71 Cal.App.5th 528
Cal. Ct. App.2021Background
- Real Soda and Drink Tank were Southern California beverage distributors who signed a mutual NDA/non‑circumvention agreement in June 2014.
- Drink Tank negotiated to acquire So Cal Beverage; Tico/So Cal negotiated with both Drink Tank and Real Soda, then sold to Real Soda for $250,000.
- Drink Tank sued Real Soda and its founder Ginsburg asserting multiple claims, but at trial narrowed the case to a single claim: intentional interference with a prospective economic advantage based solely on Real Soda’s alleged breach of the NDA.
- The jury returned a special verdict finding a violation of the NDA and awarded damages; the trial court entered judgment and later awarded attorney fees to Drink Tank under the NDA.
- Real Soda moved for JNOV arguing a bare breach of contract is not independently wrongful and thus cannot support the tort; the trial court denied relief but the Court of Appeal reversed, holding breach‑only theory cannot sustain the tort, the judgment must be reversed and the complaint dismissed, and the attorney fees award vacated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a breach of contract (NDA) constitutes “independently wrongful” conduct for the tort of intentional interference with a prospective economic advantage | Drink Tank: Breach of the NDA is wrongful and supports the tort; jury found such a breach | Real Soda: A bare breach of contract, without more, is not independently wrongful and cannot support the tort | Held: Breach alone is not independently wrongful; Supreme Court precedent bars converting a contract breach into this tort |
| Whether failure to object at trial forfeits the defendants’ challenge that the theory is legally invalid | Drink Tank: Any instructional/verdict form error could be forfeited or invited by defendants’ tactics | Real Soda: Subject‑matter‑jurisdictional defect cannot be waived and may be raised on appeal | Held: Lack of subject‑matter jurisdiction cannot be forfeited; challenge is cognizable on appeal |
| Appropriate remedy when special verdict rests solely on non‑tortious conduct | Drink Tank: Trial evidence showed other wrongful acts; verdict should stand or parties allowed to amend | Real Soda: Special verdict limited to breach‑theory mandates reversal and dismissal | Held: Because plaintiff narrowed claim and special verdict expressly rested on invalid theory, judgment reversed with directions to dismiss; court may not imply other findings |
| Effect on contractual attorney fees award tied to prevailing party under the NDA | Drink Tank: Entitled to fees under NDA remedies clause | Real Soda: If judgment reversed and plaintiff did not prevail, fee award must be vacated | Held: Fee award vacated because Drink Tank did not ultimately prevail |
Key Cases Cited
- Erlich v. Menezes, 21 Cal.4th 543 (contract breach is not tort unless independent tort duty exists)
- Cates Construction, Inc. v. Talbot Partners, 21 Cal.4th 28 (breach of contract cannot be transmuted into tort)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (elements of intentional interference with prospective economic advantage; independent‑wrongfulness requirement)
- Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal.5th 1130 (clarifying independent‑wrongfulness standard)
- Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., 2 Cal.5th 505 (elements of the tort and allocation of law/fact on independent‑wrongfulness)
- Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4th 464 (dismissing interference claim premised on contract breach)
- JRS Products, Inc. v. Matsushita Electric Corp. of America, 115 Cal.App.4th 168 (breach‑only theory insufficient for interference tort)
- Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (tort requires independent duty beyond contract)