Judge Randolph M. Hammock, Case Number: 21STCV16955, Date: 2024-12-04 Tentative Ruling

Plaintiff Sky Express World Courier, Inc., alleges Defendant Jae Hung Ryu aka Joseph Ryu, a former Sky employee, has misappropriated Sky’s trade secrets. Ryu with the other Defendants then formed a competing company, Defendant One Road USA, Inc., to utilize the trade secrets.

Lyoo filed a Cross-Complaint against Sky and Hyoungtae Kim for (1) slander per se, (2) violation of Labor Code sections 1050-1054, (3) interference with prospective economic damages, and (4) interference with contractual relationship. Lyoo alleges that Cross-Defendants made slanderous statements about him to his current employer.

Cross-Defendants’ Motion for Judgment on the Pleadings is GRANTED as to the Second, Third, and Fourth Causes of Action. To be given leave to amend, Cross-Complainant must make a sufficient “offer of proof” at the hearing demonstrating a reasonable possibility of successful amendment.

Plaintiff has submitted objections to the Lyoo declaration. This Court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication (CCP § 437c (q)] or a special motion to strike (CCP § 425.16 (b)(2)); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.)

Plaintiff Sky Express and Defendant Lyoo were involved in three separate civil actions against each other. In the first case, 21STCV12715, Jea Hung Lyoo v. Sky Express Workd Courier, Inc., et al., Plaintiff Lyoo asserted various causes of action against Defendant Sky Express, Hyoungtae Kim, and Kyoungjin Cho under the Labor Code. (Lyoo Decl. Exh. A.) On July 28, 2022, Lyoo filed a notice of settlement of entire case. On September 9, 2022, Lyoo moved to enforce the terms of the settlement agreement under CCP § 664.6. On November 30, 2022, Judge Timothy Patrick Dillon granted the motion to enforce the settlement. Judgment was entered in Lyoo’s favor on January 10, 2023.

In the instant case, 21STCV16955, Sky Express World Courier, Inc. v. Jae Jueng Ryu aka Joseph Ryu, et al., Plaintiff Sky Express alleges Ryu misappropriated its trade secrets. And in the third case, 21STCV27914, Salt International Co., LTD. v. Sky Express World Courier, Inc., et al., Salt alleges that Sky Express breached the parties’ oral contract for shipments between China and California.

By this motion, Defendant Lyoo argues that the settlement entered into in the first case requires dismissal of the instant case and third case. While Lyoo concedes the parties “did not enter into a settlement agreement specifically under the case at bar,” he asserts that “they entered into a global settlement agreement and agreed to dismiss any and all cases pending between the parties.” (Mtn. 7: 1-4.)

Settlements are “governed by the legal principles applicable to contracts generally.” (Folsom v. Butte Cnty. Assn. of Government (1982) 32 Cal. 3d 668, 677.) Settlements must be construed to “regulate and settle only such matters and differences as appear clearly to be comprehended in them by the intention of the parties and the necessary consequences thereof, and do not extend to matters which the parties never intended to include therein, although existing at the time.” (Id.)

The court therefore turns to the terms of the Settlement Agreement entered in 21STCV12715. By its terms, the Settlement Agreement was “entered into by JAE HUNG LYOO aka JOSEPH RYU ("Plaintiff'), on the one hand, and Defendants SKY EXPRESS WORLD COURIER, INC., HYOUNGTAE KIM and KYOUNGJIN CHO ("Defendants"), on the other hand.” (Lyoo Decl, Exh. D.) The Settlement notes the existence of the action titled Jae Hung Lyoo aka Joseph Ryu v. Sky Express World Courier, Inc., et al., Case No. 21STCV12715. The Settlement states its purpose “is to settle completely and fully, on an individual basis, any and all disputes by and between Plaintiff and Defendants insofar as they relate to the facts and theories alleged in the Action and any and all matters that may have or conceivably could have been asserted by Plaintiff on an individual basis in connection with the Action.” (Id., Recitals, ¶ A.) (Emphasis added.)

Here, there is no evidence from the plain text of the Settlement that the parties intended it to resolve the second or third case. The Settlement wholly fails to address the second or third actions. Instead, it only contemplates settlement of Lyoo’s “individual claims against Defendants” asserted in 21STCV12715 (the Action’). (Exh. D, Terms and Conditions, ¶ 1.)

In addition, the Settlement applies only to disputes between the parties “insofar as they relate to the facts and theories alleged in the Action [21STCV12715] and any and all matters that may have or conceivably could have been asserted by Plaintiff on an individual basis in connection with the Action.” (Id., Recitals, ¶ A.) Whereas the “facts and theories” in the first action are based mainly on violations of the Labor Code, the facts and theories in the second action are based on Lyoo allegedly misappropriating Sky Express’s “Customer Data.” It is difficult to consider these facts “related.”

The simple fact of the matter is that if the parties intended that the Settlement would resolve the other actions, it would have been easy enough to say so. Because they did not, the court cannot insert that term on its own. It should also be noted that the Settlement Agreement States: “For the purposes of construing this Settlement Agreement, each Party shall be deemed to have participated and cooperated equally in the drafting and preparation of this Settlement Agreement, and therefore, this Settlement Agreement shall not be construed against any Party.” (Exh. D, Terms and Conditions, ¶ 8.) Therefore, because Lyoo participated in the drafting of the Settlement, Lyoo had the opportunity to insist the Settlement clearly designate that it covered all actions between the parties if they had so intended. He did not do so.

Next, Lyoo argues the second and third actions must be dismissed because the Sky parties had to assert their claims in a compulsory Cross-Complaint in the first action. Lyoo asserts the Sky parties “are not allowed to assert against LYOO the related cause of action that was not pleaded in the First Case.” (Mtn. 9: 3-4.)

“Section 426.30 is an affirmative defense that completely disposes of any cause of action to which it applies.” (Chao Fu, Inc. v. Chen (2012) 206 Cal.App.4th 48, 56.) “Failure to ... plead section 426.30 constitutes a waiver of this defense.” (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1153 [“as a statutory bar to splitting a cause of action, section 426.30 must be specially pleaded”].)

Here, it is dispositive that Defendant did not raise the compulsory cross-complaint rule in his answer to the SAC in the instant case. (See 04/15/2024 Answer to SAC.) By not raising the compulsory cross-complaint rule in his answer to the SAC, Defendant waived the defense.

The rules applicable to demurrers also apply to motions for judgment on the pleadings. (County of Orange v. Association of Orange County Deputy Sheriffs (2011) 192 Cal.App.4th 21, 32.) The trial court must accept as true all material facts properly pleaded, but does not consider conclusions of law or fact, opinions, speculation, or allegations contrary to law or facts that are judicially noticed. (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1219-20.) “A motion for judgment on the pleadings may be made at any time either prior to the trial or at the trial itself.” (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.)

First, Cross-Defendants argue the alleged defamatory statements were privileged under Civil Code section 47(c).) The “common interest privilege,” codified at Civil Code section 47(c) provides: “A privileged publication or broadcast is one made: [¶] ... [¶] (c) In a communication without malice, to a person interested therein, (1) by one who is also interested....” Thus, the privilege “extends a conditional privilege against defamatory statements made without malice on subjects of mutual interest.” (Hailstone v. Martinez (2008) 169 Cal. App. 4th 728, 739–40.) “[M]alice cannot be inferred from the communication itself.” (Id., citing Civil Code § 48.) “Moreover, the malice necessary to defeat a qualified privilege is ‘actual malice.’ Such malice is established by a showing that the publication was motivated by hatred or ill will toward the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights.” (Hailstone, supra, 169 Cal. App. 4th at 740.)

Cross-Complainant Lyoo alleges that his former employers, the Cross-Defendants, “made a false representation regarding Cross-complainant by texting a false and untrue statements to Cross-complainant’s current employer. In the text, Cross-defendants stated that they were in the process of filing a criminal complaint against Cross-complainant because it was confirmed that Cross-complainant had received a check from one of the customers under his personal name.” (Cross-Complaint ¶ 13.) Plaintiff alleges that Cross-Defendants “recklessly, and intentionally published in a manner equaling malice and abuse of any alleged conditional privilege (which Cross-complainant denies existed), since the statements, and each of them, were made with hatred, ill will, and an intent to vex, harass, annoy, and injure Cross-complainant in order to justify the illegal and cruel actions of Cross-defendants, and each of them, to cause further damage to Cross-complainant’s professional and personal reputation, and to cause him to be turned down and/or fired from future employment.” (Id. ¶ 16.) On these facts, Plaintiff asserts causes of action for (1) slander per se, (2) violation of Labor Code sections 1050-1054, (3) interference with prospective economic advantage, and (4) interference with contractual relationship.

Here, accepting the allegations as true—and reading them liberally and in context—there exists a factual question as to whether Cross-Defendants made their statements with actual malice. This question cannot be resolved on a demurrer (or, as in this case, a MJOP).

Next, Cross-Defendants argue Cross-Complainant has failed to state facts sufficient under the Labor Code. Labor Code section 1050 provides: “Any person, or agent or officer thereof, who, after having discharged an employee from the service of such person or after an employee has voluntarily left such service, by any misrepresentation prevents or attempts to prevent the former employee from obtaining employment, is guilty of a misdemeanor.” Additionally, anyone “who violates any provision of sections 1050 to 1052, inclusive, is liable to the party aggrieved, in a civil action, for treble damages.” (Labor Code § 1054.)

Here, Plaintiff alleges that Cross-Defendants contacted “the Cross-complainant’s current employer and falsely accused that Cross-complainant had stolen from Cross-defendants by receiving a check from one of the customers under his personal name.” (Cross-Complaint ¶ 23.)

As correctly argued by Cross-Defendants, sections 1050-1054 are inapplicable here because Cross-Complainant alleges that he had already obtained new employment. By its terms, section 1050 only applies where one prevents or attempts to prevent the former employee from obtaining employment.

The elements of a claim for intentional interference with prospective economic relations 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.” ’ [Citations.]” (Marsh v. Anesthesia Servs. Med. Grp., Inc. (2011) 200 Cal. App. 4th 480, 504.)

Unlike interference with contract, which requires a valid contract, interference with prospective economic relations requires only “an economic relationship between the plaintiff and some third party.” (Id.) The tort “is considerably more inclusive than actions based on contract or interference with contract, and thus is not dependent on the existence of a valid contract.” (Korea Supply Co. v. Lockheed Martin Corp., (2003) 29 Cal. 4th 1134, 1157.)

Also unlike interference with contract, interference with prospective relations “requires pleading that the defendant committed an independently wrongful act.” (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal. 5th 1130, 1141.) “The independently wrongful act must be the act of interference itself, but such act must itself be independently wrongful. That is, ‘[a] plaintiff need not allege the interference and a second act independent of the interference. Instead, a plaintiff must plead and prove that the conduct alleged to constitute the interference was independently wrongful, i.e., unlawful for reasons other than that it interfered with a prospective economic advantage. [Citations.]’” (Crown Imports, LLC v. Superior Ct. (2014) 223 Cal. App. 4th 1395, 1404.)

Accordingly, Cross-Defendants’ Motion for Judgment on the Pleadings of the Third Cause of Action is GRANTED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Cross-Complainant must make an “offer of proof” at the hearing to show a reasonable possibility he can allege facts showing an actual disruption of the employment relationship with his current employer. If he cannot, no leave to amend will be given.

“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.” (Pac. Gas & Elec. Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1126.) The defendant's conduct need not be wrongful apart from the interference with the contract. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.)

Here again, Cross-Complainant has not alleged any breach or disruption of his employment contract. He alleges only in conclusory terms that he suffered “general, special, incidental and coincidental damages.” (Cross-Complaint ¶ 34.) This is insufficient to allege an actual breach or disruption of the employment agreement.

Accordingly, Cross-Defendants’ Motion for Judgment on the Pleadings of the Fourth Cause of Action is GRANTED. Cross-Complainant must make an “offer of proof” at the hearing to show a reasonable possibility he can allege facts showing an actual disruption of the employment contract with his current employer. If he cannot, no leave to amend will be given.