Judge: Thomas S. Mcconville, Case: 2020-01129185, Date: 2023-08-15 Tentative Ruling
Defendants The Scotts Miracle-Gro Company’s, Hawthorne Hydroponics, LLC’s, The Hawthorne Collective, Inc.’s, and The Hawthorne Gardening Company’s Motion For Summary Judgment or, in the Alternative, Summary Adjudication is GRANTED. (See Code Civ. Proc. § 437c.)
A defendant moving for summary judgment or adjudication must show that that there is no triable issue of material fact. CCP § 437c. The defendant can do this by, among other ways, by showing that one or more elements of the plaintiff’s cause of action cannot be established. A motion for summary judgment or adjudication is framed by the pleadings. Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258; County of Los Angeles v. Superior Court (2009) 181 Cal. App. 4th 218, 226 (overruled on other grounds by Leon v. County of Riverside (2023) 14 Cal. 5th 910).
There is no dispute between the parties regarding the elements of the single cause of action (no. 7) being addressed in the motion, intentional interference with contract. “To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove: (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the 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.” Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148.
The Third Amended Complaint (“TAC”) describes different agreements entered between Plaintiff Route Four LLC and other non-moving defendants in 2018. As a result of those agreements, plaintiff alleges that the non-moving defendants agreed to certain non-compete provisions. Plaintiff alleges that defendant Luxx Lighting was not a party to these non-compete provisions, and certain assets of Luxx Lighting were not included within the non-compete agreements. (TAC 3, 25, 27).
Plaintiff alleges that, shortly after these non-compete agreements were entered, non-moving defendants breached certain provisions, including the non-compete provision. (TAC 5-7, 40-44). These breaches became so extreme that since November 2019, the non-moving defendants have ceased all sales of Luxx Lighting products to plaintiff, which resulted in plaintiff being unable to sell Luxx Lighting products to its customers. (TAC 45). Thereafter, plaintiff commenced this action against certain non-moving defendants in 2020. (ROA 2).
According to the TAC and as supported in the Separate Statement (no. 10), following plaintiff’s lawsuit, on or around December 29, 2021 the moving defendants purchased certain assets of non-moving defendants, including assets of Luxx Lighting. (TAC 48). The TAC states that, as a result of this asset purchase by the moving defendants, “Plaintiff was no longer able to sell, distribute and/or supply Luxx Lighting and Athena products.” (TAC 50). Plaintiff added the moving defendants to this action in 2022.
Defendants’ successful argument relates to whether there is evidence to establish they acted “to induce a breach” of plaintiff’s contract(s) with a third party. Moving defendants have presented evidence that by November 2019, plaintiff concedes it was no longer capable of selling Luxx Lighting or Athena products to its customers. (Appendix, Exh. 8, p. 17). And it is moving defendants’ purchase of Luxx Lighting assets that provides the basis for plaintiff’s claims against them. It is undisputed that those assets were not acquired by the moving defendants until December 2021.
As stated in Dryden v. Tri-Valley Growers (1977) 65 Cal. App. 3d 990, 997-998 “in the absence of a showing that respondent’s act was the proximate cause of the injury, appellants failed to allege a valid cause of action based on interference with contractual relations.” In Dryden, the plaintiff had a contract with a party, which the party had terminated. Plaintiff sued that party. Thereafter, the defendant entered into a contract with that same party, prompting plaintiff to sue the defendant. In these circumstances, “the disputed contracts had been abandoned and discontinued by [the party] months prior” to the new contract, so no cause of action can lie.
Plaintiff’s reliance on Jenni Rivera Enterprises, LLC v. Latin World Entertainment (2019) 36 Cal. App. 5th 766 is unavailing. In Jenni, one defendant entered into a non-disclosure agreement (“NDA defendant”) with the plaintiff. Thereafter, the NDA defendant sold certain information covered by the NDA to the production company defendant. Plaintiff notified the production company defendant of the NDA defendant’s breach of the NDA before any information covered by the NDA had been widely disclosed. The production company defendant sought dismissal of plaintiff’s claim under the Anti-SLAPP provisions. In finding that the plaintiff could proceed with the lawsuit, the Jenni court noted that the production company defendant did not dispute that their acts were likely to interfere with the NDA, which would deprive the plaintiff of the value protected by the NDA. Id. at 789.
The fact pattern in Jenni is distinguishable. Here, more than a year after plaintiff confirmed it couldn’t sell Luxx Lighting products, the moving defendants entered into an agreement to purchase the relevant assets. Therefore, the contractual right plaintiff’s seek to vindicate against the moving defendants has lapsed. The holding in Dyrden is persuasive.
The later portion of the Jenni opinion also supports the second basis for moving defendants’ motion: plaintiff cannot establish damages. Moving defendants’ “conduct ‘is not a substantial factor in bringing about harm to another if the harm would have been sustained’ in the absence of the actor’s conduct.” Jenni 36 Cal. App. 5th at 792. “Causation is ordinarily a question of fact that may be decided as a question of law where the undisputed facts permit only one reasonable conclusion.” Id. at 793.
As stated above, it is undisputed that plaintiff made no sales of Luxx Lighting since November 2019. As a matter of law, moving defendants’ conduct cannot be a substantial factor in causing any of plaintiff’s damages.
Moving defendants’ motion is therefore GRANTED.
The following are the court’s rulings on plaintiff’s evidentiary objections:
Declaration of Robert McKinley
1. Overruled
2. Sustained as to references to “entity controlled by Ken Alston”, lack of foundation, overruled as to balance.
3-4 Overruled
6. Sustained, hearsay
7. Overruled
Declaration of Jeffrey David
2, 18-19 Overruled
Declaration of Brandon Burkhart
2-6 Overruled
8-10 Overruled
11. Sustained as to “There is no question that Route Four understood that I would continue to operate both Luxx and Athena after the asset purchase of Hydroponics’” lack of foundation, overruled as to balance.
12-18 Overruled
19. Sustained as to sentences “For example, I would get calls from people telling me that Route Four was trying to overcharge them” hearsay, and “I understand that Jungle Boys eventually stopped doing business with Plaintiff after it repeatedly failed to fulfill orders due to a lack of supply” lack of foundation, overruled as to balance.
20-27 Overruled
29-35 Overruled
36. Sustained, lack of foundation
Declaration of Aries Malone
2-5 Overruled
Declaration of Ivan Van Orthwick
2-3 Overruled
4. Sustained, hearsay
5. Sustained, foundation
6-15 Overruled
Declaration of Ethan Woods
2-6 Overruled
7. Sustained, improper argument
Declaration of Amberlee Rails
5-9 Overruled
Declaration of Robert Watt
2-14 Overruled
The following are the court’s rulings on defendant’s evidentiary objections:
Declaration of Kenneth Alston
2-17 Overruled
18. Sustained as to the phrases that follow the words “by implication”, foundation; overruled as to the balance.
19. Overruled
20-22 Sustained, foundation
23. Sustained as to the first 2 sentences, foundation; overruled as to the balance.
24. Sustained, foundation
25. Sustained as to the first 2 sentences, and last sentence, foundation; overruled as to the balance.
26. Sustained as to the first 2 sentences, and last sentence, foundation; overruled as to the balance.
27. Sustained as to the first 2 sentences, foundation; overruled as to the balance.
28. Sustained as to the first 2 sentences, foundation; overruled as to the balance.
29. Sustained, hearsay
30. Overruled
31. Overruled
32. Sustained, foundation
Declaration of Theodore Spanos
16-20 Sustained as to the argumentative language; overruled as to the balance.
21. Sustained as to the argumentative language and legal conclusions; overruled as to the balance.
The court declines to rule on the request for judicial notice, as it should have been included in the moving papers. The court declines to consider the reply declaration. (See Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-38).
Plaintiff’s request for a continuance is denied. If the opposing party shows by declaration that essential evidence “may exist but cannot, for reasons stated, be presented, the court shall deny the motion” or continue it for a reasonable period, or “make any other order as may be just.” CCP § 437c(h); see Bahl v. Bank of America (2001) 89 Cal.App.4th 389, 395. The required evidentiary showing includes: (i) Facts establishing a likelihood that controverting evidence may exist and why the information sought is essential to opposing the motion; (ii) The specific reasons why such evidence cannot be presented at the present time; (iii) An estimate of the time necessary to obtain such evidence; and (iv) The specific steps or procedures the opposing party intends to utilize to obtain such evidence. CCP § 437c(h); see Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411, 420.
Plaintiff’s supporting evidence fails to establish the specific facts plaintiff expects to obtain, an estimate of the time necessary to obtain the information, and the specific steps or procedures the opposing party intends to utilize to obtain such evidence.
Moving defendants shall give notice.