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Alex WACKER, an individual, Plaintiff, v. HAMMERKING PRODUCTIONS INC. d/b/a Ultra4 Racing, a California corporation, Defendant.
MEMORANDUM OPINION AND ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT [ECF No. 30] AND DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS [ECF No. 33]
Can legal shenanigans 1 propel an aggrieved off-road race car driver from fourteenth place to first place? Under the circumstances of this case, they can.
The Court resolves that question in the procedural context of two competing motions that rely on the same set of facts. The first is the motion of Plaintiff Alex Wacker for partial summary judgment.2 The second is the motion of Defendant Hammerking Productions Inc. for judgment on the pleadings.3 After considering the papers filed in support and in opposition,4 as well as the parties’ arguments at the hearing on the motions, the Court orders that Wacker's Summary Judgment Motion is GRANTED in part and DENIED in part, as set forth herein, and Hammerking's Rule 12(c) Motion is DENIED.
This lawsuit arises out of Hammerking's alleged failure to comply with its own rules that govern a series of off-road automobile races, beginning with the “King of Hammers” race and ending with the crowning of a National Champion. Alex Wacker, a driver who competed in the 2019 season, finished in fourteenth place overall, but, based upon the rules that Hammerking promulgated for its racing series, Wacker believes that he should be crowned National Champion.5 Wacker turns to this Court for relief.
Hammerking organizes the Ultra4 Racing Series. It holds its off-road races from February through October, in locations across the United States.6 Those races require drivers to use four-wheel-drive vehicles.7 According to the parties, the series always begins with the “King of the Hammers” race and ends in a National Championship.8 Hammerking also offers regional races categorized into an “East Coast” sub-series and a “West Coast” sub-series.9 There are a total of eight races in which drivers can earn points.10 At the end of the season, Hammerking declares champions of the East Coast and West Coast sub-series, as well as a National Champion—the “pinnacle achievement” of the Ultra4 Racing Series.11 The National, East Coast, and West Coast champions are determined by tallying points earned from a contestant's placement in various races.12 In short, the driver with the most points wins.
During the 2019 season, the governing rule book was the 2019 Ultra4 Racing Rulebook v. 4.4.2., published by Hammerking on December 1, 2018.13 Before the season began, Wacker read the rulebook and the Ultra Point Description on the Ultra4 Racing website.14 Wacker cites one rule in particular in support of his argument here, which appears under the heading “9.2 Event Participants” and the subheading “9.2.1 Registration.”15 That rule states:
1) An entrant number shall be assigned to the Driver of Record for the entire year. The Driver of Record must enter all points events to become a champion. The points stay with the Driver of Record and the entrant number for the entire year. Driver of Record must be a registered competitor in every event and must start or finish every event in a competing race vehicle bearing his/her assigned entrant number.16
In reliance on that rule, Wacker claims that he made the decision to compete in every race that season.17
Also germane to this dispute is a section of Hammerking's website, titled the Ultra4 Series Points Description.18 It provides in relevant part:
How champions are determined:
The East and West Coast Series Champions are determined by the driver with the most points from all 3 regional races in their respective series. A driver cannot combine East and West races for these Championships.
The Nitto National Champion is the [sic] determined by the driver with the most points from KOH, their top 3 regional races, and the National Championship. A driver can combine East and West races for this Championship.
Per the rulebook, a driver must compete in all respective races to be eligible for the championship.19
Of the 140 racers who competed during the 2019 season, only Wacker and one other driver competed in every race.20 Of those two drivers, Wacker earned more points.21 Shortly after he finished the national championship race on October 19, 2019,22 Wacker learned that he came in fourteenth place overall, despite his expectations that he would win the National Championship.23
Three days later, Wacker began to exchange text messages with Ultra4's Race Director, non-party JT Taylor. At first, the communications concerned Wacker's receipt of the wrong trophy.24 Then, on October 31, Wacker confronted Taylor specifically about Rule 126.96.36.199 Taylor responded:
We haven't followed that rule ever. Didn't even know it existed till [sic] it was recently brought up. It's getting changed. I wish I had seen it before. I'm sorry. I shoulda [sic] caught it.26
Taylor then escalated the issue to Hammerking's President and CEO, non-party David Cole.27 On November 15, Taylor texted the following message to Wacker:
Going off past precedent and the way the rule was intended, the championship stays as it is. I'm sorry if you interpreted it differently.28
Cole then began to communicate with Wacker.29 On December 2, Wacker texted Cole screenshots of Wacker's conversation with Taylor.30 Around that time, Cole and Wacker apparently spoke over the phone, and the conversation did not go well. Wacker alleges—and Cole admits—that Cole called Wacker a “f**king idiot” and told Wacker that his interpretation of the rules was “retarded.”31
Wacker responded by filing a lawsuit in Texas state court on February 24, 2020.32 Hammerking raised a personal jurisdiction defense,33 which led Wacker to file a Notice of Nonsuit Without Prejudice, thereby voluntarily dismissing that Texas case.34
On January 6, 2021, Wacker filed a Complaint in this Court asserting five claims for relief:
• a claim for declaratory judgment that Wacker is the 2019 Ultra4 Race Champion pursuant to the Ultra4 Rulebook;
• breach of contract;
• a claim for specific performance to declare Wacker the 2019 Ultra4 Race Champion pursuant to the Ultra4 Rulebook;
• breach of the implied covenant of good faith and fair dealing; and
• negligent misrepresentation.35
A year later, in January 2022, Wacker moved for summary judgment on his second, third, and fifth claims for relief.36 A week after that, Hammerking moved for judgment on the pleadings with respect to all five of Wacker's claims.37
The Court conducted a hearing on both motions in March 2022. During that hearing, the Court questioned whether the amount in controversy meets the statutory threshold, so it requested supplemental briefing from the parties regarding subject-matter jurisdiction.38 See 28 U.S.C. § 1332(a).
II. LEGAL STANDARD
A. Judgment on the Pleadings
The Federal Rules of Civil Procedure provide that a party may move for judgment on the pleadings after the pleadings are closed, but before trial. Fed. R. Civ. P. 12(c). A motion under Rule 12(c) tests the legal sufficiency of the complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Cafasso, U.S. ex rel. v. General Dynamics C4 Systems, Inc. 637 F.3d 1047, 1063 n.4 (9th Cir. 2011). The analysis is “substantially identical” to that of a motion to dismiss under Rule 12(b)(6): a court must determine whether, crediting the factual allegations as true, the moving party is entitled to judgment as a matter of law. See Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). The principal difference between the two motions is the timing of the filing. See Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). Under both standards, a complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. In other words, the complaint must contain “well-pleaded facts” from which the Court can “infer more than the mere possibility of misconduct.” Id. at 679, 129 S.Ct. 1937.
B. Summary Judgment
Summary judgment (or partial summary judgment) is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). When deciding a motion for summary judgment, the court construes the evidence in the light most favorable to the non-moving party. See Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir. 1991). However, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original). The substantive law determines the facts that are material. See id. at 248, 106 S.Ct. 2505. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. Factual disputes that are “irrelevant or unnecessary” are not counted. Id. A dispute about a material fact is “genuine” “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.
Under that standard, the moving party has the initial burden of informing the court of the basis for its motion and identifying the portions of the pleadings and the record that it believes demonstrate the absence of an issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof at trial, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. See id. at 325, 106 S.Ct. 2548. Instead, the moving party need only prove there is an absence of evidence to support the nonmoving party's case. See id.; In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). The party seeking summary judgment must show that “under the governing law, there can be but one reasonable conclusion as to the verdict.” Anderson, 477 U.S. at 250, 106 S.Ct. 2505.
A. Subject-Matter Jurisdiction
As a threshold matter, the Court must have subject-matter jurisdiction in order to rule on the parties’ respective motions. Federal courts may exercise diversity jurisdiction over a dispute if it is between citizens of different states and the amount in controversy exceeds $75,000 exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1). Here, the citizenship of the litigants is fully diverse.39
When the plaintiff originally files in federal court, “the amount in controversy is determined from the face of the pleadings.” Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000). The amount in controversy alleged by the proponent of federal jurisdiction—here, Wacker—controls so long as the claim is made in good faith. See id. “To justify dismissal, it must appear to a legal certainty that the claim is really for less than the jurisdictional amount.” Id. (internal quotation omitted). Thus, a federal court has subject matter jurisdiction unless “upon the face of the complaint, it is obvious that the suit cannot involve the necessary amount.” St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 292, 58 S.Ct. 586, 82 L.Ed. 845 (1938); see also Geographic Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010).
Wacker seeks $500,000 in damages, as alleged in his Complaint.40 Hammerking contends that Wacker made that allegation in bad faith because he sought less than $50,000 in damages in his original Texas state court case.41 The Court is unpersuaded by that logic for three reasons.
First, the allegations that Wacker made (or omitted) in his Texas state court filing are immaterial here. The case at bar was neither removed nor transferred from another court; it was originally filed here.42 Hammerking cannot use out-of-this-court allegations, upon which no court relied, as a judicial admission.
Second, Wacker may seek any form of relief to which he may be entitled (within, of course, the boundaries of Rule 11 and counsel's ethical obligations). No rule bars Wacker from changing his mind after he withdrew his previous lawsuit without prejudice. Res judicata is inapplicable.
And third, Hammerking overlooks the part of the Texas filing in which Wacker stated that he sought “monetary damages of less than $50,000 at this time.”43 Thus, even if Wacker's prior allegations constituted a judicial admission (which they did not), Wacker left the door open to seeking other monetary damages in the future.
Moreover, Wacker has now provided evidence to support his allegation that the statutory threshold is met,44 at least by a preponderance of the evidence. Merely considering the expenses that Wacker incurred to enter every race (allegedly in reliance on negligent representations that Hammerking made), Wacker expended over $117,949.45 When paired with the prize money at stake and attorneys’ fees, the Court concludes that Wacker has met his burden to establish that the amount in controversy in this action exceeds $75,000.46
B. Breach of Contract
The instant dispute boils down to the parties’ competing interpretations of the rules. Hammerking asserts that the Rulebook is silent regarding how National Champions are determined and that nothing in the Rulebook mandates that a competitor must compete in all eight races of the season to be crowned the National Champion.47 Hammerking asks the Court to consider parol evidence of conversations that Cole had with Wacker before the championship race, during which Cole reiterated to Wacker that a driver does not need to compete in all eight races as a prerequisite to be crowned National Champion.48
In contrast, Wacker maintains that the Rulebook clearly and unambiguously states that competitors must enter all points events to become a champion.49 In the alternative—if some ambiguity does exist—Wacker points to extrinsic evidence on Hammerking's website to corroborate his view.50
The parties do not dispute that the Rulebook is controlling: “In the event of conflict between any documents referenced herein and the contents of this rulebook, the latter shall prevail.”51 Nor do the parties dispute that certain key words have been explicitly defined by the Rulebook—including the words “shall” and “must”—which the Rulebook says are “used to indicate that compliance with, or application of, a rule or procedure is mandatory.”52 Rather, the parties dispute whether one sentence from the Rulebook—“The Driver of Record must enter all points events to become a champion”53 —requires a driver to compete in all of the races to be eligible for the title of National Champion.
The central issue, then, appears in Wacker's second claim for relief for breach of contract, so the Court will begin its analysis of Wacker's claims there. The Court will first consider whether Wacker has adequately stated a claim on the pleadings before evaluating whether he is entitled to summary judgment.54
1. Motion for Judgment on the Pleadings
Under California law, the elements of a claim for breach of contract are: “the existence of the contract, performance by the plaintiff or excuse for nonperformance, breach by the defendant and damages.” First Com. Mortg. Co. v. Reece, 89 Cal. App. 4th 731, 745, 108 Cal.Rptr.2d 23 (2001). Pleading a breach of contract claim additionally requires the plaintiff to articulate the terms of the contract “either in haec verba or according to legal effect.” Twaite v. Allstate Ins. Co., 216 Cal. App. 3d 239, 252, 264 Cal.Rptr. 598 (1989), modified (Dec. 7, 1989). The parties agree that the copy of the Rulebook that Wacker provided to the Court is true and correct,55 so the latter requirement is satisfied.
In its Rule 12(c) Motion, Hammerking does not explain how Wacker's Complaint fails to make the requisite allegations or to allege sufficiently particular facts to establish Hammerking's breach of contract.56 Rather, Hammerking contends that Wacker failed to perform in actuality; i.e., by not garnering enough total points to be deemed National Champion, resulting in his fourteenth-place finish.57 But Hammerking's argument is peripheral to the question of whether Wacker properly stated a claim. Furthermore, Hammerking's position presupposes that its interpretation of the Rulebook is the correct one. As discussed below, see infra Part III.B.2., that supposition is incorrect.
Reviewing the Complaint, the Court concludes that Wacker pleads each element of his breach of contract claim adequately and with sufficiently particular (and largely undisputed) factual allegations. See Fed. R. Civ. P. 8; Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. Thus, the Court DENIES Hammerking's Rule 12(c) Motion with respect to Wacker's breach of contract claim.
2. Motion for Partial Summary Judgment
No party disputes the existence of a contract—here, set forth in the Rulebook—nor Wacker's performance according to his interpretation of the Rulebook's terms. The only questions regarding Wacker's breach of contract claim are (a) whether Hammerking breached the contract (i.e., by failing to comply with its own rules); and (b) whether Wacker incurred any damages.
To determine whether Hammerking failed to follow its own rules, the Court reviews the text of those rules and interprets their meaning. Under California law, “[a] contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting.” Cal. Civ. Code § 1636. “When a contract is reduced to writing,” as it is in this case, “the intention of the parties is to be ascertained from the writing alone, if possible.” Cal. Civ. Code § 1639. “The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.” Cal. Civ. Code § 1638.
“Interpretation of a contract is solely a question of law unless the interpretation turns upon the credibility of extrinsic evidence.” Badie v. Bank of Am., 67 Cal. App. 4th 779, 799, 79 Cal.Rptr.2d 273 (1998). Parol evidence may be admitted to construe a written instrument when its language is ambiguous. See Winet v. Price, 4 Cal. App. 4th 1159, 1165, 6 Cal.Rptr.2d 554 (1992). The language of a contract is considered ambiguous if it is “reasonably susceptible” to more than one interpretation. Id. When the meaning of contractual language is disputed, the Court must engage in a two-step process to determine whether to admit extrinsic or parol evidence to show that an ambiguity exists and to resolve the ambiguity. See id. First, the court provisionally receives all credible evidence and determines whether the language is “reasonably susceptible” to the interpretation urged by a party. Id. If so, the extrinsic evidence is admitted to aid in the second step, which is the ultimate construction of the ambiguous language. See id. If no parol evidence can be introduced, or if the evidence does not conflict, then construction remains a question of law. See id. at 1166, 6 Cal.Rptr.2d 554.
Proceeding with that analytical guide, the Court first determines if the contract is unambiguous. When the Rulebook defines a particular word, the Court adopts the Rulebook's definition in order to give full effect to the intent of the parties. Otherwise, words are used in their ordinary plain meaning. See Waller v. Truck Ins. Exch., 11 Cal. 4th 1, 18, 44 Cal.Rptr.2d 370, 900 P.2d 619 (1995) (explaining that provisions are interpreted in their ordinary and popular sense, unless used by the parties in a technical sense or with a special meaning given to them by usage).
The Court concludes that the text of the Rulebook is unambiguous. The key sentence proclaims: “The Driver of Record must enter all points events to become a champion.”58 The Rulebook makes clear that, to be a champion, one must enter all points races. In reaching that conclusion, the Court makes four observations:
• First, the word “champion” is unqualified. The sentence does not specify that the requirement is limited to only national champions or regional champions or the champion of a specific race. The plain interpretation is that, to be a champion of any kind, one must satisfy that requirement.
• Second, as discussed above, the Rulebook defines the word “must” to indicate that compliance with this rule is “mandatory.”59
• Third, the sentence does not require the driver to enter all races, but all “points events.” While that phraseology is capacious, it is not ambiguous. The word “points” modifies “events,” as to indicate that the driver of record must enter any and all events where points may be earned. Such events include races; the Rulebook says that a “race is a specific type of event.”60 Conversely, drivers would not be expected to enter non-points events; i.e., those events where no points contributing to the final season tally could be earned or won. Therefore, the sentence, as construed, requires the driver of record to enter all events—whether a race or otherwise—where points can be earned.
• And fourth, the sentence also uses the word “all” as a modifier to the word “events.” “All” is unconditional. It does not mean “some” or “most.” Whereas the Ultra4 Series Points Description on Hammerking's website introduces some semantic flexibility when it states that “a driver must compete in all respective races to be eligible for the championship [emphasis added],”61 the Rulebook omits the word “respective.” Hammerking could have mirrored the phrasing used on its website, but it did not. The Rulebook is black-and-white.
Hammerking makes four arguments of its own to show why its interpretation of the Rulebook is unambiguous. None is persuasive.
• First, Hammerking says that the Rulebook is silent regarding how National Champions are determined.62 Hammerking is partly correct. While the Rulebook does not explicitly detail how points are tallied, the Rulebook is not entirely silent with respect to how National Champions are determined. As Hammerking admits in its own brief, there are instances where the Rulebook specifies preconditions that must be met for a driver to be a National Champion, such as satisfying “technical vehicle requirements and event participation rules.”63 Rule 9.2.1 is merely another such precondition.
• Second, Hammerking argues that Rule 9.2.1 was intended to mean that “a driver has to seat himself, and no other substitute driver, behind the steering wheel in his race car for any race event where his points will be used in East Coast, West Coast, or National Champion scoring.”64 However, the word “substitute” does not appear anywhere in the text of the rule or its accompanying paragraphs.65 Even if the rule was meant to exclude substitute drivers (and here the Court agrees—the text accomplishes that goal), the text also happens to accomplish more than its alleged purpose, and it does so unambiguously. The Court construes the text of the rule to mean what it says.
• Third, Hammerking accuses Wacker of needing to insert the word “national” into the sentence in order to achieve his interpretation.66 The Court disagrees. For one thing, the sentence already encompasses national champions because the word “champion” is unqualified, as discussed above. For another, Hammerking's competing interpretation falls prey to its own critique: its version becomes sensible only when one inserts some other word to qualify the sentence; e.g., inserting the word “respective” in front of “races,” or rewriting the rule completely in order to make clear that its scope is limited to substitute drivers.67
• And fourth, Hammerking enlists the language of the Points Description to introduce doubt or ambiguity into the interpretation of Rule 9.2.1. But Hammerking's argument is unavailing because it is undisputed that the Rulebook controls wherever there is an inconsistency with the Points Description.68 Moreover, when the Rulebook and the Points Description are read together, a far more sensible interpretation is that the Points Description describes how points are calculated, while the Rulebook sets out the eligibility requirements and the preconditions for any driver of record to be named a champion.69
In the alternative, if the Court were to find any ambiguity in Rule 9.2.1 (which it does not), it is worth noting that Hammerking drafted the entire Rulebook. According to California law, if uncertainty exists in the meaning of a provision, the language “should be interpreted most strongly against the party who caused the uncertainty to exist.” Cal. Civ. Code § 1654. Here, that party is Hammerking. The Rulebook itself states that it is “published by Hammerking Productions Inc. containing the rules for the conduct of, and participation in, Hammerking Productions Inc. events.”70 That fact tilts in favor of resolving any uncertainty against Hammerking.
Therefore, in view of the unambiguous terms of the contract, Hammerking breached its contract with Wacker when it failed to name him National Champion in 2019 because Wacker amassed the most points of the two drivers who satisfied the precondition set forth in Rule 9.2.1.
Wacker contends that he suffered monetary and non-monetary damages, and he provides evidentiary support in his supplemental briefing and the accompanying declarations.71 Hammerking refrains from arguing that Wacker suffered no damages whatsoever.72 Instead, Hammerking introduces evidence that Wacker's actual damages are far less than he claims in his Complaint.73 In view of Hammerking's evidence, the Court concludes that the elements of Wacker's claim for breach of contract have been satisfied; the record shows that Wacker suffered at least some damage as a result of Hammerking's breach. The Court therefore GRANTS Wacker's Summary Judgment Motion with respect to liability on his second claim for relief for breach of contract.
At this time, though, the exact quantum of damages that Wacker incurred from Hammerking's breach is indeterminate, and it may require a separate proceeding. This issue may also become moot, as Wacker seeks specific performance. “A plaintiff may seek specific performance, an equitable remedy, as an alternative to damages, but a plaintiff may not receive both for breach of contract to the extent such an award would constitute a double recovery.” Darbun Enterprises, Inc. v. San Fernando Cmty. Hosp., 239 Cal. App. 4th 399, 409, 191 Cal.Rptr.3d 340 (2015). The Court will not choose for Wacker, but instead turns to the claim for specific performance to determine if Wacker is eligible for that remedy.
C. Specific Performance
1. Motion for Judgment on the Pleadings
Hammerking asks this Court to dismiss Wacker's third claim for relief, which seeks specific performance. The sole argument that Hammerking advances is that specific performance is unavailable unless Wacker prevails on his breach of contract claim.74 Hammerking does not offer an independent reason why Wacker has failed to state a valid claim for specific performance.75 Because the Court concludes that Wacker has prevailed with respect to Hammerking's liability on Wacker's breach of contract claim, Hammerking's Rule 12(c) Motion is DENIED with respect to Wacker's claim for specific performance.
2. Motion for Partial Summary Judgment
“Specific performance of a contract may be decreed whenever: (1) its terms are sufficiently definite; (2) consideration is adequate; (3) there is substantial similarity of the requested performance to the contractual terms; (4) there is mutuality of remedies; and (5) plaintiff's legal remedy is inadequate.” Blackburn v. Charnley, 117 Cal. App. 4th 758, 766, 11 Cal.Rptr.3d 885 (2004); see also Cal. Civ. Code § 3390(e) (stating that an obligation cannot be enforced where the terms of the agreement “are not sufficiently certain to make the precise act which is to be done clearly ascertainable”).
Wacker easily satisfies the first element because the Court concludes that the Rulebook is unambiguous. Wacker also easily satisfies the second element of specific performance because he paid entry fees for each event,76 constituting adequate consideration.
The third and fourth elements are satisfied because the parties do not dispute that Wacker received the most points of the two racers who competed in every race during the 2019 Ultra4 series season.77 See Cal. Civ. Code § 3386(b) (stating that “specific performance may be compelled if ․ [t]he agreed counterperformance has been substantially performed”). The fact that the points are known, calculable, and not in dispute means that Wacker's requested performance—i.e., being named National Champion—is clearly ascertainable and identical in nature to the performance cognized by the Rulebook's terms.
Only the fifth element—an inadequate legal remedy—remains. Wacker argues that being named a champion has intangible value to him, appealing to pathos by invoking major sports figures who came close but never won a championship.78 Wacker also declares that he filed this lawsuit for his kids, to vindicate his hard work and efforts, and to restore a sense of pride and accomplishment.79 The Court is persuaded. There is a non-fungible psychic benefit to achieving the pinnacle of any competitive sport or activity, one that perhaps no amount of money can compensate. And when one feels robbed of victory by the very officiants who fail to observe their own rules, the Court can understand that no amount of monetary compensation will suffice. A payoff may merely confirm that one's pride can be bought.
Hammerking never addresses the argument that monetary damages are inadequate, either in its briefs or orally at the hearing.80 Rather, Hammerking feebly suggests that there are genuine facts in dispute, but it fails to identify them.81 Hammerking makes an oblique reference to unclean hands, insinuating that Wacker engaged in some sort of bad faith because he waited several days before confronting Hammerking's Race Director.82 But that brief delay cannot constitute inequitable conduct. See Meridian Fin. Servs., Inc. v. Phan, 67 Cal. App. 5th 657, 685, 282 Cal.Rptr.3d 457 (2021), review denied (Nov. 10, 2021) (noting that the doctrine of unclean hands is an equitable doctrine meant to prevent “a wrongdoer from enjoying the fruits of his transgression”). After all, “[n]ot every wrongful act constitutes unclean hands.” Id. The misconduct must “prejudicially affect” the rights of the person against whom the relief is sought “so that it would be inequitable to grant such relief.” Id. (internal citations omitted). Here, Hammerking identifies no prejudice whatsoever that it suffered from Wacker's decision to wait a few days before contesting his placement.83 Thus, the Court is not persuaded that Wacker's conduct somehow disqualifies him from receiving specific performance.
The Court concludes that monetary damages are an inadequate legal remedy. As a matter of equity, Wacker is entitled to specific performance of the contract. “Because specific performance is an equitable remedy, there is no constitutional right to jury trial on that remedy.” Darbun Enterprises, 239 Cal. App. 4th at 409, 191 Cal.Rptr.3d 340 (citing Walton v. Walton, 31 Cal. App. 4th 277, 287–88, 36 Cal.Rptr.2d 901 (1995)). The Court accordingly GRANTS Wacker's Summary Judgment Motion with respect to Wacker's third claim for relief for specific performance.84
D. Declaratory Relief
At the hearing, Wacker characterized his first claim for relief—for declaratory judgment—as alternative way to achieve the same remedy as his breach of contract claim (i.e., being named national champion). Nonetheless, it is a distinct claim, and Hammerking moves for judgment on the pleadings with respect to it.
Hammerking argues that Wacker fails to state a claim because declaratory judgment is strictly a remedy and not a separate claim for relief.85 However, Hammerking relies on inapposite legal authority, since it cites cases reviewing California state law,86 whereas Wacker asks for declaratory relief under the federal Declaratory Judgment Act.87
The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its jurisdiction ․ any court of the United States ․ may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The relevant inquiry is “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007).
It is apparent that a live controversy exists. Furthermore, unless or until specific performance is imposed, Wacker could (and likely will, based upon what the parties have averred) seek some form of legal declaration of his accomplishments.88 See Davidson v. United Servs. Auto. Ass'n, 2020 WL 4390379, at *3 (C.D. Cal. Mar. 10, 2020) (finding declaratory relief distinct where it would clarify one party's ongoing obligations, rather than merely declare a breach of contract). Thus, while declaratory relief is similar to specific performance, it is not so redundant that the Court must reject it outright at the pleading stage (even if it might be moot later in the case). Accordingly, the Court DENIES Hammerking's Rule 12(c) Motion with respect to Wacker's first claim for relief for declaratory judgment.
E. Implied Covenant of Good Faith and Fair Dealing
“ ‘There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.’ ” Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1158 (9th Cir. 2002) (quoting Comunale v. Traders & General Ins. Co., 50 Cal. 2d 654, 658, 328 P.2d 198 (1958)). While a breach of the implied covenant will always result in a breach of contract, the converse does not necessarily hold. See Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1394, 272 Cal.Rptr. 387 (1990).
“To state a claim for breach of the covenant of good faith and fair dealing, a plaintiff must allege: (1) the plaintiff and the defendant entered into a contract; (2) the plaintiff did all or substantially all of the things that the contract required him to do or that he was excused from having to do; (3) all conditions required for the defendant's performance had occurred; (4) the defendant unfairly interfered with the plaintiff's right to receive the benefits of the contract; and (5) the defendant's conduct harmed the plaintiff.” Tolotti v. JPMorgan Chase & Co., 2015 WL 12830443, at *3 (C.D. Cal. Aug. 5, 2015) (internal citations omitted). Hammerking essentially addresses only the fourth element in its Rule 12(c) Motion.
Hammerking contends that Wacker's claim for breach of the implied covenant of good faith and fair dealing fails because his allegations on that claim are duplicative of those for his breach of contract claim.89 In other words, Hammerking asserts that Wacker has not alleged that Hammerking “unfairly frustrate[d] the agreed common purposes and disappoint[ed] the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” Careau, 222 Cal. App. 3d at 1395, 272 Cal.Rptr. 387. In response, Wacker says that he alleged that Hammerking admitted to him that it never followed its own rules.90
The Court concludes that Wacker's allegations are sufficient at the pleading stage to state a plausible claim for relief.91 If Hammerking asked participants to obey binding rules, yet it never had any intention to follow them itself, then that conduct could frustrate the common purposes and reasonable expectations of the race participants who do follow those rules. Therefore, the Court DENIES Hammerking's Rule 12(c) Motion with respect to Wacker's fourth claim for relief for breach of the implied covenant of good faith and fair dealing.
F. Negligent Misrepresentation
Wacker's fifth and final claim for relief is for negligent misrepresentation, which, as Wacker confirmed during the hearing, he pleads in the alternative.92 The Court first considers whether Wacker has adequately stated a claim.
1. Motion for Judgment on the Pleadings
“Negligent misrepresentation is a form of deceit, the elements of which consist of (1) a misrepresentation of a past or existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed, and (5) damages.” Fox v. Pollack, 181 Cal. App. 3d 954, 962, 226 Cal.Rptr. 532 (1986).
Here, Hammerking argues that Wacker failed to plead the elements of reliance and falsity. With respect to reliance, Hammerking contends that Wacker never alleged that Hammerking made any false representations before Wacker acted to his detriment, thereby negating any possibility of reliance.93 With respect to falsity, Hammerking maintains that a made-up rule cannot be false because it can fiat whatever rules it wants as the organizer of the races.94
The Court concludes that Wacker's allegations and his theory of negligent misrepresentation overcome both of those attacks.95 If the rules were never meant to be followed—as Hammerking's Race Director allegedly disclosed to Wacker after the season concluded 96 —then the Rulebook would contain myriad false statements, for one of two reasons: either some other (inconsistent) set of (perhaps unwritten) rules constituted the true rules, thereby rendering the Rulebook's statements false; or the reality was that Hammerking had no rules whatsoever, meaning that any statement holding itself out as a rule (e.g., an official rulebook) would necessarily qualify as a false statement. Put differently, in a world where there are no rules, a rulebook is ipso facto a lie. Wacker has thereby adequately pleaded falsity. And because Wacker avers that he read the Rulebook before the season started and that he crafted his strategy around it, he plausibly alleges the element of reliance.97
Hammerking scoffs at the implication of this theory, calling it “absurd” that Hammerking would “unwittingly” create a false rule.98 But one can conceive all sorts of scenarios in which an organization creates a set of written rules and then forgets about them or their minutia, or otherwise neglects to follow those rules for reasons of practice, custom, or convenience.99 While the promulgator of the rules may lack the intent to deceive those participants supposedly bound by the rules, it would be still unreasonable for that same actor to continue to hold those rules out as actual rules—which is precisely what Wacker alleges in his fifth claim. Thus, the Court DENIES Hammerking's Rule 12(c) Motion with respect to Wacker's negligent misrepresentation claim.
2. Motion for Partial Summary Judgment
To adjudicate Wacker's Summary Judgment Motion on the same claim, the Court must resolve whether a genuine dispute of material fact exists and, if none does, whether Wacker is entitled to judgment as a matter of law.
On the facts, it is undisputed that Hammerking published the Rulebook, with the intent that it would bind all of the participants.100 It is also undisputed that Wacker relied on the Rulebook in crafting his strategy to enter every race.101 And it is undisputed that Taylor—Hammerking's Race Director—told Wacker that Taylor was unaware of Rule 9.2.1 and that Hammerking never followed it.102 In view of those concessions, Wacker can make out at least a prima face case of negligent misrepresentation.
In an attempt to demonstrate a dispute of genuine fact, Hammerking recycles its arguments from its Rule 12(c) Motion—i.e., that Wacker can neither prove reliance nor show that Hammerking made a false statement.103 But as discussed above, see supra Part III.F.1, those arguments are unavailing; it is undisputed that Wacker relied on the Rulebook, and Hammerking's failure to follow its own rules necessarily means that the Rulebook is a misrepresentation as a matter of law.104 Furthermore, Hammerking makes no other argument and adduces no other evidence to contest the remaining elements of negligent misrepresentation.105 In view of the absence of any meaningful dispute of material fact, Wacker is likely entitled to judgment on his tort claim of negligent misrepresentation.
But, as Hammerking points out, California law prevents recovery through tort that which could be achieved through contract.106 “If a given state of facts entitles one to recover damages upon the theory of tort, and the same state of facts entitles him to recover upon the theory of contract, it would seem plain that recovery could not be twice had simply because the facts would support recovery upon either theory.” DuBarry Internat., Inc. v. Sw. Forest Indus., Inc., 231 Cal. App. 3d 552, 564, 282 Cal.Rptr. 181 (1991) (quoting Shell v. Schmidt, 126 Cal. App. 2d 279, 291, 272 P.2d 82 (1954)). When pressed during the hearing, Wacker conceded that this claim could be dismissed as moot if he prevails on his breach of contract claim. Because Wacker did just that, see supra Part III.B., he is a victim of his own success. The Court DENIES Wacker's Summary Judgment Motion with respect to Wacker's fifth claim for relief for negligent misrepresentation and DISMISSES that claim as moot.
For the foregoing reasons, the Court hereby ORDERS as follows:
1. Wacker's Request for Judicial Notice is GRANTED.
2. Hammerking's Request for Judicial Notice is GRANTED.
3. Hammerking's Rule 12(c) Motion is DENIED.
4. Wacker's Motion for Partial Summary Judgment is GRANTED in part and DENIED in part; specifically:
a. Wacker's Motion is GRANTED with respect to Hammerking's liability on Wacker's second (breach of contract) and third (specific performance) claims for relief; and
b. Wacker's Motion is DENIED with respect to Wacker's fifth (negligent misrepresentation) claim for relief, and that claim for relief is DISMISSED as moot.
5. The parties are DIRECTED to confer forthwith in view of this Order and to file no later than July 1, 2022, a Joint Status Report that the provides the Court with the parties’ jointly proposed case schedule or, if the parties cannot agree, each party's respective proposed case schedule and detailed reasons for the failure to reach an agreement with the other party.
6. A video Status Conference is SET for July 15, 2022, at 11:00 a.m.
IT IS SO ORDERED.
1. The Court replaces the more colorful phrase “legal f**kery” (redacted) that Defendant Hammerking chose to describe Plaintiff Wacker's position. See Pl.’s Mot. for Partial Summ. J. (the “Summary Judgment Motion”) [ECF No. 30], Ex. F [ECF No. 30-8] 5:8-12 (highlighting an excerpt of Hammerking's answer to an interrogatory, where Hammerking asserted that “[Wacker] claims he's entitled to sponsorships and endorsements he would receive if he were declared the Hammerking 2019 Ultra4 Series National Champion, but no company would sponsor a ‘National Champion’ who has never placed top three in a race, never stood on the awards podium, and who ‘won’ his title through legal f**kery” (redacted)).
2. See Summary Judgment Motion.
3. Def.’s Mot. for J. on the Pleadings (the “Rule 12(c) Motion”) [ECF No. 33].
4. The Court considered the documents of record, including the following: (1) Compl. (the “Complaint”) (including its attachments [ECF No. 1]; (2) the Summary Judgment Motion (including its attachments); (3) the Rule 12(c) Motion (including its attachments); (4) Def.’s Mem. of P. & A. in Supp. of Opp'n to the Summary Judgment Motion (the “SMJ Opposition”) [ECF No. 34]; (5) Pl.’s Mem. of P. & A. in Opp'n to the Rule 12(c) Motion (the “Rule 12(c) Opposition”) [ECF No. 35]; (6) Pl.’s Reply Mem. of P. & A. in Supp. of the Summary Judgment Motion (the “SMJ Reply”) [ECF No. 36]; (7) Def.’s Reply to the Rule 12(c) Opposition (the “Rule 12(c) Reply”) [ECF No. 38]; (8) Pl.’s Brief in Response to Order to Show Cause (the “Plaintiff's Supplemental Brief”) [ECF No. 42]; and (9) Def.’s Brief in Supp. of Dismissal of This Action For Lack of Subject-Matter Jurisdiction (the “Defendant's Supplemental Brief”) [ECF No. 44].
5. Complaint ¶ 18.
6. Id. at ¶ 6; Rule 12(c) Motion 8:11-13; Def.’s Statement of Genuine Disputes of Material Fact and Statement of Undisputed Fact in Supp. of SMJ Opposition (the “Response to Plaintiff's SSUF”) [ECF No. 34-1] ¶ 1.
7. Summary Judgment Motion 3:18-20.
8. Complaint ¶ 7; Rule 12(c) Motion 8:13-15; Response to Plaintiff's SSUF ¶ 3.
9. Response to Plaintiff's SSUF ¶ 3.
10. Id. at ¶ 4; Complaint ¶ 14.
11. Response to Plaintiff's SSUF ¶ 4.
12. Id. at ¶ 5.
13. Id. at ¶ 7. The parties agree that the document attached as Exhibit A to the Complaint is a true and accurate copy of the 2019 Ultra4 Racing Rulebook v. 4.4.2. See Complaint, Ex. A (the “Rulebook”) [ECF No. 1-1].
14. Response to Plaintiff's SSUF ¶ 20.
15. Rulebook 63.
17. Summary Judgment Motion 1:22-24; Def.’s Answer to the Complaint (the “Answer”) [ECF No. 18] ¶ 26.
18. Summary Judgment Motion 1:18-24.
19. Summary Judgment Motion, Ex. C (the “Ultra4 Website Screenshot”) [ECF No. 30-4].
20. Answer ¶ 26.
22. Unless otherwise indicated, all dates are in 2019.
23. Complaint ¶ 18; Pl.’s Response to Def.’s Statement of Additional Facts in Opp'n to the Summary Judgment Motion (the “Response to Defendant's SSUF”) [ECF No. 36-1] ¶ 40.
24. Complaint ¶ 19; see also Summary Judgment Motion, Ex. D (the “Text Messages”) [ECF No. 30-5].
25. Text Messages 2.
27. Id. at 3.
28. Id. at 5.
29. Id. at 3-5; Complaint ¶¶ 20-22.
30. Text Messages 5 & 6.
31. Answer ¶ 22 (redacted).
32. See Def.’s Request for Judicial Notice in Supp. of Dismissal of This Action for Lack of Subject-Matter Jurisdiction (“Defendant's RJN”), Ex. 1 (the “State Court Complaint”) [ECF No. 44-1]. Because the exhibits contained in Defendant's RJN are court documents, they fall within the ambit of Rule 201 of the Federal Rules of Evidence. Accordingly, Defendant's RJN is GRANTED.
33. Defendant's Supplemental Brief 3:1-3.
34. Defendant's RJN, Ex. 2 [ECF No. 44-1].
35. See generally Complaint.
36. See generally Summary Judgment Motion.
37. See generally Rule 12(c) Motion.
38. See Min. Order to Show Cause Regarding Subject Matter Jurisdiction [ECF No. 41]; Plaintiff's Supplemental Brief; Defendant's Supplemental Brief.
39. See Complaint ¶¶ 1-3 (noting that Wacker is a citizen of Texas and Hammerking is a California corporation with its principal place of business also in California).
40. Id. at ¶¶ 48 & 76.
41. Defendant's Supplemental Brief 5:13-7:2.
42. See id. at 6:16 (acknowledging that the Texas state court case was not removed); see generally Complaint.
43. State Court Complaint ¶ 7 (emphasis added).
44. See Complaint ¶ 3 (where Wacker alleges the $75,000 threshold is met).
45. Plaintiff's Supplemental Brief 3:17-25; Decl. of Alex Wacker in Supp. of Brief in Response to Order to Show Cause (the “Second Wacker Declaration”) [ECF No. 42-1] ¶¶ 5-19. Even assuming, counterfactually, that Wacker would have incurred some of those expenses notwithstanding Hammerking's negligent representations, it is more likely than not that the threshold is met when paired with other possible monetary damages.
46. Wacker made his own request for judicial notice, which included screenshots of Hammerking's websites. See Request for Judicial Notice Re: Order to Show Cause (“Plaintiff's RJN”) [ECF No. 43]. The Court may take judicial notice of Hammerking's website if it is “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b); see also Ross v. ONeal, 2011 WL 5041967, at *1 (C.D. Cal. Oct. 17, 2011), aff'd sub nom. Ross v. O'Neal, 525 F. App'x 600 (9th Cir. 2013); Matthews v. Nat'l Football League Mgmt. Council, 688 F.3d 1107, 1113 (9th Cir. 2012) (taking notice of statistics posted on the NFL's website). Having verified the links, the Court GRANTS Plaintiff's RJN. To be clear, the Court does not take notice of the website's contents for their truth, but only for the fact that Hammerking made the statements and representations contained therein.
47. SMJ Opposition 11:15-17.
48. Id. at 6:21-7:20.
49. Summary Judgment Motion 12:11-19.
50. Id. at 12:20-13:2.
51. Response to Plaintiff's SSUF ¶ 16.
52. Id. at ¶ 14; Rulebook 27. The Court uses a different citing convention than the parties. For clarity, the Court's citation to page 27 of the Rulebook corresponds to page 8 of the PDF document.
53. Rulebook 63.
54. The Court will proceed in that manner for the remaining claims, albeit only for those claims for which Wacker has moved for summary judgment.
55. Response to Plaintiff's SSUF ¶ 7.
56. See generally Rule 12(c) Motion.
57. Id. at 13:14-14:24.
58. Rulebook 63.
59. Response to Plaintiff's SSUF ¶ 14; Rulebook 27. The Court uses a different citing convention than the parties. For clarity, the Court's citation to page 27 of the Rulebook corresponds to page 8 of the PDF document.
60. Rulebook 82.
61. See Ultra4 Website Screenshot.
62. SMJ Opposition 10:22-23.
63. Id. at 10:24-26.
64. Id. at 11:5-8.
65. See Rulebook 63.
66. SMJ Opposition 11:3-4; SMJ Reply 4:14-15.
67. SMJ Reply 5:7-15.
68. Response to Plaintiff's SSUF ¶ 16.
69. SMJ Reply 5:16-21.
70. Rulebook 81 (emphasis added).
71. See generally Plaintiff's Supplemental Brief; see also Decl. of Alex Wacker in Supp. of the Summary Judgment Motion (the “First Wacker Declaration”) [ECF No. 30-3] ¶ 12; Second Wacker Declaration ¶¶ 5-19.
72. See generally SMJ Opposition.
73. Compare Decl. of Josh Byler in Supp. of Dismissal of This Action for Lack of Subject-Matter Jurisdiction [ECF No. 44-2] (suggesting that the prize money was less than advertised) with Complaint ¶ 48.
74. Rule 12(c) Motion 15:23-16:2; Complaint ¶¶ 49-56.
75. See also Rule 12(c) Reply 9:1-10 (reiterating that specific performance is derivative of Wacker's breach of contract claim).
76. Response to Plaintiff's SSUF ¶ 24.
77. Id. at ¶¶ 27 & 28; see also Summary Judgment Motion 14:13-15.
78. Summary Judgment Motion 14:26-15:5.
79. First Wacker Declaration ¶ 12.
80. See generally SMJ Opposition; Rule 12(c) Motion; Rule 12(c) Reply; Defendant's Supplemental Brief.
81. See SMJ Opposition 14:15-23. At most, Hammerking's Opposition might be construed as contending that genuine disputes of fact exist regarding the meaning of extrinsic evidence modifying the Rulebook. But even then, that contention holds little weight when Hammerking makes those arguments only in the alternative. See id. at 13:11-14:14.
82. Id. at 14:19-15:2.
83. See generally id.
84. The Court reserves entering judgment until Wacker elects a particular remedy.
85. Rule 12(c) Motion 15:4-11.
86. See id. (citing, for example, A.B. Concrete Coating Inc. v. Wells Fargo Bank, Nat'l Ass'n, 491 F. Supp. 3d 727, 737 (E.D. Cal. 2020) (discussing Cal. Civ. Proc. Code § 1060)).
87. Complaint ¶ 32.
88. See, e.g., First Wacker Declaration ¶ 12.
89. Rule 12(c) Motion 17:1-18.
90. Rule 12(c) Opposition 10:25-11:4.
91. See Complaint ¶¶ 20, 21, & 27.
92. See also id. at ¶ 68.
93. Rule 12(c) Motion 19:3-20.
94. Id. at 19:21-20:20.
95. See Complaint ¶¶ 67-76.
96. Id. at ¶ 20.
97. Id. at ¶ 17; Rule 12(c) Opposition 12:4-13:1
98. Rule 12(c) Reply 11:1-7 (emphasis omitted).
99. Indeed, by Hammerking's own admission, making every team attend every race might cut down on the total number of racers in its events because “[s]uch a rule would unfairly favor wealthy racers over the best racers.” Response to Defendant's SSUF ¶ 16. That motivation strikes the Court as a plausible reason why an organization might neglect to follow its own rules to the letter.
100. Response to Plaintiff's SSUF ¶¶ 6, 10-13, & 15.
101. Id. at ¶ 18. While Hammerking nominally disputes this statement of fact, its reasoning demonstrates that it is a false dispute. Construing the argument in the light most favorable to Hammerking, it argues that reliance is impossible where the proper interpretation of the Rulebook could not have led to that result. See id.; see also SMJ Opposition 15:24-16:25. However, the Court has already concluded, as a matter of law, that the Rulebook's meaning is unambiguous and contrary to Hammerking's interpretation, so this dispute is not “genuine.” Fed. R. Civ. P. 56(a).
102. Response to Plaintiff's SSUF ¶ 33; Response to Defendant's SSUF ¶ 45.
103. SMJ Opposition 15:22-16:22.
104. Response to Plaintiff's SSUF ¶¶ 18 & 33.
105. See generally SMJ Opposition.
106. Id. at 16:22-25.
John W. Holcomb, UNITED STATES DISTRICT JUDGE
Response sent, thank you
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Docket No: Case No. 5:21-cv-00021-JWH-SP
Decided: June 20, 2022
Court: United States District Court, C.D. California.
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