COEUR SPORTS, INC. VS GDMC USA, LLC

Tentative Rulings

Case Number: 19SMCV01392    Hearing Date: September 17, 2020    Dept: P

Tentative Ruling

Coeur Sports, Inc. v. GDMC USA, LLC, Case No. 19SMCV01392

Hearing Date September 17, 2020

Plaintiff/Cross-Defendant Coeur Sports’ Demurrer to Cross-Complaint

Coeur Sports entered into an athletic apparel manufacturing agreement with Vomax, which alleges it manufactured apparel according to specifications, but Coeur Sports failed to place promised orders. Coeur Sports, as cross-defendant, demurs to Vomax’s second cause of action for fraud.

A breach of contract cannot be litigated as a tort claim unless defendant breached an independent, non-contractual legal duty. Erlich v. Menezes (1999) 21 Cal.4th 543, 554. Under the economic loss rule, plaintiff cannot recover in tort for purely economic loss due to disappointed expectations unless she demonstrates harm above and beyond a broken contractual promise. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988. The economic loss rule does not bar tort claims when the contract was fraudulently induced. Id. at 990.

An actionable misrepresentation must be about past or existing facts; statements regarding future events are nonactionable opinions. Francisco Design Center Assoc. v. Portman Cos. (1995) 41 Cal.App.4th 29, 43-44. A cause of action for promissory fraud can lie when plaintiff makes a promise with no intent to perform. Bondi v. Jewels by Ewar, Ltd. (1968) 267 Cal.App.2d 672, 677.

Coeur cites Erlich and Robinson Helicopter for the proposition that Vomax’s claims lie in contract, not in tort. This misapplies Robinson, which held the economic loss rule does not bar tort claims where the contract was fraudulently induced. Vomax alleges Coeur fraudulently induced it to enter into a manufacturing agreement by misrepresenting its intention to place promised orders and to use Vomax as its exclusive manufacturer. Cross-Complaint at ¶¶9, 25, 26. The economic loss rule does not bar Vomax’s fraud cause of action.

Coeur Sports argues Vomax has not adequately alleged a misrepresentation regarding an existing fact or promissory fraud. While a failure to perform a contractual promise is, without more, insufficient to establish a fraud cause of action, Vomax alleged Coeur Sports made multiple promises with no intent to perform, adequate to allege misrepresentation. Cross-complaint ¶¶9, 26. DENIED.

DUE TO THE ONGOING COVID-19 PANDEMIC, PARTIES AND COUNSEL ARE ENCOURAGED TO AVOID IN-PERSON APPEARANCES AND APPEAR REMOTELY VIA LA COURT CONNECT.

Case Number: 19SMCV01392    Hearing Date: June 23, 2020    Dept: P

Couer v Vomax motion for leave to file cross-complaint

TENTATIVE RULING

The parties formed a contract for Vomax to manufacture Couer’s apparel. Vomax alleg. edly failed to return raw materials provided by Coeur. Default was entered in favor of plaintiff, but Vomax successfully moved to set aside the default. Vomax moves for leave to file a cross-complaint.

If a defendant’s cause of action against a plaintiff is related to the subject matter of the complaint, it must be raised in a cross-complaint or be barred in any later lawsuit. Cal. Code of Civ. Proc. §426.30. A party that fails to file a cross-complaint required under the above statute “whether through oversight, inadvertence, mistake, neglect, or other cause” may apply for leave to file a cross-complaint. Cal. Code of Civ. Proc. §426.50. §426.50 is to be liberally construed to avoid forfeiture. Silver Orgs v. Frank (1990) 217 Cal.App.3d 94, 98-99.

The proposed cross-complaint arises out of the same contract for manufacturing apparel that formed the basis of Coeur Sports’ initial complaint. The initial complaint alleges Vomax failed to return raw materials under the contract, the cross-complaint alleges Coeur Sports failed to make mandated payments under the same contract. Because both claims arise out of alleged breaches of the same subject matter (the manufacturing contract), Vomax’s cross-complaint is mandatory under Cal. Code of Civ. Proc. §426.50. Although the cross-complaint was not timely filed, considering the preference for liberal construction set forth in Silver Orgs., the requested leave is appropriate. GRANTED. Cross-complaint to be filed within 15 court days.

IN LIGHT OF THE ONGOING COVID-19 PANDEMIC, PARTIES ARE STRONGLY ENCOURAGED TO ATTEND ORAL ARGUMENTS VIA COURT CALL.

Case Number: 19SMCV01392    Hearing Date: February 27, 2020    Dept: P

Tentative Ruling

Coeur Sports, Inc. v. GDMC USA, LLC, Case No. 19SMCV01392

Hearing Date: February 27, 2020

Defendant’s Motion for Relief from Default

Default was entered against defendant on October 3, 2019. Defendant moves to set it aside under Cal. Code of Civ. Proc. §473(b), arguing that it failed to file a responsive pleading because of mistake or excusable neglect.

A court may relieve a party from a “judgment, dismissal, order or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” Cal. Code Civ. Proc. §473(b). There is a strong public policy in favor of resolving matters on the merits, rather than via default or other procedural grounds. Barrington v. A.H. Robins Co. (1985) 39 Cal.3d 146, 152. When setting aside a default, a court has discretion to award attorneys’ fees to the non-defaulting party and sanctions of no more than $1,000.00 against the defaulting party. Cal. Code Civ. Proc. §473, Rogalski v. Nabers Cadillac (1992) 11 Cal.App.4^th 816, 822-823.

The complaint was substituted served on Catie Moores, the customer service representative at defendant’s Northampton office, on August 12, 2019. Defendant states Moores subsequently left her job and did not notify defendant’s Officer-in-Charge Rajiv Singh of the service. Singh states he did not learn of the lawsuit until October 28, 2019, when he returned to the Northampton office after several months and discovered the complaint among Moores’ papers. Plaintiff argues the default should not be set aside because the complaint was properly served, defendant was advised of impending legal action prior to service of the complaint, and Coer served its request for entry of default on defendant.

The strong public policy is in favor of deciding matters on the merits; the court accepts defendant’s statement that it did not have notice of the lawsuit until October 28, 2019, after which it moved with haste to set aside. The court awards plaintiff’s requested attorney’s fees and sanctions under Code of Civ. Proc. §473 and Rogalski.

The motion is GRANTED, and the default will be set aside. Defendant to pay a total of $4,824.95 in fees and sanctions, within 30 days.