Guiboa v. Pepperidge Farm















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NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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, Plaintiff and Appellant, v. PEPPERIDGE FARM, INC., Defendant and Respondent.

B235102 (Los Angeles County Super. Ct. No. PC044616)

APPEAL from
a judgment of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">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 href="http://www.fearnotlaw.com/">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], [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 “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 href="http://www.fearnotlaw.com/">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.href="#_ftn1" name="_ftnref1" title="">[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.href="#_ftn2" name="_ftnref2" title="">[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 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 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 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 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 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 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.href="#_ftn3" name="_ftnref3" title="">[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 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 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.

“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 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 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.