Lalani Steel, Inc. v. Int'l Econ. & Trading Corp.

LALANI STEEL, INC., Plaintiff and Respondent, v. INTERNATIONAL ECONOMIC AND TRADING CORPORATION, Defendant and Appellant.

D076198

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

April 2, 2020

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. CIVDS1312571)

APPEAL from a judgment and postjudgment order of the Superior Court of San Bernardino County, Donna G. Garza, Judge. Judgment affirmed; postjudgment order reversed and remanded with directions.

Pillsbury Winthrop Shaw Pittman and Nathan M. Spatz, Justin L. Brossier for Defendant and Appellant.

Levinson Arshonsky & Kurtz and Richard I Arshonsky, Jason J. Jarvis for Plaintiff and Respondent.

Plaintiff and respondent Lalani Steel, Inc. (Lalani)¹ sued defendant and appellant International Economic and Trading Corporation (International) for breach of an oral contract, which Lalani alleged was an exclusive supply agreement by which International would provide steel to Lalani for sale to a third party. Following a bench trial, the trial court entered judgment in Lalani's favor, finding International breached a one-year oral agreement entered into by the parties and as a result Lalani suffered $1.8 million in damages. After International filed its notice of appeal, Lalani moved under Code of Civil Procedure section 187² to amend the judgment to add China Baowu Steel Group Corporation Limited a/k/a China Baowu Steel Group Corporation (Baowu) as a judgment debtor, and the trial court granted the motion. International filed a second notice of appeal from that postjudgment order.

International contends: (1) there is no substantial evidence to support the trial court's finding the parties had entered into an oral exclusive contract; (2) the court's award to Lalani of $1.8 million in damages is speculative and unsupported by substantial evidence; and (3) the court lacked jurisdiction to amend the judgment to add Baowu as a judgment debtor while its appeal was pending and Lalani's motion failed to satisfy the requirements to permit such an amendment.

We conclude substantial evidence supports the trial court's findings of the existence of a contract and its damages award. However, we agree the court lacked jurisdiction to amend the judgment to add a new judgment debtor following International's filing of its first notice of appeal. Accordingly, we affirm the judgment, but reverse the postjudgment order and remand with directions that the trial court deny without prejudice Lalani's motion to amend the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Reviewing a judgment based on a statement of decision following a bench trial, we state the facts from the record and draw inferences in the light most favorable to Lalani as the prevailing party. (Jackson v. LegalMatch.com (2019) 42 Cal.App.5th 760, 767; Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 518; see In re Shaputis (2011) 53 Cal.4th 192, 214, fn. 11 [appellate court is not limited to facts or evidence cited in trial court's statement of decision but review extends to the entire record].)

Lalani is a steel distributor formed in about 2002. It purchases steel from various mills then sells to customers in the domestic market. Lalani did business with a company, Gonvarri Service Group (Gonvarri) or its divisions, buying secondary steel³ from Gonvarri in 2003 and 2004. Beginning in 2006, Lalani began selling prime steel to Gonvarri. From 2002 to August 2011, Lalani sold Gonvarri about $35 million in steel product. Iqbal Hemani is Lalani's owner and director of operations.

International is a Chinese state-owned mill that imports and exports steel products to trading companies like Lalani, who are its customers.⁴ In 2006, Lalani began doing business with International by purchasing excess prime steel from it. By 2010, Lalani was purchasing prime steel from International to sell to customers at a profit. In mid-2011, Lalani began selling prime material to Gonvarri, and Gonvarri and Lalani entered into an agreement that Lalani would act as a middleman or "trader" as commonly known in the industry to supply approximately 1,000 metric tons of steel product to Gonvarri per month for the next 12 months. It was not a written agreement, as the parties' custom and practice was to reach such agreements orally or via e-mails. To perform this agreement, Lalani purchased 1,000 metric tons of steel from International, whose representative, Louis Liu, was aware of Lalani and Gonvarri's 12-month agreement. Gonvarri was testing whether Lalani could fulfill their agreement, and Lalani was testing whether International could provide those quantities of steel. Lalani met its agreement with Gonvarri to supply 1,000 metric tons of steel for 12 months.

During their year-long arrangement, Lalani sought to increase its business with Gonvarri. Thus, in mid-2012, Hemani met with a Gonvarri representative in Spain. Several days later, Hemani told International representatives about the potential for additional business from Gonvarri. In early August 2012, a Gonvarri representativecommunicated with Hemani via e-mail that it had approved Lalani as a qualified source in good standing, that he felt Lalani had "very competitive" pricing, and that Gonvarri was forecasting increasing its actual purchasing from Lalani to about 10,000 metric tons of steel each month, with the potential for more.⁵ Lalani forwarded that e-mail to International.

On September 15, 2012, Hemani and Zhigang (also referred to as Jack) Guo, a representative of International, reached a "handshake" agreement in which Lalani would purchase from International about 10,000 metric tons of steel product each month and exclusively market International product to Gonvarri. International agreed that Lalani would be the exclusive channel to offer its material to Gonvarri, and Lalani would earn a profit of $15 per metric ton on sales of International steel to Gonvarri. Hemani expected the arrangement among the three companies to last three to five years. Lalani asked for written confirmation, and International memorialized the agreement in a "ConfirmationLetter" dated September 18, 2012, reading: "We, Wuhan Iron and Steel (Group) Corp. are pleased to confirm that All [sic] inquiries coming from Gonvarri Group will be offered to Lalani . . . only." Hemani understood this to mean that Lalani would be the sole channel to quote on Gonvarri inquiries and requests. International's president placed its corporate seal on the confirmation letter and e-mailed it to Lalani. Hemani informed Gonvarri of Lalani's and International's agreement.⁶

Several days after the September 15, 2012 meeting, Gonvarri sent a request for a quote to Hemani, who forwarded it to International. International gave Lalani a price that Lalani proposed to Gonvarri, but Gonvarri submitted a counteroffer, which Lalani again forwarded to International. In early October 2012, Lalani, International, and Gonvarri held a joint meeting at which they discussed several "key points," including that WISCO would provide competitive pricing to Gonvarri, Gonvarri's "[y]early qty [quantity] commitment," and Gonvarri's need for a six-month fixed price. At the meeting, Gonvarri's representative told International's representative Junhua Shen about the importance of timely delivery.

Eventually Lalani and Gonvarri agreed on pricing and entered into several sales contracts for 10,395 metric tons of product with shipment dates in mid-November and mid-December 2012. After the first order, International raised its base steel price on Lalani, but Lalani absorbed the difference, electing to suffer the loss in the interest of pursuing bigger business with Gonvarri. In an October 21, 2012 e-mail, Shen apologized for the inconvenience, but "reassure[d]" Hemani that "WISCO will quote material to Gonvarri through Lalani," which was consistent with Hemani's understanding of the parties' agreement.

Though Lalani had discussed the upcoming shipment dates with International, International later notified Lalani that it could not meet them and had to push them off by about two weeks. Gonvarri, however, agreed to the new dates and International issued sales confirmations accordingly. International, however, again missed the next new shipment date and sought to push it off, which was unacceptable to Gonvarri. The first order did not ship until early March 2013.

In May 2013, Hemani and Shen met with Gonvarri representatives. Shen apologized for the first order problems and again represented that Lalani would be International's exclusive channel for International steel sales to Gonvarri. That month Gonvarri placed another order with Lalani, which International filled. Lalani made its $15 per metric-ton profit on that sale.

Between September 2012 and May 2013, Lalani unsuccessfully tried to place other Gonvarri inquiries with International. International either did not respond, did notgive competitive pricing, or by the time International provided a price, Gonvarri had already purchased materials from another mill.

On May 12, 2013, Guo informed Hemani that Gonvarri did not want to purchase International steel solely through Lalani. This was the first Hemani had heard this news. After Hemani expressed his surprise and shock, Guo responded, "We agree to do [Gonvarri] business through sole channel Lalani," but reiterated that Gonvarri did not agree to that arrangement. Guo proposed that Lalani work together with WISCO Europe to sell to Gonvarri. Guo's assertion that they had agreed to use Lalani as its sole channel to Gonvarri comported with Hemani's understanding of their agreement. That month, Hemani met with an International representative who...