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COUNTY OF MONTEREY
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Plaintiff,
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vs.
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Defendant.
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the matter may be heard in Department 14 ofthe above-entitled court, located at 1200 Aguajito
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Road, Monterey, California, the CITY OF CARMEL BY THE SEA's demurrer to Plaintiff's
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complaint for damages, served and filed with this notice, will be heard.
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By:~~
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RACHEL OSTRANDER
Attorneys for Defendant CITY OF CARMEL
BY THE SEA
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Notice of Demurrer, Demurrer, and P&A ISO
Defendant CITY OF CARMEL BY THE SEA hereby demurs to the Complaint for
Damages on the following grounds:
BREACH OF CONTRACT
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1.
The First Cause of Action for Breach of Contract does not state facts sufficient to
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The Second Cause of Action for Inducing Breach of Contract does not state facts
sufficient to constitute a cause of action. Cal. Code Civ. Proc. 430.1 0(e).
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3.
The Third Cause of Action for Negligent Interference with prospective Advantage
does not state facts sufficient to constitute a cause of action. Cal. Code Civ. Proc. 430.10(e).
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Notice of Demurrer, Demurrer, and P&A ISO
its demurrer to the complaint for damages filed by Plaintiff GERlT SAND and COBBLESTONE
BAKERY , (referred to herein as the singular "Plaintiff' where a sole proprietorship is not a
legal entity separate from its individual owner. Ball v. Steadfast-ELK, 196 Cal. App. 4th 694,
701 (2011)).
Plaintiff's claims arise out of an oral contract to participate in the Carmel Artisan Food
Experience (CAFE), which Plaintiff entered into on May 5, 2014 with the West Coast Farmers
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Market Association (WCFMA). Com pl. 3:11-4:16. Plaintiff alleges that WCFMA is an "agent"
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of the City of Carmel. Compl 3:12. Plaintiff does not operate a bakery within the City of
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Carmel. Compl. 2:5. In Order to participate in the CAFE, Plaintiff Sand paid for space rental
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per event in the amount of $50 for each week and purchased a required health permit from the
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The license agreement between the City and WCFMA states that the WCFMA shall
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require vendors to obtain a City of Carmel Business License and that WCFMA shall keep and
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maintain all licenses at all times during the license agreement. See Exhibit A (at paragraph 8)
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to City's Request for Judicial Notice (RJN), concurrently filed. Plaintiff does not allege that
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Plaintiff alleges that the City breached it's "contract" when, after Plaintiff began
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participating in the CAFE, the City Council passed an ordinance restricting participation in the
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CAFE to personsand businesses who have fixed structures or storefronts in the downtown
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business district of Carmel by the Sea. After the action of the City Council, Plaintiff alleges that
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he was no longer eligible to receive permits from the City to participate in the CAFE. Compl.
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4:19-21. The City Council minutes from July 1, 2014, which Mr. Sand incorrectly calls a "City
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ordinance," extend the License Agreement through October 2014, with arnmendments including
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restricting participation in the CAFE to tri-county vendors from San Benito, Santa Cruz, and
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Notice of Demurrer, Demurrer, and P&A ISO
Monterey Counties and prepared foods only from businesses in the City of Carmel. See Exhibit
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resulted in his exclusion from the chain of commerce. Com pl. 5:22-23.
Plaintiff filed a complaint for damages on December 16, 2014, pleading causes of action
for breach of contract, inducing breach of contract, and negligent interference with a prospective
Plaintiff served the City on January 6, 2015. Defendant City now timely demurs to the
Complaint on the grounds that Plaintiff's first cause of action, for breach of contract, Plaintiff's
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second cause of action, for inducing breach of contract, and Plaintiff's third cause of action for
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negligent interference with a perspective advantage, are barred by immunity and otherwise do
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LEGAL ARGUMENT
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A.
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In reviewing the sufficiency of the complaint against a demurrer, the Court will take all
Standard of Review.
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facts as true and look only at the face of the pleading. Blank v. Kerwin, 39 Cal.3d 311, 318
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(1985). The Court will treat the demurrer as admitting all material facts properly pleaded, but
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In ruling on a demurrer, doubt in the complaint may be resolved against Plaintiff, and
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facts not alleged are presumed not to exist. Kramer v. Intuit, Inc., 121 Cal. App. 4th 574, 578
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(2d Dist. 2004). "The burden of proof to show that there is any reasonable possibility that a
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pleading can be cured by amendment is squarely on the plaintiff, and if there is no liability as a
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matter oflaw, leave to amend should not be granted." Hendy v. Losse, 54 Cal.3d 723, 742 (1991).
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III
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Notice of Demurrer, Demurrer, and P&A ISO
B.
The First Cause of Action for Breach of Contract Does Not State Facts
Sufficient to Constitute a Cause of Action. Cal. Code Civ. Proc. 430.10(e). The
Complaint Does Not Allege Facts Establishing That Defendant City of Carmel Had a
Contract With Plaintiffs. and the City is Immune From Plaintiff's First Cause of Action for
Breach of Contract.
1. The City did not have a contract with Plaintiff.
Plaintiff alleges that Defendant breached a contract by failing to permit the Plaintiff to
operate their food booth at the CAFE. Compl. 4:19. The City of Carmel did enter into a license
agreement with WCFMA, operated by Jerry Lami. Pursuant to the license agreement, WCFMA
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was responsible for its own contracts with vendors and agreed to indemnify the City against any
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claims arising out of such contracts. See Exhibit A (at paragraph 10) to City's RJN. Under
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California law, in order to have standing to bring a breach of contract claim, a plaintiff must have
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a contractual relationship with a defendant. In Pfeifer v. Countrywide Home Loans, Inc., 2 11 Cal.
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App. 4th 1250, 1282 (2012), the plain language of government contract was sufficient to show
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lack of intent to grant third-party beneficiary rights. The plain language of the license agreement
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here indicates that the City is not a party to contracts between WCFMA and vendors. See
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License, first paragraph (agreement is between City and WCFMA); Paragraph B (WCFMA
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desires to operate a farmers market); Paragraph 1 (City grants WCFMA a revocable license,
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WCFMA agrees to adhere to the City guidelines regarding venders, merchants shall have an
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agreement with WCFMA); Paragraph 6 (WCFMA may terminate the license at any time by
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written notice, City reserves the right to terminate the license in the event of default); Paragraph
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transferred).
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Plaintiff's claims are based on the contention that he entered into an agreement with
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WCFMA, which was acting as an "agent" for the City of Carmel. Compl. 3:9-24. While
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Notice of Demurrer, Demurrer, and P&A ISO
subsequent ratification pursuant to California Civil Code section 2307, Plaintiffs do not set forth
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any facts to show an agency relationship between the City and WCFMA. The license agreement
is absolutely silent on any grant or creation of agency. Facts not alleged in a complaint are
presumed not to exist. Kramer, supra at 578. Thus, Plaintiff has not plead facts to establish that
there was an agency relationship between the City Council of the City and the WCFMA, or that
WCFMA was authorized to act for the City. Express intent to the contrary is evident by the pla
language of the license agreement between the City and WCFMA. See Exhibit A (at
paragraph B) to City's RJN (stating that WCFMA wishes to operate a farmers market, and the
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Plaintiff claims that the City's conduct, which Plaintiff couches as breach of contract,
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was "unjustifiable and wrongful conduct". Compl. 6:27-7:29. Plaintiffs claim fails because
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there is no tort cause of action for breach of a non-insurance contract. Freeman & Mills, Inc. v.
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3. The City is immune from causes of action arising under tort, including
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Plaintiffs cause of action for breach of contract when arising out of Defendant's alleged
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wrongful conduct, pursuant to California Government Code Sections 815, 818.2, 818.4, and
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820.9.
Plaintiff alleges that the City Council's "unjustifiable and wrongful conduct" made
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Plaintiff ineligible to participate in the CAFE put on by WCFMA. Compl. 6:27-7:29. Public
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entities are not liable for any injury except as provided by statute. California Government Code
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Section 81 S; Eastburn v. Regional Fire Protection Authority, 31 Cal.4th 1175, 1179-80 (2003)
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(direct tort liability of public entities must be based on a specific statutory authorization).
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Without such specificity the general rule of immunity for public entities would be largely eroded.
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!d. at 660.
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Ill
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Notice of Demurrer, Demurrer, and P&A ISO
4. The City did not pass an ordinance restricting participation in the CAFE
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to persons and businesses who have ftxed structures or storefronts in the downtown
business district of Carmel by the Sea, but even if it had it would have immunity for claims
participation in the CAFE to persons and businesses that have fixed structures or storefronts
within the City of Carmel. Com pl. 5:26, 6:28-7:29, 7:33. The Plaintiff references an ordinace
passed by the City of Carmel as "'Exhibit 1" to his complaint, but failed to attach any ordinance.
Compl. at 3:10. No such ordinance exists. See Exhibit B to City's RJN. Even if there had
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been an ordinance passed by the City it would not matter. Public entities have absolute
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immunity against claims for damages when premised upon the adoption, or failure to adopt, an
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enactment. "[I]t is not a tort for the government to govern." HFH Ltd v Superior Court, 15
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Cal.3d 508, 519 (1975) (discussing California Government Code Section 818.2; see also Esparza
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v. County ofLos Angeles, 168 Cal. Rptr. 3d 482,489 (Cal. App. 2d Dist. 2014) (sustaining
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County's demurrer based on absolute immunity to lawsuits based in tort). This specifically
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includes the actions of the City Council. California Government Code Section 820.9.
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5. The City is immune from claims arising out of the City Council's failure
to issue a permit.
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The Government Code is explicit that immunity applies to actions for any injury caused
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by the denial, suspension or revocation of, or by the failure or refusal to issue, deny, suspend or
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revoke, any permit or license. California Government Code Section 818.4; see also Hirsch v.
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People, By and Through Dept. ofMotor Vehicles, 42 Cal. App. 3d 252, 259 (App. 2 Dist. 1974)
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(granting demurrer without leave to amend where public entity or employee is not liable for
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injuries caused by the issuance or failure to issue permits, licenses and certificates). This
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specifically includes the actions of the City Council. California Government Code Section
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820.9.
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Notice of Demurrer, Demurrer, and P&A ISO
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Therefore, Plaintiffs First Cause of Action for breach of Contract fails to state a cause of
action and should be dismissed without leave to amend.
C.
The Second Cause of Action for Inducing Breach of Contract Does Not State
Facts Sufficient to Constitute a Cause of Action. Cal. Code Civ. Proc. 430.10(e). Plaintiff
Did Not Have an Existing Contractual Relationship With WCFMA, and the City Council
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In actions for inducing breach of contract there must be a valid existing contract. Pacific
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Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126 (1990). Plaintiff's complaint,
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on its face, indicates that WCFMA had no existing contract with Plaintiffs. Plaintiff alleges that
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he "formerly held a contract with the Farmers Market (WCFMA) to operate a booth within the
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market (CAFE)", Compl. 3:13, and that he paid for space rental per event in the amount of$50
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for each week that he participated in the CAFE. Compl. 4:17. Plaintiff's complaint is consisten
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with facts describing only a contract with WCFMA on a per-event basis. The alleged oral
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contract entered into on May 5, 2014, with WCFMA, does not specify a term or a continuing
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obligation giving rise to any expectation that Plaintiff would be allowed to participate in further
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CAFE events. Where the facts of the complaint allege that only a former contract existed, there
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can be no inducing breach of said contract because there is not a valid existing contract. Pacific
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Gas & Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d at 1126.
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2. The City is immune to tort liability for the City Council's actions
pursuant to Government Code sections 815, 818.2, 818.4, and 820.9.
Even if Plaintiff had set forth facts to show inducing a breach of an existing contract,
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inducing a breach of contract is a tort. Dryden v. Tri-Valley Growers, 65 Cal. App. 3d 990,998-
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999 (1977). A cause of action for inducing breach of contract requires an allegation of a breach
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resulting from defendant's "unjustifiable or wrongful conduct." Bledsoe v. Watson, 30 Cal. App.
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3d 105, 108 (1973). Immunity prevails even where there is interferance with either a
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commercial or a fmancial interest. Lundeen Coatings Corp. v. Department ofWater & Power,
232 Cal.App.3d 816,832 (1991). Here, California Government Code Sections 815, 818.2,
818.4, and 820.9, provide that the City is immune to actions arising out of tort, and the City
cannot be held liable. Under the California Government Code, Public entities are not liable for
any injury except as provided by statute, California Government Code Section Section 815, and
public entities have absolute immunity against claims for damages when premised upon the
adoption, or failure to adopt, an enactment, California Government Code Section Section 818.4,
and are immune to actions for any injury caused by the denial, suspension or revocation of, or by
the failure or refusal to issue, deny, suspend or revoke, any permit or license. California
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Government Code Sec~ion 818.2. These government immunity statutes prohibiting liability for
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action in tort are specifically extended to the actions of the City Council. California Government
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Code Section 820.9. For these reasons, Plaintiff cannot sustain a claim against the City for
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Because the Plaintiff does not state facts sufficient to constitute a cause of action for
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inducing breach of contract against the City, the Plaintiff's causes of action for inducing breach
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D.
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Advantage Does Not State Facts Sufficient to Constitute a Cause of Action. Cal. Code Civ.
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Proc. 430.10(e). The City is Immune From Such a Negligence Claim Based on the City
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plaintiff demonstrates that economic relationship existed between plaintiff and third party which
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Where Plaintiff had only an interest in participation in the CAFE on a per event basis,
he could not have a continuing economic relationship or an expectation of participation in future
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Notice of Demurrer, Demurrer, and P&A ISO
CAFE events. The plaintiff in Blank sought to establish that his requisite economic relationship
was with the City, where the Plaintiff claimed lost earnings because the City Council had denied
his permit application. The court emphasized the established legal precedent that, "[t]he
relationship between [plaintiff] and the City cannot be characterized as an economic relationship.
It was [plaintiffs] relationship to a class of as yet unknown [patrons] which was the prospective
business relationship." Id (citing Asia Investment Co. v. Borowski, 133 Cal. App. 3d 832, 841
(1982)).
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Even if the relationship between Plaintiff and the City could be so characterized, it would
make little difference. Plaintiff cannot sustain a claim for negligent interference with prospectiv
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advantage as the tort has traditionally protected the expectancies involved in ordinary
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commercial dealings- not the "expectancies," whatever they may be, involved in the
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advantage have been explicitly denied, and properly dismissed, as applied to claims arising from
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the denial of licenses by the City Council. !d. As discussed above, tort claims arising under the
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City's permit decisions are explicitly barred. See California Government Code sections 815,
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Because Plaintiff does not state facts sufficient to constitute a cause of action for
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negligent interference with a prospective advantage against the City, the Plaintiff's third cause
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of action for negligent interference with a prospective advantage should be dismissed without
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leave to amend.
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III.
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CONCLUSION
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For the reasons stated above, Defendant City of Carmel respectfully requests that the
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Court sustain Defendant's demurrer to Plaintiff's complaint without leave to amend for the
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following reasons:
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1.
The First Cause of Action for Breach of Contract does not state facts sufficient to
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2.
The Second Cause of Action for Inducing Breach of Contract does not state facts
The Third Cause of Action for Negligent Interference with prospective Advantage
does not state facts sufficient to constitute a cause of action. Cal. Code Civ. Proc. 430.10(e).
By$
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RACHEL OSTRANDER
Attorneys for Defendant CITY OF CARMEL
BYTHESEA
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