Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-00353/USCOURTS-casd-3_09-cv-00353-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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1 09cv0353 BTM(PCL)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

KELOMAR, INC., a California

corporation,

Plaintiff,

CASE NO. 09cv0353 BTM(PCL)

ORDER GRANTING MOTION FOR

JUDGMENT ON THE PLEADINGS

v.

DARRELL KULOW,

Defendant.

Defendant Darrell Kulow (“Defendant” or “Kulow”) has filed a motion for judgment on

the pleadings. For the reasons discussed below, Defendant’s motion is GRANTED.

I. BACKGROUND

Plaintiff Kelomar, Inc., commenced this action in the Superior Court of the State of

California, County of Imperial. On February 24, 2009, Defendant removed the action to

federal court.

During the 2007 Imperial Valley spring melon season, Plaintiff was a grower, packer,

and shipper of organic cantaloupes and honeydews. (Compl. ¶ 5.) Prior to the 2007 melon

harvest, Plaintiff entered into agreements with supermarket chains to sell organic

cantaloupes and honeydews. (Compl. ¶ 6.) Under the agreements, Plaintiff was required

to attach a label on each organic cantaloupe or honeydew that identified the melon as

Case 3:09-cv-00353-BTM-PCL Document 22 Filed 11/12/09 Page 1 of 5
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organic and included the product look-up code (“PLU”) number 94050 for cantaloupe and

94034 for honeydew. (Id.) These numbers corresponded to a higher price for the organic

produce. (Id.)

Plaintiff alleges that in or around April or May 2007, it entered into an oral agreement

with Hebberd-Kulow Enterprises, Inc. (“HKE”), pursuant to which HKE agreed to sell Plaintiff

cartons, labels, and other harvesting and packing materials for conventional and organic

melons. (Compl. ¶ 9.) With respect to the organic cantaloupes and organic honeydew, HKE

agreed to provide labels containing the organic PLU codes. (Id.)

Plaintiff alleges that HKE delivered labels for the organic melons that were incorrectly

printed with the PLU code numbers for non-organic cantaloupe and honeydew (i.e., the PLU

code numbers were missing the first “9" digit). (Compl. ¶ 10.) Plaintiff did not realize that the

labels were printed with the wrong PLU codes until informed by its customers. (Id.) At that

point, the melons were already in the stores and being sold for conventional prices. (Id.)

Plaintiff alleges that its customers rejected the organic melons, resulting in melons

being sold at lower prices or going bad. (Compl. ¶¶ 13-14.) Plaintiff also incurred costs in

connection with the re-labeling and re-packing of some of its melons. (Compl. ¶ 15.) In

addition, Plaintiff claims that it lost the supermarket chains as customers due to the

mislabeling. (Compl. ¶ 16.)

According to the Complaint, Kulow was an officer, director, and employee of HKE.

(Compl. ¶ 4.) Plaintiff alleges: “Defendant, in his capacity as an officer, director and

employee of HKE, and either alone or with others, consented to, approved, and actively

participated in the design, selection, manufacture, delivery, and supplying of the labels

ordered by Kelomar. Based on his prior business experience, Defendant could foresee the

harms to Kelomar, described below, that would be caused if HKE failed to provide Kelomar

labels with the correct PLU code number.” (Compl. ¶ 11.) 

 Plaintiff asserts a single claim of negligence against Kulow. 

In 2007, HKE filed a lawsuit against Plaintiff in state court for its alleged failure to pay

33 invoices in the amount of $259,630.50 for agricultural-packing supplies. In 2008, Plaintiff

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filed counterclaims against HKE for breach of contract, breach of warranty, strict liability,

negligence, and negligent misrepresentation. (Pl.’s Ex. 3.) Plaintiff’s claims against HKE

arise out of the same facts that form the basis of this action. The state litigation is still

pending. 

II. STANDARD

“After the pleadings are closed – but early enough not to delay trial – a party may

move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). Judgment on the pleadings is

proper “when the moving party clearly establishes on the face of the pleadings that no

material issue of fact remains to be resolved and that it is entitled to judgment as a matter

of law.” Hal Roach Studios, Inc. v. Richard Feiner & Co, Inc., 896 F.2d 1542, 1550 (9th Cir.

1989). All allegations of fact by the party opposing the motion are accepted as true, and

construed in the light most favorable to that party. General Conference Corp. of SeventhDay Adventists v. Seventh-Day Adventist Congregational Church, 887 F.2d 228, 230 (9th Cir.

1989). 

III. DISCUSSION

Kulow’s primary argument in support of his motion is that Plaintiff’s negligence claim

fails because Plaintiff cannot convert a breach of contract claim into a negligence claim. The

Court agrees with Kulow.

“A person may not ordinarily recover in tort for the breach of duties that merely restate

contractual obligations.” Aas v. Superior Court, 24 Cal. 4th 627, 643 (2000). Conduct

constituting a breach of contract is deemed tortious only when it also violates a duty

independent of the contract arising from principles of tort law. Applied Equipment Corp. v.

Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 515 (1994). Thus, the mere negligent breach of a

contract is not sufficient to support a tort claim, even if it is foreseeable that the defendant

would be damaged thereby. Erlich v. Menezes, 21 Cal. 4th 543, 552 (1999).

The California Supreme Court has held that outside the insurance context, a tortious

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breach of contract may be found only in the following limited circumstances:

(1) the breach is accompanied by a traditional common law tort, such as fraud

or conversion; (2) the means used to breach the contract are tortious, involving

deceit or undue coercion or; (3) one party intentionally breaches the contract

intending or knowing that such a breach will cause severe, unmitigable harm

in the form of mental anguish, personal hardship, or substantial consequential

damages.

Erlich, 21 Cal. 4th at 554 (quoting Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85,

105 (1995) (conc. and dis. opn. of Mosk, J.)). 

In this case, Kulow’s alleged duty to properly label the organic melons arose soley

from the contractual relationship between HKE and Plaintiff. Absent the contract, Kulow, an

officer or employee of HKE, would not be under any obligation to label the melons or to label

them in any particular way. See Stop Loss Ins. Brokers, Inc. v. Brown & Toland Med. Group,

143 Cal. App. 4th 1036, 1041 (2006) (explaining that the obligation of the defendant arose

out of an implied contract and that “[t]he law imposes no duty on strangers to promptly

process another’s data that is comparable to the duty imposed on all persons to exercise due

care to avoid injuring others”). Plaintiff’s true claim is a breach of contract claim against HKE.

There are no special circumstances in this case that warrant tort recovery for the

alleged breach of contract. HKE and Kulow’s actions have not been shown to “violate a

social policy that merits the imposition of tort remedies.” Aas, 24 Cal. 4th at 643 (citation

omitted). Plaintiff has not alleged any facts establishing that Kulow breached a duty

independent of the contract by, for example, engaging in fraud or deceit. 

In arguing that Kulow owed it a duty to properly label the melons, Plaintiff relies on the

factors set forth in Biakanja v. Irving, 49 Cal. 2d 647, 650 (1958) and J’Aire Corp. v. Gregory,

24 Cal. 3d 799, 804 (1979). Plaintiff’s reliance on these cases is misplaced. These cases

deal with whether a contracting defendant owes a duty of care to third-party beneficiaries of

the contract. Here, Plaintiff is a contracting party who alleges that it was owed a duty of care

by the employee/officer of the other contracting party. “Invoking the Biakanja factors to

create a tort duty in the absence of injury to a third party would circumvent [the] rule [that

parties ordinarily cannot recover in tort for breach of a contractual obligation] and blur the

law’s distinction between contract and tort remedies.” Stop Loss Ins. Brokers, Inc. v. Brown

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& Toland Med. Group, 143 Cal. App. 4th 1036, 1043 (2006). 

This case concerns an ordinary claim for breach of a business contract that resulted

in economic damages. Nothing in the Complaint indicates that tort remedies are warranted.

Therefore, the Court grants Kulow’s motion for judgment on the pleadings.

IV. CONCLUSION

For the reasons discussed above, Defendant’s motion for judgment on the pleadings

is GRANTED. The Clerk shall enter judgment in favor of Defendant and against Plaintiff on

the Complaint.

IT IS SO ORDERED.

DATED: November 12, 2009

Honorable Barry Ted Moskowitz

United States District Judge

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