Judge Salvatore Sirna, Case 22PSCV00681 2022-12-12 Tentative Ruling

Judge: Salvatore Sirna, Case: 22PSCV00681, Date: 2022-12-12 Tentative Ruling

Case Number: 22PSCV00681 Hearing Date: December 12, 2022 Dept: G

Plaintiff National Commercial Recovery, Inc.’s Ex Parte Application for Right to Attach Order and Order for Issuance of Ex Parte Writ of Attachment and/or Temporary Protective Order

Respondent: Defendant Yucaipa Trading Co., Inc.

TENTATIVE RULING

Plaintiff National Commercial Recovery, Inc.’s Ex Parte Application for Right to Attach Order and Order for Issuance of Ex Parte Writ of Attachment is Treated as an Application for a Right to Attach Order and Issuance of a Writ of Attachment and/or Temporary Protective Order and is DENIED. The Protective Ordered issued by the court on December 1, 2022, is dissolved.

BACKGROUND

This is a breach of contract action. On August 8, 2017, Miravalle Foods, Inc. (Miravalle Foods) entered into an agreement with Defendant Yucapia Trading Co., Inc., doing business as Rio Ranch Market, in which Defendant agreed to purchase $3,000,000 worth of packaged spices from Miravalle Foods. As is customary, Miravalle Foods also advanced slotting fees of 5% to Defendant in the amount of $150,000. Defendant is alleged to have only purchased $548,581.53, leaving a balance to be ordered of $2,451,418.47 and damaging Miravalle Foods in the amount of $735,425. Defendant also did not return the unused slotting fees, leaving Miravalle Foods with further damages in the amount of $122,550 for total damages of $857,975.54. Since Defendant’s alleged breach, Miravalle Foods assigned their right, title, and interest in the claim to Plaintiff National Commercial Recovery, Inc.

On July 6, 2022, Plaintiff filed a complaint against Defendant and Does 1-10, alleging breach of written contract and a common count of money had and received. On July 7, 2022, Plaintiff filed a First Amended Complaint against the same parties alleging the same causes of action.

On July 13, 2022, Plaintiff filed an ex parte application for a right to attach order, order for issuance of a writ of attachment, and temporary protective order. On July 15, the court denied Plaintiff’s application.

On November 29, 2022, Plaintiff filed the present application. On December 1, the court denied Plaintiff’s request as an ex parte application and continued the matter for a formal hearing on December 12. In the interim, the court also granted Plaintiff’s temporary protective order. A case management conference is set for January 9, 2023.

DISCUSSION

Plaintiff moves the court for a right to attach order and issuance of a writ of attachment or temporary protective order with regards to the sale of six liquor licenses owned by Defendant and held in escrow. For the following reasons, the court DENIES Plaintiff’s application.

Attachment is proper where: (1) “[t]he claim is one upon which an attachment may be issued;” (2) “plaintiff has established the probable validity of the claim upon which the attachment is based;” (3) “[t]he attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based;” and (4) “[t]he amount to be secured by the attachment is greater than zero.” (Code Civ. Proc., § 480.090, subd. (a); see also Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 271 (Salinas Nissan) [party pursuing attachment remedy carries burden of establishing grounds justifying attachment, including presenting facts that show probable validity of underlying claim].) The court may issue an attachment on a claim for money arising under contract, so long as the amount claimed by the party seeking attachment is reasonably ascertainable in an amount greater than $500.00. (Code Civ. Proc., § 483.010, subd. (a).)

“Probable validity means that ‘more likely than not’ the plaintiff will obtain a judgment on that claim.” (Santa Clara Waste Water Co. v. Allied World National Assurance Co. (2017) 18 Cal.App.5th 881, 885, citing Code Civ. Proc., § 481.190.) Plaintiff’s application must “be supported by an affidavit or declaration showing that the applicant, on the facts presented, would be entitled to a judgment on the claim upon which the attachment is based.” (Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 944, citing Code Civ. Proc., § 484.030.) The affidavits must set forth facts with particularity and a verified complaint may be utilized in lieu of such affidavits. (Code Civ. Proc., § 482.040.) Furthermore, any documentary evidence must be presented in admissible form. (Id., at p. 944.)

In this case, Plaintiff argues it is entitled to $666,766.17 for Defendant’s breach of contract in failing to make $2,469,504.33 worth of purchases under their agreement. (Martinez Decl., ¶ 15) To establish a claim for breach of contract, a 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 West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) The parties do not dispute the existence of a contract or that Plaintiff failed to perform under the contract. Instead, parties dispute Defendant’s alleged breach of the contract and the amount of damages if any.

Defendant’s Alleged Breach

Plaintiff argues Defendant breached the contract by only making purchases of $530,495.67 when Defendant agreed to purchase a total of $3,000,000 in products. (Martinez Decl., ¶ 15.) The court disagrees.

“When interpreting a contract, courts give effect to the parties’ mutual intentions, first examining the contract's plain language.” (Estate of Jones (2022) 82 Cal.App.5th 948, 952 (Estate of Jones), citing Civ. Code, § 1636.) The court reads contractual provisions “in the context of the whole instrument and circumstances of the case,” giving “effect to all provisions without inserting or omitting text.” (Id., at p. 953.)

In this case, the contract at issue does not specify a deadline for Defendant’s performance of purchasing obligations. If a contract does not specify a time for performance, it must be performed within a reasonable time. (Civ. Code, § 1657; Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30 (Wagner Construction).) “[W]hat constitutes a reasonable time is a question of fact, depending upon the situation of the parties, the nature of the transaction, and the facts of the particular case.” (Wagner Construction, supra, 41 Cal.4th at p. 30, quoting Sawday v. Vista Irr. Dist. (1966) 64 Cal.2d 833, 836.) Here, Plaintiff does not provide any argument or evidence on this issue. Instead, Plaintiff claims Defendant informed Plaintiff it would no longer make purchases under the agreement.

“Anticipatory breach occurs when one of the parties to a bilateral contract repudiates the contract.” (Taylor v. Johnston (1975) 15 Cal.3d 130, 137.) A repudiation is express if it “is a clear, positive, unequivocal refusal to perform” while an implied repudiation “results from conduct where the promisor puts it out of his power to perform so as to make substantial performance of his promise impossible.” (Ibid.)

Here, Plaintiff points to statements by Defendant’s chief executive officer, Rudy Artiles, as proof Defendant intended to repudiate the contract. On June 9, 2022, Plaintiff received a notice from Cardenas Markets LLC (Cardenas Markets) stating Defendant was selling its store locations to Cardenas Markets. (Martinez Decl., ¶ 10.) Plaintiff then reached out to Artiles who confirmed Cardenas Markets’ report, stating Defendant “would only be paying Miravalle Foods, Inc., for any outstanding invoices still due,” and “made it clear that [Defendant] would not be making any further purchases under the terms of the executed Program Agreement.” (Martinez Decl., ¶ 11-12.)

Defendant first contends Plaintiff summarized Artiles’ statements rather than providing the statements verbatim and did not even specify if the statements were oral or in writing. However, even if accepted, Plaintiff’s recital of Artiles’ statements do not establish repudiation. As Defendant notes, the contract does not prohibit Defendant from assigning it to Cardenas Markets or another. Plaintiff’s supporting declaration also states Cardenas Markets contacted Plaintiff via email, stating it already had a distribution center from which to get produce and would not be ordering goods from Plaintiff. (Martinez Decl., ¶ 13.) However, the declaration failed to mention that the same email left open the possible partnership between Cardenas Markets and Plaintiff, stating “we will evaluate to see if there are any synergies to grow a partnership.” (Martinez Decl., Ex. B.)

Thus, Plaintiff’s own evidence does not establish Defendant repudiated the contract at issue. Rather, it demonstrates Defendant merely informed Plaintiff of its sale to Cardenas Markets and plan to not make further purchases itself. However, even if this evidence was sufficient to establish Defendant breached the contract, Plaintiff failed to establish damages.

Plaintiff’s Damages

Plaintiff argues Defendant’s breach of contract damaged Plaintiff by depriving Plaintiff of lost profits in the amount of $666,766.17. The court disagrees.

When a contract is breached, the plaintiff has the right to recover general damages which flow directly from the breach, including lost profits. (Mission Beverage Co. v. Pabst Brewing Co., LLC (2017) 15 Cal.App.5th 686, 710.) “Such damages must ‘be proven to be certain both as to their occurrence and their extent, albeit not with mathematical precision.’” (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 774, quoting Lewis Jorge Construction Management, Inc, v. Pomona Unified School Dist. (2004) 34 Cal.4th 960, 975.) “Lost profits to an established business may be recovered if their extent and occurrence can be ascertained with reasonable certainty,” and “[h]istorical data, such as past business volume, suppl[ies] an acceptable basis for ascertaining lost future profits.” (Berge v. International Harvester Co. (1983) 142 Cal.App.3d 152, 161-162.)

Here, Plaintiff’s chief executive officer stated Plaintiff’s net profits from previous sales of prepackaged spices and peppers under the contract averaged to approximately 27%. (Martinez Decl., ¶ 16.) Plaintiff calculated that Defendant only purchased $530,495.67 worth of wholesale prepacked spices and peppers, leaving $2,469,504.33 worth of orders unplaced. (Martinez Decl., ¶ 15.) Plaintiff then estimates its lost profit as $666,766.17 or 27% of $2,469,504.33. (Martinez Decl., ¶ 16.)

However, the contract between Plaintiff and Defendant does not limit Defendant’s purchases to wholesale prepackaged spices and peppers. Admittedly, the preamble of the contract states the contract is “for the purpose of setting forth the terms and conditions for the wholesale purchase by Buyer from Seller of prepackaged spices and peppers for resale to the general public by Buyer.” (Martinez Decl., Ex. A.) On the other hand in Part 1(a) of the contract, Plaintiff agrees to supply “other food products” in addition to prepackaged spices and peppers. (Martinez Decl., Ex. A.) A majority of the contract’s terms deal with prepackaged spices and peppers including offering “free fill” for packages at certain price points (Martinez Decl., Ex. A., Part 1(e)), allowing rebates for packaged spices and peppers (Martinez Decl., Ex. A., Part 1(b)), and promising credits for any prepackaged spices or peppers that are damaged (Martinez Decl., Ex. A., Part 2(b)).

But as noted above, the court interprets contracts holistically. (See Estate of Jones, supra, 82 Cal.App.5th at p. 953.) To interpret the contract as only applying to prepackaged spices and peppers improperly ignores the language in Part 1(a) where Plaintiff promises to supply “other food products.” (Martinez Decl., Ex. A.) Also, in Part 1(b) where Plaintiff provides a 10% rebate to Defendant, the provision states it applies to packaged spices and peppers but not to ‘Value Pack,’ ‘Bulk Foods’, and ‘Complimentary Line,’ and ‘Promotional Ad Items.”’ (Martinez Decl., Ex. A.) The promise to provide credits for damaged merchandise is also limited to prepackaged spices and peppers with the term “prepackaged” being bolded and italicized. (Martinez Decl., Ex. A., Part 2(b).) The specific language excluding nonpackaged peppers and spice products from the 10% rebate offer and damaged merchandise credits requires the court to conclude that the contract is inclusive of all sales made by Plaintiff to Defendant, including other food products.

Here, in addition to making $530,495.67 in rebate sales to Defendant, Plaintiff also sold $996,841.60 in bulk product, $843,413.74 of its complimentary line, and $263,331.34 of promotional ad items for total sales of $2,634,082.35. (Martinez Decl., Ex. C.) In addition to only counting prepackaged spice and pepper purchases towards Defendant’s fulfillment of the agreement, Plaintiff only provides an estimate of lost profits for those sales. As a result, the court is unable to calculate Plaintiff’s lost profits with any degree of reasonable certainty. Thus, Plaintiff cannot establish the probable validity of Plaintiff’s claims as required in Plaintiff’s application for a right to attach order and writ of attachment.

Accordingly, Plaintiff’s application is DENIED.

CONCLUSION

Based on the foregoing, the court DENIES Plaintiff’s application for a right to attach order and writ of attachment or temporary protective order. The Protective Order issued by the court on December 1, 2022, is dissolved.