Case Number: BC485826 Hearing Date: June 13, 2014 Dept: 46

Posted 6-12-2014 3:25

Case Number: BC485826
QUAIL H FARMS LLC VS DOLORES MORALES ET AL
Filing Date: 06/04/2012
Case Type: Other Intentional Tort-notPI/WD/PD (General Jurisdiction)

06/13/2014

Alberto Salgado Arellano, Individually and DBA El Cocho Produce’s Motion for Summary Judgment

TENTATIVE RULING: Alberto Salgado Arellano, Individually and DBA El Cocho Produce’s Motion for Summary Judgment is GRANTED pursuant to CCP §437c as moving party met his burden of making a prima facie showing there is no merit to each of the claimed causes of action and that therefore defendant is entitled to judgment as a matter of law pursuant to Code Civ. Proc., § 437c, subd. (p)(2); Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) Plaintiff however failed to raise a triable issue of material fact because Plaintiff failed to produce evidence that would lead a reasonable trier of fact to find the underlying material facts in support of Plaintiff: 1st Cause of Action for Conversion: This claim fails because the undisputed evidence indicates that Arellano paid the prices Morales agreed upon and Plaintiff failed to produce contrary evidence. 3rd COA: Common Count— Goods & Services Rendered: Because it is undisputed that Arellano paid the prices Morales negotiated with Santos and Plaintiff failed to produce contrary evidence. 4th COA: Violation of the Perishable Agricultural Commodities Act (PACA): Plaintiff has failed to prove any relevant sales in interstate or international commerce and Plaintiff failed to produce contrary evidence. The 6th & 7th Causes of Action for Inducing Breach of Contract and Intentional Interference with Prospective Contractual Relations (Respectively) fail since the undisputed evidence is that Morales was an at-will employee of Plaintiff and did not have an employment contract and Plaintiff failed to produce contrary evidence. The 8th Cause of Action for Interference with Prospective Economic Relations fails because the only relationship Plaintiff had with Morales was an employment one and it was Plaintiff, not Arellano, who terminated Morales’ employment. (UMF No. 386) and Plaintiff failed to produce contrary evidence. Plaintiff fails to raise a triable issue of material fact as to the existence of a conspiracy: Plaintiff cannot fails to raise evidence that Arellano was involved in a conspiracy with Santos and Morales: Arellano has never had any communications with Morales and primarily left Santos in charge of running the sweet potato business; to the extent Plaintiff relies on allegations that Santos engaged in unlawful conduct and that Arellano is liable for Santos’ actions under an agency or employment relationship, Plaintiff has failed to provide any facts in support of that contention; the undisputed evidence indicates that Santos never had an agreement with either Arellano or Morales to defraud Plaintiff or steal from Plaintiff, that all produce that ECP received from Plaintiff was documented in a purchase order and paid by ECP, and that the prices on each purchase order were those he had negotiated with Morales.

DISCUSSION:

COMPLAINT: On 6/4/12, Plaintiff filed its complaint for (1) Conversion; (2) Common Count — Money Had & Received; (3) Common Count— Goods & Services Rendered; (4) Violation of the Perishable Agricultural Commodities Act (PACA); (5) Breach of Fiduciary Duty; (6) Inducing Breach of Contract; (7) Intentional Interference with Prospective K’ual Relations and (8) Interference with Prospective Economic Relations against Dolores Morales (hereinafter, “Morales”), Hector Santos (hereinafter, “Santos”), Alberto Salgado Arellano dba El Cocho Produce (hereinafter, “Arellano”), El Cocho Produce (hereinafter, “ECP”) and DOES 1-50; the 2nd & 5th Causes of Action were asserted against Morales only, the 3rd and 6th-8th Causes of Action are asserted against Arellano, Santos and ECP only and the 4th COA was asserted against ECP only. On 6/4/12, Plaintiff filed “Notice[s] of Claim for Punitive Damages Statement[s]” for each of the 4 Defendants.

SCOPE OF MOTION: Arellano moves this court per CCP § 437c for summary judgment on the complaint; in the alternative, Arellano seeks motion for summary adjudication (“MSA”) of the 1st, 3rd, 4th, 6th, 7th and 8th COAs. Plaintiff asserts that Ds Arellano and Santos conspired with Morales to give them substantial price concessions, credits and free produce in exchange for their depositing payments into her bank account.

Summary judgment is appropriate here because Plaintiff lacks evidence establishing that Arellano willfully and knowingly entered into a conspiracy; instead, the undisputed material facts show that Morales acted alone when she embezzled Arellano’s payments to Plaintiff and that she negotiated a reasonable and fair price terms for Arellano’s produce purchases, which Arellano paid in full. Additionally, the undisputed evidence indicates that Arellano has never had any communications whatsoever with Morales and primarily left Santos in charge of running the sweet potato business. To the extent Plaintiff relies on allegations that Santos engaged in unlawful conduct, and that Arellano is liable for Santos’ actions under an agency or employment relationship, Plaintiff cannot establish that Santos and Morales had a conspiracy to defraud the company. Santos believed Morales was Plaintiff’s owner or manager and believed that depositing payments into her account was tendering a payment to Plaintiff. In his other business operations, Santos had deposited payments into owners’ and managers’ accounts, so this did not seem unusual to him. The undisputed evidence indicates that Santos believed Morales had authority to negotiate sales deals for Plaintiff’s sweet potatoes, as he had previously purchased Plaintiff’s produce from Morales when working for his parents’ company.

Paragraphs 12 through 25 of the Complaint, which are incorporated into each cause of action against ECP, rely upon the theory that Arellano conspired with Morales and Santos to defraud Plaintiff. As to ECP, Plaintiff has alleged, in relevant part, as follows:

“12. Plaintiff is one of the largest sweet potato growers, packers, and shippers in California…

13. Defendant MORALES was an employee of Plaintiff at the time the events alleged herein occurred. MORALES was employed by Plaintiff since 2005, and Plaintiffs predecessor entity, Consolidated Farms. Throughout the time of her employment with Plaintiff, MORALES’ job duties included receiving and processing orders from existing clients as well as checking existing accounts to ascertain whether they needed to order produce. In addition, MORALES’ was responsible for developing new client relationships for produce sales.

14. Defendant ARELLANO is the owner or one of the owners of Defendant ECP, which is a produce buyer located in Los Angeles, California. Defendants ARELLANO and ECP purchase produce from Plaintiff.

15. Defendant SANTOS is an employee of Defendants ARELLANO and ECP. SANTOS’ primary job duties are to purchase produce from Plaintiff and other growers and shippers on behalf of Defendants ARELLANO and ECP for subsequent resale by Defendants ARELLANO and ECP.

16. In late 2009, Defendant MORALES began selling produce to Defendant SANTOS directly on a cash basis. Defendant Santos picked up produce directly at Plaintiffs facility. Defendant Santos mounted an unpaid account balance for produce purchased from Plaintiff and therefore Plaintiff informed MORALES to cease sales to SANTOS until his account was paid in full, after which time no further credit sales would be allowed.

17. In October 2010, Defendant MORALES began selling produce to Defendant SANTOS, who represented Defendants ARELLANO and ECP, while concealing SANTOS’ identity from Plaintiff.18. Defendant SANTOS, as agent for and with the agreement of Defendants SANTOS, ARELLANO, and ECP, made payments directly to MORALES in cash or checks made payable to MORALES, or personally deposited funds in MORALES’ own checking account.

19. At all relevant times, Defendants ARELLANO, ECP and SANTOS knew: that the products they were receiving were Plaintiff’s products; that the prices they were paying for these products were substantially discounted and below market rates; that they were paying MORALES personally instead of Plaintiff without the consent or authorization of Plaintiff; and that they would continue to receive substantial price concessions and credits if they continued to pay MORALES directly for the produce (without Plaintiffs consent or authorization) instead of Plaintiff.

20. Throughout the time she sold produce to Defendant SANTOS (who prior to October 2010, bought for his own account and at all times thereafter was acting as a buyer for Defendants ARELLANO and ECP), Defendant MORALES, with the knowledge and consent of Defendants ARELLANO and ECP and without the consent of Plaintiff, invoiced Defendants ARELLANO and ECP for only a portion of the produce sent to them and granted them substantial price concessions and credits in exchange for Defendants’ continued participation in a direct sales relationship with her.

21. MORALES, without the consent of Plaintiff, deposited the checks made payable to her in her personal Bank of America checking account and retained cash payments made to her and deposits made directly into her checking account by Defendants ARELLANO, ECP and SANTOS. MORALES never tendered these funds to Plaintiff.

22. Throughout this time, Defendant MORALES maintained a pattern and practice of accounting for the sales of produce to Defendant ECP by charging them on Plaintiff’s sales and accounting system under the name of one of Plaintiff’s accounts, Cal-O-Vegetable Exchange (“Cal-O”) or deleting transactions entirely from Plaintiffs sales and accounting system, or charging sales on ECP’s own account with Plaintiff, established by MORALES, often modifying the invoice terms after generation of the original invoice.

23. Plaintiff is informed and believes that MORALES sold and delivered in excess of $5,559 in products to Defendant Santos directly and in excess of $219,548.35 in products to Defendants ECP and SANTOS, but Defendants ECP and SANTOS only paid Plaintiff approximately $108,644.20.

24. Plaintiff is informed and believes that Defendants ARELLANO, ECP and SANTOS paid Defendant MORALES in excess of $29,358.60 for the products she sent them.

25. Plaintiff is informed and believes and thereon alleges that at all times relevant herein, Defendants, and each of them, knowingly and willfully conspired and agreed among themselves to conceal the fraudulent acts and omissions and other wrongful acts of each of the Defendants, as more fully alleged above.” (Complaint, ¶¶ 12-25).

The following facts are undisputed:

• During the fall of 2010, Santos asked Arellano if he was interested in purchasing sweet potatoes to sell during the upcoming months. (UMF No. 1).
• Santos had seen Arellano in the Market before and knew that he operated a business known as El Cocho Produce. (UMF No. 2).
• Arellano agreed that he would try Santos’ proposed sweet potato business to see if it was profitable. (UMF No. 3).
• Arellano never sold sweet potatoes before Santos brought him the business. (UMF No. 53).
• All of Morales’ produce sales to El Cocho Produce went through Santos. (UMF No. 48).
• Arellano never spoke with anyone at Quail Farms. (UMF No. 49).
• Arellano and Morales have never spoken to one another. (UMF No. 50).
• Morales has never met Arellano. (UMF No. 51).
• Morales has never exchanged emails or text messages with Arellano. (UMF No. 52).

In this factual setting and based upon the allegations in the complaint, the only remaining means by which Plaintiff can establish the requite intent elements of the causes of action is by proving that there was a conspiracy. However, since Arellano has never had any communications with Morales and primarily left Santos in charge of running the sweet potato business, Plaintiff cannot establish that Arellano was involved in a conspiracy with Santos and Morales.

“’To prove a claim for civil conspiracy, [plaintiff] [is] required to provide substantial evidence of three elements: (1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct. As is well established, civil conspiracy is not an independent tort. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 C.4th 503, 510-511). Rather, civil conspiracy is a ‘legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [Citation.]’ (Id., at pp. 510-511). As Witkin explains, ‘If [the plaintiff] can show that each [of several defendants] committed a wrongful act or some part of it, e.g., that each made false representations, he has no need of averments of conspiracy. But if A alone made representations, the plaintiff can hold B and C liable with A only by alleging and proving that A acted pursuant to an agreement (conspiracy) with B and C to defraud.’ (5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 869, p. 311.).” Kidron v. Movie Acquisition Corp. (1995) 40 C.A.4th 1571, 1581.

“Accordingly, ‘[t]he basis of a civil conspiracy is the formation of a group of two or more persons who have agreed to a common plan or design to commit a tortious act.’ (1 Levy et al., Cal. Torts (1995) Civil Conspiracy, § 9.03[2], p. 9-12; see Youst v. Longo (1987) 43 C.3d 64, 79 [‘the conspirators must agree to do some act which is classified as a “civil wrong”’].) The conspiring defendants must also have actual knowledge that a tort is planned and concur in the tortious scheme with knowledge of its unlawful purpose. (Wyatt v. Union Mortgage Co. (1979) 24 C.3d 773, 784-786 [‘a plaintiff is entitled to damages from those defendants who concurred in the tortious scheme with knowledge of its unlawful purpose’]; People v. Austin [(1994)] 23 C.A.4th 1596, 1607 [‘without knowledge of the illegal purpose there is no basis for inferring an agreement’].).” Id. at 1582.

“[A]ctual knowledge of the planned tort, without more, is insufficient to serve as the basis for a conspiracy claim. Knowledge of the planned tort must be combined with intent to aid in its commission. ‘The sine qua non of a conspiratorial agreement is the knowledge on the part of the alleged conspirators of its unlawful objective and their intent to aid in achieving that objective.’ (Schick v. Lerner (1987) 193 C.A.3d 1321, 1328; see also Michael R. v. Jeffrey B. (1984) 158 C.A.3d 1059, 1069 [‘[m]ere knowledge, acquiescence, or approval of an act, without cooperation or agreement to cooperate is insufficient to establish liability’].).” Id. “While knowledge and intent “may be inferred from the nature of the acts done, the relation of the parties, the interest of the alleged conspirators, and other circumstances” (Wyatt v. Union Mortgage Co., supra, 24 C.3d at p. 785), ‘”[c]onspiracies cannot be established by suspicions. There must be some evidence. Mere association does not make a conspiracy. There must be evidence of some participation or interest in the commission of the offense.’”’ (Davis v. Superior Court (1959) 175 C.A.2d 8, 23). An inference must flow logically from other facts established in the action. (See People v. Austin, supra, 23 C.A.4th at p. 1604).” Id. (emphasis added).

Plaintiff therefore must prove three elements to show that Arellano was involved in a conspiracy: “(1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct.” Id. at 1581. Plaintiff cannot do so. As Defendant Morales herself has attested in her declaration:

“3. For over twenty years, I worked for Quail H. Farms, LLC and its predecessor company Consolidated Farms (collectively ‘Quail Farms’). I worked as a Salesperson for Quail Farms. As a Salesperson, I handled a lot of things related to the sale of Quail Farms’ produce. For example, I communicated with Quail Farms’ customers, I tried to get new customers for Quail Farms, I handled accounts, and I negotiated the sales of Quail Farms’ produce. In negotiating the sale of Quail Farms’ produce, I communicated with the buyers to agree upon sales terms such as the quantity of produce purchased, prices for the produce, delivery times and locations, who would pay the freight charges for the delivery, and the types of produce to include in the customer’s order.

4. During the time period of October 2010 through January 2011, I sold Quail Farms’ produce to a man named Hector Santos and a company he said he was working with called El Cocho Produce. I looked at Quail Farms’ customer accounts and noticed that El Cocho Produce was not listed as an established customer with Quail Farms. So, I decided that El Cocho Produce would need to prove that it could pay for its produce purchases on time, before I could establish El Cocho Produce as a customer for Quail Farms and put El Cocho Produce into Quail Farms’ computer system.

5. As I had done with numerous other buyers, I negotiated the sale of Quail Farms’ produce by speaking with Hector Santos over the phone. When the first payment for produce delivered was due, Hector Santos told me that El Cocho Produce had cash and was ready to pay…

7. I told Hector Santos that El Cocho Produce should direct their payment into my personal bank account at Bank of America. At the time I gave Hector Santos this instruction, I intended to take El Cocho Produce’s money from my personal bank account, and pay Quail Farms for the produce they had purchased. I figured that once El Cocho Produce provides it could pay for produce on time for awhile, I would then add El Cocho Produce as an established customer in Quail Farms’ system.

9. …In the beginning, when El Cocho Produce was ready to pay for their purchases, I instructed Hector Santos to have El Cocho Produce deposit the money into my bank account.

10. When El Cocho Produce deposited their payments into my bank account, the temptation was too strong to resist and I ended up taking the money for myself, instead of paying it to Quail Farms as I originally intended to do. In my mind, I thought I would figure out a way to pay Quail Farms back for the money I took later.

11. After about a month, and after El Cocho Produce proved it could pay for its purchases on time, I went ahead and established El Cocho Produce as a customer in Quail Farms’ computer system. After I did this, when Hector Santos would tell me that El Cocho Produce was ready to pay for its purchase, I would tell Hector Santos to have El Cocho Produce send a check to Quail Farms directly. I understand that El Cocho Produce did send several checks to Quail Farms directly for its produce purchases after I set them up in Quail Farms’ computer system.

12. I never had any agreement with Hector Santos, Alberto Salgado Arellano, or anyone else at El Cocho Produce to steal money or produce from Quail Farms. I never told Hector Santos, Alberto Salgado Arellano, or anyone at El Cocho Produce that I was going to take the money that they paid for buying Quail Farms’ produce and use it for myself.

13. I believe that I accurately recorded all of the sales of produce I made to Hector Santos accurately in Quail Farms’ computer system.

14. I also believe that I had the authority to negotiate the terms of the sales I made to Hector Santos and El Cocho Produce…

16. I never had any agreement with Hector Santos, Alberto Salgado Arellano, or anyone at El Cocho Produce to give them discounted prices for Quail Farms’ produce, in exchange for them depositing their payments into my bank account. I never had any agreement with Hector Santos, Alberto Salgado Arellano, or anyone at El Cocho Produce to give them price concessions or credits in exchange for them depositing their payments into my bank account. I never had any agreement with Hector Santos, Alberto Salgado Arellano, or anyone at El Cocho Produce to give them free produce, or not charge them for Quail Farms’ produce, in exchange for them depositing their payments into my bank account.

17. I never told Hector Santos, Alberto Salgado Arellano, or anyone at El Cocho Produce that I had taken, or that I even thought of taking for myself, the money that they put into my bank account to pay for the purchase of Quail Farms’ produce.” (D Morales Declaration, ¶¶ 3-5, 7, 9-14, 16 and 17).

Additionally, to the extent Plaintiff relies on allegations that Santos engaged in unlawful conduct, and that Arellano is liable for Santos’ actions under an agency or employment relationship, Plaintiff’s conspiracy theory still fails. Santos has testified as follows:

“Q. All right. Did you think it was odd that you would deposit cash directly into Dolores Morales’ account?

A. No, not really. Just because she said that she was a sales manager there and she was pretty much the guy that was running the show at Quail H. Farms…

Q. But have you ever had any experiences where you deposited cash into somebody’s personal account?

A. I have in the past.

Q. Oh, you have?

A. But—but, you know—but it was not as much business as we did
this time. It was usually—and it was usually more towards to the
company. The company deposited—direct deposit to the company.

Like, for example, we—we bought some loads out
of—watermelons out of Nogales, Arizona, and we deposited to the
company—or we wired—we wired the funds. You don’t deposit,
you just wire the funds.

Q. Is this the first time you’ve ever seen in your experience where
a distributor—or a retailer would actually deposit money into
somebody’s personal account when they were dealing with a
business?

A. I mean, I can’t speak for everybody else, but in my—in my—in
my experience, yes.

Q. It’s the first time.

Did you ever think that there may have been something shady
about the fact that you were putting money into Dolores’ account as
opposed to paying the grower or the shipper directly?

MS. ANGIONI: Objection; vague, asked and answered.

THE WITNESS: No, I didn’t think there was anything shady, because
according to her she was a business partner there and she was kind
of like the owner. And I—I never thought about it twice.”

(Declaration of Richard Allen Jorgensen, Exhibit “1,” 23:20-25 and
28:19-29:22).

Santos also testified that he never had an agreement with either Arellano or Morales to defraud Plaintiff or steal from it (Id. at 51:8-13), that every bit of produce that ECP received from Plaintiff was documented in a purchase order and paid by ECP (Id., 51:24-52:12) and that the prices on each purchase order were those he had negotiated with Morales (Id., 53:12-17).

Plaintiff’s causes of action against Arellano also fail for these reasons:

1st Cause of Action for Conversion: This claim fails because the undisputed evidence indicates that Arellano paid the prices Morales agreed upon.

“A cause of action for conversion requires allegations of plaintiff’s ownership or right to possession of property; defendant’s wrongful act toward or disposition of the property, interfering with plaintiff’s possession; and damage to plaintiff. [Citation.] Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment. [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 C.A.4th 1457, 1491…).” PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 C.A.4th 384, 395.

Plaintiff’s contention that Arellano misappropriated money and produce when he “took permanent possession of at least $225,107.35 worth of Plaintiffs produce, having paid Plaintiff only $108,644.20 for it” (Complaint, ¶ 41) fails to raise a triable issue of any wrongful act because Arellano paid the prices Morales agreed upon.

3rd COA: Common Count— Goods & Services Rendered: Because it is undisputed that Arellano paid the prices Morales negotiated with Santos, this claim fails.

CACI 371, entitled “Common Count—Goods and Services Rendered,” states as follows:

“[Name of plaintiff] claims that [name of defendant] owes
[him/her/it] money for [goods delivered/services rendered]. To
establish this claim, [name of plaintiff] must prove all of the
following:
1 That [name of defendant] requested, by words or conduct,
that [name of plaintiff] [perform services/deliver goods] for the
benefit of [name of defendant];
2 That [name of plaintiff] [performed the services/delivered the
goods] as requested;
3 That [name of defendant] has not paid [name of plaintiff] for
the [services/goods]; and
4 The reasonable value of the [goods/services] that were
provided.”

Because it is undisputed that Arellano paid the prices Morales negotiated with Santos, this claim fails.

4th COA: Violation of the Perishable Agricultural Commodities Act (PACA): Plaintiff has failed to prove any sales in interstate or international commerce. As such Plaintiff cannot state a claim under PACA.

The Perishable Agricultural Commodities Act, 1930 (hereinafter, “PACA”) was enacted ‘”to promote fair trading practices in the marketing of perishable agricultural commodities, largely fruits and vegetables.”’ (In re Magic Restaurants, Inc. (3d Cir. 2000) 205 F.3d 108, 110). The statute is designed to protect suppliers of perishable agricultural products who sell produce to certain statutorily-defined buyers. (Id. at pp. 110-111). PACA’s protections include provisions that prohibit a variety of unfair trade practices by produce buyers; require produce buyers to hold the produce and the proceeds from the produce in trust for the benefit of the sellers until full payment is made; and allow produce sellers to file court actions seeking to hold a corporation’s controlling officers personally liable for the amounts owed for the produce. (Bear Mountain Orchards, Inc. v. Mich-Kim, Inc. (3d. Cir. 2010) 623 F.3d 163, 167-168, 171-172; American Banana Co., Inc. v. Republic National Bank of New York (2d Cir. 2004) 362 F.3d 33, 36-37; Patterson Frozen Foods, Inc. v. Crown Foods International, Inc. (7th Cir.2002) 307 F.3d 666, 669).” Tomatoes Extraordinaire v. Berkley (2013) 214 C.A.4th 317, 322.

“PACA applies to produce buyers who meet the statutory definition of a dealer under the Act. (See Magic Restaurants, supra, 205 F.3d at p. 110).” Id. A “dealer” is defined in 7 U.S.C. § 499a(b)(6) as “any person engaged in the business of buying or selling in wholesale or jobbing quantities, as defined by the Secretary, any perishable agricultural commodity in interstate or foreign commerce.”

Arellano’s transactions with Plaintiff do not qualify for PACA protection based upon the undisputed facts: It is undisputed that:

• Plaintiff is located in Livingston, CA which is in Merced County (UMF No. 354);
• ECP is located in Los Angeles. (UMF No. 353)
• Plaintiff grows all of its produce in California. (UMF No. 349)
• All of the buyers Santos sold Plaintiff’s sweet potatoes to were located in California (UMF No. 351); and,
• Santos did not ship any of the sweet potatoes ECP purchased from Plaintiff to any buyers located outside the state of California (UMF No. 352);

Further, Plaintiff does not dispute UMF No. 350 (i.e., that “[a]ll of the produce that P sold to ECP was grown in CA”); in doing so, Plaintiff references the Declaration of Jackie Smith (hereinafter, “Smith”), who attests that “[w]ith the exception of a few sales of non-standard varieties of sweet potatoes, which [Plaintiff] purchased from North Carolina, all of [Plaintiff’]s produce is grown at its farms in Livingston, California.” (Smith Declaration, ¶ 6, 1:22-24). This statement cannot be interpreted as meaning that Plaintiff sold ECP sweet potatoes from North Carolina. Smith, moreover, testified at his deposition as follows:

“Q. Does Quail Farms grow all of its produce in California?

A. Yes.

Q. All the produce that was sold to El Cocho Produce was
grown in California; is that correct?

A. I believe so.

Q. You guys don’t have farms anywhere outside of California;
do you?

A. We bought one lid of purple sweet potatoes one time from
North Carolina. And I am not even sure when that was…” (Motion,
Exhibit “B,” 132:2-12).

The 6th & 7th Causes of Action for Inducing Breach of Contract and Intentional Interference with Prospective K’ual Relations (Respectively) fail since the undisputed evidence is that Morales was an at-will employee of Plaintiff and did not have an employment contract.

“[I]n order to state a cause of action for inducing a breach of contract…plaintiff must allege the existence of a valid contract…that the defendant had knowledge of the existence of the contract and intended to induce a breach thereof…that the contract was in fact breached resulting in injury to plaintiff…and the breach and resulting injury must have been proximately caused by defendant’s unjustified or wrongful conduct.” Freed v. Manchester Service, Inc. (1957) 165 C.A.2d 186, 189.

Plaintiff’s complaint at paragraphs 81 through 83 alleges that:

“81. Plaintiff and Defendant MORALES maintained a contractual relationship as employer-employee.

82. Defendants SANTOS, ARELLANO, and ECP knew of the contractual relationship between Plaintiff and Defendant MORALES.

83. Defendants SANTOS, ARELLANO, and ECP intended to cause Defendant MORALES to breach her contract with Plaintiff…”

(Complaint, ¶¶ 81-83).

However, it is undisputed that Plaintiff’s Employee Handbook confirms that Morales was at at-will employee, not bound by any employee contract. (UMF No. 368). It is further undisputed that Morales did not have any employment contract, or any other contract, with P. (UMF No. 366).

8th Cause of Action for Interference with Prospective Economic Relations: This claim fails because the only relationship Plaintiff had with Morales was an employment one and it was Plaintiff, not Arellano, who terminated Morales’ employment. (UMF No. 386). The only conduct, then, that prevented Plaintiff from receiving prospective benefits from Morales’ employment was Plaintiff’s conduct in firing her.

“[T]he requisite elements for proving the tort of intentional interference with prospective economic advantage are ‘(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.’ (Youst v. Longo (1987) 43 C.3d 64, 71, fn. 6).” San Francisco Design Center Associates v. Portman Companies (1995) 41 C.A.4th 29, 40.

P has alleged that:

“96. Plaintiff and Defendant MORALES were in an economic
relationship that probably would have resulted in an economic
benefit to Plaintiff.

97. Defendants SANTOS, ARELLANO, and ECP knew, or in the
exercise of reasonable care, should have known of the relationship
between Plaintiff and Defendant MORALES.

98. Defendants SANTOS, ARELLANO, and ECP intended to disrupt
the relationship between Plaintiff and Defendant MORALES.”
(Complaint, ¶¶ 96-98).

The only relationship Plaintiff had with Morales was an employment one. Plaintiff, nor Arellano, terminated Morales’ employment. (UMF No. 386). The only conduct, then, that prevented Plaintiff from receiving prospective benefits from Morales’ employment was Plaintiff’s conduct in firing her.