grievance procedures set forth in the MLA. (Id., ¶ 36). The grievance was also untimely filed. (Id., ¶ 43).

The prayer of Plaintiff’s SAC, in relevant part, seeks compensatory damages “in an amount according to proof against all defendants” as to the First and Third-Sixth causes of action, restitutionary damages “in an amount according to proof, as well as injunctive relief” as to the Second cause of action and punitive damages against defendants pursuant to the Third-Sixth causes of action.

On January 12, 2023, Defendants filed their answer to the SAC, asserting “No Punitive or Exemplary Damages” as their eighth affirmative defense (i.e., reading “Plaintiff is not entitled to recover punitive or exemplary damages from each Defendant herein because no such Defendant at any time engaged in discriminatory practices or actions intentionally, with malice, and/or with reckless disregard for Plaintiff’s or others’ rights”).

Plaintiff has alleged that the Union breached the CBA and MLA by stopping Plaintiff’s work in violation of Article III of the MLA and by failing to follow the required procedures for a grievance set forth in Article V of the MLA. (SAC, ¶¶ 40, 43 and 50).

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Plaintiff’s request for summary adjudication of this cause of action is summarily denied, on the basis that Plaintiff has failed to meet its initial burden. At a minimum, Plaintiff has failed to provide any evidence in support of the element of damages in its moving papers, stating only that it “was substantially harmed by defendants’ actions.” (Motion, 7:26)[1]. While Plaintiff’s CEO Moore attests that “[w]ithout defendants’ actions as set forth in the SAC and this Motion, my company would have been permitted to continue to work on the Project and would have earned millions in revenue” (Moore Decl., ¶ 23]), he fails to provide the court with any documentary evidence substantiating this statement, nor does he make any attempt to provide a specific monetary figure with respect to the revenue he claims Plaintiff would have earned.

Second Cause of Action (i.e., Unfair Business Practices (Bus. & Prof. C. §17200, Et Seq.))

Plaintiff has alleged that Defendants violated the unfair competition law by intentionally breaching the terms of the CBA and MLA, filing a false grievance “through intimidation and scare tactics,” removing Plaintiff’s operator from the job, by failing to follow the grievance procedures set forth in the MLA, and by discriminating against Plaintiff by requiring compliance with purported shift letters and by asking Plaintiff to supply documents unrelated to its performance of work on the Project. (SAC, ¶ 54).

“Business and Professions Code section 17200…establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent.” (Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647.) Section 17204 provides a private right of action “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Further, “[i]njunctive relief and restitution are the only remedies available under the UCL.” (Esparza v. Safeway, Inc. (2019) 36 Cal.App.5th 42, 53.)

Again, Plaintiff’s request for summary adjudication of this cause of action is summarily denied, on the basis that Plaintiff has failed to meet its initial burden. Plaintiff has failed to provide any evidence in support of the element of damages in its moving papers, instead generically stating only that it “has suffered injury and lost money as a result of defendants’ unfair and unlawful business practices.” (Motion, 8:6-7). Moore fails to provide the court with any documentary evidence substantiating his statement made in ¶ 23 of his declaration, nor does he make any attempt to provide a specific monetary figure with respect to the revenue he claims Plaintiff would have earned. At any rate, “compensation for expected but unearned future income to which the plaintiff has no legal entitlement is not recoverable as restitution under the UCL, regardless whether it is characterized as lost market share. Lost profits are damages, not restitution, and are unavailable in a private action under the UCL.” (Lee v. Luxottica Retail North America, Inc. (2021) 65 Cal.App.5th 793, 797.)

Plaintiff has alleged that in February 2020, Pacheco, Mendenhall and Hawkins, all representing the Union, indicated to Plaintiff that it was required to have a bona fide special shift letter to begin work, which was false and known by them to be false when they represented same. (SAC, ¶ 62). Plaintiff has also alleged that in April 2020 defendants represented to Plaintiffs that Martinez had filed a grievance against Plaintiff for allegedly failing to pay the correct applicable wages to him under the CMA and MLA, which was false and known by them to be false when they represented same as Martinez was coerced into signing the grievance. (Id.).

Fourth Cause of Action (i.e., Intentional Interference with Contractual Relations)

Plaintiff has alleged that plaintiff and Atkinson entered into a subcontract dated July 19, 2019 for the Project, that Defendants knew of the subcontract, that Defendants intentionally made Plaintiff’s performance of the subcontract more difficult by only requiring Plaintiff to provide a bona fide shift letter, knowing that Plaintiff would not be able to provide same and that the subcontract would be disrupted, and that the Union and Pacheco requested of Plaintiff information that was not standard industry practice, evidencing their discriminatory attitude towards Plaintiff. (SAC, ¶¶ 71-73). Plaintiff has alleged that Defendants also intended to disrupt performance of the subcontract, or the that was certain or substantially certain to occur, when they filed the false grievance, failed to follow grievance resolution procedures and stopped Plaintiff’s work on the Project. (Id., ¶ 74).

“The elements which a plaintiff must plead to state the cause of action for 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's 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.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.)

Fifth Cause of Action (i.e., Intentional Interference with Prospective Economic Advantage)

Plaintiff has alleged that at the time the Union had the subcontract terminated, Plaintiff and Atkinson were in an economic relationship that would have resulted in an economic benefit to Plaintiff under the Subcontract, that Plaintiff and Atkinson had also been in discussions for Plaintiff to perform all street sweeping needs for Atkinson in Southern California, that Plaintiff intended to open a shop in Southern California and build on its reputation to obtain further work from other contractors as well, that none of that was possible once defendants’ actions caused the Subcontract to be terminated, that Defendants knew of that business relationship between Plaintiff and Atkinson and engaged in the actions regarding the grievance and termination of the Subcontract with the intent to interfere with Plaintiff and Atkinson’s business relationship or with the knowledge such disruption was certain/substantially certain to occur and that the relationship was disrupted. (SAC, ¶¶ 80-84).

“The five elements 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 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.” (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn. 6.)

Plaintiff’s request for summary adjudication of this cause of action is summarily denied, on the basis that Plaintiff has failed to meet its initial burden. Plaintiff has failed to provide evidence in support of the element of damages in its moving papers, instead stating only that it “was harmed by this disruption of its relationship with Atkinson to the tune of over a million dollars on the Project and untold millions more in future work with Atkinson in Southern California.” (Motion, 14:7-9). Moore attests that “[by interfering with my subcontract with Atkinson on the Project, defendants caused me to lose millions in revenue from the Project that went to Century Sweeping” and that “at the time of the Union’s stoppage of my work on the Project, Atkinson and I were in discussions for my company to perform all street sweeping needs for Atkinson in Southern California that would have resulted in millions of dollars in revenue for my company,” (Moore Decl., ¶ 19; see also ¶ 23, supra]), Moore fails to provide the court with any documentary evidence substantiating this statement, nor does he make any attempt to quantify the “millions” Plaintiff purportedly lost.

Punitive damages may be awarded “[i]n an action for the breach of an obligation not arising from contract, where it proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” (Civ. Code § 3294.)

Plaintiff asserts that there are no triable issues of fact as to whether Defendants’ actions were done with malice, intentional oppression or fraud because Defendants required only Plaintiff to have a bona fide special shift letter, filed a false grievance against Plaintiff which was late, failed to follow proper grievance procedures and allow Plaintiff to participate and intentionally and under threat of force stopped Plaintiff from working on the Project. (Motion, 15:1-27).

However, Defendants have submitted evidence that the governing Master Labor Agreement (“MLA”) is one between the Union and the Southern California Contractors Association, Inc. (“SCCA”), rather than the MLA between the Union and the Associated General Contractors of California, Inc. (“AGC”), which Plaintiff attached as Exhibit 3 to the SAC; that the Short Form CBA that incorporates the SCCA MLA excepts certain SCCA MLA provisions from incorporation, such as SCCA MLA grievance procedures and provisions on strikes or work stoppages, that only the Short Form CBA applies to Defendants’ handling of member grievances arising from the SCCA MLA and that Article XIX of the SCCA MLA “Working Rules” required the bona fide special shift letter. (Hawkins Decl., ¶¶ 11-20, Exh. B; Pacheco Decl., ¶¶ 12-20). Again, Plaintiff in reply now concedes that it attached the incorrect MLA and that the SCCA MLA is, in fact, the correct MLA.

Plaintiff’s request for summary adjudication of Defendants’ eighth affirmative defense is denied.

[1] Defendants contend, in opposition, that Plaintiff failed to attach the correct MLA and that Article III of the Short Form CBA expressly excluded the SCCA MLA provisions on grievance procedures and work stoppages from incorporation [see below]. Plaintiff, in reply, agrees that the wrong MLA was attached to the SAC. (Reply, 2:2-12 [“Plaintiff first wishes to address the attaching of the incorrect Master Labor Agreement (‘MLA’) to its complaint and motion, which was done inadvertently and through no fault of Plaintiff. Plaintiff was given the MLA with the Southern California Contractors Association by Joe Pacheco in a small booklet form, not in electronic format, which was impossible to attach to its Second Amended Complaint (‘SAC’) in this action. (Reply Declaration of Richard Moore, ‘Moore Dec.’, ¶2.) Plaintiff could have obtained the correct electronic version of the MLA from defendants in discovery in this case, but as defendants have attached it to their opposition it is now in evidence. Along with the Short-form Collective Bargaining Agreement (‘CBA’) that Plaintiff previously attached to its SAC and motion, and which defendants also attach to their opposition, these two documents establish the existence of the contract between the parties that defendants claim in their opposition Plaintiff has not established”] [emphasis added].) It is unclear to the court why the instant motion has not been withdrawn.