Ontario International Airport Authority v. Mag US Lounge Management LLC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘Q’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: (IN CHAMBERS) - PLAINTIFF CAVU EXPERIENCES

(AMER) LLC F/K/A MAG US LOUNGE MANAGEMENT

LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT

(Dkt. 114, filed on January 3, 2025)

DEFENDANT/PLAINTIFF ONTARIO INTERNATIONAL

AIRPORT AUTHORITY’S MOTION FOR PARTIAL

SUMMARY JUDGMENT (Dkt. 115, filed on January 3, 2025)

I. INTRODUCTION

On June 16, 2021, plaintiff Cavu Experiences (Amer) LLC, f/k/a MAG US Lounge

Management LLC (“plaintiff’ or “MAG” □ filed suit in this Court against defendant

Ontario International Airport Authority (“OIAA”’) in MAG US Lounge Management

LLC v. Ontario International Airport Authority, Case No. 2:21-cv-04909-CAS-RAOx

(“MAG 1”), for (1) breach of contract; (2) breach of the implied covenant of good faith

and fair dealing; and (3) declaratory relief. MAGI, dkt. 4. On February 4, 2022, MAGI

was dismissed for lack of subject matter jurisdiction. Dkt. 22. Thereafter, MAG

appealed to the Ninth Circuit. Dkt. 23.

On July 19, 2022, OIAA filed suit in San Bernardino County Superior Court

against MAG and Does 1-50 for (1) breach of contract; (2) breach of the implied

covenant of good faith and fair dealing; (3) common counts; and (4) declaratory relief.

See Ontario International Airport Authority v. MAG US Lounge Management LLC, Case

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

No. 5:22-cv-01926-CAS-RAOx (“MAG II’), dkt. 1-1 (“OIAA Compl.”). On October 31,

2022, MAG removed MAG II to this Court. Id.

On December 14, 2022, the Ninth Circuit reversed the dismissal of MAG I, finding

that diversity of citizenship existed between the parties. MAG I, dkts. 27-28. MAGI

was thereafter reassigned to this Court. Dkt. 29. On December 29, 2022, MAG II was

transferred to this Court as a related case. dkt. 21.

On January 30, 2023, the Court granted MAG’s motion to consolidate MAG I and

MAG II. MAGI dkt. 47.

On March 4, 2024, MAG filed its first amended complaint, asserting five claims

for relief: (1) breach of contract; (2) breach of the implied covenant of good faith and fair

dealing; (3) declaratory relief; (4) fraudulent concealment; and (5) fraudulent

misrepresentation. Dkt. 78 (“FAC”). On March 18, 2024, OIAA moved to dismiss the

FAC’s fourth and fifth claims. Dkt. 81. On April 22, 2024, the Court granted OIAA’s

motion and granted MAG leave to amend. Dkt. 90.

On September 3, 2024, MAG filed its operative second amended complaint,

asserting six claims for relief: (1) breach of contract; (2) breach of the implied covenant

of good faith and fair dealing; (3) declaratory relief: (4) breach of mandatory duty under

California’s Public Records Act (“CPRA”), Cal. Gov't Code § 7920.000 et seg., pursuant

to Cal. Gov't Code § 815.6; (5) breach of mandatory duty based on OIAA’s Ethics Policy

and RFP Guidelines, pursuant to Cal. Gov't Code § 815.6; and (6) promissory estoppel.

Dkt. 101 (“MAG SAC”).

On January 3, 2025, MAG filed a motion for partial summary judgment. Dkt. 114

(“MAG MSJ’). On the same day, OIAA filed a motion for partial summary judgment.

Dkt. 115 (“‘OIAA MSJ”). On February 3, 2025, OIAA filed its opposition to MAG’s

motion. Dkt. 119 (“MAG Opp.”). On the same day, MAG filed its opposition to OIAA’s

motion. Dkt. 124 (“OIAA Opp.”). On February 18, 2025, MAG filed its reply, dkt. 128

(“MAG Reply’), as well as its response to OIAA’s statement of genuine disputes, dkt.

129 (“MAG SDF”). On the same day, OIAA filed its reply, dkt. 127 (“OIAA Reply”), as

well as its response to MAG’s statement of genuine disputes, dkt. 131 (“OIAA SDF’).

MAG filed evidentiary objections, to which OIAA filed a response. Dkts. 126, 130, 132.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

On March 10, 2025, the Court held a hearing. Presently before the Court are

MAG’s and OJAA’s cross-motions for summary judgment. Having carefully considered

the parties’ arguments and submissions, the Court finds and concludes as follows.

I. BACKGROUND

Unless otherwise noted, the Court references only facts that are uncontroverted and

to which evidentiary objections, if any, have been overruled.’

On June 20, 2018, MAG and OIAA “entered into a Common Use Airport Lounge

Concession Lease Agreement for Common Use Airport Loung[e] Concession and Car

Parking Services at Ontario International Airport” (the “Agreement”), with an effective

date of July 1, 2018, for a period of ten years, to commence on or about the date of the

opening of a second lounge or June 1, 2019, whichever was earlier. MAG SDF 4 1. The

Agreement provided that it could be terminated for “convenience” or in the event of a

default. Agreement §§ 2.4, 14.2.

To the extent the Court relies on evidence to which there has been an objection, the

Court has overruled the objection to that evidence. The Court overrules MAG’s

objection #8, see dkt. 130 at 9, because as OIAA’s Chief Financial Officer, John Schubert

states he has personal knowledge of the amounts paid and owed between the parties. The

Court also overrules MAG’s objection #4, see id. at 5, because Daniel Cappell offers

sufficient evidence as to his personal knowledge as to whether MAG engaged in financial

reconciliation. Further, the alleged inconsistencies between John Schubert’s 30(b)(6)

testimony and Daniel Cappell’s declaration are not “clear and unambiguous.” See

Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (“[T]he sham affidavit rule

should be applied with caution”). Finally, the Court overrules MAG’s objections to the

declaration of Norma Alley, see dkt. 126. As the “Clerk of Board of Commissioners...

responsible for maintaining OIAA’s official records and for responding to discovery

requests,” see dkt. 115-1 □□ she shows why she has personal knowledge regarding the

process for document maintenance and production. Further, the documents at issue,

which were prepared, maintained, and stored in OJAA’s ordinary course of business, fall

into the business records exception to the hearsay rule.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Approximately one year after the Agreement was signed, while the initial

Agreement remained in effect, on August 17, 2020, OIAA issued a Request for Proposals

(“RFP”) seeking proposals from companies to provide car parking services. Id. §j 2.

Section 10.4 of the RFP provides, in pertinent part:

OIAA reserves the right to reject any or all [statements of qualifications

(“SOQs”)]; to waive any informality in the SOQs when doing so would be to the

advantage of OIAA: to reject any unapproved alternative SOQ(s): and to reject the

SOQ of any proposer who has previously failed to perform competently in any

prior business relations with the OIAA. The receipt of the SOQs shall not in any

way obligate the OIAA to enter into any agreement or any other contract of any

kind with any prospective proposer.

OIAA SDF 431. The RFP Guidelines state that after individual evaluators complete

their scoring sheets, “the [Evaluation] Committee will meet to discuss each proposal;

make any appropriate changes: document any change; and, individually assign Total

Scores for each submission.” Id. ] 33. The RFP Guidelines further state that

“Evaluation Committee members should feel comfortable with the justification and

defense of each proposal’s evaluation and scoring. Members may not concur on any

given point; however, this meeting is an opportunity for Evaluation Committee members

to discuss, for example, gross differences in evaluations.” Id. § 34. After the Evaluation

Committee’s initial round of scoring, MAG was the highest scoring bidder. Id. 36. The

Evaluation Committee then changed its scores, resulting in the contract being awarded to

another bidder, Parking Concepts, Inc. (“PCT”). Id. § 37.

Thereafter, OIAA entered into a contract with PCI to provide car parking and

shuttle bus services at Ontario International Airport (the “Airport’”), and this contract

went into effect on March 25, 2021 (though the parties agree it was signed on April 21,

2021). MAG SDF 4 3.

On April 15, 2021, OIAA sent MAG a notice of termination of the Agreement for

convenience pursuant to Sections 2.4 and 2.4.1. Id. 9/4. In this notice, OIAA stated

“both the Lounge Concession and the Car Parking Services at Ontario International

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Airport (ONT) under the MAG USA Agreement will terminate.” Dkt. 121-8. Section

2.4 provides, in pertinent part:

2.4 Termination. Except as set forth below, this Agreement may be terminated for

convenience by either party without cause, upon one year prior written notice to

the other party delivered in accordance with this Agreement; subject to the

following:

2.4.1 If the Authority provides the Concessionaire written notice of termination

more than one (1) year prior to termination date of the Term, the Authority shall

pay for the Concessionaire's unamortized portion of the (a) Concessionaire's

Improvement costs in the Assigned Area(s) listed on Exhibits A-1 and A-2 if the

Lounge Concession Services are being terminated, plus (b) unamortized portion of

Concessionaire's Car Parking Services Costs if the Car Parking Services are being

terminated, in each case on a straight line basis, ten (10) year amortization

schedule. Payment must be made to the Concessionaire within thirty (30) days of

the Authority's notice to terminate (“Termination Costs”).

Agreement § 2.4. The parties dispute whether OIAA validly terminated the Agreement

for cause on May 20, 2021, pursuant to Sections 14.1 and 14.2 of the Agreement. MAG

SDF 4 4. The parties agree, however, that OIAA did not terminate the Agreement

following one-year prior written notice to MAG on April 15, 2021 of its intent to effect

such termination for convenience. Id. § 5. OIAA contends that this was because

“{d]uring the wind-down of the parties’ relationship ... it quickly became clear to OJAA

that MAG was not honoring its obligations under the Agreement.” Id. According to

OIAA,

MAG (1) did not and would not return the $1,181,417 overpayment, (11)

would not reimburse OJAA the $486,994 in sales taxes OIAA paid on

MAG’s behalf, (111) would not remburse OIAA the $74,774.51 in utility

costs OIAA paid on MAG’s behalf, (iv) would not remit to OIAA the

$1,704,881 in baseline parking revenues that MAG owed to OJAA, (v)

would not remit to OIAA the $735,931 in pre-book parking revenues that

MAG owed to OJAA, and (vi) would not provide OIAA the information it

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

needed to conduct a full and accurate financial reconciliation between the

parties.

Id. OIAA claims that based on these breaches, it properly terminated the Agreement for

cause. Id.

Following OIAA’s April 15, 2021, notice of termination of the Agreement, OIAA

did not make any payments to MAG. Id. § 6. The parties dispute whether “OIAA

frustrated MAG’s efforts to reconcile accounts by not meaningfully or clearly responding

or engaging.” Id. § 7. OIAA contends that “[i]t was OIAA, not MAG that consistently

sought to engage in financial reconciliation; and it was MAG, not OIAA, that refused to

provide the data necessary for such a reconciliation to occur.” Id.

MAG did not formally present a written claim for breach of Section 2.4’s notice

provision under the Government Claims Act (“GCA”), Cal. Gov't Code § 945.4. OIAA

SDF 1. However, in spring 2021, MAG and OJAA exchanged correspondence related

to the one-year notice period, and on April 30, 2021, O[AA’s Chief Commercial Officer,

Daniel Cappell (“Cappell’”), wrote to MAG “to [i]nquire if MAG would be open to a

conversation reference a buyout of the 12 month termination period over and above the

Capital Expenditure re1mbursement,” which would be “under the settlement

communications provisions of the California Evidence Code.” Id, As noted above,

MAG filed its original complaint against OIAA on June 16, 2021, and its second

amended complaint on September 3, 2024, after this case was remanded to this Court. Id.

§|2. The second amended complaint was the first pleading to assert a claim for breach of

Section 2.4’s notice provision. Id.

Il. LEGAL STANDARD

Summary judgment is appropriate where “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The moving party bears the initial burden of identifying relevant portions of the

record that demonstrate the absence of a fact or facts necessary for one or more essential

elements of each claim upon which the moving party seeks judgment. See Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

If the moving party meets its initial burden, the opposing party must then set out

specific facts showing a genuine issue for trial in order to defeat the motion. Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 250 (1986): see also Fed. R. Civ. P. 56(c), (e). The

nonmoving party must not simply rely on the pleadings and must do more than make

“conclusory allegations [in] an affidavit.” Lujan v. Nat’] Wildlife Fed’n, 497 U.S. 871,

888 (1990): see also Celotex, 477 U.S. at 324. Summary judgment must be granted for

the moving party if the nonmoving party “fails to make a showing sufficient to establish

the existence of an element essential to that party’s case, and on which that party will

bear the burden of proof at trial.” Celotex, 477 U.S. at 322; see also Abromson v. Am.

Pac. Corp., 114 F.3d 898, 902 (9th Cir. 1997).

In light of the evidence presented by the nonmoving party, along with any

undisputed facts, the Court must decide whether the moving party is entitled to judgment

as a matter of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d

626, 631 & n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the

inferences to be drawn from the underlying facts . . . must be viewed in the light most

favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio

475 U.S. 574, 587 (1986) (citation omitted); Valley Nat’] Bank of Ariz. v_ ALE.

Rouse & Co., 121 F.3d 1332, 1335 (9th Cir. 1997). Summary judgment for the moving

party is proper when a rational trier of fact would not be able to find for the nonmoving

party on the claims at issue. See Matsushita, 475 U.S. at 587.

IV. DISCUSSION

Although the parties have asserted multiple grounds for seeking summary

judgment, the crux of their dispute arises from the fact that OIAA terminated the

Agreement with MAG for convenience on April 15, 2021, but did not terminate the

Agreement for cause until May 20, 2021. The central issue in this case appears to be

whether OJAA acted properly when it awarded a new contract to a different parking

concessionaire, PCI, with an effective date of March 25, 2021, or whether OIAA’s entry

into a contract with PCI was a breach of the Agreement with MAG.

OIAA moves for summary judgment on: (1) MAG’s claim for breach of contract

based on Section 2.4’s notice provision; (2) MAG’s claim for breach of mandatory duty

pursuant to the CPRA; (3) MAG’s other claims for breach of mandatory duty; and (4)

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

MAG’s claim for promissory estoppel. OIAA MSJ at 1-2. MAG moves for summary

judgment on (1) MAG’s claim for breach of contract, including three separate breaches;

(2) OIAA’s claim for breach of contract; (3) OIAA’s claim for breach of the implied

covenant of good faith and fair dealing; and (4) OIAA’s claim for common counts. MAG

MSJ at 11. The Court discusses each claim in turn.

A. OJAA’s MSJ

1. MAG’s Breach of Contract Claim Based on Section 2.4’s Notice

Provision

OIAA first moves for summary judgment on MAG’s breach of contract claim

based on OIAA’s alleged failure to provide one-year notice of termination under Section

2.4 of the Agreement. According to MAG, after OIAA terminated for convenience, it

was required to comply with a one-year notice of termination period, and not terminate

MAG’s contract until April 19, 2022.

OIAA argues that MAG’s breach of contract claim based on Section 2.4’s notice

provision fails because MAG failed to comply with the GCA. OIAA MSJ at 8. OIAA

argues that MAG never presented this claim to OIAA for consideration and that any

letters exchanged between the parties were insufficient to properly make a claim. Id. at

11. Even if the letters were adequate to comply with the GCA, OIAA argues that MAG

failed to timely assert the claim in a lawsuit within two years of its accrual, as required by

the GCA. Id. at 14. OIAA lastly contends that MAG not only omitted this claim and

damages category from its complaint and first amended complaint, but also its Rule 26

Initial Disclosures, which have not been updated. Id.

In opposition, MAG argues that OIAA knew about Section 2.4’s one-year notice of

termination requirement in the months leading up to MAG filing the lawsuit, and even

retained counsel to propose buying out its obligations under the notice provision before

choosing to breach it. OLAA Opp. at 14. MAG therefore argues that it substantially

complied with the GCA. Id. at 15. MAG asserts that OIAA sent MAG notice in April

2021 that proposed extending the 30-day notice of termination period to 90 days: MAG

replied, rejecting the proposal and observing that the Agreement provides for one-year

notice; and OIAA responded, stating that it agreed to the one-year notice period. Id. at

15-16. Then, MAG asserts, on April 30, 2021, OIAA tried again to shorten it, proposing

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

a buyout of the notice period with the advice of counsel. Id. On May 7, 2021, according

to MAG, OIAA repeated the buyout proposal for the “remaining 12-month notice

period.” Id. Additionally, MAG argues that this claim is timely, because the breach

arises out of the same conduct set out in the complaint, and thus relates back to the

original complaint’s filing date under Federal Rule of Civil Procedure 15. Id. at 17.

In reply, OIAA contends that MAG did not substantially comply because there

“was not compliance with any of the [GCA Section 910] requirements, let alone some

compliance with all of them.” OIAA Reply at 3. OIAA asserts that the GCA must be

satisfied even if the public entity has actual knowledge of facts that might support a

claim. Id. at 4. Separately, OIAA argues that MAG did not make a “claim as presented,”

and does not even argue that it did so, as MAG cannot point to any communication in

which it put OIAA on notice that it was filing this claim or that litigation would result if

the issue was not resolved. Id. at 5-6. In regard to timeliness, OIAA asserts that in order

to relate back, a new contract claim must arise from the same contract provision at issue

in the prior pleading, whereas here, MAG’s claim under Section 2.4’s notice provision

arises from a different provision and occurred at a different time. Id. 7-8.

The GCA requires that a party seeking to recover money damages from a public

entity or its employees must submit a claim to the entity before filing suit in court,

generally no later than six months after the cause of action accrues. Cal. Gov't Code §§

905, 911.2, 945.4, and 950.2. Timely claim presentation is not merely a procedural

requirement but is an element of the plaintiffs claim for relief. Shirk v. Vista Unified

School District, 42 Cal. 4th 201, 209 (2007). A plaintiff may sue the public entity and its

employees in court only after the entity has acted upon or is deemed to have rejected the

claim. Id.; see Mangold v. California Public Utilities Commission, 67 F.3d 1470, 1477

(9th Cir. 1995) (“The California Tort Claims Act requires, as a condition precedent to suit

against a public entity, the timely presentation of a written claim and the rejection of the

claim in whole or in part.”). The California Supreme Court has held that the claims filing

requirements of the GCA apply to both tort and contract claims. City of Stockton v.

Superior Court, 42 Cal. 4th 730, 738-41 (2007).

“Substantial compliance” with the GCA will also suffice to enable plaintiffs to

state a claim for relief against a public entity. “The test for substantial compliance is

whether the face of the filed claim discloses sufficient information to enable the public

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

entity to make an adequate investigation of the claim's merits and settle it without the

expense of litigation.” Connelly v. County of Fresno, 146 Cal. App. 4th 29, 38 (2006).

So long as these purposes are effectuated, the statutory requirements “should be given a

liberal construction to permit full adjudication on the merits.” Stockett v. Ass'n of Cal.

Water Agencies Joint Powers Ins. Auth., 34 Cal. 4th 441, 449 (2004) (quoting Minsky v.

City of Los Angeles, 11 Cal. 3d 113, 123 (1974)). Additionally, Government Code

Section 911 establishes that “[a]ny defense as to the sufficiency of the claim based upon a

defect or omission in the claim as presented is waived by failure to give notice of

insufficiency with respect to the defect or omission as provided in Section 910.8].|” A

“document constitutes a ‘claim as presented’... if it discloses the existence of a claim

which will result in a lawsuit against the entity if it is not satisfactorily resolved.” Green

v. State Ctr. Cmty. Coll. Dist., 34 Cal. App. 4th 1348, 1355 (1995) (citing Phillips v.

Desert Hosp. Dist., 49 Cal. 3d 699, 705 (1989)).

The Court acknowledges that courts have differed in their interpretation of the

presentation requirement of the GCA. Some courts have narrowly construed the GCA to

find that correspondence cannot constitute “substantial compliance” or a “claim as

presented.” See. e.g., Dilts v. Cantua Elementary Sch. Dist., 189 Cal. App. 3d 27, 35-36

(Ct. App. 1987) (holding that a series of written correspondence does not constitute a

claim within the meaning of the GCA); Olson v. Manhattan Beach Unified Sch. Dist., 17

Cal. App. Sth 1052, 1062 (Ct. App. 2017) (holding that a letter notifying a public entity

of a breach of contract is not a “claim as presented” because it did not “threaten litigation

if the contractual breaches are not remedied”). Other courts, by contrast, have found

correspondence to either be substantially compliant with the GCA or to otherwise

constitute a “claim as presented” pursuant to Section 911, triggering the public entity’s

duty to notify the claimant of the technical deficiencies. See, e.g., Gen. Sec. Servs.

Corp. v. Cnty. of Fresno, 815 F. Supp. 2d 1123, 1140 (E.D. Cal. 2011) (finding plaintiff's

letter to be substantially compliant with the GCA); All. Fin. v. City & Cnty. of San

Francisco, 64 Cal. App. 4th 635, 647 (1998) (“A communication to the public entity that

a claim has accrued and that the claimant intends to enforce it suffices, even though the

communication fails to notify the public entity that a lawsuit is imminent.”).

The Court finds the cases construing the provisions of the GCA to permit

correspondence to comply with its provisions to be more persuasive, as indicated in its

February 13, 2023 order. See dkt. 51. In Foster v. McFadden, 30 Cal. App. 3d 943, 948

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

(Ct. App. 1973), the California Court of Appeal found that the plaintiffs letter

“performed the function of a claim” because it “accomplished the two principal purposes

of a sufficient claim” by affording the public entity the “opportunity to make a prompt

investigation of the accident occasioning the letter” and giving the public entity the

“opportunity to settle without suit, if it so desired.” Foster, 30 Cal. App. 3d at 948.

Foster was described as “directly [o]n point” by the California Supreme Court in Phillips,

49 Cal. 3d at 710.

Here, the Court finds that undisputed facts demonstrate that the GCA’s notice of

claim requirements were satisfied by the parties’ correspondence in April and May 2021.

Accordingly, the Court applies “a liberal construction [of the GCA] to permit full

adjudication on the merits.” Stockett, 34 Cal. 4th at 449. Specifically, the Court finds

that correspondence between Cappell and MAG’s Chief Executive Officer, Martin Jones

(“Jones”), qualifies as a “claim as presented” as a matter of law. See Simms v. Bear

Valley Cmty. Healthcare Dist., 80 Cal. App. 5th 391, 401, n.3 (2022) (holding that the

determination of whether a letter is a claim under the GCA 1s a question of law). After

back-and-forth correspondence between the parties regarding the length of the notice

period under Section 2.4, Cappell wrote the following to Jones on April 30, 2021:

Thank you for your letter April 26% 2021, prior to responding, I am writing to

enquire if MAG would be open to a conversation reference a buyout of the 12

month termination period over and above the Capital Expenditure rermbursement.

If MAG are interested in having a discussion please advise times that are suitable

for you, and if not, please confirm in order that we can respond to your letter.

Possible discussions about a buyout would be under the settlement

communications provisions of the California Evidence Code we earlier identified

on this matter.

Dkt. 124-18 at 74. Cappell confirmed in his deposition that he had “legal input” when

writing this proposal. Id. at 53. On May 7, 2021, Cappell sent a letter to Jones that

referenced the buyout proposal again, stating that OIAA “will facilitate buyout

discussions post May 19", 2021.” Dkt. 124-20 at 24. Additionally, in response to

MAG’s request for admissions on May 1, 2023, OIAA denied that MAG submitted a

“claim” under the GCA, but “admit|ted] that OIAA investigated the facts and positions

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

set forth in correspondence between OJAA and MAG that occurred prior to MAG’s

[filing of the lawsuit].” Dkt. 114-7 at 11.

Viewing this evidence in the light most favorable to OIAA, the Court finds that

MAG’s correspondence “performed the function of a claim,” because it accomplished the

GCA’s purposes: it gave OIAA the opportunity to investigate its compliance with Section

2.4’s notice provision and gave OJAA the opportunity to settle. See Foster, 30 Cal. App.

3d at 948. OJAA admitted that it investigated the “facts and positions” of the spring 2021

correspondence, which included discussion of the length of the notice period and buyout

proposal. Further, Cappell’s responses to Jones demonstrate that OIAA had the

opportunity to settle this dispute without tral, as OIAA itself explicitly requested

“discussions about a buyout... under the settlement communications provisions of the

California Evidence Code.” It is further undisputed that O[AA did not notify MAG that

its correspondence might have been deficient under the GCA, thereby waiving any

defense that there were deficiencies pursuant to Section 911. Accordingly, the Court

finds that summary judgment in OIAA’s favor is not appropriate on the grounds of

deficient compliance with the GCA, because MAG complied with the GCA as a matter of

law. See Stockett, 34 Cal. 4th at 446 (“As the purpose of the claim is to give the

government entity notice sufficient for it to investigate and evaluate the claim, not to

eliminate meritorious actions, the claims statute should not be applied to snare the

unwary where its purpose has been satisfied.”’) (citations and quotations omitted).

At oral argument, counsel for OIAA cited La v. San Mateo Cnty. Transit Dist., No.

14-CV-01768-WHO, 2014 WL 6682476, at *6 (N_D. Cal. Nov. 25, 2014) and AIL Fin.,

64 Cal. App. 4th at 647, as standing for the proposition that before a claim can be

presented, the dispute between the parties must be ripe. Although these cases discuss

ripeness, they do not appear to support OIAA’s argument. In La, the letter offered to

prove compliance with the GCA’s presentation requirement was found not to be

sufficient because it “did not concern [plaintiff's] potential legal claims against

defendants,” but merely requested documentation. La, 2014 WL 6682476, at *6.

Further, the Court based its decision on the fact that “[a]t no point during the course of

this correspondence did [plaintiff] convey to [defendant], either explicitly or implicitly,

that a claim for monetary damages exists and that litigation may ensue, or that a claim is

ripe and that litigation can be expected if the matter is not resolved.” Id. (citations

omitted). The use of the term “or” suggests that ripeness is not a prerequisite in all

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instances. As for All. Fin., although the California Court of Appeal found that the claim

at issue was ripe, the case does not appear to stand for OIAA’s asserted proposition. In

fact, in All. Fin., the letter was found to be sufficient as a “claim as presented” because it

“communicate[d] a basis for a lawsuit and communicate[d] an intent to sue—at some

time—if the claim is not resolved. [The California Supreme Court’s decision in] Phillips

requires no more.” All. Fin., 64 Cal. App. 4th at 648. Accordingly, the Court is not

persuaded by OJAA’s argument that the correspondence over Section 2.4’s notice

provision, as well as Section 5.1.10 (see Part IV(B)(1)(a)), fails under the GCA because

the disputes were unripe at the time.

Separately, at oral argument, counsel for OIAA cited Gen. Sec. Servs. Corp., 815

F. Supp. 2d at 1138, to assert that the correspondence between the parties did not

sufficiently threaten litigation. However, the correspondence regarding Section 2.4’s

notice provision expressly referenced settlement discussions, and the correspondence

regarding Section 5.10.1, written by MAG’s attorneys, effectively stated that OIAA

would be in breach if it awarded the new contract to PCI, after O[AA notified MAG that

it intended to do so. See dkt. 124-18 at 74; dkt. 121-6 at 5. Moreover, “a communication

to the public entity that a claim has accrued and that the claimant intends to enforce it

suffices, even though the communication fails to notify the public entity that a lawsuit is

imminent.” All. Fin., 64 Cal. App. 4th at 647.

Turning to OIAA’s argument about the timeliness of MAG’s filing suit for breach

of Section 2.4’s notice provision, the Court finds that the claim at issue relates back to the

conduct alleged in MAG’s original complaint. “An amendment to a pleading relates back

to the date of the original pleading when... the amendment asserts a claim or defense that

arose out of the conduct, transaction, or occurrence set out--or attempted to be set out--in

the original pleading.” Fed. R. Civ. P. 15(c)(1)(B). “To relate back, the original and

amended pleadings [must] share a common core of operative facts so that the adverse

party has fair notice of the transaction, occurrence, or conduct called into question. The

relation back doctrine of Rule 15(c) is liberally applied.”. ASARCO, LLC v. Union Pac.

R. Co., 765 F.3d 999, 1004 (9th Cir. 2014) (quotations and citations omitted).

The Court finds that MAG’s claim that OIAA breached Section 2.4’s notice

provision arises from the same conduct set out in the original pleading, which asserted

that OIAA breached Section 2.4 by failing to pay termination costs, 1.e., MAG’s capital

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expenditures, by May 19, 2021. Dkt. 49 37. Plainly, and applying Rule 15(c)

“liberally,” both breaches arise from OJAA’s termination of the Agreement. See Fin.

Indem. Co. v. Messick, No. 2:21-CV-01585-DAD-AC, 2023 WL 2696779, at *5 (E.D.

Cal. Mar. 29, 2023) (concluding that the plaintiff's reformation of contract claim arose

out of the same conduct set forth in the original pleading when the original complaint

sought declaratory relief under the same insurance contract involving the same parties).

Accordingly, because the original complaint was timely filed on June 16, 2021, the Court

finds that pursuant to Rule 15(c), MAG’s claim for breach of Section 2.4’s notice

provision, included in its SAC on September 3, 2024, relates back to the original

complaint and should be deemed to be timely. Therefore, summary judgment is not

appropriate on these grounds.

Finally, the Court considers OJAA’s assertion that MAG failed to supplement its

Rule 26 Initial Disclosures with its claim for $3.2 million in lost profits, which it now

seeks in damages resulting from the breach of Section 2.4’s notice provision. It appears

that OIAA makes this argument in support of its assertion that MAG failed to comply

with the GCA. It is unclear, however, if OL[AA moves to exclude evidence of MAG’s

lost profits damages on this basis. Regardless, it appears to the Court that, despite

failure to supplement its Initial Disclosures, MAG filed its SAC on September 3,

2024, when discovery was ongoing. The Advisory Committee notes to Rule 26(e)

explain that there is “no obligation to provide supplemental or corrective information that

has been otherwise made known to the parties in writing or during the discovery

process.” Accordingly, the Court finds that the supplemental information requested

here—that MAG seeks $3.2 million in lost profits damages, in addition to its original

damages claim—was made known to OJAA in writing by the filing of MAG’s SAC.

Therefore, supplemental disclosure was not required by Rule 26(e).

2. MAG’s Claim for Breach of Mandatory Duty Under the CPRA

OIAA seeks summary judgment on MAG’s breach of mandatory duty claim under

the CPRA. According to MAG, after OJAA awarded the new contract to PCI, MAG

requested records of the RFP scoring process under the CPRA to protest the award of the

contract to PCI. OIAA argues that MAG’s claim for breach of mandatory duty under the

CPRA fails because (1) it is untimely; (2) the exclusive remedy for CPRA violations is

the writ of mandamus; (3) the CPRA does not impose mandatory, non-discretionary

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duties; and (4) it was not designed to protect against commercial injuries. OIAA MSJ at

16-20.

In opposition, MAG argues that its non-contract claims are timely. OIAA Opp. at

19. MAG contends that it did not discover that OIAA withheld responsive CPRA

documents until OIAA produced them in December 2023 and January 2024. Id. at 20.

Additionally, MAG argues that its non-contract claims relate back to the references to a

“sham RFP” in its original complaint, which was promptly amended after MAG

discovered that OIAA withheld documents. Id. at 20-21. MAG then argues that the

CPRA imposes mandatory duties, as it states that an agency “shall” determine whether a

request seeks copies of disclosable public records, notify the requester, and respond to

denied requests in writing. Id. at 21 (citing Cal. Gov't Code §§ 7922.535(a),

7922.540(c)). Next, MAG asserts that the writ of mandamus is not the exclusive remedy

for CPRA violations, and the CPRA does not conflict with § 815.6. Id. at 22. Finally,

MAG argues that its claim satisfies the CPRA’s purposes because MAG 1s a member of

the public that suffered a dignitary harm and seeks to expose OIAA’s practices. Id. at 24.

In reply, OIAA reiterates that MAG’s non-contract claims are untimely. OIAA

Reply at 9. Next, OIAA argues that the term “shall” in the CPRA does not show a

mandatory duty, pointing to other language in the statute that permits discretion. Id. at

11. OJAA asserts that MAG cites no case finding a mandatory duty in the CPRA. Id.

As a threshold matter, the Court finds that MAG’s non-contract claims are not

barred by the statute of limitations. “An otherwise time-barred claim in an amended

pleading is deemed timely if it relates back to the date of a timely original pleading.”

ASARCO, 765 F.3d at 1004. As MAG alleged in its original complaint that OIAA

conducted a “sham RFP,” see dkt. 4 § 4, the Court finds that MAG’s claims for breach of

mandatory duty and promissory estoppel arise from the same conduct alleged in the

original pleading. Therefore, the non-contract claims relate back to the timely-filed

claims under Rule 15(c) and are not barred by the statute of limitations.

Turning to MAG’s CPRA-based claim for breach of mandatory duty, the Court

finds that MAG’s claim for damages under § 815.6 is barred by Filarsky, in which the

California Supreme Court held that the CPRA was “the exclusive procedure for litigating

the issue of a public agency's obligation to disclose records to a member of the public in

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these circumstances.” Filarsky v. Superior Ct., 28 Cal. 4th 419, 423 (2002). Therefore,

MAG 1s barred from asserting this claim under § 815.6. Even if MAG attempted to assert

this claim under the CPRA itself, “[t]he CPRA's judicial remedy is limited to a

requestor's action to determine whether a particular record or class of records must be

disclosed.” Cnty. of Santa Clara v. Superior Ct., 171 Cal. App. 4th 119, 130 (2009).

Under the CPRA, a plaintiff is entitled “only to injunctive or declaratory relief and costs,

not monetary damages.” Bagdasaryan v. City of Los Angeles, No. 2:15-CV-01008-JLS-

KES, 2020 WL 2770193, at *14 (C.D. Cal. Feb. 4, 2020), report and recommendation

adopted, No. 2:15-CV-01008-JLS-KES, 2020 WL 2770689 (C.D. Cal. Mar. 24, 2020).

Because MAG seeks damages for this claim, see dkt. 101 § 74, and not injunctive or

declaratory relief, the Court finds that even if MAG asserted it under the CPRA, the

claim would not be cognizable. See also Hammerlord v. Filner, No. 11-CV-01564 JLS

NLS, 2013 WL 4046676, at *6 (S.D. Cal. Aug. 9, 2013) (dismissing CPRA claim for

monetary damages because “the CPRA does not provide for monetary damages”).

Accordingly, the Court finds that MAG’s CPRA-based claim for breach of

mandatory duty under § 815.6 fails as a matter of law. OJAA is therefore entitled to

summary judgment on this claim.

3. MAG’s Other Claims for Breach of Mandatory Duty

OIAA next moves on MAG’s other breach of mandatory duty claims. According

to MAG, the RFP scoring process that resulted in the contract award to PCI failed to

comply with mandatory duties imposed by the Ontario Municipal Code, OIAA’s Ethics

Policy, and OIAA’s RFP Guidelines. Specifically, MAG contends that OIAA’s

evaluators failed to fulfill their duties to act with integrity and score MAG’s proposal

solely on the published RFP evaluation criteria. OJAA argues that these claims fail

because (1) they are untimely; (2) the Ontario Municipal Code does not apply to OIAA;

(3) the Ethics Policy and RFP Guidelines are not “enactments” under § 815.6; and (4)

they were not designed to prevent MAG’s commercial injury. OIAA MSJ at 20-23.

In opposition, MAG argues that OIAA’s Ethics Policy is modeled on Ontario

Municipal Code § 2-6.03, and states that its employees are “required to exemplify high

standards of integrity... and are responsible to ensure that they conduct procurement

activity consistent with O[AA policy and procedures and applicable federal, state, local

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laws and regulations.” OIAA Opp. at 24. MAG contends that the Ethics Policy

mandates that OIAA employees comply with all California and Ontario laws, which

require any bidding process to be “honest” and be “seen to be honest.” Id. at 25 (citing

Advanced Real Est. Servs., Inc. v. Superior Ct., 196 Cal. App. 4th 338, 352 (2011)

(emphasis in the original)). Additionally, according to MAG, the Acknowledgement that

OIAA required its RFP evaluators to sign uses mandatory language to explain an

evaluator’s role, including that their evaluation “must be based on the published

evaluation criteria,” and not on outside influences. Id. Finally, MAG contends that these

documents are designed to protect the public, including the economic injury suffered by

MAG. Id. at 26.

In reply, OIAA contends that MAG’s arguments are irrelevant, because the Ethics

Policy and RFP Guidelines are not “enactments” under § 815.6. OIAA Reply at 13.

California Government Code § 815.6 establishes liability for violation of a

mandatory duty and provides:

Where a public entity is under a mandatory duty imposed by an enactment that is

designed to protect against the risk of a particular kind of injury, the public entity

is hable for an injury of that kind proximately caused by its failure to discharge the

duty unless the public entity establishes that 1t exercised reasonable diligence to

discharge the duty.

Cal. Gov't Code § 815.6. Courts apply a three-pronged test to establish a prima facie

basis for liability for the violation of a mandatory duty: “(1) An enactment must impose a

mandatory, not discretionary, duty; (2) The enactment must be intended to protect against

the kind of risk of injury suffered by the plaintiff; and (3) The breach of the mandatory

duty must be a proximate cause of the plaintiff's injury.” Sumner Peck Ranch, Inc. v.

Bureau of Reclamation, 823 F. Supp. 715, 726 (E.D. Cal. 1993): see also Haggis v. City

of Los Angeles, 993 P.2d 983, 987 (Cal. 2000) (“Section 815.6 requires that the

enactment at issue be obligatory, rather than merely discretionary or permissive, in its

directions to the public entity; 1t must require, rather than merely authorize or permit, that

a particular action be taken or not taken.”).

Here, the Court finds that MAG’s claims based on OJAA’s Ethics Policy and RFP

Guidelines fail at the first step of this test. MAG has not established that either of these

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authorities are “enactments,” defined as “a constitutional provision, statute, charter

provision, ordinance or regulation.” Cal. Gov't Code § 810.6. “This definition is

intended to refer to all measures of a formal legislative or quasi-legislative nature.”

Wilson v. Cnty. of San Diego, 91 Cal. App. 4th 974, 982 (2001). MAG has not

established that either the Ethics Policy or the RFP Guidelines are legislative or quasi-

legislative in nature. MAG appears to argue that the Ethics Policy requires all OIAA

employees to comply with all of California law, which includes a judicial decision,

Advanced Real Est. Servs., 196 Cal. App. 4th at 352, requiring that bidding processes are

“honest” and “seen to be honest.” OLAA Opp. at 24-25 (emphasis in the original).

However, this judicial decision is not an enactment, as it is not legislative or quasi-

legislative in nature. Accordingly, the Court finds that neither the Ethics Policy nor the

RFP Guidelines are enactments imposing mandatory duties under § 815.6. See also

Quiroz v. Cate, No. C 11-0016 LHK PR, 2012 WL 3236490, at *3 (N.D. Cal. Aug. 6,

2012) (finding that the California Department of Corrections and Rehabilitation

Operations Manual, Code of Conduct, and Code of Ethics “appear to be general

declarations of policy goals, and thus do not impose a mandatory duty within the

meaning of § 815.6”). This claim therefore fails as a matter of law and OIAA 1s entitled

to summary judgment.

4. MAG’s Claim for Promissory Estoppel

OIAA next moves on MAG’s promissory estoppel claim. According to MAG,

even if OIAA was entitled to award the new contract to PCI under the Agreement, OIAA

was estopped from doing so because MAG received the highest score in the proposal

evaluation process. OIAA argues that MAG’s promissory estoppel claim fails because

(1) MAG failed to timely present it to OIAA; (2) OIAA did not make a “clear and

unambiguous” promise to award the contract to the highest scoring bidder; (3) OJAA

retained discretion to award the contract to any bidder and change its initial scoring; and

(4) MAG was not the highest scoring bidder overall. OIAA MSJ at 23-25.

In opposition, MAG argues that OL[AA made a clear and definite promise to the

bidders when its RFP included “28 pages of details and over 100 pages of exhibits

regarding the criteria for the job of the winning bidder.” OIAA Opp. at 27. MAG then

distinguishes the instant case from cases where the public entity reserved its right to

reject all bids and in fact rejected all bids. Id. Additionally, MAG argues that whether or

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not it was the highest scoring bidder is a disputed issue. Id. at 26. The record shows,

according to MAG, that OIAA did not want to award MAG the contract and conspired to

“knowingly select the lowest scoring operator,” thereafter creating substitute scoring

sheets after announcing the award of the contract to PCI. Id.

In reply, OIAA distinguishes the authority relied upon by MAG, arguing that here,

there is no charter or statute that required OIAA to award the contract to the highest

scoring bidder. OIAA Reply at 14. Further, OJAA asserts that this was not a process

whereby bidders provided irrevocable proposals for specific dollar amounts, but was

rather a process where bidders provided unverified revenue projections. Id.

Promissory estoppel acts to make “a promise which the promisor should

reasonably expect to induce action or forbearance on the part of the promisee or a third

person and which does induce such action or forbearance” binding, if justice so requires.

Kajima/Ray Wilson v. Los Angeles Metro. Transp. Authority, 23 Cal. 4th 305, 310

(2000) (citation omitted). Under California law, promissory estoppel requires: “(1) a

promise clear and unambiguous in its terms; (2) reliance by the party to whom the

promise is made; (3) his reliance must be both reasonable and foreseeable; and (4) the

party asserting the estoppel must be injured by his reliance.” Laks v. Coast Fed. Sav. &

Loan Assn., 60 Cal. App. 3d 885, 890 (1976).

The Court acknowledges that in the context of bidding for public contracts, the

California Court of Appeal recognized a claim for promissory estoppel in Swinerton &

Walberg Co. v. City of Inglewood-L.A. Cnty. Civic Ctr. Auth., 40 Cal. App. 3d 98, 104

(1974), where the public entity awarded a public works contract to a bidder who was not

the “lowest responsible bidder.” However, in Swinerton, the public entity had

“Tc|learly... promised in its solicitation of bids to award the contract to the lowest

responsible bidder,” which established the first element of the plaintiffs claim: a clear

and unambiguous promise. See id. The public entity in Swinerton was also statutorily

required to award public contracts to the “lowest responsible bidder.” Id. at 105. Here,

by contrast, MAG has not identified a clear and unambiguous promise in the RFP to

award the contract to the highest scoring bidder. Instead of identifying such a promise,

MAG points to “28 pages of details and over 100 pages of exhibits.” OLAA Opp. at 27.

Therefore, the Court finds that, unlike the public entity in Swinerton, OIAA had not

clearly promised in its RFP to award the contract to the highest scoring bidder, let alone

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the highest scoring bidder in the initial scoring. Because there is no general implied

promise to award a contract to the lowest bidder (or as applied here, the highest scoring

bidder), see Pac. Architects Collaborative v. State of California, 100 Cal. App. 3d 110,

123 (1979), and MAG fails to identify a clear and unambiguous promise, MAG’s claim

for promissory estoppel fails as a matter of law.

B. MAG’s MSJ

1. MAG’s Breach of Contract Claim

MAG contends that OIAA breached the Agreement in its efforts to replace MAG

with PCI. MAG argues that it is entitled to summary judgment on the first three elements

of its breach of contract claim, that there was a contract, that MAG performed, and that

OIAA breached. MAG MSJ at 17. According to MAG, there is no genuine dispute as to

three breaches by OIAA: (1) that OIAA contracted with PCI for services governed by its

existing Agreement with MAG before the Agreement terminated, in violation of Section

5.10.1; (2) that OIAA did not provide MAG with one-year prior written notice as

required by Section 2.4 before terminating the Agreement; and (3) that OIAA did not pay

MAG termination costs owed pursuant to Section 2.4.1 of the Agreement. Id.

a. OIAA Contracting with PCI While Agreement in Effect

MAG argues that Section 5.10.1 of the Agreement prohibited OIAA from

contracting with other vendors for similar services, and that OIAA breached this portion

of the Agreement by awarding an RFP to PCI to operate car parking services MAG had

been providing, just three years into the ten-year term of the Agreement. Id. at 18. MAG

contends that “OIJAA effectively contracted with PCI on March 25, 2021,” when the

contract took effect. Id. at 18-19. On this date, MAG argues, its Agreement with OIAA

remained in force, as OIAA had not sent its terminal notice yet, and even if it had, the

Agreement would have subsequently terminated a year later. Id. at 19. MAG argues that

“OIAA’s premature and accelerated termination of the Agreement on June 20, 2021, also

came too late to avoid this breach.” Id.

In opposition, O[AA contends that MAG’s claim that OIAA breached on this basis

fails for three reasons: (1) MAG did not present this claim as required by the GCA; (2)

the PCI contract did not include the same car parking services that MAG was providing:

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and (3) by the time OJAA entered the contract with PCI, MAG had already breached the

Agreement, rendering Section 5.10.1 inoperative. MAG Opp. at 2-3.

In reply, MAG contends that each of these arguments fails. MAG Reply at 8-9.

MAG argues that it substantially complied with the GCA. Id. Because OIAA knew

about and investigated MAG’s contract claim, MAG argues, 1t cannot now argue that it

was not properly noticed. Id. MAG argues that Section 5.10.1 prohibits OIAA from

contracting with any other entity to perform similar services and that the services

contracted for in the OIAA-PCI contract are plainly similar. Id. at 13. MAG lastly

argues that it cannot have been in breach at the time of contracting because OJAA relies

on a letter dated May 13, 2021, which was almost two months after it entered into its

contract with PCI. Id.

As an initial matter, the Court finds that MAG complied with the GCA’s

presentation requirements for its PC]-related claim as a matter of law. See generally Part

IV(A)(1). Specifically, MAG’s Protest Letter, dated February 23, 2021, “performed the

function of a claim” because it “accomplished the two principal purposes of a sufficient

claim” by affording the public entity the “opportunity to make a prompt investigation of

the accident occasioning the letter” and giving the public entity the “opportunity to settle

without suit, if it so desired.” Foster, 30 Cal. App. 3d at 948. In pertinent part, the

Protest Letter sent to OIAA states as follows:

MAG’s existing contract also states that OIAA shall not contract with any other

entity to perform Car Parking Services provided by MAG. This therefore restricts

OIAA’s ability to switch providers of these services. It also significantly brings

into question the proposed start date and validity of the new PCI contract|.]

Dkt. 121-6 at 5. The letter was signed by MAG’s counsel. Id. at 7. The Court finds that

OIAA’s receipt of this information gave it the opportunity to investigate its compliance

with Section 5.10.1, and specifically warned OIAA that it would be in breach of this

provision if it moved forward with awarding the contract to PCI. Further, OIAA

admitted that it investigated the “facts and positions” of the spring 2021 correspondence,

which appears to have included the Protest Letter. The Protest Letter gave OIAA an

opportunity to settle this matter without trial because it attempted to avoid the breach in

the first place. Accordingly, the Protest Letter constitutes a claim as presented because it

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was “written notice that a claim for monetary damages exists and that litigation may

ensue.” Phillips, 49 Cal. 3d at 709 (citations omitted).

Viewing these facts in the light most favorable to OIAA, the Court finds that it is

undisputed that the Protest Letter put OIAA on notice that a claim for monetary damages

would accrue if OIAA moved forward with the PCI contract and that MAG intended to

enforce that claim. It is also undisputed that the Protest Letter gave OIAA an opportunity

to investigate and settle this matter. Accordingly, the Court finds that summary judgment

as to the GCA presentation element of MAG’s claim is appropriate because MAG

complied with the GCA as a matter of law. See Shirk, 42 Cal. 4th at 209 (“Timely claim

presentation... is an element of the plaintiff's claim for relief.”); Simms, 80 Cal. App. 5th

at 401, n.3 (whether a letter is a claim under the GCA 1s a question of law).

The Court further concludes that to find that OIAA’s contract with PCI was an

event of breach, there must be no dispute of fact as to two issues: first, the Agreement

must have been in force at the ttme OIAA’s contract with PCI took effect, and second,

OIAA’s contract with PCI must have been for services similar to the services provided

for in the Agreement, such that it violated Section 5.10.1. OIAA disputes that either of

these conditions was established.

The Court concludes that the Agreement was in effect when OIAA contracted with

PCI, because MAG was not properly considered in breach of the Agreement at that time.

OIAA argues that MAG was already in breach because as of February 28, 2021, MAG

had not paid or rermbursed OIAA for the alleged overpayment, sales taxes owed by

MAG and paid by OIAA, utility costs owed by MAG and paid by OJAA, certain baseline

car parking revenues, and certain incremental pre-book car parking revenues. MAG Opp.

at 12. The Court finds this argument unavailing. OIAA contends that the reference date

of February 28, 2021 “is important, because it precedes by nearly a month the effective

date of OIAA’s parking contract with PCI.” Id. However, OIAA also states that it

communicated these alleged breaches to MAG in a letter dated May 13, 2021. Id. In this

letter, OIAA explained that failure to cure “will constitute a breach and default of the

Agreement by MAG.” Dkt. 121-10 at 2. The Court concludes that the May 13, 2021

letter’s forward-looking language makes clear that OIAA did not consider MAG already

in default. Additionally, pursuant to Section 14.1 of the Agreement, OIAA was permitted

to terminate for cause if “one or more of the following events of default occur,” with

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CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Section 14.1.4 providing that default would occur “[i]f [MAG] fails to pay any other

monetary obligation required hereunder within thirty calendar days after written notice

thereof ....”. Agreement §§ 14.1, 14.1.4. Given that written notice was first provided on

May 13, 2021, MAG could not have been in default before thirty days from that time,

which was after OIAA contracted with PCI. Accordingly, the Court concludes that there

is no genuine dispute of fact that MAG was not already in breach at the time of its

contract with PCI.

The Court further concludes that to constitute an event of breach of Section 5.10.1

of the Agreement, OJAA need only have entered into a contract with another entity to

“perform the Car Parking Services or any services similar to, or designed to provide, the

Car Parking Services during the Car Parking Services Term.” Agreement § 5.10.1.

Accordingly, OIAA’s contention that its contract with PCI did not include the same

services is unpersuasive. OIAA’s contract with PCI provides that “Concessionaire has

been selected to manage and operate the car parking operations, valet parking, car

parking services and all shuttle bus operations at the Airport ....”. Dkt. 121-7 at 5. In the

Agreement, “‘Car Parking Services’ means certain parking services and products to be

provided by Concessionaire that includes, but is not limited to, pre-book parking

reservations, trading and valet/“drop & go” parking or other such services and products

Agreement § 3.1. The Court concludes that the contract with PCI therefore covers

“services similar to ... the Car Parking Services” as defined by the Agreement.

Agreement § 5.10.1. Thus, OIAA entering into a contract with PCI to provide these

services with an effective date of March, 25, 2021, before OIAA terminated the

Agreement for convenience or cause, constituted an event of breach.27 MAG SDF 9 3.

Even though the notice of termination for convenience was on April 15, 2021, it would

not have been effective for one year, and therefore, the Agreement remained in effect

when the PCI contract was signed, whether deemed to be March 25, 2021 or April 21,

2021. OIAA’s argument does not create a genuine dispute of material fact that the

? The parties agree that the effective date of OIAA’s contract with PCI was March 25,

2021, but OIAA contends that the contract was executed on April 21, 2021. MAG SDF §

3. The parties agree that the notice of termination for convenience was the first notice

sent and that it was sent on April 15, 2021. Id. 4 4.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

services it contracted for in the PCI contract were not “similar to” those covered by the

Agreement.

The Court concludes that summary judgment on this issue for MAG is appropriate,

given that MAG sufficiently presented the issue under the GCA, the Agreement was still

in effect when OJAA contracted with PCI because MAG was not noticed of its alleged

breach until after the contract became effective, and the contract between OIAA and PCI

covered services “similar to” those to be exclusively provided by MAG.

b. OIAA’s Failure to Give One-Year Prior Notice of Termination

MAG argues that OIAA separately breached the Agreement because it failed to

provide the one-year prior written notice required by Section 2.4 of the Agreement.

MAG MSJ at 19. MAG contends that because OIAA then tried to buy out Section 2.4’s

notice period, it “knew what it was doing.” Id.

In opposition, OIAA argues that MAG’s claim for breach on this basis fails for

three reasons: (1) MAG did not present this claim as required by the GCA; (2) MAG did

not file this claim within the two-year time period allowed under the GCA; and (3)

Section 2.4’s notice provision only applies if OIAA terminates the Agreement for

convenience, but here the Agreement was terminated for cause. MAG Opp. at 3.

In reply, MAG argues that “OIAA does not dispute its failure to give one-year

written notice as required under Section 2.4.1 of the Agreement.”” MAG Reply at 14.

MAG argues that OJAA’s argument that this claim was not properly presented fails

because OJAA investigated the issue and MAG previously demanded OIAA’s adherence

to Section 2.4’s notice period, which OJAA agreed to and then offered to buy out. Id. at

14-15. According to MAG, the time bar does not apply because its amendment relates

back to the date of the original pleading and because OIAA had actual notice. Id. at 15.

MAG argues that the Agreement was terminated for convenience and that OJAA’s later

expression of termination for cause “[a|t best ... goes to damages; at worst, it is a

disingenuous effort to manufacture a way to avoid its contractual obligations.” Id.

As an initial matter, the Court finds that, as a matter of law, MAG complied with

the GCA’s presentation requirements for its breach claim based on Section 2.4’s notice

provision. The Court incorporates by reference the evidence presented in Part IV(A)(1)

of this order. Examining this evidence in the light most favorable to OIAA, the Court

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

finds that the contents of the correspondence between the parties in April and May 2021

is undisputed. This correspondence was “written notice that a claim for monetary

damages exists and that litigation may ensue,” constituting a “claim as presented” of the

Section 2.4 notice provision breach under the GCA. See Phillips, 49 Cal. 3d at 709

(citations omitted). It is further undisputed that OJAA investigated the positions in this

correspondence and that, throughout this correspondence, OJAA repeatedly proposed a

buyout of Section 2.4’s notice provision, demonstrating that it had, and attempted to take

advantage of, an opportunity to settle the matter. Because this correspondence

constituted a claim as presented and satisfied the purposes of the GCA as a matter of law,

the Court finds that MAG 1s entitled to summary judgment on this element of its claim

for breach of Section 2.4’s notice provision. See Shirk, 42 Cal. 4th at 209 (“Timely

claim presentation... is an element of the plaintiffs claim for relief.”); Simms, 80 Cal.

App. 5th at 401, n.3 (whether a letter is a claim under the GCA is a question of law).

Additionally, the Court deems MAG’s claim for breach of Section 2.4’s notice

provision timely as a matter of law, because it relates back to the claims in MAG’s

original complaint, which was timely filed on June 16, 2021. The Court incorporates by

reference its finding on this matter in Part [V(A)(1) of this order.

The Court next addresses OIAA’s argument that its termination for cause

eliminated its need to comply with Section 2.4’s notice provision. The Court concludes

that no provision of the Agreement provides that after giving one-year prior written

notice of termination for convenience, OIAA is barred from terminating the Agreement

for cause discovered thereafter. See generally Agreement. According to the Agreement,

it “may be terminated for convenience by either party without cause, upon one year prior

written notice to the other party delivered in accordance with this Agreement ....”

Agreement § 2.4. Accordingly, the Court concludes that the written notice provided on

April 15, 2021, began the notice period but did not actually effect termination. Asa

result, the Court finds that summary judgment for MAG on this issue 1s not warranted,

because though OIAA would have been obligated to honor Section 2.4’s notice period

had it only raised convenience as the basis for termination, it subsequently terminated for

cause, pursuant to Sections 14.1 and 14.2. These provisions allow for immediate

termination. Agreement §§ 14.1, 14.2. The Court concludes that the remaining question

is whether there were in fact breaches that warranted a for-cause termination, and that

this is a question for a jury, not properly decided on a motion for summary judgment.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

c. OIFAA Failed to Make the Requisite Termination Payment

Under the terms of the Agreement between the parties, a termination payment 1s

due in the event of a termination for convenience, but not in the event of a termination for

cause. See Agreement §§ 2.4.1, 14.1. This dispute arises from OIAA’s initial

termination for convenience on April 15, 2021, and the impact of its subsequent May 20,

2021, termination for cause on its obligation to pay termination costs. OIAA disputes its

obligation to pay these costs because it contends that MAG decided not to continue as the

lounge operator, because the obligation to pay no longer applied when it terminated the

Agreement for cause, and if due, it paid these costs in the form of revenues MAG has

improperly refused to return. MAG Opp. at 3.

MAG argues that “OJAA also independently breached the Agreement by failing to

pay the Termination Costs required by Section 2.4.1.” MAG MSJ at 19. MAG contends

that the record shows that OIAA agreed it owed MAG termination costs by May 19,

2021, before this litigation began, and that OJAA has never disputed MAG’s calculation

of the termination costs. Id. at 20. MAG argues that OIAA has not paid any termination

costs, and therefore breached the Agreement. Id.

In opposition, O[AA contends that MAG’s claim for breach fails for three reasons:

(1) MAG’s own decision not to continue as lounge operator unless it retained the car

parking services under the Agreement trumped OIAA’s duty to pay termination costs; (2)

Section 2.4.1 and OIAA’s duty to pay termination costs no longer applied once the

Agreement was terminated for cause; and (3) OIAA did actually pay termination costs

prior to termination in the form of parking revenues belonging to OIAA that MAG has

withheld. MAG Opp. at 3, 18.

In reply, MAG argues that none of OJAA’s three contentions has merit. MAG

Reply at 16. First, MAG argues that in OIAA’s termination notice, it provided that both

the lounge services and car parking services would terminate, and thus prior comments

about the lounge operation not being independently viable do not change OIAA’s

obligations. Id. at 17. Next, MAG argues that OIAA has no authority to support its

proposition that the subsequent termination for cause eliminated OIAA’s obligation to

pay termination costs. Id. MAG argues that even if the termination for cause is valid, it

does not affect whether OJAA breached in this way because the Agreement preserves

MAG’s right to recover damages even in the event of a termination for cause. Id. at 18.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Finally, MAG contends that OIAA incorrectly argues that it was not required to pay

termination costs because MAG “recaptured” its capital expenditures. Id.

The Court first looks to O[AA’s argument that MAG itself decided not to continue

as the lounge operator, and that O[AA’s obligation to pay termination costs under Section

2.4.1 only applied 1f OIAA terminated MAG as lounge operator. MAG Opp. at 16. The

Court concludes that a reasonable juror could find for OIAA on this question. In support

of its motion, MAG points to the termination notice from April 15, 2021, wherein OIAA

stated that “both the Lounge Concession and the Car Parking Services at Ontario

International Airport (ONT) under the ... Agreement will terminate.” Dkt. 114-18 at 37.

OIAA points to MAG’s Protest Letter, dated February 23, 2021, in which MAG informed

OIAA that “the lounges do not constitute a workable standalone business model.” Dkt.

121-6 at 4. Additionally, in his deposition, “[w]hen asked if he had offered to keep MAG

as the lounge operator, Cappell said that he had but that MAG [was not] interested.”

MAG SDF 4 6. The Court finds that this raises a genuine factual dispute as to whether

MAG sought to terminate the lounge services or whether OJAA terminated them. Thus,

the question of whether OJAA owes MAG the resulting termination costs is not properly

adjudicated at this stage.

Next, as to OIAA’s argument that it does not owe termination costs to MAG

because the Agreement was terminated for cause, the Court concludes that triable issues

of fact remain. As the Court concluded above, OJAA was able to terminate the

Agreement for cause pending termination for convenience after one-year prior written

notice was given on April 15, 2021. MAG argues that even if OIAA terminated for cause

after its termination for convenience, because pursuant to Section 2.4.1, the termination

costs come due on the thirtieth day after notice is given, the payment from OJAA to

MAG was due on May 19, 2021. MAG Reply at 17. MAG contends that OIAA

terminated the Agreement for cause on May 20, 2021, at which point the termination

costs based on termination for convenience were already due and not excused by the

subsequent termination for cause. Id. The Court finds that a reasonable juror could find

that the termination costs obligation was eliminated by the termination for cause, and

therefore that summary judgment on this issue 1s not warranted. Section 14.2 provides

that termination pursuant Section 14.1:

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

shall be without prejudice to any remedy for arrears of payments due

hereunder or breach of covenant, or damages for the balance of all fees

payable hereunder through the full Term of this Agreement, or any other

damages or remedies whatsoever, including without limitation, all direct,

indirect, consequential, and all other damages whatsoever. Upon any

termination pursuant to this Article XIV, [MAG] shall have no nght to any

reimbursements from [OIAA].

Agreement § 14.2. The Court concludes that it is not clear whether the termination costs,

which are equal to an adjusted portion of MAG’s improvement expenditures for the

lounges and parking services, are considered damages or a reimbursement pursuant to the

Agreement. Agreement § 2.4.1. If they are considered damages, MAG would be entitled

to the payment after termination for cause, but if they are considered a reimbursement for

MAG’s improvements, MAG would not be entitled to the payment under Section 14.2.

The Court finds that this is an issue of fact for a jury to consider, and is not properly

adjudicated by the Court as a matter of law.

Lastly, the Court considers OIAA’s defense that if it does owe termination costs,

OIAA has already paid these costs in the form of monies held by MAG that should be

paid to O[AA. MAG Opp. at 18. The Court concludes that the amounts owed by the

parties to one another remain in dispute, thus it is not possible to adjudicate with this

motion the ultimate question of which party owes the other and in what amount. The

Court concludes that once there is an accounting of what is owed by each party to the

other, any amount that MAG may owe to OIAA should be credited to reduce OIAA’s

debt to MAG, and if applicable, MAG’s debt to OIAA.

Accordingly, the Court concludes that summary judgment in favor of MAG is not

proper on the basis that OIAA breached the Agreement by failing to pay the requisite

termination costs.

2. OIAA’s Breach of Contract Claim

According to OIAA, MAG was the party that was initially in breach of the

Agreement, by not returning OJAA’s overpayments to MAG, and thus OIAA was free to

contract with whomever it chose. According to Sections 3.26, 4.10, and 4.11, the parties

are obligated to engage in financial reconciliation and provide one another certain

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

accounting statements so that each party is aware of its financial obligations to the other.

Agreement §§ 3.26, 4.10, 4.11. MAG argues that OIAA’s claim for breach of contract is

based upon a failure to make payments MAG allegedly owed, but that OIAA failed to

engage in required reconciliation, and therefore, MAG was not on notice of what was

allegedly owed. MAG MSJ at 20-21. MAG contends that it “made numerous attempts to

engage OJAA in contractually required reconciliations of their financial accounting,” and

that though OIAA acknowledged its contractual obligation to participate, it did not. Id. at

20. MAG argues that OJAA’s terminal notice stated that it was terminating the

Agreement for convenience, not for cause, barring its breach of contract claim. Id. at 22.

In opposition, OIAA argues that MAG 1s not entitled to summary judgment on

OIAA’s claim for breach of contract for three reasons: (1) MAG knew the overpayment

amount, so no reconciliation was necessary; (2) OIAA provided the reconciliation

information requested in a letter dated May 13, 2021; and (3) if OIAA’s conduct is found

to excuse MAG’s breach regarding overpayment, which it should not be, MAG has not

shown that its other breaches were also excused. MAG Opp. at 3-4.

In reply, MAG argues that though $1,118,258, the amount it puts forth as at issue

in 1ts motion, 1s less than the overpayment OJAA claims in its opposition, MAG 1s

regardless entitled to summary judgment “that it did not breach the Agreement by failing

to pay any amount owed OIAA because OJAA never put MAG on notice of the specific

amount.” MAG Reply at 19.

The Court concludes that triable issues remain on OIAA’s breach of contract

claim. Taking all inferences in favor of OIAA as the Court must on MAG’s motion for

summary judgment, the Court concludes that there is a dispute of fact as to whether MAG

was aware of the amounts it owed. The Court finds that a reasonable juror could

conclude that MAG was at least on notice of the amounts it allegedly owed, and was

given an opportunity to cure these bases for breach, at the time of the May 13, 2021 letter

from OIAA, which provided the requested financial reconciliation. Additionally, OIAA

relies on the declaration of Cappell wherein he states that “it was OIAA, not MAG, that

consistently sought to engage in financial reconciliation; and it was MAG, not OJAA,

that refused to provide the data necessary for such a reconciliation to occur.” Dkt. 121 4

19. On the basis of this claim and the May 13, 2021 letter, the Court concludes that there

is at least a dispute of fact as to whether MAG was aware of the amounts it owed OJAA.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

The Court also restates its above conclusion that OJAA was permitted to terminate the

Agreement for cause during the pendency of the one-year notice period initiated by the

notice of termination for convenience, and thus the Court does not credit MAG’s

alternative argument that OJAA’s breach claim is barred by its initial notice of

termination for convenience. Accordingly, the Court concludes that summary judgment

on this claim is unwarranted.

3. OIAA’s Claim for Breach of the Implied Covenant of Good Faith and

Fair Dealing

According to OIAA, MAG’s conduct violated several implied duties in the

Agreement, in addition to the alleged express breaches. In its complaint, OIAA alleges

five ways in which MAG breached the implied covenant of good faith and fair dealing.

These are: (1) that MAG agreed OIAA overpaid incremental turn-up revenues of

$1,181,418, but refused to provide an offset for this overpayment in calculating the

amounts owed between the parties, despite initial willingness to do so; (2) that MAG

refused to substantively respond to O[AA’s May 13, 2021 financial reconciliation; (3)

that MAG “failed to acknowledge or pay the amount owed”; (4) that MAG “filed—and

refused to voluntarily dismiss—a frivolous federal complaint against OIAA”; and (5) that

MAG claimed that certain trade fixtures were capital expenditures chargeable to OIAA,

and then after termination and after being reimbursed for the items, MAG repeatedly

demanded to remove them from the Airport. OI[AA Compl. § 41. MAG disputes each of

these bases for breach, either arguing that they are superfluous because they restate

breach of contract claims, or that no such implied duty arises from the contract. MAG

MSJ at 22-26. OIAA contends that factual disputes on these issues remain. MAG Opp.

at 4.

The Court addresses in turn each of MAG’s arguments directed to the five bases

put forth for breach of the implied covenant in OIAA’s complaint. See OIAA Compl. §

41. Under California law, the implied covenant of good faith and fair dealing “is implied

as a supplement to express contractual covenants to prevent a contracting party from

engaging in conduct that frustrates the other party’s rights to the benefits of the

agreement.” Charpentier v. Los Angeles Rams Football Co., 75 Cal. App. 4th 301, 314

(1999). However, a claim for breach of the implied covenant of good faith and fair

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

dealing must “go beyond the statement of a mere contract breach.” Careau & Co. v. Sec.

Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1394 (1990).

First, the Court looks to the claim that MAG breached the implied covenant by

failing to provide an offset for overpaid incremental turn-up revenues of $1,181,418.

OIAA Compl. § 41. The Court concludes that there is no implied duty to agree to an

offset where the parties dispute whether or not the contract has been breached. As the

Court previously concluded herein, to the extent MAG is holding money to which it is

not entitled, these monies will serve as an offset. However, the Court finds that the

contract terms do not give rise to an independent obligation to agree to an offset when a

dispute as to what each party owes remains ongoing. Accordingly, the Court concludes

that as a matter of law, this does not give rise to an implied duty and that summary

judgment for MAG on this claim is warranted.

Next, the Court looks at OIAA’s claim that MAG breached the implied covenant

by failing to respond to financial reconciliation. While the Court acknowledges that in its

order denying the motion to dismiss on February 6, 2023, it sustained OJAA’s claim for

breach of the implied covenant of good faith and fair dealing, that was informed by the

standard that on a Rule 12(b)(6) motion the Court must take all allegations as true. See

MAG II, dkt. 35. However, when viewed in light of the Agreement, it appears that the

duty to reconcile payments is set forth in the Agreement. Section 3.26 defines Car

Parking Revenue Allocation, with Section 3.26.5 setting out when payments are due and

Section 3.26.6 stating what kind of annual statements must be provided. Agreement §§

3.26, 3.26.5, 3.26.6. Section 4.10 requires MAG to maintain certain books and records in

compliance with generally accepted accounting principles. Agreement § 4.10. Pursuant

to Section 4.11, MAG 1s required to provide OIAA with an annual report of its gross

revenues, with Sections 4.11.1-4.11.4 setting out the requirements of what the annual

report must include. Agreement §§ 4.11, 4.11.1-4.11.4. Indeed, former OIAA Chief

Financial Officer John Schubert (“Schubert”) acknowledged the contractual requirement

to participate in financial reconciliation in his deposition. Dkt. 114-14 at 28:1-5. When

asked “[t]he contract calls for both MAG and OJAA to exchange statements for purposes

of reconciling accounts; right?” Schubert responded, “[y]Jes.” Id. Accordingly, it appears

that the parties are required to engage in financial reconciliation by the terms of the

Agreement, rather than by an implied covenant of good faith and fair dealing. Summary

judgment for MAG 1s therefore warranted on this theory.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Third, the Court examines the claim that MAG breached the implied covenant

when it “failed to acknowledge or pay the amount owed.” OIAA Compl. 4 41. As MAG

points out in its motion, and OJAA fails to meaningfully contest, this claim is duplicative

of OIAA’s express breach of contract claim. Accordingly, it cannot serve as the basis for

a claim for breach of the implied covenant, which is a supplement to express terms. The

Court concludes that summary judgment for MAG on this theory is also appropriate.

Fourth, OIAA contends that MAG breached the implied covenant by filing its

initial “frivolous” lawsuit. Id. The Court finds that the Agreement’s terms do not give

rise to any implied duty not to file suit, nor does OJAA point to any relevant terms on

which it hinges this duty. Indeed, OIAA does not address MAG’s argument on this point

in 1ts opposition. See generally MAG Opp. To the extent OJAA’s argument rests on the

notion that there is an implied duty not to file a “frivolous federal complaint,” and that

this complaint was frivolous because it was originally dismissed for lack of subject

matter jurisdiction, the Ninth Circuit, in a memorandum disposition, reversed the decision

to dismiss the complaint on diversity grounds and remanded it to this Court. Dkt. 27.

Accordingly, for both of these reasons, the Court concludes that OIAA’s claim for breach

of the implied covenant is not supported on this basis. Summary judgment for MAG

pursuant to this theory is granted.

Last, the Court looks at OIAA’s claim that MAG breached the implied covenant by

demanding to remove trade fixtures that it allegedly initially classified as capital

expenditures, for which OIAA claims it rembursed MAG, and that MAG subsequently

reclassified the fixtures as removable “‘personal property’ trade fixtures.” OIAA Compl.

The Court finds that the classification and treatment of fixtures is comprehensively

covered by Section 6.11 of the Agreement, which specifies that “trade fixtures not

permanently affixed” do not become the property of OIAA upon termination. Agreement

§ 6.11. Accordingly, the Court finds that any alleged breach is based on this express

provision, rather than on an implied duty to which it may give rise. Therefore, as a

matter of law, OIAA cannot state a claim for a breach of the implied covenant on this

basis, and summary judgment for MAG is appropriate.

The Court concludes that none of the five theories put forth by OIAA for MAG’s

breach of the implied covenant of good faith and fair dealing is viable as a matter of law.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authorityetal

Accordingly, summary judgment on OIAA’s claim for breach of the implied covenant is

granted in MAG’s favor.

4. OIAA’s Claim for “Common Counts”

According to OJAA, even if the parties did not have an enforceable contract, MAG

owed OIAA’s monies under this alternative theory. MAG contends that neither of

OIAA’s legal theories for its claim for common counts, open book account and money

had and received “1s viable in light of the undisputed existence of the Agreement.” MAG

MSJ at 26. MAG contends that OIAA cannot recharacterize its contract claim as a

common count. Id. at 27. Even if the claim were not duplicative, MAG argues, “OIAA

cannot present any evidence that MAG agreed to create an open book account.” Id.

MAG argues that OIAA’s money had and received claim also fails because it is based on

the existence of a quasi-contract and such a claim cannot be brought when an express

agreement exists. Id. at 28.

In opposition, O[AA contends that it is permitted to assert the common counts

claim in the alternative and that it has alleged sufficient facts to demonstrate that the

course of dealing between the parties established an open book account. MAG Opp. at 4.

OIAA argues that “OIAA’s recordkeeping creates a triable issue as to the existence of an

open book account and a claim for money had and received.” Id. at 25.

In reply, MAG argues that “[a]lthough a party is entitled to plead alternative

theories, this matter is well past the pleading stage.” MAG Reply at 24. MAG contends

that to succeed on an open book theory, the Court would have to find no valid contract,

which is impossible since the parties both assert breach of contract claims. Id. at 24, n.6.

MAG argues that OJAA’s money had and received claim fails because OIAA “makes no

effort to refute MAG’s argument|s],” and that OJAA therefore concedes it cannot carry

its burden on this claim. Id. at 26.

The Court concludes that OIAA is entitled to maintain its alternative theories, and

that if prevails at trial, it must at that point make an election between its theories for

recovery. The Court also finds that triable issues of fact remain as to whether the parties

established an open book account for money due and whether MAG is indebted to OIAA

for money had and received by MAG for the use of OIAA. Pursuant to California law,

parties can establish an open book account through conduct. Eloquence Corp. v. Home

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘oO’

Case No. 2:21-cv-04909-CAS Ox); consolidated Date April 22, 2025

with eISIECASRADH)

Title Mag US Lounge Management LLC v. Ontario International Airport

Authority et al

Consignment Ctr., 49 Cal. App. 5th 655, 666 (2020) (citing Warda v. Schmidt, 146 Cal.

App. 2d 234, 303 (1956)). The Court concludes that issues of fact remain as to whether

the parties did maintain such an account, crediting and debiting the amounts owed in each

direction. See dkt. 122 (declaration of Schubert, who states that “OIAA and MAG kept

account of the monies owed to and from one another under the [A]greement, including

amounts MAG owed to OIJAA for overpayment of parking revenues”). The Court finds

that summary judgment on the claim for an open book account is not appropriate.

The Court concludes that disputes also remain as to OJAA’s money had and

received claim. The factual disputes that underlie this claim are identical to those that

underlie OIAA’s breach claim: that MAG retained certain sums it should have remitted to

OIAA. OIAA Compl. § 45. Given that the Court has concluded this issue remains in

dispute, the Court finds that summary judgment on this claim is unwarranted.

V. CONCLUSION

In accordance with the foregoing, the Court GRANTS IN PART and DENIES IN

PART OIJAA’s motion. The Court DENIES OIAA’s motion for summary judgment on

MAG’s claim for breach of contract based on Section 2.4’s notice provision. The Court

GRANTS OJAA’s motion for summary judgment on MAG’s fourth, fifth, and sixth

claims.

The Court GRANTS IN PART and DENIES IN PART MAG’s motion. The

Court GRANTS MAG’s motion to the extent it seeks summary judgment on its breach of

contract claim based on Section 5.10.1 and GRANTS MAG’s motion for summary

judgment on OJAA’s implied covenant of good faith and fair dealing claim. The Court

DENIES MAG’s motion to the extent it seeks summary judgment on its breach of

contract claim based on failure to comply with Section 2.4’s notice provision and failure

to make the termination payment. The Court DENIES MAG’s motion for summary

judgment on OJAA’s breach of contract claim and OIAA’s common counts claim.

IT IS SO ORDERED.

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Initials of Preparer OM