Opinion
G031368.
11-19-2003
AMP ENTERPRISES et al., Plaintiffs and Appellants, v. PRICE PFISTER, INC., et al., Defendants and Respondents.
Haselden, Owen & Boloyan, Alford Haselden; Peters, Murdaugh, Parker, Eltzroth & Detrick, John E. Parker; Law Offices of Boudreau, Albert & Wohlfeil and Joel R. Wohlfeil for Plaintiffs and Appellants. Jones, Bell, Abbott, Fleming & Fitzgerald, Michael J. Abbott, Craig R. Bockman, Fredrick A. Rafeedie and William M. Turner for Defendants and Respondents.
Introduction
After Price Pfister, Inc., terminated its relationships with its independent sales representatives and transitioned to an employee-based sales force, the former independent sales representatives sued for fraud and violation of the Unfair Competition Act. Plaintiffs alleged that, for a four-year period preceding the terminations of their relationships, Price Pfister intentionally concealed its plan to transition to an employee-based sales force. Plaintiffs also alleged that in reliance on Price Pfisters misrepresentations regarding the security of their positions as independent sales representatives, plaintiffs incurred damages.
Based solely on the paucity of plaintiffs responses to interrogatories and document requests, Price Pfister moved for summary adjudication of plaintiffs fraud claim on the ground plaintiffs could not establish the necessary element of damage. Plaintiffs opposed the motions with a declaration from an economics/accounting expert witness, as well as declarations from each plaintiff. The trial court granted the motions for summary adjudication of plaintiffs fraud claim. Plaintiffs then dismissed their remaining claim, and judgment was entered.
On appeal, plaintiffs argue Price Pfisters reliance on plaintiffs discovery responses did not shift the burden of production to plaintiffs. We disagree and affirm the judgment. Factually devoid discovery responses can shift to the nonmoving party the burden of producing admissible evidence of a triable issue of material fact, and that happened here. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 845, 849; Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 78-79; Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 590.)
Plaintiffs also argue they met their burden in opposing the motions for summary adjudication by offering the declarations of the economics/accounting expert witness and of plaintiffs own representatives. We conclude the trial court properly excluded the experts declaration, which lacked any foundation. Plaintiffs own declarations were speculative. The trial court did not err in determining plaintiffs had failed to raise a triable issue of material fact, and in granting the motions for summary adjudication.
Plaintiffs also argue the trial court erred in denying their motion for reconsideration of the order granting the motions for summary adjudication. The new evidence offered by plaintiffs in support of their motion for reconsideration was an amended declaration of their expert witness. That declaration referenced documents reflecting plaintiffs commissions and provided additional information regarding the methodology she used to reach her conclusions of the damages plaintiffs allegedly suffered. The trial court did not abuse its discretion in determining plaintiffs had failed to explain why they did not produce this evidence in opposition to the motions for summary adjudication (McPherson v. City of Manhattan Beach (2000) 78 Cal.App.4th 1252, 1265), and therefore properly denied the motion for reconsideration.
Finally, plaintiffs argue the trial court erred in issuing a protective order preventing plaintiffs from taking the deposition of the chief executive officer of Price Pfisters parent company. Because we affirm the judgment, we need not reach this issue.
Facts and Proceedings in the Trial Court
Plaintiffs were independent sales representatives for defendant Price Pfister, a faucet manufacturer. The Black & Decker Corporation is the corporate parent of Price Pfister. (We refer to Price Pfister and Black & Decker collectively as Price Pfister.) On April 7, 1999, Price Pfister notified plaintiffs orally and in writing that it was terminating its relationships with plaintiffs effective 90 days thereafter.
Plaintiffs contend that as early as June 1994, Price Pfister developed and adopted a four-year strategic plan calling for the conversion of its sales force from one consisting primarily of independent sales representatives to one consisting exclusively of employees. Price Pfister contends the decision to convert to an employee-based sales force was made in 1998, and the process of converting the sales force began in November or December 1998.
Plaintiffs sued Price Pfister for fraud and violation of the Unfair Competition Act (UCA) (Bus. & Prof. Code, § 17200 et seq.). Plaintiffs alleged that between 1994 and 1999, Price Pfister intentionally misrepresented to plaintiffs that it was committed to maintaining a sales force of independent sales agents. Plaintiffs alleged they suffered damages as a result of Price Pfisters misrepresentations.
In July 2001, Price Pfister propounded interrogatories and document production requests on plaintiffs, seeking, among other things, information relating to the existence and extent of plaintiffs damages. Plaintiffs responded to the interrogatories and document requests in September 2001, and supplemented their responses to the document requests in December 2001.
In March 2002, Price Pfister filed 13 motions for summary adjudication, one as to each plaintiff. The basis for the motions was plaintiffs alleged inability to prove the damage element of their fraud claim. In its tentative ruling, the trial court stated: "Defendants have shifted the burden to the Plaintiff on this issue with the showing that discovery responses are devoid as to the issue of damages. Plaintiffs have failed to meet the burden. The experts Declaration is properly objected to. The other Declarations submitted show that the Plaintiffs could have sustained damages, but do not show that they have suffered damages. The Declarations are filled with speculation and conjecture. This Action is nearly a year old. Plaintiffs cannot document their damages, and it is clear that they never will." The trial court entered a minute order granting the motions for summary adjudication.
Price Pfister also sought summary adjudication as to plaintiffs claim for treble damages and punitive damages in connection with the UCA claim. At the hearing on the motions for summary adjudication, plaintiffs conceded treble and punitive damages were not recoverable on the UCA claim, and the issue of punitive and treble damages is not before us on appeal.
Also in the minute order, the trial court sustained Price Pfisters objections to the declaration of plaintiffs expert witness, which had been submitted in opposition to the motions for summary adjudication, and granted Price Pfisters motion for a protective order to prevent plaintiffs from taking the deposition of Nolan Archibald, Black & Deckers chairman, chief executive officer, and president.
Plaintiffs filed a motion for reconsideration, submitting as new evidence an amended declaration of their expert witness. The trial court denied the motion: "Plaintiffs have failed in their Motion for Reconsideration to provide any factual basis upon which the Motion can be granted. No satisfactory reason is given for the failure to present its new evidence at the original hearing."
Plaintiffs then dismissed their remaining claim for violation of the UCA, and judgment was entered. Plaintiffs timely appealed.
Discussion
I.
Motions for Summary Adjudication
A. Standard of Review
Code of Civil Procedure section 437c, subdivision (f)(1) permits a motion for summary adjudication of a cause of action if it "has no merit." A cause of action has no merit if "one or more elements of the cause of action, even if not separately pleaded, cannot be established." (Code Civ. Proc., § 437c, subd. (p)(2).)
If a moving defendant demonstrates the plaintiff cannot establish one or more elements of a cause of action, the burden shifts to the plaintiff to show a triable issue of fact exists as to that element. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 849.)
"We review the trial courts decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports." (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)
B. Did Price Pfister Shift the Burden in Its Moving Papers?
Damage is an essential element of a cause of action for fraud. (Wallis v. Farmers Group, Inc. (1990) 220 Cal.App.3d 718, 734.) "There are two measures of damages for fraud: out-of-pocket and benefit-of-the-bargain. The out-of-pocket measure restores a plaintiff to the financial position he enjoyed prior to the fraudulent transaction, awarding the difference in actual value between what the plaintiff gave and what he received. The benefit-of-the-bargain measure places a defrauded plaintiff in the position he would have enjoyed had the false representation been true, awarding him the difference in value between what he actually received and what he was fraudulently led to believe he would receive. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1240 . . . .)" (Fragale v. Faulkner (2003) 110 Cal.App.4th 229, 236.) "It is generally recognized, under both the benefit-of-the-bargain and the out-of-pocket-loss rules, that when, as a result of the fraud, the person defrauded has made expenditures which were reasonable under the circumstances, these may ordinarily be recovered, insofar as they have been lost or rendered fruitless because of the deceit." (Garrett v. Perry (1959) 53 Cal.2d 178, 186.)
A party may rely on the other partys factually inadequate discovery responses to support a motion for summary adjudication. (Scheiding v. Dinwiddie Construction Co., supra, 69 Cal.App.4th at pp. 78-79; Union Bank v. Superior Court, supra, 31 Cal.App.4th at p. 590.) This shifts the burden to the nonmoving party to "set forth the specific facts which prove the existence of a triable issue of material fact." (Union Bank v. Superior Court, supra, at p. 590.)
In response to Price Pfisters interrogatories regarding the amount and calculation of plaintiffs damages, plaintiffs responded: "Plaintiff is still attempting to determine the total amount so spent, and this answer will be supplemented as soon as the total amount is determined. Plaintiff is engaging an economist/accountant to assist in the determination of this information." No supplemental interrogatory responses were served.
The substance of the discovery requests and responses was identical for all plaintiffs.
Price Pfister also served document requests seeking all documents relating to plaintiffs claim for damages. Plaintiffs responses to these document requests were identical: "Plaintiff has not yet identified the documents responsive to this request. Plaintiff is retaining the services of an economics/accounting expert to assist in determining the sums referred to in this request. It is expected that after his/her review, said expert will have identified all documents that would be responsive to this request. At present all the Plaintiff could provide is all documents of every kind and description Plaintiff may have relating to the day to day financial and business affairs of the Plaintiff which would not be definitive or responsive to the request. As soon as the information requested is identified this response will be supplemented."
Plaintiffs supplemented their responses to these document requests in December 2001 with the following information: "Defendants have advised that they intend to copy all documents in Plaintiffs possession relating to Price Pfister, pursuant to terms discussed by the parties counsel on November 26, 2001. Plaintiff has previously produced documents, if any, it may have had, relating to commissions and profit and loss statements. There will be more documents relating to commissions and re-set expenses produced pursuant to the November 26, 2001, discussions relating to commissions and re-set expenses. [& para;] There will be additional documents generated from available information, tax returns, commission information and re-set information, as well as documents we may obtain from Defendants. We are unable to produce these documents at this time because they have not been generated, or have not yet been acquired from Defendants. [¶] As soon as Plaintiffs obtain, generate, or know definitely from our expert the documents that are responsive to this request they will be produced to the extent they have not already been produced."
Plaintiffs discovery responses were "`factually devoid," and showed plaintiffs had no facts to support their claim for damages. (Scheiding v. Dinwiddie Construction Co., supra, 69 Cal.App.4th at p. 79.) The absence of evidence supporting a necessary element of the claim shifted the burden of production to plaintiffs. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)
C. Did Plaintiffs Raise a Triable Issue of Material Fact?
Since Price Pfister shifted the burden of production to plaintiffs, plaintiffs were required to offer admissible evidence setting forth the specific facts showing that a triable issue of material fact existed. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) In opposition to the motions for summary adjudication, plaintiffs collectively submitted the declaration of their economics and accounting expert witness, Roberta Spoon. Price Pfister objected to Spoons declaration on the ground it lacked foundation, and contained nothing more than the experts "ultimate opinion, unsupported by reasoned explanation." (Kelley v. Trunk (1998) 66 Cal.App.4th 519, 525.) Each plaintiff also submitted a separate declaration regarding its claimed damages.
1. The trial court did not err in sustaining Price Pfisters objection to Spoons declaration.
Spoons declaration set forth her ultimate conclusions as to the amount of damages suffered by each plaintiff, both in terms of lost profits and the "Lost Value of Business." Nowhere in the declaration did Spoon explain the formulas or methods used to reach those conclusions. Spoon did not provide the bases for her calculations. With respect to the lost profits calculations, Spoon did not provide a time period for which the lost profits were calculated. Spoons declaration did not specify whether plaintiffs lost profits were gross or net profits. Indeed, at the hearing on the motions for summary adjudication, plaintiffs counsel acknowledged Spoons declaration did not explain how she arrived at the amount of approximate damages, stating, "The fact that she didnt get into an explanation as to how she arrived at the lost profits, as to how she arrived at the diminution in value of — as to each of the plaintiff[s] businesses, I think ultimately goes to the weight of her testimony, which is a subject of cross-examination."
The trial court properly determined Spoons declaration was speculative and lacking in foundation, and was therefore inadmissible. Plaintiffs argue that since they were the nonmoving parties, their experts declaration was entitled to all reasonable inferences. (Hanson v. Grode (1999) 76 Cal.App.4th 601, 607.) However, "`expert opinions . . . are worth no more than the reasons and factual data upon which they are based. [Citation.]" (Ibid.) In this case, Spoon failed to specify either the data upon which she was relying or the reasons for her conclusions.
In Hanson v. Grode, supra, 76 Cal.App.4th at pages 605 and 606, cited by plaintiffs, the Court of Appeal reversed the grant of summary judgment in favor of the defendants in a medical malpractice case. The trial court had determined the plaintiffs experts declaration in opposition to the motion "lacked a factual basis." (Id. at p. 606.) The Court of Appeal, however, concluded the experts declaration, which stated the defendants acted below the applicable standard of care and listed several specific reasons for that opinion, was factually sufficient to meet the plaintiffs burden on summary judgment. (Id. at pp. 606-607.) In contrast, Spoons declaration listed only her ultimate conclusions — that plaintiffs suffered lost profits or loss of business value damages. This would be the equivalent in Hanson v. Grode of the experts declaration stating, without support, the defendants acted below the applicable standard of care.
Plaintiffs also cite Sanchez v. Hillerich & Bradsby Co. (2002) 104 Cal.App.4th 703, in support of their argument that Spoons declaration was not deficient. In Sanchez, although the experts declaration did not include the actual calculations used to determine the time between a baseballs contact with a bat and the time it struck the plaintiff in the head, the declaration did describe in detail the information relied on, and provided the analytical framework used by the expert in arriving at his conclusions. (Id. at pp. 717-718.) Spoons declaration, however, did not meet this standard. Spoon merely listed the documents she reviewed, identified the individuals she spoke with, and set forth her ultimate conclusions regarding the amount of damages suffered by plaintiffs. This declaration was insufficient to meet plaintiffs burden in opposing the motions for summary adjudication.
Plaintiffs failed to submit any admissible evidence demonstrating a triable issue of material fact with regard to the existence of damages in the form of lost profits or the lost value of business.
2. The trial court properly found plaintiffs declarations to be speculative.
Each plaintiff offered a declaration setting forth claimed damages as a result of Price Pfisters alleged fraudulent misrepresentations. The types of damages claimed fall into two categories: (1) money expended by plaintiff in order to perform its role as an independent sales representative for Price Pfister and (2) lost business opportunities. Plaintiffs failed to offer admissible evidence of the existence of any out-of-pocket or benefit-of-the-bargain damages, however, and did not raise a triable issue of material fact.
With regard to out-of-pocket losses, plaintiffs failed to prove any of their claimed expenses were "lost or rendered fruitless because of the deceit." (Garrett v. Perry, supra, 53 Cal.2d at p. 186.) Plaintiffs declarations reflect significant revenues and expenses while plaintiffs functioned as independent sales representatives for Price Pfister. Plaintiffs were not damaged by the expenses they would have incurred with or without Price Pfisters misrepresentations.
Plaintiffs offered evidence of three instances in which they had incurred expenses based on Price Pfisters alleged misrepresentations after they ceased being sales representatives for Price Pfister. But in none of these instances did plaintiffs offer evidence that these expenses were incurred in reliance on Price Pfisters misrepresentations. One plaintiff, AMP Enterprises (AMP), claimed as damages the costs of a two-year lease signed shortly before Price Pfister advised AMP of the termination of their relationship. But AMP did not state whether it paid some or all of the two years of rental payments in advance, or whether it was able to rescind or shorten the lease. AMP offered no evidence that it actually paid any portion of the rent due on the two-year lease and thus failed to prove it suffered any damages.
Another plaintiff, C & S Sales & Marketing, Inc. (C & S), sought as damages the salaries and expenses of three employees who continued to be employed after the relationship with Price Pfister ended. Plaintiff Pinnacle Marketing, Inc. (Pinnacle), also sought damages for the salaries and expenses of two employees who continued to work for Pinnacle after Price Pfister terminated the relationship. Neither C & S nor Pinnacle explained whether these employees were under contract for a specific period of time, or why C & S or Pinnacle did not terminate their employment when the Price Pfister relationship ended. Again, plaintiffs failed to offer proof they suffered damage due to Price Pfisters claimed misrepresentations.
With regard to lost business opportunities, plaintiffs contend they would have sought out opportunities to represent other faucet manufacturers or pursued opportunities with the manufacturers who approached them, if plaintiffs had known Price Pfister was planning to convert to an employee-based sales force. These claims were unsupported by any evidence and were speculative. Plaintiffs submitted no evidence that they would have been offered positions as independent sales representatives with any of the other manufacturers, much less that plaintiffs would have accepted the positions or what they would have earned through those relationships.
Several plaintiffs offered specific evidence of claimed lost business opportunities, but there was insufficient evidence to raise a triable issue of material fact:
1. C & S and Hunt Sales Company, Inc., offered evidence they entered contracts to act as sales representatives for Moen Inc. in June 1997, but rescinded those contracts when Price Pfister asked them to remain as Price Pfisters representatives. But neither C & S nor Hunt Sales provided evidence of what it would have earned as a sales representative for Moen, or how long that relationship would have lasted.
2. Carolina Sales Associates, Inc., and Buffington & Associates, Inc., declined offers to serve as Moens representatives, although neither provided evidence of what it would have earned as a Moen representative.
3. Pinnacle had been a sales representative for Delta/Peerless from 1986 to 1998. In 1998, Pinnacle became a sales representative for Price Pfister. Pinnacle claimed that by leaving Delta/Peerless, it irreparably damaged its relationship with Delta/Peerlesss parent company, MASCO, and was not approached by other MASCO brands to serve as a sales representative. Pinnacle, however, provided no evidence it would have been approached to represent other MASCO brands if it had remained as a Delta/Peerless representative, or that it suffered any damage as a result of the alleged loss of MASCO business.
4. Sullivan & Dyer, Inc., severed a 20-year relationship with Delta/Peerless in 1996 to join the Price Pfister sales team. Sullivan & Dyer did not offer evidence of its revenues, expenses or profits with Delta/Peerless versus those with Price Pfister, nor did it offer evidence to establish that had it not ceased its relationship with Delta/Peerless in 1996, it would have continued to work for Delta/Peerless after July 1999.
All of these alleged lost business opportunities occurred while plaintiffs were sales representatives for Price Pfister, and while they were earning revenues based on that relationship. The evidence established plaintiffs could not represent more than one faucet manufacturer at a time. None of plaintiffs declared what happened to its relationships with other faucet manufacturers (or for that matter other hardware manufacturers) after its relationship with Price Pfister came to an end.
Plaintiffs failed to offer admissible evidence of any fraud damages suffered as a result of Price Pfisters alleged misrepresentations. The trial court properly granted the motions for summary adjudication.
II.
MOTION FOR RECONSIDERATION
After the trial court granted Price Pfisters motions for summary adjudication, plaintiffs filed a motion for reconsideration, which the court denied. We review an order denying a motion for reconsideration for abuse of discretion. (Wiz Technology, Inc. v. Coopers & Lybrand (2003) 106 Cal.App.4th 1, 16.)
A motion for reconsideration must be based on "new or different facts, circumstances, or law." (Code Civ. Proc., § 1008, subd. (a).) The moving party must also provide a satisfactory explanation for the failure to produce the new facts when the matter was originally heard by the court. (McPherson v. City of Manhattan Beach, supra, 78 Cal.App.4th at p. 1265.) The moving party must establish it could not, with reasonable diligence, have discovered and produced the new or different facts at the time of the original hearing. (Blue Mountain Development Co. v. Carville (1982) 132 Cal.App.3d 1005, 1013.)
In support of their motion for reconsideration, plaintiffs offered an amended declaration of their expert witness purporting to correct the inadequacies that caused the trial court to sustain Price Pfisters objections to the original declaration. Specifically, plaintiffs added references to certain documents reflecting the commissions paid to plaintiffs, and added information on how the expert reached her conclusions of lost profits and loss of business value.
"To merit reconsideration, a party must give a satisfactory reason why it was unable to present its `new evidence at the original hearing. [Citation.] [The responding party] did not think the evidence was necessary at the first hearing. That reason was patently insufficient, and the trial court properly refused to reconsider its ruling." (Foothills Townhome Assn v. Christiansen (1998) 65 Cal.App.4th 688, 692, fn. 6.) Here, too, plaintiffs explanation for the failure to include this "new" evidence in opposition to the motions for summary adjudication was their belief that such evidence was unnecessary, in light of the requirement the court must liberally interpret Spoons original declaration. As in Foothills Townhome Assn v. Christiansen, supra, 65 Cal.App.4th 688, plaintiffs explanation for their failure to originally offer the additional information included in the amended expert witnesss declaration was insufficient. The trial court did not abuse its discretion in denying plaintiffs motion for reconsideration.
III.
Motion for Protective Order
Plaintiffs also appeal from the protective order preventing plaintiffs from taking the deposition of Nolan Archibald, Black & Deckers chairman, chief executive officer, and president. Because we affirm the judgment, we need not address this discovery issue, which would be relevant only if we were to reverse the judgment and remand. Plaintiffs made no contention in opposing the motion for protective order, in opposing the motions for summary adjudication, or on appeal that Archibalds deposition was needed to oppose the motions for summary adjudication.
DISPOSITION
The judgment is affirmed. Respondents are to recover their costs on appeal.
WE CONCUR: SILLS, P. J., RYLAARSDAM, J.