Opinion
B201960
7-30-2008
O.E.I. INTERNATIONAL, INC., Plaintiff and Appellant, v. YONG MING INTERNATIONAL GROUP, INC. et al., Defendants and Respondents.
Law Offices of Shun C. Chen and Shun C. Chen for Plaintiff and Appellant. Law Office of Steve Qi & Associates and Steve Qi for Defendants and Respondents.
Not to be Published
O.E.I. International, Inc. appeals from a ruling granting a motion for judgment on the pleadings without leave to amend in favor of Yong Ming Intl Group, Inc. O.E.I. shipped merchandise to Yong Ming, expecting Yong Ming to provide the original bill of lading in return. O.E.I. claims that it is subject to liability for the costs of the merchandise to a supplier because it never received the original bill of lading, and sued Yong Ming for fraud and breach of contract. We conclude that because O.E.I. has alleged no basis to demonstrate damages have been incurred or would be enforceable against Yong Ming, the trial court did not abuse its discretion in granting the motion for judgment on the pleadings without leave to amend. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant O.E.I International, Inc. was hired by Liaoning Sinotrust Import and Export Co., Ltd., to engage an agent in China to arrange for merchandise to be transported to Los Angeles using the international transport company, T.V.L. Container Line Limited. Respondent Yong Ming International Group, Inc., the purchaser, on payment to Liaoning, was to receive the original bill of lading; in turn, it was to provide that document to O.E.I. to receive the containers. Yong Ming faxed a copy of the bill of lading to O.E.I., and O.E.I. released the containers. Yong Ming never provided the original bill of lading. O.E.I. now claims it is subject to liability to the supplier in China, for the costs of the merchandise, but has not alleged that a judgment exists.
O.E.I. alleges two causes of action, fraud and breach of contract. First O.E.I. claims that Yong Ming falsely and fraudulently represented to O.E.I. that it had the original bill of lading for the containers, inducing O.E.I. to release the merchandise to the respondents. O.E.I. asserts it has been damaged by "facing the liability of remitting the balance due shipper on the goods shipped but unpaid," in the amount of $35,000 plus 10 percent interest per year for this cause of action. In its second cause of action, O.E.I. alleges that it entered an oral agreement with Yong Ming for Yong Ming to provide the three original bills of lading within 15 days, which Yong Ming breached by failing to deliver the bills. On this claim, O.E.I. seeks specific performance through delivery of the original bills of lading to O.E.I. The trial court, on its own motion, entered judgment on the pleadings without leave to amend in favor of respondent Yong Ming.
DISCUSSION
The trial court found that the "complaint does not allege that plaintiff has been currently damaged in any way, shape or form, and its exposure to the liabilities...are speculative, conjectural, and . . . in any event have not ripened to an amount that any trier of fact can ascertain." At the trial level, appellant did not present facts demonstrating damages incurred from litigation against it in China, stemming from releasing the merchandise to respondent before receiving the original bills of lading in return.
A. Standard of Review
On appeal from a motion for judgment on the pleadings, the standard of review is de novo. (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 602.) All material facts alleged in the complaint are accepted as true and taken in whole, thus the determination for the court is a question of law. (Id. at p. 603.)
Denial of leave to amend after granting a motion for judgment on the pleadings is, however, reviewed using the abuse of discretion standard. (Foundation for Taxpayer and Consumer Rights v. Nextel Communications, Inc. (2006) 143 Cal.App.4th 131, 135.) To show an abuse of discretion, the plaintiff has the burden of demonstrating that there is a reasonable possibility the plaintiff could cure the defect with an amendment. (Ibid.)
B. Judgment on the Pleadings
When a court, on its own motion, grants a motion for judgment on the pleadings, it must find that the court has no jurisdiction of the subject of the cause of action alleged in the complaint, or that the complaint does not state facts sufficient to constitute a cause of action against the defendant. (Code Civ. Proc., § 438(c)(3)(B), subds. (i) & (ii).) Here, the court determined that the complaint does not state facts sufficient to constitute a cause of action against the defendant.
This court has previously held that a plaintiff may not recover damages for an unpaid liability to a third party, unless the plaintiff proves to a reasonable certainty that the liability would and could be enforced by the third party against the plaintiff or that the plaintiff otherwise could and would satisfy the obligation. (Green Wood Indus. Co. v. Forceman Intern. Development Group, Inc. (2007) 156 Cal.App.4th 766, 776.) A plaintiff cannot generally recover damages alleged to arise from a third-party claim against the plaintiff because the existence of a mere potential liability is not necessarily the equivalent of actual damage. (Ibid.)
Even evidence of an obligation to pay a liability to a third party is not enough to warrant damages without proof to a reasonable certainty that the plaintiff could and would pay the liability, because the obligation itself does not mean that one will pay the third party. (Green Wood Indus. Co. v. Forceman Intern. Development Group, Inc., supra, 156 Cal.App.4th at p. 778.) There, the plaintiff sued the defendant for damages resulting from a suit arising against it by its third party Chinese buyers. (Ibid.) Even though the plaintiff settled, agreeing to pay the claim, the plaintiff presented no evidence that the agreement would be enforceable in China, or that the buyer could and would enforce the liability in any jurisdiction. (Ibid.) The plaintiff also did not present evidence at trial to establish that the Chinese buyer actually lost profits other than the Chinese buyers mere claim. (Ibid.) That evidence of damage was insufficient to render judgment for plaintiff. (Ibid.)
Here, O.E.I. has not claimed an actual judgment against it, nor has it asserted that if a judgment were rendered in the future, the Chinese supplier could and would enforce that judgment. O.E.I. has not alleged that the Chinese supplier incurred a loss as a result of the transactions at issue. In sum, O.E.I. has asserted no showing of damages.
Appellant argues that its claims are sufficient because future damages are recoverable if "it is shown with reasonable certainty that detriment from the breach of contract, or commission of a tort, will accrue to plaintiff in the future." Appellant relies on Alderson v. Houston (1908) 154 Cal. 1, 3, for this proposition, in which there was a trial, and a motion for new trial granted. There the plaintiffs were real estate brokers for the defendant owner, who were prevented from selling lots because the owner failed to furnish the certificate of title. Plaintiffs claimed lost commission from the sale of the homes. The court found that the defendants actions prevented the plaintiffs from performing the contract, and that damages for such a breach are the "amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which in the ordinary course of things would be likely to result therefrom." (Id. at p. 15.) The uncontradicted evidence that it was probable that plaintiffs could and would have sold all of the lots if the defendant had been willing to clear title to the lots, established recoverable damages. (Id. at p. 16)
In Alderson there was evidence showing actual damage arising from defendants refusal to perform the contract. Here, in contrast, appellant has alleged no basis to conclude that damages have been incurred or would be enforceable.
Appellant also argues that it is not required to show the certainty of the amount of damages, but only show with reasonable certainty that damage exists. (GHK Associates v. Meyer Group, Inc., (1990) 224 Cal.App.3d 856 [Where the fact of damages is certain, the amount of damages need not be calculated with absolute certainty].) O.E.I. has been unable to allege any factual basis for a finding that damages exist, rendering the argument of requiring the certainty of the amount of damages irrelevant.
C. Leave to Amend Complaint
A court may grant a motion for judgment on the pleadings with or without leave to amend. (Code Civ. Proc., §438, subd. (h)(1).) Whether a motion for judgment on the pleadings should be granted with or without leave to amend depends on whether there is a reasonable possibility that the defect can be cured by amendment. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402.) If a cure is reasonably likely, the trial court abuses its discretion by not granting leave to amend. (Ibid.) The burden of proof is on the plaintiff. (Foundation for Taxpayer and Consumer Rights v. Nextel Communications, Inc., 143 Cal.App.4th 131, 135.)
Appellant has had opportunities during this case to assert additional factual allegations that would establish its ability to amend the complaint. In its Opposition to Motion for Judgment on the Pleadings on June 21, 2007, appellant failed to present any new allegations; nor did it do so during the hearing on July 2, 2007. The appellant has not shown that there is a reasonable possibility that the defect, or lack of facts supporting a cause of action, could be cured with an amendment. The trial court did not abuse its discretion in denying leave to amend the complaint.
DISPOSITION
The judgment is affirmed. Respondent is to recover its costs on appeal.
We concur:
PERLUSS, P. J.
WOODS, J. --------------- Notes: In essence, the trial court found the lawsuit to be premature. Respondent agrees; it conceded at oral argument that a later lawsuit, if damages are incurred, would not be barred by these proceedings.