Youst v. Longo

• Decision Date: 02 January 1987
• Citation: 43 Cal.3d 64,729 P2d 728,233 Cal.Rptr. 294
• Court: California Supreme Court
• Parties: , 729 P.2d 728, 85 A.L.R.4th 1025 Harlan YOUST, Plaintiff and Appellant, v. Gerald LONGO, Defendant and Respondent. L.A. 32114.

Page 294

233 Cal.Rptr. 294

43 Cal.3d 64, 729 P.2d 728, 85 A.L.R.4th 1025

Harlan YOUST, Plaintiff and Appellant, v. Gerald LONGO, Defendant and Respondent.

L.A. 32114.

Supreme Court of California.

Jan. 2, 1987.

Edward Freidberg, Marjorie E. Manning, Rex-Ann S. Gualco and R. Parker White, Sacramento, for plaintiff and appellant.

Sheryll Layne Myrdall, Beverly Hills, for defendant and respondent.

John K. Van de Kamp, Atty. Gen., N. Eugene Hill, Asst. Atty. Gen., Talmadge R. Jones, Deputy Atty. Gen., Sacramento, Roger D. Smith, Christopher S. Rooney and Jackson & Nash, New York City, amici curiae.

LUCAS, Justice.

Is a racehorse owner entitled to tort damages when the harness driver of another horse ¹ negligently or intentionally interferes with the owner's horse during a race, thereby preventing the owner from the chance of winning a particular cash prize? It is a well-settled general tort principle that interference with the chance of winning a contest, such as the horserace at issue here, usually presents a situation too uncertain upon which to base tort liability. We agree that application of this principle should govern here. Further, even if the outcome of the race was certain, as a matter of public policy, we conclude that an action for interference with prospective economic advantage, occasioned as a result of allegedly tortious conduct occurring during a sporting contest, ordinarily will not lie. Finally, the Court of Appeal concluded that the California Horse Racing Board (the Board) has jurisdiction to award affirmative relief for the alleged tort liability here. In order to clarify its duty, we hold that the Board has no authority to award compensatory or punitive damages for tortious interference with a horserace.

I. FACTS

Plaintiff Harlan Youst entered his standardbred trotter horse, Bat Champ, in the eighth harness race at Hollywood Park in Inglewood, California. Also entered in the race was The Thilly Brudder, driven by defendant, Gerald Longo. During the race, defendant allegedly drove The Thilly Brudder into Bat Champ's path and struck Bat Champ with his whip, thereby causing the horse to break stride. Bat Champ finished sixth while The Thilly Brudder finished second. The Board reviewed the events of the race and disqualified The Thilly Brudder, which moved Bat Champ into fifth place, entitling plaintiff to a purse of only $5,000. ²

Plaintiff filed a complaint for damages against defendant in the Los Angeles Superior Court, asserting three causes of action: (1) defendant negligently interfered with Bat Champ's progress in the race; ³ (2) defendant intentionally interfered therewith; and (3) defendant and unidentified individuals (Does I through X) conspired to interfere. Plaintiff sought as compensatory damages the difference in prize money between Bat Champ's actual finish and the finish which allegedly would have occurred but for defendant's interference. Plaintiff requested compensatory damages in three alternative amounts, namely, the purse amount for either first, second or third place (less the fifth place prize of $5,000 which Bat Champ has already received). Ascertainment of the amount of actual damages apparently would require a finding as to the position in which Bat Champ would have finished but for defendant's interference. Punitive damages of $250,000 were also sought.

Defendant demurred, asserting lack of subject matter jurisdiction by the superior court and failure to state a cause of action in each count of the complaint. The trial court sustained the demurrer without leave to amend on the latter ground. Plaintiff appealed from the judgment of dismissal. The Court of Appeal affirmed.

The Court of Appeal held that, as a matter of law, the facts did not invoke the tort of negligent interference with prospective economic advantage. The court also held that, given the special circumstances surrounding sports competition, and as a matter of public policy, plaintiff's allegations of intentional interference with prospective economic advantage were insufficient to state a cause of action. However, the third cause of action, alleging a civil conspiracy to intentionally interfere with prospective economic advantage, could be actionable in the context of a horserace competition. ⁴ Nevertheless, the court concluded that the third count failed to state a cause of action because plaintiff did not petition the Board for such relief and, therefore, had not exhausted his administrative remedies before the Board.

The Court of Appeal was unanimous in holding that the Board has the authority to award tort compensation for the type of injury alleged in the third count and could enforce any award against licensees and nonlicensees of the Board. The court directed the Board to waive any time limits which may have expired with respect to hearing plaintiff's claim of a conspiracy to intentionally interfere with his prospective economic advantage. This directive was deemed appropriate because, as the Board conceded, Board policy and practice precluded awarding such affirmative compensatory relief when plaintiff first filed his complaint and the trial court sustained the demurrer. ⁵

II. THE PARTIES' CONTENTIONS

The Court of Appeal ruled that a tort for civil conspiracy to intentionally interfere with prospective economic advantage may exist in the context of a sporting event, but initially only the Board may award compensation where such interference occurs during a horserace. Plaintiff challenges this holding on two grounds.

First, plaintiff contends that the Court of Appeal erred in affirming dismissal of count two of his complaint, which alleges that defendant intentionally interfered with plaintiff's horse. Plaintiff argues that this cause of action should be available when intentional conduct proscribed by horseracing rules results in economic loss. As discussed below, the Court of Appeal held that only the act of conspiring alleged in count three of the complaint fulfilled the requisite malicious intent for intentional interference with prospective economic advantage. In essence, therefore, the Court of Appeal found, through the conspiracy allegation, that a cause of action had been stated for intentional interference with prospective economic advantage, the underlying wrong.

The second ground upon which plaintiff challenges the Court of Appeal's ruling involves the jurisdiction of the Board. Plaintiff contends the court erred in holding that the Board has initial jurisdiction to award compensation to horse owners whose prospects for winning a cash prize are substantially harmed by another. Plaintiff further argues that the court erroneously applied the exhaustion of remedies doctrine. He contends that because the Board, for the first time in its amicus brief and at oral argument on rehearing, indicated a willingness to consider compensatory awards in the future, the Court of Appeal erroneously applied the exhaustion of remedies doctrine retroactively. Plaintiff asserts that he exhausted the available administrative remedies prior to seeking review in the courts, and that where no administrative remedy exists, a court action is proper.

Defendant responds that the complaint failed to state any valid tort cause of action for either negligent or intentional interference with prospective economic advantage, including a conspiracy to interfere. Defendant further asserts that the superior court lacked jurisdiction over this claim for two reasons: (1) the Board has exclusive jurisdiction over all matters relating to horseracing, and (2) plaintiff failed to exhaust his administrative remedies.

In addition, defendant also contends the Board has no power to award compensation to racehorse owners for tort damages. He argues the Legislature has expressed the intention that the Board's responsibility is limited to enforcement of the rules and regulations concerning horseracing as a business and a sport. As will appear, we agree with most of defendant's contentions.

III. DISCUSSION

We conclude that the Court of Appeal reached the correct result in affirming the dismissal as to all three counts. However, in our view, such a result should be based on substantive, rather than procedural, grounds. The Court of Appeal affirmed the dismissal for failure to exhaust administrative remedies; we believe it erred in holding that the complaint stated a valid cause of action based on conspiracy (between competitors and noncompetitors) to interfere with plaintiff's prospective economic advantage. To the contrary, and despite the existence of any such conspiracy, we conclude that tortliability for interference with prospective economic advantage is not available, as a matter of law and public policy, in the context of a sporting event.

A. Interference With Prospective Economic Advantage--Legal Principles

Each of the three counts in the complaint purports to state a claim for loss of prospective economic advantage, rather than for physical personal injury or property damage. The torts of negligent or intentional interference with prospective economic advantage require proof of various elements as a prerequisite to recovery. However, as a matter of law, a threshold causation requirement exists for maintaining a cause of action for either tort, namely, proof that it is reasonably probable that the lost economic advantage would have been realized but for the defendant's interference.

Over the past several decades, California courts analyzing the tort of interference with prospective economic advantage have required such a threshold determination. In Buckaloo v. Johnson (1975) 14 Cal.3d 815, 122 Cal.Rptr. 745, 537 P.2d 865, where we set out the five elements of the intentional form of the tort, we stated that the first element requires "the probability of future economic benefit." ⁶ (Id. at p. 827, italics added, 122 Cal.Rptr. 745, 537 P.2d 865.) Although varying language has been used to express...