Dalrada Financial Corporation v. Deprey Company
3:24-cv-01185
S.D. Cal.May 29, 2025Background
- Dalrada Financial Corp. and its subsidiary Dalrada Precision Parts entered into a Sales Representative Agreement with DePrey Company in 2021 for the procurement of a major customer, Fastenal, for custom steel parts manufacturing.
- The contract stipulated a 10% commission for DePrey and allowed either party to terminate the agreement with 60 days’ written notice; initial term was one year, renewable in writing.
- In December 2023, DePrey allegedly instructed Fastenal to cancel purchase orders with plaintiffs and work directly with the manufacturer, Mide Global, without the required termination notice.
- Plaintiffs allege significant financial loss from lost purchase orders and claimed several causes of action, including breach of contract, breach of implied covenant, intentional interference, unjust enrichment, conspiracy, RICO violation, and fraud.
- DePrey Company moved to dismiss all claims, arguing the contract had expired and there was no valid contract at the time of the alleged breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of written contract for breach claim | Implied-in-fact contract continued post-expiration | Contract expired without written renewal | Court: No valid contract after 1 year; renewal required in writing; granted leave to amend |
| Breach of implied covenant of good faith & fair dealing | Still an active (implied) contract existed during alleged breach | No enforceable contract at time of alleged breach | Dismissed with leave to amend |
| Unjust enrichment claim | May proceed if contract deemed unenforceable or inapplicable | Express contract controls; unjust enrichment unavailable | Not dismissed; claim can proceed pending resolution of contract status |
| Claims dependent on contract validity (interference, etc) | Defendants’ wrongful conduct independent from contract status | Must dismiss if no valid/enforceable contract | Contract-dependent claims mostly dismissed with leave to amend; some, like tortious interference and fraud, not dismissed |
Key Cases Cited
- Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811 (California Supreme Court) (outlines elements for breach of contract under California law)
- Bank of the W. v. Superior Ct., 2 Cal. 4th 1254 (California Supreme Court) (if contractual language is clear, it governs contract interpretation)
- Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503 (California Supreme Court) (party cannot conspire to interfere with its own contract)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (California Supreme Court) (independently wrongful act required for intentional interference with prospective advantage)
- MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635 (California Supreme Court) (mutual intent inferred from contract's written provisions)
- Name.Space, Inc. v. Internet Corp. for Assigned Names and Numbers, 795 F.3d 1124 (9th Cir.) (elements for intentional interference with business relations)