Case Name: Judith Kirchick v. Alan Kirchick, et al.
Case No.: 2018-CV-324851

Motion for Summary Judgment to the Complaint by Defendants Alan Kirchick and AMK Insurance Agency, Inc.

Factual and Procedural Background

This is an action involving payment of referral fees. Plaintiff Judith Hamilton Kirchick (“Plaintiff”) is a 50% shareholder of Hamilton Finance Corporation (“HFC” or “the Company”) also serving as its Secretary, Treasurer and Chief Financial Officer and one of two directors. (Complaint, ¶ 1.) HFC was founded by Plaintiff and her husband, S. Leonard Kirchick (“SLK”). (Id. at ¶ 7.) Defendant Alan Kirchick (“Alan” ) is also a 50% shareholder of record for HFC and one of two directors for the Company. (Id. at ¶ 2.) Defendant AMK Insurance Agency (“AMK”), owned by defendant Alan, is a California Corporation with its principal place of business in San Jose, California. (Id. at ¶¶ 3, 8.) SLK also worked for AMK from its inception in 1992 through his death in 2016. (Id. at ¶ 8.)

Prior to the formation of AMK, SLK entered into an ongoing and continual contractual relationship with Imperial Premium Finance Services Corporation (“IPFS”). (Complaint, ¶ 9.) HFC and IPFS agreed that the Company would refer third party insureds to IPFS to use IPFS’s insurance premium financing services (the “Contract”). (Ibid.) From the referrals made, IPFS would pay a finder’s fee/commissions/referral fees/etc. (the “Fee”) to the Company. (Ibid.) The Contract is the only asset of value held by the Company. (Id. at ¶ 10.)

From the Contract inception through the death of SLK, the Fee, paid from IPFS, always went directly to HFC. (Complaint, ¶ 11.) Prior to SLK’s death, the Company paid the Fees to the shareholders, SLK and Plaintiff. (Ibid.) The Contract has continued in the same manner and custom since its inception until January 2018. (Ibid.)

Following SLK’s death, payments from the Contract were made to Plaintiff and defendant Alan, as SLK’s successor in interest to his 50% of the Company. (Complaint at ¶ 13.) The payment Fee sheets received by the Company from IPFS were directed to HFC and showed the total of the fees to be received. (Ibid.) After SLK’s death, the Fee payments were made one-half to the Company and one-half to AMK at the request of defendant Alan. (Ibid.) Plaintiff was agreeable to this change in payment structure because the payments were still going 50% to her and 50% to defendant Alan, as designated by SLK. (Ibid.)

In May 2017, defendant Alan demanded that Plaintiff pay $600 per month in fees to AMK for processing of Contract paperwork sent to IPFS by AMK. (Complaint, ¶ 14.) Plaintiff thereafter made a $2,400 processing payment to AMK for January, February, March, and April 2017, and established processing payments to AMK monthly from May through December 2017. (Ibid.)

In December 2017, defendant Alan went to an executive of IPFS and terminated the Contract and entered into a new agreement with IPFS which has all payments of the Fee under the new contract go directly to AMK with no Fees paid to HFC. (Complaint, ¶ 16.) In the alternative, in December 2017, defendant Alan went to an executive of IPFS and altered the payment structure of the Contract for payment of the Fees to go directly to AMK and defendant Alan, and no Fees to be paid to AMK. (Ibid.) Since January 1, 2018, AMK has received all referral fee income from IPFS. (Ibid.) Because of actions taken by defendant Alan, all income has stopped to the Company and Plaintiff from IPFS. (Ibid.)

On March 12, 2018, Plaintiff filed the operative Complaint against defendants Alan and AMK (collectively, “Defendants”) alleging causes of action for: (1) breach of fiduciary duty; (2) intentional interference with prospective economic relations; and (3) declaratory relief and preliminary injunction. Defendants thereafter filed an Answer alleging various affirmative defenses.

Motion for Summary Judgment

Currently before the Court is Defendants’ motion for summary judgment to the Complaint. (Code Civ. Proc., § 437c.) Defendants filed a request for judicial notice in conjunction with the motion. Plaintiff filed written opposition and objections to evidence. Defendants filed reply papers and objections to evidence. No trial date has been set.

Defendants’ Request for Judicial Notice

The Court declines to address Defendants’ request for judicial notice as it is not material in resolving issues raised by the motion for summary judgment. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is confined to those matters which are relevant to the issue at hand].)

Plaintiff’s Evidentiary Objections

The Court declines to rule on Plaintiff’s objections to evidence submitted in opposition as they are not material in resolving issues raised by the motion for summary judgment. (See Code Civ. Proc., § 437c, subd. (q) [in granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion].)

Defendants’ Evidentiary Objections

The Court declines to rule on Defendants’ objections to evidence submitted in the reply papers as they are not material in resolving issues raised by the motion for summary judgment. (See Code Civ. Proc., § 437c, subd. (q) [in granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion].)

Legal Standard

Summary judgment is properly granted when no triable issue exists as to any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary judgment has met his or her burden of showing a cause of action has no merit if the defendant has shown that one or more elements of the plaintiff’s cause of action cannot be established. (Code Civ. Proc., § 437c, subd. (p)(2).) “[T]he defendant bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact. [Citation.] If the defendant carries the burden of production, the burden shifts to the plaintiff to make his or her own prima facie showing of the existence of a triable issue of fact.” (McGonnell v. Kaiser Gypsum Co. (2002) 98 Cal.App.4th 1098, 1103.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 [fn. omitted].) The evidence in favor of the party opposing the motion must be liberally construed, and all doubts concerning the evidence must be resolved in favor of that party. (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460.)

Second Cause of Action: Intentional Interference with Prospective Economic Relations

The second cause of action is a claim for intentional interference with prospective economic relations. The elements of a claim of intentional interference with prospective economic relations are: (1) an economic relationship between the plaintiff and a third party containing the probability of future economic benefit; (2) knowledge by the defendant of the relationship; (3) acts by defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the acts of the defendant. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.)

The plaintiff “must plead and prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiff’s expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself.” (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.) “[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard … an act must be wrongful by some legal measure, rather than merely a product of an improper, but lawful, purpose or motive.” (Id. at p. 1159 & fn. 11; Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152.)

Here, Plaintiff alleges that HFC entered into an economic relationship with IPFS for the payment of Fees through the Contract. (Complaint, ¶ 25.) Defendant Alan received the benefit from the Contract and therefore knew of the economic benefit to Plaintiff. (Id. at ¶ 26.) Defendants allegedly reached out to IPFS, or its agents, with the intent to disrupt the relationship formed through the Contract. (Id. at ¶ 27.) Defendants maliciously interfered with the Contract in order to have all IPFS’ Fees paid directly to AMK. (Id. at ¶ 28.) Thus, Plaintiff’s relationship with IPFS has been disrupted and strained and she continues to be harmed each day because of Defendants’ interference with the Contract. (Id. at ¶¶ 29-30.)

On summary judgment, Defendants make the following two arguments: (1) Plaintiff has no enforceable Contract to establish an economic relationship; and (2) Plaintiff lacks standing to assert an interference claim.

Lack of Enforceable Contract

Defendants first argue the alleged Contract forms the basis for any economic relationship to support the second cause of action. Defendants contend the Contract either did not exist or is not enforceable and thus there is no economic relationship to establish a claim for interference.

“[A]n essential element of the tort of intentional interference with prospective business advantage is the existence of a business relationship with which the tortfeasor interfered. [Citation.] Although this need not be a contractual relationship, an existing relationship is required. [Citation.]” (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 546.)
In opposition, Plaintiff correctly points out that the existence of a contract is not necessary to establish a claim for interference with prospective advantage. (See OPP at p. 8; see also Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 [“The tort of interference with prospective economic advantage protects the same interest in stable economic relationships as does the tort of interference with contract, though interference with prospective advantage does not require proof of a legally binding contract.”].) Nevertheless, the economic relationship at issue in this lawsuit clearly revolves around the existence of the alleged Contract. The Court therefore will consider Defendants’ argument on this issue for purposes of this motion.

In addressing the interference claim, Defendants rely on material fact nos. 13-21 with supporting evidence in the separate statement. These material facts and supporting evidence however do not address whether a contract existed between HFC and IPFS. (See Allen v. Smith (2002) 94 Cal.App.4th 1270, 1282 [all material facts must be set forth in the separate statement].) Defendants therefore do not submit any admissible evidence showing that the alleged Contract does not exist. (See Gaggero v. Yura (2003) 108 Cal. App. 4th 884, 891[a party moving for summary judgment cannot simply point out the opposing party’s absence of evidence; the moving party must also produce evidence that the opposing party cannot reasonably obtain evidence to support his or her claim].)

In the alternative, Defendants contend that, to the extent such a contract does exist, it is not enforceable as it expired in April 2009. (See Defendants’ Separate Statement of Undisputed Facts at No. 21; Hoffman Decl. at Ex. A.) In doing so, Defendants rely on a document titled “Business Agreement” entered into between IPFS and HFC/AMK in April 2006. (Ibid.) The problem here is that neither side is confident that this is the alleged Contract entered into between IPFS and HFC. The fact that this “might” be the contract is not a proper basis to support a motion for summary judgment. In addition, “[a] motion for summary judgment must respond to the issues framed by the pleadings.” (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064.) The Complaint here specifically refers to a Contract between SLK and IPFS prior to 1992 and before the formation of AMK. (See Complaint at ¶¶ 9, 11.) Thus, the “Business Agreement,” entered in April 2006, is beyond the scope of the pleadings and therefore does not support a basis for summary judgment. (See Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663 [summary judgment cannot be granted on a ground not raised by the pleadings].)

Furthermore, Plaintiff has presented deposition testimony from Sean Hoffman, IPFS’ Vice President and Branch Manager, where he testifies that there was an ongoing relationship between IPFS and HFC since before he joined IPFS in 2004. (See Declaration of Ashlee E. Gustafson, Ex. A [Hoffman Depo at pp. 10, 66].) Such testimony provides at least some evidence showing an economic relationship existed between IPFS and HFC to support a claim for interference.

Lack of Standing

Defendants next argue that Plaintiff lacks standing to assert an interference claim because, HFC, not Plaintiff, is the real party in interest. (See Redevelopment Agency of San Diego v. San Diego Gas & Electric Co. (2003) 111 Cal.App.4th 912, 920 [“A party who is not the real party in interest lacks standing to sue.”]; see also Killian v. Millard (1991) 228 Cal.App.3d 1601, 1605 [“A real party in interest ordinarily is defined as the person possessing the right sued upon by reason of the substantive law.”].)

Again, in addressing the interference claim, Defendants rely on material fact nos. 13-21 with supporting evidence in the separate statement. None of the material facts or supporting evidence consider the standing argument. Nor do Defendants fully explain and substantiate their standing argument in their memorandum of points and authorities except to cite the California appellate decision in LiMandri v. Judkins (1997) 52 Cal.App.4th 326 (LiMandri), a case examining a trial court’s ruling on demurrer. (See Memo of P’s & A’s at p. 10.) While LiMandri does address a claim for interference, the appellate court does not consider the issue of standing with respect to the claim. Therefore, LiMandri is inapposite and does not resolve the issue of standing for purposes of summary judgment.

Since Defendants do not prevail on the interference claim, they are not entitled to summary judgment and the Court therefore declines to address the remaining arguments. (See Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717 [“If there is any issue of material fact to be tried, summary judgment must be denied.”]; see also Gleason v. Klamer (1980) 103 Cal.App.3d 782 [appellate court reversed trial court’s order granting summary judgment because there was a single triable issue of fact].)

Disposition

The motion for summary judgment is DENIED.

The Court will prepare the Order.