This case was last updated from Los Angeles County Superior Courts on 05/30/2019 at 00:10:39 (UTC).

DEFENSE NUTRITION LLC VS JULIAN BAKERY INC

Case Summary

On 08/08/2016 DEFENSE NUTRITION LLC filed a Contract - Other Contract lawsuit against JULIAN BAKERY INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9719

  • Filing Date:

    08/08/2016

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

 

Party Details

Plaintiffs, Petitioners and Cross Defendants

DEFENSE NUTRITION LLC

SQUIER HEATH

OLSEN BRUCE

HOFMEKLER ORI

SAPPHIRE BAKERY COMPANY LLC

JULIAN BAKERY INC.

Defendants, Respondents and Cross Plaintiffs

DOES 1-10

JULIAN BAKERY INC

OLSEN BRUCE

EAGLE MIST CORPORATION DBA OSAGAI

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

FREEDMAN & TAITELMAN LLP

TAITELMAN MICHAEL A.

Cross Plaintiff Attorney

SYBERT RICHARD P.

Cross Defendant Attorneys

LOVETT STEVEN ROBERT ESQ.

SMALL WILLIAM

SCHENA JOHN A.

TAULER ROBERT

BERMAN DANIEL A.

 

Court Documents

CROSS-COMPLAINANTS' OPPOSITION TO CROSS-DEFENDANT'S MOTION TO COMPEL THE DEPOSITION OF CROSS-COMPLAINANTS' PERSON MOST KNOWLEDGEABLE AND KEVIN LAUGHLIN

4/11/2018: CROSS-COMPLAINANTS' OPPOSITION TO CROSS-DEFENDANT'S MOTION TO COMPEL THE DEPOSITION OF CROSS-COMPLAINANTS' PERSON MOST KNOWLEDGEABLE AND KEVIN LAUGHLIN

SUBSTITUTION OF ATTORNEY

4/12/2018: SUBSTITUTION OF ATTORNEY

CROSS-DEFENDANT SAPPHIRE BAKERY COMPANY, LLC'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS, SET TWO, NOS. 24-52 PROPOUNDED ON EAGLE MIST CORPORATION DBA OSAGAI INTERNATIO

4/24/2018: CROSS-DEFENDANT SAPPHIRE BAKERY COMPANY, LLC'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS, SET TWO, NOS. 24-52 PROPOUNDED ON EAGLE MIST CORPORATION DBA OSAGAI INTERNATIO

CROSS-DEFENDANT SAPPHIRE BAKERY COMPANY, LLC'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR ADMISSIONS, SET THREE, NOS. 22, 23, 24, 25, 26, 27, 32, 33, 34, 36, 39, & 42 PROPOUNDED ON EAGLE MIST C

5/11/2018: CROSS-DEFENDANT SAPPHIRE BAKERY COMPANY, LLC'S MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR ADMISSIONS, SET THREE, NOS. 22, 23, 24, 25, 26, 27, 32, 33, 34, 36, 39, & 42 PROPOUNDED ON EAGLE MIST C

NOTICE RE: CONTINUANCE OF HEARING

5/24/2018: NOTICE RE: CONTINUANCE OF HEARING

REQUEST FOR JUDICIAL NOTICE IN OPPOSITION TO CROSS- DEFENDANT AND CROSS- COMPLAINANT EAGLE MIST CORPORATION DBA OSAGAI INTERNATIONAL'S TO CROSS- DEFENDANT SAPPHAIRE BAKERY COMPANY, LLC'S MOTION TO COM

5/29/2018: REQUEST FOR JUDICIAL NOTICE IN OPPOSITION TO CROSS- DEFENDANT AND CROSS- COMPLAINANT EAGLE MIST CORPORATION DBA OSAGAI INTERNATIONAL'S TO CROSS- DEFENDANT SAPPHAIRE BAKERY COMPANY, LLC'S MOTION TO COM

NOTICE OF LIEN

7/11/2018: NOTICE OF LIEN

CIVIL DEPOSIT

8/30/2018: CIVIL DEPOSIT

Proof of Service

8/31/2018: Proof of Service

Proof of Service

9/4/2018: Proof of Service

Opposition

10/17/2018: Opposition

Notice of Change of Firm Name

2/5/2019: Notice of Change of Firm Name

Minute Order

5/16/2019: Minute Order

CIVIL DEPOSIT

11/23/2016: CIVIL DEPOSIT

STIPULATED REQUEST AND ORDER TO EXTEND SAPPHIRE BAKERY COMPANY, LLC?S TIME TO OBJECT, ANSWER, OR OTHERWISE RESPOND TO JULIAN BAKERY, INC.?S FIRST AMENDED CROSS- COMPLAINT

1/20/2017: STIPULATED REQUEST AND ORDER TO EXTEND SAPPHIRE BAKERY COMPANY, LLC?S TIME TO OBJECT, ANSWER, OR OTHERWISE RESPOND TO JULIAN BAKERY, INC.?S FIRST AMENDED CROSS- COMPLAINT

DEFENDANT SAPPHIRE BAKERY LLC'S NOTICE OF HEARING ON DEMURRER AND DEMURRER TO THE SECOND, FIFTH, NINTH, TENTH, AND ELEVENTH CAUSES OF ACTION OF THE CROSS-COMPLAINT BY EAGLE MIST CORPORATION D/B/A OSAG

7/24/2017: DEFENDANT SAPPHIRE BAKERY LLC'S NOTICE OF HEARING ON DEMURRER AND DEMURRER TO THE SECOND, FIFTH, NINTH, TENTH, AND ELEVENTH CAUSES OF ACTION OF THE CROSS-COMPLAINT BY EAGLE MIST CORPORATION D/B/A OSAG

ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL?CIVIL

11/3/2017: ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL?CIVIL

Proof of Service

11/6/2017: Proof of Service

272 More Documents Available

 

Docket Entries

  • 05/22/2019
  • Motion to Compel Further Discovery Responses; Filed by Eagle Mist Corporation dba Osagai (Cross-Complainant)

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  • 05/22/2019
  • Declaration (of Dillon Malar in Support); Filed by Eagle Mist Corporation dba Osagai (Cross-Complainant)

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  • 05/22/2019
  • Declaration (of Kevin Laughlin in Support); Filed by Eagle Mist Corporation dba Osagai (Cross-Complainant)

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  • 05/22/2019
  • Separate Statement; Filed by Eagle Mist Corporation dba Osagai (Cross-Complainant)

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  • 05/20/2019
  • at 08:35 AM in Department 34; Jury Trial - Not Held - Advanced and Vacated

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  • 05/16/2019
  • at 08:30 AM in Department 34; Hearing on Motion for Summary Judgment - Held

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  • 05/16/2019
  • Order Appointing Court Approved Reporter as Official Reporter Pro Tempore (Timothy J. McCoy, CSR# 4745); Filed by Sapphire Bakery Company,LLC (Cross-Defendant)

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  • 05/16/2019
  • Minute Order ( (Hearing on Motion for Summary Judgment)); Filed by Clerk

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  • 05/16/2019
  • Notice of Ruling; Filed by Sapphire Bakery Company,LLC (Cross-Defendant)

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  • 05/10/2019
  • Brief (Sapphire Bakery's Brief in Reply To Julian Bakery Llc's Opposition to Motion for Summary Adjudication; Memorandum of Points and Authorities); Filed by Sapphire Bakery Company,LLC (Cross-Defendant)

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545 More Docket Entries
  • 08/22/2016
  • First Amended Complaint

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  • 08/22/2016
  • Complaint ((1st)); Filed by Defense Nutrition, LLC (Plaintiff)

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  • 08/22/2016
  • Summons; Filed by Plaintiff

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  • 08/18/2016
  • Proof-Service/Summons; Filed by Plaintiff/Petitioner

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  • 08/18/2016
  • PROOF OF SERVICE SUMMONS

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  • 08/17/2016
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 08/17/2016
  • Notice of Case Management Conference; Filed by Clerk

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  • 08/08/2016
  • Complaint; Filed by Defense Nutrition, LLC (Plaintiff)

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  • 08/08/2016
  • SUMMONS

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  • 08/08/2016
  • COMPLAINT FOR DAMAGES BASED ON: 1) BREACH OF WRITTEN CONTRACT; ETC

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Tentative Rulings

Case Number: BC629719    Hearing Date: January 27, 2020    Dept: 34

SUBJECT: (1) Motion for Judgment on the Pleadings

Moving Party: Eagle Mist and Kevin Laughlin

Resp. Party: Defense Nutrition

(2) Motion for Judgment on the Pleadings

Moving Party: Eagle Mist

Resp. Party: Julian Bakery

Eagle Mist and Kevin Laughlin’s motion for judgment on the pleadings is GRANTED as to Defense Nutrition’s first, fourth, and fifth causes of action and is DENIED as to Defense Nutrition’s third cause of action.

Eagle Mist’s motion for judgment on the pleadings is GRANTED as to Julian Bakery’s third, fourth, fifth, eighth, and ninth causes of action and DENIED as to Julian Bakery’s second, eleventh, and thirteenth causes of action.

For the Defense Nutrition Motion, Eagle Mist and Kevin Laughlin’s request for judicial notice is DENIED as superfluous.

For the Julian Bakery Motion, Eagle Mist’s request for judicial notice is DENIED as to Exhibit A and DENIED as superfluous as to Exhibit B.

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. The following individuals involved in this case are the CEOs of the respective business entities:

· Bruce Olsen: Sapphire Bakery;

· Ori Hofmekler: Defense Nutrition;

· Kevin Laughlin: Eagle Mist;

· Heath Squier: Julian Bakery.

Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist (“a/k/a Osagai”) filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint, but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages, but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

On November 8, 2019, the Court granted Sapphire Bakery and Bruce Olsen’s motion to bifurcate liability and punitive damages.

On November 8, 2019, the Court granted Eagle Mist and Kevin Laughlin’s motion for protective order and granted in part Sapphire Bakery and Bruce Olsen’s motion to compel attendance and testimony at the depositions of Kevin Laughlin and Eagle Mist, as it is limited by the protective order.

On November 22, 2019, the Court granted in part Eagle Mist’s motion to compel the depositions of Heath Squier and Julian Bakery.

On December 5, 2019, the Court granted Olsen’s ex parte application for leave from the discovery cut-off date for a motion to compel Eagle Mist’s supplemental responses to Olsen’s form and special interrogatories.

On December 30, 2019, Eagle Mist and Kevin Laughlin filed the instant motion for judgment on the pleadings against Defense Nutrition’s cross-complaint and Eagle Mist filed the instant motion for judgment on the pleadings against Julian Bakery’s cross-complaint.

ANALYSIS:

A. Legal Standard

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed.” (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064.) “In deciding or reviewing a judgment on the pleadings, all properly pleaded material facts are deemed to be true, as well as all facts that may be implied or inferred from those expressly alleged.” (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452.) A motion for judgment on the pleadings does not lie as to a portion of a cause of action. (Id.) “In the case of either a demurrer or a motion for judgment on the pleadings, leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action.” (Gami v. Mullikin Medical Ctr. (1993) 18 Cal.App.4th 870, 876.) A non-statutory motion for judgment on the pleadings may be made any time before or during trial. (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.)

B. Request for Judicial Notice

1. Defense Nutrition’s Request for Judicial Notice

 

In support of its motion as to Defense Nutrition, Eagle Mist requests that the Court take judicial notice of the following records:

· Defense Nutrition, LLC’s First Amended Complaint, dated August 22, 2016. (Ex. A.)

· Julian Bakery, Inc.’s First Amended Cross-Complaint, dated November 14, 2016. (Ex. B.)

· Defense Nutrition, LLC and Ori Hofmekler’s Cross-Complaint, dated January 31, 2017. (Ex. C.)

· Order granting Defense Nutrition, LLC’s Motion for Good Faith Settlement, dated October 31, 2017. (Ex. D.)

· Julian Bakery, Inc.’s Request for Dismissal of its Cross-Complaint as to Defense Nutrition, LLC and Ori Hofmekler, dated November 15, 2017. (Ex. E.)

· Defense Nutrition, LLC’s Request for Dismissal of its Complaint, dated July 19, 2018. (Ex. F.)

· Declaration of Ori Hofmekler in Support of Defense Nutrition, LLC’s Motion for Summary Judgment, dated July 3, 2019. (Ex. G.)

This request is DENIED as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

2. Julian Bakery’s Request for Judicial Notice

In support of its motion as to Julian Bakery, Eagle Mist requests that the Court take judicial notice of the following records:

· Mutual Non-Disclosure and Non-Circumvention Agreement entered into as of October 6, 2015 by and between Osagai International, LLC and Sapphire Bakery Company, LLC. (Ex. A.)

· Ruling on Sapphire Bakery Company, LLC’s Motion for Summary Adjudication, dated May 16, 2019. (Ex. B.)

The request for judicial notice as to Exhibit A is DENIED.

The request for judicial notice as to Exhibit B is DENIED as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

C. Timeliness of Motions

Julian Bakery and Defense Nutrition both oppose the motions for judgment on the pleadings on the grounds that the motions were untimely pursuant to Code of Civil Procedure section 438. (See JB Opp., p. 3:5, DN Opp., p. 2:10-16.)

Code of Civil Procedure section 438, subdivision (e) provides that no motion for judgment on the pleadings may be made “if a pretrial conference order has been entered pursuant to Section 575, or within 30 days of the date the action is initially set for trial, whichever is later, unless the court otherwise permits.” (Code Civ. Proc., §¿438, subd. (e).)

However, a non-statutory motion for judgment on the pleadings may be made any time before or during trial. (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.)

As Eagle Mist and Kevin Laughlin bring non-statutory motions for judgment on the pleadings, the time limitations of Code of Civil Procedure section 438 are inapplicable. The Court finds that the motions are timely.

D. Discussion

1. Motion for Judgment on the Pleadings as to Defense Nutrition

a. First Cause of Action: Equitable Indemnity

“The elements for a cause of action for [equitable indemnity] are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is . . . equitably responsible.” (Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217 [internal citation omitted].) “ ‘[A] fundamental prerequisite to an action for partial or total equitable indemnity is an actual monetary loss through payment of a judgment or settlement.’ ” (Major Clients Agency v. Diemer (1998) 67 Cal.App.4th 1116, 1126 [internal citation omitted].)

“The purpose of equitable indemnification is to avoid the unfairness, under the theory of joint and several liability, of holding one defendant liable for the plaintiff's entire loss while allowing another potentially liable defendant to escape any financial responsibility for the loss.” (Bailey, supra, 199 Cal.App.4th at 212.)

However, “[w]here . . . the parties have expressly contracted with respect to the duty to indemnify, the extent of that duty must be determined from the contract and not by reliance on the independent doctrine of equitable indemnity.” (Oltmans Construction Co. v. Bayside Interiors, Inc. (2017) 10 Cal.App.5th 355, 361 [internal citations omitted].)

Eagle Mist and Kevin Laughlin state that Defense Nutrition’s Cross-Complaint (“DNCC”) alleges that Defense Nutrition and Eagle Mist “contracted regarding their respective indemnification rights, and the indemnification contract was incorporated to the DNCC.” (DN Motion, p. 5:13-15 [citing DNCC ¶ 5; Ex. 1].) Eagle Mist and Kevin Laughlin argue that the first cause of action should be dismissed because “since there is a contractual indemnification clause, equitable indemnity is not an available form of relief.” (Id. at p. 5:15-16.) Eagle Mist and Kevin Laughlin maintain that “since [Defense Nutrition] has no liability to Julian Bakery by virtue of their . . . Motion for Good Faith Settlement Determination which provided [Defense Nutrition] with $30,000 and a sharing in the proceeds of Julian Bakery’s claims, no claim lies as a matter of law for equitable indemnity.” (Id.at p. 5:21-23.)

In opposition, Defense Nutrition argues that “notwithstanding the settlement between Defense Nutrition and . . . Julian Bakery, Defense Nutrition may still be entitled to its fees and costs in litigating with Julian Bakery prior to the settlement.” (DN Opp., p. 3:20-24.)

The DNCC contains the following allegations:

· “Section 5.1 of the Manufacturing Agreement requires [Eagle Mist] to defend, indemnify and hold Defense Nutrition and its officers and managers harmless from claims made based on personal injury caused or alleged to be caused by a failure to manufacture products in accordance with the formula or specifications provided by Defense Nutrition. Hofmekler is the manager of Defense Nutrition, and as such, is a third-party beneficiary of said Section 5.1.” (DNCC, ¶ 55.)

· “As a result of the complaints about the quality of the product produced by [Eagle Mist] pursuant to the Order, Julian Bakery has filed a cross-complaint against Defense Nutrition and Hofmekler in this action . . . charging them with, among other things, breach of contract, negligence, and breach of warranty, and seeking damages after rejection of allegedly defective goods and rescission.” (Id. at ¶ 28.)

· “[I]f Defense Nutrition and/or Hofmekler are liable for the claims of breach of contract, negligence, breach of warranty, damages after rejection of goods, and/or rescission asserted in the Julian Cross-Complaint at all, such liability will solely be due to the breaches of contract of [Eagle Mist] in performing its obligations under the Order, and the fraud of [Eagle Mist] and Kevin Laughlin committed in connection therewith.” (Ibid.)

· “In equity and good conscience, [Eagle Mist] and Laughlin should indemnify Defense Nutrition and Hofmekler against an any and all liability that either of them may incur to Julian Bakery under the Julian Cross-Complaint by reason of the acts of [Eagle Mist] and Laughlin.” (Id. at ¶ 29.)

Because the DNCC alleges that that Defense Nutrition and Eagle Mist are parties to an agreement that contains a contractual indemnification clause (see DNCC, ¶ 55; Ex. 1), equitable indemnity is not proper here.

The Court GRANTS Eagle Mist and Kevin Laughlin’s motion for judgment on the pleadings as to the first cause of action in the DNCC.

b. Fifth Cause of Action: Express Indemnity

“Express indemnity refers to an obligation that arises ‘“by virtue of express contractual language establishing a duty in one party to have another harmless upon the occurrence of specified circumstances.”’” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.App.4th 1151, 1158 [internal citations omitted].)

In indemnity actions against non-settling parties, the amount of an approved good faith settlement establishes a cap of the indemnity obligations. (See Heppler v. J.M. Peters (1993) 73 Cal.App.4th 1265, 1274; see also Mel Clayton Ford v. Ford Motor Co. (2002) 104 Cal.App.4th 46, 58.)

Eagle Mist and Kevin Laughlin argue that “the fifth cause of action for express contractual indemnity is moot” because “the only claims asserted against [Defense Nutrition] regarding the personal injury and hardness of the bars were dismissed on November 21, 2017, after the Court granted [Defense Nutrition] and Julian Bakery’s Motion for Good Faith Settlement.” (DN Motion, p. 6:4, 6:9-11.) Eagle Mist and Kevin Laughlin argue that “there are no claims remaining made based on personal injury made against or in favor of [Defense Nutrition].” (Id. at p. 6:11-12.) Eagle Mist and Kevin Laughlin maintain that “since [Defense Nutrition] is not liable for any claim of personal injury brought by Julian Bakery as a matter of law, the fifth cause of action based on the contractual language agreed upon by the parties should be dismissed.” (Id. at p. 6:21-23.)

In opposition, Defense Nutrition argue that “the fifth cause of action is not limited to personal injury, but it a[pp]lies to ‘claims made based on personal injury or alleged to be caused by a failure to manufacture products in accordance with the formula or specifications provided by Defense Nutrition.” (DN Opp., p. 5:17-22 [citing DNCC, ¶ 55].)

As stated above, paragraph 55 of the DNCC states:

“Section 5.1 of the Manufacturing Agreement requires [Eagle Mist] to defend, indemnify and hold Defense Nutrition and its officers and managers harmless from claims made based on personal injury caused or alleged to be caused by a failure to manufacture products in accordance with the formula or specifications provided by Defense Nutrition. Hofmekler is the manager of Defense Nutrition, and as such, is a third-party beneficiary of said Section 5.1.” (DNCC, ¶ 55.)

Paragraph 57 of the DNCC provides:

“Cross-Complainants desire an order declaring that [Eagle Mist] must defend and indemnify them against any and all claims of personal injury based on the alleged hardness of the products supplied by [Eagle Mist].” (Id. at ¶ 57.)

The settlement between Defense Nutrition and Julian Bakery “provides for a payment to Defense of $30,000.00 of its claimed $509,181.84, Defense will retain unused deposits received from Julian in the amount of $29,770.20, and Defense will deliver to Julian packaging materials that Eagle Mist had represented cost $72,000.00.” (10/31/17 Minute Order.) The settlement’s “net effect will be that Defense Nutrition will contribute $399,411.64 towards the damages that Julian claims in its cross-complaint.” (Ibid.) On November 21, 2017, the Court found that the settlement was made in good faith and granted the motion for determination of good faith settlement. (11/21/17 Order Determining Good Faith of Settlement.) In its order, the Court stated that “all claims by any other alleged joint tortfeasor or co-obligor against Defense Nutrition for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault, are barred.” (Ibid.)

Based on the allegations of the DNCC, Defense Nutrition’s contractual indemnity cause of action is based on claims that arise from any personal injury caused by the manufacturing of the nutrition bars. (See DNCC, ¶¶ 55, 57.) Because the good faith settlement between Defense Nutrition and Julian Bakery did not require Defense Nutrition to pay money regarding personal injury claims, there is no valid claim for express indemnity against Eagle Mist and Kevin Laughlin. Further, because the claims regarding the personal injury and the manufacturing of bars were dismissed on November 21, 2017 after the Court granted the motion for determination of good faith settlement, there is no longer liability for Defense Nutrition for these claims and Defense Nutrition cannot seek indemnity from Eagle Mist and Kevin Laughlin.

The Court GRANTS Eagle Mist and Kevin Laughlin’s motion for judgment on the pleadings as to the fifth cause of action for express indemnity.

c. Third Cause of Action: Fraud

The elements for fraud are: (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud (that is, to induce reliance on the representation); (4) justifiable reliance and (5) resulting damage. (Cicone v. URS Corp (1986) 183 Cal.App.3d 194, 200.)

In California, claims based on fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) “In order to recover for fraud, as in any other tort, the plaintiff must plead and prove the “detriment proximately caused” by the defendant's tortious conduct. (Civ. Code, § 3333.) Deception without resulting loss is not actionable fraud. (Hill v. Wrather (1958) 158 Cal.App.2d 818, 825, 323 P.2d 567.) ‘Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown.”’ (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818.)

Although the general rule states that a fraud claim must be specifically pleaded, less specificity is required if it appears from the nature of allegations that defendant must necessarily possess full information, or if the facts lie more in the knowledge of opposing parties. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384-1385 [“it does not appear necessary to require each of the 38 plaintiffs to allege each occasion on which an agent of either defendant could have disclosed …. Surely defendants have records of their dealings with the plaintiffs”]. Accord Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 931 [“plaintiffs did not have to specify the … personnel who prepared these documents because that information is uniquely within … [defendant’s] knowledge”].) “‘[T]he courts should not ... seek to absolve the defendant from liability on highly technical requirements of form in pleading. Pleading facts in ordinary and concise language is as permissible in fraud cases as in any others, and liberal construction of the pleading is as much a duty of the court in these as in other cases.’” (Appollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 242.)

Eagle Mist and Kevin Laughlin argue that “the fraud cause of action should be dismissed since it is inconsistent with the law, inconsistent with the contract attached to the DNCC, and inconsistent with Hofmekler’s subsequent declarations under oath.” (DN Motion, p. 7:1-3.) Eagle Mist and Kevin Laughlin also argue that this “claim should be dismissed because it is duplicative of Julian Bakery’s fraud claim, which is also being made on behalf of [Defense Nutrition], since as part of the good faith settlement order, both DN and Julian Bakery agreed to ‘share in any proceeds realized through litigation [with (Eagle Mist)]’” and “allowing [Defense Nutrition] to try the very same case as Julian Bakery . . . would be manifestly unjust.” (Id. at p. 7:4-10.)

However, Eagle Mist and Kevin Laughlin do not cite any legal authority in their moving papers that would support the dismissal of this cause of action based on the alleged inconsistencies or based on the settlement agreement’s effect on Defense Nutrition and Julian Bakery’s separate claims. “A point which is merely suggested by [a party’s] counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.” (Do It Urself Moving & Storage v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, 35; Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn 2.) The assertions made by Eagle Mist and Kevin Laughlin are unsupported by legal authority and thus lack merit. (See Atchley v. City of Fresno (1984) 151 Cal. App.3d 635, In Re Marriage of Nichols (1994) 27 Cal.App.4th 661, 673; Utz v. Aureguy (1952) 109 Cal. App. 2d 803, 807.)

The Court DENIES Eagle Mist and Kevin Laughlin’s motion for judgment on the pleadings as to the fraud claim in the DNCC.

d. Fourth Cause of Action: Declaratory Relief

A cross-complainant seeking declaratory relief must allege that an actual, present controversy exists, and must state the facts of the respective claims concerning the disputed subject matter. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80.) The cross-complaint will be found sufficient if it sets forth facts showing the existence of an actual controversy relating to the parties' legal rights and duties, and requests the court to adjudge these rights and duties. (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 606.)

The court may grant a motion for judgment on the pleadings “if it determines that a judicial declaration is not ‘necessary or proper at the time under all the circumstances.’” (DeLaura v. Beckett (2006) 137 Cal.App.4th 542, 545; see also Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 648 (demurrer properly sustained where no allegations that declaratory relief would “have any practical consequences.”).) For example, “when there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied.” (Osseous Technologies, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366.)

Courts have held that a court abuses its discretion by failing to dismiss a declaratory relief action when a breach of contract action is available. (Travers v. Louden (1967) 254 Cal.App.2d 926, 932 (Travers); Osseous Technologies of America, Inc. v. Discovery Ortho Partners, LLC (2010) 191 Cal.App.4th 357, 366-367 (Osseous).)

The Osseous court explained the Travers court’s decision:

“Travers featured a plaintiff who failed miserably in framing the pleadings. The Travers plaintiff sued two other individuals for declaratory relief in connection with a botched attempt by plaintiff to purchase real estate from one of the defendants (the other defendant purchased the real estate). (Travers, supra, 254 Cal.App.2d at pp. 927–928, 62 Cal.Rptr. 654.) The complaint did ‘not allege uncertainty as to the meaning of the contract or pray for its interpretation. It merely alleged a breach of the contract as a foundation for some unspecified claim of a right to redress. No facts are alleged which would render necessary or proper a declaration with respect to the future conduct of the parties.’ (Id. at p. 929, 62 Cal.Rptr. 654.)

“Affirming the trial court's grant of summary judgment (which was granted on other grounds), the Travers court observed: ‘[W]e have found no authority for the proposition that declaratory relief is a proper procedure when the rights of the complaining party have crystallized into a cause of action for past wrongs, all relationship between the parties has ceased to exist and there is no conduct of the parties subject to regulation by the court.’ (Travers, supra, 254 Cal.App.2d at p. 929, 62 Cal.Rptr. 654.) ‘There is unanimity of authority to the effect that the declaratory procedure operates prospectively, and not merely for the redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.’ (Id. at p. 931, 62 Cal.Rptr. 654.)” (Osseous, supra, 191 Cal.App.4th 357, 367.)

Eagle Mist and Kevin Laughlin argue that the declaratory relief claim should be dismissed because (1) there is no future relationship between Defense Nutrition and Eagle Mist that would benefit from a judicial declaration; and (2) because Defense Nutrition asserts a breach of contract claim, a cause of action for declaratory relief is superfluous. (DN Motion, p. 9:22-24 [citing to Travers, supra, 254 Cal.App.2d at 929].)

Here, in support of its declaratory relief cause of action, Defense Nutrition alleges the following:

· “An actual controversy has arisen and now exists between Defense Nutrition and [Eagle Mist] regarding the effect of Section 7.3 of the Manufacturing Agreement on Defense Nutrition’s ability to place orders directly with other vendors, including placement of orders directly with [Eagle Mist’s] former subcontractor, Sapphire Bakery Company. Defense Nutrition contends that, by reason of the failure of [Eagle Mist] to cure its breaches after receipt of notice thereof and the subsequent termination of the Manufacturing Agreement, Section 7.3 does not encumber its freedom to place future orders with any other vendor, including but not limited to Sapphire Bakery Company. Defense Nutrition is informed and believes that [Eagle Mist] contends that Defense Nutrition may not place any order with Sapphire Bakery Company or any other of [Eagle Mist’s] former subcontractors.” (DNCC, ¶ 52.)

· “Defense Nutrition desires a declaration of its right to place orders directly with former subcontractors of [Eagle Mist], including Sapphire Bakery Company. Such a declaration is necessary and proper at this time so that the parties may ascertain their respective rights and obligations under the Manufacturing Agreement.” (Id. at ¶ 53.)

In this case, Defense Nutrition’s declaratory relief claim is duplicative; it is based on the same allegations as its cause of action for breach of contract. Defense Nutrition’s declaratory relief claims concern the same rights, obligations and duties of the parties that will necessarily be adjudicated within the breach of contract claim. 

The Court GRANTS Eagle Mist and Kevin Laughlin’s motion for judgment on the pleadings as to the declaratory relief claim.

2. Motion for Judgment on the Pleadings as to Julian Bakery

 

Eagle Mist “moves for judgment on the pleadings on Causes of Action 2-5, 8-9, 11, and 13 of Julian Bakery[’s] . . . First Amended Cross-Complaint (the ‘[JBFACC]’).” (JB Motion, p. 3:2-4.)

In opposition, Julian Bakery notes that it is “dismiss[ing] the following claims without prejudice as to [Eagle Mist]: the third cause of action for Specific Performance; the fourth cause of action for Damages after Rightful Rejection of Goods; the fifth cause of action for Rescission; the eighth cause of action for Breach of Warranty; and the ninth cause of action for Unfair Business Practices.” (JB Opp., p. 3, fn. 1.)

Accordingly, the Court GRANTS Eagle Mist’s motion as to the third, fourth, fifth, eighth, and ninth causes of action.

a. Second Cause of Action: Breach of Contract (Third Party Beneficiary)

The elements of breach of contract are: (1) the existence of a contract; (2) plaintiff's performance or excused nonperformance; (3) defendant's breach; and (4) damages. (Coles v. Glaser (2016) 2 Cal. App.5th 384, 391.) To sufficiently plead the existence of a contract, a plaintiff must either attach a copy of the contract, plead the terms verbatim, or plead its legal effect. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199.) In order to plead a contract's legal effect, a plaintiff need not specify its every term but must allege the material terms of the contract. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

“A contract made expressly for the benefit of a third person may be enforced by that person at any time before the parties rescind it. But a third party beneficiary must show the contract was made expressly for his or her benefit.” (Sofias v. Bank of America (1985) 172 Cal.App.3d 583,587; see also Civ. Code §1559.) “A third party may qualify as a beneficiary under a contract where the contracting parties must have intended to benefit that third party and such intent appears on the terms of the contract.” (Johnson v. Superior Court (2000) 80 Cal.App.4th 1050, 1064.) If the plaintiff is a third party beneficiary of the contract, the plaintiff has a right to sue for its breach. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1031.)

Eagle Mist argues that Julian Bakery’s second cause of action should be dismissed because (1) “the [JBFACC] does not allege any specific contract between [Eagle Mist] and Sapphire[;]” (2) “no contractual terms are provided by [Julian Bakery], let alone specific allegations regarding their [sic] breach[;]” and (3) “the Court has already acknowledged in dismissing Julian’s claim against Sapphire that ‘Julian’s second cause of action for third party beneficiary breach of contract against Sapphire fails as a matter of law, as Julian cannot meet its burden to present evidence to establish all the elements of a breach of contract, namely the evidence demonstrating Eagle Mist's performance or excuse of performance under the contract.’” (JB Motion, p. 5:11, 5:19-20, 5:21-25 [citing May 16, 2019 MSJ Ruling].)

Julian Bakery maintains that it “alleges sufficient facts to state a cause of action for breach of contract as a third party beneficiary between Defense Nutrition and [Eagle Mist], and the motion must be denied.” (Opp., p. 5:1-3.) Julian Bakery argues that even though “the Court previously granted a motion for summary adjudication as to Julian’s second cause of action against cross-defendant Sapphire Bakery Company, LLC (‘Sapphire’)[,] that motion and the evidence related to it dealt entirely with Julian’s claim as a third party beneficiary to the contract between Sapphire and [Eagle Mist] – and no rulings or findings were made as to the contract between [Eagle Mist] and Defense Nutrition.” (Id. at p. 5:4-8.) Julian Bakery asserts that “the Court’s ruling on that motion for summary adjudication has no bearing on the instant motion, which must be denied as to this cause of action.” (Id. at p. 5:9-10.)

The JBFACC alleges:

· “Julian Bakery may enforce the contracts and promises made between and among the co-conspirators Defense Nutrition, [Eagle Mist], and Sapphire, as they were made and intended to specifically benefit Julian Bakery.” (JBFACC, ¶ 54.)

· “Defense Nutrition and [Eagle Mist] have exchanged promises and entered into contractual agreements by which [Eagle Mist] would provide Defense Nutrition with product for the specific purpose of delivering custom manufactured goods to Julian Bakery.” (Id. at ¶ 55.)

· “[Eagle Mist] and Sapphire exchanged promises and entered into contractual agreements by which Sapphire would manufacture and provide [Eagle Mist] with custom manufactured goods for the benefit and ultimate use by, Julian Bakery.” (Ibid.)

· “[A]ll parties except for Julian Bakery (i.e. Defense Nutrition, [Eagle Mist], and Sapphire) were aware that the finished products produced . . . were being manufactured for and being delivered to Julian Bakery. Accordingly, Julian Bakery is the known and specifically intended third-party beneficiary of the promises and contracts between Defense Nutrition and [Eagle Mist], between [Eagle Mist] and Sapphire, and to the extent any exist, between Defense Nutrition and Sapphire. Alternatively, Julian Bakery is a member of the class of parties intended to benefit the contracts between and/or among Defense Nutrition, [Eagle Mist], and Sapphire.” (Id. at ¶ 56.)

· “[B]oth [Eagle Mist] and Sapphire have breached their respective contracts by failing to timely manufacture and procure conforming products as alleged herein, as a result of those breaches, Julian Bakery has been harmed.” (Id. at ¶ 57.)

The Court finds that Julian Bakery sufficiently alleges a cause of action for breach of third party beneficiary contract. The JBFACC contains sufficient allegations that there were agreements between Defense Nutrition and Eagle Mist and between Eagle Mist and Sapphire, that were intended to benefit Julian Bakery. The JBFACC alleges that these agreements were breached by Eagle Mist and the breaches harmed Julian Bakery. Even though Julian Bakery did not attach a copy of these contracts or plead the terms verbatim, the Court finds that Julian Bakery has plead the legal effect of these contracts by alleging the material terms of the contract. Further, the Court agrees with Julian Bakery that the ruling on the motion for summary adjudication has no bearing on the instant motion, as Julian Bakery pleads a breach of the third party beneficiary contract by Eagle Mist as to contracts with Defense Nutrition, which was not the subject of the motion for summary adjudication.

The Court DENIES Eagle Mist’s motion for judgment on the pleadings as to the second cause of action.

b. Eleventh Cause of Action: Fraud

 

Eagle Mist argues that “Julian Bakery’s cause of action for fraud fails as a matter of law, because the [JBFACC] identifies no specific representations made to [Julian Bakery] by [Eagle Mist].” (JB Motion, p. 10:14-15.)

In opposition, Julian Bakery argues that it “alleges facts sufficient to state a claim for fraud as against [Eagle Mist].” (JB Opp., p. 5:27-28 [referencing JBFACC, ¶¶ 122-127.)

The JBFACC contains the following allegations:

· “[O]n the June 2016 conference call between Julian Bakery, Defense Nutrition, Sapphire, and, on information and belief secretly [Eagle Mist], the defendants represented and promised that quality-related issues – including the use of the unauthorized ‘processing aid’ – would be addressed and corrective action taken to prevent similar harm moving forward.” (JBFACC, ¶ 122.)

· “[T]hese representations were false” and “Julian Bakery is informed and believes that the co-conspirators, Hofmekler, Defense Nutrition, [Eagle Mist], Sapphire, and each of them, knew the representations were false at the time they were made with the intention to induce Julian Bakery’s action by relying on such the false representations and promises.” (Id. at ¶ 123.)

· “Further inducing Julian Bakery’s reliance, Hofmekler continued to demand additional payments for new orders, while willfully failing – in concert with [Eagle Mist] and Sapphire – to take corrective action or remedy the issues posed by prior and pending orders.” (Id. at ¶ 124.)

· “[T]hroughout the relationship between the parties, Hofmekler’s representations and promises regarding confidentiality, exclusivity, and the remaining co-conspirators[’] representations and promises manufacturing capability, and the ability to execute corrective actions were false and were made with fraudulent intent.” (Id. at ¶ 125; see also id. at ¶ 126.)

The Court finds that Julian Bakery sufficiently alleges a cause of action for fraud against Eagle Mist. The Court DENIES Eagle Mist’s motion for judgment on the pleadings as to the eleventh cause of action.

c. Thirteenth Cause of Action: Promissory Estoppel

“The elements of promissory estoppel are (1) a promise, (2) the promisor should reasonably expect the promise to induce action or forbearance on the part of the promisee or a third person, (3) the promise induces action or forbearance by the promisee or a third person (which we refer to as detrimental reliance), and (4) injustice can be avoided only by enforcement of the promise.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 803.) “The party claiming estoppel must specifically plead all facts relied on to establish its elements.” (Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 48.) A conclusory allegation of detrimental reliance is insufficient. (See id.) “To be binding, the promise must be clear and unambiguous.” (Lange v. TIG Ins. Co. (1998) 68 Cal.App.4th 1179, 1185.)

Eagle Mist argues that Julian Bakery’s cause of action for promissory estoppel fails as a matter of law because there was no promise made by [Eagle Mist] - let alone ‘a promise clear and unambiguous in its terms’ - cited in the [JBFACC].” (JB Motion, p. 11:5-7.)

In opposition, Julian Bakery argues that it states a claim for promissory estoppel. (JB Opp., p. 6:13-17 [citing JBFACC, ¶ 126].)

In addition to the allegations described above in the fraud claim, the JBFACC also alleges that “the Cross-Defendants’ representations and promises regarding addressing quality-related issues and taking corrective actions were false and made with fraudulent intent.” (JBFACC, ¶ 126.) The JBFACC also alleges that “defendants Defense Nutrition and Sapphire made explicit promises in the July 2016 conference call – a call in which, on information and belief, [Eagle Mist] surreptitiously participated in and silently acquiesced to – that the parties would address Julian Bakery’s quality-related issues and institute corrective action.” (JBFACC, ¶ 132.)

The JBFACC also contains allegations regarding reliance on this promise:

· “As a result of these promises, Julian Bakery continued to submit POs to Defense Nutrition, which . . . then reasonably believed would be properly manufactured by [Eagle Mist] and Sapphire. Julian Bakery’s reliance on the aforementioned promises to institute corrective action, in its decision to continue to purchase from and submit orders to Defense Nutrition was reasonable and foreseeable and intended by the Cross-Defendants’ promises.” (JBFACC, ¶ 133.)

· “As a result of this reasonable and foreseeable reliance, however, Julian Bakery was injured . . . .” (JBFACC, ¶ 134.)

As discussed above, the Court finds that the JBFACC contains sufficient allegations that a promise was made by Eagle Mist to Julian Bakery that would support a claim for promissory estoppel. (See JBFACC, ¶¶ 122-126, 132.)

The Court DENIES Eagle Mist’s motion for judgment on the pleadings as to the thirteenth cause of action.

Case Number: BC629719    Hearing Date: January 10, 2020    Dept: 34

SUBJECT: Motion to Compel Further Responses to Form and Special Interrogatories

Moving Party: Bruce Olsen

Resp. Party: Eagle Mist

TENTATIVE RULING:

The Court orders the parties to attend an Informal Discovery Conference prior to ruling on these motions. (See Department 34 Trial Orders, part VI(B).) The Court orders the parties contact Department 34’s judicial assistant, Reyna Navarro, at (213) 633-0154 to schedule this informal discovery conference.

PRELIMINARY COMMENTS:

Bruce Olsen filed one motion to compel further responses; however, movant should have filed two separate motions.

A party must generally file a separate motion for each discovery device and for each defendant. (See Gov. Code § 70677.) Requiring separate motions preserves judicial efficiency by preventing combined, lengthy, time-consuming motions from monopolizing the Court’s time for consideration of properly calendared motions and interfering with the rights of other litigants. The requirement also better enables the Court to fully consider the motions and matters before it.

Furthermore, Olsen has only paid one filing fee for the one combined motion. “[P]ayment of filing fees is both mandatory and jurisdictional.”  (Hu v. Silgan Containers Corp. (1999) 70 Cal.App.4th 1261, 1269.) The Court normally requires proof of payment of a motion fee for each discovery device directed to each defendant, i.e., for each motion. (See Gov. Code § 70677(d).)]

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. The following individuals involved in this case are the CEOs of the respective business entities: Bruce Olsen, of Sapphire Bakery; Ori Hofmekler, of Defense Nutrition; Kevin Laughlin, of Eagle Mist; Heath Squier, of Julian Bakery. Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist (“a/k/a Osagai”) filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint, but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages, but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

On November 8, 2019, the Court granted Sapphire Bakery and Bruce Olsen’s motion to bifurcate liability and punitive damages.

On November 8, 2019, the Court granted Eagle Mist and Kevin Laughlin’s motion for protective order and granted in part Sapphire Bakery and Bruce Olsen’s motion to compel attendance and testimony at the depositions of Kevin Laughlin and Eagle Mist, as it is limited by the protective order.

On November 22, 2019, the Court granted in part Eagle Mist’s motion to compel the depositions of Heath Squier and Julian Bakery.

On December 5, 2019, the Court granted Olsen’s ex parte application for leave from the discovery cut-off date for a motion to compel Eagle Mist’s supplemental responses to Olsen’s form and special interrogatories.

On December 5, 2019, Olsen filed the instant motion to compel further responses to set one of his form and special interrogatories and request for sanctions.

Trial in this matter is scheduled to commence on January 27, 2020.

ANALYSIS:

Bruce Olsen moves for an order compelling Eagle Mist to provide further responses to 66 special interrogatories (numbers 1, 3, 4, 10, 21-22, 27-28, 32,35-47, 61-104) and 41 form interrogatories (numbers 3.1-3.7, 4.1, 4.2, 7.1-7.3, 8.1-8.8, 9.1-9.2, 12.1-12.7, 13.1- 9 13.2,14.1, 14.2, 15.1, 17.1. and 50.1-50.6.) Bruce Olsen also moves for an order awarding sanctions in the amount of $3,117.50 against Eagle Mist and its counsel, Robert Tauler, jointly and severally.

Department 34 Trial Orders, part VI, subpart (B) states:

“If there are numerous or particularly complicated motions to compel further discovery, the Court will order counsel to attend an Informal Discovery Conference prior to ruling on the motion(s). The moving party is strongly encouraged to arrange for an Informal Discovery Conference prior to the date for the scheduled hearing on the motions.”

Bruce Olsen’s counsel declares that after sending the initial meet and confer letter, Eagle Mist’s counsel was not opposed to an IDC and proposed Joint IDC Statement was created, but the parties were unable to schedule the IDC to resolve these issues. (Blank Decl., ¶ 5; Motion, p. 3:14-20.) The Court orders the parties to attend an Informal Discovery Conference prior to ruling on this motion. (See Department 34 Trial Orders, part VI(B).)

The Court orders the parties contact Department 34’s judicial assistant, Reyna Navarro, at (213) 633-0154 to schedule this informal discovery conference.

Case Number: BC629719    Hearing Date: November 22, 2019    Dept: 34

SUBJECT: Motion to Compel Depositions of Heath Squier and Julian Bakery, Inc.

Moving Party: Eagle Mist

Resp. Party: Julian Bakery, Inc. and Heath Squier

Eagle Mist’s motion to compel the depositions of Heath Squier and Julian Bakery, Inc. is DENIED

PRELIMINARY COMMENT:

The Court’s 11/13/19 minute order states that the opposition, if any, is to be filed and served by November 15, 2019. The opposition was filed on 11/19/2019, thus was late. However, the Court will exercise its discretion to consider the merits of the late-filed opposition. (Cal. Rules of Court, rule 3.1300; Kapitanski v. Von's Grocery Co. (1983) 146 Cal.App.3d 29, 32.)

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. The following individuals involved in this case are the CEOs of the respective business entities: Bruce Olsen, of Sapphire Bakery; Ori Hofmekler, of Defense Nutrition; Kevin Laughlin, of Eagle Mist; Heath Squier, of Julian Bakery. Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist (“a/k/a Osagai”) filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint, but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages, but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

On November 8, 2019, the Court granted Sapphire Bakery and Bruce Olsen’s motion to bifurcate liability and punitive damages.

On November 8, 2019, the Court granted Eagle Mist and Kevin Laughlin’s motion for protective order and granted in part Sapphire Bakery and Bruce Olsen’s motion to compel attendance and testimony at the depositions of Kevin Laughlin and Eagle Mist, as it is limited by the protective order.

Before the Court is Eagle Mist’s motion to compel the depositions of Heath Squier and Julian Bakery, filed on November 7, 2019.

ANALYSIS:

A. Relevant Law

Any party may obtain discovery, subject to restrictions, by taking the oral deposition of any person, including any party to the action. (Code Civ. Proc., § 2025.010.) A properly served deposition notice is effective to require a party or party-affiliated deponent to attend and to testify, as well as to produce documents for inspection and copying. (Code Civ. Proc., § 2025.280, subd. (a).)

“If, after service of a deposition notice, a party . . . fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving notice may move for an order compelling deponent’s attendance and testimony, and the production . . . of any document . . . described in the deposition notice.” (Code Civ. Proc., § 2025.450, subd. (a).) The motion must set forth both facts showing good cause justifying the demand for any documents and a meet and confer declaration. (Code of Civ. Proc., § 2025.450, subds. (b)(1), (b)(2).)

B. Discussion

Eagle Mist moves for an order compelling Heath Squier and Julian Bakery, Inc. to attend and testify at their depositions on the grounds that they failed to attend or testify at their depositions as originally noticed for October 18 and October 29, 2019. (Motion, p. 2:1-8.) Eagle Mist asserts that “While Squier was previously deposed as Julian’s Person Most Knowledgeable (‘PMK’), Eagle Mist has the right to depose him in his individual capacity as a party to this action.” (Id. at p. 2:8-10.) Eagle Mist also asserts that “after the initial deposition of Julian’s PMK, the parties added numerous new claims and produced voluminous, previously undisclosed documents[; thus,] Eagle Mist is entitled to depose Squier and Julian in order to, at minimum, explore these new claims and documents.” (Id. at p. 2:10-13.)

In opposition, Heath Squier and Julian Bakery, Inc. argue that this motion should be denied because (1) the deposition notice of the PMK for Julian Bakery is completely devoid of any categories on which the PMK would testify and fails to satisfy the requirements of Code of Civil procedure section 2025.230; (2) discovery in this case closed on November 12, 2019 and Eagle Mist does not request the Court reopen discovery or provide any good faith basis to extend the discovery cut-off; and (3) Eagle Mist waited an unreasonable amount of time if it thought a second deposition of Mr. Squier was necessary, as Mr. Squier was added as an individual defendant on October 3, 2018. (Opp., pp. 1:27-2:6.)

Code of Civil Procedure section 2024.020 provides:

“(a) Except as otherwise provided in this chapter, any party shall be entitled as a matter of right to complete discovery proceedings on or before the 30th day, and to have motions concerning discovery heard on or before the 15th day, before the date initially set for the trial of the action.

(b) Except as provided in Section 2024.050, a continuance or postponement of the trial date does not operate to reopen discovery proceedings.”

Code of Civil Procedure section 2024.050, subdivisions (a) and (b) provides:

(a) On motion of any party, the court may grant leave to complete discovery proceedings, or to have a motion concerning discovery heard, closer to the initial trial date, or to reopen discovery after a new trial date has been set. This motion shall be accompanied by a meet and confer declaration under Section 2016.040.

(b) In exercising its discretion to grant or deny this motion, the court shall take into consideration any matter relevant to the leave requested, including, but not limited to, the following:

(1) The necessity and the reasons for the discovery.

(2) The diligence or lack of diligence of the party seeking the discovery or the hearing of a discovery motion, and the reasons that the discovery was not completed or that the discovery motion was not heard earlier.

(3) Any likelihood that permitting the discovery or hearing the discovery motion will prevent the case from going to trial on the date set, or otherwise interfere with the trial calendar, or result in prejudice to any other party.

(4) The length of time that has elapsed between any date previously set, and the date presently set, for the trial of the action.

Heath Squier, as Julian Bakery, Inc.’s PMK, was deposed on October 17, 2017. (Tauler Decl., ¶ 4; Ex. C.) However, Eagle Mist subsequently filed the second amended cross-complaint against Julian Bakery, Inc. and Heath Squier on October 3, 2018. Eagle Mist would be entitled to depose Heath Squier, as Julian Bakery’s PMK on the new matters discovered since the initial deposition as Eagle Mist has demonstrated that new facts, documents, and claims did not arise only until after Julian Bakery’s initial deposition. (See Tauler Decl., ¶¶ 5-6; Ex. D.) Further, Eagle Mist normally would be entitled to have an opportunity to depose Heath Squier in his individual capacity, as Eagle Mist added Heath Squier as a defendant to the second amended cross-complaint and Heath Squier failed to appear for his originally noticed deposition.

Trial in this matter is set for December 9, 2019, and hence the discovery cut-off date is November 9, 2019. However, Eagle Mist has not requested that the Court grant leave to reopen discovery to complete these depositions. Moreover, Eagle Mist has not demonstrated to the Court why the depositions or filing of the motion to compel depositions did not take place earlier, as Eagle Mist amended its cross-complaint on October 3, 2018, but waited until October 7, 2019 to notice Mr. Squier’s deposition (which was set for October 18, 2019) and waited until October 18, 2019 to notice Julian Bakery’s PMK’s deposition (which was set for October 29, 2019). Eagle Mist has failed to request leave to reopen discovery and even if it had, failed to explain its lack of diligence in scheduling the depositions after adding Mr. Squier as an individual defendant and after adding new allegations in the second amended cross-complaint.

Further, as to the sufficiency of Eagle Mist’s deposition notice to Julian Bakery’s PMK, Code of Civil Procedure section 2025.230 provides:

“If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.”

Eagle Mist’s deposition notice to Julian Bakery’s PMK fails to describe with reasonable particularity the matters on which examination is requested. (See Tauer Decl., Ex. B.) The Court finds that Julian Bakery’s objection to the deposition notice was valid (see Small Decl., Ex. B), due to Eagle Mist’s noncompliance with Code of Civil Procedure section 2025.230, thus the motion to compel regarding the deposition of Julian Bakery’s PMK is without merit.

For the foregoing reasons, the Court DENIES Eagle Mist’s motion to compel the depositions of Heath Squier and Julian Bakery.

Case Number: BC629719    Hearing Date: November 08, 2019    Dept: 34

SUBJECT: Motion to Bifurcate Liability and Punitive Damages

Moving Party: Sapphire Bakery and Bruce Olsen

Resp. Party: None

Sapphire Bakery and Bruce Olsen’s motion to bifurcate liability and punitive damages is GRANTED.

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint, but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages, but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

Before the Court is Sapphire Bakery and Bruce Olsen’s unopposed motion to bifurcate liability and punitive damages.

ANALYSIS:

Sapphire Bakery and Bruce Olsen “move for an order to bifurcate the trial of liability and punitive damages and to preclude evidence and/or reference punitive damages and Cross-Defendants Sapphire’s and Olsen’s financial condition during the liability phase of the trial.” (Motion, pp. 1:26-2:2.) Sapphire Bakery and Bruce Olsen make this motion “pursuant to California Civil Code section 3295(d) and Code of Civil Procedure sections 598 and 1048(b) on the grounds that bifurcation is in furtherance of convenience, will avoid significant prejudice to Cross-Defendants Sapphire and Olsen, and will promote judicial economy.” (Id. at p. 2:3-6.)

Sapphire Bakery and Bruce Olson maintain that the “bifurcation of liability and punitive damages will promote judicial efficiency and economy” because “the trial in this matter is set for Los Angeles County; however, Cross-Defendants and various additional parties, witnesses and anticipated experts (some only testifying to damages) will be traveling to this area from across the nation.” (Id. at p. 6:22-26.) Sapphire Bakery and Bruce Olsen argue that “bifurcating the trial of liability and damages will avoid wasting the time and money of all involved by postponing damages only until after a finding of liability.” (Id. at p. 6:26-27.)

Sapphire Bakery and Bruce Olsen argue that they “will be unduly prejudiced if evidence of their financial condition is presented prior to such time as Julian [Bakery] or [Eagle Mist] may establish liability and/or entitlement to punitive damages.” (Id. at pp. 6:28-7:2.) Sapphire Bakery and Bruce Olsen assert that “evidence of wealth has no bearing whatsoever on liability and would be introduced solely in an attempt to drive up damages,” thus “it is proper and mandatory for the Court to bifurcate the issues of liability and punitive damages in this action.” (Id. at p. 7:2-4.)

Civil Code section 3295, subdivision (d) states:

The court shall, on application of any defendant, preclude the admission of evidence of that defendant's profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with Section 3294. Evidence of profit and financial condition shall be admissible only as to the defendant or defendants found to be liable to the plaintiff and to be guilty of malice, oppression, or fraud. Evidence of profit and financial condition shall be presented to the same trier of fact that found for the plaintiff and found one or more defendants guilty of malice, oppression, or fraud.

“The purpose behind Civil Code section 3295, which allows bifurcation and preclusion of evidence of a defendant's wealth and profits during the liability phase of trial, is to minimize prejudice prior to the jury's determination of a prima facie case of liability for punitive damages.” (Notricia v. State Compensation Insurance Fund (1999) 70 Cal. App. 4th 911, 939 [referencing Torres v. Automobile Club of So. California

“In practice, bifurcation under this section means that all evidence relating to the amount entitled (Holdgrafer v. Unocal Corp. (2008) 160 Cal. App. 4th 907, 919 [emphasis in original].)

The Court agrees with Sapphire Bakery and Bruce Olsen that the determination as to whether they are liable for compensatory damages should not contain evidence of their financial condition in order to minimize prejudice prior to the jury’s determination of a prima facie case of liability for punitive damages. (See Notricia v. State Compensation Insurance Fund, 70 Cal. App. 4th at 939.)

The Court GRANTS Sapphire Bakery and Bruce Olsen’s motion to bifurcate the trial into two phases for the purposes of the punitive damages claims, pursuant to Civil Code section 3295, subdivision (d).

SUBJECT: (1) Motion for Protective Order

Moving Party: Eagle Mist and Kevin Laughlin

Resp. Party: Bruce Olsen

(2) Motion to Compel Attendance and Testimony at the Depositions of Kevin Laughlin and Eagle Mist

Moving Party: Bruce Olsen

Resp. Party: Eagle Mist and Kevin Laughlin

Eagle Mist and Kevin Laughlin’s motion for protective order is GRANTED.

Eagle Mist and Kevin Laughlin’s request for judicial notice is DENIED as superfluous.

Sapphire Bakery and Bruce Olsen’s motion to compel attendance and testimony at the depositions of Kevin Laughlin and Eagle Mist is GRANTED in part, as it is limited by the Protective Order.

Sapphire Bakery and Bruce Olsen’s request for sanctions is DENIED.

PRELIMINARY COMMENTS:

The penultimate heading of Eagle Mist and Kevin Laughlin’s motion for protective order states that “The Court Should Not Limit the Deposition of Kevin Laughlin and EM.” (Motion, p. 5:10.) The Court assumes this is a typo, since the motion actually requests a protective order to limit the depositions.

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint, but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages, but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

Before the Court is Eagle Mist and Kevin Laughlin’s motion for protective order, filed on October 9, 2019.

Before the Court is also Bruce Olsen’s motion to compel attendance and testimony at the depositions of Kevin Laughlin and Eagle Mist, filed on October 17, 2019.

ANALYSIS:

I. Motion for Protective Order

Kevin Laughlin and Eagle Mist “move . . . pursuant to Code of Civil Procedure §§ 2019.030, 2030.040, 2030.090, 2033.040, and 2033.080 for a protective order against Cross-Defendant Bruce Olsen (‘Olsen’) limiting the questioning of [Kevin Laughlin] and [Eagle Mist] at his third deposition in this case.” (Motion, p. 2:5-9.)

A. Relevant Law

Code of Civil Procedure section 2025.420 states in pertinent part:

“(a) Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order. The motion shall be accompanied by a meet and confer declaration under Section 2016.040.

“(b) The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense. This protective order may include, but is not limited to, one or more of the following directions:

. . .

“(5) That the deposition be taken only on certain specified terms and conditions.

. . .

“(9) That certain matters not be inquired into.

“(10) That the scope of the examination be limited to certain matters. . . .” (Code Civ. Proc., §§ 2025.420(a), (b).)

B. Discussion

Kevin Laughlin and Eagle Mist explain that they “were deposed for two full days on July 17 and 18, 2018” and “the same attorneys, Wood, Smith, and Berman, LLP, who now represent Bruce Olsen in addition to Sapphire, have noticed the deposition of Kevin Laughlin and [Eagle Mist] again by way of two deposition notices served by mail on October 4, 2019, setting the deposition for October 14, 2019.” (Motion for Protective Order, p. 4:2-8 [citing Tauler Decl., ¶ 2, Exs. A, B].) Kevin Laughlin and Eagle Mist contend that Mr. Olsen’s lawyers, already took the 2018 depositions on behalf of Sapphire Bakery and now seek to have Kevin Laughlin and Eagle Mist “sit again without restriction with their sole rationale being that they now represent Olsen, and get another unbridled attempt to depose Mr. Laughlin on any subject of their choosing, including those already addressed by counsel’s 2018 depositions.” Kevin Laughlin and Eagle Mist assert that counsel for Olsen refuses to limit the scope of questioning for the newly noticed depositions in any manner. (Id. at p. 4:9-17 [citing Tauler Decl., Exs. C, D].)

Kevin Laughlin and Eagle Mist argue that “the Court should limit any subsequent deposition of [them] to only the new issues raised in the FACC and documents produced subsequent to the 2018 depositions, and/or limit the deposition to two hours maximum.” (Id. at p. 5:11-13.) Kevin Laughlin and Eagle Mist maintain that “an unconditional deposition of the very same witness, Kevin Laughlin, for a third time is unwarranted, unduly burdensome, and oppressive given the long history of discovery sought by Sapphire’s side, which includes over 200 (two-hundred) special interrogatories and 8 (eight) sets of form interrogatories.” (Id. at p. 5:13-16.)

In opposition, Olsen argues that he “has an absolute right to conduct these depositions, the moving parties have not shown good cause for the protective order, and Olsen will be severely prejudiced if the motion is granted such that justice and equity dictates that the motion be denied to guarantee Olsen's due process right to defend himself at trial.” (Protective Order Opp., p. 2:6-9.) Olsen contends that “good cause exists for the noticed oral depositions and associated document production requests as the requested testimony and documents are directly relevant to the issue of whether Mr. Olsen is personally liable for the alleged damages, and are essential to preparation of Mr. Olsen's defense.” (Id. at p. 2:10-13.)

Olsen argues that he “was not a party to this action at the time of the prior depositions and has an absolute right to conduct the depositions of Laughlin and Eagle Mist based upon the claims asserted against him at this time.” (Id. at p. 2:13-15.) Olsen maintains that “since the time of the original depositions, Eagle Mist has filed a Second Amended Cross-Complaint asserting multiple new allegations and has served over 5,000 pages of additional documents, all of which constitute good cause for additional depositions.” (Id. at p. 2:15-18.) Olsen argues that “it is unreasonable and inappropriate to request Mr. Olsen limit the scope of his examination to Eagle Mist's new allegations in the Second Amended Cross-Complaint and documents produced after the original 2018 depositions as Mr. Olsen has not yet had any ability to question Eagle Mist and Laughlin about their claims against Olsen in this action.” (Id. at p. 11:16-20.)

Bruce Olsen is the CEO of Sapphire Bakery. (See, e.g., Eagle Mist’s Second Amended Cross-Complaint, ¶ 32.) The Court agrees that “Olsen and [Sapphire Bakery] are similarly situated with aligned interests,” which is evidenced, among other things, “by their representation by the very same lawyers. . . .” (Motion, p. 3:14-15.)

The Court finds that Eagle Mist and Kevin Laughlin have shown good cause that a protective order limiting any subsequent deposition to only the new issues raised in the FACC and documents produced subsequent to the 2018 depositions would protect them from unwarranted annoyance, oppression, undue burden and expense by Olsen. (See Code Civ. Proc., § 2025.420(b)(5), (9), (10).)

The Court GRANTS Eagle Mist and Kevin Laughlin’s motion for a protective order to limit the subsequent depositions of Eagle Mist and Kevin Laughlin.

II. Motion to Compel Attendance and Testimony at the Depositions of Kevin Laughlin and Eagle Mist

Bruce Olsen (“Olsen”) moves “for an order requiring Kevin Laughlin (‘Laughlin’) and Eagle Mist Corporation (‘Eagle Mist’) to attend and testify at their oral depositions originally scheduled to be held on October 14, 2019 via video conference.” (Motion to Compel Depositions, pp. 1:28-2:3.) Olsen also moves “for an order requiring Laughlin, Eagle Mist, and their counsel of record, Robert Tauler, [to] pay sanctions in the amount of $2,770.00 for failing to attend the noticed depositions.” (Id. at p. 2:3-5.)

A. Relevant Law

Any party may obtain discovery, subject to restrictions, by taking the oral deposition of any person, including any party to the action. (Code of Civ. Proc., § 2025.010.) A properly served deposition notice is effective to require a party or party-affiliated deponent to attend and to testify, as well as to produce documents for inspection and copying. (Code of Civ. Proc., § 2025.280, subd. (a).)  

“If, after service of a deposition notice, a party . . . fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving notice may move for an order compelling deponent’s attendance and testimony, and the production . . . of any document . . . described in the deposition notice.”  (Code Civ. Proc., § 2025.450, subd. (a).) The motion must set forth both facts showing good cause justifying the demand for any documents and a meet and confer declaration. (Code of Civ. Proc., § 2025.450, subds. (b)(1), (b)(2).)

A court shall impose monetary sanctions if the motion to compel is granted, unless the one subject to sanction acted with substantial justification or other circumstances would make the imposition of the sanction unjust. (Code Civ. Proc., § 2025.450, subd. (g)(1).)

B. Request for Judicial Notice

Eagle Mist requests that the Court take judicial notice of its Motion for Protective Order Regarding Third Deposition of Kevin Laughlin and Eagle Mist Corporation d/b/a Osagai International, filed on October 9, 2019. (RJN, p. 2:1-6.)

The Court DENIES this request for judicial notice as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, Rule 3.1110(d).)

C. Discussion

1. Compelling Depositions

Olsen brings this motion “on the grounds that Laughlin and Eagle Mist failed to attend or testify at their depositions as originally noticed.” (Motion to Compel Depositions, p. 2:6-7.) Olsen asserts that “prior to the depositions, all counsel agreed to conduct the depositions of Laughlin and Eagle Mist concurrently on the noticed date.” (Id. at p. 2:7-7.) Olsen maintains that “Laughlin and Eagle Mist did not file written objections or a Motion to Stay in response to the deposition notices, which were properly served on Laughlin and Eagle Mist on October 4, 2019 via personal service.” (Id. at p. 2:8-11.) Olsen asserts that his counsel took a nonappearance because Laughlin and Eagle Mist failed to appear for the depositions. (Id. at p. 4:22-24 [citing Beagle Decl., ¶ 12].)

Olsen also argues that “good cause exists to compel the production of [the documents or things identified in the notices of deposition], in that the documents sought are relevant to the issue of whether Olsen is personally liable for the alleged damages, and are essential to preparation of Olsen's defense.” (Id. at p. 2:12-15.) Olsen contends that “Laughlin's and Eagle Mist's refusal to attend the depositions and produce the items specified in the deposition notices was without substantial justification.” (Id. at p. 2:16-17.)

In opposition, Laughlin and Eagle Mist argue that Olsen’s “unnecessary motion to compel raises the very same issues as Plaintiff’s motion for protective order, filed eight days prior and set for hearing on the same day.” (Compel Opp., p. 2:9-11.) Laughlin and Eagle Mist assert that Olsen “was aware of the pending motion for protective order and refused to delay the deposition until the Court’s ruling on the matter, even though it was only three weeks away.” (Id. at p. 5:4-6 [citing Tauler Decl., ¶ 4].) Laughlin and Eagle Mist incorporate their arguments in their motion for protective order to the opposition to the motion to compel depositions. (Id. at p. 2:17-20.)

There is no dispute that Eagle Mist and Laughlin failed to appear for the depositions set for October 14, 2019 and failed to produce for inspection the documents described in the deposition notice. (Code Civ. Proc., § 2025.450.) However, as discussed in the motion for protective order, the Court finds that Eagle Mist and Laughlin acted with substantial justification and that Olsen has not met his burden to justify his demand of all of the documents request.

The Court GRANTS Olsen’s motion to compel attendance at the depositions, subject to the limitations set forth in the motion for protective order.

2. Sanctions

Olsen requests that the Court impose “sanctions in the amount of $2,770.00 against Eagle Mist, Laughlin and their counsel of record, Robert Tauler, for their failure to attend the properly noticed depositions.” (Motion to Compel Depositions, p. 9:4-7.)

Because Laughlin and Eagle Mist acted with substantial justification in not attending the noticed depositions, the Court DENIES Olsen’s request for sanctions. (Code Civ. Proc., § 2025.450, subd. (g)(1).)

SUBJECT: (1) Motion for Summary Adjudication

Moving Party: Bruce Olsen

Resp. Party: Eagle Mist

(2) Motion for Summary Adjudication

Moving Party: Sapphire Bakery

Resp. Party: Eagle Mist

Bruce Olsen’s motion for summary adjudication of Issues 1-5 is DENIED.

Sapphire Bakery’s motion for summary adjudication of Issues 1-5 is DENIED.

Bruce Olsen and Sapphire Bakery’s evidentiary objections are either overruled or immaterial to the Court’s determination of this motion, as explained below.

Eagle Mist’s request for judicial notice is DENIED as superfluous.

BACKGROUND:

This action arises from the manufacture of nutrition bars by Sapphire Bakery at the request of Eagle Mist. Eagle Mist was hired by Defense Nutrition to facilitate the manufacturing of nutrition bars for Julian Bakery. From April to July 2016, Sapphire Bakery manufactured Primal Whey and Paleo protein bars utilizing Defense Nutrition’s formulas and ingredients provided by Eagle Mist. The following individuals involved in this case are the CEOs of the respective business entities: Bruce Olsen, of Sapphire Bakery; Ori Hofmekler, of Defense Nutrition; Kevin Laughlin, of Eagle Mist; Heath Squier, of Julian Bakery. Due to a variety of issues, all production ceased in July 2016 and litigation commenced in August 2016 in St. Louis, Missouri and Los Angeles, California.

Plaintiff Defense Nutrition, LLC (“Defense Nutrition”) commenced this action on August 8, 2016. Defense Nutrition filed a first amended complaint on August 22, 2016 against defendants Julian Bakery Inc. (“Julian Bakery”) and Heath Squier for: (1) breach of contract; (2) goods sold and delivered; (3) account stated; (4) open book account; and (5) promissory fraud.

Julian Bakery filed a cross-complaint on September 8, 2016 against Defense Nutrition, LLC and Ori Hofmekler (“Hofmekler”). Julian Bakery filed a first amended cross-complaint on November 14, 2016 against Defense Nutrition, Hofmekler, Eagle Mist Corporation (“Eagle Mist”), and Sapphire Bakery Company, LLC (“Sapphire Bakery”) for: (1) breach of contract; (2) breach of contract; (3) specific performance; (4) damages for rejection of defective goods; (5) rescission; (6) negligence; (7) equitable indemnity; (8) breach of warranty; (9) unfair business practices; (10) trade secret misappropriation; (11) fraud; (12) negligent misrepresentation; (13) promissory estoppel; and (14) interference with prospective economic advantage.

Eagle Mist (“a/k/a Osagai”) filed a cross-complaint on January 10, 2017 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen for: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) interference with prospective economic advantage; (8) inducing breach of contract; (9) unfair business practices; (10) conversion; and (11) injunctive relief.

Defense Nutrition and Hofmekler filed a cross-complaint on January 31, 2017 against Eagle Mist and Kevin Laughlin for: (1) equitable indemnity; (2) breach of contract; (3) fraud; (4) declaratory relief; and (5) express indemnity.

The Court sustained Sapphire Bakery’s demurrer to the twelfth cause of action of Julian Bakery’s first amended cross-complaint but overruled the demurrer to the other causes of action on September 22, 2017. The Court also granted Sapphire Bakery’s motion to strike Julian’s request for treble damages but denied the rest of the most to strike on September 22, 2017. (09/22/2017 Minute Order.)

On August 25, 2018, the Court overruled Sapphire Bakery’s demurrer to the second, fifth, ninth, tenth, and eleventh causes of action in Eagle Mist’s cross-complaint.

On September 14, 2018, the Court granted Eagle Mist’s motion for leave to file a first amended cross-complaint. Eagle Mist then filed a first amended cross-complaint on October 3, 2018 against Defense Nutrition, Hofmekler, Sapphire Bakery, Heath Squier, and Bruce Olsen.

Eagle Mist then filed a seconded amended cross-complaint on January 4, 2019 for: (1) breach of written contract; (2) conversion; (3) theft- violation of California Penal Code § 496; (4) misappropriation of trade secrets; (5) intentional misrepresentation; and (6) concealment.

On April 17, 2019, the Court overruled Sapphire Bakery’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 8, 2019, the Court overruled Bruce Olsen’s demurrer to Eagle Mist’s second amended cross-complaint.

On May 16, 2019, the Court granted in part and denied in part Sapphire Bakery’s motion for summary judgment/adjudication against Julian Bakery.

On May 30, 2019, Eagle Mist’s fourth cause of action for misappropriation of trade secrets was dismissed with prejudice.

The Court denied Defense Nutrition and Hofmekler’s motion for summary judgment, or in the alternative, summary adjudication of Eagle Mist’s cross-complaint on October 1, 2019.

On October 11, 2019, the Court denied Eagle Mist’s motion to compel further responses to special interrogatories.

On October 22, 2019, the Court denied Eagle Mist’s motion for summary judgment as to Julian Bakery.

Before the Court are Bruce Olson’s motion for summary adjudication and Sapphire Bakery’s motion for summary adjudication, both motions asserted against Eagle Mist.

ANALYSIS:

Bruce Olsen moves for summary adjudication against Eagle Mist of the following issues:

1. As a matter of law, there is no basis for individual liability against Mr. Olsen, as he was acting within the course and scope of his employment.

2. As a matter of law, Eagle Mist's second cause of action for Conversion has no merit because Mr. Olsen did not personally have control over Eagle Mist’s property. Further, Eagle Mist had no ownership interest in the produced product that was allegedly converted.

3. As a matter of law, Eagle Mist's third cause of action for Violation of California Penal Code § 496 has no merit because Mr. Olsen did not conceal, sell, withhold, or aid in concealing. selling, or withholding any property from Eagle Mist, knowing the property to be so stolen. This claim also has no merit because Eagle Mist had no ownership interest in the produced product that was allegedly stolen.

4. As a matter of law, Eagle Mist’s fifth cause of action for Intentional Misrepresentation has no merit because Mr. Olsen did not misrepresent the truth of any fact to Eagle Mist upon which Eagle Mist reasonably relied.

5. As a matter of law, Eagle Mist's sixth cause of action for Concealment has no merit because Mr. Olsen did not individually owe Eagle Mist any duty to disclose information. Further, at no time did he intentionally fail to disclose any facts to Eagle Mist with the intent to deceive it. (Olsen Motion for Summary Adjudication [“Olsen MSA”], p. 2:4-19.)

Sapphire Bakery moves for summary adjudication against Eagle Mist of the following issues:

1. As a matter of law, Eagle Mist’s first cause of action for Breach of Written Contract has no merit as it is void as contrary to public policy; Sapphire never misused or disclosed any of Eagle Mist's confidential or proprietary information; and Eagle Mist's claimed damages are utterly speculative.

2. As a matter of law, Eagle Mist's second cause of action for Conversion has no merit because Eagle Mist has no ownership interest in the nutritional bar formulas or the finished product.

3. As a matter of law, Eagle Mist's third cause of action for Violation of California Penal Code § 496 has no merit because Sapphire did not conceal, sell, withhold, or aid in concealing, selling, or withholding any property from Eagle Mist, knowing the property to be so stolen. Further, Eagle Mist has no ownership interest in the nutritional bar formulas or the finished product that was allegedly stolen.

4. As a matter of law, Eagle Mist's fifth cause of action for Intentional Misrepresentation has no merit because there are no misstatements of particular facts upon which the cross-complainant justifiably relied.

6. As a matter of law, Eagle Mist’s sixth cause of action for Concealment has no merit because there are no misstatements of particular facts upon which the cross-complainant justifiably relied. (Sapphire Bakery’s Motion for Summary Adjudication [“Sapphire Bakery MSA”], p. 2:5-22.)

Both Bruce Olsen (“Olsen”) and Sapphire Bakery’s motion for summary adjudication as to issues 2-6 are the same and will be analyzed accordingly.

A. Relevant Law

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal. App. 4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, 159 Cal.App.4th at 467; Code Civ. Proc., § 437c, subd. (c).) 

B. Request for Judicial Notice

Eagle Mist requests that the Court take judicial notice of the following documents:

· Sapphire Bakery Company, LLC’s Notice of Ruling on its Motion for Summary Adjudication against Julian Bakery, Inc., dated May 16, 2019

· Julian Bakery, Inc’s Request for Dismissal of its Sixth and Twelfth Causes of Action against Eagle Mist Corporation, dated March 20, 2019.

· Dismissal of Julian Bakery, Inc’s Sixth and Twelfth Causes of Action, entered by the Court on April 23, 2019.

The Court DENIES this request for judicial notice as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, Rule 3.1110(d).)

C. Evidentiary Objections

Bruce Olsen submits 88 evidentiary objections to Eagle Mist’s evidence in support of its opposition. Sapphire Bakery submits 79 evidentiary objections to Eagle Mist’s evidence in support of its opposition.

The Court OVERRULES Olsen’s objections numbers 7, 8, 9, 10, 11, 13, 14, 15, 29, 31, 33, 35, 36, 38, 40, 43, 51, 52, 58, 59, 65, 80, 84, 85, 86, 87. The Court OVERRULES Sapphire Bakery’s objections numbers 25 and 60. The remaining objections are immaterial to the Court’s disposition of the motion. The Court therefore declines to rule upon them. All objections not ruled upon are preserved for appeal. (Code Civ. Proc. § 437c, subd. (q).) 

D. Discussion

1. Olsen’s Issue No. 1: Individual Liability

The second amended cross-complaint (“SACC”) alleges:

· "In April 2016, Osagai was informed that Sapphire had a new CEO. Sapphire’s new CEO, Bruce Olsen, expressed an interest in meeting with Defense Nutrition. Mr. Laughlin, of Osagai, reminded Mr. Olsen that Sapphire was beholden to the terms of the Sapphire NDA with Osagai, and that the only thing Sapphire could discuss with Defense Nutrition was Sapphire's production capabilities.” (SACC, ¶¶ 32, 93.)

· “On or about July 11, 2016, Sapphire's CEO, Bruce Olsen, emailed Mr. Laughlin saying that Sapphire would no longer accept purchase orders from Osagai after finishing up the remaining Egg P.O. and Whey P.O. Mr. Olsen mentioned nothing about the bad bars.” (SACC ¶ 44)

· “Specifically, hand-written notes of Bruce Olsen, CEO of Sapphire, identify Kevin Laughlin of Osagai as ‘the enemy’ and note that Mr. Laughlin was ‘to know nothing’ of the conspiracy. Olsen’s notes also reference Osagai’s instructions that the bars, which Osagai had paid for, not be shipped to Defense Nutrition or Julian Bakery. Despite this, Olsen notes his intent to ship the bars anyway. In a note with the same date, Olsen writes that ‘Heath is 100% for us’ indicating that Julian Bakery and Mr. Heath were 100% involved in the parties scheme to fraudulently deprive Osagai the fruits of his labor by taking of advantage of his weakened position, even going so far as to include in his notes that Kevin Laughlin of Osagai ‘has no $$.’” (SACC. ¶ 45.)

· “Osagai has learned that Olsen communication through a separate secret email address for all of his communications that breached the parties’ agreements. Hokmekler for his part, has claimed that all of his emails were lost due to a ‘server crash.’” (SACC, ¶ 46.)

“Ordinarily, a corporation is regarded as a legal entity separate and distinct from its stockholders, officers and directors. Under the alter ego doctrine, however, where a corporation is used by an individual or individuals, or by another corporation, to perpetrate fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, a court may disregard the corporate entity and treat the corporation's acts as if they were done by the persons actually controlling the corporation. [Citations.] [¶] In general, the two requirements for applying the alter ego doctrine are that (1) there is such a unity of interest and ownership between the corporation and the individual or organization controlling it that their separate personalities no longer exist, and (2) failure to disregard the corporate entity would sanction a fraud or promote injustice. [Citations.] The doctrine is applicable where some innocent party attacks the corporate form as an injury to that party's interests. The issue is not so much whether the corporate entity should be disregarded for all purposes or whether its very purpose was to defraud the innocent party, as it is whether in the particular case presented, justice and equity can best be accomplished and fraud and unfairness defeated by disregarding the distinct entity of the corporate form. [Citations.]” (Robbins v. Blecher (1997) 52 Cal.App.4th 886, 892 [quoting Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993].)

"To maintain a tort claim against a director in his or her personal capacity, a plaintiff must first show that the director specifically authorized, directed or participated in the allegedly tortious conduct [citation]; or that although they specifically knew or reasonably should have known that some hazardous condition or activity under their control could injure plaintiff, they negligently failed to take or order appropriate action to avoid the harm [citations]. The plaintiff must also allege and prove that an ordinary prudent person, knowing what the director knew at that time, would not have acted similarly under the circumstances." (Frances T. v. Village Green Owners Assn. (1986) 42 Cal. 3d 490, 508-509.)

Olsen argues that he “is immune from personal liability because he acted within the scope of his employment.” (Olsen MSA, p. 7:25-26.) Olsen asserts that “the Second Amended Cross-Complaint is predicated on Mr. Olsen’s actions as the Sapphire CEO.” (Id. at p. 14:1-12.) Olsen maintains that “nowhere is it alleged that Mr. Olsen engaged in any actions outside the course and scope of his employment” and “nowhere is it alleged that Mr. Olsen acted on his own behalf in engaging in any tortious conduct or misappropriated for individual gain and advantage any ingredients, nutritional bars or trade secrets.” (Id. at p. 14:2-5.) Olsen argues that Eagle Mist “has failed to specifically and sufficiently plead facts to substantiate its claims for Conversion, Violation of California Penal Code § 496, Intentional misrepresentation and Concealment against Bruce Olsen as an individual actor.” (Id. at p. 14:5-7.)

In opposition, Eagle Mist argues that “the evidence demonstrates that Olsen acted in his individual interests with respect to the misconduct alleged in the SACC.” (Eagle Mist Opp. to Olsen MSA, p. 1:23-24.) Eagle Mist identifies that “Olsen used his Sapphire Bakery email address (bolsen@1bakery.com) for those communications to and from [Eagle Mist], and used his private individual email address (BOlsen@Hearthstonebakedproducts) when he acted in his own interests.” (Id. at pp. 1:24-2:1 [citing Tauler Decl., ¶ 7, Ex. F, Olsen Deposition at p. 115:22-116:1].) Eagle Mist argues that “on those occasions when Mr. Olsen was working with Mr. Hofmekler to use [Eagle Mist]’s information for his own benefit, he didn’t use his Sapphire Bakery email address (bolsen@1bakery.com), he used his private individual email address (BOlsen@Hearthstonebakedproducts).” (Id. at p. 6:23-27 [citing Tauler Decl., ¶ 7, Ex. F, Olsen Deposition at p. 115:22-116:1 (Q. So HearthStone Baked Products was like that old consortium we were talking about, right? A. Right. It was my email. Q. So that's your own thing. A. Right)].) Eagle Mist maintains that “this distinction was highlighted by Mr. Olsen at his deposition when questioned about the varied use of these different emails for different purposes:

Q. Why didn't you write [Exhibit 282] from the HearthStone Baked Products account?

A. Because I was speaking to Ori as my official capacity as CEO. Q. So what about the previous exhibit? What capacity was that? A. Well, I guess as CEO of HearthStone.” (Id. at pp. 6:27-8:5 [citing Tauler Decl. ¶ 8, Ex. G, Olsen Deposition at p. 165:8-14; Exhibits 281-282 to Bruce Olsen Deposition].)

Eagle Mist also presents an “email from Olsen’s personal account, dated June 29, 2016 (during the Julian Bar Production), contained the subject line ‘Osagai Film Inventory & Source’ and demonstrates Bruce Olsen’s collaborative efforts with Ori Hofmekler to determine the confidential label and packaging information [Eagle Mist] provided to Sapphire Bakery as part of the Julian Bar production.” (Id. at p. 2:9-12 [citing Tauler Decl., ¶ 14, Ex. L].)

Eagle Mist asserts that even without these personal emails, “it is evident that Olsen should be held liable since he actively ‘engaged in, authorized, directed or participated in the allegedly tortious conduct’” which includes “Olsen’s handwritten notes making the determination that ‘K.L. [Kevin Laughlin] was the enemy” that was to “know nothing” and to “ignore” the directions of [Eagle Mist]’s creditors to halt shipment of the Whey Bars on July 15, 2016.” (Id. at p. 2:13-19 [citing Tauler Decl. ¶ 15, Ex. M; Tauler Decl. ¶ 9, Ex. H, Olsen Deposition at p. 245:9-246:1].) Eagle Mist argues that the handwritten notes regarding the Whey Bar shipments “reveal Olsen’s intentions to knowingly run afoul of the law, stating in part: ‘Legally—we have to follow Osagai’s’ but concluding that they should ‘Ship it,’ anyways and his strategy to ‘speak to no one till [Whey Bars] off premises.’” (Id. at p. 7:25-27 [citing Laughlin Decl., ¶ 52; Ex. Q].)

Olsen has not met his initial burden of proof by presenting facts to negate an essential element, or to establish a defense as to whether he is individually liable for the actions of Sapphire. (Code of Civ. Proc. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Even if Olsen had met its initial burden of proof, Eagle Mist has provided evidence demonstrating that Olsen acted in an individual capacity, which creates a triable issue of material fact.

The Court DENIES Olsen’s summary adjudication as to Issue Number 1.

2. Sapphire Bakery’s Issue No. 1: Breach of Contract

Sapphire Bakery argues that Eagle Mist’s breach of contract claim, asserting that it sustained at least $5 million in lost profits, “is insupportable because the Agreement is void as contrary to public policy; Sapphire never misused or disclosed any of [Eagle Mist’s] confidential or proprietary information; and [Eagle Mist’s claimed damages are utterly speculative.” (Sapphire Bakery MSA, p. 17:16-19.)

i. Contracts Void as Contrary to Public Policy

California Civil Code section 1646 provides, “A contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and usage of the place where it was made.” Furthermore, “a court can decline to enforce the parties contractual choice-of-law provision only if the interests of the forum state are ‘materially greater’ than those of the chosen state, and the forum state’s interests would be more seriously impaired by the enforcement of the parties’ contractual choice of-law provision than would the interests of the chosen state by application of the law in the forum state.” (Brack v. Omni Loan Co., Ltd. (2008) 164 Cal. App. 4th 1312, 1328 [quoting Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal. App. 4th 881, 898.)

Sapphire Bakery argues that “the subject Mutual Non-Disclosure and Non-Circumvention Agreement is void, as it is wholly inconsistent under California law and Missouri law.” (Sapphire Bakery MSA, p. 19:5-6.) Sapphire Bakery maintains that “the noncompete, nonsolicitation and nondisclosure clauses in the Agreement are certainly not narrowly tailored” but rather, “these clauses are so broadly worded that they plainly restrain competition and trade.” (Id. at p. 19:6-8.) Sapphire Bakery asserts that “the NDA was entered well-before Sapphire was retained by Defense Nutrition to manufacture nutritional bars for Julian Bakery and, consequently, the nature and scope of the agreement was not reasonably foreseeable.” (Id. at p. 19:8-10.) Sapphire Bakery argues that the agreement “purports to prohibit Sapphire from having contact with any customer /client / supplier /vendor of Osagai, anywhere in the world, for two years from the termination of the Agreement, regardless of whether or not it knew that the aforementioned had any connection to [Eagle Mist].” (Id. at p. 19:11-14.)

The Court already analyzed Sapphire Bakery’s identical arguments in the motion, in its ruling on the demurrer to the SACC. In the Court’s Minute Order of April 17, 2019, the Court explained:

“Eagle Mist’s second amended cross-complaint alleges that both parties are Missouri entities, the facility where Sapphire would manufacture the food bars is in Missouri, provides a copy of the agreement itself, and shows that the contractual choice of law provisions in the Agreement requires the application of the laws of Missouri. (See SACC, ¶¶ 1, 4, 26, 27, Exh. C.) Moreover, Sapphire has not persuaded the Court that a fundamental policy of the State of California requires the Court to overlook the choice of law provisions. Thus, the breach of contract claim asserted in the second amended cross-complaint does not fail as a matter of law under public policy reasons.” (04/17/19 Minute Order, p. 6.)

Sapphire Bakery has not presented any new factual support to address this argument. The Court finds that Sapphire Bakery has not met its initial burden of proof by presenting facts to negate an essential element – that this agreement is void as contrary to public policy of California. Sapphire Bakery mainly asserted their same argument in support of the demurrer which was overruled and has not pointed to any evidence. (Code of Civ. Proc. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)

Accordingly, the Court DENIES Sapphire Bakery’s motion for summary adjudication on this ground.

ii. Misuse or Disclosure of Confidential or Proprietary Information

The SACC alleges the following:

· “Osagai and Sapphire entered into the Sapphire NDA.” (SACC, ¶ 60.)

· “Pursuant to the terms of the Sapphire NDA, Sapphire agreed, among other things, not to misuse or disclose the confidential and proprietary information it obtained from Osagai thereunder.” (SACC, ¶ 61.)

· “In direct violation of the NDA, Sapphire has taken the information provided thereunder and used Osagai’s confidential information and specifications to cut out Osagai and instead have Sapphire produce the bars directly for Defense Nutrition.” (SACC, ¶ 62.)

· “By virtue of the above actions, Sapphire has repeatedly and materially breached the terms of the Sapphire NDA.” (SACC, ¶ 63.)

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

Sapphire Bakery argues that Eagle Mist “does not have standing to assert this claim because Defense Nutrition owned all such proprietary information, as confirmed by the following:

“(1) Purchase Order, Terms and Conditions between Defense Nutrition and Julian Bakery: "[A]11 product formulas and/or specifications (including, without limitation, all product formulas, trademarks, patents, and/or specifications that have been adjusted, developed or revised ... are exclusively owned by Defense Nutrition."

“(2) Manufacturing and Supply Agreement between Osagai and Defense Nutrition: "[T]he parties hereby acknowledge and agree that any and all formulas and/or specifications ...including without limitation, all Product formulas and/or specifications that have been adjusted, or revised by Osagai for Customer ...shall be exclusively owned by Customer ..." (Sapphire Bakery MSA, pp. 21:22-22:2 [citation missing].)

Although not cited to in the motion, Sapphire Bakery’s separate statement cites to the declaration of Hofmekler and the deposition of Kevin Laughlin to demonstrate that “at all times Defense Nutrition owned all the formulas for the bars, per the terms of the Manufacturing and Supply Agreement that it entered with Osagai.” (Sapphire Bakery’s Separate Statement, No. 62 [citing Exhibit 15, Manufacturing and Supply Agreement; Declaration of Ori Hofmekler, ¶ 5; Exhibit 13, Deposition of Kevin Laughlin (Volume I), pg. 118:11-23].)

For example, in his declaration, Hofmeker declares that “While Defense Nutrition provided confidential formulas and ingredients to Osagai LLC and Laughlin, Osagai LLC and Laughlin did not provide any such confidential information to Defense Nutrition and the agreement was clearly designed to protect Defense Nutrition.” (Notice of Errata, Hofmekler Decl., ¶ 5.) However, the portion of the deposition that Sapphire Bakery cites to only asks whether Laughlin recognizes the manufacturing and supply agreement. (Notice of Errata, Exhibit 13, Deposition of Kevin Laughlin (Volume I), pg. 118:11-23].)

Sapphire Bakery maintains that it “did not engage in any inappropriate use of confidential or proprietary information” because “with Osagai's consent and knowledge, Sapphire entered into a Mutual Non-Disclosure and Non-Circumvention Agreement with Defense Nutrition” and because “Osagai instructed Sapphire and Defense Nutrition to have direct communication and meet to discuss the nutritional bars and other projects.” (Id. at p. 22:4-8.)

In opposition, Eagle Mist argues that “the record is replete of Sapphire’s breaches of the NDNCA by engaging in discussions with DN about confidential information, including Osagai’s financial state.” (Eagle Mist Opp. to Sapphire Bakery’s MSA, p. 9:22-24 [citing Laughlin Decl. ¶ 51; Ex. P].) For example, Eagle Mist points to evidence that Sapphire Bakery “produced handwritten notes memorializing numerous unauthorized communications with Defense Nutrition and other third parties that contravene the NDNCA.” (Id. at p. 9:24-26 [citing Laughlin Decl. Exhs. N-Q; W].) Eagle Mist asserts that “these notes evidence that SB and DN communicated about the financial affairs of Osagai, including that Osagai was using a factoring company, which SB was a weakness to exploit.” (Id. at p. 9:26-28 [citing Laughlin Decl. ¶ 51; Ex. P].) Eagle Mist also cites to an email with the subject line of “Osagai Film Inventory & Source,” sent on June 29, 2016 between Sapphire Bakery and Defense Nutrition. (Tauler Decl., ¶ 14, Ex. L.) Eagle Mist argues that this “email demonstrates defendants’ efforts to decipher confidential label and packaging information Osagai provided to Sapphire Bakery as part of the Julian Bar production” and these “communications were prohibited by the NDNCA.” (Eagle Mist Opp. to Sapphire Bakery MSA, p. 10:1-6.)

The Court finds that a triable issue of fact exists as to Sapphire Bakery’s breach of the NDA, as it is disputed whether Eagle Mist owned certain confidential and proprietary information and whether Sapphire Bakery’s actions in disclosing and discussing this information with other parties constitutes a breach of the agreement.

The Court DENIES the motion for summary adjudication on this ground.

iii. Speculative Damages

 

Sapphire Bakery argues that when Eagle Mist “entered into the Mutual Non-Disclosure and Non-Circumvention Agreement with Sapphire, it had but one client —Defense Nutrition” and therefore “it had no established track record of success, especially with respect to working on large scale, mass production of nutritional products.” (Sapphire Bakery MSA, p. 21:8-10.) Sapphire Bakery asserts that “Eagle Mist, which was not a signatory to any agreement which is the subject of this litigation, was only formed in October 2015” and therefore “neither Osagai nor Eagle Mist can provide any evidence, with any reasonable certainty, of lost profits.” (Id. at p. 21:11-13.)

Sapphire Bakery argues that “a majority of the purchase orders for the nutritional bars have gone unpaid, from Julian Bakery to Defense Nutrition; from Defense Nutrition to Osagai; and from Osagai to Sapphire.” (Id. at p. 21:14-16.) However, Sapphire Bakery maintains, “the assumptions upon which [Eagle Mist] base this damages claim are inherently uncertain, contingent, unforeseeable, speculative and unreliable and therefore not recoverable under either California or Missouri law.” (Id. at p. 21:16-18.)

In opposition, Eagle Mist argues that Sapphire Bakery “cites no authority to support its contention” and “the record supports that [Eagle Mist] was damaged by SB’s conduct, and any questions as to the specific amount of damages sought are a question of fact for the jury.” (Eagle Mist Opp. to Sapphire Bakery’s MSA, p. 8:8-11.)

Sapphire Bakery provides evidence that “Osagai was a start up company when it was formed and did not have an established client base.” (Sapphire Bakery Separate Statement, No. 7.) For example, Sapphire Bakery cites to Hofmekler’s declaration, who states that he “was unaware at the time that the business was a start up, formed a few weeks before our business relationship commenced, and Laughlin had lauded his experience to formulating ingredients for a lengthy period of time.” (Notice of Errata, Hofmekler Decl., ¶ 5.) Sapphire Bakery also cites to the deposition of Kevin Laughlin, who states that when Osagai International LLC was first formed, it did not have an established client base” and that when it started it had one client. (Id., Exhibit 13, Deposition of Kevin Laughlin (Volume I), pgs. 36:12-14, 37:5-10.)

However, Eagle Mist contradicts this evidence by demonstrating that they worked on projects with other clients, such as YouBar and two other highly confidential vendors. (Eagle Mist Response to Sapphire Bakery Separate Statement, No. 7 [citing Laughlin Decl., ¶ 15; Ex. B, Non-Disclosure Agreement (“NDA”); Ex. C, Mutual Non-Disclosure and Non-Circumvention Agreement (“NDNCA”).) Further, Eagle Mist demonstrates that it was in business for over a year prior to working with Sapphire Bakery in August 2016, shown by the contracts between Osagai and Defense Nutrition dated July 18, 2014 and the agreement with Sapphire dated 2015. (Ibid.)

Whether Eagle Mist is considered a new business and whether its profits are too speculative or uncertain – so as to prevent Eagle Mist from recovering its lost profits – is a quintessential jury question. The Court DENIES Sapphire Bakery’s motion for summary adjudication on this ground.

Sapphire Bakery’s motion for summary adjudication as to issue 1 is DENIED.

 

3. Olsen and Sapphire Bakery’s Issues Nos. 2 and 3: Conversion and Penal Code Section 496

 

The SACC contains the following allegations:

· “Osagai purchased and owned the ingredients to formulate the aforementioned protein bars and provided them to Sapphire. Sapphire took the ingredients to make the protein bars, and then turned them over to Defense Nutrition and Julian Bakery who never compensated Osagai. Osagai had the right to immediate possession of the ingredients it had provided to Cross-Defendants and the bars that Defense Nutrition acquired without payment, and later were transferred to Julian Bakery. As detailed above, Osagai demanded the return of the stolen goods on numerous occasions to no avail.” (SACC, ¶ 71.)

· “On information and belief, at all relevant times, including following the purported termination of the business relationship between Defense Nutrition, Sapphire and Osagai, Osagai owned the ingredients it had provided to Cross-Defendants and the bars that Defense Nutrition and Julian Bakery acquired without payment.” (SACC, ¶ 79.)

· “Although Cross-Defendants had no right to possess the ingredients or steal the bars belonging to Osagai, they failed to return the ingredients and bars to Osagai and prevented Osagai from being paid for their own benefit.” (SACC, ¶¶ 72, 80.)

· “Osagai did not consent to Cross-Defendants’ continuing use and possession of Osagai’s ingredients and bars following purported termination of the parties’ business relationship.” (SACC, ¶ 80.)

· “Defense Nutrition and Sapphire conspires to convert Osagai’s ingredients and bars to sell to Julian Bakery, who ultimately knowingly accepted the converted bars. Indeed, notes produced by Olsen/Sapphire indicate that there was never an intention to return the stolen goods whatsoever, and that the goods were stolen in part because the parties did not believe Osagai could do anything about it because of his financial position; the very definition of oppressive conduct.” (SACC, ¶ 73.)

· “On information and belief, Cross-Defendants intentionally and substantially interfered with Osagai’s right of possession by continuing to keep the ingredients and bars they did not pay for following the purported termination of their business relationship, including for the improper purpose of eliminating Osagai from the equation. Specifically, Sapphire took the stolen goods and gave them to Defense Nutrition, who then gave the stolen goods to Julian Bakery, despite instructions from Osagai that the bars should not be transferred. Julian Bakery was aware it was receiving stolen goods and was part of the Cross-Defendants’ scheme.” (SACC, ¶ 81.)

 

“Conversion is generally described as the wrongful exercise of dominion over the personal property of another.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal. App. 4th 97, 119. [citing Gruber v. Pacific States Sav. & Loan Co. (1939) 13 Cal. 2d 144, 148].) “The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages. (Id. [citing Burlesci v. Petersen (1998) 68 Cal. App. 4th 1062, 1066].)

California Penal Code section 496(a) provides “[e]very person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.” California Penal Code section 496(c) explains that “[a]ny person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.”

 

Sapphire Bakery argues that “the conversion claim is barred since [Eagle Mist] never had any ownership interest in the formulas or the finished product.” (Sapphire Bakery MSA, p. 22:11-12.) Sapphire Bakery asserts that it did not take Eagle Mist’s property, but rather Eagle Mist, “per its contractual arrangement with Defense Nutrition, provided Sapphire with ingredients and Defense Nutrition's formulas necessary to manufacture nutritional bars.” (Id. at p. 23:1-3.) Sapphire Bakery maintains that it “did not refuse to give up possession of any ingredients or formulas to [Eagle Mist] on demand” and Eagle Mist “has not requested the return of any ingredients or formulas from Sapphire.” (Id. at p. 23:3-5.) Sapphire Bakery also argues that “Defense Nutrition owned all intellectual property regarding the nutritional bars, including the formulas, ingredients, suppliers and cost information.” (Id. at p. 24:6-8.)

Similarly, Olsen asserts that pursuant to the contractual agreement with Eagle Mist “Defense Nutrition owned all product formulas and/or specifications relating to Defense Nutrition's products, including Flipn'Sweet-based Products” and Eagle Mist, “per its contractual arrangement with Defense Nutrition, provided Sapphire with ingredients and formulas necessary to manufacture nutritional bars.” (Olsen MSA, p. 15:20-23. [Note: throughout the MSAs, Olsen and Sapphire often do not cite to any evidence, making assertions without any evidentiary support. Olsen’s counsel has done this in past motions. See e.g., Sapphire’s MSA to Julian Bakery, heard by this Court on May 19, 2019.] Olsen argues that Eagle Mist “consented and authorized Sapphire to use the ingredients to manufacture the nutritional bars.” (Id. at p. 15:23-24.) Olsen asserts that Eagle Mist “has not requested the return of any formulas, client information, vendor information, or ingredients from Sapphire or Mr. Olsen.” (Id. at p. 16:1-2 [fn. omitted].)

Olsen and Sapphire Bakery argue that “pursuant to the terms of Osagai's Manufacturing and Supply Agreement with Defense Nutrition, the food products to be produced were to be delivered FOB at the facility” and “Sapphire was obligated to manufacture nutrition bars and deliver such to its shipping dock, at which point title transferred to Defense Nutrition.” (Id. at p. 16:12-15; see also Sapphire Bakery MSA, p. 23:10-13, p. 25:5-8.) Therefore, Olsen maintains, Eagle Mist “cannot claim that it had any ownership or right of possession to the nutritional bars.” (Olsen MSA, p. 16:15-16.) Olsen and Sapphire Bakery argue that Eagle Mist’s “theft claim fails for the same reasons its conversion claim fails.” (Id. at p. 17:19; see also Sapphire Bakery MSA, p. 25:19.) Olsen and Sapphire Bakery assert that “Sapphire and Mr. Olsen did not withhold any property from [Eagle Mist], which neither held title to the completed bars delivered FOB Facility nor requested return of any ingredients.” (Olsen MSA, p. 17:25-27; see Sapphire Bakery MSA, p. 25:19-25.)

Olsen and Sapphire do not cite to any evidence in their motions for summary adjudication. However, in their separate statements and supporting exhibits, they provide evidence that Hofmekler states that “Defense Nutrition formerly produced, marketed, and sold . . . protein bars in various flavors made in accordance to its trade secret and patent pending formulas.” (Olsen Notice of Errata, Ex. B, Hofmekler Decl., ¶ 3.) They also provide evidence from Olsen’s deposition, where Olsen stated he understood Ori Hofmekler to be the owner of the formulas. (Id., Ex. 20, Bruce Olsen Depo. (Vol. 1), p. 51:9-19.)

In opposition, Eagle Mist argues that “regardless of who owns the formulas of the bars, [Eagle Mist] owned the ingredients and packaging of the bars and had rightful possession and ownership interest to the bars at the time the bars were stolen.” (Eagle Mist Opp. to Olsen’s MSA, p. 9:3-4 [citing Laughlin Decl. ¶ 71]; see Eagle Mist Opp. to Sapphire Bakery’s MSA, p. 10:22-24.) Eagle Mist presents evidence that it “is the only party that placed purchase orders with SB” and that it “is the only party that SB invoiced for the purchase orders.” (Id. at p. 9:4-6 [citing Laughlin Decl., ¶¶ 72-73]; see Eagle Mist Opp. to Sapphire Bakery’s MSA, p. 12:19-20 [citing Laughlin Decl., ¶¶ 45-46, Ex. M].) Eagle Mist argues that based on these facts alone, it “was undoubtedly the rightful owner and possessor of the bars.” (Eagle Mist Opp. to Olsen’s MSA, p. 9:6-7 [citing Laughlin Decl. ¶ 74].)

Eagle Mist presents evidence regarding the egg bars and how it “ordered all the ingredients and packing for the egg bars after issuing purchase orders to SB,” paid for the ingredients and packaging on credit or by financing, and produced and shipped these bars “via authorization from Osagai and invoiced to DN.” (Id. at p. 9:7-10 [citing Laughlin Decl., ¶¶ 19, 17, 25].) Eagle Mist also demonstrates that it ordered all the ingredients and packaging for the whey bars through credit and once they were produced, it instructed Sapphire Bakery not to ship most of the bars, which was ignored. (Id. at p. 9:10-13 [citing Laughlin Decl., ¶¶ 30, 45-46; Ex. M; Tauler Decl., ¶ 15; Ex. M].)

There is a triable issue of material fact as to which entity or individual had ownership interests in each of the various bars and in the components of each bar. It is disputed whether Ori Hofmekler is the formulator and owner of the formulas produced by Defense Nutrition, or whether Eagle Mist is the formulator of the nutrition bars, including the flavoring and the owner of the ingredients and packaging.

The Court DENIES Olson and Sapphire Bakery’s motion for summary adjudication as to issues two and three.

4. Olsen and Sapphire Bakery’s Issues No. 4: Intentional Misrepresentation

 

The SACC alleges the following:

· “In mid-April 2016, Sapphire's new CEO, Bruce Olsen, expressed an interest in meeting with Ori Hofmekler of Defense Nutrition. Mr. Laughlin, of Osagai, reminded Mr. Olsen that Sapphire was beholden to the terms of the Sapphire NDA with Osagai, and that the only thing Sapphire could discuss with Defense Nutrition was Sapphire’s production capabilities.” (SACC, ¶ 93.)

· “On or about April 18, 2016, Mr. Olsen and Mr. Hofmekler met in Southern California and thereafter hatched a plan to remove Osagai from the Julian Bakery contract. As part of the plan, (1) Olsen misrepresented his intentions in meeting with Hofmekler (2) had secret communications with Hofmekler and Julian Bakery and, when discovered, misrepresented the true nature of the communications; (3) created multiple pre-textual excuses to blame Osagai for the so-called “bad bars,” including the non-sensical excuse that the bad bars were the result of Osagai’s use of processing aid which was by definition could be removed solely by the manufacturer Sapphire. These representations were all knowingly false when made and intended only to advance the parties conspiracy.” (SACC, ¶ 94.)

The elements of a cause of action for intentional misrepresentation include “(1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (3) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype, Inc. (2013) 220 Cal. App. 4th 217, 230-231 [citing Lazar v. Superior Court (1996) 12 Cal.4th 631, 638].)

Olsen and Sapphire Bakery argue that “there is no evidence of any misrepresentations by Sapphire or Mr. Olsen” and “no evidence that [Eagle Mist] actually relied upon any alleged misrepresentation, or that such was justified.” (Olsen MSA, p. 20:9-10; Sapphire Bakery MSA, p. 26:27-28.) Olsen maintains that “there is no evidence that [Eagle Mist] sustained any damages as a result of any alleged misrepresentation.” (Olsen MSA, p. 20:11-12.)

Olsen and Sapphire Bakery argue that Eagle Mist “cannot claim ignorance of Sapphire's communications with Defense Nutrition” because “Defense Nutrition demanded that Sapphire enter an NDA, which [Eagle Mist] facilitated.” (Id. at p. 19:2-4; Sapphire Bakery MSA, pp. 26:28-27:2.) Olsen and Sapphire Bakery maintain that “Defense Nutrition (Mr. Hofmekler) demanded direct access to Sapphire.” (Olsen MSA, p. 19:4; Sapphire Bakery MSA, p. 27:2.) Olsen and Sapphire Bakery assert that Olsen “met with Mr. Hofmekler in April 2016 at Mr. Laughlin's behest” because “Mr. Hofmekler requested the meeting to discuss pending nutritional bar project as well as to potential future projects.” (Olsen MSA, p. 19:5-7; Sapphire Bakery MSA, p. 27:3-5.) Olsen and Sapphire Bakery assert that “Laughlin sent an email reminding him to address multiple topics, including potential other projects:

“With your visit to Defense Nutrition today, let Ori know about your capabilities including dry blending, cookies, bulk packaging (e.g. 50# plastic bag inside cardboard box), pouching plus that for projects like true chocolate enrobing, if the #'s make sense, Sapphire will rent equipment for piloting. He may mention a bread project. We know that you don't have a proofing room; however, we don't believe that this project needs one. I'll follow-up with him to get his thoughts on priorities. Then, Osagai will work on ‘how’ to move forward with their ‘whats.’ I look forward to continuing our conversation. Call me if you have any questions.” (Olsen MSA, p. 19:7-16; Sapphire Bakery MSA, p. 27:5-14 [typos in original].)

Olsen and Sapphire Bakery’s motions do not cite where this email comes from, but the email is reflected in Olsen’s Separate Statement Number 387 and Sapphire Bakery’s Separate Statement Number 69, which cites to Exhibit 6, Email from Kevin Laughlin to Bruce Olsen, dated April 18, 2016.

Olsen and Sapphire Bakery argue that “it is also undisputed that Julian Bakery received ongoing complaints regarding the bars, and Mr. Hofmekler initiated discussions with [Eagle Mist] and Sapphire personnel regarding the manufacturing processes, ingredients and processing aids utilized.” (Olsen MSA, p. 19:16-19; Sapphire Bakery MSA, p. 27:14-17.) Olsen and Sapphire Bakery assert that “the processing aids, which were provided by and utilized at the direction of [Eagle Mist], were discussed as a possible cause of the poor tasting bars” and that “Defense Nutrition instructed that no processing aids were to be used.” (Olsen MSA p. 19:19-22; Sapphire Bakery MSA, p. 27:17-20.)

In opposition, Eagle Mist argues that it “would not have continued to purchase ingredients and packaging for the bars and contribute labor to the manufacture process had it known that Olsen and Hofmekler were conspiring to (and did in fact) cut it out of the current business deal and all of the future business deals.” (Eagle Mist Opp. to Olsen’s MSA, p. 17:1-4 [citing Laughlin Decl. ¶ 67].) Eagle Mist argues that it “justifiably relied on Olsen to comply with the NDNCA when it paid for the ingredients and packaging for the bars,” but “Olsen violated the NDNCA and circumvented its agreement with Osagai by cutting it out of the business deal and working directly with DN.” (Id. at p. 17:4-6 [citing Laughlin Decl., ¶ 67].) Eagle Mist argues that “as a result of being cut out, [Eagle Mist] was not paid for Invoice Nos. 131476A P7-P15 for egg bars totaling $468,167.04 nor invoices for the shipped bars in July 2016 totaling $444,462.00.” (Id. at p. 17:6-8 [citing Laughlin Decl., ¶ 67].)

Eagle Mist asserts that the following statements were knowingly false when they were made and were intended only to advance the parties’ conspiracy:

· On or about April 18, 2016, Olsen and Hofmekler met in California and hatched their plan to remove Osagai from the JB contract. (Tauler Decl., ¶ 13.)

· As part of the plan, (1) Olsen misrepresented his intentions in meeting with Hofmekler; (2) had secret communications with Hofmekler and JB and, when discovered, misrepresented the true nature of the communications; (3) created multiple pre-textual excuses to blame Osagai for the so-called “bad bars,” including the non-sensical excuse that the bad bars were the result of Osagai’s use of processing aid even though processing aid is solely removed by the manufacturer. (Tauler Decl., ¶ 13.) (See id. at p. 11:15-22.)

Eagle Mist argues that “there is ample evidence that Olsen concealed the documented conspiracy with DN to cast Osagai and its CEO Laughlin as ‘the enemy’ because they were deemed a ‘choke point.’” (Id. at p. 11:23-25 [citing Tauler Decl., ¶ 10, Ex. I, Bruce Olsen’s Deposition Transcript at 107:13-15].)

Eagle Mist cites to the testimony of Olsen, which provides:

· “If I have a choke point, my job is to solve the choke point. The choke point was Kevin apparently didn't have enough money.” (Tauler Decl., ¶ 10, Ex. I, Bruce Olsen’s Deposition Transcript at 107:13-15.)

· Q. At what point did you realize that Kevin was a chokepoint? A. When he had difficulty getting ingredients. Q. And when was this? A. Sometime during the production, possibly the production of the second PO or the Paleo PO. (Tauler Decl., ¶ 11, Ex. J, Bruce Olsen’s Deposition at 108:19-25.)

Eagle Mist asserts that on April 18, 2019, Olsen and Hofmekler met in person and discussed future R&D and business deals that did not include Eagle Mist. (Eagle Mist Opp. to Olsen’s MSA, p. 12:13-15 [citing Laughlin Decl., ¶ 21].) The day after the meeting, Eagle Mist cites to evidence that “Laughlin wrote to Olsen, ‘I’m unclear why Sapphire is potentially doing R&D directly with our clients’ (Laughlin Decl. ¶ 21; Ex. D)” and “on April 19, 2016 Olsen wrote to Hofmekler, ‘Thanks for a good meeting yesterday – it was a delight, and I am very enthused with all of the possibilities that could exist for us’ (Laughlin Decl. ¶ 22; Ex. E).” (Id. at p. 12:15-19.) Eagle Mist shows that “Olsen goes on to write about the R&D discussions they had, ‘We know there are Paleo cookie possibilities (chocolate chip), waffles, dry blending, enrobing and granola possibilities.’” (Id. at p. 12:19-21 [citing Laughlin Decl., ¶ 22; Ex. E].) Eagle Mist argues that “after the in person meeting between Olsen and Hofmekler, the parties conspired to cut out [Eagle Mist] from all business dealings because they realized that they could just directly work with each other without need for the middle man [Eagle Mist] (despite it being a violation of the parties NDA’s), and further enrich themselves at the expense of [Eagle Mist].” (Id. at p. 12:23-26.)

Eagle Mist cites to evidence showing that Olsen and Hofmekler continued to engage in communications without Eagle Mist, as evidenced by the May 9, 2016 conference call between Squier, Olsen, and Hofmekler about the bar production and intentionally did not invite anyone from Eagle Mist, despite its role as the manager of production. (Id. at pp. 12:26-13:6 [citing Laughlin Decl., ¶¶ 27, 38, Ex. I].) Eagle Mist demonstrates that “on the conference call, JB told Olsen to use more processing aid to speed up the production of the bars because JB needed the bars expedited” and “Hofmekler did not dispute this instruction during the call, and even agreed with the instruction stating that people see flour on baked goods.” (Id. at p. 13:3-6 [citing Laughlin Decl., ¶¶ 27, 38, Ex. I].)

Eagle Mist argues that “Olsen and Hofmekler feared legal repercussions from [Eagle Mist] for their violations of agreements in place with [Eagle Mist]” which “is evidenced by a July 14, 2016 handwritten note in which Olsen wrote, ‘Kevin to know nothing,’ ‘K.L. the enemy,’ ‘Forbidden to come to plant’ and ‘He can know anything.’” (Id. at p. 15:17-20 [citing Laughlin Decl, ¶ 52; Ex. Q].)

Considering the evidence submitted to the Court by both Eagle Mist, Bruce Olsen, and Sapphire Bakery, there is a triable issue of material fact as to whether misrepresentations were made by Olsen and Sapphire upon which Eagle Mist relied. There are material issues of disputed fact whether Olsen, Sapphire Bakery, Hofmekler, and Defense Nutrition actively chose to not include Eagle Mist in business deals and whether Eagle Mist reasonably relied on these parties to comply with the NDA. The Court DENIES the summary adjudication as to Olsen and Sapphire Bakery’s issues number 4.

 

5. Olsen and Sapphire Bakery’s Issues No. 5: Concealment

The SACC contains the following allegations:

· “After the meeting between Olsen and Hofmekler, the Cross-Defendants began communicating extensively without informing Osagai and attempted to conceal these communications from Osagai.” (SACC, ¶ 97.)

· “On or about May 9, 2016, a few days after the Egg P.O. production had commenced, a conference call was initiated between Defense Nutrition, Sapphire and Julian Bakery to discuss “Sapphire Production of JB Bars”, without inviting Osagai and despite the fact that Sapphire was actually producing the bars for Osagai. On the call was Squier of Julian Bakery, Scaff of Sapphire, and Hofmekler of Defense Nutrition, among others.” (SACC, ¶ 98.)

· “In late May 2016, an Osagai representative went to Sapphire to tour the facility at which time Sapphire informed Osagai that plant changes were being made at Defense Nutrition's request, without Osagai's input or knowledge, and with Sapphire's full cooperation. The changes included, but were not limited to, moving production lines around, HVAC construction, electrical construction, adding plastic "linguini" walls, implementing a new ingredient inbound quality control system, construction updates in the wash area, and changing the overall factory flow of ingredients vs. finished products.” (SACC, ¶ 99.)

· “On or about July 15, 2016, Osagai was made aware of another pending bar shipment from Sapphire and, once again made it explicitly clear to Sapphire, through multiple emails to numerous Sapphire agents and employees, including e-mails from Osagai's counsel and financing company, that no additional bars should be sent to anyone without Osagai' s authorization, which was expressly being withheld. Despite Osagai's repeated and additional directives to the contrary, Sapphire sent additional shipments, totaling approximately 66,000 bars, to Julian Bakery and Defense Nutrition.” (SACC, ¶ 100.)

· “Cross-Defendants engaged in communications which they concealed from Osagai regarding the transfer of the bars which Osagai had expressly forbidden.” (SACC, ¶ 101.)

· “Mr. Olsen kept hand-written notes of his discussions with Mr. Hofmekler regarding what is referred to in the notes as the “Conspiracy between DN + Sapphire.” (SACC, ¶ 102.)

· “Mr. Olsen’s notes reflect that Julian Bakery and its CEO Heath Squier was involved in the plan to cut out Osagai of the business relationship and to convert Osagai’s property. (SACC, ¶ 103.)

· “Mr. Olsen’s notes reflect that Sapphire regarded Kevin Laugh of Osagai as “the enemy” and evidence a concerted effort to keep Mr. Laughin in the dark about efforts by Sapphire, Defense Nutrition and Julian Bakery to cut Osagai out.” (SACC, ¶ 104.)

The elements of a cause of action for concealment include: “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Moncada v. W. Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 775 [quoting Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612–613].)

“A duty to speak may arise in four ways: it may be directly imposed by statute or other prescriptive law; it may be voluntarily assumed by contractual undertaking; it may arise as an incident of a relationship between the defendant and the plaintiff; and it may arise as a result of other conduct by the defendant that makes it wrongful for him to remain silent.” (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 864 [quoting Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868].) “[A] duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.’ ” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187 [citing LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337].)

“Although, typically, a duty to disclose arises when a defendant owes a fiduciary duty to a plaintiff (see, e.g., Goodman v. Kennedy (1976) 18 Cal.3d 335, 346–347), a duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff.” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199 [referencing Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 482, 55 Cal.Rptr.2d 225 (“ ‘[t]he duty to disclose may arise without any confidential relationship where the defendant alone has knowledge of material facts which are not accessible to the plaintiff’ ”)].)

Olsen and Sapphire Bakery argue that they “did not owe any duty to [Eagle Mist]” and “beyond that, it is unclear what, precisely, was concealed or how [Eagle Mist] justifiably relied upon such.” (Olsen MSA, p. 21:5-6; Sapphire Bakery MSA, p. 29:3-4.) Olsen and Sapphire Bakery point to Mr. Laughlin’s testimony, to show that “Mr. Laughlin testified that he participated in or monitored a conference call with Mr. Hofinekler, Mr. Squier (Julian Bakery) and Mr. Scaff (Sapphire) on May 9, 2016.” (Olsen MSA, p. 21:6-9 [citing Laughlin depo, pg. 164 —July 17; Laughlin depot pg. 92 —July 18]; Sapphire Bakery MSA, p. 29:4-6.) Therefore, Olsen and Sapphire Bakery maintain that “whether or not [Eagle Mist] was ‘invited’ to participate in the call, Mr. Laughlin was on the call.” (Olsen MSA, p. 21:9-10; Sapphire Bakery MSA, p. 29:6-7.)

Olsen and Sapphire assert that any modifications Sapphire made to the plant “could not have been concealed inasmuch as they were plainly apparent” and because “Mr. Laughlin testified that Mr. Scaff advised him of such, for which [Eagle Mist] did not have to pay.” (Olsen MSA, p. 21:11-14 [citing Laughlin depo, pg. 166 —174 —July 18]; Sapphire Bakery MSA, p. 29:8-11.) Olsen and Sapphire Bakery also argue that they “certainly never concealed the shipment of the nutritional bars” and pursuant to “the Manufacturing and Supply Agreement, [Eagle Mist] was aware that the finished product was delivered FOB facility.” (Olsen MSA, p. 21:15-17; Sapphire Bakery MSA, p. 29:12-14.)

In opposition, Eagle Mist asserts that as “discussed in the previous section, Olsen intentionally concealed material facts from Osagai with the intent to defraud Osagai, including Olsen’s characterization of Eagle Mist (SB’s customer) as ‘the enemy’ who is weak’ and a ‘choke point,’ while at the same time creating pretextual excuses for eliminating Eagle Mist from the Julian Bar production, including casting blame to Eagle Mist for using too much ‘processing aid’ and ‘tapioca powder’ as well as producing bad ingredients.” (Eagle Mist Opp. to Olsen MSA, p. 18:4-8.) Eagle Mist argues that “it is self-evident that Olsen and Hofmekler had no intent to disclose their plan to [Eagle Mist] or their ongoing clandestine communications about future business deals,” but “the parties were under contract with Eagle Mist to not only disclose these communications, as they had a direct impact on the parties’ joint enterprise, but a contractual obligation to refrain from having them in the first place.” (Id. at p. 18:8-12.) Eagle Mist maintains that “a duty to disclose exists here based on the facts” and that it “would not have continued to purchase ingredients and packaging for the bars and work on the manufacture process had Olsen not concealed his true intentions.” (Id. at p. 18:12-14.)

The Court has already found that there is a triable issue of material fact as to whether misrepresentations were made by Olsen and Sapphire Bakery that Eagle Mist relied upon. After a review of the evidence presented above, the Court also finds that a triable issue of material fact exists as to whether a duty to disclose arose between the parties because it is disputed whether Olsen and Sapphire may have possessed material facts not readily available to Eagle Mist. Further, there is a triable issue of material fact whether in violation of this duty, certain communications were concealed from Eagle Mist.

Accordingly, the Court DENIES Olsen and Sapphire Bakery’s motions for summary adjudication as to the fifth issue.