IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA
March 11, 2013
PNC EQUIPMENT FINANCE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS SUCCESSOR TO NATIONAL CITY COMMERCIAL CAPITAL CORPORATION,
CALIFORNIA FAIRS FINANCING AUTHORITY, A CALIFORNIA JOINT POWERS AUTHORITY; 15TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 18TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 21ST DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 26TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 27TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 30TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; EL DORADO COUNTY FAIR ASSOCIATION, INC., A CALIFORNIA CORPORATION; AND MADERA COUNTY LIVESTOCK ASSOCIATION, A CALIFORNIA CORPORATION,
The opinion of the court was delivered by: Garland E. Burrell, Jr. Senior United States District Judge
ORDER DISMISSING COUNTER- CLAIM
AND RELATED CROSS-CLAIMS AND COUNTER-CLAIMS.
Plaintiff and Counter-Defendant PNC Equipment Finance, LLC ("PNC") filed a motion under Federal Rule of Civil Procedure ("Rule") 12(b)(6) in which it seeks dismissal of Defendants 15th, 18th, 21st, 26th, 27th, and 30th District Agricultural Associations' ("the DAAs") counter-claim for tortious interference with contract. (Pl. and Counter- Def.'s Mot. to Dismiss Counter-Claim ("Mot."), ECF No. 131.) The DAAs did not oppose the motion or file a statement of non-opposition to the motion as required by Local Rule 230. E.D. Cal. R. 230(c).
The DAAs allege in the Counter-Claim that "PNC's actions will cause a breach of contract by the DAA[s] by interfering with the DAA[s'] contractual requirements to make payments to [California Fairs Financing Authority ("]CFFA[")]." (Cross-Claim by 15th, 18th, 21st, 26th, 27th and 30th Dist. Agric. Ass'ns Against PNC ("Counter-Claim") ¶ 27, ECF No. 122.)*fn1 PNC argues that "a tortious interference claim cannot be brought against a defendant that has a direct economic interest in the contract with which it purportedly interferes--even where the defendant is a nonparty to the subject contract." (Mot. 6:3--6.) PNC further argues that "the DAAs fail to plead three of the five elements--actual breach, causation, or damages--required to allege tortious interference." (Id. 6:6--8.)
To prevail on [an] intentional interference with contract claim, [the plaintiff] ha[s] to show (1) the existence of a valid contract between [the plaintiff] and a third party, (2) [the defendant]'s knowledge of the contract, (3) intentional acts designed to induce a breach or to disrupt a contractual relationship, (4) actual breach or disruption of the contractual relationship, and (5) resulting damage.
Bank of N.Y. v. Fremont Gen. Corp., 523 F.3d 902, 909 (9th Cir. 2008) (citing Reeves v. Hanlon, 33 Cal. 4th 1140, 1148 (2004)). PNC argues that "[t]he fourth element, 'actual breach or disruption' is not adequately pled." (Mot. 9:19.) PNC further argues that "[w]ithout damages, there can be no basis for a cause of action for contractual interference." (Id. 13:5--6 (citing Charles C. Chapman Bldg. Co. v. Cal. Mart, 2 Cal. App. 3d 846 (1969); Bill A. Duffy, Inc. v. Scott, 2009 WL 1125959, at *6 (N.D. Cal. 2009).) PNC argues that "the DAAs allege that they continue to make payments under the Use Agreements," and "[t]hey do not allege any specific damages stemming from a breach of the Use Agreements." (Id. 13:11--13 (citing Counter- Claim ¶¶ 25, 21--28).)
The Counter-Claim comprises the following allegations relating to actual breach and damages:
25. PNC has demanded that DAA[s] make User Fee monthly payments to PNC instead of CFFA as required under the DAA[s'] Use Agreements. PNC by making this demand intends to induce the DAA[s] to breach their Use Agreements.
26. PNC's demand if complied with by the DAA[s] will result in a breach of their Use Agreements and subject the DAA[s] to a breach of contract action by CFFA.
27. PNC's demand is unjustified because the DAA[s] have made payments to CFFA. PNC's actions will cause a breach of contract by the DAA[s] by interfering with the DAA's contractual requirements to make payments to CFFA.
(Counter-Claim ¶¶ 25--27.) The DAAs have alleged neither "actual breach or disruption" nor damages since the allegations contained in the Counter-Claim refer to the possibility of future occurrences. Since a claim for tortious interference with contract requires both actual breach and damages, the Counter-Claim is dismissed.
Therefore, the DAAs are granted ten (10) days from the date on which this order is filed to file an amended Counter-Claim addressing the Counter-Claim's deficiencies. The DAAs are warned that a dismissal with prejudice of the Counter-Claim could be entered under Rule 41 if the DAAs fail to file an amended Counter-Claim within the prescribed time period.