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)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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12 MARK YI, an individual, as )
successor in interest to OE )
13 SUN YI,
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Plaintiff,
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v.
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17 CIRCLE K STORES, INC.,
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Defendant.
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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

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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

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