California

Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

Craig V. Randall v. Gordon A. Campbell et al.,
No. H025938 (Cal.App. 01/11/2005)

COURT OF APPEAL OF CALIFORNIA, SIXTH APPELLATE DISTRICT

January 11, 2005, Filed

NOTICE: [*1] NOT TO BE PUBLISHED IN OFFICIAL REPORTS. CALIFORNIA RULES OF COURT, RULE 977(a), PROHIBIT COURTS AND PARTIES FROM CITING OR RELYING ON OPINIONS NOT CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY RULE 977(B). THIS OPINION HAS NOT BEEN CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED FOR THE PURPOSES OF RULE 977.

PRIOR HISTORY: Santa Clara County Super. Ct. No. CV804209.

DISPOSITION: The judgment is affirmed. Defendants Campbell and Ligeti shall have their costs on appeal. Defendants' motion for sanctions is denied.

JUDGES: McAdams, J.; Rushing, P. J., Walsh, J. Concurred.

OPINIONBY: McAdams

OPINION: This litigation followed the demise of a start-up business venture. The action proceeded to jury trial and resulted in judgment for the defendants. The plaintiff appeals, asserting that the trial court committed three errors: granting nonsuit on his interference claim, refusing to allow him to amend his pleadings, and instructing the jury on the statute of frauds. For their part, the defendants assert that the plaintiff forfeited his appellate claims by violating appellate rules. They also counter each argument on its merits. In addition, by separate motion, defendants seek sanctions.

We reject plaintiff's [*2] contentions on the merits, and we therefore affirm the judgment. We deny defendants' motion for sanctions.

BACKGROUND

Craig V. Randall is the plaintiff, cross-defendant, and appellant in this action. Randall is a former military pilot with experience in the field of commercial aviation. Gordon Campbell and Maria Ligeti, husband and wife, are defendants, cross-complainants, and respondents here. Campbell is in the business of providing business venture capital.

Through on-going discussions in early 2000, Randall and Campbell agreed to form a new company, Pacific Jets Corporation, which would operate a full service corporate jet aviation maintenance center.

Genesis and Funding of the Company

Under the terms of an oral agreement, Campbell was to provide $ 1 million in start-up money and Randall was to provide his expertise and his full-time efforts to develop the company. Campbell would own one-third of the common stock of the corporation, with Randall holding the remaining two-thirds. Pursuant to a written stock purchase agreement, Randall's ownership was subject to a vesting schedule and a dilution clause. Meanwhile, Campbell retained the right to convert [*3] his initial investment to common stock in the new corporation, at $ 1 per share, at the end of one year or upon the earlier sale of the company to a third party. The parties presented conflicting testimony at trial about their specific contractual rights and obligations, including the time for performance. Randall testified that the contract obligated him to get the company "up and running" and bring it to "fruition" within one year. Campbell testified that he never reached an understanding with Randall about those terms.

Pacific Jets was established as a Delaware corporation in March 2000. The new corporation had three directors: Campbell, who was chairman of the board; Randall, who was president and chief executive officer; and Stephanie Dorris, with whom Campbell had previously worked, who was chief financial officer.

During the spring and summer of 2000, Randall leased space at a former military base near Sacramento and converted it for use by the new company. The facility's grand opening was held in August 2000. During the same time period, Randall met with representatives of a French aircraft manufacturer that had expressed interest in purchasing Pacific Jets.

From the [*4] start, the company's funding came from Campbell. Campbell eventually increased his investment to more than $ 1.5 million. During its entire existence, Pacific Jets had only four clients. The revenue stream generated from those clients was not sufficient to cover the corporation's monthly rental cost for its hangar space. Furthermore, of the company's four clients, only one used its aircraft management services: Aerial Properties, a company owned by Campbell and Ligeti.

Ligeti's Involvement

The parties disagree on the nature of Ligeti's involvement with Pacific Jets.

According to Randall, Ligeti impermissibly injected herself into the business, orchestrating Dorris's resignation in November 2000 and then insisting on taking over management of the business. According to Campbell, his wife performed certain services for the company at his request, which she was well qualified to do, given her economics degree and her extensive experience in business management. Furthermore, Campbell observes, Ligeti maintained a financial interest in the business because community property was used to fund it.

Randall's Removal

By June 2001, the relationship between Ligeti and [*5] Randall had become so antagonistic that Randall hired an attorney, who threatened to sue Ligeti for interfering with the company. By that time, Campbell had lost confidence in Randall.

At a meeting held on June 18, 2001, the Pacific Jets board of directors voted to remove Randall as president and chief executive of the company. At the time of this board action, Randall was in France, attempting to negotiate a sale of the company. When he returned, he was locked out of the company's premises.

Shortly thereafter, Pacific Jets ceased operations. The company officially closed down in September 2001.

PROCEDURAL HISTORY

This litigation was commenced in January 2002.

Pleadings

Randall filed an unverified complaint containing five causes of action: (1) breach of oral contract against Campbell; (2) breach of implied contract against Campbell; (3) interference with economic relationship against Ligeti; (4) fraud against both Campbell and Ligeti; and (5) promissory estoppel against Campbell.

Campbell and Ligeti answered the complaint by general denial. Among defendants' eleven affirmative defenses was one based on the statute of frauds; they also asserted that "Ligeti [*6] was privileged and justified" in acting as she did.

Campbell and Ligeti also cross-complained against Randall, asserting fraud. Randall answered, denying the charging allegations of the cross-complaint.

Trial Proceedings

Following pretrial motions in December 2002, the action proceeded to jury trial in January 2003. The presentation of evidence consumed 13 court days. After arguments of counsel, the court gave the jury special verdict forms and instructions relating to the matters it would decide. One instruction is challenged here, which concerns the statute of frauds.

Of the parties' various claims, only those alleging fraud and express oral contract were tried to the jury. The jury decided two of the five causes of action in Randall's complaint: one for breach of oral contract and the other for fraud. It also resolved the defendants' cross-complaint for fraud. The jury found no actionable conduct by any party.

In a special verdict addressing Randall's cause of action for breach of contract, the jury found that there was an enforceable oral contract between Randall and Campbell. Nevertheless, the jury determined, Campbell had not breached the agreement. On the [*7] question of fraud, the jury rejected both Randall's claim against Campbell and the defendants' cross-claim.

The remaining causes of action of Randall's complaint were resolved by the court, all in favor of the defendants. Of those determinations, only one is at issue here: the grant of nonsuit for Ligeti on Randall's interference claim. n1

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n1 The court resolved Randall's other claims at various points in the proceedings and through various mechanisms. On Randall's fraud cause of action against Ligeti, the court granted nonsuit after opening statements. With respect to Randall's claim against Campbell for breach of implied contract, the court refused to instruct on that theory. As to Randall's promissory estoppel claim, the court gave defense judgment for Campbell following a bench trial. None of those determinations is at issue in this appeal.

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Ligeti moved for nonsuit on the third cause of action of Randall's complaint, which charged her with intentional interference with economic relationship. In support [*8] of her motion, Ligeti argued that Randall failed to present evidence of actionable conduct. She further claimed that she "had both a financial privilege to conduct herself in the manner indicated and a spousal privilege to do the same."

In granting the motion for nonsuit, the court explained that Ligeti was legally incapable of interfering with the contract, since she was neither a "stranger" nor an "interloper" vis-a-vis the economic relationship between her husband and Randall.

At the same time, the court also refused to allow Randall to amend his complaint to name Ligeti as a party to the contract. The court concluded that no "contract cause of action would lie against a party who was not participating in the original contract" notwithstanding that person's financial interest in performance of the agreement. As the court explained, Randall remained "fully protected in terms of remedies for breach of the contract" because any resulting damages could be collected from community property belonging to either defendant.

In February 2003, the court entered judgment in accordance with its prior rulings and the jury's verdicts. The court thus gave judgment for defendants Campbell [*9] and Ligeti on the complaint, and it gave judgment for cross-defendant Randall on the cross- complaint. The court determined that Campbell and Ligeti were the prevailing parties.

Post-Trial Proceedings

Randall moved for a new trial. As grounds for his motion, Randall argued that the court erred in allowing the statute of frauds defense to go to the jury. He asserted that the instruction and the special verdict form suggested to the jury that only events occurring within a year of the contract's formation could form the basis for a breach. Because of that suggestion, he urged, the jury mistakenly believed that it could not consider Campbell's actions in June 2001, when he orchestrated Randall's ouster. Alternatively, Randall contended, the jury engaged in unintentional misconduct during its deliberations. In support of his arguments, Randall presented declarations from six jurors.

In April 2003, the court heard and denied the new trial motion.

This timely appeal by Randall ensued.

CONTENTIONS

Randall makes three claims of error.
Randall first challenges the court's grant of nonsuit on his cause of action against Ligeti for intentional interference with his [*10] economic relationship with her husband. Randall takes issue with the court's determination that it was impossible for Ligeti to interfere because she had a financial interest.

In a related argument, Randall next asserts that the court erred in refusing to permit him to amend his pleadings to allege breach of contract against Ligeti.

Randall's final claim of error relates to the jury instruction on the statute of frauds. He contends that the court erred in giving the jury instruction in the first instance, citing lack of evidentiary support for it. He further contends that he was prejudiced by the instruction and by a related special verdict question, because they caused jury confusion.

Defendants counter each of Randall's arguments on the merits. But they first contend that Randall has forfeited his appellate claims by violating applicable court rules. In addition, by separate motion, they also seek sanctions based on assertions that Randall's appeal is frivolous and that he violated the rules on appeal.

DISCUSSION

At the threshold, we consider and reject defendants' contention that Randall's conduct on appeal forfeits his appellate claims. Next, we consider Randall's [*11] appellate arguments on the merits. Finally, we turn to defendants' motion for sanctions. As to each issue, we begin our analysis with a summary of the applicable legal principles. We then apply those principles to the case before us.

I. Forfeiture for Rule Violations

Defendants accuse Randall of violating applicable court rules. Specifically, they assert, Randall disregarded his duty to accurately summarize the material facts on appeal. (See Cal. Rules of Court, rule 14, subd. (a)(2)(C). See also, e.g., City of Lincoln v. Barringer (2002) 102 Cal.App.4th 1211, 1239; Pierotti v. Torian (2000) 81 Cal.App.4th 17, 29-30; County of Solano v. Vallejo Redevelopment Agency (1999) 75 Cal.App.4th 1262, 1274.) They argue that Randall's opening brief cites only facts favorable to his position, while disregarding critical evidence supporting the judgment. (See Brockey v. Moore (2003) 107 Cal.App.4th 86, 96-97.) Defendants also take issue with Randall's citation to inadmissible juror declarations. They ask us to punish those violations by deeming Randall's appellate arguments waived. In his reply [*12] brief, Randall disputes defendants' assertions. He contends that that the evidence cited in his opening brief is material to his assertions of legal error and resulting prejudice. As he puts it, his recitation of the facts demonstrates "what the jury could have concluded if the cited errors had not been committed."

Appellate courts have broad discretion in dealing with infractions of the rules on appeal. "A violation of the rules of court may result in the striking of the offending document, the waiver of the arguments made therein, the imposition of fines and/or the dismissal of the appeal. [Citations.]" (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768.) Alternatively, the reviewing court may "accept the statements of respondent's brief as to the evidence upon the subject. [Citation.]" (Rosen v. E. C. Losch Co. (1965) 234 Cal. App. 2d 324, 327, fn. 1, 44 Cal. Rptr. 377.) Finally, the court also has discretion to disregard lack of compliance. (Cal. Rules of Court, rule 14, subd. (e)(2)(C); Stockinger v. Feather River Community College (2003) 111 Cal.App.4th 1014, 1025.)

We decline to [*13] find a waiver in this case. To be sure, Randall's fact statement is not helpful to our resolution of the issues he raises. It is long on irrelevancies and short on evidence underlying key aspects of the judgment. Nevertheless, we are not convinced that it represents any rule violation so egregious as to warrant forfeiture. We therefore exercise our discretion to disregard any noncompliance and to supplement any resulting gap or bias by relying on defendants' recitation of the material facts.

We therefore reach Randall's arguments on the merits. As noted above, as to each, we summarize then apply the governing legal principles.

II. Grant of Nonsuit on Interference Claim

A. Nonsuit

1. General principles

"A motion for nonsuit is a procedural device which allows a defendant to challenge the sufficiency of plaintiff's evidence to submit the case to the jury. [Citation.]" (Campbell v. General Motors Corp. (1982) 32 Cal.3d 112, 117, 184 Cal. Rptr. 891.) "A defendant is entitled to a nonsuit if the trial court determines that, as a matter of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his favor." (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291, 253 Cal. Rptr. 97, [*14] citing Campbell v. General Motors Corp., supra, 32 Cal.3d at pp. 117-118.)

"Because a grant of the motion serves to take a case from the jury's consideration, courts traditionally have taken a very restrictive view of the circumstances under which nonsuit is proper." (Campbell v. General Motors Corp., supra, 32 Cal.3d at p. 117. Accord, Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838, 206 Cal. Rptr. 136.) "The rule is that a trial court may not grant a defendant's motion for nonsuit if plaintiff's evidence would support a jury verdict in plaintiff's favor. [Citations.]" (Campbell v. General Motors Corp., supra, 32 Cal.3d at pp. 117-118. Accord, Zavala v. Board of Trustees (1993) 16 Cal.App.4th 1755, 1763.)

"In determining whether plaintiff's evidence is sufficient, the court may not weigh the evidence or consider the credibility of witnesses. Instead, the evidence most favorable to plaintiff must be accepted as true and conflicting evidence must be disregarded." (Campbell v. General Motors Corp., supra, 32 Cal.3d at p. 118.) Even so, a "mere 'scintilla of evidence' [*15] does not create a conflict for the jury's resolution; 'there must be substantial evidence to create the necessary conflict.' " (Nally v. Grace Community Church, supra, 47 Cal.3d at p. 291, quoting 7 Witkin, Cal. Procedure (3d ed. 1985) Trial, § 410, p. 413, italics omitted.)

2. Standard of review
In reviewing the grant of nonsuit, the appellate court is "guided by the same rule requiring evaluation of the evidence in the light most favorable to the plaintiff." (Carson v. Facilities Development Co., supra, 36 Cal.3d at p. 839.) The reviewing court thus is required to resolve " ' "all presumptions, inferences and doubts" ' [citations]" favorably to the plaintiff. (Nally v. Grace Community Church, supra, 47 Cal.3d at p. 291.)

B. Tortious Interference

1. Nature of the Interference Torts

There are two "so-called 'interference torts' . . . interference with contract and its sibling, interference with prospective economic relations . . . ." (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 381, 382, fn. omitted (Della Penna).) As relevant [*16] here, "a cause of action for intentional interference with contract requires an underlying enforceable contract. Where there is no existing enforceable contract, only a claim for interference with prospective advantage may be pleaded." (PMC, Inc. v. Saban Entertainment, Inc. (1996) 45 Cal.App.4th 579, 601 disapproved on another ground in Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159, fn. 11 [oral license unenforceable under federal copyright law]. Accord, Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 879 [unsigned lease unenforceable under statute of frauds].)

The tort of intentional interference with economic relations imposes liability for wrongful conduct that disrupts the business relationship of another. (PMC, Inc. v. Saban Entertainment, Inc., supra, 45 Cal.App.4th at p. 595.) It is an extension of the "basic principle underlying the tort of inducing breach of contract . . . ." (5 Witkin, Summary of Cal. Law (9th ed., 2004 supp.) Torts, § 652. p. 740.) Although the underlying principles [*17] are related, there are both analytic and practical differences, depending on whether the economic interest at stake is embodied in a formal contract.

As the California Supreme Court has emphasized, there is a "distinction between claims for tortious disruption of an existing contract and claims that a prospective contractual or economic relationship has been interfered with by the defendant." (Della Penna, supra, 11 Cal.4th at p. 392. Accord, Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1157 (Korea Supply Co.).) "The tort of interference with contractual relations protects an existing, formally cemented economic relationship. The tort of interference with prospective business relations protects nonformalized or anticipated business relationships which are reasonably certain to occur, but which are nonetheless prospective." (PMC, Inc. v. Saban Entertainment, Inc., supra, 45 Cal.App.4th at p. 601. See also, Kasparian v. County of Los Angeles (1995) 38 Cal.App.4th 242, 260. See generally, 5 Witkin, Summary of Cal. Law (9th ed., 2004 supp.) Torts, § 652 [*18] , pp. 740-741; id, 2004 supp., pp. 546-547.) The "interests invaded" are not of "equal dignity." (Della Penna, supra, 11 Cal.4th at p. 392.) A "formally cemented economic relationship is deemed worthy of protection from interference by a stranger to the agreement. Economic relationships short of contractual, however, should stand on a different legal footing as far as the potential for tort liability is reckoned." (Ibid.)
2. Potential Defendants

In Applied Equipment, the California Supreme Court held that a tort action for interference with contract does not lie against a contracting party. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 521 (Applied Equipment).)

By extension, a claim for interference with prospective economic advantage does not lie against a party to the relationship from which the anticipated benefit will derive. (Kasparian v. County of Los Angeles, supra, 38 Cal.App.4th at p. 260 [general partners not liable]. See also, e.g., Webber v. Inland Empire Investments, Inc. (1999) 74 Cal.App.4th 884, 897 [corporation not liable under alter ego theory]. [*19] See generally, 5 Witkin, Summary of Cal. Law, supra, 2004 supp., § 652A, pp. 547-549.)

3. Elements of the Interference Torts

"To recover in tort for intentional interference with the performance of a contract, a plaintiff must prove: (1) a valid contract between plaintiff and another party; (2) defendant's knowledge of the contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. [Citation.]" (Applied Equipment, supra, 7 Cal.4th at p. 514, fn. 5.)

The elements of the tort of interference with economic relations are similar. They "are usually stated as follows: (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) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant." (Korea Supply Co., supra, 29 Cal.4th at p. 1153, [*20] internal quotation marks and citations omitted.) With respect to the third element of the tort of interference with economic relations, "a plaintiff must plead and prove that the defendant's acts are wrongful apart from the interference itself. [Citation.]" (Id. at p. 1154, citing Della Penna, supra, 11 Cal.4th at p. 393.)

4. Privilege to Interfere

The defendant may have a legally cognizable privilege or justification for interfering with a contract or with some less formal economic relationship. For example, "California law has long recognized a 'competition privilege' which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor." (Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners, supra, 52 Cal.App.4th at p. 880.) New York has recognized a wife's "limited immunity" against claims that she interfered with her husband's contractual relationship with his manager. (Joel v. Weber (1992) 153 Misc. 2d 549, 581 N.Y.S.2d 579, 581.) Generally speaking, interference with prospective economic advantage may be [*21] justified on broader grounds than interference with contract. (Kasparian v. County of Los Angeles, supra, 38 Cal.App.4th at p. 260. See Della Penna, supra, 11 Cal.4th at p. 392.)
With the foregoing legal principles in mind, we turn to the merits of Randall's interference claim against Ligeti. In assessing that claim, we remain cognizant of the proper review standard. We therefore proceed with due regard for Randall's right to have the jury decide all contested fact issues within its ken.

C. Application

The court granted Ligeti's motion for nonsuit, based on uncontradicted evidence of her financial interest in the contract. n2 Randall asserts that the court erred in doing so. As we explain, we reject Randall's assertion that the court erred in granting nonsuit. Our analysis begins with an examination of the nature of Randall's tort claim against Ligeti.

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n2 Explaining its decision, the court said: "I am satisfied that the cases such as Applied Equipment as well as Kasparian v. County of Los Angeles do apply here and they basically hold this tort claim cannot be against a party who has economic interest in the contract. It is a tort that applies to - as the cases say, interlopers or strangers. Ms. Ligeti certainly was not an interloper or a stranger to the relationship. It is clear from the testimony that we have heard and [that is] uncontradicted that the contract, if one, indeed, was formed[,] was formed during the time Ms. Ligeti was married to Mr. Campbell. It is also clear her funds as well as Mr. Campbell's funds went into the corporation that was formed pursuant to whatever the arrangement was, and that she had very direct financial interest in the performance under that contract." Citing "community property law," the court concluded that Ligeti could not be liable for interference, "because of the strong financial interest that she had in the performance of the contract itself."

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1. What Is The Nature of Randall's Claim?

In his briefing on appeal, Randall does not specify the nature of his claim against Ligeti - whether it is for interference with contract or for interference with economic relations. Nor is the nature of the claim clear from the record. n3 At oral argument, Randall stated that his claim was for interference with contract, but he asserted that the nature of his claim is not determinative of the outcome.

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n3 In Randall's complaint, that claim is entitled "Intentional Interference with Economic Relationship." In that cause of action, Randall alleges that "Ligeti knew of the existence of the economic relationship" between him and Campbell and that she "engaged in intentional acts designed to disrupt" it. Randall further alleges that as "a proximate result" of Ligeti's conduct, "Campbell breached the aforementioned agreement" with him, and that he "suffered economic damages as a result of that breach," including lost profits and lost salary. In Ligeti's motion for nonsuit on this claim, she asserts that Randall "woefully failed to present any evidence which would constitute actionable conduct for an interference with a contract or interference with a prospective economic advantage claim." After Ligeti's motion was granted, the jury determined that there was an enforceable oral contract between Randall and Campbell, although it found no breach.

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We need not determine the nature of Randall's interference claim. As we explain, we conclude that Ligeti has no liability for either tort. We begin by assessing Ligeti's role in the economic relationship between Randall and her husband, to determine whether the rationale in Applied Equipment immunizes her from tort liability.

2. Is Ligeti A Potential Defendant?

Randall challenges the dismissal of his interference claim against Ligeti. Because Ligeti was not a contracting party, he asserts, the court erred in relying on Applied Equipment. Defendants vigorously dispute Randall's claim of error. Citing Applied Equipment, they assert: "As a matter of law, and as the trial court correctly found, one who has a legitimate social or economic interest in the contractual relationship cannot be liable for tortious interference with the contract."

The parties' dispute on this question centers on their divergent interpretations of Applied Equipment. Defendants rely on this statement in the high court's decision: "The tort duty not to interfere with the contract falls only on strangers-interlopers who have no legitimate interest in the scope or course of the contract's [*24] performance." (Applied Equipment, supra, 7 Cal.4th at p. 514.) Defendants also rely on the court's statement of the tort's "underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship . . . ." (Ibid.)

We read Applied Equipment more narrowly than defendants. In that case, the California Supreme Court introduced its discussion as follows: "California recognizes a cause of action against noncontracting parties who interfere with the performance of a contract." (Applied Equipment, supra, 7 Cal.4th at p. 513.) It then explained: "One contracting party owes no general tort duty to another not to interfere with performance of the contract; its duty is simply to perform the contract according to its terms." (Id. at p. 514.) "Contract and tort are different branches of law. Contract law exists to enforce legally binding agreements between parties; tort law is designed to vindicate social policy. [Citation.]" (Ibid.) "Conduct amounting to a breach of contract becomes tortious only when it also [*25] violates an independent duty arising from principles of tort law." (Id. at p. 515.) "The fundamental differences between contract and tort are obscured by the imposition of tort liability on a contracting party for conspiracy to interfere with the contract. Whether or not a stranger to the contract induces its breach, the essential character of a contracting party's conduct remains the same-an unjustified failure or refusal to perform." (Id. at pp. 516-517.) "In its contract with Applied, Varian assumed only the obligation to perform the contract or pay damages for breach. It did not assume the independent tort obligation not to interfere with the performance of its own contract. Accordingly, Varian is legally responsible only in contract, not in tort." (Id. at pp. 517-518.) "A breaching party already has a legal incentive to perform-the likely prospect of liability for breach of contract. We perceive no additional value, and significant additional uncertainty, from the imposition of tort damages on a contracting party in this instance." (Id. at p. 520, fn. omitted.) The court then articulated its narrow holding. As [*26] the court put it, "we hold only that Varian may not be held liable to Applied for conspiracy to interfere with Varian's own contract-the Applied/Varian purchase order." (Id. at p. 521, fn. omitted.)

Given our narrow reading of Applied Equipment, we agree with Randall that its rationale does not insulate a non-contracting party from tort liability for interference, even where that person has a legitimate economic interest in the contract and thus is neither a stranger nor an interloper. In short, because Ligeti is not a contracting party, Allied Equipment offers her no protection.

That conclusion does not end the inquiry, however. It leaves open the question of whether Ligeti's status as wife and contributor of community property clothes her in privilege. In this case, however, we need not reach that interesting question, since we can resolve this case based our determination that Randall's evidence fails to support an interference claim against Ligeti.

As we now explain, we find Randall's evidence lacking with respect to at least one essential element of each of the two interference torts.

3. Is There Evidence Of Actionable Conduct?

With respect to [*27] claims for tortious inference with contract, actionable conduct includes any act "designed to induce a breach or disruption of the contractual relationship . . . ." (Applied Equipment, supra, 7 Cal.4th at p. 514, fn. 5.) Put another way, "intentionally interfering with an existing contract is 'a wrong in and of itself' [citation] . . . ." (Korea Supply Co., supra, 29 Cal.4th at p. 1158.)

On the other hand, a "plaintiff seeking to recover for alleged interference with prospective economic relations has the burden of pleading and proving that the defendant's interference was wrongful 'by some measure beyond the fact of the interference itself.' [Citation.]" (Della Penna, supra, 11 Cal.4th at pp. 392-393, fn. omitted; accord, Korea Supply Co., supra, 29 Cal.4th at pp. 1158-1159; Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1256.) As the California Supreme Court recently clarified in the Korea Supply Co. case, "an act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other [*28] determinable legal standard." (Korea Supply Co., supra, 29 Cal.4th at p. 1159, fn. and citation omitted. See also, e.g., San Francisco Design Center Associates v. Portman Companies (1995) 41 Cal.App.4th 29, 42-43; Gemini Aluminum Corp. v. California Custom Shapes, Inc., supra, 95 Cal.App.4th at p. 1259.) In that case, the court concluded, the plaintiff "clearly satisfied the independent wrongfulness requirement. In its complaint, [plaintiff] alleged that defendant . . . engaged in bribery and offered sexual favors to key Korean officials in order to obtain the contract from the Republic of Korea." (Korea Supply Co., supra, 29 Cal.4th at p. 1159.) Because those acts violate the Foreign Corrupt Practices Act, they are independently wrongful. (Ibid.)

In this case, Randall presented evidence that Ligeti injected herself into the management of Pacific Jets; made demands for information regarding the corporation, first to his face and later behind his back; insulted him and threatened to have him fired; damaged the morale of company employees; and helped orchestrate his ouster from the company. None of the foregoing [*29] conduct constitutes an independent wrong for purposes of this tort. In order for liability to attach, "defendant's conduct must be independently actionable. [Citations.]" (San Francisco Design Center Associates v. Portman Companies, supra, 41 Cal.App.4th at pp. 42-43, fns. omitted. Accord, Gemini Aluminum Corp. v. California Custom Shapes, Inc., supra, 95 Cal.App.4th at pp. 1258-1259.) It must violate a "constitutional, statutory, regulatory, common law, or other determinable legal standard." (Korea Supply Co., supra, 29 Cal.4th at p. 1159, fn. and citation omitted.) There is no such violation here.

Based on the allegations of Randall's complaint, as demonstrated by his trial evidence, Ligeti's conduct is not independently actionable. For that reason, it cannot form the basis of a claim of interference with economic relations. However, Ligeti's conduct might support a claim of interference with contract, since intentional disruption of an existing contract is independently wrongful. (Korea Supply Co., supra, 29 Cal.4th at p. 1158.)

4. Is There Evidence Of Disruption?

An essential element of both interference [*30] torts is disruption of the contractual or other relationship. To support a claim for interference with contract, the plaintiff must prove the "actual breach or disruption of the contractual relationship . . . ." (Applied Equipment, supra, 7 Cal.4th at p. 514, fn. 5.) The same is true of the tort of interference with economic relations: "only plaintiffs that can demonstrate actual disruption of their economic relationship will be able to state a claim for this tort." (Korea Supply Co., supra, 29 Cal.4th at p. 1165.)

Here, we may properly analyze the issue solely as one of contract interference. For one thing, as explained above, Randall cannot state a cause of action for interference with economic relations, since he failed to satisfy the independent wrongfulness requirement for that tort. For another thing, the jury in this case found that there was an enforceable oral contract between Randall and Campbell.

Significantly, the jury determined that Campbell had not breached the oral contract. It is difficult to see how Ligeti could have induced a contract breach that did not occur. For that reason, any error in granting nonsuit for interfering with [*31] that contractual relationship necessarily was harmless. (Cf., e.g., Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1390 [error in granting nonsuit on punitive damages claim was harmless, where plaintiff failed to meet his burden of proof on the underlying causes of action].) Nor are we persuaded by Randall's contention that Ligeti is liable for disrupting the contract, albeit without inducing a breach. Though neither party briefed the point, there is authority for the proposition that interference may be actionable, even if it does not induce breach of the contract. (See Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1129, 270 Cal. Rptr. 1.) As the California Supreme Court put it, "interference with the plaintiff's performance may give rise to a claim for interference with contractual relations if plaintiff's performance is made more costly or more burdensome." (Ibid.) That proposition does not assist Randall, however, given the cause of action as pleaded. Randall's complaint asserts only that Ligeti's conduct induced Campbell's breach and that he suffered damages as a result of that breach. He does [*32] not allege that Ligeti's actions made his performance of the contract more costly or more burdensome. The " 'plaintiff must recover, if at all, upon the cause of action alleged and not upon some other which may appear from the proofs.' [Citation.]" (Lewis v. South S. F. Yellow Cab Co. (1949) 93 Cal. App. 2d 849, 852.) Moreover, Randall did not move to amend his complaint following the presentation of his evidence to include such allegations. "It is the well established rule that the allegations of a complaint and the proof thereof must be in agreement. This rule is based upon the fundamental proposition that a party must recover, if at all, according to his pleadings, rather than upon some other or different cause which may have been developed by the proof. When such is the case there is presented a material variance, and the defendant is properly entitled to a nonsuit even though the objection might have been obviated by amendment. [Citations.]" (Von Goerlitz v. Turner (1944) 65 Cal. App. 2d 425, 431.)

To sum up: (1) assuming Randall's claim is one for inducing breach of contract, any error in granting nonsuit was harmless since there was no [*33] breach; (2) assuming Randall's claim is one for interference with contract that rendered his performance more burdensome or costly, he failed to assert such a cause of action; (3) assuming Randall's claim is one for interference with economic relations, the cause of action fails since Ligeti did not engage in independently wrongful conduct. Given Randall's failure to satisfy the essential elements to state a cause of action, the trial court acted properly in granting Ligeti nonsuit on this claim.

III. Refusal to Permit Amendment of Pleadings

In the trial court, Randall argued alternatively that the court should deny Ligeti's nonsuit motion on the ground that she was not a contracting party or that it should allow him to amend his complaint to assert a contract claim against her. On appeal, Randall continues to press the point that Ligeti either was a contracting party or she was not. If we endorse the court's reliance on Applied Equipment in granting nonsuit, he urges, then we must find error in the trial court's denial of his alternative request to amend his pleadings. Otherwise, Randall contends, he will have "no remedy against Ms. Ligeti - however egregious her misconduct. [*34] "

We find no error in the trial court's refusal to permit Randall to amend his complaint in this fashion. n4 As we explained above, the trial court correctly determined that Ligeti was not a contracting party. There is no evidence to the contrary. If Randall has no remedy against Ligeti, that consequence is a function of his failure to state a tort claim against her.

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n4 In making that ruling, the court said this: "As to whether the Complaint can be amended to allege a breach of contract claim against her, I am denying that request. I don't believe that a contract cause of action would lie against a party who was not participating in the original contract and I realize it sounds like that may be contradictory to the fact that she later has economic interest." As the court further explained, "under cases like Applied Equipment, she is not liable for tort. At the same time, she is not a party to that contract."

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IV. Jury Instruction on the Statute of Frauds

Randall asserts prejudicial error in the [*35] court's decision to instruct the jury on the statute of frauds. n5 According to Randall, "there is not a scintilla of evidence tending to show that the oral contract . . . by its terms was not to be performed in a year." Defendants disagree. They point out that Randall and Campbell expressed differing views in their testimony concerning the time period in which Randall was to get the company "up and running" and bring it to "fruition."

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n5 The instruction given reads as follows: "The law does not enforce oral contracts, other than certain financial contracts, that necessarily require more than a year to perform. Plaintiff has the burden of proving by a preponderance of the evidence that the terms of the contract were such that it could be performed within one year from the date the contract was made. Even though it might take longer, it is still enforceable if there is a possibility that it could be performed within a year. The year starts from the date the contract was made, not from when the performance begins."

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On appeal, we view the trial evidence in favor of the contention that the instruction is warranted. (Sills v. Los Angeles Transit Lines (1953) 40 Cal.2d 630, 633.) The reason is this: "Each party is entitled to have his theory of the case submitted to the jury in accordance with the pleadings and proof [citation], and it is incumbent upon the trial court to instruct on all vital issues involved [citations]." (Ibid. See also, e.g., Maxwell v. Powers (1994) 22 Cal.App.4th 1596, 1607.)

A. There Was No Error

Among the issues in Randall's motion for new trial was the jury instruction on the statute of frauds. Addressing that issue, the court explained that "reasonable minds could differ on whether this contract was capable of being performed within one year of formation." It therefore concluded: "There was no error in allowing the jury to hear, deliberate on, and ultimately reject, defendant's Statute of Frauds defense."

We agree with the trial court's assessment that the instruction was appropriate on this record. A party is entitled to requested instructions as " 'supported by the pleadings and the evidence, whether or not that [*37] evidence was considered persuasive by the trial court.' [Citation.]" (Maxwell v. Powers, supra, 22 Cal.App.4th at p. 1607.) Here, defendants' answer asserted the statute of frauds as an affirmative defense. Furthermore, as explained above, there is evidence in the trial record to support the instruction.

B. There Was No Prejudice

Even assuming error, we discern no prejudice.

"In assessing prejudice from an erroneous instruction, we consider, insofar as relevant, '(1) the degree of conflict in the evidence on critical issues [citations]; (2) whether respondent's argument to the jury may have contributed to the instruction's misleading effect [citation]; (3) whether the jury requested a rereading of the erroneous instruction [citation] or of related evidence [citation]; (4) the closeness of the jury's verdict [citation]; and (5) the effect of other instructions in remedying the error [citations].' [Citations.]" (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 570-571.)

Three of the foregoing factors are relevant here. One is the conflict in the evidence about the time for performance, mentioned above. Another is [*38] the closeness of the verdict. On the question of whether Campbell breached the contract, nine jurors found no breach, with the remaining three in opposition. Significantly, however, on the question of whether the statute of frauds barred Randall's contract claim, the jury found unanimously in his favor. The third pertinent factor is the jury's question during deliberations: "If an oral contract is modified/amended, does the date of the modified/amended oral contract supersede the date of the original oral contract." To answer that question, the judge gave an explanation in open court that apparently failed to satisfy the jury. A colloquy between the court and a juror took place, followed by a side bar with counsel, which concluded with the court telling the jury that modification "does not, quote, 'restart the clock,' end of quote."

Randall argues that the jury's question demonstrates that it was confused by the instruction on the statute of frauds. He attempts to bolster that argument with declarations from six jurors. The trial court properly rejected the proffered juror declarations, finding them inadmissible under the governing statute. (See Evid. Code, § 1150 [*39] ; Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1683.) As the trial court explained: "Plaintiff's sole claim of 'misconduct' is that the jurors misconstrued and misapplied certain of the instructions. This clearly calls for an inquiry into the jurors' subjective mental processes - an area where courts do not go."

Disregarding the juror declarations, as we must, we find scant evidence of prejudice. To the contrary, it seems clear that Randall was not prejudiced by the instruction on the statute of frauds, given that the jury found in his favor on that issue. In a civil case, reversal for instructional error is required only where it is likely that the error adversely affected the verdict. (Gemini Aluminum Corp. v. California Custom Shapes, Inc., supra, 95 Cal.App.4th at p. 1257.) No such showing can be made on this record.

V. Motion For Sanctions

Having rejected Randall's arguments on appeal, we now turn to defendants' motion for sanctions. Defendants request dismissal of the appeal and an award of nearly $ 60,000 in attorney fees. As grounds for their motion, defendants assert (1) Randall's appeal is frivolous, and (2) [*40] Randall violated appellate rules by failing to accurately recite the material facts and by failing to address controlling adverse legal authorities.

A. Is the appeal frivolous?

Sanctions may be imposed for a frivolous appeal. (Code of Civ. Proc., § 907; Cal. Rules of Court, rule 27 (e)(1)(A).) We apply a two-pronged standard to determine whether an appeal is frivolous and thus warrants sanctions. The California Supreme Court formulated that standard more than two decades ago, in In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, 183 Cal. Rptr. 508. As the court put it, "an appeal should be held to be frivolous only when it is prosecuted for an improper motive - to harass the respondent or delay the effect of an adverse judgment - or when it indisputably has no merit - when any reasonable attorney would agree that the appeal is totally and completely without merit. [Citation.]" (Ibid.)

Under the first prong of the Flaherty test, an appeal is frivolous if it is brought for an improper motive. (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.) In this case, defendants [*41] make no argument that Randall brought this appeal for an inappropriate purpose.

Under the second prong of Flaherty, an appeal is frivolous if it indisputably lacks merit. (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.) It is this second prong of the Flaherty standard on which defendants rely. They contend that Randall's appeal "is totally and completely without merit."

We disagree. As Flaherty instructs: "Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal. An appeal that is simply without merit is not by definition frivolous and should not incur sanctions." (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.) The court cautioned that the use of sanctions could have "a serious chilling effect on the assertion of litigants' rights on appeal." (Ibid.) For that reason, the court concluded, appellate sanctions should be imposed only in the clearest and most egregious cases. (Id. at pp. 650-651.) This is not such a case. In our view, the Flaherty standard defining a frivolous appeal has not been met [*42] here.

B. Do Randall's rule violations warrant sanctions?

As noted above, appellate courts may impose monetary sanctions against litigants for unreasonable rule infractions. (Cal. Rules of Court, rule 27 (e)(1)(C).) Sanctions may be imposed "as the circumstances of the case and the discouragement of like conduct in the future may require. [Citations.]" (Pierotti v. Torian, supra, 81 Cal.App.4th at p. 29, internal quotation marks omitted.)

We are not persuaded that the rule violations in this case warrant the imposition of monetary sanctions. Although Randall's briefing "is not a model of exemplary appellate briefing, it is not so misleading or otherwise improper as to cause the needless expenditure of substantial time by the court or counsel." (Orr v. Pacific Southwest Airlines (1989) 208 Cal. App. 3d 1467, 1475, 257 Cal. Rptr. 18.) As explained above, we believe the appropriate remedy for these rules violations is to accept defendants' recitation of the facts.

SUMMARY OF CONCLUSIONS

Reaching Randall's appellate arguments on the merits, we find (1) no basis for reversing the trial court's grant [*43] of nonsuit on Randall's interference claim against Ligeti; (2) no error in the court's refusal to permit Randall to amend his complaint; and (3) no prejudicial instructional error.

As to defendants' motion for sanctions, we conclude that Randall's appeal is not frivolous. We further conclude that his rule violations do not warrant the imposition of sanctions.
DISPOSITION

McAdams, J.

WE CONCUR:

Rushing, P. J.

Walsh, J. *

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* Judge of the Santa Clara County Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

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