Wine Country Gateway et al v Abby Allen, et al. 16CVP0027

Re: Motion to Compel Motion for Preliminary Injunction

Date: April 3, 2018

Plaintiffs The Wine Country Gateway Recreational Vehicle Park, LLC (“WCG”), Abby Allen dba Templeton Market & Deli (“Ms. Allen”), Templeton Market & Deli, Inc. (“Templeton”), John Letters dba Santa Maria Wash & Lube (“Mr. Letters”), and Letters, Inc. (“Letters”) (collectively Plaintiffs) are separate independent retail service stations, joined in this action to allege that each of them entered into their respective contracts with Defendant Eagle Energy, Inc. (“Eagle”) for the exclusive supply of gasoline products for a ten-year term. According to the second amended complaint (“SAC”), the Parties agreed that pricing would be accomplished according to the industry “Dealer Tank Wagon Pricing” (DTW) standard. (SAC, ¶17.) The SAC alleges that with respect to each contract, Eagle improperly charged an additional three cents per gallon over and above the price set by the DTW standard. Plaintiffs’ SAC asserts causes of action for breach of contract, fraud in the inducement, unfair business practices, and reformation of contract.

Eagle filed a cross-complaint against Tom McDonald (“Mr. McDonald”), WCG, Van de Pol Enterprises, Inc. (“VDP”), and Valero Marketing and Supply Company1 (collectively CrossDefendants). Eagle’s cross-complaint alleges its former employee Mr. McDonald, now employed with both VDP and WCG, terminated his employment with Eagle and then wrongfully solicited Eagle’s customers to move their business to VDP. Mr. McDonald also allegedly negotiated customer contracts on behalf of VDP and VDPE with Eagle’s customers causing the customers to breach their agreements with Eagle.

Before the Court are two motions: (1) Plaintiffs’ motion for a preliminary injunction prohibiting Eagle from charging Plaintiffs for fuel purchases exceeding DTW pricing; and (2) Eagle’s motion for an order compelling Mr. McDonald to comply with one request for production of documents and request for $2,046.00 in sanctions. (Code Civ. Proc., §2031.320(b).).

(1) Plaintiffs’ Motion for a Preliminary Injunction.

Pursuant to Code of Civil Procedure section 526, injunctive relief is typically appropriate when monetary damages are inadequate or the plaintiff will suffer immediate irreparable harm. If those conditions exist, the Court then must balance the equities and determine whether there is a reasonable probability plaintiff will prevail on the merits. (Robbins v. Superior Court (1985) 38 Cal.3d 199, 206.)

1 For ease of reference, the Court will refer to VDP and Valero collectively as VDP.
Here, Plaintiffs do not identify – either in their moving papers or on reply – any irreparable injury they will suffer. Nor do Plaintiffs describe why monetary damages are an inadequate remedy at law for Eagle’s alleged breaches. Plaintiffs concede that injunctive relief is generally unavailable to prevent a breach of contract, but claim that “a party may be enjoined from procuring funds to which it is not entitled.” (Mtn., p. 4, ll. 2-5.) Plaintiffs’ support for this contention, however, is inapposite. Mitsui Manufacturers Bank v. Texas Commerce Bank-Fort Worth (1984) 159 Cal.App.3d 1051 (Mitsui) involved a beneficiary improperly drawing against a letter of credit, which letter was provided based on false representations. (Id. at p. 1059.) Moreover, the Mitsui opinion indicates that the party seeking the injunction had made some preliminary showing of irreparable injury, which is absent here. (Ibid.)

Plaintiffs’ motion for a preliminary injunction is denied.

(2) Eagle’s Motion to Compel.

Although Eagle’s motion is directed to Mr. McDonald, it is opposed by both Mr. McDonald and VDP. Eagle seeks Mr. McDonald produce documents responsive to request for production no. 29 (“the McDonald Request”):

Produce true and correct copies of all DOCUMENTS in YOUR possession evidencing COMMUNICATIONS between YOU and VDPE after May 31, 2015.

In response to the McDonald Request, Mr. McDonald asserted no objections, and stated he had conducted a diligent search but did not believe any such records ever existed, but that “any responsive [documents] uncovered” would be produced. (VDP Opp., p. 2, ll. 16-19.) In its motion, Eagle asserts that no documents responsive to request no. 29 were produced, despite Mr. McDonald’s failure to object to this request, and despite numerous assurances by Mr. McDonald’s counsel that he would do so.

After Eagle filed the instant motion, Mr. McDonald produced documents responsive to Eagle’s request, consisting of over 350 pages of email communications. (McDonald Opp., p. 2, ll. 1-4.) Before doing so, however, VDP’s attorney reviewed the responsive documents, redacted certain portions, and withheld other communications altogether. (McDonald Opp., p. 2, ll. 5-9; VDP Opp., p. 1, ll. 18-222.) VDP argues these documents, while arguably responsive to Eagle’s request, should not be produced because they contain VDP’s confidential trade secrets, in addition to “sensitive information concerning customers and potential customers that are unrelated to Eagle or any issue in this action.” (VDP Opp., p. 1, ll. 12-15.)

By way of background, Eagle previously propounded a request nearly identical to the McDonald request to VDP (“the VDP Request”):

Produce true and correct copies of all DOCUMENTS in YOUR possession evidencing COMMUNICATIONS between YOU and McDONALD during the
2 As outlined in its opposition, VDP permitted Mr. McDonald to produce between 371 and 391 pages of documents, representing 63 documents, with “irrelevant competitive information redacted,” and withheld 442 documents from Mr. McDonald’s production. (VDP Opp., p. 1, ll. 18-22.)
period May 31, 2015 to the present.

In short, both the McDonald Request and VDP Request seek the same documents, which are communications between Mr. McDonald and VDP after May 31, 2015.

In response to the VDP Request, VDP asserted objections, including that the request was overbroad, called for irrelevant information, and sought confidential, proprietary, and private information. VDP agreed to produce “responsive non-privileged documents within its possession, custody, or control,” which it did. (VDP Opp., p. 2, ll. 10-16.) VDP also produced a privilege log. VDP thus asserts that Eagle has received all non-privileged, relevant documents responsive to both the McDonald Request and the VDP Request. Eagle did not move to compel VDP to produce additional or further documents in response to the VDP Request.

The pleadings before the Court evidence that Eagle was compelled to file the instant motion based on Mr. McDonald’s failure to produce any documents. Therefore, sanctions are warranted. (Code Civ. Proc., § 2031.320(b).)

Mr. McDonald shall pay sanctions in the amount of $2,046.00 to Eagle within 30 days of the hearing on this motion. After payment of sanctions, the Parties shall return to Court at which time the Court will consider the following issues: – Whether Mr. McDonald can raise the objection of privilege, despite his failure to object in his original response to the McDonald Request; and – Whether McDonald can rely on an independent privilege log prepared by VDP, rather than creating his own privilege log.

The Parties shall return to Court on May 1, 2018, to address the above issues.