Diamondstar Entertainment Holdings, LLC v. THH LLC

• Court: District Court, C.D. California
• Decided: November 15, 2022
• Docket: 8:21-cv-01150
• Status: Unknown

Opinion

Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 1 of 35 Page ID #:1345

8 UNITED STATES DISTRICT COURT

9 CENTRAL DISTRICT OF CALIFORNIA

11 DIAMONDSTAR ENTERTAINMENT Case No. 8:21-cv-01150-KES

12 HOLDINGS, LLC, FINDINGS OF FACT AND 13 Plaintiff, CONCLUSIONS OF LAW

14 v.

15 THH, LLC, et al.,

16 Defendants.

19 I.

20 INTRODUCTION 21 In mid-2020, during the height of the COVID-19 pandemic, Diamondstar 22 Entertainment Holdings, LLC (“Plaintiff”) purchased disinfectant wipes from THH, 23 LLC (“THH”), which Plaintiff planned to resell to its own customers. Plaintiff 24 claims that the wipes were unusable, and it brings claims for breach of contract, 25 breach of the implied covenant of good faith and fair dealing, breach of express and 26 implied warranties, unfair competition under California Business and Professions 27 Code section 17220, and negligent interference with contractual relationships. 28 1 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 2 of 35 Page ID #:1346

1 (Dkt. 62 at 3-4 [Final Pretrial Conference Order].)1 2 Plaintiff filed this action in state court against Defendant THH and its owner, 3 Rick Zielomski (“Zielomski”) (collectively, “Defendants”). (Dkt. 1-3.) Defendants 4 later removed the action to this Court based on diversity jurisdiction. (Dkt. 1, 10); 5 see generally 28 U.S.C. § 1332. The parties consented to the jurisdiction of the 6 undersigned Magistrate Judge. (Dkt. 6); see generally 28 U.S.C. § 636(c)(1). 7 The case proceeded through discovery, and no party moved for summary 8 judgment. In preparation for trial, the parties stipulated to certain facts, which the 9 Court accepted and recited in its Final Pretrial Conference Order. (Dkt. 62 at 2-3 10 ¶ 5.) A bench trial was held before the undersigned on August 2, 3, and 4, 2022. 11 (Dkt. 64-66 [minutes], Dkt. 76-78 [transcripts].) On September 13, 2022, the 12 parties submitted written briefs in lieu of closing argument. (Dkt. 82 [“Defendants’ 13 Closing Brief”], Dkt. 83 [“Plaintiff’s Closing Brief”].) Accordingly, the case is 14 now ripe for decision. 15 After considering the evidence, briefs, and arguments of counsel, the Court 16 makes the following findings of fact and conclusions of law.2 Plaintiff is entitled to 17 judgment against Defendant THH on the claims for breach of contract and breach 18 of the implied warranty of merchantability. However, the only reasonably certain 19 damages that Plaintiff has proven by a preponderance of the evidence are the 20 purchase price ($42,568) and cover damages ($7,000). Plaintiff has failed to show 21 it is entitled to relief on any of its other claims. 22 23 24

25 1 Plaintiff also brought a claim for rescission but withdrew the claim after trial. (Dkt. 83 at 12 [Plaintiff’s Closing Brief].) 26 2 Any finding of fact that constitutes a conclusion of law is hereby adopted as a conclusion 27 of law, and any conclusion of law that constitutes a finding of fact is hereby adopted as a finding of fact. 28 2 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 3 of 35 Page ID #:1347

1 II. 2 UNDISPUTED FACTS 3 In May 2020, Plaintiff began negotiating with Defendant Zielomski, owner 4 of Defendant THH, for the purchase of disinfectant wipes. (Stip. Facts / Dkt. 62 at 5 3.) Plaintiff’s owner, Aric Gastwirth, was introduced to Defendant Zielomski by a 6 man named Dominic Moscato, who “facilitated the purchase” and was paid a 7 commission by Defendant Zielomski. (Trial Day 1 at 134-36, 140 [Moscato’s 8 testimony]; see also Trial Day 1 at 17-18 [Gastwirth’s testimony].) 9 Defendant Zielomski provided Plaintiff with a Safety Data Sheet (“SDS”) for 10 the disinfectant wipes stating that the product was safe. (Stip. Facts / Dkt. 62 at 2.) 11 The SDS had Defendant Zielomski’s name on it. (Id.)3 12 The wipes were not manufactured by Defendant THH; Defendant THH 13 purchased them from another company called Luca’s Dog Food, which was owned 14 by Michael Balano. (Trial Ex. 2 [purchase order between Luca’s Dog Food and 15 Defendant THH]; Trial Day 2 at 48-49 [Zielomski testimony]; Trial Day 3 at 6-7 16 [Balano testimony].) 17 On May 22, 2020, Plaintiff and Defendant THH entered into a contract in the 18 form of a purchase order. (Stip. Facts / Dkt. 62 at 2; Trial Ex. 1 [purchase order 19 between Plaintiff and Defendant THH].) On May 23, 2020, Defendant THH sent 20 Plaintiff an invoice for 10,016 thirty-count containers of Outlaw Brand Disinfectant 21 Wipes for a price of $4.25 each. (Stip. Facts / Dkt. 62 at 2; Trial Ex. 3 [the 22 invoice].) Plaintiff paid a total of $42,568 for the 10,016 containers. (Stip. Facts / 23 Dkt. 62 at 2.) 24 Plaintiff intended to buy the disinfectant wipes to sell to a customer, 25 Safeguard. (Id.) Safeguard was then to provide the disinfectant wipes to Haas 26

27 3 There are several SDS’s in the record. (Trial Ex. 7, 44.) The parties’ Stipulated Facts do not specify which exhibit is the referenced SDS. 28 3 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 4 of 35 Page ID #:1348

1 Automation, Inc. and KB Home. (Id.) Though Safeguard was a customer of 2 Plaintiff, this was a test order for Haas Automation, Inc. and KB Home, who 3 intended to continue ordering from Plaintiff through Safeguard if they were 4 satisfied with the products. (Id.) 5 Pursuant to the contract between Plaintiff and Defendant THH, the 10,016 6 containers of wipes were to be shipped to Ft. Lauderdale, Florida, on May 27 or 7 May 28, 2020, in care of Plaintiff, for its customers. (Id.) They were shipped to a 8 warehouse in Florida that was operated by a warehouse and distribution company 9 called J.M. Field. (Trial Day 1 at 21-22 [Gastwirth’s testimony].) 10 Once the wipes were delivered, Plaintiff discovered, through its customers, 11 that several of the 10,016 cases of wipes received from Defendants contained mold 12 and were unusable. (Stip. Facts / Dkt. 62 at 3.) Plaintiff requested a full refund of 13 the entire shipment. (Id.) Defendants refused to respond to Plaintiff’s demands to 14 rescind the agreement and return the $42,568 paid by Plaintiff for the 10,016 cases 15 of Outlaw Brand Disinfectant Wipes. (Id.) Defendants refused because they 16 claimed they were not manufacturers of the wipes, but only brokered the purchase. 17 (Id.) 18 Because the disinfectant wipes purchased by Plaintiff for its customers did 19 not meet specifications and were moldy and unusable, Plaintiff was forced to pay 20 its customers an additional $7,000, which was the additional amount its customers 21 (through Safeguard) had to pay in order to purchase quality disinfectant wipes. 22 (Id.) 23 III. 24 FINDINGS OF FACT AND CONCLUSIONS OF LAW 25 This action is in federal court based on diversity jurisdiction under 28 U.S.C. 26 § 1332. (Dkt. 10 [amended notice of removal].) The parties’ contract, a one-page 27 purchase order, does not contain a choice-of-law provision. (Trial Ex. 1.) This 28 Court applies the substantive law of the forum state of California, including its 4 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 5 of 35 Page ID #:1349

1 choice-of-law rules. See generally Muldoon v. Tropitone Furniture Co., 1 F.3d 2 964, 966 (9th Cir. 1993) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). 3 The parties agree that California law governs the interpretation of the contract’s 4 terms. See generally Cal. Civ. Code § 1646 (“A contract is to be interpreted 5 according to the law and usage of the place where it is to be performed; or, if it does 6 not indicate a place of performance, according to the law and usage of the place 7 where it is made.”); Madera Grp., LLC v. Mitsui Sumitomo Ins. USA, Inc., 545 F. 8 Supp. 3d 820, 831 (C.D. Cal. 2021). 9 Neither party’s briefing explicitly discusses whether the contract is governed 10 by California common law or the UCC as adopted in California. (See, e.g., Pl. 11 Closing Br. at 5-6 [citing case law discussing both types of contracts].) However, 12 the UCC and common law do not appear to differ materially as to the issues and 13 arguments raised by the parties. 14 A. Breach of Contract and the Implied Warranty of Merchantability. 15 1. Applicable Law. 16 a. Breach of Contract. 17 To prevail on a breach of contract claim under California law, a plaintiff 18 must prove: (1) the existence of a contract; (2) plaintiff’s performance or excuse for 19 nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of 20 the breach. CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). 21 Contracts for the sale of goods are governed by the California Uniform Commercial 22 Code. Cal. Com. Code §§ 2102, 2106. “Goods … are ‘conforming’ or conform to 23 the contract when they are in accordance with the obligations under the contract.” 24 Cal. Com. Code § 2106(2). 25 b. Implied Warranty of Merchantability. 26 “[A] warranty that the goods shall be merchantable is implied in a contract 27 for their sale if the seller is a merchant with respect to goods of that kind.” Cal. 28 Com. Code § 2314(1). To be “merchantable,” goods must be, among other things, 5 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 6 of 35 Page ID #:1350

1 “fit for the ordinary purposes for which such goods are used.” Cal. Com. Code 2 § 2314(2)(b). Thus, this “implied warranty ‘provides for a minimum level of 3 quality’” and a breach “occurs if the product lacks ‘even the most basic degree of 4 fitness for ordinary use.’” Birdsong v. Apple, Inc., 590 F.3d 955, 958 (9th Cir. 5 2009) (quoting Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291, 6 1296 (1995) and Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th 402, 406 (2003)). 7 “Under California Commercial Code section 2314, … a plaintiff asserting breach of 8 [the implied] warranty [of merchantability] claims must stand in vertical contractual 9 privity with the defendant.” Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 10 1023 (9th Cir. 2008); see also In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 986 11 (C.D. Cal. 2015) (noting that “the exception to privity available for breach of 12 express warranty claims is not available for breach of implied warranty claims”), 13 aff’d sub nom. Briseno v. ConAgra Foods, Inc., 674 F. App’x 654 (9th Cir. 2017) 14 and 844 F.3d 1121 (9th Cir. 2017). 15 “A buyer who is damaged by a breach of implied warranty has two possible 16 measures of those damages: one where the buyer has rightfully rejected or 17 ‘justifiably revoked acceptance’ of the goods … , and one where the buyer has 18 accepted the goods….” Simgel Co. v. Jaguar Land Rover N. Am., LLC, 55 Cal. 19 App. 5th 305, 315-16 (2020) (citing Cal. Com. Code §§ 2711, 2714). “A buyer 20 who has accepted goods may revoke acceptance of a commercial unit ‘whose 21 nonconformity substantially impairs its value to him.’” Id. (quoting Cal. Com. 22 Code § 2608(1)). 23 If the buyer rejects or revokes a prior acceptance of the goods, the buyer 24 “may ‘recover[ ] so much of the price as has been paid,’ among other remedies….” 25 Id. at 316 (quoting Cal. Com. Code § 2711(1)). In addition to the purchase price, 26 “the buyer may ‘cover’ by making in good faith and without unreasonable delay 27 any purchase of … goods in substitution for those due from the seller,” and then the 28 “recover from the seller as damages the difference between the cost of cover and 6 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 7 of 35 Page ID #:1351

1 the contract price….” Cal. Com. Code § 2712(1)-(2). The buyer may also recover 2 incidental and consequential damages, id. § 2712(2), which are defined as follows: 3 (1) Incidental damages resulting from the seller’s breach include 4 expenses reasonably incurred in inspection, receipt, transportation and 5 care and custody of goods rightfully rejected, any commercially 6 reasonable charges, expenses or commissions in connection with 7 effecting cover and any other reasonable expense incident to the delay 8 or other breach. 9 (2) Consequential damages resulting from the seller’s breach include 10 (a) Any loss resulting from general or particular requirements 11 and needs of which the seller at the time of contracting had reason to 12 know and which could not reasonably be prevented by cover or 13 otherwise; and 14 (b) Injury to person or property proximately resulting from any 15 breach of warranty. 16 Cal. Com. Code § 2715. 17 Where the buyer accepts the goods—rather than rejecting them or revoking 18 acceptance—”the measure of damages for breach of warranty ‘is the difference ... 19 between the value of the goods accepted and the value they would have had if they 20 had been as warranted, unless special circumstances show proximate damages of a 21 different amount’ … and incidental and consequential damages also may be 22 recovered….” Simgel Co., 55 Cal. App. 5th at 316 (quoting Cal. Com. Code 23 § 2714). 24 2. Plaintiff Had a Contract With Defendant THH But Not With 25 Defendant Zielomski. 26 The parties stipulated that Plaintiff and Defendant THH entered into a 27 contract in the form of a Purchase Order. (Stip. Facts / Dkt. 62 at 2; Trial Ex. 1 [the 28 purchase order].) 7 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 8 of 35 Page ID #:1352

1 Plaintiff argues that Defendant Zielomski should also be personally liable for 2 breach of contract under a “pierc[ing] the corporate veil” theory, arguing that: 3 (a) ”there were no corporate formalities followed with regard to the role of Michael 4 Balano and/or Lucas Dog Food”; (b) “proper records” were not kept; and (c) it 5 would be “inequitable” for Defendant Zielomski “to escape liability.” (Pl. Closing 6 Br. at 16-17.) Plaintiff cites evidence purportedly showing that Defendant 7 Zielomski made Plaintiff believe that Defendant THH, rather than Michael Balano 8 or Luca’s Dog Food, was the manufacturer of the wipes. (Id., citing Ex. 44 [SDS 9 listing TH as the “manufacturer/ supplier”]; Ex. 6 [text message from Moscato to 10 Defendant Zielomski stating, “you listed yourself as the manufacturer in the 11 paperwork and also on the MSDS [sic]”]; Trial Day 2 at 63-67 [testimony of 12 Defendant Zielomski about whether he represented that Defendant THH was the 13 manufacturer on the SDS].) 14 Under California law, the piercing the corporate veil or alter-ego doctrine “is 15 an extreme remedy, sparingly used.” Sonora Diamond Corp. v. Superior Ct., 83 16 Cal. App. 4th 523, 539 (2000). The California Court of Appeal has summarized the 17 doctrine as follows: 18 The circumstances of an individual case determine whether the 19 court will pierce the corporate veil and regard the corporation as the 20 alter ego of its shareholders. … “First, there must be such a unity of 21 interest and ownership between the corporation and its equitable 22 owner that the separate personalities of the corporation and the 23 shareholder do not in reality exist. Second, there must be an 24 inequitable result if the acts in question are treated as those of the 25 corporation alone.” … Factors for the trial court to consider include 26 the commingling of funds and assets of the two entities, identical 27 equitable ownership in the two entities, use of the same offices and 28 employees, disregard of corporate formalities, identical directors and 8 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 9 of 35 Page ID #:1353

1 officers, and use of one as a mere shell or conduit for the affairs of the 2 other. “No one characteristic governs, but the courts must look at all 3 the circumstances to determine whether the doctrine should be 4 applied.” … 5 [The issue is whether] to disregard the corporate entity as a 6 distinct defendant and to hold the alter ego individuals liable on the 7 obligations of the corporation where the corporate form is being used 8 by the individuals to escape personal liability, sanction a fraud, or 9 promote injustice. 10 Shaoxing Cnty. Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189, 1198 11 (2011) (citations omitted). 12 Plaintiff has not shown that it is entitled to prevail on this theory for two 13 reasons. First, this theory was not pled in the Complaint. (Dkt. 10-3.) District 14 courts in the Ninth Circuit disagree about which pleading standard applies to alter 15 ego liability: either the heightened pleading standard for fraud allegations under 16 Federal Rule of Civil Procedure 9(b) or the more liberal standard in Rule 8. 17 Risinger v. SOC LLC, 936 F. Supp. 2d 1235, 1242 n.2 (D. Nev. 2013) (“Whether 18 Rule 9(b) applies to pleadings of alter ego liability has been the subject of debate in 19 district courts nationwide.”); Wimbledon Fund v. Graybox, LLC, No. 15-cv-6633- 20 CAS-AJWx, 2016 WL 7444709 at *5, 2016 U.S. Dist. LEXIS 192161 at *17 (C.D. 21 Cal. Aug. 31, 2016) (finding that “a majority of courts in this Circuit have found 22 that plaintiffs must satisfy Rule 9(b)’s particularity standard as to the fraud element 23 of plaintiff’s alter ego theory”). Yet even courts that apply the less stringent 24 standard require that the theory be pled in the complaint and supported with factual 25 allegations. See, e.g., Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 26 1116 (C.D. Cal. 2003) (“Conclusory allegations of ‘alter ego’ status are insufficient 27 to state a claim. Rather, a plaintiff must allege specifically both of the elements of 28 alter ego liability, as well as facts supporting each.”); Dakavia Mgmt. Corp. v. 9 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 10 of 35 Page ID #:1354

1 Bigelow, No. 20-cv-00448, 2022 WL 104245 at *5, 2022 U.S. Dist. LEXIS 4894 at 2 *12 (E.D. Cal. Jan. 10, 2022) (“Although the pleading requirements for alter-ego 3 liability are ‘not so strict,’ … a plaintiff must allege more than legal conclusions.”) 4 (citation omitted). 5 In Wady v. Provident Life and Accident Insurance Co. of America, 216 F. 6 Supp. 2d 1060 (C.D. Cal. 2002), for example, the court found that the plaintiff 7 could not raise an alter ego theory as a defense to summary judgment because the 8 theory was not raised in the complaint, reasoning as follows: 9 [N]one [of the complaint’s allegations] contains any reference to 10 UnumProvident being the alter ego of Provident. None alleges that 11 UnumProvident treats the assets of Provident as its own, that it 12 commingles funds with Provident, that it controls the finances of 13 Provident, that it shares officers or directors with Provident, that 14 Provident is undercapitalized, or that the separateness of the 15 subsidiary has ceased. Without such allegations, the issue is not 16 adequately raised, and UnumProvident was not put on notice that this 17 was a theory against which it should be prepared to defend. 18 Id. at 1067. Similarly, the Complaint in this case contains no allegations of alter 19 ego. (Dkt. 10-3.) It does not allege the relationship between Defendant Zielomski 20 and Defendant THH, but simply alleges on information and belief that all 21 Defendants “were the agents, employees, officers, principals, subsidiaries, parent 22 company, affiliated companies and/or representatives of each of the remaining 23 Defendants….” (Id. at ¶ 5.) The Complaint also alleges that it entered a contract or 24 agreement with “Defendants,” without specifying that it was seeking to hold 25 Defendant Zielomski liable under an alter ego theory. (See, e.g., id. at ¶¶ 21, 31, 26 56.) Accordingly, the Complaint did not put Defendant Zielomski on notice that 27 this was a theory against which he should be prepared to defend. 28 Second, Plaintiff has pointed to no evidence that would support piercing the 10 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 11 of 35 Page ID #:1355

1 corporate veil of Defendant THH to hold Defendant Zielomski liable for a breach of 2 Plaintiff’s contract with Defendant THH. It is irrelevant whether or not formalities 3 were followed or adequate records kept between Defendant THH and Luca’s Dog 4 Food; Plaintiff is not seeking to hold Luca’s Dog Food liable on the contract. The 5 issue is whether Defendant Zielomski treated Defendant THH as his personal alter 6 ego, such that Defendant THH’s acts should be considered Defendant Zielomski’s 7 acts. Even if Defendant Zielomski did misrepresent that Defendant THH rather 8 than Lucas Dog Food was the manufacturer of the wipes (which the Court is not 9 finding), this is not the type of inequity that would support piercing the corporate 10 veil, as it does not show that “the corporate form” of Defendant THH was “used by 11 [Defendant Zielomski] to escape personal liability, sanction a fraud, or promote 12 injustice.” Shaoxing, 191 Cal. App. 4th at 1198. For example, Plaintiff has not 13 introduced any evidence suggesting that Defendant Zielomski formed Defendant 14 THH for the purpose of concealing the identity of the true manufacturer. (Cf. Trial 15 Day 2 at 108 [Defendant Zielomski’s testimony that he had been “in the business of 16 selling somebody else’s product to a third party” for “[a]pproximately 23, 24 17 years”]; Trial Day 1 at 134-36 [Dominic Moscato’s testimony that he had done 18 business with Defendant Zielomski in 2018].) 19 Accordingly, the Court finds that only Defendant THH can be held liable for 20 breach of the contract or the implied warranty of merchantability. 21 3. Defendant THH is a Merchant With Respect to Goods of This 22 Kind. 23 As noted above, to be liable for a breach of the implied warranty of 24 merchantability, the seller must be “a merchant with respect to goods of that kind.” 25 Cal. Com. Code § 2314(1). A merchant “means a person who deals in goods of the 26 kind or otherwise by his occupation holds himself out as having knowledge or skill 27 peculiar to the practices or goods involved in the transaction or to whom such 28 knowledge or skill may be attributed by his employment of an agent or broker or 11 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 12 of 35 Page ID #:1356

1 other intermediary who by his occupation holds himself out as having such 2 knowledge or skill.” Cal. Com. Code § 2104(1). “A person making an isolated 3 sale of goods is not a ‘merchant’ within the meaning of the full scope of this section 4 and, thus, no warranty of merchantability would apply.” U.C.C. § 2-314, Comment 5 3; see also Arriaga v. CitiCapital Com. Corp., 167 Cal. App. 4th 1527, 1542 (2008) 6 (rejecting the plaintiff’s argument that, “as a lessor of industrial machinery that 7 occasionally sells items that have reverted to it, CitiCapital” was “a merchant with 8 respect to such industrial machinery”; finding that CitiCapital was “not a merchant 9 with respect to industrial machinery,” but rather “a finance lessor,” and “the 10 product a finance lessor deals in is money, not industrial equipment”). 11 Although Mr. Zielomski testified that Defendant THH’s business was 12 primarily CBD products (Trial Day 2 at 39-40), he also testified that, since the 13 beginning of the COVID-19 pandemic, he had worked on approximately 100 or 14 200 transactions involving personal protective equipment (“PPE”). (Trial Day 2 at 15 111.) He estimated that, between May and August of 2020, he participated in 16 approximately 10 phone conversations a day about PPE sales. (Id. at 112.) He also 17 offered testimony about whether certain business practices were common or 18 uncommon “in the PPE space.” (See, e.g., id. at 107.) Disinfectant wipes are 19 reasonably considered part of the PPE industry. This is sufficient to show that 20 Defendant THH was a merchant with respect to the goods of this kind, especially as 21 Defendant does not appear to dispute this element. (See Defs. Closing Br. at 12-13 22 [in the section dealing with the implied warranty of merchantability, arguing only 23 that Plaintiff “failed to mitigate or prove its damages”]; Dkt. 10-8 [Defendants’ 24 answer, not raising this issue]; Dkt. 62 [Final Pretrial Order, not raising this issue].) 25 4. Plaintiff Performed Under the Contract. 26 Defendants argue that Plaintiff failed to perform under the contract because 27 Defendant Zielomski testified that an entity called “Run It Up, Inc.,” not Plaintiff, 28 “was the entity that actually paid for the goods.” (Defs. Closing Br. at 5, 8; Trial 12 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 13 of 35 Page ID #:1357

1 Day 2 at 38, 114.) 2 However, the fact that Plaintiff paid for the wipes was stipulated in the 3 parties’ proposed Final Pretrial Conference Order (Dkt. 42-1) and approved by the 4 undersigned in the Final Pretrial Conference Order (Dkt. 62 at 2). Stipulations are 5 “binding … when filed in the proceeding” and “approved by the judge….” Central 6 District of California Local Rule 7-1. “Litigants, [the Supreme Court has] long 7 recognized, ‘[a]re entitled to have [their] case tried upon the assumption that ... 8 facts, stipulated into the record, were established.’” Christian Legal Soc. Chapter 9 of the Univ. of California, Hastings Coll. of the L. v. Martinez, 561 U.S. 661, 676 10 (2010) (quoting H. Hackfeld & Co. v. United States, 197 U.S. 442, 447 (1905)). 11 To the extent Defendants complain that the information about which entity 12 paid for the wipes “was not provided to the Defendants during discovery” (Defs. 13 Closing Br. at 5), they cannot demonstrate prejudice, because Defendant 14 Zielomski’s trial testimony shows that which entity paid for the wipes was a fact 15 within his personal knowledge at the time of the transaction. Moreover, Plaintiff’s 16 owner Aric Gastwirth testified that he owns Run It Up, LLC and repaid that entity 17 out of Plaintiff’s funds. (Trial Day 1 at 107, 127-28.)4 18 4 Defendants argue that Plaintiff “failed to join an indispensable party” under Federal Rule 19 of Civil Procedure 19, i.e., Run It Up, Inc., because “[w]hile Gastwirth orally claimed that he 20 owned and repaid” Run It Up, Inc. for the wipes, he “failed to provide any primary written evidence that Plaintiff actually paid for or owns the goods,” in violation of the “best evidence” 21 rules, Federal Rules of Evidence 1002 and 1004. (Defs. Closing Br. at 5-8.) 22 Defendants did not raise a best evidence objection to Mr. Gastwirth’s trial testimony. (See Trial Day 1 at 107, 127-28.) Moreover, Mr. Gastwirth’s testimony was not offered to prove 23 the content of a writing within the meaning of these rules. See Fed. R. Civ. P. 1002 (“An original writing … is required in order to prove its content….”) (emphasis added). “The ‘best evidence’ 24 rule, embodied in Fed. R. Evid. 1002, comes into play only when the Terms of a Writing are being established…. The rule is not applicable when a witness testifies from Personal knowledge 25 of the matter, even though the same information is contained in a writing.” D’Angelo v. United 26 States, 456 F. Supp. 127, 131 (D. Del. 1978), aff’d, 605 F.2d 1194 and 605 F.2d 1197 (3d Cir. 1979); compare Fireman’s Fund Ins. Co. v. Stites, 258 F.3d 1016, 1023 (9th Cir. 2001) (“the 27 checks and billing records the Insurers submitted were not offered to prove ‘the content of a writing’ as required by the” best evidence rule) with Medina v. Multaler, Inc., 547 F. Supp. 2d 28 1099, 1122 (C.D. Cal. 2007) (the plaintiff’s “references to the content of emails she received,” 13 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 14 of 35 Page ID #:1358

1 Accordingly, the Court finds that Plaintiff performed its obligations under the 2 contract with Defendant THH by paying for the wipes. 3 5. Defendant THH Breached the Contract and the Implied Warranty 4 of Merchantability. 5 Plaintiff argues that Defendant THH breached the contract and the implied 6 warranty of merchantability by “fail[ing] to provide [Plaintiff] with usable 7 disinfectant wipes,” arguing that the wipes “were moldy and unfit for human use.” 8 (Pl. Closing Br. at 5, 9.) Defendants argue there was no breach of any “express” 9 contractual term (Defs. Closing Br. at 9), and that as to the other claims, “Plaintiff 10 has failed to establish any reasonable certainty as to the actual damages for which 11 the Defendant THH should be liable, as so much of the product was uninspected 12 and … unaccounted for after [being] received by Plaintiff’s clients.” (Id. at 12.) 13 Citing the testimony of Michael Balano, the owner of manufacturer Luca’s Dog 14 Food, Defendants argue, “[T]he manufacturer did attempt to replace the goods that 15 the Plaintiff claimed were defective by shipping replacement boxes, but … Plaintiff 16 refused to accept the shipment…. [T]he goods that the Plaintiff received were 17 saleable, and upon their return, were, in fact, sold without complaint by” Mr. 18 Balano and/or Luca’s Dog Food. (Id.) Defendants argue, “There was no evidence 19 presented that there were any defects in [the] replacement sanitary wipes,” and “it is 20 impossible to determine from the evidence offered by the Plaintiff how many of the 21 units were inspected, returned without inspection, found usable or unusable.” (Id. 22 at 13.) 23 Although Plaintiff has not demonstrated the breach of any express term— 24 given that the parties’ contract was a one-page purchase order with very few 25 express terms—Plaintiff has shown that Defendants breached the implied term that 26 the wipes be “fit for the ordinary purposes for which such goods are used.” Cal. 27 allegedly showing pregnancy discrimination, “violate the best evidence rule”). 28 14 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 15 of 35 Page ID #:1359

1 Com. Code § 2314(2)(b). Although the exact numbers of usable and unusable 2 wipes are unclear, the evidence shows that enough of the wipes were unusable to 3 justify Plaintiff rejecting the goods or revoking its acceptance of the goods. See 4 Cal. Civ. Code § 1794(b)(1) (describing damages for breach of an implied warranty 5 “[w]here the buyer has rightfully rejected or justifiably revoked acceptance of the 6 goods”); see generally Cal. Com. Code § 2602 (manner and effect of rightful 7 rejection); id. at § 2608 (revocation of acceptance in whole or in part). 8 The parties stipulated that “several of the 10,016 cases of wipes received 9 from Defendants contained mold and were unusable.” (Stip. Facts / Dkt. 62 at 3.) 10 Matthew Kraft, an account coordinator at J.M. Field, testified about his personal 11 observations of the wipes that arrived at J.M. Field’s warehouse as follows: 12 A lot of it was kind of tossed around. I mean, we have pictures 13 of a couple of them that are just – they’re not even, like, palletized. It 14 looks like it’s just kind of like on a pallet. They’re all smashed. 15 A lot of them after opening and reviewing them were either, A, 16 completely dry and had no sanitizer contents in them; or if they did, 17 they -- most of it had some type of mold on them which we could tell 18 just from the black specks directly on the wipes just from opening it. 19 There was also just no seal or anything on the product either. 20 … 21 [W]e did weigh some of them. … [W]e weighed them because 22 … a lot of the packages, when we opened it, there’s no liquid or 23 sanitizer in the contents. So just off the bat when we were just 24 comparing a couple, we could tell whether or not there was even any 25 liquid in some of these canisters. Some of them were not even useful 26 because of that also. 27 There was also the issue with the mold, but also there was no 28 usable contents in there. It was just sheets of paper basically. 15 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 16 of 35 Page ID #:1360

1 . . . 2 We noticed obviously there was physical visual damages on a 3 lot of these canisters. Then we noticed a huge weight difference in a 4 couple of them. So because of that and because of visually seeing the 5 damages, we had no choice but to open the canisters just to see how 6 far the damages were and how far the issues were with the -- with this 7 product that just came in. It was obviously worse than we would have 8 expected. 9 (Trial Day 2 at 9-12.) When asked whether there were “any wipes or canisters of 10 wipes that appeared like they were usable,” Mr. Kraft responded: 11 [I]n my opinion there were some usable wipes, which I do believe that 12 we relayed. But I would say the very vast majority we had issues 13 with, and we were not able to use most of the inventory, as I had said. 14 Just the majority that we had to go through and weigh, they either had 15 no contents in it or there was mold in the contents. So, yes, there’s 16 not -- there wasn’t many or very many that we could use for any 17 orders. 18 (Id. at 20-21.) He also testified that, to the best of his recollection, none of the 19 wipes were used to fulfill orders for customers; they were either shipped back to the 20 manufacturer or thrown away. (Id. at 21.) 21 Similarly, Mr. Moscato testified about problems J.M. Field reported with the 22 wipes as follows: 23 [T]he first problems that were brought up to my attention was 24 how the boxes arrived. They appeared to be damaged. The boxes 25 were damaged. They were just in beat-up condition. 26 The issue is also that they were not palletized how they were 27 stated, how Rick [Zielomski] stated that they were going to arrive. So 28 the count, it was difficult to get a proper count in how they were 16 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 17 of 35 Page ID #:1361

1 palletized. From there, there was a – I believe that they mentioned 2 that the weight on some of the products were not consistent, which led 3 them to believe that they were dried out, which was the case. 4 A lot of the products -- and I don’t know the amount or how 5 many, that some were -- a good portion of them were dry, and then 6 later to find out that upon further inspection, that there was [sic] mold 7 spots on some of them. 8 (Trial Day 1 at 138-39.) Contemporaneous emails corroborate Mr. Kraft’s and Mr. 9 Moscato’s testimony about the condition of the wipes. (See, e.g., Trial Ex. 17, 23 10 [emails discussing how the number of units and cases per pallet did not match the 11 bill of lading sent by Defendant THH, and attaching photos].) 12 Defendants argue that “the pallets and products” Mr. Kraft was describing 13 above “were returned to the manufacturer, and replaced with a new shipment,” and 14 although Mr. Kraft “testified that the replacement pallets ‘still had some issues’ … 15 there is no evidence that [Mr. Kraft or J.M. Field] did any thorough investigation or 16 examination of these replacement shipments.” (Defs. Closing Br. at 12.) The 17 Court does not interpret Mr. Kraft’s testimony as describing only the first shipment 18 of wipes, and other evidence indicates that later shipments suffered from similar 19 problems. Mr. Gastwirth testified that, while he and Defendant Zielomski were 20 discussing how to fix the problems with the first shipment, “there was a problem 21 with the next shipment that showed up also.” (Trial Day 1 at 38; see also Trial Ex. 22 31 [June 19, 2020 email from Mr. Gastwirth to Defendant Zielomski stating, “This 23 is a HUGE problem as I fulfilled my other large order from this stockpile. We are 24 talking costing me 100k’s of business with my 2 largest clients. Please let me know 25 your thoughts.”]5; Trial Ex. 17 [emails from Mr. Kraft showing that the first 26 5 This exhibit, along with others, was initially the subject of a hearsay objection and 27 admitted only for its effect on the listener, but Defendants later withdrew their hearsay objections. (Trial Day 3 at 22.) 28 17 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 18 of 35 Page ID #:1362

1 shipment was received at the J.M. Field warehouse on or about June 2, 2020].) Mr. 2 Gastwirth also testified that 512 units that Defendant THH shipped directly to 3 Plaintiff’s customer Haas Automation (rather than to the J.M. Field warehouse) 4 were rejected by Haas. (Trial Day 1 at 125 [“[Haas] looked at them. They didn’t 5 want them. They told me to take them back.”]; id. at 113-14 [Gastwirth’s 6 testimony that an order to KB Home or Haas Automotive “was picked up from the 7 client when it was deemed that they didn’t want them”].) 8 Defendants argue that Mr. Kraft testified that “there were at least two good 9 pallets of merchandise.” (Defs. Closing Br. at 12.) Mr. Kraft’s testimony about 10 “two good pallets” was quoting an email Mr. Kraft sent Mr. Gastwirth on June 5, 11 2020, shortly after a shipment of wipes arrived. (Trial Day 2 at 16-18.) The email 12 was part of a chain in which Mr. Kraft was reporting that the boxes of wipes were 13 damaged, and that the number of wipes per pallet did not correspond with 14 paperwork provided by Defendant THH. Mr. Kraft stated: 15 We still need a confirmation of the inventory that was just delivered. 16 Can you please give us a quantity of the inventory that was just sent 17 here out of the 2 good pallets that are not damaged? If you are not 18 sure, we can physically count this inventory if you would like. 19 (Trial Ex. 23 at THH000095.) This email indicates that the boxes on those two 20 pallets did not appear to be damaged on first visual inspection, but it does not 21 indicate that the wipes in that shipment were useable. The other defects mentioned 22 by Mr. Kraft and Mr. Moscato, i.e., dryness and mold, did not become apparent 23 until further inspection. 24 Defendants also cite a bill of lading indicating that five pallets of wipes were 25 shipped to KB Home in San Ramon, California on or about June 9, 2020. (Defs. 26 Closing Br. at 12; Trial Ex. 23 at THH000117.) Although neither Mr. Gastwirth 27 nor Mr. Kraft remembered this specific shipment, Mr. Gastwirth agreed that either 28 this shipment or another shipment was rejected by KB Home, not because the wipes 18 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 19 of 35 Page ID #:1363

1 were found to be defective, but because it was delivered to an office address rather 2 than a warehouse address. (Trial Day 2 at 25-28 [Kraft testimony]; Trial Day 1 at 3 112-15 [Gastwirth testimony].) However, there is no evidence that Plaintiff sold 4 these wipes to KB Home for a profit. Emails between Mr. Gastwirth and 5 Defendant Zielomski discussing this bill of lading indicate that the parties arranged 6 for Defendants or their agents to pick up this shipment. (Trial Ex. 35 [emails dated 7 June 23 and 24, 2020].) In light of the other evidence about defects across multiple 8 shipments of the wipes, the evidence does not tend to show that these wipes were 9 usable merely because KB Home rejected them for a different reason before 10 attempting to use them. At that point, Plaintiff was entitled to reject the goods 11 based on the defects that had already been discovered. (See Trial Day 1 at 97 12 [Gastwirth’s testimony that, by mid-June 2020, he became “concerned that 13 potentially the ones that [Plaintiff] sent out [to its customers], since we didn’t 14 inspect every one of them before they went out, could have gone out with the same 15 problems”]). 16 Finally, to the extent Defendants rely on the testimony of Michael Balano, 17 owner of manufacturer Luca’s Dog Food, to establish that the wipes were not 18 defective, the Court does not find his testimony credible. Mr. Balano testified that 19 the only problem he recalled with the wipes was that “the courier had tipped a pallet 20 over,” and that when his team inspected the wipes that were returned to Luca’s Dog 21 Food, “they were all perfect.” (Trial Day 3 at 8-9.) The assertion that “all” of the 22 wipes were “perfect” is not credible in light of Mr. Kraft and Mr. Moscato’s 23 testimony and contemporaneous emails, including photographs. Moreover, unlike 24 those witnesses, Mr. Balano is not a disinterested party to these proceedings. 25 Defendants have filed a lawsuit against Mr. Balano in the U.S. District Court for 26 the Western District of Missouri for claims arising out of this same transaction. 27 (Trial Day 3 at 17 [Balano’s trial testimony]; see also Dkt. 28 [order denying 28 Defendants’ motion to transfer this action to Missouri]); THH, LLC, et al. v. MJB 19 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 20 of 35 Page ID #:1364

1 Worldwide, LLC, et al., No. 4:22-cv-00017-GAF (W.D. Mo. Jan. 12, 2022) (date 2 complaint filed).6 Mr. Balano therefore has a financial motive to assert that the 3 wipes were not defective. 4 Overall, Defendants have not rebutted the testimony by Mr. Gastwirth and 5 Mr. Kraft that Plaintiff was unable to fulfill any customer orders from the wipes 6 that Defendant THH sold to Plaintiff. (Trial Day 2 at 21, 72-73, 109-10.) Through 7 the credible testimony of Mr. Kraft, Plaintiff has established more probably than 8 not that the “vast majority” of the wipes were not fit for ordinary use, such that 9 Defendant THH violated the implied warranty of merchantability. 10 6. Plaintiff Was Damaged as a Result of the Breach. 11 a. Plaintiff did not fail to mitigate its damages. 12 Defendants argue, “While the Plaintiff has introduced some evidence of 13 damaged product, there has been no clear demonstrable evidence of how much of 14 the product was unacceptable, [and] what efforts, if any, Plaintiff took to mitigate 15 its damages….” (Defs. Closing Br. at 24.) Defendants further argue that Plaintiff 16 “had a duty to mitigate, but when offered replacement goods, [Plaintiff] didn’t even 17 both to inspect or try and mitigate their damages.” (Id. at 10.)7 18 Defendants’ argument seems to be that, once J.M. Field observed the initial 19 problems with some containers of wipes, Plaintiff should have directed J.M. Field 20 to open and inspect every container to determine exactly how many were usable. In 21 support of their mitigation argument, Defendants cite the following language from 22 Agam v. Gavra, 236 Cal. App. 4th 91 (2015): 23 The doctrine of mitigation of damages holds that “[a] plaintiff who 24 suffers damage as a result of ... a breach of contract ... has a duty to 25

26 6 As of the date of this order, the Missouri case remains pending. See THH, No. 4:22-cv- 00017-GAF, Dkt. 16 (April 2022 scheduling order setting trial for June 2023). 27 7 Plaintiff’s closing brief does not discuss this issue. 28 20 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 21 of 35 Page ID #:1365

1 take reasonable steps to mitigate those damages and will not be able 2 to recover for any losses which could have been thus avoided.’ “ … 3 Under the doctrine, “[a] plaintiff may not recover for damages 4 avoidable through ordinary care and reasonable exertion.” … 5 However, “[t]he duty to mitigate damages does not require an injured 6 party to do what is unreasonable or impracticable.” 7 Id. at 111 (emphasis added; citations omitted). 8 In the present case, inspecting every container of wipes would have been 9 unreasonable and impracticable. Mr. Kraft’s testimony indicates that J.M. Field did 10 inspect many of the wipes, and Mr. Gastwirth testified that he did not have J.M. 11 Field inventory all of them because J.M. Field would have charged Plaintiff $40 per 12 hour to do so. (Trial Day 1 at 46-48.) Incurring these additional expenses to 13 inspect every single container of wipes actually would have increased Plaintiff’s 14 potential damages. See Cal. Com. Code § 2715(1) (“Incidental damages resulting 15 from the seller’s breach include expenses reasonably incurred in inspection … of 16 goods rightfully rejected….”); id. at § 2513(2) (“Expenses of inspection must be 17 borne by the buyer but may be recovered from the seller if the goods do not 18 conform and are rejected.”); see also Unif. Com. Code § 2513 (Buyer’s Right to 19 Inspection of Goods, Comment 4, “Expenses of an inspection made to satisfy the 20 buyer of the seller’s performance must be assumed by the buyer in the first 21 instance. … Where the buyer would normally bear the expenses of the inspection 22 but the goods are rightly rejected because of what the inspection reveals, 23 demonstrable and reasonable costs of the inspection are part of his incidental 24 damage caused by the seller’s breach.”). Defendants have not shown that J.M. 25 Field’s inspection of the wipes on Plaintiff’s behalf was commercially 26 unreasonable, or that Plaintiff unreasonably rejected the wipes. See Cal. Com. 27 Code § 2513(1) (“the buyer has a right before payment or acceptance to inspect [the 28 goods] at any reasonable place and time and in any reasonable manner”); 4 Cal. 21 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 22 of 35 Page ID #:1366

1 Transactions Forms--Bus. Transactions § 24:354 (“[I]t is not necessary that the 2 buyer select the most appropriate time, place, or manner to inspect or that the 3 selection be the customary one in the trade or locality. Any reasonable time, place, 4 or manner is available to the buyer and the reasonableness will be determined by 5 trade usages, past practices between the parties and the other circumstances of the 6 case.”) 7 In sum, Defendants have not shown that Plaintiff failed to mitigate its 8 damages, such that it should be barred from recovering on its claims. 9 b. Plaintiff is entitled to damages for the $42,568 purchase price 10 and the $7,000 it paid for replacement goods. 11 As discussed above, where the seller has breached the implied warranty of 12 merchantability and the buyer has rightfully rejected or justifiably revoked 13 acceptance of the goods, the buyer may recover the purchase price, cover damages, 14 and incidental and consequential damages. See Simgel Co., 55 Cal. App. 5th at 15 315-16; Cal. Com. Code §§ 2711, 2712, 2715. “A buyer who has accepted goods 16 may revoke acceptance of a commercial unit ‘whose nonconformity substantially 17 impairs its value to him.’” Simgel Co., 55 Cal. App. at 316 (quoting Cal. Com. 18 Code § 2608(1)). Here, the Court finds, Plaintiff justifiably revoked its prior 19 acceptance of the wipes once the problems were discovered. Mr. Gastwirth 20 testified that, when J.M. Field first discovered the problems, he and Mr. Zielomski 21 initially discussed whether and when replacement wipes could be provided. (Trial 22 Day 1 at 37-55; Trial Ex. 16, 19-23 [emails].) Mr. Gastwirth also spoke with Mr. 23 Balano of Luca’s Dog Food, the manufacturer of the wipes, who “indicated that he 24 had a cash flow problem that would potentially prohibit him from fixing the issue.” 25 (Trial Day 1 at 66.) Eventually, Mr. Gastwirth testified, “We got to the point where 26 we could not in our opinion in good faith use the disinfectant wipes that we had to 27 fulfill the orders. I let Mr. Zielomski know and he could come pick it [sic] up and 28 refund our money … for what we had paid for the wipes.” (Id. at 75.) By June 23, 22 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 23 of 35 Page ID #:1367

1 2020, emails show the parties were making arrangements for Defendants or Luca’s 2 Dog Food to pick up the wipes. (See, e.g., Trial Ex. 33, 34.) 3 Defendants nevertheless argue that Plaintiff cannot recover damages because, 4 “While the Plaintiff has introduced some evidence of damaged product, there has 5 been no clear demonstrable evidence of … exactly what damages the Plaintiff 6 suffered in the present or future.” (Dkt. 82 at 24.) They cite Cal. Civ. Code section 7 3301, which provides, “No damages can be recovered for a breach of contract 8 which are not clearly ascertainable in both their nature and origin.” 9 Plaintiff has shown damages in the form of the purchase price of $42,568. 10 (See Trial Ex. 1 [purchase order between Defendant THH and Plaintiff]; Trial Ex. 3 11 [invoice from Defendant THH to Plaintiff]; Stip. Facts / Dkt. 62 at 2 [“Plaintiff paid 12 a total of $42,568 for the 10,016 containers.”].) 13 Plaintiff is also entitled to recover the $7,000 it paid its customers to obtain 14 replacement goods. (Id. at 3 [“Because the disinfectant wipes purchased by 15 Plaintiff for its customers did not meet specifications and were moldy and unusable, 16 Plaintiff was forced to pay its customers an additional $7,000, which was the 17 additional amount its customers (through Safeguard) had to pay in order to 18 purchase quality disinfectant wipes.”]; Trial Day 1 at 73 [Gastwirth’s testimony that 19 Plaintiff paid Safeguard “an extra $7,000 to cover the cost differential” for the new 20 wipes]); see Canesco, 570 F. Supp. 3d at 892 (“Under Section 2712 of the 21 Commercial Code, Plaintiff would have, in addition to his right to recover the 22 purchase price, the right to ‘cover,’ or purchase substitute goods without 23 unreasonable delay and recover as damages the difference between the cost of 24 cover and the contract price plus any incidental or consequential damages minus 25 expenses saved in consequence of the breach.”); Cal. Civ. Code § 1794(b)(1); Cal. 26 Com. Code §§ 2711(1), 2712(2). 27 To the extent Plaintiff is seeking other types of damages, however, those 28 have not been proven with sufficient particularity, as discussed further below. 23 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 24 of 35 Page ID #:1368

1 c. Plaintiff did not prove the amount of expenses it incurred in 2 inspecting the wipes. 3 Plaintiff argues it is entitled to “reimbursement of its expenses incurred in 4 inspecting the products (at $40 per hour)….” (Pl. Closing Br. at 15.) Mr. 5 Gastwirth did testify that this was J.M. Field’s hourly rate for “stuff outside of 6 normal just warehousing.” (Trial Day 1 at 46-47.) But Plaintiff did not present any 7 evidence about how many hours J.M. Field expended or charged to Plaintiff. (See 8 id. at 47-48 [Gastwirth’s testimony that he did not have J.M. Field “go through the 9 product” because he was trying to avoid these extra costs]; id. at 49 [Gastwirth’s 10 testimony that he had J.M. Field do “a physical count of how many [wipes] were 11 actually on hand at that time,” but he did not state how many hours J.M. Field 12 expended or how much Plaintiff was billed or paid].) Accordingly, Plaintiff has not 13 introduced any evidence quantifying the amount of these damages. 14 d. Plaintiff’s lost profits damages are too speculative. 15 Plaintiff seeks “$698,645 (or some portion thereof) in damages for its lost 16 profits” as “special damages.” (Pl. Closing Br. at 15.) Defendants argue, “The only 17 exhibit Plaintiff introduced” in support of its lost profits argument “was Exhibit 46, 18 which comprises of a number of alleged claims of profits allegedly made by some 19 other companies for unknown activities…. Any damages to which the Plaintiff 20 testified [sic] were purely speculative.” (Defs. Closing Br. at 20.) 21 A buyer may recover lost profits under the California Commercial Code 22 under some circumstances. See Cal. Com. Code § 2715 (buyer’s incidental and 23 consequential damages); R.B. Matthews, Inc. v. Transamerica Transp. Servs., Inc., 24 945 F.2d 269, 274-75 (9th Cir. 1991) (“Consequential damages are those damages 25 which did not arise within the scope of [the buyer’s] transactions with [the seller], 26 but which stemmed in a foreseeable way from losses incurred by [the buyer] as a 27 result of [the seller’s] breach. … The profits that [the buyer] lost from its resale of 28 the refurbished trailers are one form of consequential damages.”). Lost profits may 24 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 25 of 35 Page ID #:1369

1 only “be recovered if the evidence shows with reasonable certainty both their 2 occurrence and the extent thereof.” Gerwin v. Se. Cal. Assn. of Seventh Day 3 Adventists, 14 Cal. App. 3d 209, 221 (1971) (capitalization removed). “[I]f a 4 business is new,” it may be “improper to award damage for loss of profits because 5 absence of income and expense experience renders anticipated profits too 6 speculative to meet the legal standard of reasonable certainty necessary to support 7 an award of such damage.” Id.; see also Sargon Enterprises, Inc. v. Univ. of S. 8 California, 55 Cal. 4th 747, 773-74 (2012) (“[T]he general principle [is] that 9 damages for the loss of prospective profits are recoverable where the evidence 10 makes reasonably certain their occurrence and extent.”) (citation omitted). 11 The only evidence Plaintiff offered in support of its claim to lost profits is the 12 testimony of Mr. Gastwirth and Exhibit 46, a chart Mr. Gastwirth prepared, which 13 he described as “a 12-month projection of revenue generated from the three main 14 channels that [Plaintiff] had potential distribution and sales set up for … the wipes.” 15 (Trial Day 1 at 85.) These three channels were KB Home, Haas Automation, and 16 Amazon. Per the chart, Mr. Gastwirth estimated that orders from KB Home and 17 Haas Automation would have more than tripled in June 2020 and risen steadily by 18 500 units or more for each of the following months through May 2021. (Trial Ex. 19 46.) Mr. Gastwirth testified that the estimated “number of units sold were derived 20 … as a function of speaking with Ira [Fineman8] at Safeguard about what he was 21 ultimately able to move in quantities and supplies available at the time and what 22 [Plaintiff] could have done if the availability of wipes to meet these units was [sic] 23 available….” (Id. at 87.) Regarding Amazon, Mr. Gastwirth testified that Plaintiff 24 was “putting together a package” to sell on Amazon, which was “a kit consisting of 25

26 8 Mr. Gastwirth testified that Ira Fineman was “a rep that goes out and solicits business on [Safeguard’s] behalf and has his own clients that he brings in and gets paid on … commissions, I 27 guess…. He was also working with [Mr. Gastwirth] at [Plaintiff] as the salesperson.” (Trial Day 1 at 79.) 28 25 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 26 of 35 Page ID #:1370

1 a box of masks, two bottles of sanitizer, and a thing of disinfectant wipes….” (Trial 2 Day 1 at 78, 86.) It appears that Plaintiff never actually sold any of these kits on 3 Amazon. (See id. at 56 [Gastwirth testimony that Plaintiff was “working to sell on 4 Amazon”].) 5 Mr. Gastwirth testified that Plaintiff “was originally formed to be in the 6 entertainment business,” specifically “concert promotions.” (Id. at 17.) In 2020, in 7 response to the COVID-19 pandemic, Plaintiff switched to selling hand sanitizer 8 and PPE. (Id.) “In 2020 the only business [Plaintiff] did was PPE business.” (Id. 9 at 16.) Prior to the sales at issue in this lawsuit, Plaintiff had procured hand 10 sanitizer and masks for Safeguard. (Id. at 56-57.) Safeguard then “approached 11 [Plaintiff] and asked if [Plaintiff] could get … disinfectant wipes” for Haas and KB 12 Home. (Id. at 56.) Haas and KB Home had never ordered any products from 13 Plaintiff before. (See Stip. Facts / Dkt. 62 at 2 [“this was a test order for Haas 14 Automation, Inc. and KB Home”].) 15 Given Plaintiff’s new entry into this line of business in 2020, and the lack of 16 an existing sales relationship with either Haas or KB Home, Plaintiff’s estimated 17 lost profits are too speculative to support an award of damages.9 18 e. Prejudgment interest. 19 Plaintiff argues, “Since the parties’ contract (the Purchase Order) did not 20 provide a legal rate of interest, [Plaintiff] is also entitled to interest at the rate of 10 21 percent per year following Defendants’ breach” under California Civil Code section 22 3289. (Pl. Closing Br. at 15.) 23 Section 3289 provides that, if a party is entitled to prejudgment interest on a 24 breach of contract claim, and the contract “does not stipulate a legal rate of interest, 25 9 Defendants object to Exhibit 46 and Mr. Gastwirth’s lost profits testimony on multiple 26 grounds, e.g., that it was improper expert testimony and hearsay, and that Plaintiff did not provide Exhibit 46 to Defendants during discovery. (Defs. Closing Br. at 19.) The Court denies these 27 objections as moot because, even if the evidence were admitted, it is insufficient to support an award of lost profits. 28 26 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 27 of 35 Page ID #:1371

1 the obligation shall bear interest at a rate of 10 percent per annum after a breach.” 2 Cal. Civ. Code § 3289(b). “[U]nder California Civil Code § 3287, prejudgment 3 interest is recoverable in any action in which damages are certain or ‘capable of 4 being made certain by calculation’ and the right to recover such damages is vested 5 in the plaintiff on a particular day.” Carlson Produce, LLC v. Clapper, No. 18-cv- 6 07195, 2020 WL 533004 at *7, 2020 U.S. Dist. LEXIS 17936 at *21 (N.D. Cal. 7 Feb. 3, 2020). “Damages are deemed certain or capable of being made certain 8 within the provisions of subdivision (a) of section 3287 where there is essentially 9 no dispute between the parties concerning the basis of computation of damages if 10 any are recoverable but where their dispute centers on the issue of liability giving 11 rise to damage.” Duale v. Mercedes-Benz USA, LLC, 148 Cal. App. 4th 718, 729 12 (2007) (citation omitted). “In other words, prejudgment interest is awarded only 13 when the sum is liquidated within the meaning of the statute.” Id. at 728. 14 “[T]he court has no discretion, but must award prejudgment interest upon 15 request, from the first day there exists both a breach and a liquidated claim.” 16 Warren v. Kia Motors Am., Inc., 30 Cal. App. 5th 24, 43 (2018) (citation omitted). 17 However, several district courts have refused to award prejudgment interest where 18 the plaintiff does not provide sufficient information to calculate the award. See, 19 e.g., Andrade v. Arby’s Rest. Grp., Inc., 225 F. Supp. 3d 1115, 1141 (N.D. Cal. 20 2016) (“[T]he Court received no documentation suggesting how it might calculate 21 the interest due to Andrade for these unpaid wages. The Court declines to take on 22 Andrade’s burden.”); Carlson, 2020 WL 533004 at *8, 2020 U.S. Dist. LEXIS 23 17936 at *21-22 (declining to award prejudgment interest where the plaintiff’s 24 briefing calculated it on a monthly rather than yearly bases and did “not explain 25 why it relies on a monthly calculation, or how it believes this calculation is 26 mathematically equivalent to the rate specified in section 3289(b)”). 27 Here, the entirety of Plaintiff’s argument about prejudgment interest is set 28 forth above. Plaintiff has not stated what amount of prejudgment interest it is 27 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 28 of 35 Page ID #:1372

1 seeking, suggested the date when the interest began accruing, or otherwise 2 explained how the Court should calculate such interest. See Andrade, 225 F. Supp. 3 3d at 1141. Moreover, Plaintiff has not explained why and when it believes the 4 amount of damages in this case became undisputed. See Duale, 148 Cal. App. 4th 5 at 729. Indeed, Plaintiff and Defendants disagreed over the amount of damages up 6 to and through trial, with Defendants claiming that some of the wipes were usable 7 and therefore not compensable. The Court therefore declines to award prejudgment 8 interest. 9 B. Breach of the Implied Covenant of Good Faith and Fair Dealing. 10 1. Applicable Law. 11 “Every contract imposes on each party a duty of good faith and fair dealing 12 in each performance and in its enforcement.” Careau & Co. v. Sec. Pac. Bus. 13 Credit, Inc., 222 Cal. App. 3d 1371, 1393 (1990) (quoting Rest. 2d Contracts, 14 § 205). “Simply stated, the burden imposed is that neither party will do anything 15 which will injure the right of the other to receive the benefits of the agreement.” Id. 16 (citations and quotation marks omitted). “In essence, the covenant is implied as a 17 supplement to the express contractual covenants, to prevent a contracting party 18 from engaging in conduct which (while not technically transgressing the express 19 covenants) frustrates the other party’s rights to the benefits of the contract.” Racine 20 & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026, 1031-32 21 (1992), reh’g denied & opinion modified (Jan. 6, 1993), as modified on denial of 22 reh’g (Mar. 25, 1993). (quoting Love v. Fire Ins. Exchange, 221 Cal. App. 3d 23 1136, 1153 (1990)). 24 If the allegations supporting a claim for breach of the implied covenant of 25 good faith and fair dealing “do not go beyond the statement of a mere contract 26 breach and, relying on the same alleged acts, simply seek the same damages or 27 other relief already claimed in a companion contract cause of action, they may be 28 disregarded as superfluous as no additional claim is actually stated.” Careau, 222 28 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 29 of 35 Page ID #:1373

1 Cal. App. at 1395. “Thus, absent those limited cases where a breach of a 2 consensual contract term is not claimed or alleged, the only justification for 3 asserting a separate cause of action for breach of the implied covenant is to obtain a 4 tort recovery.” Id. 5 2. Plaintiff Has Not Shown Entitlement to Any Additional Relief. 6 Defendants argue that this claim is “superfluous” because it relies on the 7 same actions as Plaintiff’s breach of contract claim. (Defs. Closing Br. at 9-10, 8 citing Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 3d 9 1371, 1395 (1990)). However, Plaintiff bases this claim on actions Defendants 10 took after the breach of selling unusable wipes, arguing that Defendants: 11 (a) ”refus[ed] to do anything to rectify the situation and provide [Plaintiff] with 12 usable wipes, once [Defendant] THH discovered that no additional wipes would be 13 ordered”; (b) refused to refund Plaintiff’s money; (c) offered to test the wipes, but 14 either never did so or never shared the results of the testing with Plaintiff; and 15 (d) ”claim[ed], for the first time after the breach … that [Defendant] THH was in 16 fact not the manufacturer of the disinfectant wipes and was therefore unable to 17 provide usable wipes….” (Pl.’s Closing Br. at 7-8.) 18 Nevertheless, Plaintiffs have neither claimed nor shown that they are entitled 19 to any relief other than the damages that they are already entitled to recover on the 20 claims for breach of contract and breach of the implied warranty of merchantability. 21 Accordingly, the Court declines to decide whether a party who breaches a contract 22 by selling rejectable goods is required to act in good faith to attempt to rectify that 23 breach. 24 C. Breach of an Express Warranty. 25 1. Applicable Law. 26 “Any affirmation of fact or promise made by the seller to the buyer which 27 relates to the goods and becomes part of the basis of the bargain creates an express 28 warranty that the goods shall conform to the affirmation or promise.” Cal. Com. 29 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 30 of 35 Page ID #:1374

1 Code § 2313(1)(a). Likewise, “Any description of the goods which is made part of 2 the basis of the bargain creates an express warranty that the goods shall conform to 3 the description.” Cal. Com. Code § 2313(1)(b). 4 “It is not necessary to the creation of an express warranty that the seller use 5 formal words such as ‘warrant’ or ‘guarantee’ or that he have a specific intention to 6 make a warranty, but an affirmation merely of the value of the goods or a statement 7 purporting to be merely the seller’s opinion or commendation of the goods does not 8 create a warranty.” Cal. Com. Code § 2313(2). 9 2. Plaintiff Has Not Shown that Defendants Made Any Express 10 Warranty. 11 Defendant argues that “there was no express warranty, nor was there a 12 product specification or description other tha[n] the designation of sanitary wipes.” 13 (Defs. Closing Br. at 11.) Plaintiff does not explain what specific oral or written 14 statement by Defendant Zielomski (or any other person) forms the basis of its 15 express warranty claim. Citing the parties’ stipulated facts, Plaintiff argues, 16 “Plaintiff negotiated with Defendants for the purchase of disinfectant wipes for 17 Plaintiff’s customers. … During the course of the negotiations, Defendants affirmed 18 the fact that the disinfectant wipes were of good quality and sufficient for use by 19 Plaintiff’s customers.” (Pl. Closing Br. at 8.) The only stipulated facts relevant to 20 Plaintiff’s assertions are that Plaintiff “negotiat[ed] with Defendant Rick Zielomski 21 … for the purchase of disinfectant wipes”; that Defendant Zielomski’s name was on 22 an SDS “stating that the product was safe”; and “the disinfectant wipes … did not 23 meet specifications and were moldy and unusable….” (Stip. Facts / Dkt. 62 at 2-3.) 24 The allegation that the wipes were “unusable” for their intended purpose can 25 support a claim for the breach of the implied warranty of merchantability, as 26 discussed above. See Viggiano v. Hansen Nat. Corp., 944 F. Supp. 2d 877, 896 27 (C.D. Cal. 2013) (“A “defendant[‘s] liability for an implied warranty does not 28 depend upon any specific conduct or promise on [its] part, but instead turns upon 30 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 31 of 35 Page ID #:1375

1 whether the[ ] product is merchantable under the code.”) (quoting Hauter v. 2 Zogarts, 14 Cal. 3d 104, 117 (1975)). An express warranty, in contrast, requires 3 proof of a specific “affirmation of fact or promise or … description of its goods….” 4 Id. at 893. To the extent Plaintiff is claiming that the wipes did not “disinfect[]” as 5 intended, or that they were not “safe,” this overlaps with its claim for breach of the 6 implied warranty of merchantability. Because Plaintiff does not point to any other 7 statements Defendant Zielomski or others made about the wipes’ “specifications,” 8 this claim fails. 9 D. Negligent Interference with Prospective Economic Relations. 10 In support of this claim, Plaintiff argues that Defendants knew Plaintiff’s 11 relationship with Safeguard “would be disrupted if [Defendants] failed to act with 12 reasonable care in providing usable disinfectant wipes,” and Defendants disrupted 13 this relationship “by providing wipes that were moldy and unusable.” (Pl. Closing 14 Br. at 13-14.) Defendants argue that this claim fails because it is “between 15 contracting parties” and “the California Commercial Code and the UCC … provide 16 adequate protection.” (Defs. Closing Br. at 18; see also id. at 20 [arguing “the 17 injury [was] part of the plaintiff’s ordinary business risk”].) 18 1. Applicable Law. 19 A plaintiff asserting a claim for negligent interference with prospective 20 economic relations “must show that the defendant knowingly interfered with an 21 economic relationship between the plaintiff and some third party, [which carries] 22 the probability of future economic benefit to the plaintiff.” Ixchel Pharma, LLC v. 23 Biogen, Inc., 9 Cal. 5th 1130, 1141 (2020) (citations and quotation marks omitted). 24 “Where the suit is between a non-performing seller and an aggrieved buyer 25 and the injury consists of damage to the goods themselves and the costs of repair of 26 such damage or a loss of profits that the deal had been expected to yield to the 27 buyer, it” is “sensible to limit the buyer’s rights to those provided by the Uniform 28 Commercial Code....” S.M. Wilson & Co. v. Smith Int’l, Inc., 587 F.2d 1363, 1376 31 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 32 of 35 Page ID #:1376

1 (9th Cir. 1978). “California law achieves this result by limiting the type of losses 2 recoverable under an action in negligence. Economic losses are not recoverable 3 under negligence.” Id. (citing Seely v. White Motor Co., 63 Cal. 2d 9, 18 (1965)). 4 This principle is often referred to as the “economic loss rule,” which 5 “generally bars tort claims based on contract breaches, ‘thereby limiting contracting 6 parties to contract damages.’” UMG Recordings, Inc. v. Glob. Eagle Ent., Inc., 117 7 F. Supp. 3d 1092, 1103 (C.D. Cal. 2015) (citation omitted); see also Restatement 8 (Third) of Torts: Liab. for Econ. Harm § 3 (2020), Comment b. (“[I]f plaintiff and 9 defendant have a valid contract, monetary harm caused by the defendant’s negligent 10 performance of it is generally not actionable in tort. … When a party’s negligence 11 in performing or negotiating a contract causes economic loss to the counterparty, 12 remedies are determined by other bodies of law: principally the law of 13 contract….”). “A breach of contract is tortious only when some independent duty 14 arising from tort law is violated.” UMG Recordings, 117 F. Supp. 3d at 1103. 15 Additionally, “a plaintiff seeking to recover damages for interference with 16 prospective economic advantage must plead as an element of the claim that the 17 defendant’s conduct was ‘wrongful by some legal measure other than the fact of 18 interference itself.’” Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130, 1142 19 (2020) (quoting Della Penna v. Toyota Motor Sales, USA, Inc., 11 Cal. 4th 376, 20 393 (1995)). “[A]n act is independently wrongful if it is unlawful, that is, if it is 21 proscribed by some constitutional, statutory, regulatory, common law, or other 22 determinable legal standard.” Id. (quoting Korea Supply Co. v. Lockheed Martin 23 Corp., 29 Cal. 4th 1134, 1159 (2003)). 24 2. Plaintiff Has Not Shown It Is Entitled to Recover on This Claim. 25 The only behavior Plaintiff points to in support of this claim is Defendants’ 26 failure to deliver usable disinfectant wipes. (Pl.’s Closing Br. at 12-14.) This is the 27 same behavior Plaintiff relies on to support its claims for breach of contract and 28 breach of the implied warranty of merchantability. (Id. at 5-6, 9-10.) As discussed 32 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 33 of 35 Page ID #:1377

1 above, Plaintiff already has a remedy under these theories. Recovery in tort for the 2 same behavior is therefore barred by the economic loss rule. See UMG Recordings, 3 117 F. Supp. 3d at 1103. Moreover, Plaintiff does not point to any independent 4 wrongful act to support this claim. See Ixchel Pharma, 9 Cal. 5th at 1142. 5 Accordingly, Plaintiff has not shown that it is entitled to relief on this claim. 6 E. Unfair Competition Law (“UCL”). 7 Plaintiff argues that Defendants committed “fraud” because they “knew that 8 the SDS provided was for the wrong item” and “intended for [Plaintiff] to rely on 9 the SDS….” (Pl. Closing Br. at 11.) Plaintiff further argues that Defendants 10 “engaged in unfair and fraudulent practices by: 1) pretending that they were in fact 11 the manufacturers of the disinfectant wipes, up until the point that that wipes were 12 found to be moldy; 2) using a fraudulent [SDS] while essentially claiming that it 13 was industry practice to do so … ; 3) failing to rectify the fact that unusable, moldy 14 wipes were provided to [Plaintiff] (and therefore, it’s [sic] customers).” (Id. at 11- 15 12.) Plaintiff seeks “restitution and injunctive relief” in the form of a “full refund.” 16 (Id. at 12.) Defendants respond, “There has been absolutely no evidence 17 whatsoever … of any ‘fraudulent business act or practice’” or “that any Defendant 18 committed any act that was ‘unfair.’” (Defs. Closing Br. at 14.) 19 1. Applicable Law. 20 “The purpose of the UCL is to protect both consumers and competitors by 21 promoting fair competition in commercial markets for goods and services.” Paulus 22 v. Bob Lynch Ford, Inc., 139 Cal. App. 4th 659, 676 (2006) (citation and quotation 23 marks omitted). Unfair competition is defined, in relevant part, as “any unlawful, 24 unfair or fraudulent business act or practice….” Cal. Bus. & Prof. Code § 17200. 25 “Pursuant to Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), and 26 Guaranty Trust Co. of New York v. York, 326 U.S. 99 (1945), we hold that federal 27 courts must apply equitable principles derived from federal common law to claims 28 for equitable restitution under California’s Unfair Competition Law (“UCL”)….” 33 Case 8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 34 of 35 Page ID #:1378

1 Sonner v. Premier Nutrition Corp., 971 F.3d 834, 837 (9th Cir. 2020) (parallel 2 citations omitted). “Under these principles, [a plaintiff] must establish that [it] 3 lacks an adequate remedy at law before securing equitable restitution for past harm 4 under the UCL….” Id. at 844. 5 “In order to entertain a request for equitable relief, a district court must have 6 equitable jurisdiction, which can only exist under federal common law if the 7 plaintiff has no adequate legal remedy.” Guzman v. Polaris Indus. Inc., 49 F.4th 8 1308, 1313 (9th Cir. 2022) (citing Sonner, 971 F.3d at 843-44). Where a federal 9 court lacks equitable jurisdiction over a UCL claim, because the plaintiff has an 10 adequate remedy at law, the court can “not … make a merits determination as to 11 liability” and should “dismiss[] [the] UCL claim without prejudice to refiling the 12 same claim in state court.” Id. at 1314 (reversing summary judgment for 13 defendants and directing the district court to enter a dismissal without prejudice for 14 lack of equitable jurisdiction). 15 2. Analysis. 16 Plaintiff has an adequate remedy at law, namely the claims for breach of 17 contract and breach of the implied warranty of merchantability discussed above. 18 See, e.g., Williams v. Apple, Inc., No. 19-cv-04700, 2020 WL 6743911 at *9, 2020 19 U.S. Dist. LEXIS 215046 at *24-25 (N.D. Cal. Nov. 17, 2020) (dismissing UCL 20 claim that was duplicative of claim for breach of contract for money damages). In 21 those claims, Plaintiff seeks the same “full refund” as monetary damages that it 22 seeks as equitable relief under the UCL. See Sonner, 971 F.3d at 844 (finding the 23 plaintiff had an adequate remedy at law where she “conceded that she seeks the 24 same sum in equitable restitution as ‘a full refund of the purchase price’ … as she 25 requested in damages to compensate her for the same past harm,” and she “fail[ed] 26 to explain how the same amount of money for the exact same harm is inadequate or 27 incomplete”). 28 Accordingly, this claim should be dismissed without prejudice for lack of 34 Case,8:21-cv-01150-KES Document 84 Filed 11/15/22 Page 35of35 Page ID #:1379

1 | equitable jurisdiction. 2 IV. 3 CONCLUSION 4 Based on the foregoing, IT IS HEREBY ORDERED that Judgment shall be 5 || entered : 6 1. for Defendant Zielomski on all claims; 7 2. for Plaintiff and against Defendant THH in the amount of $49,568.00 8 on the claims for breach of contract and breach of the implied warranty 9 of merchantability; 10 3. for Defendant THH and against Plaintiff on the claims for breach of 1] express warranty, breach of the implied covenant of good faith and fair 12 dealing, and negligent interference with prospective economic 13 relations; and 14 4. dismissing the UCL claim without prejudice for lack of equitable 15 jurisdiction. 16 17 | DATED: November 15, 2022 "Toran &. cot? 18 KAREN E. SCOTT 19 UNITED STATES MAGISTRATE JUDGE

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