Caliber Paving Co. v. Rexford Indus. Realty & Mgmt., Inc.

• Decision Date: 01 September 2020
• Docket Number: G058406
• Citation: 268 Cal.Rptr.3d 443,54 Cal.App.5th 175
• Parties: CALIBER PAVING COMPANY, INC., Plaintiff and Appellant, v. REXFORD INDUSTRIAL REALTY AND MANAGEMENT, INC., Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

54 Cal.App.5th 175

268 Cal.Rptr.3d 443

CALIBER PAVING COMPANY, INC., Plaintiff and Appellant,

v.REXFORD INDUSTRIAL REALTY AND MANAGEMENT, INC., Defendant and Respondent.

G058406

Court of Appeal, Fourth District, Division 3, California.

Filed September 1, 2020

Callari & Summers and Andrew C. Callari, Costa Mesa, for Plaintiff and Appellant.

Law Offices of Tom S. Chun and Tom S. Chun, Irvine, for Defendant and Respondent.

OPINION

FYBEL, J.

INTRODUCTION

California law recognizes a tort cause of action against a noncontracting party—also called a stranger to the contract—who intentionally interferes with the performance of a contract. ( Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 513-514, 28 Cal.Rptr.2d 475, 869 P.2d 454 ( Applied Equipment ).) Caliber Paving Company, Inc. (Caliber) sued Rexford Industrial Realty and Management, Inc. (Rexford) for intentional interference with a contract between Caliber and Steve Fodor Construction (SFC). The trial court granted Rexford's motion for summary judgment on the ground that Rexford, although not a party to the contract, had an economic interest in it and therefore could not be liable in tort for intentional interference with contract. Caliber appealed from the judgment; we reverse.

In a case of first impression in this district, we hold that, under Applied Equipment , a defendant who is not a party to the contract or an agent of a party to the contract is a noncontracting party or stranger to the contract and, regardless whether the defendant claims a social or economic interest in the contractual relationship, may be liable in tort for intentional interference with contract. Applied Equipment does not confer immunity for intentional interference with contract on noncontracting parties having a social or economic interest in the contractual relationship from liability. We also conclude that Caliber submitted admissible evidence sufficient to meet its burden of raising a triable issue of fact as to whether Rexford interfered with the contract between SFC and Caliber.

FACTS

Rexford owns and operates industrial property throughout Southern California. In 2017, Rexford hired SFC to make certain improvements to a Rexford property in Carson (the property). The scope of work included repaving the parking lot on the property.

SFC hired Caliber to perform the repaving of the parking lot. The contract between SFC and Caliber (the SFC/Caliber contract) divided the parking lot into four areas, with a separate cost to repave each area. Caliber completed the work for area one in June 2017.

SFC and Caliber agreed the work on the next area would start on September 11, 2017. Caliber could not start the work on that area on September 11 because there were trucks and trailers parked on the jobsite.

From this point, SFC's and Caliber's versions of events materially differ. SFC's sole owner and officer, Steve Fodor, declared that he learned on September 11 that Caliber had arrived earlier than expected on the jobsite and left because there were trucks and trailers parked there. Fodor declared that at 11:02 a.m. on September 11 he received an e-mail from Caliber with a "move on" charge of $7,500. A few hours later the charge increased to $15,000. Fodor believed the charge was unjustified and refused to pay it. In the following days, SFC and Caliber had discussions to resolve the dispute but Caliber refused to return to work and complete the job unless SFC agreed to pay the move on charge. Unable to resolve the dispute, Fodor hired another paving subcontractor to complete the repaving of the parking lot.

Caliber's president, Darin Gilchriese, declared it was imperative for Caliber to begin work in the next area to repave on September 11, 2017 in order to complete the work on September 12 but trucks and trailers parked in the jobsite had prevented Caliber from starting on September 11. When those circumstances were explained to SFC, it agreed to reschedule the work to September 14 and 15. Gilchriese declared the move on charge was authorized by the SFC/Caliber contract and SFC was contractually obligated to pay it. At about 6:00 p.m. on September 13, SFC canceled the work. Gilchriese testified in his deposition and declared that Fodor had told him that Rexford's primary representative to SFC, Andy Wilson, had directed Fodor to "kick [Caliber] off the job or hire somebody else." Caliber's account executive, Jeffrey Neilan, declared that the SFC onsite project manager, Darin Maddox, had told him "Rexford wanted Caliber off the job."

PROCEDURAL HISTORY

Caliber sued SFC for breach of the SFC/Caliber contract and sued Rexford for intentional interference with that contract. Rexford moved for summary judgment on two grounds: (1) Rexford was not a stranger to the contract and therefore could not be liable for interfering with it and (2) the only evidence Caliber had to prove Rexford interfered with the contract between Caliber and SFC was inadmissible double hearsay.

The trial court concluded the hearsay evidence offered by Caliber was admissible because "each layer" of hearsay fell within an exception to the hearsay rule. The court granted Rexford's motion for summary judgment, however, on the ground Rexford was not a stranger to the contract. The court stated: "In Applied Equipment [, supra ,] 7 Cal.4th 503 at pages 513-514 [28 Cal.Rptr.2d 475, 869 P.2d 454], the Supreme Court held that non-contracting parties, i.e., strangers to the contract, could be held liable for intentionally interfering with contract. It referred to the non-contracting parties as ‘outsiders’ who have ‘no legitimate social or economic interest in the contractual relationship.’ Two lines of authority have developed as to what the Supreme Court meant.... Suffice it to say, it does not appear that the local District Court of Appeal has weighed in on how to apply the Supreme Court's holding. [¶] Here, Rexford is the owner of the real property; the contract involves improvements to that real property; and the express contracting parties are effectively the general contractor and a subcontractor. It is hard to envision a situation where the alleged interfering party does not have a more direct economic interest in a contract than one between its general contractor and a subcontractor over how the property is improved. Based on that relationship, it would appear, under Applied Equipment , that for purposes of analysis Rexford cannot be held liable for interference with the contract between the general contractor and the subcontractor." Judgment in Rexford's favor was entered in July 2019.

DISCUSSION

I.Standard of Review

We review orders granting summary judgment de novo. ( Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767, 107 Cal.Rptr.2d 617, 23 P.3d 1143.) Summary judgment is warranted if the moving papers establish there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. ( Code Civ. Proc., § 437c, subd. (c) ; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493.)

We consider all of the evidence presented by the parties (except for evidence which the trial court properly excluded), liberally construe the evidence in support of the party opposing summary judgment, and resolve all doubts about the evidence in that party's favor. ( Hughes v. Pair (2009) 46 Cal.4th 1035, 1039, 95 Cal.Rptr.3d 636, 209 P.3d 963.) We must draw from the evidence all reasonable inferences in the light most favorable to the party opposing summary judgment. ( Essex Ins. Co. v. Heck (2010) 186 Cal.App.4th 1513, 1522, 112 Cal.Rptr.3d 915 ; Nadaf-Rahrov v. Neiman Marcus Group, Inc. (2008) 166 Cal.App.4th 952, 961, 83 Cal.Rptr.3d 190.)

II.As a Noncontracting Party, Rexford May Be Liable for Intentional Interference with Contract

A. Applied Equipment Does Restrict Noncontracting Parties to Those Having No Social or Economic Interest in the Contract.

"[I]n 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.’ " ( Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148, 17 Cal.Rptr.3d 289, 95 P.3d 513, quoting Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126, 270 Cal.Rptr. 1, 791 P.2d 587.)¹ Citing Applied Equipment, supra , 7 Cal.4th at pages 513-514, 28 Cal.Rptr.2d 475, 869 P.2d 454, Rexford argues it cannot be held liable for intentional interference with contract by virtue of having a legitimate economic interest in the contractual relationship.

The California Supreme Court in Applied Equipment held that a party to a contract cannot be held liable in tort for conspiracy to interfere with the party's own contract. ( Applied Equipment, supra , 7 Cal.4th at p. 514, 28 Cal.Rptr.2d 475, 869 P.2d 454.) The court reasoned that one party to a contract has no tort duty to another party not to interfere with contract performance; a contracting party's only duty is to perform the contract according to its terms. ( Ibid. ) " ‘To impose tort liability upon the contract breaker because of the involvement of a third person (when liability is limited to contract damages when the contract breaker is acting alone) undermines the policies which have developed limited contractual liability.’ " ( Id. at p. 517, 28 Cal.Rptr.2d 475, 869 P.2d 454.)

The Supreme Court stated, with emphasis, that "noncontracting parties " or " ‘a stranger to a contract ’ " can be liable in tort for intentionally interfering with the performance of a contract. ( Applied Equipment, supra , 7 Cal.4th at p. 513, 28 Cal.Rptr.2d 475, 869 P.2d 454 ; see also id. at p. 514, 28 Cal.Rptr.2d 475, 869 P.2d 454 ["[t]he tort duty not to interfere with the contract falls only on strangers"].) These statements are quite unambiguous. The source of ambiguity is two lines from Applied Equipment which, when viewed in isolation, seem to restrict tort liability. The court, in explaining why...