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Mushroom Express, Inc. v. Penske Truck Leasing Co., LP

United States District Court, S.D. California

January 7, 2015



JEFFREY T. MILLER, District Judge.

Defendant and Counter-Claimant Penske Truck Leasing Co., LP ("Penske") moves for summary judgment or, alternatively, partial summary judgment. Plaintiff and Counter-Defendant Mushroom Express, Inc. ("Mushroom") opposes the motion. Pursuant to L.R. 7.1(d)(1), the matters presented are appropriate for decision without oral argument. For the reasons set forth below, the court grants in part and denies in part Penske's motion for summary judgment.


On September 6, 2013, in the Superior Court for the County of San Diego, Plaintiff commenced this action by alleging a claim for breach of contract and a claim for intentional interference with prospective business interests. (Ct. Dkt. 1). Following removal of the action to this court on October 30, 2013, based upon diversity jurisdiction, the parties jointly moved to dismiss with prejudice the intentional interference with prospective business interests claim. (Ct. Dkt. 5). On February 26, 2014, Penske answered the Complaint and filed a Counterclaim alleging three causes of action for breach of contract, account stated and common counts. Penske seeks to recover unpaid lease payments in the amount of $15, 150.20.

Mushroom's claims arise from the following alleged events. Mushroom, incorporated in California with its principal place of business in California, is engaged in the business of growing and distributing mushrooms to customer accounts throughout the nation. (Compl. ¶2). Penske, a Delaware corporation with its principal place of business in Pennsylvania, is in the business of leasing vehicles, among other things. In December 2009, the parties entered into a written contract, the Vehicle Lease Service Agreement ("Agreement"), pursuant to which Penske agreed to lease freightliner trucks to Mushroom in exchange for lease payments. The Agreement also provided that Penske would "provide all preventive maintenance and repairs to keep the leased vehicle in good repair and operating condition." (Compl. ¶7). In the event a leased vehicle became disabled, Penske "agreed to provide a substitute vehicle in good repair and operating condition at the location where the originally leased vehicle became disabled." Id.

In January 2010, one of Mushroom's drivers was operating a leased vehicle in western Oklahoma when the truck broke down and became disabled. (Compl. ¶9). Mushroom notified Penske and a substitute vehicle was delivered to the site of the break down. The substitute truck provided had just been returned to Penske with a mechanical problem. Upon delivery of the substitute vehicle, the Penske "drivers advised Plaintiff's driver of the problems with the substitute vehicle." The substitute vehicle would not start and had to be towed away. (Compl. ¶10-12). A second substitute vehicle was requested. However, by the time it arrived, Mushroom could not make a timely delivery to its largest customer and "the perishable produce had declined in quality during the delay." (Compl. ¶15). Based upon the failure to timely provide a working substitute vehicle, Mushroom asserts that Penske breached the Agreement by (1) not properly maintaining the originally leased vehicle and (2) failing to provide a substitute vehicle in good operating condition. Mushroom asserts that the 15 hour delay "resulted in a significant downgrade in the quality of mushrooms after losing at least 15% of its shelf life" as a result of the "delay in providing the substitute vehicle." (Oppo. at p.10:26-28).

The Counterclaim filed by Penske alleges that Mushroom stopped paying the lease invoices starting in August 2012. As of October 2013, there allegedly remained an unpaid balance under the Agreement in the amount of $15, 150.20. (Counterclaim ¶12).


Legal Standards

A motion for summary judgment shall be granted where "there is no genuine issue as to any material fact and... the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Prison Legal News v. Lehman, 397 F.3d 692, 698 (9th Cir. 2005). The moving party bears the initial burden of informing the court of the basis for its motion and identifying those portions of the file which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). There is "no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent's claim." Id . (emphasis in original). The opposing party cannot rest on the mere allegations or denials of a pleading, but must "go beyond the pleadings and by [the party's] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.'" Id. at 324 (citation omitted). The opposing party also may not rely solely on conclusory allegations unsupported by factual data. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).

The court must examine the evidence in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). Any doubt as to the existence of any issue of material fact requires denial of the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). On a motion for summary judgment, when "the moving party bears the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence were uncontroverted at trial.'" Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992) (emphasis in original) (quoting International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991), cert. denied, 502 U.S. 1059 (1992)).

The Motion for Summary Judgment

The Choice-of-Law Issue

Before addressing the merits of the summary judgment motion, the parties dispute whether the contractual choice-of-law provision, choosing Pennsylvania state law, applies to the parties' contractual relationship. Mushroom argues that California law should apply to the parties' relationship ...

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