Judge: Walter P. Schwarm, Case: 30-2020-01168117, Date: 2022-07-26 Tentative Ruling

Defendants’ (Cos Automotive, Inc. and Manheim Investments, Inc.) Motion for Summary Judgment (Motion), filed on 5-12-22 under ROA No. 87, is GRANTED.  (The Notice of this Motion (Notice) was filed on 5-12-22 under ROA No. 91.)

Code of Civil Procedure section 437c, subdivision (p)(2) provides, “A defendant . . . has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action.  Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” 

Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, (Aguilar), states, “Second, and generally, the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. Although not expressly, the 1992 and 1993 amendments impliedly provide in this regard for a burden of production as opposed to a burden of persuasion. A burden of production entails only the presentation of ‘evidence.’ (Evid. Code, § 110.) A burden of persuasion, however, entails the ‘establish[ment]’ through such evidence of a ‘requisite degree of belief.’ (Id., § 115.) It would make little, if any, sense to allow for the shifting of a burden of persuasion. For if the moving party carries a burden of persuasion, the opposing party can do nothing other than concede. Further, although not expressly, the 1992 and 1993 amendments impliedly provide for a burden of production to make a prima facie showing.  A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]”  (Italics in Aguilar; Footnotes 13 and 14 omitted.)

Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 838 (Binder) states, “Although summary judgment might no longer be considered a ‘disfavored’ procedure, [citation], the rule continues that the moving party's evidence must be strictly construed, while the opposing party's evidence must be liberally construed.” “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. [Citation.]” (Id., at p. 839.)

Cole v. Town of Los Gatos (2012) 205 Cal.App.4th 749, 756-757, provides, “The plaintiff can defeat a defense motion for summary judgment by showing either that the defense evidence itself permits conflicting inferences as to the existence of the specified fact, or by presenting additional evidence of its existence. [Citation.] The dispositive question in all cases is whether the evidence before the court, viewed as a whole, permits only a finding favorable to the defendant with respect to one or more necessary elements of the plaintiff's claims—that is, whether it negates an element of the claim ‘as a matter of law.’ [Citation.]”

On 10-26-21, the court SUSTAINED Defendants’ Demurrer to the first, second, third, and fourth causes of action contained in Plaintiff’s (High Bid Trading Company, Inc.) First Amended Complaint (FAC) filed on 4-26-21 under ROA No. 22. (10-26-21 Minute Order.)  The fifth cause of action (Breach of Oral Contract) is the only cause of action remaining in the FAC.  The Motion seeks summary judgment as to the fifth cause of action. (Notice; 2:3-3:2.)

Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98, “To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff's performance or excuse for nonperformance, (3) the defendant's breach, and (4) resulting damages to the plaintiff. [Citations.]”  Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453 (Stockton), states, “The elements of a breach of oral contract claim are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages. [Citations.]”

The FAC pleads: (1)  “. . . Approximately eight to ten years ago, Plaintiff entered into an oral agreement with Defendants, wherein Plaintiff was granted authorization to sell these vehicles at Defendants auction houses, in exchange for Defendants agreeing to pay Plaintiff approximately $150.00 per vehicle sold.” (FAC, ¶ 57.); (2) “The oral agreement further provided that Defendants would tender payment to Plaintiff at the end of each month, the sum total of fess for the vehicles sold that month.  Plaintiff received anywhere from $100,000 to $150,000 per month in fees from Defendants.” (FAC, ¶ 58.); and (3) “In addition, the oral agreement provided that Plaintiff would be given a lane at the auction houses, for its own exclusive use, because of the reputation it earned over its many years in the industry.” (FAC, ¶ 59.)

The Motion states, “High Bid’s breach of oral contract claim fails at the outset because, as a matter of written contract, High Bid and Manheim agreed either could cease the relationship at any time. High Bid accepted Manheim’s Terms and Conditions, which expressly stipulated that neither party was obligated to continue working with the other.” (Motion; 11:14-17 (Italics in Motion.).)  Plaintiff’s Opposition to Defendants Cox Automotive, Inc. and Manheim Investments, Inc.’s Motion for Summary Judgment (Opposition), filed on 7-12-22 under ROA No. 125, states, “An oral agreement was reached whereby Manheim would pay Plaintiff the broker fee and provide it with its own dedicated auction lane, in exchange for Plaintiff maintaining a 70% or higher sale rate at auction.” (Opposition; 2:18-21.)  The Opposition asserts“. . . it is Plaintiff’s contention that the Terms and Conditions are separate and apart from the oral agreement it had with Manheim and that even if the Terms and Conditions ‘agreement’ is taken into consideration, the oral agreement served to modify the terms of the written agreement, especially when the actions of the parties are taken into account.”   (Opposition; 7:15-19.)  As to breach, the Opposition states, “Not only do the facts establish that an oral agreement existed, but the facts evidence Manheim breached the agreement when it banned Plaintiff from the auction.” (Opposition; 9:21-22.)

Defendants present the following evidence as to the relevant terms of the written agreement (Terms and Conditions) between the parties: (1) “. . . By attending any of Manheim’s private auctions or using any of Manheim’s services, whether at a Manheim location or online, you agree, for yourself, your dealership, your company, and your representatives (collectively, “you”) to abide by the following terms and conditions, as amended from time to time by Manheim.” (Tai Decl., ¶¶ 15, 18, and Exhibit D.); (2) “1. Manheim: These terms and conditions govern your use of and access to the automobile auctions, websites, mobile sites, online tools, and other service delivery channels made available by Manheim Remarketing, Inc and its various subsidiaries and affiliates, including the various Manheim auto auctions, Cox Automotive, Inc, and others (collectively, ‘Manheim,’ ‘we,’ ‘our,’ or ‘us’) These terms and conditions are in addition to, and not in lieu of, any more specific agreements you may have or make with Manheim (eg, sales invoices, consignment agreements, online visitor agreements, privacy policies, loan agreements, etc) To the extent there is any conflict between these terms and conditions and other more specific agreements you have signed with Manheim, those other more specific agreements will control. . . .” (Tai Decl., ¶¶ 15, 18, and Exhibit D.); (3) “3. Fairness and Courtesy: You agree to behave in a fair, ethical, courteous, and civil manner in your interactions with us, our personnel, and our other customers while participating in any Manheim auction, when accessing our online and mobile sites, or when otherwise using any of Manheim’s services. . . .”  (Tai Decl., ¶¶ 15, 18, and Exhibit D.); and (4) “16. No Right to Do Business: You have no obligation to do business with us. Likewise, you agree and acknowledge that we have no obligation to do business with you. We are affiliated private businesses; we reserve the right to cease doing business with you or anyone else, at any time, for any reason or no reason, in our sole discretion, collectively or separately among out affiliates; and you shall have no right, remedy, or cause of action for same. You acknowledge and agree that there are numerous sources, other than Manheim, for you to acquire and sell used motor vehicles and related services.” (Tai Decl., ¶¶ 15, 18, and Exhibit D.)  Although Plaintiff asserts it had a separate agreement with Defendants, Plaintiff does not dispute that it was subject to these Terms and Conditions. (Plaintiff’s Separate Statement (PSS) filed on 7-12-22 under ROA No. 119); PSS Nos. 8-15.)

First, Defendants state, “There is no evidence that Manheim and High Bid mutually consented to an agreement that guaranteed High Bid an indefinite right to sell used cars through Manheim’s auction.” (Motion; 13:18-19.)  Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 (Weddington), explains, “ ‘The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.’ [Citation.] Outward manifestations thus govern the finding of mutual consent required by Civil Code sections 1550, 1565 and 1580 for contract formation. [Citation.] The parties' outward manifestations must show that the parties all agreed ‘upon the same thing in the same sense.’ (Civ. Code, § 1580.) If there is no evidence establishing a manifestation of assent to the ‘same thing’ by both parties, then there is no mutual consent to contract and no contract formation. (Civ. Code, §§ 1550, 1565 & 1580.)”

Defendant have carried their initial burden of demonstrating that they did not consent to the oral contract with Plaintiff. (PSS Nos. 27; Wemhoff Decl., ¶ 6.)  Plaintiff’s evidence, however, creates a triable issue of material fact as to whether Defendant consented to the oral contract.  The declaration from Mr. Ashrafi states: (1) “An oral agreement was reached, whereby Plaintiff was given a dedicated lane and for every vehicle sold through Plaintiff’s lane, it was paid the agreed upon fee by Manheim and in exchange, Plaintiff would ensure that it bring a high volume of vehicles to the auction and sell on average at least 70% or more of those vehicles each week.” (Ashrafi Decl., ¶ 3.); (2) “. . . Plaintiff was assured that as long as it continued to hit the goals set by Manheim, Manheim would continue to grant Plaintiff its own lane and Plaintiff did in fact continue to have its own dedicated lane. . . .” (Ashrafi Decl., ¶ 3.) “. . . Also, whenever the subject of Plaintiff’s continued use of the lane was brought up, Manheim’s managers would ensure Plaintiff that as long as its sales were 70% or greater, the lane would always be Plaintiff’s. . . .” (Ashrafi Decl., ¶ 8.)

Mr. Ashrafi testified he was “guaranteed a permanent position in that lane” as long as he “could do 70 percent or more and bring 70 percent high sale ratio. . . .” (Wegner Decl., ¶ 2 and Exhibit E (Ashrafi Depo., 93:20-94:1.).)  Mr. Ashrafi also testified, “. . . Nobody was stuck.  We were doing business together.” (Wegner Decl., ¶ 2 and Exhibit E (Ashrafi Depo., 96:4-8.).) 

The declaration from Steve Shaangelyan, Defendant—Manheim Investments, Inc.’s former Dealer Services Manager, states, “It was my understanding that it was Manheim’s policy that as long as Plaintiff maintained his high volume of sales, in conjunction with continuing to attract buyers and maintaining its reputation as a reputable seller, Plaintiff would always be guaranteed its own lane at the auction.”  (Shaangelyan Decl., ¶¶ 1,2, and 5.)

The declaration from Richard Steffy, Defendant—Manheim Investments, Inc.’s former Assistant General Manager, states, “. . . Manheim “made it clear that as long as Plaintiff continued outperforming the other sellers and maintained its consistent high performance, it would always have a lane at the auction.” (Steffy Decl., ¶¶ 1, 2, and 7.)

This evidence is sufficient to create a triable issue of material fact as to whether Defendants consented to the oral contract that was a more specific agreement separate and apart from the Terms and Conditions.

As to breach, Defendant has carried its initial burden of demonstrating it did not breach the contract based on the paragraphs 1 and 16 of the Terms and Conditions. 

Plaintiff, however, has not provided evidence that Defendants consented doing business with Plaintiff indefinitely as long as Plaintiff met the sales threshold.  When asked when he considered himself “. . . stuck doing business with Manheim no matter what?”, Mr. Ashrafi testified, “. . . Nobody was stuck.  We were doing business together.” (Wegner Decl., ¶ 2 and Exhibit E (Ashrafi Depo., 96:4-8.).)  Without evidence that Defendant consented to do business with Plaintiff indefinitely as part of the oral agreement, the oral agreement does not conflict with the Terms and Conditions.  Since the oral agreement does not conflict with the Terms and Conditions, paragraph 16 of the Terms and Conditions allowed Defendants to cease business with Plaintiff in their sole discretion.

The court OVERRULES Plaintiff’s Evidentiary Objections filed on 7-12-22 under ROA No. 131.

The court SUSTAINS Objection No. 6 to the declaration of Steve Shaangelyan contained in Defendants’ Evidentiary Objections filed on 7-21-22 under ROA No. 133.  The court OVERRULES the remaining objections.

Since there is no triable issue of material fact as to breach, the court GRANTS Defendants’ (Cos Automotive, Inc. and Manheim Investments, Inc.) Motion for Summary Judgment filed on 5-12-22 under ROA No. 87.

Defendant is to give notice.