Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Superior Court County of Ventura, Kent M. Kellegrew, William Q. Liebman, Judges, Super. Ct. No. CIV 215119
Lewis Brisbois Bisgaard & Smith, LLP, Roy G. Weatherup, Allison A. Arabian for Plaintiffs and Appellants.
Horgan, Rosen, Beckham & Coren, LLP, Alan M. Mirman, Mona D. Miller for Defendants and Respondents.
PERREN, J.
Lisa Kudler and Colleen Cronin (sometimes collectively Kudler) appeal from the judgment entered after a demurrer and a motion for summary judgment disposed of all issues in their third amended complaint (TAC) in favor of respondents Savvy Enterprises, dba Savvy Salon & Day Spa, Michael Hawkins and Susan Hughes-Hawkins (collectively Savvy). The demurrer was sustained to causes of action for fraud and intentional interference with economic advantage. The motion for summary judgment addressed causes of action for defamation and retaliatory eviction. Kudler also appeals from an award of $139,908.29 in attorney fees and costs to Savvy. We affirm.
FACTUAL AND PROCEDURAL HISTORY
The following facts are from the TAC and exhibits attached to prior versions of the complaint.
Appellant Lisa Kudler is a hair stylist. She began working at Jamie's Hair Design in December 1991. Kudler had a written "chair lease" with Jamie's. The lease could be terminated by either party upon 14 days' notice. Appellant Colleen Cronin began working at Jamie's in October 1999 as Kudler's assistant. Cronin did not have her own chair.
In April 2002, Savvy bought Jamie's assets and renamed the salon. Kudler consented to the assignment of her lease to Savvy. To obtain financing, Savvy prepared a business plan that stated it intended to eliminate the salon's booth rental agreements and convert the stylists from renters to employees within 12 months of purchase. Savvy did not disclose the existence or content of the business plan to Kudler. On May 16, 2002, Savvy issued a memorandum to its stylists stating that "no one will be asked to change from rental to commission status," and that "Savvy's goal is not to turn the salon into a 100% employee salon."
On June 4, 2002, Savvy provided the stylists with a new chair lease. The stylists were told that if they did not sign the new agreement, their leases with Savvy would be terminated. The lease provided for termination by either party on 10 days' notice. The lease gave Kudler three weeks' free rent and contained an integration clause. The lease also stated: "Renter shall be solely responsible for developing and maintaining Renter's customer base," and "The relationship between Owner and Renter shall be that of landlord and tenant, and nothing in this Lease shall be construed as creating an employment relationship, partnership, joint venture, agency or fiduciary relationship of any kind between the parties."
Savvy circulated a memorandum on June 10, 2002, prohibiting stylists from soliciting each other's clients while working at Savvy. The memorandum stated that if a chair renter had provided her client list to the front desk of the salon to facilitate scheduling appointments, the list would be returned to the stylist if she left the salon.
Kudler signed the lease on June 14, 2002. She and Cronin also signed a "Tri-Party Agreement" that acknowledged that Cronin's rights at the salon were derivative of Kudler's and could be terminated based on termination of Kudler's rights. The agreement states: "Owner's sole relationship with Renter is that of a lessor of styling chair facilities for use by Renter in conducting Renter's independent cosmetology services. Assistant [Cronin] acknowledges and agrees that Renter is not an employee, affiliate, agent or representative of Owner. Assistant acknowledges and agrees that nothing in this agreement or the relationship between Renter and Assistant shall give rise to or constitute an employment or independent contractor relationship between Assistant and Owner." At the time Kudler signed the lease, respondent Michael Hawkins told her and Cronin that they could expect to work indefinitely at Savvy.
The chair lease and tri-party agreement contained identical attorney fee clauses that stated: "The parties agree that if litigation arises between the parties to this Agreement concerning the construction of this Agreement or enforcement of this Agreement, the prevailing party in such litigation shall be entitled to recover its reasonable and necessary attorneys' fees and expenses incurred in maintaining or defending such action."
On or about June 18, 2002, Michael Hawkins accused Kudler and Cronin of threatening to report his salon to the State Board of Cosmetology for having unlicensed stylists performing services on clients. On July 23, Savvy gave Kudler 10 days' written notice of termination. The termination notice accused Kudler of "planning on terminating [her] chair lease with Savvy" and "informing [her] clients and those of the salon of this pending transition in a negative manner." Kudler told Hawkins the allegations were false. Hawkins then repeated the allegations in the presence of a receptionist.
On July 24, 2002, Michael Hawkins told several Savvy stylists of Kudler's and Cronin's termination. Hawkins stated: "Kudler and Cronin are spreading rumors about the salon, threatening to report my salon to the State Board of Cosmetology, and are disruptive to other stylists and clients of Savvy."
On August 3, 2002, Kudler and Cronin began working at Cleo Hair Salon. They attempted to contact their clients but were unable to reach many of them. Before leaving Savvy, Kudler and Cronin gave the receptionist the name and telephone number of Cleo's for client referrals. On August 12, Hawkins ordered the receptionist not to refer Kudler's clients and to solicit them for Savvy. Many of Kudler's clients called Savvy and were told that Kudler left the salon and Savvy did not know where she had moved. Some of these clients were solicited by Savvy stylists.
Kudler and Cronin filed a complaint against Savvy on October 25, 2002. The complaint was amended three times. The operative complaint is the third amended complaint (TAC) filed on July 21, 2004. It alleges causes of action for fraud, breach of contract, defamation, wrongful eviction, retaliatory eviction, injunctive relief and intentional interference with prospective economic advantage.
The trial court sustained without leave to amend Savvy’s demurrer to the causes of action for fraud, breach of contract and intentional interference with prospective economic advantage. As to the fraud and breach of contract claims, the court concluded that the chair lease and tri-party agreements constituted the entire agreement of the parties and precluded Kudler from relying on any oral promises contrary to the written agreements. As to the intentional interference claim, the court held that the complaint did not state a cause of action because the chair lease did not require Savvy to direct Kudler's clients to the new salon. Instead, the lease expressly stated that "Renter shall be solely responsible for developing and maintaining Renter's customer base."
Savvy then filed a motion for summary judgment to the remaining causes of action for defamation and retaliatory eviction. The motion was granted.
Having prevailed on all claims against it, Savvy filed a motion for attorney fees under Civil Code section 1717. Kudler opposed the motion on the ground that her complaint contained only tort, not contract, causes of action. The court disagreed, finding that Savvy was the prevailing party on the contract claims and that all the other causes of action alleged in the complaint, except the defamation and retaliatory eviction claims, were "inextricably intertwined with the breach of contract causes of action, such that apportionment of attorneys fees for work done on these claims is not appropriate." The court awarded $139,908.29 as reasonable attorney fees and costs after reducing the amount requested by Savvy by approximately $40,000.
DISCUSSION
I. The Demurrers Were Properly Sustained Standard of Review
In reviewing the sufficiency of a complaint tested by demurrer, we accept as true well-pleaded material facts, but not contentions, deductions or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Whether a writing was intended to be an integrated agreement is a question of law for the court. (Slivinsky v. Watkins-Johnson Co. (1990) 221 Cal.App.3d 799, 805.)
Fraud Claims
The TAC contains four separately stated fraud causes of action for intentional misrepresentation, nondisclosure, promise without intent to perform and constructive fraud. All are based on allegations that (1) defendants issued a memo to the stylists stating that Savvy had no intention of discontinuing chair leases and converting the salon to an all employee salon, (2) defendants told Kudler and Cronin that they could expect to work indefinitely at Savvy, and (3) defendants failed to disclose their "secret" business plan to eliminate the chair renters within 12 to 14 months.
The trial court ruled that these allegations do not state a cause of action. We agree. "[O]ur courts have consistently rejected promissory fraud claims premised on prior or contemporaneous statements at variance with the terms of a written integrated agreement." (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 346.)
Savvy's purported representations that it would not discontinue the chair lease and that Kudler could stay at the salon indefinitely were at direct variance with the provision in the chair lease that either party could terminate the contract with 10 days' written notice. "[O]ral assurances of continued employment cannot create an implied contract in the face of the written acknowledgement signed by plaintiff that his employment was at will." (Starzynski v. Capital Public Radio, Inc. (2001) 88 Cal.App.4th 33, 38; see also Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 393 [right to terminate agency agreement by written notice not reasonably susceptible to an interpretation requiring good cause for termination].) Kudler could have insisted that the agreement accurately reflect the promises made. If that could not be accomplished, she could have refused to sign the agreement.
The assertion that an undisclosed business plan existed to eliminate chair leases fails for the same reason. Savvy's motivation for terminating Kudler's chair lease, whether to further the objectives of an undisclosed business plan or other reasons, is simply immaterial because the agreement gave Savvy the right to terminate Kudler's lease with 10 days' written notice. It is undisputed that Savvy complied with the notice provisions of the agreement. Therefore, the termination was not wrongful.
Intentional Interference with Economic Advantage
The trial court did not err in sustaining the demurrer to Kudler's claim for intentional interference with economic advantage. Savvy's alleged solicitation of Kudler's customers is protected by the privilege of competition. "California law has long recognized a 'competition privilege' which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor. The privilege applies where '"(a) the relation [between the competitor and third person] concerns a matter involved in the competition between the actor and the competitor, and (b) the actor does not employ improper means, and (c) the actor does not intend thereby to create or continue an illegal restraint of competition, and (d) the actor's purpose is at least in part to advance his interest in his competition with the other.". . .' [Citation.] In short, the competition privilege furthers free enterprise by protecting the right to compete fairly in the marketplace. One may compete for an advantageous economic relationship with a third party as long as one does not act improperly or illegally." (Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 880.)
Savvy's alleged solicitation of Kudler's clients falls squarely within the privilege. To defeat the privilege, Kudler was required to, but did not, allege an independently wrongful act. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392-393.) Kudler's allegations that Savvy lied about not knowing of her whereabouts or that Savvy acted from an improper motive are insufficient. While lying about a competitor's whereabouts is not to be condoned, it is not conduct "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard." (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159.)
Kudler's argument that the demurrer should have been overruled because the face of the complaint does not contain allegations justifying Savvy's interference is without merit. Because nothing Savvy is alleged to have done was illegal or wrongful, no facts showing justification were required.
II. Summary Judgment on Causes of Action for Defamation and Retaliatory Eviction Standard of Review
On appeal, we review de novo the grant of summary judgment. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860; Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661.) We consider all of the evidence set forth in the moving and opposing papers, except that to which objections were made and sustained by the trial court. (Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037.)
"The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th 826, 843.) "Summary judgment is mandatory where no triable issues exist as to a material fact, and if the documentation submitted on the motion entitles the moving party to judgment as a matter of law." (Thompson v. Halvonik, supra, 36 Cal.App.4th 657, 661.) This occurs when a defendant's supporting documents establish either a complete defense to the plaintiff's action or an absence of an essential element of the plaintiff's case. (Ibid.; Forensis Group, Inc. v. Frantz, Townsend & Foldenaurer (2005) 130 Cal.App.4th 14, 26.) Unless the plaintiff rebuts this showing with specific facts which establish a triable issue of material fact, summary judgment must be granted. (Aguilar, at p. 849.)
Defamation
The tort of defamation "involves (a) a publication that is (b) false, (c) defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes special damage." (Taus v. Loftus (2007) 40 Cal.4th 683, 720.)
Summary judgment is favored in defamation cases due to the chilling effect of protracted litigation on rights protected by the First Amendment. Courts impose more stringent burdens on a plaintiff who opposes the motion and require a showing of high probability that the plaintiff will ultimately prevail in the case. In the absence of such showing, courts are inclined to grant the motion, and do not permit the case to proceed beyond the summary judgment stage. (Alszeh v. Home Box Office (1998) 67 Cal.App.4th 1456, 1460.)
Kudler alleges that Michael Hawkins stated in the presence of Savvy's receptionist, other stylists, and cleaning staff that Kudler planned on terminating her chair lease with Savvy and that she had been informing her clients and other Savvy clients of the pending transition in a negative manner. In addition, Hawkins told several Savvy stylists that Kudler was spreading rumors about the salon, threatening to report the salon to the State Board of Cosmetology, and was disruptive to other stylists and clients of Savvy.
The trial court granted summary judgment on this claim because it found that the statement was subject to the qualified "common interest" privilege in Civil Code section 47, subdivision (c), which states in part: "A privileged publication or broadcast is one made: [¶] . . . [¶] (c) In a communication, without malice, to a person interested therein, (1) by one who is also interested . . . ."
The privilege applies in this case. Communications made in a commercial setting relating to the conduct of an employee fall squarely within the common interest privilege. (Cuenca v. Safeway San Francisco Employees Fed. Credit Union (1986) 180 Cal.App.3d 985, 995.) In Deaile v. General Telephone Co. of California (1974) 40 Cal.App.3d 841, 847, for example, the court held that an employer may publish to his employees the reasons for termination of another employee because of the employer's economic interest in clarifying its policies and preventing future abuses of those policies. "[B]ecause an employer and its employees have a common interest in protecting the workplace from abuse, an employer's statements to employees regarding the reasons for termination of another employee generally are privileged." (King v. United Parcel Service, Inc. (2007) 152 Cal.App.4th 426, 440.) Like the statements in Deaile, the statements allegedly made by Hawkins fall within the privilege because they concerned the reasons for Kudler's termination and were made to others working in the salon.
Kudler argues that summary judgment should not have been granted because she presented evidence that the statements were made with malice. The trial court rejected Kudler's evidence in this regard and, in addition, found that she had not presented sufficient evidence that she was damaged by the alleged statements. We agree.
To defeat summary judgment, Kudler was required to produce clear and convincing evidence that Savvy acted with actual malice. (Lundquist v. Reusser (1994) 7 Cal.4th 1193,1203-1204; Melaleuca, Inc. v. Clark (1998) 66 Cal.App.4th 1344, 1350.) In Sanborn v. Chronicle Pub. Co. (1976) 18 Cal.3d 406, 413, our Supreme Court explained: "'The malice necessary to defeat a qualified privilege is "actual malice" which is established by a showing that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights.'" Malice is not inferred from the communication. (Civ. Code, § 48.)
Kudler argues she has raised a triable issue of material fact as to malice because she submitted declarations from a former Savvy stylist who said she heard Hawkins make the statements and that customers were within "earshot." She also claims the trial court erred in striking other declarations she submitted to substantiate these allegations. We disagree. In Williams v. Taylor (1982) 129 Cal.App.3d 745, the court affirmed the trial court's grant of summary judgment and rejected a claim of defamation against the owner of an automobile body shop who called a terminated employee "a thief" in conversations with two insurance adjusters who referred business to the shop. The court found that the common interest privilege applied: "'Decisional law has recognized the defense of qualified privilege in a variety of commercial settings . . . .' [Citations.] This case comes within the ambit of these cases. Plaintiff does not dispute that both insurance adjusters referred business to the body shop. Moreover, the evidence is without conflict that all 'plaintiff-related' statements made by defendants to [the insurance adjusters] concerned the reasons for plaintiff's termination; '[a]s such, they were of a kind reasonably calculated to protect or further a common interest of both the communicator and the recipient.'" (Id. at p. 752.) In rejecting plaintiff's argument that the statements were made with malice and defeated the privilege, the court said: "'[I]f the publication is made for the purpose of protecting the interest in question, the fact that the publication is inspired in part by resentment or indignation at the supposed misconduct of the person defamed does not constitute an abuse of the privilege.'" (Id. at pp. 752-753; see also Kashian v. Harriman (2002) 98 Cal.App.4th 892, 932 [bare assertion that the statements made are false does not make them so, much less establish that they were made maliciously].)
The statements made by Michael Hawkins were privileged. Kudler has failed to meet her burden to show they were made with actual malice.
Retaliatory Eviction Claim
Kudler fares no better with her retaliatory eviction claim. Kudler claims that she was "evicted" in retaliation for her statements that she would report Savvy to the licensing authority for violations of state law. This claim does not help Kudler because Savvy had a legal right, given to it by the chair lease, to terminate the lease for any reason or no reason with 10 days' notice. In Witt v. Union Oil Co. (1979) 99 Cal.App.3d 435, the lessee of a gas station sued Union Oil for retaliatory eviction when it refused to renew its lease. In rejecting the claim, the court said: "The parties agreed to a term of three years and it automatically terminated at that time. Plaintiff had no continued expectancy in the lease that he could be deprived of by some wrongful act of Union Oil. From the face of the complaint, it appears that plaintiff received exactly what he was entitled to receive under the agreement . . . . It is his contention that there was retaliatory eviction because Union Oil refused to renew the agreement, however, there is nothing in the lease requiring Union Oil to renew or any provisions that would justify plaintiff in believing that the lease would be renewed so that he could allege these provisions were breached by some form of retaliatory action on the part of Union Oil." (Id. at p. 440; see also Cunningham v. Universal Underwriters (2002) 98 Cal.App.4th 1141, 1149-1150 [a wrongful eviction occurs when the person recovering the property had no legal right to do so]; and see California Livestock Production Credit Assn. v. Sutfin (1985) 165 Cal.App.3d 136, 143 [claim of retaliatory eviction cannot be made where party has no lawful right of possession under lease or rental agreement].)
Kudler's reliance on Lujan v. Minagar (2004) 124 Cal.App.4th 1040 is misplaced. That case involved an employee who was terminated from employment for stating that she intended to report her employer for safety violations. Kudler provides no authority establishing that the protection provided to employee whistleblowers, or potential whistleblowers, applies to an independent contractor whose commercial lease was terminated in accordance with its terms. More to the point is Abrahamson v. NME Hospitals, Inc. (1987) 195 Cal.App.3d 1325. In that case, a doctor filed a lawsuit against a hospital with which he had a one-year contract terminable without cause with 90 days' written notice. The appellate court affirmed the grant of summary judgment on a claim of wrongful discharge, stating: "These concepts concerning causes of action sounding in wrongful discharge . . . are not on point. [The doctor] was engaged as an independent contractor for the term of one year under a contract terminable without cause on 90 days written notice. He was not an employee and he was not discharged from employee status." (Id. at p. 1329.)
Kudler had no legal right to continue working under the Savvy lease, where Savvy exercised its legal right to terminate with proper notice. Kudler's claim fails as a matter of law.
III. The Trial Court Did not Err in Granting Savvy's Motion for Attorney Fees
A. Savvy Was the Prevailing Party
The parties disagree as to the standard of appellate review applicable to a prevailing party determination. Kudler contends review is de novo. Savvy asserts our review is for abuse of discretion. There are cases applying both standards. We will review the matter de novo as the issue involves interpretation of a statute and the terms of contract.
The chair lease and tri-party agreement contain identical attorney fee provisions: "The parties agree that if litigation arises between the parties to this Agreement concerning the construction of this Agreement or enforcement of this Agreement, the prevailing party in such litigation shall be entitled to recover its reasonable and necessary attorneys' fees and expenses incurred in maintaining or defending such action."
Kudler contends that Savvy is not entitled to contractual attorney fees because she abandoned her contract claims. This assertion is belied by the record. The TAC alleges two separate breach of contract causes of action against Savvy. Kudler submitted the agreements as exhibits to the prior versions of her complaint. (See Barnett v. Fireman's Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [if factual allegations conflict with exhibits, we rely on and accept as true the content of exhibits].)
Civil Code section 1717 mandates an award of fees to the "prevailing party" and the court lacks discretion to deny fees where, as here, a defendant has obtained a "simple, unqualified win." (Hsu v. Abbara (1995) 9 Cal.4th 863, 877.)
Kudler asserts the award is erroneous because it includes fees for work done on noncontract claims. We disagree. The attorney fee provision in the agreements is broad enough to include an award for contract-related litigation. (See, e.g., Moshonov v. Walsh (2000) 22 Cal.4th 771, 775; Allstate Ins. Co. v. Loo (1996) 46 Cal.App.4th 1794. 1797 [contract provided for fees "'[i]n any legal action brought by either party to enforce the terms hereof or relating to the demised premises'"]; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1343 [contract provided for fees "'[i]f this Agreement gives rise to a lawsuit or other legal proceeding'"].)
Moreover, a prevailing party is entitled to fees for work done on noncontract claims if the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney's time into compensable and noncompensable units. (See, e.g., Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111 [defense of contract, tort, and RICO claims so intertwined that separation of time "'impracticable, if not impossible,'" to achieve]; see also Erickson v. R.E.M. Concepts, Inc. (2005) 126 Cal.App.4th 1073, 1085-1086 [time spent on non-fee shifting claims were determinative of fee-shifting claims and thus compensable].) In addition, time spent on overlapping claims is compensable. (See, e.g., Beeman v. Burling (1990) 216 Cal.App.3d 1586, 1608 [action for wrongful eviction fundamentally based on lease, permitting successful plaintiff to recover fees under Civil Code section 1717].) The trial court found, and we agree, that all theories of recovery sought in the complaint, except the defamation and retaliatory eviction claims, are based on the agreements between Kudler and Savvy.
B. The Amount Awarded Was Not Excessive
"[T]he trial court has broad authority to determine the amount of a reasonable fee. [Citations.] . . . 'The "experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong"'--meaning that it abused its discretion." (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)
Savvy succeeded in defeating all of Kudler's many claims, thus an award of attorney fees was mandatory under Civil Code section 1717. Savvy submitted detailed time records in support of its motion. The trial court analyzed these records and deducted appropriate amounts for work done on the defamation and retaliatory eviction claims as required by the lodestar method of calculating attorney fees. (See, e.g. PLCM Group v. Drexler, supra, 22 Cal.4th 1084, 1095 [fee setting inquiry normally begins with the lodestar].)
The record we have been provided shows that this matter was resolved before trial based on Savvy's demurrer to a 13-count complaint followed by several summary judgment motions. The record also shows that substantial time was spent on discovery. The award of $139,908.29 was not unreasonable, and we will not interfere with the trial court's sound exercise of its discretion.
The judgment and order are affirmed. Costs are awarded to respondents.
We concur: GILBERT, P.J., COFFEE, J.