Robinson v. U-Haul Co. of Cal.

• Decision Date: 18 October 2016
• Docket Number: A141396,A145828
• Citation: 209 Cal.Rptr.3d 81,4 Cal.App.5th 304
• Court: California Court of Appeals Court of Appeals
• Parties: Leigh ROBINSON, Plaintiff and Respondent, v. U–HAUL COMPANY OF CALIFORNIA, et al., Defendants and Appellants.

4 Cal.App.5th 304

209 Cal.Rptr.3d 81

Leigh ROBINSON, Plaintiff and Respondent,

v.U–HAUL COMPANY OF CALIFORNIA, et al., Defendants and Appellants.

A141396

A145828

Court of Appeal, First District, Division 4, California.

Filed October 18, 2016

Alston & Bird, James R. Evans, Jr., and Ryan T. McCoy, Los Angeles, for Defendants and Appellants.

Law Offices of Freeman & Freeman, Rebecca J. Freeman, Matthew C. Freeman, Santa Rosa, and Molly A. Gilardi for Plaintiff and Respondent.

Streeter

, J.

I. INTRODUCTION

Nearly ten years ago, appellant U–Haul Co. of California (UHC)¹ sued respondent Leigh Robinson, one of UHC's independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from what was formerly a UHC dealership (Robinson I ). UHC alleged a covenant not to compete in the UHC dealer contract prohibited Robinson from offering the products of UHC's competitors while a Yellow Pages ad, running at UHC's expense, was still promoting Robinson's business as a U–Haul dealership. Robinson filed a cross-complaint seeking to avoid enforcement of the covenant not to compete by, among other things, seeking a judicial declaration that it was void due to fraud in the inducement.²

After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation by U–Haul of Business and Professions Code

³section 17200, et seq., also known as the unfair competition law (UCL) (Robinson II ). He based his UCL cause of action on UHC's inclusion of the covenant not to compete in its dealer contracts, which he alleged was illegal, and its aggressive enforcement of that provision through litigation and threats of litigation. A jury awarded Robinson more than $195,000 in compensatory damages for malicious prosecution. The trial court later issued a permanent injunction prohibiting U–Haul from initiating or threatening to initiate judicial proceedings to enforce the noncompetition covenant in California. It awarded Robinson more than $800,000 in attorney's fees as a private attorney general on his UCL cause of action.

In their consolidated appeals from Robinson II , the U–Haul defendants argue (1) the trial court committed reversible error in issuing a permanent injunction because UHC had voluntarily abandoned enforcement of the covenant not to compete in California, and (2) the court abused its discretion in awarding attorney's fees to Robinson as a private attorney general because Robinson's request for fees was late-filed. We conclude the injunction was properly entered and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney's fees. We therefore affirm the judgment and the award of fees.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Relationship Between the Parties

In 2001, Robinson purchased Downtown Self Storage, a self-storage business in Fairfield, California. On August 1, 2001, he signed a standard form dealer contract with UHC and renewed the contract three years later. Under the dealer contract, UHC and Robinson agreed that he would rent U–Haul vehicles and equipment at his storage facility and they would share the rental income. UHC also agreed to promote and advertise Robinson's storage business as a U–Haul rental location, including Yellow Pages advertisements using the U–Haul trademark.

UHC's standard dealer contract included a “Noncompetition Covenant” requiring Robinson to refrain from competing with UHC by representing U–Haul's competitors while the Yellow Pages ad remained in print: “Dealer warrants, covenants and agrees that ... Dealer ... shall not represent or render any service either on its own behalf or in any capacity ... for the duration of the then-existing or contracted-for telephone directory listing(s) for the Dealer Location.” An addendum to the contract extended the “Noncompetition Covenant” for another year after expiration of the advertising, which could leave a dealer unable to rent competitors' trucks for two years or more. Covenants not to compete are, with limited exceptions, illegal under California law. (§ 16600, et seq.; see Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 945, 81 Cal.Rptr.3d 282, 189 P.3d 285

.)

Between 2001 and 2006, UHC advertised Downtown Self Storage in the Fairfield and Vacaville area Yellow Pages as a place where consumers could find U–Haul rental vehicles and equipment. UHC paid for the dealer ads on an annual basis, placing the orders several months before the directory listings were published.

On September 6, 2006, a month after UHC had renewed the annual Yellow Pages advertising (and after it was too late to cancel the ads), Robinson sent a letter to UHC terminating their dealer contract. A few days later, Robinson opened a Budget rental truck dealership at Downtown Self Storage. UHC responded by writing to Robinson, warning him not to compete with UHC while the Yellow Pages ad was running. In the letter UHC said it was the “policy of U–Haul to aggressively protect its legitimate business interests by seeking to enforce the non-competition provisions” of the dealer contract, and that it would, “without hesitation, ... consider any and all remedies available to it at law and in equity.”

B. The Proceedings in Robinson I

In December 2006, UHC filed its complaint in Robinson I in Solano County Superior Court against Robinson in docket No. FCS028840. UHC asserted causes of action for unfair competition, breach of contract, and specific performance. UHC's lawsuit alleged that Robinson was impermissibly offering Budget trucks for rent at the same time that UHC's Yellow Pages ad identified Robinson's business as a U–Haul dealership. In addition to damages, restitution, an accounting, attorney's fees and costs, UHC sought preliminary and permanent injunctions requiring Robinson to discontinue his relationship with Budget and to refrain from entering into business with any other competitor of UHC until a year after the Yellow Pages ads expired.

Robinson filed a cross-complaint for declaratory relief and breach of contract. He alleged UHC had breached the dealer contract in various material ways, relieving him of the obligation to comply with the covenant not to compete. He further alleged the covenant not to compete was void based on fraud in the inducement, and he sought a judicial declaration to that effect.

In June 2007, UHC filed a motion for a preliminary injunction, and Robinson opposed it, primarily based on the theory that the noncompetition covenant was void under section 16600. The court denied UHC its requested preliminary injunction. Approximately three weeks later, UHC dismissed its complaint in Robinson I . According to a declaration by Robinson's lawyer, UHC dismissed its complaint in an effort to avoid having to pay Robinson's attorney's fees. In mid-November 2007, UHC filed a motion for summary judgment on Robinson's cross-claims, together with the supporting declaration of Jeff Singleton (a UHC management level employee). Singleton stated under oath that UHC had dismissed its complaint against Robinson and would not “re-file or reinitiate any proceedings against Downtown [Self Storage] seeking to enforce the noncompetition provisions.” UHC's motion for summary judgment argued that the cross-claims were therefore moot.

Robinson dismissed his cause of action for breach of contract, but maintained his action for declaratory relief. Two weeks after UHC filed its summary judgment motion, he filed a motion for summary judgment on his declaratory relief cause of action, asking the court to declare UHC's noncompetition covenant void. As the court would later observe, Robinson had by that time developed the argument that UHC had a “pattern of threatening to sue, and/or filing lawsuit[s], against former dealers with identical noncompetition covenants, with no evidence or reasonable expectation of use of trade secrets by these former dealers, that would legally justify attempted enforcement of the covenants.” Robinson sought declaratory relief despite UHC's claim that the dispute was moot because, Robinson argued, UHC's wrongdoing was “capable of repetition, yet evading review.”

In February 2008, the trial court (Judge Paul L. Beeman) in Robinson I denied Robinson's motion for summary judgment on his declaratory relief cause of action in part because it was moot in light of the fact that UHC had waived enforcement of the noncompetition clause against Robinson. As for Robinson's contention that UHC's misconduct was “capable of repetition, yet evading review,” the court ruled that Robinson had failed to produce “sufficient admissible evidence that U–HAUL had, or currently has, cases against other dealers pending in which U–HAUL attempted or is attempting to enforce non-competition covenants without a reasonable expectation that the dealer used or is using its trade secrets.”

UHC's motion for summary judgment remained pending at that time, as Robinson was seeking to reopen discovery to locate additional litigation between UHC and its dealers. Robinson claimed he had found through his own investigation a number of lawsuits against dealers that UHC had failed to disclose in discovery. Robinson was granted limited additional discovery on that basis in May 2008. UHC's summary judgment motion in Robinson I was never ruled upon because Robinson ultimately dismissed his cross-complaint for declaratory relief before there was a ruling. UHC unsuccessfully sought recovery of attorney's fees in Robinson I , with the court determining in May 2013 that UHC was not the prevailing party.

C. The Trial in Robinson II

On June 9, 2008, while Robinson I was still pending, Robinson filed Robinson II as a class action in docket No. FCS031532.⁴ He alleged causes of action against the U–Haul defendants for malicious prosecution and violation of the UCL. Through his UCL claim, Robinson sought to...