Wireless Warehouse Inc v. Boost Mobile LLC, No. 8:2009cv01436 - Document 76 (C.D. Cal. 2011)
Court Description: MEMORANDUM OPINION AND ORDER by Magistrate Judge Marc L. Goldman: GRANTING MOTION FOR SUMMARY JUDGMENT 54 : Defendant's motion for summary judgment is GRANTED as to all of Plaintiff's claims. IT IS ORDERED that judgment be entered dismissing the action with prejudice. (rla)
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Wireless Warehouse Inc v. Boost Mobile LLC Doc. 76 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION 10 11 WIRELESS WAREHOUSE, INC. 12 Plaintiff, 13 v. 14 BOOST MOBILE, LLC, 15 Defendant. 16 ) ) ) ) ) ) ) ) ) Case No. SACV 09-1436-MLG MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT 17 18 I. Background 19 A. Procedural History 20 On December 8, 2009, Plaintiff Wireless Warehouse, Inc. (“WWI”) 21 filed a complaint against Defendant Boost Mobile, LLC (“Boost”) 22 alleging causes of action for (1) false promise; (2) promissory 23 estoppel; (3) intentional interference with prospective economic 24 relations; and (4) unfair, deceptive or illegal acts or practices in 25 violation of California Business and Profession Code § 17000 et seq. 26 (Docket No. 1.) WWI is a wireless communications master dealer that 27 provides services to sub-dealers in the United States. (Compl. ¶6.) 28 Boost is a division of Sprint Mobile that offers pre-paid wireless Dockets.Justia.com 1 2 phones and services without contracts or activation fees. (Compl. ¶7.) 3 Plaintiff’s claims arise out of an alleged oral promise by Boost to 4 enter into a long-term business partner relationship with WWI. (Compl. 5 ¶9.) 6 On November 4, 2010, Defendant filed a motion for summary judgment 7 with supporting declarations, exhibits, and statement of uncontroverted 8 facts. On November 15, 2010, Plaintiff filed an opposition to the 9 motion with supporting documents. The Court heard oral argument on 10 December 2, 2010, and took the matter under submission. The matter is 11 now ready for decision.1 12 B. 13 The relevant facts, stated in the light most favorable to 14 Factual Background2 Plaintiff, are as follows: 15 Plaintiff and Defendant entered into a one-year written Prepaid 16 Wireless Product Agreement (“PPA”) in 2005, which they renewed in March 17 2006, and again on March 7, 2007, with an effective date of April 1, 18 2007. (Pl.’s Opp. to Motion for Summ. J. at 2.) The PPA created a 19 distributor-supplier relationship between the parties and outlined the 20 terms by which Plaintiff WWI, the distributor, was to sell Boost’s 21 products. (Id.) 22 Sometime in early 2007, Boost launched a new unlimited service 23 24 25 26 27 28 1 The parties consented to the exercise of jurisdiction by this United States Magistrate Judge. 28 U.S.C. § 636(c). 2 The Court assumes the truth of these facts only for purposes of determination of Defendant’s motion for summary judgment. In fact, many of the operative facts, including the making of the alleged oral promise by Boost’s representative to WWI, is contested by Defendant. (See, e.g., Pennington Decl., Ex. C, Deposition of Job Trucker (“Tucker Depo.”) at 59:4-61:22; 76:25-77:7; 85:25-87:5; 93:6-94:3; 97:7-13, 98:10-24; 110:11-111:1.) 2 1 product called Unlimited by Boost (“UBB”). (Pl.’s Opp. at 3.) The C290 2 handsets were the first model phones offered under Boost’s UBB program. 3 (Pennington Decl. in Supp. of Def.’s Mot. for Summ. J., Ex. C, Tucker 4 Depo. at 38:14-17.) 5 On March 21, 2007, prior to the effective date of the 2007 PPA, 6 Boost sent WWI an attachment to the PPA, which expressly covered the 7 CDMA UBB product line (the “CDMA Attachment”). The CDMA Attachment 8 revised the PPA by, inter alia, (1) establishing that distributors must 9 seek approval for each authorized location in which distributors wished 10 to offer CDMA products; (2) establishing a return policy for CDMA 11 products; (3) setting the gross add bonus for the CDMA handsets (C290) 12 of $5 per new subscriber activation; and (4) listing the fee that 13 distributors 14 accounts. (Anderson Decl. in Supp. of Def.’s Mot. for Summ. J., Ex. B.) 15 The CDMA attachment was sent to Plaintiff through Fedex and was 16 received by Plaintiff on March 22, 2007. (Anderson Decl., Ex. B at 1; 17 Pennington Decl., Ex. D.) may charge consumers to replenish CDMA UBB product 18 On or about June 1, 2007, Boost invited Howard Kim, Plaintiff’s 19 representative, to its main business office in Irvine, California for 20 the purpose of discussing the expansion of its market for UBB. (Pl.’s 21 Opp. at 3.) At Boost’s invitation, Kim also attended a conference in 22 Irvine on June 12, 2007. (Id.) While Howard Kim was in California, Job 23 Tucker, the acting vice president of Boost, allegedly told Kim that 24 Boost would enter into a long-term business partner relationship with 25 WWI if WWI would have its sub-dealers across the nation sell Boost’s 26 unlimited service, switching their focus from T-Mobile to Boost. (Id.) 27 Job Tucker also allegedly promised to pay Plaintiff $1.00 for each 28 payment and a $3.00 to $20.00 commission per product (“spiff”) if 3 1 Plaintiff would have its sub-dealers sign up as Boost’s prepaid service 2 payment centers. (Id.) According to Kim, between June 2007 and February 3 2008, 4 continuously encouraged WWI to provide more effort in expanding its 5 markets and establishing more payment centers. (Id. at 4.) Boost set specific targets for its market expansion and 6 Plaintiff alleges that, between June 12, 2007 and February 28, 7 2008, in reliance on Boost’s alleged oral promises, WWI undertook the 8 following actions: (1) set up new facilities across the nation to 9 handle Boost’s new product; (2) hired eight additional salespersons 10 solely for the purpose of expanding the market for Boost; (3) sent its 11 representative to meet with its sub-dealers in order to convince them 12 to promote Boost’s new product and to sign up as Boost payment centers; 13 (4) trained its sub-dealers to handle Boost’s product and service; and 14 (5) moved to a larger facility with higher monthly mortgage payments 15 and did extensive remodeling on the building. (Id. at 5.) 16 Because Boost is a prepaid phone brand and does not send monthly 17 bills to customers, in order to collect payment from its customers, 18 Boost utilized several technology service providers (“TSP”). A company 19 named “VIA ONE” was the TSP which dealt with WWI’s sub-dealers. In 20 order for WWI to collect the promised “spiff,” WWI was required to ask 21 its sub-dealers to sign an application for direct deposit with VIA ONE 22 and to obtain Boost’s approval for each retail store and Boost payment 23 center. Between June 2007 and February 2008, WWI obtained more than 700 24 applications from its sub-dealers, which were approved by Boost as its 25 retail and Boost payment centers. (Id. at 5-6.) Plaintiff claims that, 26 as a result of WWI’s efforts and investments, its sub-dealers collected 27 14,000 payments and were adding approximately 3,000 new subscribers per 28 month by January 2008. (Id. at 8.) 4 1 Plaintiff alleges that, on or about February 14, 2008, Roger 2 Schlegel, who was then Boost’s regional sales manager, informally 3 advised Howard Kim of the following: (1) Boost was going to terminate 4 its relationship with WWI and had never considered WWI a partner; (2) 5 Boost needed WWI to take WWI’s sub-dealers’ base for its market 6 expansion; and (3) all of the sub-dealers’ accounts which belonged to 7 WWI would be transferred to companies run by Vincent Huang and Jack 8 Huston, who were close friends of Job Tucker. (Id. at 9.) 9 In March 2008, Boost terminated its business relationship with 10 Plaintiff and declined to renew the PPA, which by its own terms expired 11 on April 1, 2008. Plaintiff claims that, on or before April 1, 2008, 12 Boost sent notices to all of WWI’s sub-dealers, notifying them that WWI 13 would no longer act as Boost’s master dealer and that the sub-dealers 14 should switch to other master dealers to continue selling Boost’s 15 products. (Id.) On March 25, 2008, WWI sent notices to each of its sub- 16 dealers, advising that it was no longer a master dealer for Boost 17 products and encouraging the sub-dealers to focus their marketing 18 efforts on T-Mobile’s products.3 19 Plaintiff alleges that, as a result of Plaintiff’s reliance on 20 Defendant’s oral promise, Plaintiff sustained the following actual 21 damages: 22 salespersons; (2) $250,000 in remodeling costs for the new building; 23 and (3) $237,000 in additional monthly mortgage payments and property 24 taxes. (Id. at 12-13.) Plaintiff also alleges that it sustained over (1) $168,645 in total salaries for eight additional 25 26 27 28 3 Plaintiff is currently involved in an unrelated arbitration proceeding regarding more than $700,000 of Boost and Sprint products which Plaintiff ordered and took delivery of but allegedly never paid for. (Forestner Decl. in Supp. of Def.’s Motion for Summ. J., Ex. A, ¶¶ 2-3.) 5 1 $1,675,766.59 in expectation damages. (Id. at 13.) Plaintiff further 2 alleges that, as a result of Boost’s intentional interference with 3 WWI’s business relationship with its sub-dealers, WWI lost T-Mobile 4 commissions, in the amount of $1,948,229.58, for the year 2008. (Id.) 5 6 7 II. Standard of Review Summary judgment is appropriate when, after reviewing the 8 discovery and disclosure materials on file and any affidavits, in the 9 light most favorable to the nonmoving party, the Court determines that 10 “there is no genuine issue as to any material fact, and that the movant 11 is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see 12 also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); 13 Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). 14 The moving party bears the initial burden of demonstrating the absence 15 of a genuine issue of material fact, at which time the burden shifts 16 to the nonmoving party to show the existence of a genuine issue. 17 Celotex Corp. V. Catrett, 477 U.S. 317, 322 (1986). The nonmoving party 18 “must come forward with ‘specific facts showing that there is a genuine 19 issue for trial.’” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio 20 Corp., 475 U.S. 574, 587 (1986)(quoting Fed. R. Civ. P. 56(e))(emphasis 21 omitted). 22 23 III. Applicable Law 24 As a preliminary matter, the parties dispute what law governs 25 Plaintiff’s claims. Defendant contends that Virginia law applies based 26 upon the choice-of-law provision in the PPA, which provides as follows: 27 “Governing 28 Commonwealth of Virginia, regardless of conflicts of laws provisions.” Law: This agreement is 6 governed by the laws of the 1 (Anderson Decl. in Supp. of Def.’s Mot. for Summ. J., Ex. A, PPA at 19, 2 ¶ 31.) Plaintiff claims that California law applies because the claims 3 do not arise out of the PPA. (Pl.’s Opp. at 18-19.) 4 Federal courts apply the choice-of-law rules of the state in which 5 they sit. Shannon-Vail Five, Inc. v. Bunch, 270 F.3d 1207, 1210 (9th 6 Cir. 2001). California’s approach to determining whether to enforce an 7 arm’s-length contractual choice-of-law provision reflects a strong 8 policy in favor of enforcement of such provisions. Nedlloyd Lines B.V. 9 v. Super. Ct., 3 Cal.4th 459, 464-65 (1992). In making a choice-of-law 10 determination, a court must examine: “(1) whether the chosen state has 11 a substantial relationship to the parties or their transaction, or (2) 12 whether there is any other reasonable basis for the parties’ choice of 13 law.” Id. at 466. If neither standard is met, the Court need not 14 enforce the parties’ choice of law. Id. If either standard is met, the 15 chosen state’s law applies unless it is “contrary to a fundamental 16 policy of California.” Id. (emphasis in original). 17 Here, there was a substantial relationship between the contracting 18 parties and Virginia at the time of the PPA and the oral promise 19 because support services, replenishment operations, certain finance 20 operations, IT services, and legal services related to Boost were 21 provided from Virginia. (York Decl. in Supp. of Def.’s Mot. for Summ. 22 J. at 3.) In addition, because Boost products are distributed across 23 the country, in states with varying laws, Boost had a “reasonable 24 basis” for choosing Virginia law. (York Decl., ¶ 4.) See, e.g., 1-800- 25 Got Junk v. Super. Ct., 189 Cal.App.4th 500, 514 (2010). Nor does 26 Plaintiff contend that the choice-of-law clause is contrary to any of 27 California’s policy interests. 28 Plaintiff argues that the choice-of-law provision in the PPA is 7 1 not applicable because its claims are outside the scope of the clause. 2 In making this argument, Plaintiff relies upon (1) an alleged long-term 3 partnership between Boost and an unrelated third-party to this action, 4 VIP 5 arbitration proceeding that Boost be dismissed from the arbitration 6 relating to WWI’s failure to pay for products it obtained under the 7 PPA.4 (Pl.’s Opp. at 18-19.) Neither of these arguments is persuasive. 8 As Defendant points out, there is no admissible evidence in this case 9 regarding any agreement between Boost and non-party VIP Wireless. 10 Further, the arbitrator’s order dismissing Boost as a party to the 11 arbitration has no force or effect unless and until it is confirmed by 12 a court. See Camping Constr. Co. v. Dist. Council of Iron Workers, 915 13 F.2d 1333, 1347-48 (9th Cir. 1990) (“Arbitration awards are not 14 self-enforcing; and unless an award persuades the party contesting the 15 arbitrator’s authority to comply voluntarily with its terms, it will 16 have no binding effect on either party until it is confirmed in 17 court.”). Plaintiff makes no claim that an arbitration award has been 18 converted into a court order or judgment which is binding on this 19 Court. Wireless, and (2) the arbitrator’s order in the unrelated 20 Moreover, the Nedlloyd court held that a valid choice-of-law 21 clause, such as the one here, “encompasses all causes of action arising 22 from 23 characterized, including tortious breaches of duties emanating from the 24 agreement or the legal relationships it creates.” 3 Cal.4th at 470 25 (emphasis added); see also Olinick v. BMG Entm’t, 138 Cal.App.4th 1286, or related to that agreement, regardless of how they are 26 27 28 4 Boost was apparently dismissed because it was not a proper party to the arbitration proceeding. See Ex. E to Decl. of Mary Lee in Supp. of Pl.’s Opp. to Motion for Summ. J. 8 1 1300 2 “inextricably intertwined with the construction and enforcement” of the 3 contract). Given the broad application of choice-of-law provisions by 4 California courts, Plaintiff’s claims are sufficiently related to the 5 PPA to fall under the scope of the PPA’s choice-of-law provision. See 6 PAE Government Services, Inc. v. MPRI, Inc., 514 F.3d 856, 860 (9th 7 Cir. 2007)(enforcing contractual choice-of-law provision and applying 8 Virginia rather than California law where alleged promises were made 9 “in connection with” the written agreement). 10 11 (2006) (choice-of-law clause applies to claims that are Accordingly, the Court will enforce the PPA’s choice-of-law clause and apply Virginia law to the dispute. 12 13 IV. Discussion 14 Two of Plaintiff’s four claims are not actionable under Virginia 15 law. First, promissory estoppel is not a cognizable cause of action in 16 Virginia. See Mangold v. Woods, 278 Va. 196, 202-03 (2009) (expressly 17 refusing to create a cause of action for promissory estoppel); see also 18 PAE Government Services, 514 F.3d at 860 (affirming district court’s 19 dismissal of promissory estoppel claim because Virginia law “doesn’t 20 recognize 21 Plaintiff’s cause of action for “unlawful, unfair, or fraudulent 22 business acts or practices,” pursuant to California’s Business and 23 Professions Code § 17000 et seq., is obviously not cognizable under 24 Virginia law. A valid choice-of-law provision selecting another state’s 25 law is grounds to dismiss a claim under California’s unfair competition 26 law. See, e.g., Medimatch, Inc. v. Lucent Techs., Inc., 120 F.Supp.2d 27 842, 862 (N.D.Cal. 2000) (agreement that “construction, interpretation 28 and performance of this Agreement shall be governed by the local laws promissory estoppel as 9 a cause of action”). Second, 1 of the State of New Jersey” required dismissal of California UCL 2 claims). Moreover, to state a statutory unfair competition claim under 3 Virginia law, a plaintiff must allege and prove “deception, by means 4 of which the goods of one dealer are palmed off as those of another.” 5 Monoflo Internat’l v. Sahm, 726 F.Supp. 121, 127 (E.D.Va. 1989) 6 (quoting Benjamin T. Crump Co. v. J.L. Lindsay, Inc., 130 Va. 144, 160 7 (1921)). Here, Plaintiff has not alleged that Boost improperly “palmed 8 off” any of WWI’s goods or services as another’s or another’s goods or 9 services as WWI’s. 10 The Court will now address Plaintiff’s two remaining claims under 11 Virginia law: 12 A. 13 Plaintiff contends that, at the time that Job Tucker made the 14 alleged oral promise to Plaintiff that Boost would “enter into a long- 15 term business partner relationship if Plaintiff would make its sub- 16 dealers across the nation sell Boost’s unlimited service and UBB[,] 17 switching their service from T-mobile to Boost,” he did not intend to 18 perform this promise. (Compl. ¶ 9.) Plaintiff further alleges that 19 Defendant intended that Plaintiff rely on the oral promise and that 20 Plaintiff reasonably relied on the promise to its detriment. (Compl. 21 ¶¶ 10, 11.) 22 False Promise Claim In Virginia, to succeed on a claim for fraud, a party must show 23 “(1) 24 intentionally and knowingly, (4) with intent to mislead, (5) reliance 25 by the party misled, and (5) resulting damage to the party misled.” 26 State Farm Mut. Auto. Ins. Co. v. Remley, 270 Va. 209, 218 (2005). “In 27 Virginia, 28 establish an action for fraud and deceit.” Patrick v. Summers, 235 Va. a false representation clear, cogent and (2) of a convincing 10 material evidence fact, is (3) made necessary to 1 452, 454 (1988)(citing Carter v. Carter, 223 Va. 505, 509 (1982)). 2 Clear and convincing evidence is such proof as will establish in the 3 trier of fact a firm belief or conviction concerning the allegations 4 which must be established. Thompson v. Bacon, 245 Va. 107, 111 (1993). 5 In addition to proving that a fraudulent material statement or omission 6 of fact was made by the defendant, the plaintiff must also prove by 7 clear and convincing evidence that plaintiff reasonably and justifiably 8 relied on the acts or statements of the defendant, to the plaintiff’s 9 detriment. See Piedmont Trust Bank v. Aetna Cas. & Sur. Co., 210 Va. 10 11 396, 400 (1969). Defendant contends that it is entitled to summary judgment on 12 Plaintiff’s 13 Plaintiff cannot show that its reliance on the alleged promise was 14 reasonable 15 Defendant intended to mislead Plaintiff at the time the oral promise 16 was made; and (3) Plaintiff has not produced admissible evidence of 17 damages resulting from its reliance on the oral promise. (Def.’s Mot. 18 for Summ. J. at 8-11.) 19 1. false and 20 21 promise claim justifiable; (2) for the Plaintiff following cannot reasons: establish (1) that Plaintiff Has Not Produced Any Evidence of Reasonable and Justifiable Reliance Defendant argues that Plaintiff cannot establish reasonable 22 reliance upon the alleged oral promise because Plaintiff was aware that 23 there was a conflicting written agreement on point, that is, the PPA 24 and the CDMA Attachment. Defendant contends that, as a party to the 25 PPA, Plaintiff was aware that several of the express terms of the PPA 26 directly conflicted with the provisions of the alleged oral promise. 27 The alleged oral promise was that Boost would enter into a long-term 28 business partner relationship if Plaintiff would make its retailers 11 1 across the nation sell UBB, switching their service from T-Mobile to 2 Boost. In addition, Boost would give Plaintiff $1.00 per each payment 3 and a $3.00 to $20.00 commission (“spiff”) per product if Plaintiff 4 would make its retailers sign up as Boost’s prepaid service centers. 5 (Pennington Decl., Ex. F, Pl.’s Response to Inter. No. 4.) 6 In contrast, several of the express terms of the PPA and CDMA 7 attachment to the PPA directly conflict with the terms of the oral 8 promise, including: (1) the terms and conditions of the PPA did not 9 “create an agency, franchise, dealership, employment, partnership, 10 landlord-tenant, or joint venture relationship;” (2) the PPA had a one- 11 year term that expired on April 1, 2008; (3) the PPA could not be 12 modified by oral representations; (4) the oral promise relating to the 13 amount of commission WWI would receive on UBB products was governed by 14 the CDMA attachment to the PPA, which expressly set the gross-add bonus 15 for each C290 UBB CDMA phone at $5.00; (5) WWI’s distributorship was 16 limited to a territory and was not nationwide; and (6) the PPA did not 17 require that retailers exclusively carry Boost products. (Anderson 18 Decl., Ex. A, PPA.) Therefore, Defendant contends that Plaintiff cannot 19 have reasonably relied upon the oral promise because it directly 20 contradicted the terms of the PPA. 21 Virginia courts have consistently held that reliance on alleged 22 verbal 23 unreasonable. See, e.g., Wynn v. Wachovia Bank, N.A., 2009 WL 2147629, 24 *6 (E.D. Va. 2009); Bd. of Dirs. of Cardinal Place Condo. v. Carrhomes 25 P’ship., 58 Va. Cir. 602, 608 (2000) (holding that “a buyer’s decision 26 to rely on [an oral misrepresentation as to the seller’s identity] was 27 not reasonable, particularly in the face of a document that openly 28 indicates otherwise ...”); Schryer v. VBR, 25 Va. Cir. 464, 476 (1991) promises that contradict 12 clearly written statements is 1 (because 2 parties[,] ... plaintiff’s reliance on any representations made by the 3 employer’s agent was unreasonable”). 4 “the terms of the contract were equally known to all Plaintiff has not produced any evidence showing the existence of 5 a 6 Plaintiff merely states that, because Boost is not the “Supplier” under 7 the PPA, and therefore not a party to the PPA, the terms of the PPA are 8 entirely irrelevant to the dispute. (Pl.’s Opp. at 15.) This argument 9 is apparently based on the unexplained arbitration decision and has 10 genuine issue of material fact for trial. In its opposition, already been rejected. 11 Plaintiff also argues that its reliance on the oral promise was 12 reasonable 13 purportedly had a partnership with Boost and received benefits from 14 this partnership, which it “enjoyed for the past few years.” (Id.) 15 Plaintiff offers no factual evidence to support its claim that its 16 reliance was reasonable given a business relationship between Boost and 17 a non-party. Further, the existence of any contractual relationship 18 between Boost and VIP Wireless cannot establish that WWI’s reliance on 19 the oral promise was reasonable and justifiable because WWI has never 20 alleged that it relied upon any relationship between VIP Wireless and 21 Boost in its acceptance of the alleged oral promise. because VIP Wireless, a non-party to this action, 22 In light of the explicit terms of the PPA and the CDMA attachment, 23 it was unreasonable as a matter of law for Plaintiff to rely on the 24 oral 25 contradicted the terms of the PPA and the CDMA attachment. Plaintiff 26 has not provided any evidence to show that its reliance upon the 27 alleged oral promise was reasonable, and therefore Plaintiff cannot 28 maintain a claim for fraud. representations of Boost’s 13 representative, which directly 1 // 2 3 2. Plaintiff Has Not Produced Any Evidence to Show That 4 Defendant Intended to Deceive Plaintiff 5 Defendant also contends that it is entitled to summary judgment 6 on Plaintiff’s false promise claim because Plaintiff has not produced 7 any 8 representative of Boost, had the “intent to deceive” WWI at the time 9 he made the alleged oral promise. Rather, Defendant argues, Plaintiff 10 has shown at most the nonperformance of an oral promise, which is 11 insufficient to demonstrate intent to mislead under Virginia law. 12 (Def.’s Mot. for Summ. J. at 10.) admissible evidence to demonstrate that Job Tucker, as a 13 As a general rule, under Virginia law, “fraud must relate to a 14 present or a pre-existing fact, and cannot ordinarily be predicated on 15 unfulfilled promises or statements as to future events.” Patrick, 235 16 Va. at 454 (citing Soble v. Herman, 175 Va. 489, 500 (1940)). The 17 reason underlying the general rule is that “a mere promise to perform 18 an act in the future is not, in a legal sense, a representation, and 19 a failure to perform it does not change its character.” Patrick, 235 20 Va. at 454. 21 Fraud claims may, however, be “predicated on promises which are 22 made with a present intention not to perform them, or on promises made 23 without any intention to perform them.” Id. at 454-455 (citing Lloyd 24 v. Smith, 150 Va. 132, 145 (1928)). The basis for the exception is that 25 “the state of the promisor’s mind at the time he makes the promise is 26 a 27 misrepresents a then existing fact.” Lloyd, 150 Va. at 145-46. A 28 plaintiff nevertheless still bears the burden to present clear, cogent fact,” so that, if he misrepresents 14 his state of mind, “he 1 and convincing evidence that the defendant “had the intent to defraud 2 at the time he made the promise.” Patrick, 235 Va. at 456 (holding that 3 plaintiffs’ evidence as to falsity of broker’s promise to purchase home 4 failed to meet “the increased proof the law requires to establish 5 fraud”). 6 In its opposition, Plaintiff contends that Job Tucker’s 7 contemporaneous intention to mislead can be demonstrated through “Job 8 Tucker’s own testimony as well as what Roger Schlegel advised Howard 9 Kim on February 14, 2008.” (Pl.’s Opp. at 15.) Plaintiff fails to cite 10 to any evidence in the record to support this contention. From the 11 Court’s own review of Job Tucker’s deposition testimony, there is no 12 support for Plaintiff’s claim that Mr. Tucker had the intent not to 13 perform the oral promise at the time he made it. Indeed, Mr. Tucker 14 repeatedly and emphatically denied that he ever made the alleged oral 15 promise at all, let alone made any statements from which one could 16 infer 17 (Pennington Decl. Ex. C, J. Tucker Depo. Tr. at 59:4-61:22; 76:25-77:7; 18 85:25-87:5; 93:6-94:3; 97:7-13, 98:10-24; 110:11-111:1.) In light of 19 this testimony, there is no evidence to support an intent to deceive 20 at the time the alleged oral promise was made. that he had the contemporaneous intent to deceive WWI. 21 Similarly, the deposition testimony of Roger Schlegel provides no 22 support for Plaintiff’s contention. During his deposition, Mr. Schlegel 23 stated that at his meeting with Howard Kim on February 14, 2008, the 24 only reason that he gave for Boost’s decision not to renew the PPA with 25 WWI was that Boost was exercising the convenience clause in the PPA. 26 (Lee Decl., Ex. C, R. Schlegel Depo. Tr. at 7:20-8:10; 12:1-12.) Mr. 27 Schlegel also denied that he told Howard Kim that Boost was terminating 28 its relationship with WWI because Boost wanted to take WWI’s sub15 1 dealers. (Schlegel Depo. Tr. at 8:11-9:2.) 2 // 3 Plaintiff has not demonstrated the existence of a genuine issue 4 of material fact regarding whether the alleged oral promise was false 5 at the time it was made. See, e.g., Albanese v. WCI Communities, Inc., 6 530 F.Supp.2d 752, 772-73 (E.D.Va. 2007) (granting summary judgment on 7 fraud claim where plaintiff failed to produce any evidence to show that 8 the defendant knew that the alleged oral promises were false at the 9 time they were made). 10 11 3. Plaintiff Has Not Produced Any Admissible Evidence of Damages 12 Defendant also contends that it is entitled to summary judgment 13 as a matter of law on Plaintiff’s false promise claim because Plaintiff 14 has not produced any admissible evidence regarding its alleged damages. 15 Plaintiff alleges that it incurred damages in reliance on the alleged 16 oral promise by hiring new employees, setting up new facilities to 17 handle Boost’s business, traveling to visit its sub-dealers to convince 18 them to switch to Boost products, training the sub-dealers regarding 19 UBB, and moving to a new facility with higher rents and a five-year 20 lease. (Compl. ¶ 11.) Defendant contends that each of Plaintiff’s 21 claims for damages are fatally speculative and uncertain. (Def.’s Mot. 22 for Summ. J. at 18-19.) 23 Under Virginia law, a plaintiff has the “burden of proving with 24 reasonable certainty the amount of damages and the cause from which 25 they resulted; speculation and conjecture cannot form the basis of 26 recovery.” Carr v. Citizens Bank & Trust Co., 228 Va. 644, 652 (1985) 27 (citing Hale v. Fawcett, 214 Va. 583, 585 (1974); Barnes v. Quarries, 28 Inc., 204 Va. 414, 418 (1963)). Damages based on uncertainties, 16 1 contingencies, or speculation cannot be recovered. Barnes, 204 Va. at 2 418. “A plaintiff is not required to prove the exact amount of his 3 damages; 4 circumstances to permit a jury to make a reasonable estimate of those 5 damages.” Murray v. Hadid, 238 Va. 722, 731 (1989). however, he is required to show sufficient facts and 6 Defendant argues that the damages claimed by Plaintiff fail under 7 this rule. Defendant contends that all of the evidence regarding 8 Plaintiff’s damages is speculative because it is based primarily upon 9 Plaintiff’s “guesstimates,” rather than any actual evidentiary proof. 10 (Def.’s Mot. for Summ. J. at 18-19.) During his deposition, Howard Kim 11 repeatedly admitted that he arbitrarily fixed a monetary figure for the 12 various 13 calculations “simple” or because any documentary evidence he had was 14 on his computer which had crashed and been discarded. See, e.g., 15 Pennington Decl., Ex. A, Howard Kim Depo. Tr. at 178:15-18; 178:20- 16 179:4; 181:16-18; 184:6-12; 185:23-186:3; 217:18-22; 223:15-17; Supp. 17 Pennington Decl., Ex. A, 11/17/10 Howard Kim Depo. Tr. at 119:25-120:9; 18 121:22-122:12; 122:12-123:2, 122:13-123:2; 129:9-130:4; 132:22-133:10. 19 In its opposition, Plaintiff does not set forth any evidence 20 establishing a genuine issue of material fact sufficient to survive a 21 motion for summary judgment, but merely refers to the declaration of 22 Howard Kim, which in turn merely restates the amount of Plaintiff’s 23 alleged monetary damages without providing any supporting evidence. 24 Thus, Plaintiff has failed to present evidence to establish a genuine 25 issue of material fact for the jury regarding its alleged damages. 26 27 In kinds sum, of damages Defendant is suffered entitled by to WWI, either summary to keep judgment as the to Plaintiff’s false promise claim because no reasonable jury could find 28 17 1 that Plaintiff had proven fraud by “clear, cogent and convincing 2 evidence,” as required under Virginia law. See, e.g., Petra Intern. 3 Banking Corp. v. First American Bank of Virginia, 758 F.Supp.1120, 1139 4 (E.D.Va. 1991) (granting summary judgment where plaintiff failed to set 5 forth any facts that a reasonable jury could find as “clear, cogent, 6 and convincing evidence” of fraud). 7 8 9 B. Interference With Prospective Economic Advantage Plaintiff relationship alleges between that Defendant Plaintiff and its knew 780 about the sub-dealers economic and that 10 Defendant intended to disrupt these relationships by sending notices 11 to all of WWI’s sub-dealers informing them that WWI could no longer act 12 as Boost’s master dealer and thereby causing all of WWI’s sub-dealers 13 to terminate their contractual and/or business relationship with WWI. 14 Plaintiff further alleges that Boost then placed a close friend of its 15 executive officer in the position of master dealer who received $1 per 16 payment and $3 per product based upon all the transactions made by 17 Plaintiff’s sub-dealers. (Compl. ¶¶ 12, 13, 21-24.) As a result of this 18 wrongful conduct by Defendant, Plaintiff alleges that the relationship 19 between WWI and its sub-dealers was disrupted and Plaintiff sustained 20 actual damages in excess of $4 million. (Compl. ¶ 25.) 21 The elements of a cause of action for wrongful interference with 22 prospective business or economic advantage under Virginia law are as 23 follows: “(1) the existence of a business relationship or expectancy, 24 with a probability of future economic benefit to plaintiff; (2) 25 defendant’s 26 reasonable certainty that absent defendant’s intentional misconduct, 27 plaintiff would have continued in the relationship or realized the 28 expectancy; and (4) damage to plaintiff.” Glass v. Glass, 228 Va. 39, knowledge of the relationship 51 (1984). 18 or expectancy; (3) a 1 // 2 3 In its opposition, Plaintiff states that it has shown that: “(1) 4 it maintained an economic relationship with 780 sub-dealers and from 5 them Plaintiff earned substantial income every month; (2) Boost had 6 knowledge of the relationships and approved each of them and the 7 applications for the payment locations; (3) Plaintiff was induced to 8 create these sub-dealers to become Boost payment centers; and (4) the 9 relationship between the sub-dealers and Plaintiff were disrupted by 10 wrongfully misappropriating these accounts to VIP Wireless and VHA 11 Wireless. As an independent wrong, Plaintiff alleged and has shown that 12 Defendant made a false promise without any intent to perform it.” 13 (Pl.’s Opp. at 16-17.) 14 Defendant contends that it is entitled to summary judgment on this 15 claim for the following reasons: (1) Plaintiff has not produced 16 evidence establishing the independent wrongfulness of Boost’s alleged 17 conduct; (2) Plaintiff has not alleged or produced admissible evidence 18 of future economic benefit with its sub-dealers; (3) Plaintiff has not 19 produced admissible evidence of economic relationships with its 780 20 sub-dealers; (4) Plaintiff has not produced evidence of any disruption 21 actually caused by Boost; and (5) Plaintiff cannot produce admissible 22 evidence of damages caused by Boost’s alleged wrongful interference. 23 (Def.’s Mot. for Summ. J. at 13-15.)5 24 25 1. Plaintiff Has Produced No Evidence to Establish the Independent Wrongfulness of Defendant’s Conduct 26 Under Virginia law, in a claim for interference with prospective 27 economic relationships, a plaintiff must allege that the interfering 28 5 The Court will only discuss factors one, two and five above and does not reach the remaining factors. 19 1 party used “improper methods.” Masco Contractor Servs. E., Inc. v. 2 Beals, 279 F.Supp.2d 699, 709 (E.D.Va. 2003) (citing Commerce Funding 3 Corp. V. Worldwide Sec. Serv. Corp, 249 F.3d 204, 213 (4th Cir. 2001); 4 Duggin v. Adams, 234 Va. 221, 227 (1987)). Improper methods may include 5 the 6 overreaching, 7 Whitlock Corp., 44 Va. Cir. 54, 1997 WL 1070458, at *6 (Va.Cir.Ct. 8 1997) (citations omitted); see also Commerce Funding Corp., 249 F.3d 9 at 214. 10 violation of or a statute, unfair trade competition. standard, Simbeck, sharp Inc. v. dealing, Dodd-Sisk Plaintiff has not shown that there is a disputed material fact 11 sufficient 12 Defendant’s alleged wrongful conduct. Defendant’s act of refusing to 13 renew the PPA and informing WWI’s sub-dealers that WWI was no longer 14 the master dealer for Boost products is not independently wrongful. In 15 fact, Plaintiff admitted that, under the terms of the PPA, Boost was 16 legally entitled not to renew its contract with WWI. (Pennington Decl., 17 Ex. A, Kim Depo. Tr. at 88:2-6.) Thus, Plaintiff has failed to produce 18 any admissible evidence to show that Defendant used any “improper 19 methods” to interfere with WWI’s relationship with its sub-dealers. In 20 addition, because Plaintiff’s claim for false promise fails as a matter 21 of law, as discussed above, the alleged false promise also cannot form 22 the basis for a showing of an independent wrong. 23 to 2. overcome a motion for summary judgment regarding Plaintiff Has Not Alleged or Produced Any Admissible 24 Evidence 25 dealers of Future Economic Benefit With Its Sub- 26 Defendant next contends that Plaintiff has not alleged or produced 27 any evidence sufficient to overcome a motion for summary judgment 28 regarding the probability that its relationship with its retailers would result in future economic benefit but for Boost’s conduct. 20 1 (Def.’s Mot. for Summ. J. at 14.) “Mere proof of a plaintiff’s belief 2 and hope that a business relationship will continue is inadequate to 3 sustain a cause of action.” Commercial Business Systems, Inc. v. 4 Halifax Corp., 253 Va. 292, 301 (1997). Further, the proof must 5 establish a “probability” of future economic benefit to a plaintiff. 6 Proof of a “possibility” that such benefit will accrue is insufficient. 7 Id. 8 Here, Plaintiff has not produced any evidence of a “probability” 9 of future economic benefit with its sub-dealers absent the alleged 10 intentional interference by Defendant. (Pennington Decl., Ex. G, Pl.’s 11 Further Responses to Request for Production No. 55; Ex. E.) Indeed, as 12 Defendant points out, Plaintiff admitted that WWI’s sub-dealers are 13 free to terminate their relationship with WWI at any time. (Def.’s Mot. 14 at 14; Kim Depo. Tr. at 137:10-13.) Thus, Plaintiff has failed to put 15 forth any genuine issue of material fact to establish the “probability” 16 of future economic benefit in its relationships with its sub-dealers. 17 3. Plaintiff Has Not Produced Any Admissible Evidence of 18 Damages 19 Interference 20 Caused by Defendant’s Alleged Wrongful As discussed above, Plaintiff has not produced any admissible 21 evidence 22 judgment. 23 In of damages sum, sufficient Defendant 24 Plaintiff’s 25 // 27 // 28 // claim for survive entitled economic advantage. 26 is to intentional 21 to a motion summary interference for judgment with summary as to prospective 1 IV. Conclusion 2 For the foregoing reasons, Defendant’s motion for summary judgment 3 is GRANTED as to all of Plaintiff’s claims. IT IS ORDERED that judgment 4 be entered dismissing the action with prejudice. 5 6 Dated: January 11, 2011 7 8 9 ______________________________ Marc L. Goldman United States Magistrate Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22
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