Caliber Paving Co. v. Rexford Industrial Realty and Management

Filed 9/1/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CALIBER PAVING COMPANY, INC.,
Plaintiff and Appellant, G058406
v. (Super. Ct. No. 30-2018-00977441)
REXFORD INDUSTRIAL REALTY OPINION
AND MANAGEMENT, INC.,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Glenn R.
Salter, Judge. Reversed and remanded.
Callari & Summers and Andrew C. Callari for Plaintiff and Appellant.
Law Offices of Tom S. Chun and Tom S. Chun for Defendant and
Respondent.
* * *
INTRODUCTION
California law recognizes a tort cause of action against a noncontracting
party—also called a stranger to the contract—who intentionally interferes with the
performance of a contract. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994)
7 Cal. 4th 503, 513-514 (Applied Equipment).) Caliber Paving Company, Inc. (Caliber)
sued Rexford Industrial Realty and Management, Inc. (Rexford) for intentional
interference with a contract between Caliber and Steve Fodor Construction (SFC). The
trial court granted Rexford’s motion for summary judgment on the ground that Rexford,
although not a party to the contract, had an economic interest in it and therefore could not
be liable in tort for intentional interference with contract. Caliber appealed from the
judgment; we reverse.
In a case of first impression in this district, we hold that, under Applied
Equipment, a defendant who is not a party to the contract or an agent of a party to the
contract is a noncontracting party or stranger to the contract and, regardless whether the
defendant claims a social or economic interest in the contractual relationship, may be
liable in tort for intentional interference with contract. Applied Equipment does not
confer immunity for intentional interference with contract on noncontracting parties
having a social or economic interest in the contractual relationship from liability. We
also conclude that Caliber submitted admissible evidence sufficient to meet its burden of
raising a triable issue of fact as to whether Rexford interfered with the contract between
SFC and Caliber.
FACTS
Rexford owns and operates industrial property throughout Southern
California. In 2017, Rexford hired SFC to make certain improvements to a Rexford
property in Carson (the property). The scope of work included repaving the parking lot
on the property.
2
SFC hired Caliber to perform the repaving of the parking lot. The contract
between SFC and Caliber (the SFC/Caliber contract) divided the parking lot into four
areas, with a separate cost to repave each area. Caliber completed the work for area one
in June 2017.
SFC and Caliber agreed the work on the next area would start on
September 11, 2017. Caliber could not start the work on that area on September 11
because there were trucks and trailers parked on the jobsite.
From this point, SFC’s and Caliber’s versions of events materially differ.
SFC’s sole owner and officer, Steve Fodor, declared that he learned on September 11 that
Caliber had arrived earlier than expected on the jobsite and left because there were trucks
and trailers parked there. Fodor declared that at 11:02 a.m. on September 11 he received
an e-mail from Caliber with a “move on” charge of $7,500. A few hours later the charge
increased to $15,000. Fodor believed the charge was unjustified and refused to pay it. In
the following days, SFC and Caliber had discussions to resolve the dispute but Caliber
refused to return to work and complete the job unless SFC agreed to pay the move on
charge. Unable to resolve the dispute, Fodor hired another paving subcontractor to
complete the repaving of the parking lot.
Caliber’s president, Darin Gilchriese, declared it was imperative for Caliber
to begin work in the next area to repave on September 11, 2017 in order to complete the
work on September 12 but trucks and trailers parked in the jobsite had prevented Caliber
from starting on September 11. When those circumstances were explained to SFC, it
agreed to reschedule the work to September 14 and 15. Gilchriese declared the move on
charge was authorized by the SFC/Caliber contract and SFC was contractually obligated
to pay it. At about 6:00 p.m. on September 13, SFC canceled the work. Gilchriese
testified in his deposition and declared that Fodor had told him that Rexford’s primary
representative to SFC, Andy Wilson, had directed Fodor to “kick [Caliber] off the job or
hire somebody else.” Caliber’s account executive, Jeffrey Neilan, declared that the SFC
3
onsite project manager, Darin Maddox, had told him “Rexford wanted Caliber off the
job.”
PROCEDURAL HISTORY
Caliber sued SFC for breach of the SFC/Caliber contract and sued Rexford
for intentional interference with that contract. Rexford moved for summary judgment on
two grounds: (1) Rexford was not a stranger to the contract and therefore could not be
liable for interfering with it and (2) the only evidence Caliber had to prove Rexford
interfered with the contract between Caliber and SFC was inadmissible double hearsay.
The trial court concluded the hearsay evidence offered by Caliber was
admissible because “each layer” of hearsay fell within an exception to the hearsay rule.
The court granted Rexford’s motion for summary judgment, however, on the ground
Rexford was not a stranger to the contract. The court stated: “In Applied Equipment
[,supra,] 7 Cal. 4th 503 at pages 513-514, the Supreme Court held that non-contracting
parties, i.e., strangers to the contract, could be held liable for intentionally interfering
with contract. It referred to the non-contracting parties as ‘outsiders’ who have ‘no
legitimate social or economic interest in the contractual relationship.’ Two lines of
authority have developed as to what the Supreme Court meant. . . . Suffice it to say, it
does not appear that the local District Court of Appeal has weighed in on how to apply
the Supreme Court’s holding. [¶] Here, Rexford is the owner of the real property; the
contract involves improvements to that real property; and the express contracting parties
are effectively the general contractor and a subcontractor. It is hard to envision a
situation where the alleged interfering party does not have a more direct economic
interest in a contract than one between its general contractor and a subcontractor over
how the property is improved. Based on that relationship, it would appear, under Applied
Equipment, that for purposes of analysis Rexford cannot be held liable for interference
4
with the contract between the general contractor and the subcontractor.” Judgment in
Rexford’s favor was entered in July 2019.
DISCUSSION
I.
Standard of Review
We review orders granting summary judgment de novo. (Saelzler v.
Advanced Group 400 (2001) 25 Cal. 4th 763, 767.) Summary judgment is warranted if
the moving papers establish there is no triable issue of material fact and the moving party
is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 843.)
We consider all of the evidence presented by the parties (except for
evidence which the trial court properly excluded), liberally construe the evidence in
support of the party opposing summary judgment, and resolve all doubts about the
evidence in that party’s favor. (Hughes v. Pair (2009) 46 Cal. 4th 1035, 1039.) We must
draw from the evidence all reasonable inferences in the light most favorable to the party
opposing summary judgment. (Essex Ins. Co. v. Heck (2010) 186 Cal. App. 4th 1513,
1522; Nadaf-Rahrov v. Neiman Marcus Group, Inc. (2008) 166 Cal. App. 4th 952, 961.)
II.
As a Noncontracting Party, Rexford May Be Liable for
Intentional Interference with Contract
A. Applied Equipment Does Restrict Noncontracting Parties to
Those Having No Social or Economic Interest in the Contract.
“[I]n California, the law is settled that ‘a stranger to a contract may be
liable in tort for intentionally interfering with the performance of the contract.’” (Reeves
v. Hanlon (2004) 33 Cal. 4th 1140, 1148, quoting Pacific Gas & Electric Co. v. Bear
5
Stearns & Co. (1990) 50 Cal. 3d 1118, 1126.)1 Citing Applied Equipment, supra, 7
Cal.4th at pages 513-514, Rexford argues it cannot be held liable for intentional
interference with contract by virtue of having a legitimate economic interest in the
contractual relationship.
The California Supreme Court in Applied Equipment held that a party to a
contract cannot be held liable in tort for conspiracy to interfere with the party’s own
contract. (Applied Equipment, supra, 7 Cal.4th at p. 514.) The court reasoned that one
party to a contract has no tort duty to another party not to interfere with contract
performance; a contracting party’s only duty is to perform the contract according to its
terms. (Ibid.) “‘To impose tort liability upon the contract breaker because of the
involvement of a third person (when liability is limited to contract damages when the
contract breaker is acting alone) undermines the policies which have developed limited
contractual liability.’” (Id. at p. 517.)
The Supreme Court stated, with emphasis, that “noncontracting parties” or
“‘a stranger to a contract’” can be liable in tort for intentionally interfering with the
performance of a contract. (Applied Equipment, supra, 7 Cal.4th at p. 513; see also id. at
p. 514 [“[t]he tort duty not to interfere with the contract falls only on strangers”].) These
statements are quite unambiguous. The source of ambiguity is two lines from Applied
Equipment which, when viewed in isolation, seem to restrict tort liability. The court, in
explaining why contracting parties cannot be held liable for intentional interference with
contract, stated: “However, consistent with its underlying policy of protecting the
expectations of contracting parties against frustration by outsiders who have no legitimate
1
The elements of a cause of action for intentional interference with contract are (1) a
valid contract between the plaintiff and a third party, (2) the defendant’s knowledge of
that contract, (3) the defendant’s intentional acts designed to induce a breach or
disruption of the contractual relationship, (4) actual breach or disruption of the
contractual relationship, and (5) resulting damage. (Reeves v. Hanlon, supra, 33 Cal.4th
at p. 1148.)
6
social or economic interest in the contractual relationship, the tort cause of action for
interference with a contract does not lie against a party to the contract.” (Id. at p. 514.)
In the next paragraph, the court stated: “The tort duty not to interfere with the contract
falls only on strangers—interlopers who have no legitimate interest in the scope or course
of the contract’s performance.” (Ibid.)
The Supreme Court’s comments about the liability of noncontracting
parties were unnecessary to the holding of Applied Equipment, which was limited to
whether a party can be liable for conspiracy to interfere with its own contract. The
Supreme Court never addressed whether a tort claim for interference with contract could
be made against a noncontracting party claiming to have a social or economic interest in
the contractual relationship. Cases are not authority for propositions not considered.
(Kinsman v. Unocal Corp. (2005) 37 Cal. 4th 659, 680.)
Further, when interpreting an opinion, any one sentence must be viewed in
the context of the entire opinion (International Assn. of Fire Fighter, Local 188,
AFL-CIO v. Public Employment Relations Bd. (2011) 51 Cal. 4th 259, 276), and language
must be construed in the context of the entire opinion (Superior Court v. Public
Employment Relations Bd. (2018) 30 Cal. App. 5th 158, 188, fn. 10). The context of
Applied Equipment leaves no doubt the Supreme Court did not intend to restrict tort
liability for interfering with contractual relations to noncontracting parties with no social
or economic interest in the contract. As we have mentioned, the court placed emphasis
on the words “noncontracting parties” and “‘stranger to a contract’” in identifying who
may be liable for interference with contract. (Applied Equipment, supra, 7 Cal.4th at
p. 513.) None of the authorities cited in Applied Equipment uses the phrase “outsiders
who have no legitimate social or economic interest in the contractual relationship” (see
Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal. App. 4th 344, 352-353 (Woods)),
and no California Supreme Court opinion since Applied Equipment has used that phrase.
7
The reasoning of Applied Equipment and the purpose for imposing liability
for intentional interference with contract further demonstrate the Supreme Court did not
confer immunity for that tort on noncontracting parties with a social or economic interest
in the contract. The Supreme Court reasoned that imposing tort liability on a contracting
party for conspiracy to interfere with contract would obscure the “fundamental
differences between contract and tort.” (Applied Equipment, supra, 7 Cal.4th at p. 516.)
“Whether or not a stranger to the contract induces its breach, the essential character of a
contracting party’s conduct remains the same—an unjustified failure or refusal to
perform. . . . Regardless of the presence or absence of third party involvement, the
contracting party has done nothing more socially opprobrious than to fall short in meeting
a contractual commitment.” (Id. at pp. 516-517.) When a noncontracting party,
including one claiming a social or economic interest in the contract, induces a contracting
party to breach, the noncontracting party’s conduct does not amount to a failure or refusal
to perform. Instead, the noncontracting party has engaged in “socially opprobrious”
conduct for which tort liability is imposed; such conduct is socially opprobrious
regardless whether the noncontracting party claims a social or economic interest in the
contract.
The tort of intentional interference with contract recognizes the importance
of an established contractual relationship by protecting a party’s interest in receiving
performance of the contract. “The courts provide a damage remedy against third party
conduct intended to disrupt an existing contract precisely because the exchange of
promises resulting in such a formally cemented economic relationship is deemed worthy
of protection from interference by a stranger to that agreement.” (Della Penna v. Toyota
Motor Sales U.S.A., Inc. (1995) 11 Cal. 4th 376, 392.) A contractual relationship is no
less disrupted, and the contracting party’s interest in receiving performance of the
contract no less impaired, when the noncontracting stranger claims a social or economic
interest in the contractual relationship.
8
Another reason the Supreme Court declined to impose tort liability against
a party to a contract for conspiracy for its breach was that the prospect of liability for
breach of contract created sufficient legal incentive to induce performance. (Applied
Equipment, supra, 7 Cal.4th at p. 520.) But a noncontracting party, including one
claiming a social or economic interest in the contractual relationship, does not face the
prospect of liability for breach of contract; for the noncontracting party, it is the prospect
of liability for interference with contract that serves as the incentive to refrain from
interfering with the contractual relationship.
Conferring immunity from tort liability for interference with contract on a
noncontracting party claiming to have a social or economic interest in the contractual
relationship could have the anomalous result of leaving a plaintiff without a remedy for
tortious conduct. “‘To shield parties with an economic interest in the contract from
potential liability would create an undesirable lacuna in the law between the respective
domains of tort and contract. A party with an economic interest in a contractual
relationship could interfere without risk of facing either tort or contract liability. This
result is particularly perverse as it is those parties with some type of economic interest in
a contract who[] would have the greatest incentive to interfere with it. Such a result
would hardly serve the established goal of protecting “a formally cemented economic
relationship . . . from interference by a stranger to the agreement.”’” (Popescu v. Apple
Inc. (2016) 1 Cal. App. 5th 39, 53 (Popescu), disapproved on another ground in Ixchel
Pharma, LLC v. Biogen, Inc. (2020) 9 Cal. 5th 1130, 1148.) As Caliber points out, under
the trial court’s interpretation of Applied Equipment, Caliber cannot sue Rexford for
interference with contract because Rexford claims to have an economic interest in the
SFC/Caliber contract, but neither can Caliber sue Rexford for breach of contract, because
Rexford is not a contracting party.
9
B. Court of Appeal Opinions Addressing Applied Equipment
Several Court of Appeal opinions have grappled with the meaning of
Applied Equipment, and all but one have concluded it does not restrict tort liability for
interference with contract to noncontracting parties having no social or economic interest
in the contract.
In Woods, supra, 129 Cal.App.4th at pages 347-348, two employees of a
joint venture sued its majority shareholder for interference with a stock option contract
the employees had with the joint venture. The trial court sustained the majority
shareholder’s demurrer on the ground the majority shareholder was not a stranger to the
contract. (Id. at p. 349.) The Court of Appeal, reversing the judgment, rejected the claim
that under Applied Equipment a noncontracting party with an economic interest in the
contract is immune from a claim for intentional interference with contract. (Id. at
pp. 352-353.) The Woods court noted that neither Applied Equipment nor any of the
cases it cited considered the “potential liability of noncontracting parties who had some
general economic interest or other stake in the contract.” (Id. at p. 352.) The Woods
court concluded it was “highly unlikely” that Applied Equipment held or could be
construed to hold that “persons or entities with an ownership interest in a corporation are
automatically immune from liability for interfering with their corporation’s contractual
obligations.” (Id. at p. 353.)
The Woods court, in addressing Applied Equipment, observed that the
source of the phrase “outsiders who have no legitimate social or economic interest in the
contractual relationship” (Applied Equipment, supra, 7 Cal.4th at p. 514, italics omitted)
is “a mystery” with “no apparent connection to the issues.” (Woods, supra, 129
Cal.App.4th at p. 353.) The Woods court surmised that the Applied Equipment court used
the term stranger to a contract interchangeably with the terms “‘noncontracting parties’”
and “‘third parties.’” (Ibid.) We agree.
10
In Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal. App. 4th 945,
963-964 (Asahi), the Court of Appeal held that a corporate defendant that had acquired as
a subsidiary an entity with an existing license agreement was not immune from suit for
interference with that agreement under the theory the corporate defendant was not a
stranger to it. The Asahi court agreed with Woods that “‘[a] stranger,’ as used in Applied
Equipment, means one who is not a party to the contract or an agent of a party to the
contract.” (Id. at pp. 963-964.)
In Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp., U.S.A.
(2013) 221 Cal. App. 4th 867, 872-873, 883, the Court of Appeal upheld a jury verdict in
favor of the plaintiff on its claim that the defendant/franchisor interfered with the
plaintiff’s contract to sell a dealership franchise. The court rejected the argument the
defendant could not be liable for interference with contract because the defendant, by
virtue of its right to approve the successor dealer, was not a stranger to the contract. (Id.
at p. 883.) The court, after discussing Woods with approval, stated, “we also decline to
extend the holding of Applied Equipment.” (Id. at p. 884.)
The Court of Appeal in Popescu, supra, 1 Cal.App.5th at pages 39 and 53
also declined to read Applied Equipment as restricting the class of nonparties who could
be liable for intentional interference with contract. The plaintiff in Popescu alleged the
defendant (Apple) had interfered with his employment relationship by taking affirmative
steps to convince the employer, which had a research and development agreement with
Apple, to terminate the plaintiff for his resistance to Apple’s alleged anti-competitive
conduct. (Id. at p. 44.) The Court of Appeal reversed a judgment dismissing the
plaintiff’s complaint, which had alleged, among other things, intentional interference
with contract. (Id. at pp. 44, 49-50.)
In Popescu, the court rejected Apple’s contention that under Applied
Equipment Apple could not be liable because it had an economic interest in the plaintiff’s
employment contract, and declined to read Applied Equipment as restricting liability for
11
interference with contract to those noncontracting parties not having a legitimate
economic interest in the contract. (Popescu, supra, 1 Cal.App.5th at p. 53.) The court
concluded the “stranger to a contract” language in Applied Equipment “is used as a
synonym for ‘noncontracting party’” and “[a]n extension of Applied Equipment’s holding
to immunize a third party from tortious interference claims simply because the third party
asserts some economic or other interest in a contract would significantly undercut the tort
itself and the public policy underlying it.” (Ibid.) We find this reasoning to be
persuasive.
Most recently, in Redfearn v. Trader Joe’s Co. (2018) 20 Cal. App. 5th 989,
994 (Redfearn) disapproved on another ground in Ixchel Pharma, LLC v. Biogen, Inc.
supra, 9 Cal.5th at p. 1148), the plaintiff, a broker for manufacturers of food products,
alleged the defendant, a retailer of food products, caused two of the plaintiff’s clients to
terminate their contracts with the plaintiff. The trial court sustained, without leave to
amend, a demurrer to the plaintiff’s cause of action for intentional interference with
contract on the ground the defendant was not a stranger to the contract because
performance of the broker contracts depended on the defendant purchasing the clients’
products. (Id. at p. 995.) The Court of Appeal reversed. After analyzing the foregoing
cases at length, the court concluded: “In, sum, consistent with Popescu . . . , Asahi . . . ,
and Woods . . . , we conclude that one, like [the defendant] here, who is not a party to the
contract or an agent of a party to the contract is a ‘stranger’ for purpose of the tort of
intentional interference with contract. A nonparty to a contract that contemplates the
nonparty’s performance, by that fact alone, is not immune from liability for contract
interference. Liability is properly imposed if each of the elements of the tort are
otherwise satisfied.” (Id. at p. 1003, fn. omitted.) We reach the same conclusion.
The outlier among California Court of Appeal cases is PM Group, Inc. v.
Stewart (2007) 154 Cal. App. 4th 55, 65 (PM Group). In that case, the Court of Appeal
relied on Applied Equipment to hold that if a contract depended on a noncontracting
12
party’s performance, then the noncontracting party had an economic interest in the
contract and could not be liable for interfering with it. The plaintiffs, who were concert
promoters, entered into a series of contracts with subpromoters; those contracts expressly
provided for a concert tour by the singer Rod Stewart. (Id. at p. 58.) Stewart and his
agents ultimately decided to cancel the tour. (Id. at pp. 59-60.) The plaintiffs sued
Stewart and his agents for intentional interference with the plaintiffs’ contracts with the
subpromoters. (Id. at p. 60.) A jury awarded the plaintiffs $1.6 million on the
interference cause of action. (Id. at p. 61.) The Court of Appeal reversed on the ground
that, as a matter of law, Stewart and his agents could not have interfered with the
contracts between the plaintiffs and the subpromoters. (Id. at p. 65.) Citing Applied
Equipment, the court concluded, with no analysis, “[b]ecause the subcontracts at issue
here provided for Stewart’s performance, neither Stewart nor his agents can be liable for
the tort of interfering with the subcontracts.” (Ibid.)
PM Group has been distinguished on the ground the alleged contractual
interference occurred through failure to perform (i.e., cancellation of the concert tour) as
opposed to affirmative misconduct (Redfearn, supra, 20 Cal.App.5th at pp. 1001-1002)
and on the ground that performance by Stewart and his agents was expressly
contemplated by and necessary to the contract with the subpromoters (Asahi, supra, 222
Cal.App.4th at p. 965, fn. 14; see Redfearn, supra, at p. 1001 [“[PM Group] stated a
noncontracting party is not a stranger-interloper when that party’s performance is
necessary to the plaintiff’s contract performance”]). PM Group has been read as standing
only for the proposition, not applicable here, that “a contracting party could not be held
liable for interfering with the performance of subcontracts if that claim hinged on the
defendant’s failure to perform on the original contract.” (United Nat. Maint. v. San
Diego Convention Center (9th Cir. 2014) 766 F.3d 1002, 1008.)
Here, unlike PM Group, the alleged interference was undertaken through
affirmative conduct, and the SFC/Caliber contract did not expressly contemplate any
13
action or performance by Rexford. Although the SFC/Caliber contract is a subcontract,
Caliber’s claim for interference with that contract did not hinge on Rexford’s
performance of the contract between Rexford and SFC. Caliber’s interference with
contract claim is not based upon anything Rexford did or did not do in performing
Rexford’s contract with SFC, but on the allegation, unrelated to contract performance,
that Rexford told SFC to take Caliber off the job. To the extent PM Group holds a
noncontracting party with an alleged economic interest in the contract cannot be liable for
intentional interference with contract, we respectfully disagree with that case and decline
to follow it.
Rexford relies on a nonpublished United States District Court case, Synergy
Project Management, Inc. v. City and County of San Francisco (N.D. Cal. May 16, 2018,
No. 17-cv-06763-JST) 2018 U.S.Dist. Lexis 82817, in which the court concluded a
contractor could not be liable for interfering with a subcontract. Relying on PM Group
and two federal district court cases, the court concluded the contractor could not be liable
for intentional interference because performance of the subcontracts depended on the
contractor’s performance. (Id., 2018 U.S.Dist. Lexis 82817 at p. *15.)
We are not bound by Synergy or any other decision of the federal district
courts and circuit courts of appeals. (Southern California Pizza Co., LLC v. Certain
Underwriters at Lloyd’s, London etc. (2019) 40 Cal. App. 5th 140, 151; People v. Uribe
(2011) 199 Cal. App. 4th 836, 875.) Nor do we find Synergy to be persuasive. In Synergy,
the court disregarded Asahi and Redfearn, did not mention Woods or Popescu, and
engaged in no analysis of Applied Equipment. In United Nat. Maint. v. San Diego
Convention Center, supra, 766 F.3d 1002, the Ninth Circuit Court of Appeals rejected the
argument that a noncontracting party with an economic interest in the contract cannot be
held liable for intentional interference with contract. (Id. at pp. 1007-1008.) The Ninth
Circuit stated, “California courts have repeatedly held that ‘in California, the law is
settled that “a stranger to a contract may be liable in tort for intentionally interfering with
14
the performance of the contract”’” and “California courts have repeatedly held that
parties with an economic interest in a contractual relationship may be liable for
intentional interference with that contract.” (Ibid.)
We conclude that a defendant who is not a party to the contract or an agent
of a party to the contract is not immune from liability for intentional interference with
contract by virtue of having an economic or social interest in the contract.
III.
Caliber Raised a Triable Issue of Fact as to Whether
Rexford Interfered With the SFC/Caliber Contract.
A. Rexford Did Not Have to File a Notice of Appeal to
Challenge the Trial Court’s Evidentiary Rulings.
Rexford argues that Caliber failed to show a triable issue of fact as to
whether Rexford did anything to interfere with the SFC/Caliber contract. As evidence of
Rexford’s alleged interference with the SFC/Caliber contract, Caliber submitted a
declaration each from Gilchriese and Neilan and portions of Gilchriese’s deposition
transcript. Rexford challenges the trial court’s ruling that this evidence comes within an
exception to the hearsay rule and is admissible.
Caliber contends that Rexford cannot challenge the trial court’s evidentiary
ruling because Rexford did not file a notice of appeal. A respondent must file a notice of
appeal and become a cross-appellant if the respondent seeks affirmative relief by way of
appeal. (Preserve Poway v. City of Poway (2016) 245 Cal. App. 4th 560, 585.) But Code
of Civil Procedure section 906 permits a respondent, without filing a notice of appeal, to
assert a legal theory on appeal that will result in affirmance. (See Preserve Poway v. City
of Poway, supra, 245 Cal.App.4th at p. 586.) “[T]he exception in Code of Civil
Procedure section 906 applies where a respondent asserts an alternate legal theory upon
which the judgment may be affirmed, notwithstanding the court’s resolution of the
15
appellant’s contentions in the appellant’s favor.” (Ibid.) Rexford’s challenge to the trial
court’s rulings comes within this exception.
B. Gilchriese’s Deposition Testimony and Declaration Were
Admissible; Neilan’s Declaration Was Not.
In his deposition, Gilchriese testified that, in October 2018, “Steve Fodor
told me that Andy [Wilson] at Rexford directed him to kick us [Caliber] off the job or
hire somebody else.” When asked whether Wilson had directed Fodor to breach SFC’s
contract with Caliber, Gilchriese testified, “He just explained to me that Andy [Wilson]
directed him to get somebody else to finish the work.”
Gilchriese stated in his declaration: “Mr. Fodor told me that Andy Wilson
of Rexford directed SFC to get another paving company to finish the work. Moreover, as
I testified in my deposition, ‘Steve Fodor told me that Andy at Rexford directed him to
kick us off the job or hire somebody else. I forgot exactly how he put it.’ My testimony
was in response to the question: ‘Did you hear that Rexford had instructed SFC to
terminate its contract with Caliber?’ . . . I also testified at my deposition that Mr. Wilson
directed SFC to ‘get somebody else to finish the work.’ . . . That was, in substance, what
Mr. Fodor told me.”
Neilan stated in his declaration: “Darin Maddox (SFC superintendent/
project manager at the property) stated in a conversation with me that ‘Rexford wanted
Caliber off the job.’ This fact was disclosed to Rexford in Caliber’s Response to Special
Interrogatory No. 1, which states: [¶] ‘Steve Fodor told Darin Gilchriese that Andy
Wilson instructed/directed STEVE FODOR CONSTRUCTION, INC. (“SFC”) to cancel
the contract with CALIBER and replace CALIBER with another paving contractor. In
addition, Darin Maddox (SFC superintendent/project manager at the property) stated in a
conversation with Jeff Neilan that “Rexford wanted Caliber off the job.”’” The quoted
testimony of Gilchriese and Neilan is double hearsay. In the case of Gilchriese, the two
levels of hearsay are (1) Wilson’s statement to Fodor about kicking Caliber off the job
16
and (2) Fodor’s statement to Gilchriese about what Wilson had said to Fodor. In the case
of Neilan, the two levels of hearsay are (1) statements made by a Rexford representative
to Maddox about wanting Caliber off the job and (2) Maddox’s statement to Neilan about
what Maddox had been told by the Rexford representative.
Double hearsay is not categorically inadmissible; instead, a double hearsay
statement is admissible if each level of hearsay comes within an exception to the hearsay
rule. (People v. Anderson (2018) 5 Cal. 5th 372, 403; People v. Zapien (1993) 4 Cal. 4th
929, 951-952.) In People v. Anderson, supra, at page 403, the California Supreme Court
concluded the double hearsay evidence was admissible because the first level came
within the exception for statements of a party (Evid. Code, § 1220) and the second level
came within the exception for prior inconsistent statements (id., § 1235). “‘[M]ultiple
hearsay consisting of a prior inconsistent statement and an admission of the defendant’ is
admissible.” (People v. Anderson, supra, at p. 403.)
The first level of hearsay for the testimony of both Gilchriese and Neilan
comes within the hearsay exception for statements made by a party opponent. (Evid.
Code, § 1220.) “The evidence was of statements, defendant was the declarant, the
statements were offered against him, and he was a party to the action. Accordingly, the
hearsay rule does not make the statement inadmissible.” (People v. Carpenter (1999) 21
Cal. 4th 1016, 1049.) Here, the evidence was of statements; the declarant was a
representative of Rexford, a defendant; the statements were offered against Rexford;
Rexford is a party.
The second level of hearsay for Gilchriese’s testimony comes within the
hearsay exception for prior inconsistent statements. (Evid. Code, § 1235.) A declarant’s
statements that are inconsistent with the declarant’s testimony are admissible as
substantive evidence if the requirements of Evidence Code section 770 are met. (People
v. Brown (1995) 35 Cal. App. 4th 1585, 1596-1597; People v. Sanders (1990) 221
Cal. App. 3d 350, 402, fn. 10.) For prior inconsistent statements to be admissible,
17
Evidence Code section 770 requires either (1) “The witness was so examined while
testifying as to give him an opportunity to explain or deny the statement” or (2) “The
witness has not been excused from giving further testimony in the action.”
Fodor’s statement to Gilchriese about what Wilson had said is inconsistent
with statements made by Fodor in his declaration submitted in support of Rexford’s
motion for summary judgment. Fodor stated in his declaration: “I never told Darin
Gilchriese that Andy Wilson or anyone else at Rexford had directed me to terminate the
contract with Caliber. No one told me to kick Caliber off the job.” Fodor had the
opportunity in his declaration to explain or deny the statement attributed to him by
Gilchriese.
The second level of hearsay for Neilan’s declaration does not, however,
come within the inconsistent statement exception because there was no testimony from
Maddox to create an inconsistency. Rexford did not submit a declaration from Maddox
in support of the summary judgment motion, and neither Rexford nor Caliber submitted a
deposition transcript for Maddox.2
Neilan’s declaration was therefore inadmissible to show that Rexford
interfered with the SFC/Caliber contract. Gilchriese’s declaration and deposition
testimony were admissible, however, for that purpose. (See Colarossi v. Coty US Inc.
(2002) 97 Cal. App. 4th 1142, 1151 [evidence of inconsistent statements and statements of
party opponents are admissible to oppose summary judgment motion].)
2
Maddox’s statement to Neilan does not come within the exception for statements made
by a party opponent because, to come within that exception, the statement must have
been offered against the declarant in an action in which the declarant is a party. (Evid.
Code, § 1220; see Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The
Rutter Group 2019) ¶ 8:1150, p. 8D-43.) Although Maddox was SFC’s superintendent
and on-site project manager, his statements to Neilan were not offered against SFC; they
were offered against Rexford in opposition to its summary judgment motion.
18
C. Gilchriese’s Declaration and Deposition Testimony Were
Sufficient to Raise a Triable Issue of Material Fact.
Admissibility of the evidence is just the first step; the question remains
whether Gilchriese’s declaration and deposition testimony were enough to meet Caliber’s
burden of showing a triable issue of material fact. A defendant moving for summary
judgment has the initial burden of showing that at least one element of a cause of action
has no merit or there is a complete defense to the cause of action. (Code Civ. Proc.,
§ 437c, subd. (p)(2).) Once the moving defendant has met that burden, the burden shifts
to the plaintiff to show there is a least one triable issue of material fact to the cause of
action or to a defense. (Ibid.)
Two points on the standard of review are particularly significant for this
case. First, in reviewing the trial court’s decision to grant summary judgment, we
liberally construe the evidence in support of the party opposing summary judgment and
resolve all doubts about the evidence in that party’s favor. (Hughes v. Pair, supra, 46
Cal.4th at p. 1039.) Second, we must draw from the evidence all reasonable inferences in
the light most favorable to the party opposing summary judgment. (Essex Ins. Co. v.
Heck, supra, 186 Cal.App.4th at p. 1522; Nadaf-Rahrov v. Neiman Marcus Group, Inc.,
supra, 166 Cal.App.4th at p. 961.)
Reasonable inferences drawn from Gilchriese’s declaration and deposition
testimony include: (1) Rexford instructed SFC to kick Caliber off the paving job and hire
a different paving subcontractor and (2) SFC followed those instructions and hired a
different paving subcontractor to complete the repaving project. These inferences are
enough to raise a triable issue whether Rexford interfered with the SFC/Caliber contract.
Rexford argues Gilchriese’s declaration and deposition testimony are
merely circumstantial evidence. Circumstantial evidence is neither incompetent nor
inadmissible; it is simply evidence that proves the principal fact through inference.
(1 Witkin, Cal. Evid. (5th ed. 2012) Circumstantial Evidence, § 1, pp. 358-359.)
19
Gilchriese’s declaration and deposition testimony tend to prove the principal fact—
Rexford interfered with the SFC/Caliber contract—by means of reasonable inference.
Rexford argues it is speculation to draw the inference from Gilchriese’s
declaration and deposition testimony that Rexford instructed SFC to hire a different
subcontractor. Speculation generally means a “guess,” that is, “a conclusion not based
upon a logical, reasonable, and therefore, lawfully drawable inference from the
evidence.” (People v. Bohana (2000) 84 Cal. App. 4th 360, 369.) Gilchriese declared that
SFC canceled the paving work on September 13, 2017, and it was undisputed SFC hired
a new paving subcontractor soon thereafter. According to Gilchriese’s declaration and
deposition testimony, Rexford had instructed SFC to kick Caliber off the job and hire a
different subcontractor to complete the repaving project. From those facts, it is not a
guess to draw the inference that SFC kicked Caliber off the job and hired a new paving
subcontractor in response to Rexford’s instruction.
Rexford also argues that inference is contrary to the “undisputed” fact that
Caliber abandoned the paving job. It was undisputed that Caliber left the jobsite on the
morning of September 11, 2017; whether Caliber was justified in doing so was disputed.
Caliber produced evidence it was justified in leaving the jobsite because trucks and
trailers parked in the jobsite had prevented it from starting work in a timely fashion.
20
DISPOSITION
The judgment is reversed and the matter is remanded. Appellant to recover
costs on appeal.
FYBEL, J.
WE CONCUR:
ARONSON, ACTING P. J.
IKOLA, J.
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