city of carmel notice of demurrer and demurrer to plaintiff's complaint; memo of p&a...

Vincent P. Hurley #111215 Rachel Ostrander #291890

2 LAW OFFICES OF VINCENT P. HURLEY A Professional Corporation

3 28 Seascape Village Aptos, California 95003

4 Telephone: (831) 661-4800 Facsimile: (831) 661-4804

5 Attorneys for Defendant

6 CITY OF CARMEL BY THE SEA

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SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF MONTEREY

) 11 GERlT SAND; COBBLESTONE )

BAKERY, A SOLE PROPRIETORSHIP ) 12 )

Plaintiff, ) 13 )

vs. ) 14 )

CITY OF CARMEL BY THE SEA.; ) 15 DOES 1 THROUGH 20, )

) 16 Defendant. )

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Case No. M130393

CITY OF CARMEL BY THE SEA'S NOTICE OF DEMURRER AND DEMURRER TO PLAINTIFF'S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITES IN SUPPORT THEREOF

Date: March 6, 2015 Time: 9:00 a.m. Dept.: 14

18 TO ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD:

19 PLEASE TAKE NOTICE that on March 6, 2015, at 9:00a.m., or as soon thereafter as

20 the matter may be heard in Department 14 ofthe above-entitled court, located at 1200 Aguajito

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Road, Monterey, California, the CITY OF CARMEL BY THE SEA's demurrer to Plaintiff's

complaint for damages, served and filed with this notice, will be heard.

Dated: February 5, 2015

Notice of Demurrer, Demurrer, and P&A ISO

LAW OFFICES OF VINCENT P. HURLEY A Professional Corporation

By:~~ RACHEL OSTRANDER

Attorneys for Defendant CITY OF CARMEL BY THE SEA

1 Case No. M130393

TO ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD:

2 Defendant CITY OF CARMEL BY THE SEA hereby demurs to the Complaint for

3 Damages on the following grounds:

4 DEMURRER TO THE FIRST CAUSE OF ACTION:

5 BREACH OF CONTRACT

6 1. The First Cause of Action for Breach of Contract does not state facts sufficient to

7 constitute a cause of action. Cal. Code Civ. Proc. § 430.1 0( e). ·

8 DEMURRER TO THE SECOND CAUSE OF ACTION:

9 INDUCING BREACH OF CONTRACT

10 2. The Second Cause of Action for Inducing Breach of Contract does not state facts

11 sufficient to constitute a cause of action. Cal. Code Civ. Proc. § 430.1 0( e).

12 DEMURRER TO THE TIDRD CAUSE OF ACTION:

13 NEGLIGENT INTERFERANCE WITH A PROSPECTIVE ADVANTAGE

14 3. The Third Cause of Action for Negligent Interference with prospective Advantage

15 does not state facts sufficient to constitute a cause of action. Cal. Code Civ. Proc. § 430.10(e).

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Attorneys for Defendant CITY OF CARMEL BY THE SEA

2 Case No. Ml30393

Defendant CITY OF CARMEL BY THE SEA submits this memorandum in support of

2 its demurrer to the complaint for damages filed by Plaintiff GERlT SAND and COBBLESTONE

3 BAKERY , (referred to herein as the singular "Plaintiff' where a sole proprietorship is not a

4 legal entity separate from its individual owner. Ball v. Steadfast-ELK, 196 Cal. App. 4th 694,

5 701 (2011)).

6 L

7 STATEMENT OF FACTS AND PROCEDURE

8 Plaintiff's claims arise out of an oral contract to participate in the Carmel Artisan Food

9 Experience (CAFE), which Plaintiff entered into on May 5, 2014 with the West Coast Farmers

10 Market Association (WCFMA). Com pl. 3:11-4:16. Plaintiff alleges that WCFMA is an "agent"

11 of the City of Carmel. Compl 3:12. Plaintiff does not operate a bakery within the City of

12 Carmel. Compl. 2:5. In Order to participate in the CAFE, Plaintiff Sand paid for space rental

13 per event in the amount of $50 for each week and purchased a required health permit from the

14 County ofMonterey Health Department for $741.00. Compl. 4:17-18.

15 The license agreement between the City and WCFMA states that the WCFMA shall

16 require vendors to obtain a City of Carmel Business License and that WCFMA shall keep and

17 maintain all licenses at all times during the license agreement. See Exhibit A (at paragraph 8)

18 to City's Request for Judicial Notice (RJN), concurrently filed. Plaintiff does not allege that

19 any permit was ever issued or required by the City of Carmel.

20 Plaintiff alleges that the City breached it's "contract" when, after Plaintiff began

21 participating in the CAFE, the City Council passed an ordinance restricting participation in the

22 CAFE to persons· and businesses who have fixed structures or storefronts in the downtown

23 business district of Carmel by the Sea. After the action of the City Council, Plaintiff alleges that

24 he was no longer eligible to receive permits from the City to participate in the CAFE. Compl.

25 4:19-21. The City Council minutes from July 1, 2014, which Mr. Sand incorrectly calls a "City

26 ordinance," extend the License Agreement through October 2014, with arnmendments including

27 restricting participation in the CAFE to tri-county vendors from San Benito, Santa Cruz, and

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Notice of Demurrer, Demurrer, and P&A ISO Case No. M130393

Monterey Counties and prepared foods only from businesses in the City of Carmel. See Exhibit

2 B to City's RJN, concurrently filed.

3 Plaintiff further alleges that he was discriminated against and that such acts of exclusion

4 resulted in his exclusion from the chain of commerce. Com pl. 5:22-23.

5 Plaintiff filed a complaint for damages on December 16, 2014, pleading causes of action

6 for breach of contract, inducing breach of contract, and negligent interference with a prospective

7 advantage against the City. Compl. 5:24- 8:36.

8 Plaintiff served the City on January 6, 2015. Defendant City now timely demurs to the

9 Complaint on the grounds that Plaintiff's first cause of action, for breach of contract, Plaintiff's

10 second cause of action, for inducing breach of contract, and Plaintiff's third cause of action for

11 negligent interference with a perspective advantage, are barred by immunity and otherwise do

12 not state a cause of action against the City.

13 IL

14 LEGAL ARGUMENT

15 A. Standard of Review.

16 In reviewing the sufficiency of the complaint against a demurrer, the Court will take all

17 facts as true and look only at the face of the pleading. Blank v. Kerwin, 39 Cal.3d 311, 318

18 (1985). The Court will treat the demurrer as admitting all material facts properly pleaded, but

19 not contentions, deductions or conclusions of fact or law. !d.

20 In ruling on a demurrer, doubt in the complaint may be resolved against Plaintiff, and

21 facts not alleged are presumed not to exist. Kramer v. Intuit, Inc., 121 Cal. App. 4th 574, 578

22 (2d Dist. 2004). "The burden of proof to show that there is any reasonable possibility that a

23 pleading can be cured by amendment is squarely on the plaintiff, and if there is no liability as a

24 matter oflaw, leave to amend should not be granted." Hendy v. Losse, 54 Cal.3d 723, 742 (1991).

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Notice of Demurrer, Demurrer, and P&A ISO Case No. M 130393

B. The First Cause of Action for Breach of Contract Does Not State Facts

2 Sufficient to Constitute a Cause of Action. Cal. Code Civ. Proc. § 430.10(e). The

3 Complaint Does Not Allege Facts Establishing That Defendant City of Carmel Had a

4 Contract With Plaintiffs. and the City is Immune From Plaintiff's First Cause of Action for

5 Breach of Contract.

6 1. The City did not have a contract with Plaintiff.

7 Plaintiff alleges that Defendant breached a contract by failing to permit the Plaintiff to

8 operate their food booth at the CAFE. Compl. 4:19. The City of Carmel did enter into a license

9 agreement with WCFMA, operated by Jerry Lami. Pursuant to the license agreement, WCFMA

10 was responsible for its own contracts with vendors and agreed to indemnify the City against any

11 claims arising out of such contracts. See Exhibit A (at paragraph 10) to City's RJN. Under

12 California law, in order to have standing to bring a breach of contract claim, a plaintiff must have

13 a contractual relationship with a defendant. In Pfeifer v. Countrywide Home Loans, Inc., 211 Cal.

14 App. 4th 1250, 1282 (2012), the plain language of government contract was sufficient to show

15 lack of intent to grant third-party beneficiary rights. The plain language of the license agreement

16 here indicates that the City is not a party to contracts between WCFMA and vendors. See

17 License, first paragraph (agreement is between City and WCFMA); Paragraph B (WCFMA

18 desires to operate a farmers market); Paragraph 1 (City grants WCFMA a revocable license,

19 WCFMA agrees to adhere to the City guidelines regarding venders, merchants shall have an

20 agreement with WCFMA); Paragraph 6 (WCFMA may terminate the license at any time by

21 written notice, City reserves the right to terminate the license in the event of default); Paragraph

22 10 (WCFMA agrees to indemnify City); Paragraph 11 (WCFMA agrees to obtain liability

23 insurance); Paragraph 14 (the license is personal to WCFMA and cannot be assigned or

24 transferred).

25 Plaintiff's claims are based on the contention that he entered into an agreement with

26 WCFMA, which was acting as an "agent" for the City of Carmel. Com pl. 3:9-24. While

27 agency may be created, and an authority may be conferred by a precedent authorization or a

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Notice of Demurrer, Demurrer, and P&A ISO Case No. Ml30393

subsequent ratification pursuant to California Civil Code section 2307, Plaintiffs do not set forth

2 any facts to show an agency relationship between the City and WCFMA. The license agreement

3 is absolutely silent on any grant or creation of agency. Facts not alleged in a complaint are

4 presumed not to exist. Kramer, supra at 578. Thus, Plaintiff has not plead facts to establish that

5 there was an agency relationship between the City Council of the City and the WCFMA, or that

6 WCFMA was authorized to act for the City. Express intent to the contrary is evident by the pla·

7 language of the license agreement between the City and WCFMA. See Exhibit A (at

8 paragraph B) to City's RJN (stating that WCFMA wishes to operate a farmers market, and the

9 City of Carmel is willing to grant a revocable license for that purpose).

10 2. There is no cause of action in tort for an alleged breach of contract.

11 Plaintiff claims that the City's conduct, which Plaintiff couches as breach of contract,

12 was "unjustifiable and wrongful conduct". Compl. 6:27-7:29. Plaintiffs claim fails because

13 there is no tort cause of action for breach of a non-insurance contract. Freeman & Mills, Inc. v.

14 Belcher Oil Co., 11 Cal. 4th 85, 102 (1995).

15 3. The City is immune from causes of action arising under tort, including

16 Plaintiffs cause of action for breach of contract when arising out of Defendant's alleged

17 wrongful conduct, pursuant to California Government Code Sections 815, 818.2, 818.4, and

18 820.9.

19 Plaintiff alleges that the City Council's "unjustifiable and wrongful conduct" made

20 Plaintiff ineligible to participate in the CAFE put on by WCFMA. Compl. 6:27-7:29. Public

21 entities are not liable for any injury except as provided by statute. California Government Code

22 Section 81 S; Eastburn v. Regional Fire Protection Authority, 31 Cal .4th 117 5, 1179-80 (2003)

23 (direct tort liability of public entities must be based on a specific statutory authorization).

24 Without such specificity the general rule of immunity for public entities would be largely eroded.

25 !d. at 660.

26 Ill

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Notice of Demurrer, Demurrer, and P&A ISO Case No. M l30393

4. The City did not pass an ordinance restricting participation in the CAFE

2 to persons and businesses who have ftxed structures or storefronts in the downtown

3 business district of Carmel by the Sea, but even if it had it would have immunity for claims

4 arising from the City's adoption of an ordinance.

5 Plaintiff's claim is premised upon the City's passage of an ordinance restricting

6 participation in the CAFE to persons and businesses that have fixed structures or storefronts

7 within the City of Carmel. Com pl. 5:26, 6:28-7:29, 7:33. The Plaintiff references an ordinace

8 passed by the City of Carmel as "'Exhibit 1" to his complaint, but failed to attach any ordinance.

9 Compl. at 3:10. No such ordinance exists. See Exhibit B to City's RJN. Even if there had

10 been an ordinance passed by the City it would not matter. Public entities have absolute

11 immunity against claims for damages when premised upon the adoption, or failure to adopt, an

12 enactment. "[I]t is not a tort for the government to govern." HFH Ltd v Superior Court, 15

13 Cal.3d 508, 519 (1975) (discussing California Government Code Section 818.2; see also Esparza

14 v. County of Los Angeles, 168 Cal. Rptr. 3d 482,489 (Cal. App. 2d Dist. 2014) (sustaining

15 County's demurrer based on absolute immunity to lawsuits based in tort). This specifically

16 includes the actions of the City Council. California Government Code Section 820.9.

17 5. The City is immune from claims arising out of the City Council's failure

18 to issue a permit.

19 The Government Code is explicit that immunity applies to actions for any injury caused

20 by the denial, suspension or revocation of, or by the failure or refusal to issue, deny, suspend or

21 revoke, any permit or license. California Government Code Section 818.4; see also Hirsch v.

22 People, By and Through Dept. of Motor Vehicles, 42 Cal. App. 3d 252, 259 (App. 2 Dist. 1974)

23 (granting demurrer without leave to amend where public entity or employee is not liable for

24 injuries caused by the issuance or failure to issue permits, licenses and certificates). This

25 specifically includes the actions of the City Council. California Government Code Section

26 820.9.

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1 Therefore, Plaintiffs First Cause of Action for breach of Contract fails to state a cause of

2 action and should be dismissed without leave to amend.

3 C. The Second Cause of Action for Inducing Breach of Contract Does Not State

4 Facts Sufficient to Constitute a Cause of Action. Cal. Code Civ. Proc. § 430.10(e). Plaintiff

5 Did Not Have an Existing Contractual Relationship With WCFMA, and the City Council

6 Actions Cannot Constitute Unjustifiable or Wrongful Acts. See California Government

7 Code Sections 815, 818.2, 818.4, and 820.9.

8 1. Plaintiffs did not have a contractual relationship with WCFMA.

9 In actions for inducing breach of contract there must be a valid existing contract. Pacific

10 Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126 (1990). Plaintiff's complaint,

11 on its face, indicates that WCFMA had no existing contract with Plaintiffs. Plaintiff alleges that

12 he "formerly held a contract with the Farmers Market (WCFMA) to operate a booth within the

13 market (CAFE)", Compl. 3:13, and that he paid for space rental per event in the amount of$50

14 for each week that he participated in the CAFE. Compl. 4:17. Plaintiff's complaint is consisten

15 with facts describing only a contract with WCFMA on a per-event basis. The alleged oral

16 contract entered into on May 5, 2014, with WCFMA, does not specify a term or a continuing

17 obligation giving rise to any expectation that Plaintiff would be allowed to participate in further

18 CAFE events. Where the facts of the complaint allege that only a former contract existed, there

19 can be no inducing breach of said contract because there is not a valid existing contract. Pacific

20 Gas & Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d at 1126.

21 2. The City is immune to tort liability for the City Council's actions

22 pursuant to Government Code sections 815, 818.2, 818.4, and 820.9.

23 Even if Plaintiff had set forth facts to show inducing a breach of an existing contract,

24 inducing a breach of contract is a tort. Dryden v. Tri-Valley Growers, 65 Cal. App. 3d 990,998-

25 999 (1977). A cause of action for inducing breach of contract requires an allegation of a breach

26 resulting from defendant's "unjustifiable or wrongful conduct." Bledsoe v. Watson, 30 Cal. App.

27 3d 105, 108 (1973). Immunity prevails even where there is interferance with either a

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1 commercial or a fmancial interest. Lundeen Coatings Corp. v. Department ofWater & Power,

2 232 Cal.App.3d 816,832 (1991). Here, California Government Code Sections 815, 818.2,

3 818.4, and 820.9, provide that the City is immune to actions arising out of tort, and the City

4 cannot be held liable. Under the California Government Code, Public entities are not liable for

5 any injury except as provided by statute, California Government Code Section Section 815, and

6 public entities have absolute immunity against claims for damages when premised upon the

7 adoption, or failure to adopt, an enactment, California Government Code Section Section 818.4,

8 and are immune to actions for any injury caused by the denial, suspension or revocation of, or by

9 the failure or refusal to issue, deny, suspend or revoke, any permit or license. California

10 Government Code Sec~ion 818.2. These government immunity statutes prohibiting liability for

11 action in tort are specifically extended to the actions of the City Council. California Government

12 Code Section 820.9. For these reasons, Plaintiff cannot sustain a claim against the City for

13 inducing breach of contract.

14 Because the Plaintiff does not state facts sufficient to constitute a cause of action for

15 inducing breach of contract against the City, the Plaintiff's causes of action for inducing breach

16 of contract should be dismissed without leave to amend.

17 D. The Third Cause of Action for Negligent Interference With Prospective

18 Advantage Does Not State Facts Sufficient to Constitute a Cause of Action. Cal. Code Civ.

19 Proc. § 430.10(e). The City is Immune From Such a Negligence Claim Based on the City

20 Council Adopting an Enactment or Failure to Issue a Permit Pursuant to California

21 Government Code Sections 815, 818.2, 818.4, and 820.9.

22 Negligent interference with prospective economic advantage is established where

23 plaintiff demonstrates that economic relationship existed between plaintiff and third party which

24 contained reasonably probable future economic benefit or advantage to plaintiff. Blank v.

251 Kirwan, supra, 39 Cal.3d at 329.

26 Where Plaintiff had only an interest in participation in the CAFE on a per event basis,

27 he could not have a continuing economic relationship or an expectation of participation in future

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1 CAFE events. The plaintiff in Blank sought to establish that his requisite economic relationship

2 was with the City, where the Plaintiff claimed lost earnings because the City Council had denied

3 his permit application. The court emphasized the established legal precedent that, "[t]he

4 relationship between [plaintiff] and the City cannot be characterized as an economic relationship.

5 It was [plaintiffs] relationship to a class of as yet unknown [patrons] which was the prospective

6 business relationship." Id (citing Asia Investment Co. v. Borowski, 133 Cal. App. 3d 832, 841

7 (1982)).

8 Even if the relationship between Plaintiff and the City could be so characterized, it would

9 make little difference. Plaintiff cannot sustain a claim for negligent interference with prospectiv

10 advantage as the tort has traditionally protected the expectancies involved in ordinary

11 commercial dealings- not the "expectancies," whatever they may be, involved in the

12 governmental licensing process. Jd Claims of negligent interference with a prospective

13 advantage have been explicitly denied, and properly dismissed, as applied to claims arising from

14 the denial of licenses by the City Council. !d. As discussed above, tort claims arising under the

15 City's permit decisions are explicitly barred. See California Government Code sections 815,

16 818.2, 818.4, and 820.9.

17 Because Plaintiff does not state facts sufficient to constitute a cause of action for

18 negligent interference with a prospective advantage against the City, the Plaintiff's third cause

19 of action for negligent interference with a prospective advantage should be dismissed without

20 leave to amend.

21 III.

22 CONCLUSION

23 For the reasons stated above, Defendant City of Carmel respectfully requests that the

24 Court sustain Defendant's demurrer to Plaintiff's complaint without leave to amend for the

25 following reasons:

26 1. The First Cause of Action for Breach of Contract does not state facts sufficient to

27 constitute a cause of action. Cal. Code Civ. Proc. § 430.10(e).

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1 2. The Second Cause of Action for Inducing Breach of Contract does not state facts

2 sufficient to constitute a cause of action. Cal. Code Civ. Proc. § 430.10(e).

3 3. The Third Cause of Action for Negligent Interference with prospective Advantage

4 does not state facts sufficient to constitute a cause of action. Cal. Code Civ. Proc. § 430.10(e).

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By$ . RACHEL OSTRANDER

Attorneys for Defendant CITY OF CARMEL BYTHESEA

11 Case No. M130393

city of carmel notice of demurrer and demurrer to plaintiff's complaint; memo of p&a...

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