Mark Yi v. Circle K Stores, Inc.

Filing 48

ORDER re: Defendant's Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment 30 by Judge Ronald S.W. Lew. Based on the foregoing, the Court GRANTS Defendant's Motion for Summary Judgment as to the entire Complaint 30 . The Clerk shall close this action. SEE ORDER FOR COMPLETE DETAILS. (jre)

Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 MARK YI, an individual, as ) successor in interest to OE ) 13 SUN YI, ) ) 14 ) Plaintiff, ) 15 ) v. ) 16 ) ) 17 CIRCLE K STORES, INC., ) ) 18 ) Defendant. ) 19 ) ) 20 ) 21 CV 16-2171-RSWL-AJWx ORDER re: Defendant’s Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment [30] Currently before the Court is Defendant Circle K 22 Stores Inc.’s (“Defendant”) Motion for Summary Judgment 23 or, in the Alternative, Partial Summary Judgment 24 (“Motion” or “Motion for Summary Judgment”). Having 25 reviewed all papers submitted pertaining to this 26 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the 27 Court GRANTS Defendant’s Motion [30]. 28 /// 1 1 I. BACKGROUND 2 A. Factual Background 3 Plaintiff operates a gas station in Los Angeles 4 (“the Station”). Compl. ¶¶ 1, 4, ECF No. 1-1. His 5 mother, the late Mrs. Oe Sun Yi (“Mrs. Yi”), previously 6 operated the Station as a franchisee to ExxonMobil 7 Corp., Inc. (“Exxon”). Id. at ¶¶ 6, 18. Elizabeth Yi 8 is Plaintiff’s sister and Mrs. Yi’s daughter, and she 9 is a non-party to the action. Decl. of Anthony D. 10 Phillips (“Phillips Decl.”) Ex. A, at 15:20-23. 11 Defendant owns and operates gas stations and 12 convenience stores. See Compl. ¶ 2; Decl. of Timothy 13 S. Tourek (“Tourek Decl.”) ¶ 3. 14 Until 2011, Mrs. Yi was the franchisee and Exxon 15 was her franchisor. 16 at 18:16-21. Id. at ¶ 6; Phillips Decl. Ex. B, In June 2011, Exxon and Defendant agreed 17 that Defendant would purchase Exxon’s property and 18 contractual interest in approximately 400 Mobil-branded 19 retail fuel stations in Southern California, including 20 Mrs. Yi’s Station. Tourek Decl. ¶ 4. Pursuant to 21 California Business & Professions Code § 20999.25(a), 22 before Exxon sold the Station to Defendant, Mrs. Yi had 23 a legal right to a bona fide offer from Exxon to 24 purchase the Station. 25 Id. On October 20, 2011, Exxon sent Mrs. Yi the “Terms 26 and Conditions of Bona Fide Offer of Sale” for the 27 Station. Phillips Decl. Ex. D, at 4. Exxon offered to 28 sell Mrs. Yi the Station for $2,611,000. 2 Id. 1 Defendant had sent Mrs. Yi a letter, dated October 7, 2 2011, entitled “Assignment Offer” (“Assignment Offer”), 3 requesting that she assign Defendant her right to 4 receive a bona fide offer from Exxon. 5 Ex. E, at 131. Phillips Decl. In exchange for assignment of Mrs. Yi’s 6 right to the bona fide offer, Defendant would be 7 “willing to sit down . . . and negotiate a mutually 8 agreeable sale of the [Station] . . . after [Defendant] 9 closes its purchase of the [S]tation from [Exxon].” 10 Id. Before executing the Assignment Offer, Plaintiff 11 called Timothy Tourek—the West Coast Vice President of 12 Operations at Defendant’s indirect parent 13 company—asking where Mrs. Yi should fax the Assignment 14 Offer. Phillips Decl. Ex. B, at 62:3-63:3, 47:25- 15 48:15. Mrs. Yi signed and Plaintiff faxed the 16 Assignment Offer on her behalf by the due date. Id. at 17 44:13-14, 65:5-20. 18 In Fall 2013, a Hopkins Appraisal Report for 19 Defendant appraised the Station at $3.6 million. 20 Tourek Decl. Ex. 1. On September 18, 2013, Plaintiff 21 emailed Defendant that he and Mrs. Yi would accept the 22 Assignment Offer and planned “to exercise our option of 23 negotiating a mutually agreeable sale of the 24 [Station].” Phillips Decl. Ex. J. On February 22, 25 2012, Defendant took title to the Station that it had 26 agreed to buy from Exxon in June 2011. Tourek Decl. ¶ 27 8. 28 In early 2014, Defendant performed a divestment 3 1 analysis to determine whether it would be beneficial to 2 divest itself of several gas stations, including Mrs. 3 Yi’s Station, or whether it should enter sale-leaseback 4 transactions for those sites. Tourek Decl. ¶ 12. 5 Between February and July 2014, Defendant used a broker 6 to gather purchase offer prices from third parties for 7 the relevant gas Stations. Id. The third-party offer 8 for Plaintiff and Mrs. Yi’s Station was $3.6 million. 9 Id. 10 Plaintiff emailed Defendant on March 5, 2014, 11 stating that he would seek to move forward with the 12 sale “for the asking price.” 13 2. Phillips Decl. Ex. K, at On March 18, 2014, Mrs. Yi and Defendant executed a 14 Contract of Sale and Station Lease (“Contract of Sale 15 and Lease”), formalizing their franchisor-franchisee 16 relationship. Tourek Decl. Ex. 2. That same day, Mrs. 17 Yi executed a “Successor in Interest Designation” form 18 (“Successor in Interest Form”), designating Plaintiff 19 as primary successor in interest and Elizabeth Yi as 20 alternate successor in interest pursuant to the terms 21 in the Contract of Sale and Lease. Phillips Decl. Ex. 22 I. 23 On May 29, 2014, Defendant sent Mrs. Yi a Non- 24 Binding Letter of Intent inviting her to make an offer 25 to purchase the Station, stating that it would consider 26 the “highest and best offer.” Phillips Decl. Ex. M. 27 Plaintiff offered to purchase the Station from 28 Defendant for $2.6 million in a Letter of Intent dated 4 1 June 29, 2014. Decl. of Mark Yi (“Yi Decl.”) Ex. 6. 2 On October 1, 2014, Defendant counter-offered to sell 3 the Station for $3.6 million. Phillips Decl. Ex. N. 4 Plaintiff did not counter back. 5 Mrs. Yi died intestate on November 11, 2015. 6 Phillips Decl. Ex. B, at 20:7-9. On December 22, 2015, 7 Plaintiff emailed Defendant stating that he “would like 8 to execute the survivorship” for the Station. 9 182:24-183:11. Id. at On March 18, 2016, Defendant sent 10 Plaintiff agreements that would assign him the 11 franchise agreements as Mrs. Yi’s successor in interest 12 (“Assignment Agreements”). 13 192:23-24; Ex. P. 14 Phillips Decl. Ex. B, at Plaintiff never executed them. Id. Plaintiff continues to operate the Station and pays 15 higher rent in light of the $3.6 million appraisal. 16 Tourek Decl. ¶ 17. Upset that Defendant did not sell 17 him or Mrs. Yi the Station at Exxon’s bona fide offer 18 price or at the equivalent of October 2011 fair market 19 value, Plaintiff filed the instant action. 20 B. Procedural Background 21 Plaintiff filed his Complaint on March 7, 2016 in 22 the Los Angeles Superior Court [1-1]. Defendant 23 removed the action to federal court on March 31, 2016 24 [1]. The Complaint asserted the following causes of 25 action: (1) breach of contract; (2) breach of the 26 covenant of good faith and fair dealing; (3) fraud; (4) 27 unfair competition in violation of California Business 28 & Professions Code § 17200 et seq.; (5) violation of 5 1 California Business & Professions Code § 21140.6. 2 On April 6, 2017, Defendant filed a Motion for 3 Summary Judgment as to the entire Complaint or, in the 4 alternative, Partial Summary Judgment as to Plaintiff’s 5 requests for expectation damages and specific 6 performance of certain claims. Def.’s Ntc. of Mot. for 7 Summ. J. 1:23-36, 3:5-16, ECF No. 30. Plaintiff filed 8 its Opposition on April 26, 2017 [32], and Defendant 9 filed its Reply on May 2, 2017 [36]. 10 II. FINDINGS OF FACT 11 1. On or about October 20, 2011, Exxon sent Mrs. Yi a 12 letter, “Terms and Conditions of Bona Fide Offer” 13 which offered to sell Mrs. Yi the Station for 14 $2,611,000. Phillips Decl. Ex. D; Pl.’s Facts ¶ 11. 15 2. On or about October 7, 2011, Defendant sent Mrs. Yi 16 a letter titled “Assignment Offer.” 17 Ex. E; Def.’s Stmt. of Undisputed Facts (“SUF”) ¶ 18 11; Pl.’s Stmt. of Genuine Disputes of Material 19 Fact (“Pl.’s Facts”) ¶ 12. 20 3. The letter included the following provisions: “With 21 this letter we are requesting that you assign to 22 [Defendant] your rights to receive a bona fide 23 offer (or a right of first refusal) from [Exxon].” 24 Phillips Decl. Ex. E; Def.’s SUF ¶ 12(a); Pl.’s 25 Facts ¶ 12(a). 26 4. The letter also included this provision: “We are 27 wiling to sit down with you and negotiate a 28 mutually agreeable sale of the [Station] to you 6 Phillips Decl. 1 after [Defendant] closes its purchase of the 2 [Station] from [Exxon]. 3 Def.’s SUF ¶ 12(d); Pl.’s Facts ¶ 12(d). 4 5. The Assignment Offer does not set forth or refer to 5 any timeframe respecting the negotiation of a 6 mutually agreeable sale of the Station.” 7 Decl. Ex. E; Def.’s SUF ¶ 15; Pl.’s Facts ¶ 15. 8 6. Other than the Assignment Offer itself, Defendant 9 made no other representations, either written or Phillips Decl. Ex. E; Phillips 10 oral, to Mrs. Yi or Plaintiff respecting the 11 Assignment Offer terms prior to its execution. 12 Philips Decl. Ex. B, at 47:25-48:19; Def.’s SUF ¶ 13 17; Pl.’s Facts ¶ 17. 14 7. The sole communication between Plaintiff and Circle 15 K prior to executing the Assignment Offer was a 16 telephone call to Timothy Tourek in which Plaintiff 17 inquired as to where he should fax the executed 18 Assignment Offer. 19 63:3; Def.’s SUF ¶ 18; Pl.’s Facts ¶ 18. 20 8. Mr. Yi followed up with a September 18, 2013 email 21 expressing an interest in purchasing the Station. 22 Phillips Decl. Ex. J; Def.’s SUF ¶ 30; Pl.’s Facts 23 ¶ 30. 24 Phillips Decl. Ex. B, at 62:3- III. DISCUSSION 25 A. Legal Standard 26 Federal Rule of Civil Procedure 56 states that a 27 “court shall grant summary judgment” when the movant 28 “shows that there is no genuine dispute as to any 7 1 material fact and the movant is entitled to judgment as 2 a matter of law.” Fed. R. Civ. P. 56(a). A fact is 3 “material” for purposes of summary judgment if it might 4 affect the outcome of the suit, and a “genuine issue” 5 exists if the evidence is such that a reasonable fact 6 finder could return a verdict for the non-moving party. 7 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 8 (1986). The evidence, and any inferences based on 9 underlying facts, must be viewed in the light most 10 favorable to the opposing party. Twentieth Century-Fox 11 Film Corp. v. MCA, Inc., 715 F.2d 1327, 1329 (9th Cir. 12 1983). 13 Under Rule 56, the party moving for summary 14 judgment has the initial burden to show “no genuine 15 dispute as to any material fact.” Fed. R. Civ. P. 16 56(a); see Nissan Fire & Marine Ins. Co. v. Fritz Cos., 17 210 F.3d 1099, 1102-03 (9th Cir. 2000). The burden 18 then shifts to the non-moving party to produce 19 admissible evidence showing a triable issue of fact. 20 Nissan Fire & Marine Ins., 210 F.3d at 1102-03; see 21 Fed. R. Civ. P. 56(a). Summary judgment “is 22 appropriate when the plaintiff fails to make a showing 23 sufficient to establish the existence of an element 24 essential to [their] case, and on which [they] will 25 bear the burden of proof at trial.” Cleveland v. 26 Policy Mgmt. Sys. Corp., 526 U.S. 795, 805–06 (1999); 27 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 28 The standard “provides that the mere existence of some 8 1 alleged factual dispute between the parties will not 2 defeat an otherwise properly supported motion for 3 summary judgment; the requirement is that there be no 4 genuine issues of material fact.” Anderson, 477 U.S. 5 at 247-48. 6 B. Discussion 7 Defendant asks the Court to grant summary judgment 8 as to all five claims in the Complaint.1 9 1. 10 11 Motion for Summary Judgment a. Plaintiff’s Capacity to Sue As a preliminary matter, the Court considers 12 whether Plaintiff has capacity to sue on behalf of his 13 deceased mother, Mrs. Yi. See Def.’s Mot. for Summ. J. 14 (“Mot.”) 20:16-17. 15 For an individual acting in a representative 16 17 18 19 20 21 22 23 24 1 Plaintiff also seeks judicial notice of Mr. Tourek’s Declaration in Light Petroleum Inc. et al. v. Exxon Mobil Oil Corp. et al., Case No. 12-CV-04689-PA. Pl’s Req. for Judicial Ntc. (“Pl.’s RJN”) ¶ 1, ECF No. 33. Plaintiff also seeks judicial notice of the Declaration of Donald J. Salamack in the same case. Id. at ¶ 2. At the time of his declaration, Mr. Salamack was Manager, Global Projects for Exxon Mobil Corporation Fields, Lubricants & Specialties Marketing Company, an unincorporated division of Exxon. The Court GRANTS Plaintiff’s Request for Judicial Notice [33] and takes judicial notice of the Salamack and Tourek Declarations for their existence, but does not accept as true the facts or allegations alleged in these documents. Peel v. Brooks Am. Mortg. Corp., 788 F. Supp. 2d 1149, 1158 (C.D. Cal. 2011). 25 26 27 28 Defendant makes several evidentiary objections [36-4] to the Mark Yi Declaration in support of the Opposition [32-2]. Upon review of the objected-to evidence and Defendant’s bases for its objections, Defendant’s evidentiary objections are OVERRULED [364] either because the objections are without merit or because the Court does not rely on the objected-to evidence. 9 1 capacity, capacity to sue is governed by the law of the 2 individual’s domicile. Fed R. Civ. P. 17(b)(1). 3 Because Plaintiff is domiciled in California, compl. ¶ 4 1, California law governs. Pursuant to California Code 5 of Civil Procedure § 337.30, a decedent’s personal 6 representative or if none, successor in interest, may 7 commence an action on the decedent’s behalf. Section 8 337.32 further provides that the successor in interest 9 file an affidavit or declaration that includes 10 information establishing their right to proceed on 11 behalf of the decedent. 12 Defendant avers that Plaintiff, as Mrs. Yi’s 13 successor in interest, lacks capacity to sue because he 14 did not file the requisite affidavit. 15 Mot. 22:11-12.2 Although Plaintiff did not vigorously comply with 16 section 337.32, the facts at hand create at least a 17 genuine dispute as to whether Plaintiff is a successor 18 in interest with capacity to sue. On November 18, 19 2015, Plaintiff advised Defendant that Mrs. Yi died on 20 November 11, 2015.3 Decl. of Troy M. Mueller (“Mueller 21 22 23 24 25 26 27 28 2 Defendant also argues that Elizabeth Yi, Plaintiff’s sister, is an indispensable party pursuant to Federal Rule of Civil Procedure 19 who “potentially shares an equal right in the estate of her mother.” Mot. 22:15-16. Defendant offers no caselaw or compelling analysis as to why the Court should deem her an indispensable party, and thus the Court does not delve into this issue. 3 The Court notes that this at least partially complies with two requirements in section 337.32, that the successor in interest file a declaration stating (1) the decedent’s name and (2) the date of the decedent’s death. 10 1 Decl.”) Ex. C, at 574. Subsequently, Defendant 2 initiated work on Plaintiff’s survivor documents to 3 take over the Station. Id. at 573. On December 22, 4 2015, Plaintiff expressed its interest in “execut[ing] 5 the survivorship” for the Station. 6 O. Phillips Decl. Ex. While Plaintiff failed to execute the “Assignment 7 Agreements” which would have assigned his mother’s 8 franchise rights to him, Phillips Decl. Ex. B, at 9 192:23-24, Defendant continued to treat Plaintiff as 10 the successor in interest, accepting rent from him, 11 training him, and sending him the Assignment 12 Agreements. 13 See Yi. Decl. ¶¶ 24, 25. Strict adherence with a section 337.32 declaration 14 is not required under Federal Rule of Civil Procedure 15 17(b). Bowoto v. Chevron Corp., No. C 99-02506 SI, 16 2006 WL 2455761, at *13 (N.D. Cal. Aug. 22, 2006). 17 While section 337.32 offers a procedural formality to 18 establish a party is a successor in interest, it does 19 not explicitly define who qualifies as a successor in 20 interest. Id. Rather, California Civil Code § 377.11 21 defines a successor in interest as “the beneficiary of 22 the decedent’s estate or other successor in interest 23 who succeeds to a cause of action . . . .” Considering 24 Plaintiff’s efforts to keep Defendant abreast of Mrs. 25 Yi’s death, his attempts to exercise his survivorship 26 rights, and Defendant’s continued treatment of him as a 27 successor in interest, at the very least, a genuine 28 dispute of material fact exists as to whether Plaintiff 11 1 has succeeded to Mrs. Yi’s causes of action. Thus, the 2 Court does not grant summary judgment on this ground. 3 4 b. Breach of Contract Defendant requests summary judgment as to the 5 breach of contract claim, as there is no genuine 6 dispute of material fact whether Defendant breached the 7 agreement to negotiate on the Station sale price. Ntc. 8 of Mot. for Summ. J. 2:9-11. 9 The elements for a breach of contract claim are: 10 (1) a contract exists; (2) plaintiff’s performance or 11 excuse for nonperformance; (3) defendant’s breach; and 12 (4) resulting damages to plaintiff. Durell v. Sharp 13 Healthcare, 183 Cal. App. 4th 1350, 1367 (Ct. App. 14 2010). 15 The parties disagree as to the meaning of certain 16 Assignment Offer language. The parties dispute whether 17 Defendant breached the agreement to “negotiate a 18 mutually agreeable sale” by offering the Station to 19 Plaintiff for $3.6 million rather than matching Exxon’s 20 $2.6 million bona fide offer, and whether Defendant 21 negotiated with Plaintiff after it “close[d] its 22 purchase of the [Station]” from Exxon. 23 Contract interpretation is a question of law for 24 the trial court. Parsons v. Bristol Dev. Co., 62 Cal. 25 2d 861, 865 (1965). California law allows a contract 26 to be interpreted in a way that “give[s] effect to the 27 mutual intention of the parties as it existed at the 28 time of contracting.” Cal. Civ. Code § 1636. 12 The 1 parties’ objective intent, demonstrated by the contract 2 words and the contract as a whole, rather than the 3 parties’ subjective intent, controls interpretation. 4 Titan Grp., Inc., v. Sonoma Valley Cnty. Sanitation 5 Dist., 164 Cal. App. 3d 1122, 1127 (Ct. App. 1985). 6 If the parties disagree about the contractual 7 meaning, the court should use a two-step approach. 8 First, the court asks whether, as a matter of law, the 9 contract terms are ambiguous; that is, the court 10 considers extrinsic evidence to determine whether the 11 contract is reasonably susceptible to a party’s 12 proffered interpretation. See Wolf v. Superior Court, 13 114 Cal. App. 4th 1343, 1351 (Ct. App. 2004). Second, 14 if ambiguity persists, the court admits extrinsic or 15 parol evidence to help interpret the contract. 16 Id. Defendant contends that the contract terms are 17 unambiguous and even if they were ambiguous, the 18 extrinsic evidence does not support Plaintiff’s 19 interpretation that Defendant should have matched 20 Exxon’s $2.6 million bona fide offer. 21 21. Mot. 9:5-6, 20- Plaintiff counters that the language “mutually 22 agreeable” and “after [Defendant] closes its purchase 23 of the [Station] from [Exxon]” are ambiguous and 24 require interpretation. Opp’n 11:20, 12:14. The Court 25 discusses each of the terms Plaintiff disputes in turn. 26 27 i. “Mutually Agreeable Sale” The language “mutually agreeable sale” is not 28 ambiguous from its plain meaning. 13 “Mutually agreeable” 1 should be given its ordinary and popular meaning, Cal. 2 Civ. Code § 1644; that is, that the parties acceded to 3 an equally beneficial, fair price. 4 Ambiguity does not arise merely because a word or 5 phrase has multiple meanings, and “ambiguity cannot be 6 based on a strained instead of reasonable 7 interpretation of the contract’s terms.” Univ. Green 8 Sol., LLC v. VII Pac Shores Inv., LLC, Case No. 9 C–12–5613–RMW, 2014 WL 1994880, at *2 (N.D. Cal. May 10 15, 2014)(internal citations and quotation marks 11 omitted). Here, Plaintiff imputes a strained, 12 unreasonable interpretation of “mutually agreeable” and 13 seizes upon its broad, general language in order to 14 advance his unsupported belief that Defendant would 15 make an offer at $2.6 million or less. Yi Decl. ¶ 8. 16 Plaintiff concedes that “mutually agreeable sale” 17 ordinarily means that both parties should agree, but 18 asks the Court to depart from this common understanding 19 and interpret “mutually agreeable” with reference to 20 Exxon’s offer because Plaintiff assigned its existing 21 bona fide offer from Exxon. Opp’n 12:3-8. In essence, 22 Plaintiff interchanges “mutually agreeable” with his 23 own subjective interpretation of the contract. Ross 24 Grp. Constr. Corp. v. Riggs Contracting, Inc., No. 25 12–CV–0246–CVE–FHM, 2012 WL 5511644, at *3 (N.D. Okla. 26 Nov. 14, 2012)(agreement to create a “mutually 27 agreeable” construction schedule did not lend itself to 28 one party’s understanding that he could revise the 14 1 schedule without the other’s agreement). But the sum 2 total of the language “mutual,” “negotiate,” and 3 “agreeable” belies Plaintiff’s unilateral 4 interpretation that Exxon’s $2.6 million offer was the 5 ceiling below which the parties had to negotiate. 6 The remainder of the written Assignment Offer does 7 not support Plaintiff’s interpretation. First, the 8 actual words of the Assignment Offer make no mention of 9 the $2.6 million Exxon offer price, nor do they 10 incorporate it by reference. See Phillips Decl. Ex. E. 11 Although the contract need not explicitly state it 12 incorporates another document, “reference to the 13 incorporated document must be clear and unequivocal. 14 The reference must be called to the attention of the 15 other party, who must consent to it . . . .” Cal. 16 Civ. Practice Business Litig. § 24:11 (2017). The 17 Assignment Offer stated that Defendant understood “that 18 [Exxon] would be providing you with the terms of a 19 bonafide offer in the near future.” 20 E. Phillips Decl. Ex. But this does not mean that Defendant consented to 21 Exxon’s specific price as the point of reference for 22 “mutually agreeable sale.” Plaintiff even admits that 23 the Assignment Offer lacked any language that 24 Defendant’s offer would be $2.6 million and that 25 “mutually agreeable” was not interchangeable with 26 Exxon’s offer price. Phillips Decl. Ex. F 120:13-22; 27 cf. Bulloch Cellular, Inc. v. Alltel Commc’ns, LLC, No. 28 1:09-CV-2186-RWS, 2009 WL 10664938, at *3 (N.D. Ga. 15 1 Dec. 23, 2009)(contract language required any partner 2 to assign its ownership by making an offer to other 3 partners through written notice, at the same price and 4 on the same terms as the bona fide offer). Here, 5 unlike Bulloch, the contract language does not 6 explicitly require the consideration in exchange for 7 assignment of the Exxon bona fide offer to match the 8 Exxon bona fide offer price. 9 Finally, even the extrinsic evidence, including the 10 parties’ course of conduct and actions, does not render 11 Plaintiff’s interpretation sufficiently reasonable. 12 Plaintiff admittedly did not follow up with Mr. Tourek 13 to discuss the offer and price terms before signing the 14 Assignment Offer. 15 48:19. See Phillips Decl. Ex. B, at 47:25- The parties do not dispute that Plaintiff only 16 asked whether he could fax the Assignment Offer, 17 Phillips Decl. Ex. B, at 108:24-109:3, 62:3-63:3; Pl.’s 18 Facts ¶ 18. And the parties do not dispute that 19 Defendant never made any promises, oral or otherwise 20 regarding the Assignment Offer terms prior to signing. 21 Id. at 47:25-48:19; Pl.’s Facts ¶ 17. 22 Moreover, Defendant’s internal emails also do not 23 show it was reasonable to presume that “mutually 24 agreeable” meant a Station price of $2.6 million or 25 less, or an amount approximating fair market value in 26 /// 27 /// 28 /// 16 1 2011, as Plaintiff later testified in his deposition.4 2 Indeed, Defendant informed Plaintiff that “mutually 3 agreeable sale” would encapsulate a more flexible 4 purchase price based on market changes and appraisal 5 variations. Mueller Decl. Ex. C, at 269 (“[I]nform 6 [Plaintiff] the $3.6M new value is his price if he 7 wants to purchase the site from us, as opposed to the 8 initial [bona fide offer] in 2011 at $2.611M.”) And an 9 internal email where one of Defendant’s agents said, in 10 response to the appraisal, “Ouch! $3.6M,” is too 11 circumstantial to compel the conclusion that Defendant 12 understood $2.6 million was the offer price maximum. 13 At bottom, the extrinsic evidence suggests that 14 Plaintiff was allowed to make an offer and negotiate, 15 but could not expect that the parties would agree to 16 lock in a price comparable to fair market value in 17 2011. Because the negotiation time window was open- 18 ended, it was not reasonable that $2.6 million was the 19 hard ceiling for the Station’s purchase price. See 20 Mueller Decl. Ex. C, at 633. 21 /// 22 23 24 25 26 27 28 4 During his deposition, Plaintiff offered a new theory of contract interpretation: that the Assignment Offer gave him a right to purchase the Station at fair market value in 2011. Phillips Decl. Ex. B, at 114:-21-25. This slightly new understanding is still unsupported by the Assignment Offer terms and the parties’ conduct. Moreover, the Court is unconvinced that the change in Plaintiff’s contract interpretation theory is sufficient to create a genuine dispute of material fact. See Nelson v. The City of Davis, 571 F.3d 924, 927 (9th Cir. 2009). 17 1 2 ii. “After Defendant Closes its Purchase” Plaintiff also argues ambiguity exists in the 3 clause “after [Defendant] closes its purchase of the 4 [Station] from [Exxon].” Phillips Decl. Ex. E. 5 Plaintiff argues that because Defendant would negotiate 6 a mutually agreeable sale with Plaintiff after it 7 closed its purchase of the Station from Exxon, this 8 implies that Defendant would commence negotiations 9 after its purchase and had a duty to inform Plaintiff 10 when negotiations would start. 11 Opp’n 12:19-25. This phrase is not ambiguous. Plaintiff reads an 12 unreasonable requirement into the contract language not 13 borne out of the record. Plaintiff admitted that he 14 suspected around January 2012 that Defendant closed its 15 purchase of Exxon because he started paying rent to 16 Defendant. Phillips Decl. Ex. B, at 107:8-108:2. But 17 even if he had not been on notice that the sale had 18 closed, the Assignment Offer contains no duty that 19 Defendant had to inform Plaintiff of the next steps, 20 and it is undisputed that the Assignment Offer did not 21 expressly outline a timeline for how long after closing 22 the sale Defendant would need to commence negotiations. 23 See Phillips Decl. Ex. E; Pl.’s Facts ¶ 15. 24 With the contract interpretation issues settled, 25 there are no genuine disputes of material fact that 26 Defendant performed its obligations to negotiate 27 pursuant to the Assignment Offer. On September 18, 28 2013, Plaintiff sent an email memorializing his 18 1 interest in purchasing the Station. 2 J. Phillips Decl. Ex. Contrary to Plaintiff’s assertion that Defendant 3 never “sat down” with him, id. at Ex. B at 119:16-20, 4 Defendant set up an appointment for Plaintiff to meet 5 one of its representatives at Defendant’s office. 6 at 142:4-19. Id. At that meeting, Defendant’s 7 representative informed Plaintiff that the reappraisal 8 would not match Exxon’s $2.6 million offer. 9 143:8-13. Id. at Moreover, Plaintiff admits that he and 10 Defendant negotiated in good faith beginning in October 11 2013, he agreed that the parties “negotiated to reach 12 an agreement,” and he knew Defendant “intend[ed] to 13 negotiate as well,” even though he felt the reappraisal 14 rendered the agreement a “sham,” and he unilaterally 15 expected a lower offer price. Id. at 150:1-25. 16 Plaintiff confuses the parties’ failure to agree with 17 breach of contract; but in a contract to negotiate, 18 “[f]ailure to agree is not, itself, a breach of [] 19 contract . . . rather, liability arises if a party 20 breaches its obligation to negotiate in good faith.” 21 Because the Court has concluded that “negotiate a 22 mutually agreeable sale” did not obligate Defendant to 23 offer a sale at $2.6 million, and in light of 24 Plaintiff’s repeated admissions that Defendant at least 25 negotiated as promised in the Assignment Offer, 26 Defendant did not breach the agreement. 27 In sum, Plaintiff’s evidence regarding contract 28 interpretation relies heavily on subjective, 19 1 unexpressed intent, which “is of no moment in 2 ascertaining the meaning of the words used in the 3 instruments.” Mission Valley East, Inc. v. Cnty. of 4 Kern, 120 Cal. App. 3d 89, 97 (Ct. App. 1981). Because 5 there are no genuine disputes regarding the breach of 6 contract claim, the Court GRANTS summary judgment as to 7 this claim. 8 c. 9 10 Breach of the Covenant of Good Faith and Fair Dealing California law implies a covenant of good faith and 11 fair dealing in every contract. Keshish v. Allstate 12 Ins. Co., 959 F. Supp. 2d 1226, 1232 (C.D. Cal. 2013). 13 “This covenant requires each contracting party to 14 refrain from doing anything to injure the right of the 15 other to receive the benefits of the agreement.” San 16 Jose Prod. Credit Ass’n v. Old Republic Life Ins. Co., 17 723 F.2d 700, 703 (9th Cir. 1984). 18 Plaintiff alleges that there are questions of fact 19 whether Defendant violated the covenant of good faith 20 and fair dealing, as Defendant knew of lower prices for 21 the Station, it bought the Station for $1.7 million in 22 2012, its book value of the Station was $2.4 million, 23 and it received offers from mid-2014 that were within 24 Exxon’s $2.6 million range. Opp’n 9:1-7. Plaintiff’s 25 allegations presuppose that the Assignment Offer 26 contains an implied covenant to sell the Station to 27 Plaintiff at least at the Exxon $2.6 million offer 28 price. This is problematic for two reasons: (1) 20 1 Plaintiff’s proposed covenant of good faith and fair 2 dealing claim is duplicative of the breach of contract 3 claim; and (2) Plaintiff’s covenant of good faith 4 theory also improperly reads requirements into the 5 Assignment Offer. 6 A claim for breach of the covenant of good faith 7 and fair dealing may be disregarded as superfluous if 8 it “relies upon essentially the same allegations” as a 9 companion “breach of contract claim.” In re Facebook 10 PPC Adver. Litig., 709 F. Supp. 2d 762, 770 (N.D. Cal. 11 2010). 12 Plaintiff’s covenant of good faith and fair dealing 13 claim is superfluous to its breach of contract claim. 14 Plaintiff alleges that Defendant breached the covenant 15 of good faith and fair dealing by “soliciting offers 16 from third parties, listing the property for sale with 17 third parties[,]” and eventually offering to sell at a 18 price which [Defendant] knew [Plaintiff] did not expect 19 to pay.” Compl. ¶ 26. The allegations that Defendant 20 made a $3.6 million offer not agreeable to Plaintiff 21 are reminiscent of the breach of contract allegations 22 that Defendant “failed to make Plaintiff an offer at 23 the Exxon offer price of $2,611,000,” compl. ¶ 35, and 24 that Defendant used Plaintiff’s offer to “solicit 25 higher offers from other bidders.” The allegations for 26 both claims deal with the discrepancy between 27 Defendant’s $3.6 million offer and the Exxon $2.6 28 million bona fide offer. 21 1 Summary judgment is also appropriate because 2 Plaintiff changes the Assignment Offer terms to conform 3 to his one-sided covenant of good faith theory. In 4 measuring the relevant duties for a covenant of good 5 faith and fair dealing claim, the parties are confined 6 to the contract’s purpose and express terms. Delgado 7 v. Nationstar Mortg. LLC, No. 2:14–cv–02547–ODW(PJWx), 8 2014 WL 2115218, at *3 (C.D. Cal. May 21, 9 2014)(citation omitted). “[A] party may not use the 10 covenant to create additional rights not contemplated 11 by the contract’s term.” Id. (citing Carma Dev. 12 (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 13 342, 373 (1992). As discussed in supra Part 14 III.B.1.b.i, the specific terms of the Assignment Offer 15 do not incorporate a duty for the “mutually agreeable 16 sale” to match $2.6 million or lower. Similarly, 17 Plaintiff’s theory—that Defendant’s delay in disclosing 18 it had acquired the Station from Exxon and overall 19 delay in making Plaintiff an offer—imposes duties 20 regarding timing that the parties did not contemplate. 21 As previously mentioned, Plaintiff does not dispute 22 that the Assignment Offer does not create a timeframe 23 for sale negotiations. 24 Pl.’s Facts ¶ 15. The facts also do not clearly show Defendant’s 25 conduct was objectively unreasonable. In his 26 deposition, Plaintiff admitted that Defendant 27 negotiated in good faith when it appraised the Station 28 at a $3.6 million fair market value, but it acted in 22 1 bad faith by delaying the appraisal so that it could 2 “continue collecting rent while the property value 3 increased.” Phillips Decl. Ex. B, at 150:1-9; Ex. C. 4 But the facts do little to support this theory. 5 On April 22, 2014, Plaintiff did indicate in an email 6 to Defendant that because “significant time has passed 7 and [ ] the value of the property has changed, [an 8 offer differing from Exxon’s] is not what we expected.” 9 Again, Plaintiff defines the covenant of good faith and 10 fair dealing by his subjective, one-sided understanding 11 of the Assignment Offer. Phillips Decl. Ex. L. The 12 remainder of Plaintiff’s evidence focuses on innuendo; 13 for instance, Defendant showed its intent to delay 14 negotiations or acted in bad faith when it “quickly 15 ended the conversation” after Plaintiff mentioned he 16 was waiting for Defendant to sell the Station to him. 17 Yi Decl. ¶ 10. And Defendant’s agents allegedly 18 brushed him off, telling him “that’s not my department” 19 when he inquired about the purchase price. 20 12. Id. at ¶ Yet in his deposition, Plaintiff admitted that the 21 parties negotiated, albeit not at the unilateral price 22 he sought. Phillips Decl. Ex. B, at 150:1-25. Because 23 Plaintiff has not demonstrated a genuine dispute 24 regarding Defendant’s bad faith actions, the Court 25 GRANTS summary judgment for the covenant of good faith 26 and fair dealing claim. 27 /// 28 /// 23 1 2 d. Fraudulent Inducement The elements of fraudulent inducement are (1) 3 misrepresentation; (2) knowledge of its falsity; (3) 4 intent to induce reliance; (4) justifiable reliance; 5 and (5) damages. City Solutions, Inc. v. Clear Channel 6 Commc’ns., 365 F.3d 835, 839 (9th Cir. 2004). 7 The record does not reveal a specific 8 misrepresentation from Defendant that induced Mrs. Yi 9 or Plaintiff to enter the Assignment Offer. Plaintiff 10 testified and does not dispute that, outside of the 11 Assignment Offer, Defendant did not make any misleading 12 statements. In fact, Plaintiff did not have any 13 conversations or follow-up regarding the Assignment 14 Offer terms with Defendant. 15 48:10-15, 56:14-57:19. Phillips Decl. Ex. B, at On the due date of the 16 Assignment Offer, Plaintiff contacted Mr. Tourek solely 17 to ask if he could fax it to him. Id. at 62:2-63:3. 18 As such, it is difficult to conclude that Defendant 19 somehow misled Plaintiff to think that he would receive 20 the Station for $2.6 million. 21 Equally problematic for Plaintiff’s fraudulent 22 inducement claim is that it repeats the breach of 23 contract allegations. Plaintiff alleges that Defendant 24 breached the Assignment Offer by failing to make an 25 offer at the $2.6 million Exxon price. Compl. ¶ 36. 26 And he claims that Defendant fraudulently induced him 27 to believe that he would be able to purchase the 28 Station at Exxon’s price. Compl. ¶ 48. 24 But the 1 economic loss doctrine bars fraudulent inducement 2 claims where the alleged misrepresentation is the 3 contract itself. Foster Poultry Farms v. Alkar- 4 Rapidpak-MP Equip., Inc., 868 F. Supp. 2d 983, 993 5 (E.D. Cal. 2012). 6 Plaintiff vaguely alludes to the “circumstances” 7 and “timing” of Defendant’s $3.6 million offer as apt 8 evidence of Defendant’s fraudulent inducement. Because 9 Plaintiff offers little more evidence than this and 10 because the fraudulent inducement claim is largely 11 duplicative of the breach of contract claim, the Court 12 GRANTS summary judgment as to the fraudulent inducement 13 claim. 14 e. 15 16 California Business & Professions Code § 17200 California unfair competition law, California 17 Business & Professions Code § 17200, polices “unlawful, 18 unfair or fraudulent business acts or practices.” 19 “Because [the UCL] is written in the disjunctive, it 20 establishes three varieties of unfair competition—acts 21 or practices which are unlawful, or unfair, or 22 fraudulent.” Cel-Tech. Commc’ns., Inc. v. Los Angeles 23 Cellular Tel. Co., 20 Cal. 4th 163, 181 (1999). 24 Defendant allegedly acted “fraudulently” by never 25 intending to negotiate a mutually agreeable offer or 26 one at $2.6 million. Compl. ¶ 43. To state a claim 27 under the “fraudulent” prong of the UCL, a plaintiff 28 must show that “reasonable members of the public are 25 1 likely to be deceived” by the alleged unfair business 2 practice, though the “deception need not be intended.” 3 Rubio v. Capital One Bank, 613 F.3d 1195, 1204 (9th 4 Cir. 2010)(internal quotations omitted). Neither 5 Plaintiff’s Complaint nor the attached exhibits and 6 declarations explain why Defendant’s conduct is likely 7 to deceive members of the public. In fact, Plaintiff 8 seemingly abandons his section 17200 claim in his 9 Opposition, providing no legal argument or theory. See 10 generally Opp’n. 11 Plaintiff alleges that Defendant acted “unfairly” 12 by persuading Plaintiff to give up his statutory right 13 of first refusal in exchange for a “mutually agreeable 14 sale” that never came to fruition. Compl. ¶ 41. 15 Beyond the bare allegations in the Complaint, Plaintiff 16 also does not unpack how Defendant’s conduct “unfairly” 17 violates Plaintiff’s right to a bona fide offer under 18 any relevant California franchise or petroleum law, let 19 alone California Business & Professions Code § 20 20999.25. Plaintiff alleges that Defendant solicited 21 higher offers from third parties and made Plaintiff an 22 offer that exceeded the understood purchase price. 23 Compl. ¶ 41. These allegations are nearly identical to 24 those raised in the breach of contract and implied 25 covenant claims. 26 Compl ¶ 34. Compare Id. with Compl. ¶ 26, and At their core, Plaintiff’s section 17200 27 allegations concern the parties’ contractual duties; 28 but these common-law contractual duties are not the 26 1 state or federal law violations that section 17200 2 concerns. Boland, Inc. v. Rolf C. Hagen (USA) Corp., 3 685 F. Supp. 2d 1094, 1110 (E.D. Cal. 2010). Because 4 the record lacks sufficient evidence of “the requisite 5 additional wrongfulness” section 17200 requires, the 6 Court GRANTS summary judgment as to the section 17200 7 claim. 8 f. 9 10 California Business & Professions Code § 21140.6 California Business & Professions Code section 11 21140.6(a) provides, in relevant part: “it shall be 12 unlawful to include in any franchise agreement any term 13 which provides for the termination of the franchise by 14 the franchisor upon the death of the franchisee if the 15 franchisee, prior to his demise, designates a 16 successor-in-interest in a form prescribed by and 17 delivered to the franchisor.” 18 Plaintiff argues that Defendant violated this 19 section in the Assignment Agreements. 20 Opp’n 19:12-20. Compl. ¶ 58; see The Assignment Agreement, where 21 Defendant attempted to assign the franchise to 22 Plaintiff as Mrs. Yi’s successor-in-interest, has a 23 paragraph entitled “Release,” where Plaintiff agreed to 24 release and discharge Defendant from any laws in 25 connection with the Franchise Agreements. Yi Decl. Ex. 26 13, at § 5. 27 Plaintiff offers no language from the Assignment 28 Agreements or caselaw that connect “release of all 27 1 claims . . including claims for violation of any law in 2 connection with the franchise agreements” with any part 3 of section 21140.6. It is equally unclear to what 4 extent Plaintiff can claim this violation, as it is 5 undisputed that he never signed the “Assignment and 6 Assumption Agreement.” Phillips Decl. Ex. B, at 7 192:23-24; Pl.’s Facts ¶ 53. And the Contract of Sale 8 and Lease between Mrs. Yi and Defendant—attached to the 9 Assignment and Assumption Agreement—on its face does 10 not violate section 21140.6(a). It provides that 11 “[designation] of a successor-in-interest upon the 12 death of the [franchisee] shall be governed by 13 California Bus. & Prof. Code § 21140.6. Absent [Mrs. 14 Yi’s] designation pursuant to the aforementioned 15 California statute, this Contract shall terminate upon 16 the death of the [franchisee].” Ex. B. to Philips 17 Decl. to Reply re Leave to Amend Ans., at § 36, ECF No. 18 26-3. Section 21140.6(a) does not wholesale prevent a 19 franchisor from terminating the franchise pursuant to a 20 term in a franchise agreement. Rather, this type of 21 term is forbidden if the franchisee, prior to her 22 death, designates a successor-in-interest. As is 23 evident from the language in the Contract of Sale and 24 Lease, Defendant stated it would terminate the 25 franchise upon Mrs. Yi’s death should she fail to 26 designate a successor-in-interest pursuant to section 27 21140.6. This mirrors the language and purpose of 28 section 21140.6(a). Because Plaintiff offers no 28 1 cognizable explanation or genuine disputes of material 2 fact regarding the section 21140 claim, the Court 3 GRANTS summary judgment. 4 5 IV. CONCLUSION Based on the foregoing, the Court 6 GRANTS Defendant’s Motion for Summary Judgment as to 7 the entire Complaint [30]. The Clerk shall close this 8 action. 9 IT IS SO ORDERED. 10 11 DATED: June 26, 2017 s/ 12 HONORABLE RONALD S.W. LEW Senior U.S. District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?