Opinion
NOT TO BE PUBLISHED
Super. Ct. No. SCCVCV05-1507
BLEASE, Acting P. J.
Plaintiff Shasta-Siskiyou Transport, doing business as SST Oil (hereafter SSTO) appeals from the summary judgment entered in favor of defendant Steve Hilton, individually and doing business as McCloud Exxon (hereafter Hilton), on SSTO’s complaint for fraud and negligent interference with prospective economic advantage.
SSTO predicated both causes of action on allegations that during an introductory meeting of the parties, Hilton engaged in promissory fraud by falsely agreeing to enter into a 10-year exclusive purchase agreement with SSTO. Since the undisputed evidence shows that the parties failed to discuss any of the terms of that agreement, their oral discussions at the meeting did not give rise to a binding agreement. Since no agreement arose, Hilton’s failure to comply with such an agreement does not constitute promissory fraud or independent wrongdoing. We shall therefore affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
On appeal from a summary judgment entered in favor of a defendant, we view the facts and inferences reasonably drawn from those facts in the light most favorable to the plaintiff. (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1520.)
Anthony Reginato of Reginato, Inc. (Reginato) owned a retail gasoline station in McCloud, California (the Station) and purchased gasoline from SSTO, a wholesale supplier of petroleum products. Reginato and Jim Holt, President of SSTO, had an informal oral agreement in which Reginato agreed to purchase petroleum products from SSTO exclusively.
In 1999, Reginato entered into a written agreement with SSTO, referred to as the Modernization Loan Agreement (MLA). Under its terms, SSTO agreed to pay Reginato $96,000 to improve and modernize the Station in consideration of Reginato’s agreement to repay the loan by making annual installments for 10 years. The agreement authorized SSTO to annually waive the repayment obligation if Reginato actively marketed only Exxon-branded gasoline, and if waived, the principal loan amount was reduced by 10 percent. The agreement also contained an acceleration provision, which provided inter alia, that the unpaid balance of the loan would become due if Reginato failed to exclusively sell Exxon branded gasoline. Additionally, the agreement gave SSTO the right of first refusal if Reginato elected to sell the Station to a third party. It is undisputed that Reginato could terminate the exclusive purchase agreement at any time by paying off the modernization loan due under the MLA.
In January 2003, Reginato decided to sell the Station and entered into negotiations with defendant Hilton. Reginato informed Hilton that he had an MLA with SSTO and if Hilton wanted to buy the Station, he would have to assume and repay the loan, but if he continued to purchase fuel from SSTO exclusively, the loan amount would decrease each year.
In the spring of 2003, Reginato telephoned Paul Wellington, SSTO’s Vice President of Operations, and advised him that he (Reginato) wanted to sell the Station and asked Wellington whether SSTO was interested in purchasing it. SSTO declined the offer and advised Reginato that he could sell the Station to a third party.
Reginato then arranged a meeting so Hilton could meet the officers of SSTO because SSTO would be Hilton’s supplier. The meeting took place in March or April in Wellington’s office in Redding, California and lasted about one hour. Hilton, Reginato, Wellington, and Holt were all present and discussed the sale of the Station and the circumstances under which SSTO would waive its right of first refusal. One of those circumstances was Hilton’s assumption of Reginato’s obligations under the MLA and Hilton indicated he would be willing to assume that agreement. Also discussed was the necessity of Hilton entering into an exclusive supply agreement with SSTO. However, Wellington, the only one in attendance who could remember any discussion on the subject of a “supply agreement,” could not recall whether there was any discussion about the terms of the agreement. Nevertheless, he advised the group that the terms of the exclusive supply agreement would be contained in a “Reseller Agreement”, which had not yet been prepared but would be drafted by SSTO’s attorney and sent to Hilton’s attorney as part of the escrow documents.
On March 25, 2003, Wellington contacted attorney Archer Pugh and asked him to prepare an agreement for Hilton to assume the MLA.
By a letter dated March 28, 2003, attorney Christopher Marto informed SSTO that his law offices would be serving as the escrow holder for the sale of the Station and that May 1, 2003, was the anticipated date for closing escrow. To meet that deadline, Marto requested that SSTO provide his office “with the necessary documents and instructions for Mr. Hilton to assume the current Loan Agreement held with Mr. Reginato” by April 10th.
Pugh prepared a draft of the assumption agreement and faxed it to Marto on April 8, 2003.
Wellington sent Hilton a letter dated May 28, which waived SSTO’s right of first refusal to purchase Reginato’s Station. According to Wellington, the purpose of the letter was to carry out the agreement so the sale could go forward.
Hilton began operating the Station on June 9th.
On July 11, Pugh received directions from Wellington to finalize the assumption agreement and prepare and send a supply agreement, entitled the “Reseller Agreement.” Pugh prepared the two agreements as directed and sent them to Marto with a transmittal letter dated July 15, 2003. The Reseller Agreement is a formal 16 page contract, which requires Hilton to buy petroleum products exclusively from SSTO for a period of 10 years. The transmittal letter advises that “[u]pon execution of these documents by your clients, you are authorized to use them in escrow and they become effective upon the close of said escrow.”
Wellington states in his declaration that upon receiving Marto’s March 28th letter, he contacted Pugh and directed him to prepare the documents to be sent to Marto and instructed him to prepare an assumption agreement and a “Reseller Agreement.” However, Wellington does not state the date he actually contacted Pugh.
Although the record does not show the actual date escrow closed, the Bill of Sale and the Closing Statements are dated July 31, 2003.
On or about October 8, 2003, Pugh contacted Marto and asked when he would receive the signed Reseller Agreement. Marto advised him that Hilton was not going to sign that agreement and that he was “going with Chevron” instead. Pugh conveyed this information to Wellington.
Meanwhile, sometime in early October 2003, Hilton contacted SSTO and requested that it provide him with the payoff amount on the MLA. He received a letter from Wellington dated October 14, advising him that the payoff amount was $65,846.25.
About the same time, Hilton also advised SSTO that he was changing suppliers. Hilton subsequently received correspondence from SSTO’s bookkeeper that as of November 26th, SSTO would no longer provide him with electronic fee transfer (EFT) service, which allowed SSTO to electronically withdraw the amount Hilton owed fuel SSTO delivered to him.
Hilton also informed Reginato that he was rebranding the Station to McCloud Chevron effective October 21st and would fully satisfy his obligation under the assumption agreement. He subsequently repaid the loan in full by check, which SSTO accepted and cashed.
On October 5, 2005, SSTO filed a two count complaint against Hilton for damages alleging fraud and negligent interference with prospective economic relations. This was the first time Hilton was apprised of SSTO’s position that he had made a binding promise to sign a separate exclusive purchase agreement.
DISCUSSION
I.
Standard of Review
Summary judgment is properly granted when there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) A defendant seeking summary judgment bears the initial burden of proving the cause of “action has no merit” by showing that one or more elements of the plaintiff’s cause of action cannot be established or there is a complete defense. (Code Civ. Proc., § 437c, subds. (a), (o)(2); Addy v. Bliss & Glennon (1996) 44 Cal.App.4th 205, 213.) Once the defendant’s burden is met, the burden shifts to the plaintiff to show that a triable issue of fact exists as to that cause of action. (Ibid.)
We independently review the trial court’s decision, viewing the evidence in the light most favorable to plaintiffs as the losing party. (Wiener v. Southcoast Childcare Centers, Inc., supra, 32 Cal.4th at p. 1142.) In resolving any evidentiary doubts or ambiguities, we liberally construe plaintiff’s evidence and strictly construe defendant’s evidence. (Ibid.)
II.
Fraud
SSTO’s complaint alleges that at the April 2003 meeting, Hilton told Wellington “it was Hilton’s intention to enter into a Reseller Agreement whereby he would promise to actively market only grades of gasoline supplied to him by SST Oil for a period of ten (10) years.” Nevertheless, in the summary judgment proceedings below and on appeal, SSTO bases its fraud claim on the allegation that Hilton, through his attorney Marto, represented to SSTO that Hilton would sign all documents SSTO deposited into escrow for the sale of the Station.
Hilton contends SSTO failed to present evidence to support the claim of promissory fraud as pled because the parties failed to discuss any of the terms of the agreement with sufficient certainty to give rise to a binding agreement. He also argues that the unpled claim of fraud is baseless because the undisputed evidence shows Marto did not make any representation that Hilton would sign a Reseller Agreement.
According to Hilton, SSTO changed the basis for its fraud claim during discovery after Jim Holt denied ever discussing a reseller agreement with Hilton.
We agree with Hilton. This claim fails because there is no evidence he made a false promise since the preliminary negotiations that took place during the April meeting did not give rise to a binding agreement. We also find the unpled claim of fraud does not provide a basis for recovery.
We first address the scope of the issues before us. A motion for summary judgment is delimited by the pleadings which frame the issues. “‘“The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues: the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”’” (Fortier v. Los Rios Community College Dist. (1996) 45 Cal.App.4th 430, 433, quoting FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381.)
The elements of a claim of fraud are (1) a false misrepresentation or concealment of a material fact; (2) scienter or knowledge of the falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1108, superseded by statute on other grounds as stated in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854; 1 Witkin, Summary of Cal. Law (10th ed. 2007) Contracts, § 286, p. 315.)
Using the complaint as a measure, SSTO had to prove the element of a false representation by presenting prima facie evidence that Hilton falsely represented to Wellington that he would enter into a Reseller Agreement whereby he would only market and sell gasoline supplied to him by SSTO for a period of 10 years.
SSTO did not amend its complaint to include the unpled allegation of misrepresentation in Marto’s escrow letter. The claim of fraud was therefore limited to the allegation pled in the complaint. However, because Hilton did not object to this claim of fraud in the trial court or on appeal on the grounds it is outside the scope of the pleadings, and the trial court addressed the merits of the unpled claim, we too shall consider it.
SSTO contends Marto had represented Hilton, and was his agent and that he made the material misrepresentation that Hilton would sign all the documents deposited by SSTO into escrow. SSTO relies on paragraph 10 of Wellington’s declaration as evidence of this misrepresentation where Wellington states that “Marto informed us that he was to serve as the escrow holder for the sale from Mr. Reginato to Mr. Hilton of the McCloud Exxon Station and he requested that my office provide him with the documents that were necessary for the transaction to be consummated.”
Wellington’s characterization of Marto’s statement is inaccurate and irrelevant because Marto’s March 28th letter was before the trial court and speaks for itself. A quick reading of that letter disposes of SSTO’s claim. In the letter, Marto informs SSTO that his law offices would be serving as the escrow holder for the sale of the Station and requests that SSTO provide his office “with the necessary documents and instructions for Mr. Hilton to assume the current Loan Agreement held with Mr. Reginato.” (Italics added.) Needless to say, this letter makes no reference to a Reseller Agreement or to “documents that were necessary for the transaction to be consummated,” nor does it state that Hilton would sign all documents deposited into escrow by SSTO. As the trial court found, “this letter simply is not a representation committing Hilton to a reseller agreement, separate and apart from the MLA.”
We next turn to the evidence in support of the properly pled claim of fraud. That claim is based solely on the discussion that took place in Wellington’s office in April 2003. Since Wellington is the only person at that meeting who had any memory of a discussion about the Reseller Agreement, SSTO’s claim rises and falls on Wellington’s declaration and deposition testimony. However, a review of that evidence shows that Hilton did not promise or agree to enter into a reseller agreement separate from assuming the MLA.
It is a basic principle of contract law that “‘an offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain.’ [Citations.] ‘Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. [Citation.]’" (Ladas v. Calif. State Auto. Assn. (1993) 19 Cal.App.4th 761, 770; see Civ. Code, § 1598.) A contract is reasonably certain if its terms provide a basis for determining the existence of a breach and giving an appropriate remedy. (Holmes v. Lerner (1999) 74 Cal.App.4th 442, 457.)
In his deposition testimony, Wellington could not remember whether there was any discussion about the specific terms of the agreement and could not recall whether they even discussed the duration of the agreement. At most, the evidence shows from paragraph 8 of Wellington’s declaration that he informed Hilton “he would be required to sign a supply agreement. . . . [and] that the terms of that supply agreement would be contained in the Reseller Agreement. The Reseller Agreement had not yet been prepared, of course, but I informed Mr. Hilton that [SSTO’s] attorney would take care of that and would send it on to Mr. Hilton’s attorney as part of the escrow documents.”
As the trial court found, this discussion was a preliminary negotiation at best, and while such negotiations may result in a binding contract, that is so only if all the terms are definitely understood and the parties intended that a formal writing embodying these terms will be executed later. (Pacific Grove-Asilomar Operating Corp. v. County of Monterey (1974) 43 Cal.App.3d 675, 686; 1 Witkin, Summary of Cal. Law, supra, § 133, p. 172.)
As outlined above and relevant here, there is no evidence the parties orally discussed, much less agreed to, all the material terms and conditions of a separate exclusive purchase agreement. Hilton agreed to assume the MLA which carried an exclusive purchase requirement that terminated upon repayment of the loan. With respect to an additional and separate exclusive purchase agreement however, Wellington could not recall whether they discussed the duration of such an agreement or any other terms. On the other hand, the written agreement Reseller Agreement, which was 16 pages long and included 29 separate sections, would restrain Hilton from purchasing fuel from another supplier for a period of 10 years and impose numerous other requirements and prohibitions on him. Aside from the lack of evidence to show that the parties discussed any of the terms of the agreement, it would have been impossible to discuss each material term contained in the written agreement during the one-hour introductory meeting.
The Reseller Agreement sets the hours of operation and the terms of payment, gives SSTO a unilateral right to cancel the proposed agreement, imposes trademark restraints, limits Hilton’s ability to transfer, assign, or sell his interest in the Station to a third party, requires that Hilton indemnify SSTO, maintain insurance, and obtain telecommunications equipment at his sole expense. The proposed agreement also gives SSTO a right of first refusal and includes a binding arbitration clause.
In sum, SSTO’s evidence shows at most that the parties engaged in preliminary negotiations concerning a separate exclusive purchase agreement. However, because there is no evidence that they agreed on terms, which were reasonably certain and clearly understood, the negotiations failed to result in a binding contract. It follows therefore that the evidence fails as a matter of law to show Hilton made a false promise.
III.
Negligent Interference with Prospective Economic Advantage
SSTO contends the trial court erred by granting summary judgment on its claim of negligent interference with prospective economic advantage, arguing there is evidence to support each element. Hilton argues the trial court properly granted his motion on this claim because the evidence fails to support several of the elements including evidence of independent wrongdoing. We agree there is no evidence of independent wrongdoing.
To prove the tort of negligent interference with prospective economic advantage, the plaintiff must establish inter alia, that the defendant’s conduct “was independently wrongful apart from the interference itself.” (Lange v. TIG Insurance Co. (1998) 68 Cal.App.4th 1179, 1187; National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 440.) Proof of wrongful conduct must be by some legal measure other than the fact of the interference itself. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159; Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.)
The elements of this tort are: (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant engaged in wrongful conduct; (4) the defendant was negligent in that he or she failed to exercise due care; and (5) the defendant’s negligence caused damage to the plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)
SSTO relies on the alleged fraud as the sole basis for wrongdoing. Because we have found there is no evidence of fraud, this claim necessarily fails.
DISPOSITION
The judgment is affirmed. Steve Hilton is awarded his costs on appeal. (Cal. Rules of Court, rule 8.276(a)(1).)
We concur: DAVIS , J., HULL , J.