Court Opinion

ID: 867719
Source: CourtListenerOpinion
Date Created: 2013-05-13 19:56:00.266941+00
Date Added: 2024-06-11T15:26:47.071692
License: Public Domain

Filed 5/13/13 Guiboa v. Pepperidge Farm CA2/4

                    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                         SECOND APPELLATE DISTRICT

                                                        DIVISION FOUR

JAMES M. GUIBOA,                                                              B235102

          Plaintiff and Appellant,                                            (Los Angeles County
                                                                              Super. Ct. No. PC044616)
          v.

PEPPERIDGE FARM, INC.,

          Defendant and Respondent.

          APPEAL from a judgment of the Superior Court of Los Angeles County,
Burt Pines, Judge. Affirmed.
          Law Offices of Todd D. Thibodo, Todd D. Thibodo and Ankur Tarneja;
Benedon & Serlin, Gerald M. Serlin and Douglas G. Benedon for Plaintiff and Appellant.
          Allen Matkins Leck Gamble Mallory & Natsis, Anthony J. Oliva and
Andrew E. Miller for Defendant and Respondent.
       Plaintiff James M. Guiboa appeals from a defense judgment in this case arising
from a consignment agreement under which he distributed goods produced by defendant
Pepperidge Farm, Inc. Guiboa argues the trial court erred in granting nonsuit on his
cause of action for breach of the implied covenant of good faith and fair dealing and for
punitive damages. He also challenges the sufficiency of the evidence supporting the
jury‘s verdict that Pepperidge Farm was not required to pay him the fair market value of
his distributorship following the termination of the consignment agreement for cause. He
asserts that on remand, the jury should decide his cause of action for conversion and the
court should decide his cause of action for unfair business practices under Business and
Professions Code section 17200.
       We find no basis for reversal and affirm.

                     FACTUAL AND PROCEDURAL SUMMARY
       Guiboa purchased a Pepperidge Farm distributorship route in 1975 from a third
party and entered into a consignment agreement with Pepperidge Farm to distribute
cookies and crackers within that defined, and exclusive, territory in southern California.
As a Sales Development Associate (S.D.A.), Guiboa was an independent contractor. He
received a 20 percent commission on gross sales within his territory.
       Over the next 33 years, Guiboa‘s distribution territory for Pepperidge Farm
changed, sometimes expanding through purchases of additional territory, and sometimes
contracting due to the sale of portions of the territory to third parties. Pepperidge Farm
had the right to approve the potential buyers of parts of Guiboa‘s territory. Each time the
territory changed, Guiboa and Pepperidge Farm entered into a new consignment
agreement. They entered into the last of these consignment agreements in December
2004 (the Agreement). It covered Guiboa‘s distribution territories in the San Fernando
and Santa Clarita Valleys.
       Paragraph 7 of the Agreement provided that if Guiboa failed to maintain
satisfactory distribution service to any retail store within his territory ―and such failure is
not remedied within five days after written notice thereof from [Pepperidge Farm],

                                               2
[Pepperidge Farm] may make other arrangements, on either a permanent or temporary
basis in the discretion of [Pepperidge Farm], for the service of such store.‖
       The Agreement provided for termination for cause, or without cause. Paragraph
17 set the terms for termination with cause upon written notice. Only the first two
grounds for termination for cause are relevant here: (a) failure ―adequately to realize the
sales potential of the territory‖ and ―failure to make satisfactory improvement within
thirty days after notice of inadequacy‖, and (b) failure to perform or comply with any
material terms of the Agreement and the continuance of such failure for seven days after
written notice from Pepperidge Farm. Paragraph 17 concluded: ―Termination pursuant
to this paragraph shall operate to release all rights and obligations hereunder of both
[Pepperidge Farm] and [Guiboa] except the right to receive any favorable balances and
the obligation to pay any adverse balances.‖ No provision for payment of the value of
Guiboa‘s territory was included in paragraph 17.
       Paragraph 18 of the Agreement stated the terms for termination without cause.
Pepperidge Farm was given the right in its discretion to terminate the Agreement at any
time without cause upon written notice. A procedure was provided for determining the
fair market value of the franchise and payment to the distributor: ―Upon termination
pursuant to this paragraph [Pepperidge Farm] will pay to [Guiboa] a sum equal to the fair
market value of this franchise on the termination date plus 25% of such value, such value
to be determined either by agreement between [Pepperidge Farm] and [Guiboa] or, if they
shall be unable to agree, by three arbitrators, one of whom shall be chosen by
[Pepperidge Farm] and one by [Guiboa] and the third by the two first chosen.‖ Paragraph
18 concluded: ―Termination pursuant to this paragraph shall operate to release all rights
and obligations hereunder of both [Pepperidge Farm] and [Guiboa] except (a) the right to
receive any favorable balances and the obligation to pay any adverse balances and (b) the
rights and obligations with respect to payment and arbitration stated in this paragraph.‖
       Beginning in February 2007, Pepperidge Farm received complaints from
customers (stores in Guiboa‘s territory) about poor service. Pepperidge Farm conducted
store audits. Based on a total of 56 separate failed audits, it sent Guioba a series of 24

                                              3
―5-day letters‖ directing him to cure identified deficiencies within 5 days. In May, July,
and October 2008, Pepperidge Farm sent Guioba ―Business Development System‖ or
―B.D.S.‖ letters outlining the serious problems being experienced within Guiboa‘s
territory. Each letter warned that failure to resolve the problems could result in
termination of Guiboa‘s Agreement for cause. In addition, each time a B.D.S. letter was
issued, Pepperidge Farm managers met with Guiboa in an effort to resolve the service
problems.
       After the October 2008 B.D.S. letter was sent, new audits were conducted of
several stores within Guiboa‘s territory. Based on continuing service deficiencies, on
November 14, 2008, Pepperidge Farm notified Guiboa that his agreement had been
terminated for cause. Pepperidge Farm marketed Guiboa‘s territory for sale, as a single
route, broken into five separate territories. Although no buyer was found for the entire
territory, by October 2010, all five pieces of the territory had been sold for a total of
$1,382,087.25. He never brought any prospective buyers for his territory to Pepperidge
Farm. All sale proceeds went to Guiboa.
       Guiboa sued Pepperidge Farm, alleging causes of action for breach of contract,
breach of the implied covenant of good faith and fair dealing, conversion, unfair business
practices under Business and Professions Code section 17200, and for declaratory relief.1
After Guiboa rested at the jury trial, Pepperidge Farm moved for nonsuit on the causes of
action for conversion, breach of the implied covenant of good faith and fair dealing,
violation of Business and Professions Code section 17200, and the claim for declaratory
relief.2 The trial court deferred ruling on the motion until the close of Pepperidge Farm‘s
case. It then granted nonsuit on the cause of action for breach of the implied covenant of
good faith. It also ruled that there was insufficient evidence of oppression, fraud, or

       1 Guiboa‘s causes of action for libel and slander were withdrawn before trial. In
addition, Ronald Woolsey, a Pepperidge Farm manager, was dismissed as a defendant.

       2 During argument on the nonsuit motion, Guioba agreed to dismissal of his
declaratory relief cause of action.

                                               4
malice to allow the claim for punitive damages, but denied the motion as to the
conversion cause of action. It deferred ruling on the unfair business practices claim.
       The jury deliberated on Guiboa‘s causes of action for breach of contract and
conversion. It rendered a special verdict in favor of Pepperidge Farm. Answering the
first two questions on the special verdict form, the jury found that Pepperidge Farm had
terminated the Agreement for cause, and that it was not required to pay Guiboa the fair
market value of the distribution territory. At that point, the verdict form directed the jury
not to answer the remaining questions, and to have the foreperson sign and date the form.
The unanswered questions asked the jury to determine the fair market value of the
distributorship as of the date of termination, whether Pepperidge Farm was liable for
conversion, and if so, Guiboa‘s damages for conversion. The trial court then determined
that Guiboa was not entitled to equitable relief under Business and Professions Code
section 17200. Guiboa‘s motions for judgment notwithstanding the verdict and for new
trial were denied. Judgment for Pepperidge Farm was entered and this timely appeal
followed.

                                       DISCUSSION
                                               I
       Since the trial court deferred ruling on Pepperidge Farm‘s motion for nonsuit until
both sides had rested, its ruling was technically a directed verdict. It is a distinction
without substance because like a nonsuit, a motion for directed verdict is in the nature of
a demurrer to the evidence. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621,
629.) ―A directed verdict may be granted only when, disregarding conflicting evidence,
giving the evidence of the party against whom the motion is directed all the value to
which it is legally entitled, and indulging every legitimate inference from such evidence
in favor of that party, the court nonetheless determines there is no evidence of sufficient
substantiality to support the claim or defense of the party opposing the motion, or a
verdict in favor of that party. [Citations.]‖ (Id. at pp. 629–630.) The trial court

                                               5
considering such a motion has no power to weigh the evidence and may not consider the
credibility of the witnesses. (Id. at p. 629.)
       On appeal, ―we review the evidence in the light most favorable to the plaintiff,
resolving all conflicts and drawing all inferences in its favor and disregarding conflicting
evidence. [Citations.] We must reverse the judgment if substantial evidence exists that
would tend to prove each of the elements of the plaintiff‘s case. [Citation.]‖ (Wolf v.
Walt Disney Pictures and Television (2008) 162 Cal.App.4th 1107, 1119.)

                                                 II
       We begin by clarifying which matters are not appealed by Guiboa. He does not
challenge the sufficiency of the evidence supporting the verdict for Pepperidge Farm on
the cause of action for breach of contract. He ―does not contest that substantial evidence
supports the jury‘s finding that he was terminated for cause.‖ But he contends that this
concession is not a sufficient basis for nonsuit on his claim for breach of the implied
covenant of good faith and fair dealing.
       Guiboa argues that his breach of the implied covenant should have gone to the jury
based on Pepperidge Farm‘s conduct after the Agreement was terminated. His position is
that the territory itself had a market value since he had the exclusive right to distribute
within that geographic area. He contends that upon termination for cause, Pepperidge
Farm should have paid him the fair market value of the territory immediately, and then
sold it when able to do so to offset the sum paid to him. Based on these assumptions, he
asserts that Pepperidge Farm deprived him of the benefits of the Agreement by
―(1) taking Guiboa‘s distributorship, (2) failing to immediately, or—at minimum—within
a reasonable time, pay Guiboa upon termination of the Consignment Agreement,
(3) retaining Guiboa‘s funds for its own use, (4) obtaining the time benefit of Guiboa‘s
funds before selling the distributorship, (5) keeping the commissions on the sales within
Guiboa‘s territory, (6) breaking up Guiboa‘s distributorship, which reduced its value and
the ease with which it could be sold, (7) failing to communicate with Guiboa about the
sale of [the] distributorship, and (8) tying Guiboa‘s payment to the ultimate sales price

                                                 6
received for [the] distributorship territories, an amount which declined due to our nation‘s
recession, and a risk which Pepperidge Farm unilaterally imposed on Guiboa.‖ In
support, Guiboa cites a passage from R.J. Kuhl Corp. v. Sullivan (1993) 13 Cal.App.4th
1589, 1602 quoting comment (d) to the Restatement 2nd of Contracts, section 205:
―‗Subterfuges and evasions violate the obligation of good faith in performance even
though the actor believes his conduct to be justified. But the obligation goes further: bad
faith may be overt or may consist of inaction, and fair dealing may require more than
honesty. A complete catalogue of types of bad faith is impossible, but the following
types are among those which have been recognized in judicial decisions: evasion of the
spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect
performance, abuse of a power to specify terms, and interference with or failure to
cooperate in the other party‘s performance.‘‖
       ―‗―Every contract imposes upon each party a duty of good faith and fair dealing in
its performance and its enforcement.‖ (Rest.2d Contracts, § 205.)‘‖ (Carma Developers
(Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371
(Carma).) ―A party violates the covenant if it subjectively lacks belief in the validity of
its act or if its conduct is objectively unreasonable. [Citations.]‖ (Ibid.) ―[B]reach of a
specific provision of the contract is not a necessary prerequisite. [Citation.] Were it
otherwise, the covenant would have no practical meaning, for any breach thereof would
necessarily involve breach of some other term of the contract.‖ (Id. at p. 373,
fn. omitted.) But the Supreme Court in Carma recognized that the express terms and
purposes of the contract circumscribe the scope of conduct prohibited by the covenant of
good faith. (Ibid.) It said: ―As explained in Foley [v. Interactive Data Corp. (1988)
47 Cal.3d 654], under traditional contract principles, the implied covenant of good faith is
read into contracts ‗in order to protect the express covenants or promises of the contract,
not to protect some general public policy interest not directly tied to the contract‘s
purpose.‘ (Foley, supra, 47 Cal.3d at p. 690.)‖ (Ibid, italics added.) ―The covenant of
good faith and fair dealing was developed in the contract arena and is aimed at making

                                              7
effective the agreement‘s promises.‘‖ (Id. at p. 373, fn. 13, quoting Foley, supra,
47 Cal.3d at p. 683.)
       In Carma, the Supreme Court observed that it was ―aware of no reported case in
which a court has held the covenant of good faith may be read to prohibit a party from
doing that which is expressly permitted by an agreement. On the contrary, as a general
matter, implied terms should never be read to vary express terms. [Citations.]‖ (Carma,
supra, 2 Cal.4th at p. 374.) The Carma court cited with approval Gerlund v. Electronic
Dispensers International (1987) 190 Cal.App.3d 263, which arose in the context of
termination of a sales representative agreement. The contract expressly provided that the
agreement was to be effective until thirty days after notice of termination given by either
party, and that notice of termination could be given at any time and for any reason. (Id.
at p. 268.) The Court of Appeal held that it was reversible error to instruct the jury that it
could apply an implied covenant of good faith and fair dealing to override an express
provision of the contract. (Id. at p. 277; see also Thrifty Payless, Inc. v. Mariners Mile
Gateway, LLC (2010) 185 Cal.App.4th 1050, 1061–1062, 1064 [holding a freely
negotiated lease provision allowing either party to terminate the lease for any reason
within a particular time frame must be given effect and that it could not be read ―out of
the lease simply because one party feels its operation was harsh or unfair‖].) In Carma,
the court reasoned that the covenant of good faith could not be read to prohibit Marathon
from exercising its express contractual right to terminate the lease upon notice of intent to
sublease or assign. It held that there was no breach of the implied covenant because
Marathon‘s termination of the lease in order to claim the appreciated rental value for
itself was expressly permitted by the lease and was clearly within the parties‘ reasonable
expectations. It concluded: ―In our view, such conduct can never violate an implied
covenant of good faith and fair dealing.‖ (2 Cal.4th at p. 376, fn. omitted.)
       ―Because the covenant of good faith and fair dealing essentially is a contract term
that aims to effectuate the contractual intentions of the parties, ‗compensation for its
breach has almost always been limited to contract rather than tort remedies.‘ [Citations.]
At present, this court recognizes only one exception to that general rule: tort remedies

                                              8
are available for a breach of the covenant in cases involving insurance policies.
[Citations.]‖ (Cates Construction, Inc. v. Talbot Partners (21 Cal.4th 28, 43; see also
Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118,
1127.) Guiboa did not seek tort damages for breach of the implied covenant.
       Guiboa‘s claim that Pepperidge Farm breached the covenant by taking his
distributorship is undercut by his concession that there was substantial evidence to
support the jury‘s verdict that Pepperidge Farm had cause to terminate the Agreement. In
light of that concession, he cannot attempt to impose liability on Pepperidge Farm for
taking action expressly within the terms of the Agreement. His argument that he retained
the exclusive territory after the termination for cause, and that no one else had a right to
service that territory until he was paid, is undercut by the express terms of paragraph 7 of
the Agreement. It provided that if Guiboa failed to remedy any failure to maintain
satisfactory distribution service to any retail store within his territory within five days of
written notice from Pepperidge Farm, it ―may make other arrangements, on either a
permanent or temporary basis in the discretion of [Pepperidge Farm], for service of such
store.‖ Guiboa‘s failure to remedy the distribution failures within his territory was the
basis for his termination for cause. Under those circumstances, Pepperidge Farm had the
right to permanently make other arrangements for distribution of its products to the stores
within his territory.
       Guiboa attempts to base a breach of the implied covenant on other actions of
Pepperidge Farm. But the evidence established that Pepperidge Farm‘s conduct was
allowed by the applicable terms of the Agreement. Since Guiboa does not contest that he
was terminated for cause, this case comes within paragraph 17 of the Agreement, rather
than paragraph 18, which provided for termination without cause. Two primary aspects
of paragraph 17 are relevant to our analysis. The first impacts Guiboa‘s arguments
regarding payment for his territory. Paragraph 17 imposes no obligation on Pepperidge
Farm to sell Guiboa‘s territory and pay him the proceeds. In contrast, paragraph 18 calls
for payment to Guiboa of the fair market value of his territory. In the event that Guiboa
and Pepperidge Farm could not agree on that value, paragraph 18 sets out a procedure to

                                               9
select arbitrators who would make that determination. (Ex. 1, ¶ 18.) This ambiguity was
the subject of much discussion at trial. Guiboa acknowledged both at trial and in his
briefs on appeal that there is no express language in paragraph 17 requiring Pepperidge
Farm to pay him the proceeds of the sale of the territory. Instead, he relies on a statement
at trial by counsel for Pepperidge Farm that it was obligated to pay Guiboa the value of
the territory if the Agreement was terminated for cause, and if terminated without cause,
to pay 125 percent of the value. Interestingly, the jury found that Pepperidge Farm was
not ―‗required to pay James Guiboa the fair market value of the distributorship following
termination for cause.‘‖
       Nonetheless, it is undisputed that Pepperidge Farm sold Guiboa‘s territory and
sent him the proceeds of $1,382,087.25. Guiboa acknowledges that paragraph 17 of the
Agreement did not state when payment would occur, which is understandable since there
is no payment provision at all in that paragraph. Guiboa argues that where no express
provision is made, under Civil Code section 1657, performance must be either
immediate, or within a reasonable time.3 Since sale of the territory was required, we
conclude that immediate performance was not possible. Guiboa cites no provision of the
Agreement obligating Pepperidge Farm to pay him for the territory immediately before it
was sold to other distributors and we have found none. In granting nonsuit (or directed
verdict) on the implied covenant claim, we infer that the trial court found that Pepperidge
Farm‘s efforts to sell the territory and pay the proceeds to Guiboa occurred within a
reasonable time.
       This conclusion is supported by extensive evidence of Pepperidge Farm‘s efforts
to market Guiboa‘s territory. Guiboa complains that the territory was broken into five
pieces, thus reducing its value, and that he was not paid for the final piece until October

       3 Civil Code section 1657 provides: ―If no time is specified for the performance
of an act required to be performed, a reasonable time is allowed. If the act is in its nature
capable of being done instantly—as, for example, if it consists in the payment of money
only—it must be performed immediately upon the thing to be done being exactly
ascertained.‖

                                             10
2010, nearly two years after the Agreement was terminated. But witnesses for
Pepperidge Farm, who were directly involved in the sale of Guiboa‘s territory, testified to
extensive sales efforts.
         John Lucas, Director of Retail Operations, oversaw nine district sales managers,
including Will Werther, who supervised Guiboa. He testified that after termination of the
Agreement, Guiboa‘s territory was marketed both as a single territory and as five separate
territories. He said that for the first time, Pepperidge Farm spent $20,000 on a billboard
off of Interstate 5 to advertise the sale. It also held several open houses in Los Angeles,
conducted marketing blitzes in the field by distributing fliers about the territory, and
placed advertisements in newspapers like the Los Angeles Times. The open houses were
advertised in the newspaper. A hotel room was rented, maps of the territories put up, and
orientation about Pepperidge Farm distributorships was provided. Pepperidge Farm
would have been willing to accept a purchaser for the entire territory but none came
forward. Two extremely low offers at a ratio of 20 or 21 times average weekly sales
were rejected. To Lucas‘ knowledge, Guiboa never presented a prospective buyer to
Pepperidge Farm.
         Ron Woolsey, Customer Vice President of the West Region, also testified that
Pepperidge Farm marketed Guiboa‘s territory both as a single parcel and as five. He said
the territory was marketed as five parcels to give the best chance of sales. The first check
was sent to Guiboa for sale of one part of the territory in June 2009. Although Guiboa
sought a sales price of 55 times the weekly average sales in his territory, no offer at this
price was received. In a first for Pepperidge Farm, it arranged with its parent company
for financing for three buyers of parcels of Guiboa‘s territory in order to complete the
sales.
         Kyle Jordan, Director of Distributor Development for Pepperidge Farm, had
overseen 2,500 route sales transactions for the company. He also described the
marketing of Guiboa‘s territory, including use of the billboard and subsidized down
payments for the first time. He testified that Guiboa‘s territory sold for an amount above
the San Fernando Valley average ratio, which translated to $42,000 over fair market

                                             11
value. Will Werther, Guiboa‘s District Sales Manager, testified that Pepperidge Farm
advertised the five pieces of the territory on a website for marketing distributorships.
         This evidence supports a conclusion that Pepperidge Farm acted reasonably in
marketing and selling Guiboa‘s territory, within a reasonable time after the termination of
the Agreement. Guiboa failed to present evidence which would have supported judgment
in his favor under the implied covenant theory on his claims related to the marketing and
timing of the sale of his former territory.
         As we have discussed, paragraph 17 of the Agreement provides that upon
termination, all rights and obligations of both Guiboa and Pepperidge Farm are released,
except the right to receive any favorable balances and the obligation to pay any adverse
balances. Under these terms, Guiboa had no continuing right to commissions on sales
within his former territory, as he claims. Guiboa also argues Pepperidge Farm breached
the implied covenant by failing to communicate with him about the sale. But neither
paragraph 17, or any other provision of the contract, imposed that duty on Pepperidge
Farm.
         Finally, Guiboa claims Pepperidge Farm breached the implied covenant by ―tying
Guiboa‘s payment to the ultimate sales price received for the distributorship territories,
an amount which declined due to our nation‘s recession, and a risk which Pepperidge
Farm unilaterally imposed on Guiboa.‖ If it is an argument that the sale was improperly
delayed until the national recession impacted the value of the territory, we have already
found that Pepperidge Farm did not breach the covenant in either the extent or timing of
its marketing efforts. We conclude that nonsuit on the breach of implied covenant cause
of action was proper.

                                              II
         Guiboa also argues the jury erred in finding that Pepperidge Farm was not
required to pay him the fair market value of his distributorship following termination for
cause.

                                              12
        ―The most fundamental rule of appellate review is that a judgment is presumed
correct, all intendments and presumptions are indulged in its favor, and ambiguities are
resolved in favor of affirmance. [Citations.] Where appellants challenge the sufficiency
of the evidence we defer to the trial court. Our review is limited to whether there is any
substantial evidence contradicted or uncontradicted that will support the challenged
factual finding. [Citation.]‖ (City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266,
286.)
        The evidence is that Guiboa was paid for his territory by Pepperidge Farm.
Having received that payment, despite the jury‘s finding that there was no obligation to
make it, we see no harm to Guiboa and hence no basis for reversal. (See Red Mountain,
LLC v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333, 347–348 [―appellant
has the burden to show not only that the trial court erred but also that the error was
prejudicial. (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475; Paterno v. State of
California (1999) 74 Cal.App.4th 68, 105.)‖].) ―Error is prejudicial if it is reasonably
probable that a result more favorable to the appellant would have been reached absent the
error. [Citations.]‖ (Id. at p. 348.) Guiboa has not demonstrated a right to any payment
in addition to what he received. No prejudice is shown.

                                             III
        Guiboa argues that on remand, the jury should resolve whether Pepperidge Farm is
liable to him for conversion. This argument presupposes that Guiboa will prevail on his
argument that the judgment would be reversed because the trial court improperly granted
nonsuit. We have rejected that argument and see no basis for remand. This argument
therefore is moot.

                                             IV
        Guiboa argues the trial court erred in granting nonsuit on his claim for punitive
damages, because this was not a ground raised in Pepperidge Farm‘s motion, and the trial
court did not have the authority on its own to grant the motion on a new ground. It is

                                             13
unclear under California law whether a trial court has the power to grant nonsuit or
directed verdict on a ground not raised by the moving party. (Wegner et al., Cal. Practice
Guide: Civil Trials and Evidence (The Rutter Group 2012) [¶] 12:352 to 12:356, pp. 12–
70 to 12–71.) But the error, if any, was harmless since Guiboa had no viable tort cause of
action on which punitive damages could be based.
       As we have noted, Guiboa makes it clear that his claim for breach of the implied
covenant of good faith and fair dealing was for contract rather than tort damages.
―Claims for breach of the implied covenant of good faith and fair dealing may sound in
either contract or tort, depending on the remedies being sought. A contract claim limits
the plaintiff to contract remedies only, while a tort claim permits recovery of noncontract
damages, such as emotional distress, punitive damages, and attorney‘s fees. (Archdale v.
American Internat. Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 467, fn. 19.)‖
(Blue Shield of California Life & Health Ins. Co. v. Superior Court (2011) 192
Cal.App.4th 727, 730, fn. 1, italics added.) A claim for punitive damages thus could not
be based on the implied covenant claim.
       We also have rejected Guiboa‘s argument that on remand, the jury should
determine his right to damages for conversion since we are not remanding. The
conversion cause of action was the only other possible basis for an award of punitive
damages. Thus even though Pepperidge Farm did not seek nonsuit on the punitive
damages claim, we conclude that Guiboa has failed to carry his burden of proving this
error was prejudicial on this record. (See Red Mountain, LLC v. Fallbrook Public Utility
Dist., supra, 143 Cal.App.4th at pp. 347–348.)

                                             V
       Guiboa argues that upon remand, the court should resolve whether he is entitled to
an award based on Pepperidge Farm‘s unfair business practices. As we have explained,
there is no basis for remand. Guiboa‘s argument is that while Pepperidge Farm had the
unilateral right to terminate the Agreement, it did not have the right to exercise dominion

                                            14
over the distributorship ―unless it abided by its concomitant duty of paying Guiboa
immediately for his distributorship or doing so within a reasonable period of time.‖
       The complaint alleged the following unfair business practices: that Pepperidge
Farm actually terminated the Agreement without cause but stated pretextual grounds for
termination with cause to avoid paying compensation under paragraph 18 ([¶] 69 of
complaint); that Pepperidge Farm libeled and slandered Guiboa ([¶] 70 of complaint); and
that Pepperidge Farm converted Guiboa‘s distributorship to its own use without any
compensation ([¶] 71 of complaint). The trial court found that Guiboa had no basis for
recovery under Business and Professions Code section 17200 because termination was
with cause, a point now conceded by Guiboa; the libel and slander claims were
withdrawn and were not part of the evidence at trial; and Guiboa‘s right to possess and
distribute Pepperidge Farm products was extinguished upon termination of the
Agreement for cause under paragraph 17.
       We agree with the trial court‘s reasoning. None of these grounds has continuing
viability. The termination was for cause, the defamation claims were dismissed, and the
jury did not reach the conversion cause of action as directed by the special verdict form.

                                     DISPOSITION
       The judgment is affirmed. Pepperidge Farm is to have its costs on appeal.
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                 EPSTEIN, P. J.
We concur:

       WILLHITE, J.                              SUZUKAWA, J.

                                            15