Physician Assistant Specialists-California, Inc. vs. Orange County Thoracic and Cardiovascular Surgeons

Third Cause of Action for Intentional Interference with Prospective Contractual Relations

The elements of a cause of action for intentional interference with prospective economic advantage “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.” [Citations.]’ ” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.)

Defendant argues this cause of action fails because its allegations are conclusory, does not state a cause of action, is based on statements that were opinions not facts, and fails to allege damages. This court rejects each of those arguments.

There is no requirement that a plaintiff asserting a cause of action for intentional interference with prospective contractual relations based on the misappropriation of confidential information allege how the information was obtained. However, Plaintiff expressly alleges that Defendant used confidential

information in order to establish a competing team of physician assistants. (Compl. ¶ 45.)

As to whether the alleged statements are actionable false statements, the statements “must contain a provable falsehood.” (Cocoa AJ Holdings, LLC v. Schneider (2025) 115 Cal.App.5th 980, 997.) Courts “assess ‘ “whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact,” ’ considering both the language of the statement and the context in which it is made.” (Ibid.) Here, the alleged statements that Plaintiff “was incapable of providing sufficient or adequate staffing and therefore in breach of its contractual obligations” are not pure opinions but are provable assertions of fact.

As to damages, Plaintiff alleges that its business relationship with certain hospital clients, including the Providence health care system and specific hospitals within said system, have been disrupted as a result of Defendant’s conduct. (Compl. ¶ 48.) At this stage, this allegation is sufficient to demonstrate damages.

Fourth Cause of Action for Violation of California Uniform Trade Secrets Act

Defendant argues that this cause of action fails because the alleged trade secrets have no independent economic value and can be easily ascertained with minimal effort. Plaintiff alleges that Defendant misappropriated its trade secrets, including information relating to the rates that Plaintiff was receiving for its services and the rates it was paying its employees. (Compl. ¶ 53.) Plaintiff alleges that this confidential information is not readily known or available to its competition and has independent economic value. (Compl. ¶ 52.) These allegations sufficiently support the cause of action.

Defendant argues it could not have improperly disclosed Plaintiff’s confidential information when solicitating Plaintiff’s employees because those employees were parties to the Agreement. This argument is unsupported by authority and unpersuasive. That the company was a

party to the agreement does not make every employee a party to the agreement.

Finally, the fact that Defendant was contractually permitted to hire Plaintiff’s employees does not mean it cannot be liable for allegedly using trade secrets to interfere with Plaintiff’s other contractual relationships.

Fifth Cause of Action for Violation of Business & Professions Code § 17200 Defendant again argues Plaintiff’s allegation that it has suffered economic injury in relation to the loss of its employees who were poached by Defendant ignores its ability under the contract to hire Plaintiff’s employees.

As with the other causes of action, this argument is not persuasive. Further, this cause of action is based not only on Defendant’s hiring of Plaintiff’s employees but also based on Defendant’s alleged circumvention of its obligations under the California Labor Code to obtain an unfair economic advantage in the marketplace. (Compl. ¶ 60.)

Seventh Cause of Action for Open Book Account Defendant argues this cause of action fails because a valid express contract exists between the parties and the general rule is that express contracts are not open accounts. At this stage of the proceedings, Plaintiff is not prohibited from pleading alternate theories of liability.

Motion to Strike Defendant argues the claim for punitive damages should be stricken because Plaintiff’s only viable cause of action is for breach of contract. As discussed above, the Demurrer to the tort causes of action is overruled and, accordingly, the Motion to Strike as to the punitive damages is DENIED.

Defendant next argues that the request for disgorgement under the UCL is improper because it ignores the fact that it was contractually permitted to retain Plaintiff’s employees and Plaintiff has no standing to bring this claim. For the same reasons explained above, the court rejects this claim.

Finally, Defendant argues that the 10% monthly late fee that Plaintiff seeks as part of its damages constitutes an unenforceable penalty and Plaintiff has provided no indication that the 10% monthly late fee has any bearing to the amount of damages delinquent payments would pose to them. However, it is the defendant’s burden to establish that a liquidated damages provision is unreasonable and invalid. (Gormley v. Gonzalez (2022) 84 Cal.App.5th 72, 82.) And an analysis of Defendant’s arguments against the 10% monthly late fee would require the Court to consider matters beyond the face of the pleading or matters which may be judicially noticed.

The demurrer is OVERRULED. The motion to strike is DENIED. Defendant shall have 20 days to answer the complaint

110 Simplified Builders, Motion to Be Relieved as Counsel of Record -GRANTED Inc. vs. Tran, 2022- 01297068 The motion of attorney Edward Freedman of the Law Offices of Edward W. Freedman to be relieved as counsel for Plaintiff/Cross-defendant Simplified Builders, Inc. is GRANTED.

Service on the client and on all other parties who have appeared in the case was proper and all required forms containing the requisite information were filed pursuant to California Rules of Court, rule 3.1362.

Importantly, a corporation must be represented in court by an attorney. As such, Plaintiff/Cross-Defendant Simplified Builders, Inc. is ORDERED to obtain new counsel within a reasonable time. (CLD Constr., Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1150 [“[T]he court retains authority to dismiss an action if an unrepresented corporation does not obtain counsel within reasonable time.”].)

The order will take effect once moving attorney files proof of service of the signed order (MC-053) on the client.