Case Number: VC066929 Hearing Date: October 30, 2018 Dept: SEC

H.P. AUTOMOMTIVE AND TOW, INC. v. HUNTINGTON PARK TOW SERVICE

CASE NO.: VC066929

HEARING: 10/30/18

#10

TENTATIVE ORDER

Defendants CITY OF HUNTINGTON PARK; CITY OF HUNTINGTON PARK CITY COUNCIL; COSME LOZANO; and EDGAR CISNEROS’s demurrer to Plaintiff’s Complaint is MOOT in part, and SUSTAINED with 30 days leave to amend in part. CCP §430.10(e).

Moving Party to give notice.

Defendants’ request for judicial notice is GRANTED as to the existence of the documents, but not as to any hearsay statements contained therein. Cal. Ev. Code §452.

As an initial matter, the demurrer is MOOT as to Defendants COSME LOZANO and EDGAR CISNEROS pursuant to the Requests for Dismissal without prejudice of the entire complaint entered on June 28, 2018.

This breach of contract action was filed by Plaintiff H.P. AUTOMOTIVE AND TOW, INC. on February 15, 2018. The relevant facts as alleged, are as follows: “HP Tow has served the City since 1952, and since 1966 it has held the exclusive contract with the City to provide its police garage, towing and storage services.” (Complaint ¶1.) “In late 2009, Mr. Sandhu assumed the position of HP Tow’s President and Mr. Singh became Chief Financial Officer. That same year, on or about June 1, 2009, HP Tow and the City entered into an amended and restated version of the towing, storage, and police garage contract. The amended and restated contract (the ‘Contract’) was originally set to terminate in 2015, but the parties later agreed to extend the term of service until June 30, 2022, unless cancelled in accordance with contract provisions. The contract expressly prohibited the City from cancelling the contract unless: (1) there had been a prior breach by HP Tow; (2) the City gave notice of the breach to HP Tow; and (3) HP Tow failed to correct the breach within 90-days. The Contract also forbade the City from cancelling the contract in a capricious manner.” (Contract ¶3.) “Despite the express terms of the Contract, or about December 23, 2015, the City sought to terminate the Contract because the City believed HP Tow’s towing and storage rates—amounts that the City Council had previously approved—were too high….” (Complaint ¶4.) “H.P. Tow confronted the City about its…breach of the Contract and the City Council’s violation of the Brown Act’s notice requirements prior to its vote. Forced to withdraw and rescind its previous vote, the City changed course and instead relied upon newly discovered information to once again unlawfully breach the Contract.” (Complaint ¶5.) “The City discovered that over the course of several months…City Council member Valentin Amezquita…had been acting as a confidential informant for the FBI. In this capacity, Amezquita met numerous times with HP Tow representatives concerning the company’s desire to adjust the contract’s towing and storage rates under terms which the contract specifically allowed. As a result of these meetings, the government charged the company and Mr. Singh, with conspiracy to commit bribery of a public official.” (Complaint ¶6.) Plaintiffs allege that neither Mr. Singh nor Mr. Sandhu had been found guilty of anything, rather, “the City seized upon this circumstance as a pretext to do what they wanted to do previously: cancel the Contract.” (Complaint ¶7.)

Plaintiff’s Complaint asserts the following causes of action: (1) Breach of Contract; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing; (3) Specific Performance of the Contract; (4-6) Declaratory Relief; (7) Intentional Interference with Contract; and (8) Intentional Interference with Prospective Economic Relations.

Defendants CITY OF HUNTINGTON PARK, and CITY OF HUNTINGTON PARK CITY COUNCIL (“Defendants”) demur to Plaintiff’s second, third, fourth, fifth, and sixth causes of action pursuant to CCP §430.10(e). Defendants also demur to the first, second, fourth, fifth, and sixth causes of action as alleged against Defendant HUNTINGTON PARK CITY COUNCIL where the City Council is not a separate entity from the City and thus is an unnecessary party.

Second Cause of Action – Breach of Implied Covenant of Good Faith and Fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in the performance of the contract such that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36.) The implied covenant “is designed to effectuate the intentions and reasonable expectations of parties reflected by mutual promises within the contract.” (Nein v. HostPro, Inc. (2009) 174 Cal.App.4th 833, 852.) The covenant mandates that neither party do anything which will deprive the other of the benefits of the agreement. (Wolf v. Walt Disney Pictures and Television (2008) 162 Cal.App.4th 1107, 1120.) In addition, the covenant implies a promise to give any necessary cooperation to accomplish the purpose of the contract. (Pasadena Live, LLC v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1093; see also Thrifty Payless, Inc. v. Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244 [covenant supplements express contractual duties].) “A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment ….Thus, allegations which assert such a claim must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement. Just what conduct will meet these criteria must be determined on a case by case basis and will depend on the contractual purposes and reasonably justified expectations of the parties. If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395-96.)

Defendants demur to this cause of action on the basis that “all actions taken by the Defendants and complaint of in the Complaint—namely exercising the termination provision—are expressly authorized in the Tow Contract.” (Demurrer, 4: 16-17.; See Complaint Exs. A and C.). The Court agrees. This cause of action is superfluous of the first cause of action for breach of contract. The demurrer to the second cause of action is sustained with 30 days leave to amend.

Third Cause of Action – Specific Performance

“Specific performance is a[]…remedy and the cause of action is for breach of contract.” (5 Witkin, California Procedure (5th), Pleading, Section 784.) Plaintiff has already alleged a claim for breach of contract. A standalone claim for specific performance is unnecessary. The demurrer to the third cause of action is sustained with 30 days leave to amend. However, the Court notes that it is premature at this time to determine whether specific performance is an available remedy, should Plaintiff prevail on the first cause of action. (See Stevens Group Fund IV v. Sobrato Dev. Co. (1991) 1 Cal.App.4th 886, 896.)

Fourth, Fifth, and Sixth Causes of Action – Declaratory Relief

Plaintiff’s declaratory relief claims fail where the rights, obligations and duties of the parties will necessarily be adjudicated within the first cause of action. (CCP §1061.) These causes of action are duplicative and based on the same allegations as Plaintiff’s first cause of action for breach of contract. The demurrer to the fourth, fifth, and sixth causes of action is sustained with 30 days leave to amend.

First, Second, Fourth, Fifth, and Sixth Causes of Action – As to Defendant CITY OF HUNTINGTON PARK CITY COUNCIL

Defendants argue that the CITY OF HUNTINGTON PARK CITY COUNCIL is an improper party, and should be dismissed. Defendants specifically argue that the proper entity defendant is the CITY OF HUNTINGTON PARK.

As argued by Defendants in the instant demurrer, “’City Council’ means the legislative body or governing board of a city.” (Gov. Code §56024.) The City Council is a party of the City, not a separate entity which can be sued. The demurrer to the first, second, fourth, fifth, and sixth causes of action as to Defendant CITY OF HUNTINGTON PARK CITY COUNCIL is sustained with 30 days leave to amend.