Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. RIC452059 Kenneth Andreen, Judge. (Retired Associate Justice of the Court of Appeal, Fifth Appellate District, assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed.
Gary J. Bryant; and Christopher B. Mears for Plaintiffs and Appellants.
Hecht Solberg Robinson Goldberg & Bagley, Gregory S. Markow and Amanda A. Allen for Defendants and Respondents.
OPINION
MILLER J.
Plaintiffs William Knight and Karl Hennicke (plaintiffs) filed suit against Continental Residential, Inc. and D.R. Horton, Inc. (Continental) alleging a cause of action for intentional interference with contractual relations (IIKR). Plaintiffs alleged that Continental had interfered in their contractual relations with attorney Raymond Johnson of the law firm of Sedlack & Johnson (Johnson) in that Continental had bribed Johnson to dismiss actions he had filed on plaintiffs’ behalf seeking to set aside approvals of two residential development projects in alleged violation of California’s Environmental Quality Act (CEQA). One day prior to trial, Continental filed a motion in limine seeking to exclude all evidence of the profits earned by it in connection with the real estate developments. The court granted the motion. Plaintiffs informed the court that its ruling had effectively disposed of the case; plaintiffs could allege no other damages. Counsel for both sides stipulated to treatment of the motion in limine as a motion for nonsuit. The court granted the motion for nonsuit on the basis that unjust enrichment damages were not available in the case before it. Judgment was entered thereafter. On appeal, plaintiffs contend the court committed an error of law in determining that unjust enrichment damages were unavailable in their case. We affirm the judgment.
In response to interrogatories propounded by plaintiffs, Continental stated that it had obtained total gross sales of $48,198,741 for the Meadowlane project and $28,385,411 for the Amberwalk project. At the hearing on the motion in limine, plaintiffs alleged they had obtained an economist who determined that Continental derived an average net profit of 25 percent of its sales. Thus, plaintiffs’ sought disgorgement of Continental’s profits on a theory of unjust enrichment in an amount approximating $19,146,038.
Plaintiffs waived the procedural irregularity that the motion for nonsuit was brought prior to the presentation of opening statements.
FACTUAL AND PROCEDURAL HISTORY
For purposes of this appeal, we assume the truth of the non-controversial and non-disputed facts alleged in plaintiffs’ second amended complaint.
On July 23, 2003, the planning commission for the City of Murrieta (the City) approved a high density residential development project consisting of 159 condominium units (Meadowlane), proposed by Continental to be constructed in a rural residential neighborhood immediately adjacent to residential property owned by plaintiffs. On August 27, 2003, the planning commission approved a high density residential development project consisting of 93 condominium units (Amberwalk) proposed by Continental to be constructed in a rural residential neighborhood immediately adjacent to residential property owned by plaintiff Hennicke. On or about August 31, 2003, plaintiffs met with Johnson in order to retain his legal services in opposing the aforementioned development projects. Plaintiffs alleged Johnson indicated the projects were noncompliant with CEQA; he verbally agreed to represent plaintiffs in their opposition to the proposed projects.
On September 16, 2003, the Murrieta City Council (the City Council) affirmed the planning commission’s approval of the Meadowlane project. On September 25, 2003, plaintiffs entered into a formal, written contract with Johnson for representation with respect to the Meadowlane project. On October 23, 2003, plaintiffs entered into a similar contract with Johnson regarding the Amberwalk project.
The complaint does not indicate when the City Council approved the Amberwalk project, but clearly indicates that it did so.
Whether plaintiffs individually entered into the contracts with Johnson or simply as members or officers of an unincorporated association known as Westside Home Owners of Murrieta (WHOM) was hotly contested at the pretrial proceedings below. Indeed, Continental contended that plaintiffs lacked standing to bring the current action because they were not individually represented by Johnson. Continental further argued that plaintiffs’ standing in the current case could be determined as a matter of law simply by the trial court’s perusal of the contracts themselves. Plaintiffs argued the validity of their individual representation by Johnson was an issue of fact to be determined by the jury. Nevertheless, the court’s ruling on Continental’s motion in limine rendered the issue moot.
On October 7, 2003, Johnson commenced litigation regarding the approval of Meadowlane alleging violations of CEQA. On November 4, 2003, Johnson commenced similar litigation regarding Amberwalk. On November 25, 2003, Continental requested the City conduct new CEQA studies for both projects. Those studies were completed in March 2004. Plaintiffs alleged that in June 2004, Continental agreed to make “minor and inexpensive modifications” to the projects in exchange for a dismissal of the writ proceedings, payments of $40,000 to $90,000 in attorney’s fees to Johnson, and the promise of the utilization of Johnson’s services in the future. Plaintiffs alleged that Johnson executed and forwarded a request for dismissal with prejudice in both cases without their consent. The requests for dismissal were filed on July 1, 2004.
Both actions consisted of petitions for writ of mandate filed on behalf of WHOM. Plaintiffs were not listed as parties to the proceedings. Both petitions were verified by Hennicke as “an officer of Westside Homeowners of Murrieta, ” an individual authorized to verify the petitions. This, despite plaintiffs’ contention below that WHOM “was no formal organization. There were no bylaws. There was no bank account. There were no officers, et cetera. It truly was a name, a collection of words invented by Mr. Johnson for purposes of the CEQA case, which had to be brought in the name of an organization if Mr. Johnson later on was going to be in a position to claim attorney[’]s fees based on some contribution to some public-issue of public concern.” (Italics added.) Further confusing matters was Knight’s attorney’s contention that “No one was authorized to execute a contract on behalf of WHOM with Ray Johnson; therefore-no one was authorized on behalf of [WHOM] to enter into a contract....” Also, from the context of plaintiffs’ pleadings as a whole, there was an insinuation that plaintiffs were the only members of WHOM. However, such an implication was belied by Hennicke’s statements below that “this lawsuit was being brought on behalf of a number of neighbors who wanted to stop the development[, ]... [¶]... [¶]... the neighbors each came up with some amount of money individually... to give Mr. Johnson in order to file the lawsuit to stop the development, ” that 17 residents came up with the money to provide Johnson with attorney’s fees, and that there was at least one other signatory to the retainer agreements with Johnson, who was not a party to the present action. No other “member” of WHOM is a party to the present action.
The record is devoid of any information regarding how Johnson obtained the requisite client approval for the settlement. Johnson alleged below that plaintiffs initially filed a malpractice lawsuit against them, but subsequently allowed it to be dismissed and failed to refile prior to the expiration of the statute of limitations.
Plaintiffs filed the second amended complaint alleging a cause of action against Johnson for fraud and another cause of action for IIKR against Continental. Thus, the essence of plaintiffs’ complaint was that Continental bribed Johnson to have the CEQA challenges dismissed in order to personally benefit Johnson, to plaintiffs’ detriment. Plaintiffs maintained that “in the absence of the aforesaid wrongful conduct” the development projects would have been denied. Plaintiffs alleged damages “resulting in a substantial decrease in the Plaintiffs’ residential property value, ” special damages, emotional distress, other general damages, and punitive damages. Plaintiffs prayed for special damages, general damages, punitive damages, and “[s]uch other and further relief as the Court deems just and proper.”
Johnson filed a motion for summary adjudication on March 6, 2009. On May 22, 2009, plaintiffs requested that their first cause of action be dismissed. Johnson and his firm remained parties to the action as the subjects of Continental’s cross-complaint for implied indemnity. Continental never filed a motion for summary judgment; counsel for Continental stated that he had not been given permission to do so.
After granting Continental’s motion in limine, counsel for Hennicke noted, “[t]he court perhaps needs to know, in granting the motion, that the Court has probably disposed of the case. We have no emotional distress damages;... and we have no damages of diminished value of our property because of the condition of the real estate market. So there are no damages, other than unjust enrichment, for us to take to the jury.”
DISCUSSION
Plaintiffs contend the court erred in determining that damages for unjust enrichment were unavailable in their case. We hold that under the alleged facts of this case, unjust enrichment was simply not a legally cognizable remedy; thus, because plaintiffs could not adduce any evidence in support of the requisite damages element of the tort of IIKR, the trial court properly granted defendant’s motion for nonsuit.
A. STANDARD OF REVIEW
A trial court may grant a nonsuit if it determines that, as a matter of law, a plaintiff’s evidence is insufficient to support a jury verdict in his favor. The trial court’s role is not to weigh the evidence or determine the credibility of the witnesses. Instead, the trial court must consider the evidence in the light most favorable to the plaintiff and accept the plaintiff’s evidence as true, disregarding any conflicting evidence. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291 (Nally); see also Syufy Enterprises v. City of Oakland (2002) 104 Cal.App.4th 869, 877.)
In reviewing the trial court’s grant of a motion for nonsuit, this court independently reviews the record and applies the same test. To uphold the ruling, we must find, after interpreting the evidence most favorably to the plaintiff and most strongly against the defendant, that judgment for the defendant was required as a matter of law. (Nally, supra, 47 Cal.3d at p. 291; Resolution Trust Corp. v. Rossmoor Corp. (1995) 34 Cal.App.4th 93, 99.)
However, a trial court may also grant a defendant’s motion for nonsuit when it finds “‘there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff.’ [Citations.]” (Raber v. Tumin (1951) 36 Cal.2d 654, 656.) Thus, the requirement is not only whether there exists any evidence to support a verdict in favor of the plaintiff, but whether the plaintiff can even potentially adduce “substantial evidence to create the necessary conflict” for the trier of fact’s resolution. (Nally, supra, 47 Cal.3d at p. 291.)
B. IIKR AND THE AVAILABILITY OF THE REMEDY OF UNJUST UNRICHMENT
“We start by observing that, in 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.’ [Citation.] To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of 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. [Citation.]” (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148, italics added.) “[A]n action for intentional interference with contractual relations lies for intentional interference with an attorney’s” contract with his or her client. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 344.)
“For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.” (Civ. Code, § 3333, italics added.) “(1) One who is liable to another for interference with a contract or prospective contractual relation is liable for damages for [¶] (a) the pecuniary loss of the benefits of the contract or the prospective relation; [¶] (b) consequential losses for which the interference is a legal cause; and [¶] (c) emotional distress or actual harm to reputation, if they are reasonably to be expected to result from the interference.” (Rest.2d Torts, § 774A, subd. (1).) “Detriment is a loss or harm suffered in person or property.” (Civ. Code, § 3282.) “The measure of damages for intentional interference with contractual relations or prospective economic advantage is ‘an amount that will reasonably compensate plaintiff for all loss or harm... suffered by plaintiff and caused by the defendant’s conduct.’ [Citations.]” (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 232-233.)
“Whether the interference is with an existing contract or with a prospective contractual relation, one who becomes liable for it is liable for damages for the pecuniary loss of the benefits of the contract or the relation. In the case in which a third person is prevented from performing a contract with the plaintiff, the plaintiff may recover for the loss of profits from the contract.” (Rest. 2d Torts, § 774A, com. b, italics added.) “The plaintiff can also recover for consequential harms, provided they were legally caused by the defendant’s interference.” (Rest. 2d Torts, § 774A, com. d.)
Here, damages are a necessary element of a cause of action for IIKR. Plaintiffs conceded below that they could not prove that they had incurred any actual damages. “We have no emotional distress damages.... [W]e have no damages of diminished value of our property because of the condition of the real estate market. So there are no damages, other than unjust enrichment, for us to take to the jury. [¶] And if the Court, as it evidently has, has found that we are not going to be permitted to reach the issue of unjust enrichment damages, we’re done for today.” Thus, plaintiffs failed to allege they could adduce even a scintilla of evidence on the requisite damages element, sufficient to create the necessary conflict for the court to permit the matter to go to a jury.
Nonetheless, plaintiffs maintain that policy considerations compel a determination that unjust enrichment damages should be an available remedy in an action such as theirs in order to discourage wrongful behavior even where a plaintiff has suffered no discernible loss. “Unjust enrichment is an equitable principle that underlies ‘various legal doctrines and remedies.’ [Citation.] It is based on the idea that ‘one person should not be permitted unjustly to enrich himself at the expense of another, but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made....’ [Citations.]” (County of San Bernardino v. Walsh (2008) 158 Cal.App.4th 533, 542 (Walsh).) “‘[T]he public policy of this state does not permit one to “take advantage of his own wrong”’ regardless of whether the other party suffers actual damage. [Citation.] Where ‘a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss or, in some cases, any loss, but nevertheless the enrichment of the defendant would be unjust... [t]he defendant may be under a duty to give to the plaintiff the amount by which [the defendant] has been enriched.’ [Citation.]” (Ibid.)
In Walsh, the defendant Mays, a former county administrative officer (CAO), conspired with the defendant Walsh, the vice president of a waste disposal company, to bribe the current CAO, with whom Mays had previously conspired in order to hide the current CAO’s criminal record from county officials, to secure contracts with the county for Walsh’s company. (Walsh, supra, 158 Cal.App.4th at pp. 538-539.) The Walsh court held “that the evidence and law support the trial court and warrant a damage award based on disgorgement of the amounts by which [defendants] were unjustly enriched.” (Id. at p. 541.)
We find Walsh distinguishable from the instant case. First, Walsh did not involve an action for IIKR. Second, Walsh repeatedly stressed that the plaintiff directly “suffered a monetary loss” that included “millions of dollars.” (Walsh, supra, 158 Cal.App.4th at pp. 541, 543, 544.) Third, the source of the money to be disgorged in Walsh was the plaintiff itself. (Id. at p. 544.) Fourth, the defendant Mays owed the plaintiff a fiduciary duty; the defendant Walsh’s company had a direct contractual relationship with the plaintiff. (Id. at pp. 543 & 538.) Fifth, Mays and Walsh were both convicted of bribery. (Id. at p. 539.) Finally, Walsh paid special note of the fact that the plaintiff was a public entity: “This result is both equitable and vindicates a public policy that wrongdoers must give up the money they wrongfully obtain in dealing with the government.” (Id. at pp. 543, italics added.) Here, plaintiffs allege solely a cause of action for IIKR, they did not suffer any monetary loss, they were not the source of the money obtained by Continental, Continental owed plaintiffs no fiduciary duty, Continental had no contractual relationship with plaintiffs, plaintiffs allege no conviction nor even any official investigation into their allegations of bribery against Continental, and plaintiffs are not a public entity.
The opinion describes the plaintiff’s suit as involving “a variety of claims” (Walsh, supra, 158 Cal.App.4th at p. 540) later more particularly described as “breach of fiduciary duty, fraud, breach of lease, unfair competition, and unjust enrichment.” (Id. at p. 549.) Plaintiffs cite no case in this appeal where unjust enrichment damages have been awarded solely on an IIKR claim.
The second group of defendants in Walsh included McCook, the owner of a corporation engaged in the business of constructing and leasing billboards, and his company, Oakridge. (Walsh, supra, 158 Cal.App.4th at p. 548.) McCook bribed the then-current CAO to facilitate extensions of time for obtaining the proper permits for construction of billboards on county rights-of-way, to expedite the permit and construction process, and to pressure the board of supervisors to issue a no-default letter to permit Oakridge to assign its leases. (Ibid.) The court held “for reasons similar to our analysis of the unjust enrichment recovery against Mays/Walsh, that the trial court properly required McCook/Oakridge to disgorge the profits they received....” (Id. at p. 549.)
Here, again, McCook had a direct contractual relationship with the plaintiff. (Walsh, supra, 158 Cal.App.4th at p. 549.) Thus, like in GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 877, the court held that unjust enrichment damages are proper when awarded coextensively with contract claims. (Walsh, at pp. 549-551) Here, plaintiffs had no contractual or quasi-contractual claims against defendants. Finally, while acknowledging that no published case had previously permitted such damages, Walsh determined that under the specific circumstances of its case, disgorgement of profits was consistent with the statutory purposes of the plaintiff’s Government Code section 1090 claim, which proscribes public officials from being financially interested in contracts made by them in their official capacity. (Walsh, at pp. 550-551.) Plaintiffs identify no similarly compelling statutory purpose relevant here.
Although the parties below suggested on several occasions that this case involved a contractual claim with contractual damages, it is clear that IILK is a tort, a so-called “business tort, ” for which contractual damages are not appropriate. (Ramona Manor Convalescent Hospital v. Care Enterprises (1986) 177 Cal.App.3d 1120, 1140 [Fourth Dist., Div. Two].)
Plaintiffs also exposit Ward v. Taggart (1959) 51 Cal.2d 736 (Ward), in support of their contention that the trial court should have permitted them to proceed to trial on an unjust enrichment theory of damages. Ward engaged a real estate broker, Thomsen, to look for properties he might wish to purchase. (Id. at p. 739.) Thomsen met another broker who informed him that he was the exclusive agent for a particular parcel of land. With Ward’s permission, Thomsen offered $4,000 an acre for the land. The broker informed Thomsen that the owner refused to take less than $5,000 per acre. Ward directed Thomsen to offer $5,000 an acre. They subsequently concluded the transaction. (Ibid.) The plaintiffs later learned that the broker had never represented the owner of the property, never took the plaintiffs’ initial offer to the owner, and, instead, purchased the property from the owner for $4,000 and resold it to Ward for $5,000. (Id. at pp. 739-740.) The court noted that “[i]n the absence of a fiduciary relationship, recovery in a tort action for fraud is limited to the actual damages suffered by the plaintiff.” (Id. at pp. 741.) Thus, since there was no evidence of an agency or other fiduciary relationship between the parties, the plaintiffs would normally be limited to “‘out-of-pocket’” damages. (Id. at pp. 740-741.) Nevertheless, the court concluded that an award of damages equal to disgorgement of the profits made by the broker on the sale of the property to the plaintiffs was proper. (Id. at p. 742.)
Like Walsh, we find Ward distinguishable from the instant case. First, the court found that the defendant violated his statutory duties as a real estate broker to be honest and truthful in his business dealings. (Ward, supra, 51 Cal.2d at pp. 741& 743) Thus, the defendant became “an involuntary trustee for the benefit of plaintiffs on the secret profit of $1,000 per acre that he made from his dealings with them.” (Id. at pp. 741-742.) Therefore, a quasi-contractual relationship arose between the parties “sufficient to uphold recovery under the quasi-contractual theory of unjust enrichment....” (Id. at pp. 742-743.) This was true despite, “the facts pleaded and proved by plaintiffs do not sustain the judgment on [a] theory of tort....” (Id. at p. 742.) Here, plaintiffs fail to identify any statutory duty Continental bore with respect to its interactions, if any, with plaintiffs, such that a quasi-contractual relationship arose between them. Second, the court conspicuously noted that “[t]hrough fraudulent misrepresentations [defendant] received money that plaintiffs would otherwise have had.” (Id. at p. 741, italics added.) Here, as discussed above, Continental’s profits were not derived from plaintiffs. Finally, we note that Justice Schauer, in his concurring opinion, noted the novelty of the court’s resolution of the issue before it: “In fact this decision, by its ingenious innovation and application of a constructive trust-unjust enrichment-quasi-contractual theory to support an award of exemplary damages as against one of the defendants, avoids much... evil... and is therefore to that extent desirable.” (Id. at p. 744 (conc. opn. of Schauer, J.).) We simply fail to find the alleged facts of the instant case similarly deserving of such “ingenious innovation.”
We also note the highly speculative manner in which such damages would necessarily have had to be calculated should the court have allowed trial to proceed, and should the jury have decided the case in plaintiffs’ favor. Although plaintiffs averred below that had Continental not interfered with their contractual relations with Johnson the projects would not have proceeded at all, this assertion is inherently incredible. If true, assuming the appropriateness of allowing unjust enrichment damages, it would certainly entitle plaintiffs to the profits obtained by Continental as identified in footnote 1 ante. However, the more likely outcome would be that, at best, both projects would have proceeded in some more restricted manner, e.g., less units built. Any such determination would be highly speculative and any damages to plaintiffs under an unjust enrichment theory would be even more inexact. This, itself, argues for inappropriateness of such damages in this case. (See Ward, supra, 51 Cal.2d at p. 744 [inequitable to permit determination of damages award on entirely speculative data].)
We are in no way broadly proclaiming the inappropriateness of an award of damages based on unjust enrichment in any tort claim. Neither are we excluding the possibility of such damages in an action for IIKR in particular. Nevertheless, one may distill from a review of the cases on the subject the overriding principle that unjust enrichment is an equitable remedy most appropriately awarded in contractual or quasi-contractual cases rather than ones which lie in tort. To the extent a court would consider an award for such damages in tort, it would necessarily require a close analysis of the particular facts adduced or alleged to be adduced at trial in that specific case. Here, the trial court scrutinized the facts plaintiffs alleged would be adduced at trial, and properly concluded that unjust enrichment damages would not be legally available.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
We concur: McKINSTER Acting P. J., KING J.