Santa Barbara Smokehouse, Inc. v. Aquachile, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 3, 2023
• Docket: 22-55676
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 3 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SANTA BARBARA SMOKEHOUSE, INC., No. 22-55676 a California corporation; DHBRANDS LIMITED, a Cyprus limited liability D.C. No. company, 2:19-cv-10733-RSWL-JEM

Plaintiffs-Appellants, MEMORANDUM* v.

AQUACHILE, INC., a Florida corporation; AGROSUPER S.A., a Chile corporation; EMPRESAS AQUACHILE S.A., a Chile corporation,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Ronald S.W. Lew, District Judge, Presiding

Argued and Submitted October 16, 2023 Pasadena, California

Before: CLIFTON and SANCHEZ, Circuit Judges, and KORMAN,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Edward R. Korman, United States District Judge for the Eastern District of New York, sitting by designation. Santa Barbara Smokehouse, Inc. (“Smokehouse”) sued AquaChile, Inc. for

breach of a purported three-year supply agreement dated July 3, 2017 (the “2017

Agreement”). We have jurisdiction pursuant to 28 U.S.C. § 1291. We review a

grant of summary judgment de novo. Albino v. Baca, 747 F.3d 1162, 1168 (9th

Cir. 2014). We affirm.1

1. The district court properly held that the 2017 Agreement is

unenforceable under the statute of frauds because it was not signed by AquaChile.

See CAL. CIV. CODE § 1624(a). Plaintiffs argue that a signed 2019 agreement (the

“2019 Agreement”) references an agreement with the same date as the 2017

Agreement, and the two should be read together as one writing under the

memorandum exception to the statute of frauds. See Sterling v. Taylor, 152 P.3d

420, 425 (Cal. 2007). While California law allows for two writings to be read as

one memorandum, the 2017 Agreement and the 2019 Agreement were not

sufficiently linked on their faces that “they may fairly be said to constitute one

paper.” Searles v. Gonzalez, 216 P. 1003, 1004 (Cal. 1923). The single reference in

the 2019 Agreement to an agreement with the same date as the unsigned 2017

Agreement is not enough as a matter of law to satisfy the statute of frauds under

the memorandum exception. See id. at 1005 (“[A]s practical men, we look at the

1 To the extent this disposition references information from sealed documents, the parties acknowledged at oral argument that none of the contents are still confidential.

2 22-55676 writings and see, inhering in them, evidence which entirely satisfies the mind that

they all relate to one general transaction, there is no reason why they should not be

so considered.”).

2. The district court properly held that the doctrine of part performance

did not bar Defendants from asserting the statute of frauds. The doctrine of part

performance “allows specific enforcement of a contract that lacks the requisite

writing.” In re Marriage of Benson, 116 P.3d 1152, 1159 (Cal. 2005). That

AquaChile supplied salmon consistent with the 2017 Agreement did not “confirm[]

that a bargain was in fact reached” given that AquaChile previously supplied

salmon to Smokehouse without a long-term supply agreement in place. See id. at

1160.

3. Summary judgment was appropriate as to Plaintiffs’ fraudulent

concealment claims. To maintain a fraudulent concealment claim, “the defendant

must have been under a [legal] duty to disclose the [material] fact to the plaintiff.”

Bigler-Engler v. Breg, Inc., 7 Cal. App. 5th 276, 310–11 (Cal. Ct. App. 2017).

Since the 2017 Agreement was unenforceable under the statute of frauds,

Defendants had no legal duty under that agreement to disclose their plans to

discontinue supply. See CAL. CIV. CODE § 1624(a). Plaintiffs’ reliance on Huy

Fong Foods, Inc. v. Underwood Ranches, LP, 66 Cal. App. 5th 1112 (Cal. Ct. App.

2021) is unavailing. Plaintiffs’ own complaint details a contentious relationship

3 22-55676 with Defendants that was completely unlike the “relationship of trust and

confidence” in Huy Fong that gave rise to a legal duty to disclose material facts.

See id. at 1122 (“Where there exists a relationship of trust and confidence, it is the

duty of one in whom the confidence is reposed to make a full disclosure of all

material facts within his knowledge relating to the transaction in question and any

concealment of a material fact is a fraud.”).

4. Summary judgment was appropriate with respect to Plaintiffs’

interference with prospective economic advantage claims. In California, “a

plaintiff seeking to recover damages for interference with prospective economic

advantage must plead and prove as part of its case-in-chief that the defendant’s

conduct was ‘wrongful by some legal measure other than the fact of interference

itself.’” Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 950 (Cal. 2003)

(quoting Della Penna v. Toyota Motor Sales, U.S.A., Inc., 902 P.2d 740, 751 (Cal.

1995)). Defendants’ conduct was not wrongful under the 2017 Agreement because

that agreement was unenforceable under the statute of frauds, and Plaintiffs do not

point to any other conduct “that [was] wrongful apart from the interference itself.”

See id.

5. The district court’s grant of summary judgment on Smokehouse’s

promissory estoppel claim was proper because Smokehouse had a “full and fair

opportunity to ventilate the issues involved in the motion.” In re Rothery, 143 F.3d

4 22-55676 546, 549 (9th Cir. 1998); see Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)

(“[D]istrict courts are widely acknowledged to possess the power to enter summary

judgments sua sponte, so long as the losing party was on notice that she had to

come forward with all of her evidence.”).

6. The district court properly granted summary judgment on

AquaChile’s counterclaim for breach of contract. Smokehouse does not dispute

that it failed to pay for $556,519.32 of salmon received from AquaChile.

Smokehouse claimed fraud as an affirmative defense, but fraud requires a showing

of “misrepresentation, knowledge of falsity, intent to induce reliance, justifiable

reliance, and resulting damage.” Odorizzi v. Bloomfield Sch. Dist., 246 Cal. App.

2d 123, 128 (Cal. Ct. App. 1966). Smokehouse failed to raise a triable issue as to

damages – the unpaid invoices do not reflect that Smokehouse was charged a $0.15

premium for washed salmon, and Smokehouse points to no other evidence that a

premium was charged.

AFFIRMED.

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