Filed 11/10/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

DRINK TANK VENTURES

LLC,

Plaintiff and Respondent,

v.

REAL SODA IN REAL 

BOTTLES, LTD., et al.,

Defendants and 

Appellants.

 B298881, consolidated with 

 B302215

 (Los Angeles County

 Super. Ct. No. BC654392)

APPEAL from a judgment and postjudgment orders of the 

Superior Court of Los Angeles County, Terry A. Green, Judge. 

Judgment reversed with directions to dismiss complaint; 

postjudgment order vacated.

Felsenthal Law Firm and David B. Felsenthal; Joseph S. 

Socher for Defendants and Appellants.

JDP and Jeff Dominic Price for Plaintiff and Respondent.

* * * * * *
2

One beverage distributorship sued another for several 

claims, but ultimately narrowed its lawsuit to a solitary tort 

claim for intentional interference with a prospective economic 

advantage premised solely on the theory that the other had 

engaged in independently wrongful conduct by breaching a 

nondisclosure and noncircumvention agreement. This is an 

invalid theory as a matter of law because, as our Supreme Court 

has said time and again, an actor’s breach of contract, without 

more, is not “wrongful conduct” capable of supporting a tort 

(Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552 (Erlich); Cates 

Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 54 

(Cates)), including the tort of intentional interference with a 

prospective economic advantage (Arntz Contracting Co. v. St. 

Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 478-479 

(Arntz); JRS Products, Inc. v. Matsushita Electric Corp. of 

America (2004) 115 Cal.App.4th 168, 183 (JRS Products)). 

Unfortunately, no one—not the plaintiff, not the defendant, not 

the trial court—caught this error until the defendant moved for 

judgment notwithstanding the verdict after the jury returned a 

special verdict in the plaintiff’s favor that was premised solely on 

the breach of the agreement.

We hold that where the jury’s special verdict for the 

plaintiff is based on conduct that does not constitute an 

actionable tort, that verdict cannot stand. That is because, just 

as a trial court lacks subject matter jurisdiction to enter 

judgment for conduct that does not violate a criminal or civil 

statute (e.g., Dollenmayer v. Pryor (1906) 150 Cal. 1, 5 

(Dollenmayer); People ex rel. Allstate Ins. Co. v. Weitzman (2003) 

107 Cal.App.4th 534, 545-546 (Weitzman); People v. Vasilyan

(2009) 174 Cal.App.4th 443, 450 (Vasilyan)), a trial court also 
3

lacks subject matter jurisdiction to enter judgment for allegedly 

tortious conduct, fashioned by common law, that our Supreme 

Court has determined is not tortious. Because a party’s conduct 

cannot confer subject matter jurisdiction upon a court, the 

defendant’s delay in objecting is irrelevant. And because the 

plaintiff voluntarily whittled down its lawsuit to a solitary claim 

and then submitted a special verdict form requiring the jury to 

expressly find the invalid theory true, we may not infer other 

findings to “save” that verdict and must accordingly reverse that

judgment and dismiss the plaintiff’s case. The attorney fees 

order premised on the plaintiff prevailing consequently falls as 

well. 

FACTS AND PROCEDURAL BACKGROUND

I. Facts

A. Relationship between Real Soda and Drink 

Tank

Both Real Soda in Real Bottles, Ltd. (Real Soda) and Drink 

Tank Ventures, LLC (Drink Tank) distribute beverages and other 

consumables to retailers and restaurants in the Southern 

California region. Real Soda distributes old-timey craft sodas; 

Drink Tank, drinks and snacks. 

In early 2014, the founders of Real Soda and Drink Tank—

Daniel Ginsburg (Ginsburg) and Benjamin Kim (Kim), 

respectively—met and became fast friends. Around the time that 

Drink Tank started renting space for its operations in Real Soda’s 

large warehouse, Drink Tank made overtures about acquiring 

Real Soda. 

In June 2014, Real Soda and Drink Tank signed a Mutual 

Non-Disclosure and Non-Circumvention Agreement (the NDA).1

1 Ginsberg is not a party to the NDA. 
4

Among other provisions, the NDA (1) obligated the parties not to 

“directly or indirectly . . . divert any business, relationships, 

contracts or other benefits, or otherwise impair any business 

relationship [the other] has with any third [p]arty” for a period of 

at least two years, and (2) provided that the “Discloser [of 

information] shall be entitled to reasonable attorneys’ fees and 

costs” “[i]n the event a dispute arises under this Agreement” “in 

addition to all other remedies available to the Discloser . . . at law 

or otherwise.” 

On December 11, 2014, Real Soda and Drink Tank signed a 

letter of intent regarding the potential acquisition.

No acquisition occurred because Ginsburg thought Drink 

Tank’s asking price was too low. 

B. So Cal Beverage plays Real Soda and Drink 

Tank against each other

Enter Tico Group Inc., a company in the business of 

distributing beer, wine, and spirits in the Southern California 

region under the name So Cal Beverage Distributor (So Cal 

Beverage).

In the fall of 2014, Drink Tank started negotiating with 

Joseph Tchan (Tchan)— Tico Group, Inc.’s operator—to acquire 

So Cal Beverage. On December 2, 2014, Drink Tank and So Cal 

Beverage signed a letter of intent regarding a potential 

acquisition that obligated each not to negotiate with anyone else 

for 60 days. Drink Tank and So Cal Beverage exchanged a 

barrage of draft purchase agreements. Drink Tank consistently 

offered $240,000 to acquire So Cal Beverage. 

In late February 2015, Tchan approached Ginsburg. 

Within a few weeks, Real Soda started negotiating to acquire So 

Cal Beverage. On April 2, 2015, Real Soda and So Cal Beverage 
5

signed a letter of intent regarding a potential acquisition for 

$250,000. Pursuant to that letter, Real Soda gave So Cal 

Beverage a deposit of $5,000 on April 2 and a further payment of 

$125,000 on April 23, when the two companies signed a purchase 

agreement. 

As the trial court aptly observed, Tchan was “play[ing] both 

sides” by negotiating with both Drink Tank and Real Soda 

simultaneously. From emails with Kim, Ginsburg knew about 

the December 2014 letter of intent between Drink Tank and So 

Cal Beverage, and knew that those negotiations were still 

ongoing in mid-March 2017 (because one of Drink Tank’s 

investors flew to California regarding the possible deal). But 

Tchan assured Ginsburg that he had become dissatisfied and 

upset with the state of negotiations with Drink Tank, and that he 

had advised Drink Tank that the negotiations were effectively 

over. As a result, Tchan and Ginsburg did not inform Drink 

Tank about their negotiations. At the same time, however, 

Tchan never told Drink Tank that he was dissatisfied; instead, he 

kept negotiating with Drink Tank by continuing to provide 

feedback on draft purchase agreements—up to and even after he 

accepted the deposits from Real Soda. 

C. Real Soda acquires So Cal Beverage

Real Soda ended up paying the full $250,000 purchase 

price, and acquired So Cal Beverage.2

2 Real Soda later prevailed in an unrelated arbitration 

proceeding against So Cal Beverage and Tchan to unwind the 

deal and recover damages. 
6

II. Procedural Background

A. Pleadings

In March 2017, Drink Tank sued Real Soda and Ginsburg 

for (1) breach of contract and two torts regarding their alleged 

interference with a contract or potential contract between Drink 

Tank and a water supplier,3 and (2) intentional interference with 

a prospective economic advantage—namely, Drink Tank’s 

possible acquisition of So Cal Beverage—because Real Soda and 

Ginsburg (a) “breach[ed]” the NDA, and (b) otherwise “tortiously 

interfer[ed] in [Drink Tank’s] economic relationship and 

negotiations with” So Cal Beverage.

Drink Tank prayed for actual damages from Real Soda and 

Ginsburg exceeding $1.3 million as well as punitive damages. 

B. Trial

On the first day of trial, Drink Tank narrowed its lawsuit 

to its intentional interference with a prospective economic 

advantage claim involving So Cal Beverage.

Drink Tank also narrowed its theory of liability on that 

claim to the theory that Real Soda and Ginsburg had breached 

the NDA. The court instructed the jury that Drink Tank had to 

prove “that Real Soda . . . and/or [] Ginsburg . . . engage[d] in 

conduct that violated the written [NDA].” The trial court kept for 

itself the legal question whether that conduct was “wrongful.” 

Consistent with these instructions, Drink Tank argued in 

opening and closing statements that its claim “involve[d] . . . the 

solemnity of a contract” and that Real Soda and Ginsburg had 

violated the NDA by “diverting . . . business, diverting 

3 Drink Tank also sued the water supplier, but never served 

it, so it was never joined as a party to the lawsuit. 
7

relationships” away from Drink Tank and to themselves. 

Although the trial court did not expressly find that Real Soda and 

Ginsburg’s conduct in breaching the NDA was “wrongful,” it 

implicitly did so by submitting the case to the jury. Real Soda 

and Ginsburg did not object to the trial court’s handling of these 

issues.

After the trial court dismissed the punitive damages 

allegations, the jury returned a verdict awarding Drink Tank 

$250,000 in lost business opportunity damages and $100,000 in 

lost profits. In its special verdict, the jury found that “Real Soda . 

. . or . . . Ginsburg . . . engage[d] in conduct that violated the 

written [NDA].” There were no other special verdict findings 

regarding other possible wrongful conduct by Real Soda or 

Ginsburg. 

The trial court entered judgment for Drink Tank in midMarch 2019. 

C. Motion for judgment notwithstanding the 

verdict (JNOV)

In April 2019, Real Soda and Ginsburg filed a JNOV 

motion on the ground, as pertinent here, that the intentional 

interference verdict is invalid because the breach of a contract 

(such as the NDA) is not “wrongful” conduct capable of 

supporting such a claim. Following briefing and a hearing, the 

trial court denied the motion in May 2019. The court cited three 

reasons for denying relief on this ground: (1) Real Soda and 

Ginsburg’s challenge to the wrongfulness of the conduct is not a 

challenge to the sufficiency of the evidence, and thus is properly 

raised in a motion for new trial (and not a motion for JNOV); (2) 

Real Soda and Ginsburg cannot raise this challenge in a JNOV 

motion because they had made the “tactical decision[]” not to 
8

object until after the verdict and cannot now “ask the [trial] judge 

for a mulligan”; and (3) the verdict is supported by other wrongful 

conduct by Real Soda and Ginsburg aside from the breach of the 

NDA found by the jury, such as making “disparaging” and 

inaccurate remarks about Drink Tank to Tchan as well as 

engaging in a “breach of etiquette” by not telling Drink Tank 

about their negotiations with So Cal Beverage.

D. Motion for attorney fees

In July 2019, Drink Tank moved for attorney fees pursuant 

to the remedies clause in the NDA. Drink Tank sought a total of 

$785,981.70 in fees. After further briefing and a hearing, the 

trial court found that Drink Tank’s attorney had overbilled and 

overcharged; declined to use a multiplier; and awarded fees of 

$280,700 recoverable against Real Soda. 

E. Appeal and cross-appeal

Real Soda and Ginsburg appealed both the “judgment” and 

the postjudgment order denying their JNOV motion, and Real 

Soda appealed the postjudgment order granting Drink Tank 

attorney fees. 

Drink Tank cross-appealed the attorney fees order, but 

abandoned that cross-appeal by not briefing any challenge to the 

trial court’s award of attorney fees. 

DISCUSSION

Real Soda and Ginsburg argue that the trial court erred in 

letting the jury’s special verdict stand despite resting on a single 

tort premised on a legally invalid theory. This argument requires 

us to ask three questions: (1) Did the trial court err in implicitly 

concluding that Real Soda and Ginsburg’s breach of the NDA 

constituted “wrongful” conduct capable of supporting a claim for 

intentional interference with a prospective economic advantage? 
9

(2) If so, is that error cognizable in this appeal? (3) If so, what is 

the proper remedy? These questions all involve questions of law 

or the application of law to undisputed facts; as such, our review 

is de novo. (Kaanaana v. Barrett Business Services, Inc. (2021) 11 

Cal.5th 158, 165 [questions of law]; Boling v. Public Employment 

Relations Bd. (2018) 5 Cal.5th 898, 912-913 [application of law to 

undisputed facts]; Saffer v. JP Morgan Chase Bank, N.A. (2014) 

225 Cal.App.4th 1239, 1248 (Saffer) [subject matter jurisdiction 

is a question of law].) 

I. Was There Error?

To prevail on a claim for intentional interference with a 

prospective economic advantage, the plaintiff must prove (1) “‘“an 

economic relationship between the plaintiff and some third party, 

with the probability of future economic benefit to the plaintiff”’”; 

(2) “the defendant’s knowledge of the relationship”; (3) (a) the 

defendant engaged in conduct that interfered with that 

relationship and (b) the defendant’s conduct was “independently 

wrongful”—that is, ‘“wrongful by some measure beyond the fact 

of the interference itself’”; (4) the defendant either intended to 

interfere with the relationship or “knew that the interference was 

certain or substantially certain to occur as a result of its” 

conduct; and (5) the defendant’s acts “proximately caused” 

“economic harm to the plaintiff.” (Roy Allan Slurry Seal, Inc. v. 

American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512 (Roy 

Allan Slurry); Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 

Cal.5th 1130, 1141 (Ixchel); Korea Supply Co. v. Lockheed Martin 

Corp. (2003) 29 Cal.4th 1134, 1153-1154, 1164-1165 (Korea 

Supply); Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 

Cal.4th 376, 392-393 (Della Penna); see also CACI No. 2202.) 
10

Where, as here, the plaintiff asserts the right to a trial by 

jury, it is the jury’s job to adjudicate whether the plaintiff has 

proven every element—except the third element. The 

responsibility of adjudicating the third element is divided 

between the jury and the trial court: Whether the defendant 

engaged in interfering conduct (part (3)(a)) is, like the other 

elements of this tort, a factual question for the jury, but whether 

that conduct is independently wrongful (part (3)(b)) is a legal 

question for the trial court. (CACI No. 2202, Directions for Use 

[“Whether the conduct alleged qualifies as wrongful . . . is 

resolved by the court as a matter of law”]; Crown Imports, LLC v. 

Superior Court (2014) 223 Cal.App.4th 1395, 1404-1405 (Crown 

Imports) [“The fact that the defendant’s conduct was 

independently wrongful is an element of the cause of action 

itself”].)

The requirement that the defendant’s interference be 

independently wrongful means that it is not enough for a plaintiff 

to show that the defendant interfered with the plaintiff’s 

economic relationship with the third party (Della Penna, supra, 

11 Cal.4th at pp. 378-379, 392-393; Ixchel, supra, 9 Cal.5th at p. 

1142), even if the defendant did so with an improper motive 

(Korea Supply, supra, 29 Cal.4th at pp. 1158 & 1159, fn. 11 [“[a]n 

act is not independently wrongful merely because defendant 

acted with an improper motive”]; San Jose Construction, Inc. v. 

S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545; Artnz,

supra, 47 Cal.App.4th at p. 477 [“bad thoughts are no tort”]). To 

establish that the defendant’s interfering conduct was 

independently wrongful, the plaintiff must instead prove that the 

conduct—whether directed at the plaintiff or someone else—was 

‘“proscribed by some constitutional, statutory, regulatory, 
11

common law, or other determinable legal standard.’” (Ixchel, at 

p. 1142, quoting Korea Supply, at p. 1159; Reeves v. Hanlon

(2004) 33 Cal.4th 1140, 1152; Crown Imports, supra, 223 

Cal.App.4th at p. 1405 [conduct need not be “independently 

wrongful as to the plaintiff”]; accord, Tri-Growth Centre City, Ltd. 

v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 

Cal.App.3d 1139, 1153-1154 [defendant’s conduct breached a 

fiduciary duty; independently wrongful]; PMC, Inc. v. Saban 

Entertainment, Inc. (1996) 45 Cal.App.4th 579, 602-603 (PMC) 

[defendant’s conduct violated “federal or state law or unethical 

business practices,” such as “defamation, trade libel or trade 

mark infringement”; independently wrongful], disapproved on 

other grounds in Korea Supply, at p. 1059, fn. 11.)

What is more, the requirement that the defendant’s 

interference be independently wrongful is an essential—and, 

indeed, defining and limiting—aspect of the tort of intentional 

interference with a prospective economic advantage. It is quite 

literally the element that causes the interference to be a tort. 

(Korea Supply, supra, 29 Cal.4th at p. 1159 [“It is this 

independent wrongfulness requirement that makes defendants’ 

interference with plaintiff’s business expectancy a tortious act”].) 

There is a good reason for this. Where the economic relationship 

between a plaintiff and a third party has ripened into an 

enforceable contract, that “contract receives greater solicitude” 

and a defendant’s effort to cause a breach of that contract “is . . . 

a wrong in and of itself.” (Quelimane Co. v. Stewart Title 

Guaranty Co. (1998) 19 Cal.4th 26, 55-56.) But where the 

plaintiff and a third party have only a “prospective contractual 

relationship,” that third party’s business is still up for grabs: 

“[A]s long as” other market participants “use[] fair and 
12

reasonable means” to entice the third party away from the 

plaintiff, the “privilege of free competition” shields those 

participants from liability in tort for doing so. (PMC, supra, 45 

Cal.App.4th at p. 603; Bed, Bath & Beyond of La Jolla, Inc. v. La 

Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 

881.) The limitation of the tort of intentional interference with a 

prospective economic advantage to cases where the plaintiff 

proves that the defendant’s conduct was independently wrongful 

thus “sensibly redresses the balance between providing a remedy 

for predatory [that is, wrongful] economic behavior” (on the one

hand) “and keeping legitimate business competition outside 

litigative bounds” (on the other). (Della Penna, supra, 11 Cal.4th 

at p. 378; Ixchel, supra, 9 Cal.5th at pp. 1142, 1146.) 

Because, as noted above, Drink Tank narrowed its lawsuit 

to a single claim for intentional interference with a prospective 

economic advantage and then further narrowed that claim to the 

theory that Real Soda and Ginsburg’s conduct was independently 

wrongful solely because they “violated the written [NDA],” the 

question then becomes: Did the trial court err in implicitly 

concluding that a violation of the NDA constituted independently 

wrongful conduct?

It did. 

That is because “[c]onduct amounting to a breach of 

contract becomes tortious only when it also violates an 

independent duty arising from principles of tort law.” (Applied 

Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 

503, 515; Erlich, supra, 21 Cal.4th at p. 551; Aas v. Superior 

Court (2000) 24 Cal.4th 627, 643, superseded on other grounds by 

Civ. Code, §§ 895-945.5.) Because a bare breach of contract, 

without more, is not tortious, such a breach cannot constitute 
13

independently wrongful conduct capable of giving rise to the tort 

of intentional interference with a prospective economic 

advantage. (Cates, supra, 21 Cal.4th at p. 54 [“‘[a] contracting 

party’s unjustified failure or refusal to perform is a breach of 

contract, and cannot be transmuted into tort liability by claiming 

that the breach detrimentally affected the promisee’s business’”]; 

Artnz, supra, 47 Cal.App.4th at pp. 478-479 [dismissing claim for 

intentional interference with a prospective economic advantage 

premised on defendant’s breach of a contract with the plaintiff]; 

JRS Products, supra, 115 Cal.App.4th at p. 183 [same]; Deerpoint 

Group, Inc. v. Agrigenix, LLC (E.D.Cal. 2018) 345 F.Supp.3d 

1207, 1235 [“Under California law, a breach of contract cannot 

constitute the ‘wrongful’ conduct required for the tort of 

interference with prospective economic advantage”].)

For these reasons, we conclude that, by sending the case to 

the jury, the trial court erred in implicitly ruling that Real Soda 

and Ginsburg’s breach of the NDA qualified as an independently 

wrongful act.

II. Is the Error Cognizable In This Appeal?

Due to the trial court’s error, Real Soda and Ginsburg have 

been found liable based on conduct that is not independently 

wrongful—and, as a consequence, not tortious. May this verdict 

stand because Real Soda and Ginsburg did not bring this error to 

the court’s attention until after trial? 

It must not stand, for two interlocking reasons.

The first reason is that a trial court lacks subject matter 

jurisdiction to enter judgment for conduct that our Supreme 

Court has determined does not amount to a tort.

“Subject matter jurisdiction . . . is the power of the court 

over a cause of action or to act in a particular way.” (Greener v. 
14

Workers Comp. Appeals Bd. (1993) 6 Cal.4th 1028, 1035, italics 

added; Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, 

1236 [“Subject matter jurisdiction concerns the authority of the 

court to try a certain type of action . . .”], italics added; Quigley v. 

Garden Valley Fire Protection Dist. (2019) 7 Cal.5th 798, 807 [“A 

lack of fundamental jurisdiction is the “‘“‘entire absence of power 

to hear or determine the case”’”], italics added; cf. People v. 

American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660 

[“Lack of [subject matter] jurisdiction . . . means an entire . . . 

absence of authority over the subject matter”].) 

Causes of action—and the subject matter jurisdiction that 

trial courts possess to entertain them—can arise (1) from statutes 

enacted by legislative bodies (such as our Legislature or 

Congress), except where that authority has been curtailed by the 

Supremacy Clauses of the federal or California Constitutions 

(e.g., De Tomaso v. Pan American World Airways, Inc. (1987) 43 

Cal.3d 517, 520, fn. 1 [“[w]hether or not tort claims are 

preempted by [federal Railway Labor Act] is a question of subject 

matter jurisdiction”]; El Rancho Unified School Dist. v. National 

Education Assn. (1983) 33 Cal.3d 946, 961 [federal statute divests 

trial courts of subject matter jurisdiction over lawsuit for 

damages]) or (2) from judges exercising their inherent, common 

law authority to fashion remedies, except where that authority 

has been curtailed by statutory or constitutional law (Olcese v. 

Justice’s Court (1909) 156 Cal. 82, 85 [trial courts are the “courts 

with the fullest common law and equity jurisdiction”]; Dale v. 

Dale (1998) 66 Cal.App.4th 1172, 1177-1178 [“The superior court 

has subject matter jurisdiction over a tort action . . .”]; Cory v. 

Shierloh (1981) 29 Cal.3d 430, 439 [“the Legislature possesses a 

broad authority both to establish and to abolish tort causes of 
15

action”], superseded on other grounds by Bus. & Prof. Code, § 

25602.1.)

Where a party purports to bring a statute-based cause of 

action that does not satisfy its statutory prerequisites, a trial 

court lacks subject matter jurisdiction. This is true for civil 

causes of action. (E.g., Weitzman, supra, 107 Cal.App.4th at pp. 

545-546 [statute allows litigant to bring qui tam suit for public 

disclosure of information, but only if he was not original source of 

that information; failure to satisfy this requirement means no 

subject matter jurisdiction]; Dollenmayer, supra, 150 Cal. at p. 5 

[statute allows action only if there is a “lawful order of reference”; 

failure to satisfy this requirement means no subject matter 

jurisdiction]; Vaughn v. Condon (1921) 52 Cal.App. 713, 715-716 

[statute allows for garnishment, but not by public corporations; 

failure to satisfy this requirement means no subject matter 

jurisdiction]; cf. In re Estate of Keet (1940) 15 Cal.2d 328, 336 

[trial court’s decree is “clearly within its statutory grant of

jurisdiction” means subject matter jurisdiction exists].) It is also 

true for prosecutions for crimes that must, in California, be 

defined by statute; thus, a trial court lacks subject matter 

jurisdiction to accept a plea for conduct that does not fall within 

any statutorily defined crime. (E.g., Vasilyan, supra, 174 

Cal.App.4th at pp. 448-450 [a trial court “lack[s] subject matter 

jurisdiction” over a “conviction and sentence imposed for a crime 

that does not exist”]; People v. Wallace (2003) 109 Cal.App.4th 

1699, 1704 [same].)4

4 The courts are currently split over whether a trial court 

categorically lacks subject matter jurisdiction where the 

statutory prerequisite that goes unmet is the requirement of 

exhaustion of claims or the presentation of claims to a public 
16

By this same logic, a trial court also lacks subject matter 

jurisdiction where a party purports to bring a common law-based 

cause of action that does not satisfy its judicially articulated 

prerequisites.

Even though the tort of intentional interference with a 

prospective economic advantage is a common law creation, our 

Supreme Court has definitively ruled that a plaintiff does not 

have a valid claim for this tort where the sole interference alleged 

is a breach of contract. Put differently, where the plaintiff’s sole 

theory supporting the special verdict and the judgment is that 

the defendant’s conduct was wrongful because the defendant 

breached a contract, there is no tort. Because there is no tort, the 

trial court in this case lacked subject matter jurisdiction.

The parties resist this conclusion, noting the longstanding 

principle that a court’s subject matter jurisdiction does not turn 

on the “sufficiency or insufficiency of [the] pleadings,” at least 

where the “pleadings state a case belonging to a general class 

over which the authority of the court extends.” (In re Application 

of Sargen (1933) 135 Cal.App. 402, 408-409; City of Santa Paula 

agency. (Compare Redlands High School Dist. v. Superior Court

(1942) 20 Cal.2d 348, 360 [failure to satisfy claims presentation 

requirement does not deprive trial court of subject matter 

jurisdiction]; State of California v. Superior Court (2004) 32 

Cal.4th 1234, 1239-1240 & fn. 7 [same]; Keiffer v. Bechtel Corp.

(1998) 65 Cal.App.4th 893, 900 [failure to exhaust administrative 

remedies “does not concern . . . subject matter jurisdiction”]; 

Mission Housing Development Co. v. City & County of San 

Francisco (1997) 59 Cal.App.4th 55, 66-68 [same] with Saffer,

supra, 225 Cal.App.4th at pp. 1252-1253 [failure to exhaust 

administrative remedies required by a federal statute “implicates 

a question of subject matter jurisdiction”].) However, this split is 

not implicated here.
17

v. Narula (2003) 114 Cal.App.4th 485, 491 [“an error in the 

labeling of the pleading did not deprive the court of 

jurisdiction”].) This principle is of no help here for two reasons. 

To begin, the operative pleading in this case—that is, Drink 

Tank’s complaint—was “sufficient” to invoke the court’s subject 

matter jurisdiction because it alleged independently wrongful 

conduct beyond the bare breach of the NDA. Further, and more 

to the point, it was Drink Tank’s decision to narrow its lawsuit 

and to obtain a special verdict based solely on the bare breach of 

the NDA that yielded a judgment for conduct that is not a tort as 

defined by our Supreme Court and hence outside the trial court’s 

subject matter jurisdiction. 

The second reason is that a trial court’s lack of subject 

matter jurisdiction generally cannot be forfeited, waived, or the 

subject of invited error or estoppel. (Schlyen v. Schlyen (1954) 43 

Cal.2d 361, 375-376 [subject matter jurisdiction “‘may not be 

conferred by consent, waiver, agreement, acquiescence or 

estoppel’”]; People v. Tindall (2000) 24 Cal.4th 767, 776, fn. 6 

[same].) Because a judgment issued by a court lacking subject 

matter jurisdiction is void (Varian Medical Systems, Inc. v. 

Delfino (2005) 35 Cal.4th 180, 196), the possible nonexistence of 

such jurisdiction may be raised “‘whenever that issue comes to 

the court’s attention,’” including for the first time on appeal

(Totten v. Hill (2007) 154 Cal.App.4th 40, 46; People v. Lara

(2010) 48 Cal.4th 216, 225).5

5 The exception providing that parties may lose the right to 

object to a trial court’s common law-based subject matter 

jurisdiction by not invoking a statute that operates to displace 

that jurisdiction (Doney v. Tambouratgis (1979) 23 Cal.3d 91, 98-

99; Popejoy v. Hannon (1951) 37 Cal.2d 159, 173, superseded by 
18

Drink Tank responds with what boils down to three 

arguments.

First, Drink Tank invites us to view the issue here as an 

error with the jury instructions or the special verdict form, and

notes that such errors may be forfeited, waived, or found to be 

invited error or the subject of estoppel. To be sure, unlike a trial 

court in a criminal case that has “the ultimate responsibility for 

properly instructing the jury” (People v. Wickersham (1981) 32 

Cal.3d 307, 335, overruled on other grounds in People v. Barton 

(1995) 12 Cal.4th 186), a trial court in a civil case has “‘no duty to 

instruct on its own motion’” (Agarwal v. Johnson (1979) 25 Cal.3d 

932, 950-951, disapproved on other grounds in White v. Ultramar, 

Inc. (1999) 21 Cal.4th 563) and no duty to revise incorrect 

instructions (Truman v. Thomas (1980) 27 Cal.3d 285, 301). 

Consequently, errors in the jury instructions can be forfeited by a 

party’s failure to object, can be the subject of waiver or estoppel 

due to a party’s acquiescence, and can be deemed invited error if 

that acquiescence was tactical. (Saxena v. Goffney (2008) 159 

Cal.App.4th 316, 328-329; Mesecher v. County of San Diego (1992) 

9 Cal.App.4th 1677, 1685-1686; Elisalda v. Welch’s Sand & 

Gravel Co. (1968) 260 Cal.App.2d 46, 51-52.) And although it is 

the plaintiff who bears the burden of submitting a special verdict 

form that obtains a finding on each of the questions essential to 

liability (Behr v. Redmond (2011) 193 Cal.App.4th 517, 531-532 

statute on other grounds as stated in Marsh v. Tilley Steel Co. 

(1980) 486, 496) certainly exists, but it has no applicability here, 

where the limitation on subject matter jurisdiction derives from 

our Supreme Court’s binding delineation of the boundaries of a 

tort that must be satisfied as an element of the plaintiff’s case 

(Della Penna, supra, 11 Cal.4th at p. 378) rather than an 

optional, statute-based affirmative defense.
19

(Behr)), errors in a special verdict form are not cognizable on 

appeal if they were invited by the defendant (Saxena, at pp. 328-

329). But neither the jury instructions nor the special verdict 

form in this case were erroneous: The trial court instructed the 

jury to make every factual finding entrusted to it, and the special 

verdict form tracked those instructions. As noted above, the error 

here was with the trial court’s erroneous finding—on a question 

of law entrusted to it—that Real Soda and Ginsburg’s alleged 

breach of contract was independently “wrongful” and it was this 

erroneous legal finding that led to a verdict being entered on 

conduct that does not constitute a tort at all and thus led to a 

judgment entered when the court lacked subject matter 

jurisdiction.

Second, Drink Tank suggests that Real Soda and Ginsburg 

used the wrong procedural vehicle—namely, a motion for JNOV 

rather than a motion for new trial—to raise their objection to the 

verdict. This argument is beside the point. Real Soda and 

Ginsburg appealed both the order denying the JNOV motion and

the judgment itself. Those are separately appealable. 

(Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 

62, 68 [“The moving party may appeal from the judgment or from 

the order denying the motion for judgment notwithstanding the 

verdict, or both”]; Code Civ. Proc., § 904.1, subds. (a)(1) & (a)(4) 

[“judgment” and “order . . . denying a motion for judgment 

notwithstanding the verdict” each subject to appeal].)

Regardless of any limits on the scope of the JNOV motion, we 

may certainly consider a challenge to the trial court’s subject 

matter jurisdiction on appeal from the judgment. 

Lastly, Drink Tank argues that its complaint properly 

alleged a claim for intentional interference with a prospective 
20

economic advantage. This is correct, as the complaint alleged two 

categories of “wrongful conduct”—namely, (1) the alleged breach 

of the NDA, and (2) other, unspecified “tortious[] interference.” 

But it is also irrelevant because Drink Tank subsequently 

narrowed its claim at trial to the legally invalid breach-ofcontract theory.6

For these reasons, we conclude that the absence of subject 

matter jurisdiction is cognizable in this appeal.

III. What Is the Proper Remedy?

A. As to the judgment

Using a special verdict (rather than a general verdict) can 

be risky. On the front end, the plaintiff must be excruciatingly

careful to make sure that the special verdict form contains every 

finding necessary to sustain a cause of action (Pinto v. Farmers 

Ins. Exchange (2021) 61 Cal.App.5th 676, 693; Myers Building 

Industries, Ltd. v. Interface Technology, Inc. (1993) 13 

Cal.App.4th 949, 959-960 (Myers Building)) because any missing 

elements preclude a judgment in the plaintiff’s favor. The risk of 

error falls solely on the plaintiff because it is the plaintiff, as the 

party with the burden of proof, who has the “responsibility for 

submitting a verdict form sufficient to support her causes of 

action.” (Behr, supra, 193 Cal.App.4th at p. 531.) On the back 

end, the plaintiff is limited to the express findings made by the 

jury in the special verdict form and, unlike with a general 

verdict, courts cannot imply findings to support a special verdict. 

(Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 

6 This is also why Drink Tank’s request, at oral argument, 

for leave to amend its complaint is misplaced; the defect is not 

with the operative complaint but with how Drink Tank 

subsequently chose to narrow it.
21

285; Singh v. Southland Stone, U.S.A., Inc. (2010) 186 

Cal.App.4th 338, 358.) If an essential finding is missing, its 

“absence . . . precludes judgment for the plaintiff on that claim.” 

(Behr, at p. 531.)

So what is the proper remedy when a trial court lacks 

subject matter jurisdiction because the only remaining claim is 

based solely on a theory that renders the defendants’ conduct 

nontortious, and the special verdict form submitted to the jury is 

limited to findings pertaining to that invalid theory?

It is reversal with instructions to dismiss the plaintiff’s 

case.

Although Drink Tank initially alleged other claims and, as 

to the intentional interference with a prospective economic 

advantage claim, initially alleged other theories of wrongful 

conduct aside from Real Soda and Ginsburg’s breach of the NDA, 

Drink Tank voluntarily dismissed its other claims and, in its 

special verdict form, voluntarily narrowed its intentional 

interference claim to a theory of wrongful conduct based on a 

breach of the NDA. Drink Tank is stuck with these choices, and 

these choices lead ineluctably to the conclusion that dismissal of 

its action is the necessary remedy.

Drink Tank points us to evidence from the trial that it 

argues demonstrates Ginsburg disparaged Drink Tank to Tchan, 

misused Drink Tank’s confidential and proprietary information, 

misappropriated trade secrets, breached Drink Tank’s 

“confidence,” and otherwise engaged in unfair business practices 

in violation of California’s unfair competition law (Bus. & Prof. 

Code, § 17200). To be sure, this conduct might in theory be 

sufficient to elevate Real Soda and Ginsburg’s breach of the NDA 

into a tortious breach of contract, which exists outside the bad 
22

faith insurance context when “‘(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, unimaginable harm in the form of mental 

anguish, personal hardship, or substantial consequential 

damages.’” (Erlich, supra, 21 Cal.4th at pp. 553-554.) But Drink 

Tank’s use of the special verdict form precludes us from inferring 

that the jury’s finding of wrongful conduct was based on any of 

these other, possibly valid theories. 

B. As to the attorney fees award

Does our conclusion that the judgment in Drink Tank’s 

favor must be reversed and that Drink Tank’s sole remaining 

claim dismissed mandate that the award of attorney fees in its 

favor also be vacated?

It does.

Although California follows the American rule that 

requires parties to bear their own attorney fees, parties may alter 

that rule by contract to allow for the award of attorney fees to the 

party who prevails in litigation between them. (Code Civ. Proc., § 

1021; Miske v. Coxeter (2012) 204 Cal.App.4th 1249, 1259 [section 

1021 “allows the parties to agree that the prevailing party in 

litigation may recover attorney fees”]; Civ. Code, § 1717, subd. (a) 

[authorizing an award of attorney fees “to the prevailing party” 

“[i]n any action on a contract” if “the contract specifically 

provides” for attorney fees].) 

The trial court’s award of attorney fees in this case was 

based upon the remedies clause in the NDA, which entitles the 

“Discloser” to “reasonable attorney’s fees” “[i]n the event a 
23

dispute arises under this Agreement” “in addition to all other 

remedies available to the Discloser . . . at law or otherwise.” 

Although this clause does not expressly limit the award of 

attorney fees to the prevailing party, we must imply that 

limitation: It is required by the pertinent statutes (Code Civ. 

Proc., § 1021; Civ. Code, § 1717); it is implied by the clause itself, 

which provides for attorney fees “in addition to all other remedies 

available,” and there are no remedies available to the party that 

does not prevail; and it is necessary to avoid giving the clause the 

absurd instruction that would entitle the “Discloser” to attorney 

fees in all situations, including if it brought an utterly frivolous 

lawsuit (Morris v. Reclamation Dist. No. 108 (1941) 17 Cal.2d 43, 

51).

Because, in light of our rulings, Drink Tank did not prevail 

in its lawsuit against Real Soda and Ginsburg, Drink Tank is not 

entitled to any attorney fees and the trial court’s order awarding 

fees must be vacated.

* * *

Given our disposition, we need not reach the remaining 

arguments challenging the validity of the verdict.
24

DISPOSITION

The judgment is reversed, the order granting attorney fees 

is vacated, and the trial court is ordered to dismiss plaintiff’s 

complaint in its entirety. Each party is to bear its own costs on 

appeal.

CERTIFIED FOR PUBLICATION.

______________________, J.

HOFFSTADT

We concur:

_________________________, P. J.

LUI

_________________________, J.

ASHMANN-GERST