This case was last updated from Los Angeles County Superior Courts on 06/15/2019 at 11:55:00 (UTC).

CMB EXPORT LLC ET AL VS AMERICAN DEVELOPMENT CENTER LLC ET A

Case Summary

On 04/04/2017 CMB EXPORT LLC filed a Contract - Other Contract lawsuit against AMERICAN DEVELOPMENT CENTER LLC ET A. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is RANDOLPH M. HAMMOCK. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****6328

  • Filing Date:

    04/04/2017

  • 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

Judge Details

Presiding Judge

RANDOLPH M. HAMMOCK

 

Party Details

Plaintiffs and Petitioners

CMB EXPORT INFRASTRUCTURE INVESTMENT

CMB EXPORT LLC

Defendants and Respondents

AMERICAN DEVELOPMENT CENTER LLC

SILVERPEAK REAL ESTATE PARTNERS L.P.

LITCHTER STUART

PCCP IRG DOWNEY LLC

INDUSTRIAL REALTY GROUP LLC

IRG DOWNEY LLC

DOES 1 TO 20

COOK JEFF

ADC DOWNEY LP

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

GODSIL JOHN P. ESQ

GODSIL JOHN P.

Defendant and Respondent Attorneys

FOLEY THOMAS G. JR. ESQ.

FOGELMAN JAMES P.

RYAN K. IWAHASHI ESQ.

IWAHASHI RYAN KIYOTO

FOLEY THOMAS G. JR.

FOGELMAN JAMES PRESCOTT

 

Court Documents

Proof of Service

2/13/2018: Proof of Service

RULING

3/9/2018: RULING

REQUEST FOR REFUND

5/11/2018: REQUEST FOR REFUND

PLAINTIFFS' MEMORANDUM OF POINTS IN AUTHORITIES IN OPPOSITION TO DEMURRER OF AMERICAN DEVELOPMENT CENTER, LLC, ADC DOWNEY, LP, INDUSTRIAL REALTY GROUP, LLC, IRG DOWNEY LLC AND STUART LICHTER TO THIRD

5/31/2018: PLAINTIFFS' MEMORANDUM OF POINTS IN AUTHORITIES IN OPPOSITION TO DEMURRER OF AMERICAN DEVELOPMENT CENTER, LLC, ADC DOWNEY, LP, INDUSTRIAL REALTY GROUP, LLC, IRG DOWNEY LLC AND STUART LICHTER TO THIRD

Stipulation and Order

10/24/2018: Stipulation and Order

Proof of Service (not Summons and Complaint)

3/21/2019: Proof of Service (not Summons and Complaint)

Order

5/10/2019: Order

ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

12/8/2017: ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

Proof of Service

12/11/2017: Proof of Service

SUMMONS

4/4/2017: SUMMONS

PROOF OF SERVICE SUMMONS

4/26/2017: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

4/26/2017: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

4/26/2017: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

4/26/2017: PROOF OF SERVICE SUMMONS

JOINT STIPULATION AND ORDER EXTENDING TIME FOR DEFENDANTS PCCP IRG DOWNEY, LLC; ETC.

5/23/2017: JOINT STIPULATION AND ORDER EXTENDING TIME FOR DEFENDANTS PCCP IRG DOWNEY, LLC; ETC.

DEFENDANTS PCCP IRG DOWNEY, LLC; SILVERPEAK REAL ESTATE PARTNERS, L.P.; AND JEFF COOK'S REQUEST FOR JUDICIAL NOTICE

5/30/2017: DEFENDANTS PCCP IRG DOWNEY, LLC; SILVERPEAK REAL ESTATE PARTNERS, L.P.; AND JEFF COOK'S REQUEST FOR JUDICIAL NOTICE

PCCF IRG DOWNEY, LLC; SILVERPEAK REAL ESTATE PARTNERS, L.P.; AND JEFF COOK'S NOTICE OF MOTION AND MOTION TO FILE DOCUMENTS UNDER SEAL; ETC.

5/30/2017: PCCF IRG DOWNEY, LLC; SILVERPEAK REAL ESTATE PARTNERS, L.P.; AND JEFF COOK'S NOTICE OF MOTION AND MOTION TO FILE DOCUMENTS UNDER SEAL; ETC.

Proof of Service

7/27/2017: Proof of Service

126 More Documents Available

 

Docket Entries

  • 06/14/2019
  • at 08:30 AM in Department 47, Randolph M. Hammock, Presiding; Hearing on Motion to Compel Further Discovery Responses - Not Held - Taken Off Calendar by Party

    Read MoreRead Less
  • 05/24/2019
  • at 08:30 AM in Department 47, Randolph M. Hammock, Presiding; Hearing on Motion for Judgment on the Pleadings - Not Held - Taken Off Calendar by Party

    Read MoreRead Less
  • 05/10/2019
  • Order (Advancing The Hearing Date Of Plaintiffs? Motion For Leave To File Fourth Amended Complaint); Filed by CMB Export, LLC (Plaintiff)

    Read MoreRead Less
  • 05/08/2019
  • Stipulation and Order ( Advancing The Hearing Date Of Plaintiffs? Motion For Leave To File Fourth Amended Complaint); Filed by CMB Export, LLC (Plaintiff)

    Read MoreRead Less
  • 04/10/2019
  • Stipulation and Order (Stipulation and Proposed Protective Order Pertaining to Highly Confidential Documents); Filed by American Development Center, LLC (Defendant); ADC Downey, LP (Defendant); Industrial Realty Group, LLC (Defendant) et al.

    Read MoreRead Less
  • 03/21/2019
  • Memorandum of Points & Authorities; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 03/21/2019
  • Proof of Service (not Summons and Complaint); Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 03/21/2019
  • Declaration (of John P. Godsil in Support of Motion); Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 03/21/2019
  • Declaration (of Kraig Schwigen in Support of Motion); Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 03/21/2019
  • Notice of Motion (and Motion of CMB Export, LLC and CMB Export Infrastructure Investment Group XV, LP for Leave to File Fourth Amended Complaint); Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
271 More Docket Entries
  • 04/26/2017
  • PROOF OF SERVICE SUMMONS

    Read MoreRead Less
  • 04/26/2017
  • Proof-Service/Summons; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 04/26/2017
  • Proof-Service/Summons; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 04/26/2017
  • Proof-Service/Summons; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 04/26/2017
  • Proof-Service/Summons; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 04/12/2017
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 04/12/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 04/04/2017
  • Complaint; Filed by CMB Export, LLC (Plaintiff); CMB Export Infrastructure Investment (Plaintiff)

    Read MoreRead Less
  • 04/04/2017
  • SUMMONS

    Read MoreRead Less
  • 04/04/2017
  • COMPLAINT FOR: (1) BREACH OF CONTRACT; ETC

    Read MoreRead Less

Tentative Rulings

Case Number: BC656328    Hearing Date: January 27, 2020    Dept: 47

CMB Export, LLC, et al. v. American Development Center, LLC, et al.

 

DEMURRER TO FOURTH AMENDED COMPLAINT OR, IN THE ALTERNATIVE, MOTION FOR JUDGMENT ON THE PLEADINGS

MOVING PARTY: Defendants American Development Center, LLC, ADC Downey, LP, Industrial Realty Group, LLC, IRG Downey, LLC and Stuart Lichter

RESPONDING PARTY(S): Plaintiffs CMB Export, LLC, CMB Export Infrastructure Investment XV, LP, and CMB Summit, LLC

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiffs allege that Defendants have taken credit for Plaintiffs’ industry accomplishments, concepts and creations and have used Plaintiffs’ trade secrets in Defendants’ own business dealings.

Defendants demur to the fourth amended complaint or, in the alternative, seek judgment on the pleadings.

TENTATIVE RULING:

Defendants American Development Center, LLC, ADC Downey, LP, Industrial Realty Group, LLC, IRG Downey, LLC, and Stuart Lichter’s demurrer to the fourth amended complaint is OVERRULED. Defendants are to answer the 4AC within 30 days of the date of this order.

Defendants’ alternative motion for judgment on the pleadings is DENIED without prejudice.

DISCUSSION

Demurrer to Fourth Amended Complaint

Unsigned Notice of Demurrer, Demurrer, Memorandum, Declaration, and Request for Judicial Notice

Defendants’ notice of demurrer, demurrer, and memorandum of points and authorities are all unsigned. So is the Declaration of Attorney Kevin D. Gamarnik. So is the Request for Judicial Notice. Even the proof of service is unsigned for three of these four documents.

Every pleading, petition, written notice of motion, or other similar paper shall be signed by at least one attorney of record in the attorney's individual name, or, if the party is not represented by an attorney, shall be signed by the party. Each paper shall state the signer’s address and telephone number, if any. Except when otherwise provided by law, pleadings need not be verified or accompanied by affidavit. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney or party.

(CCP § 128.7(a) (bold emphasis added).)

Defendants’ notice of demurrer, demurrer, memorandum, declaration, and request for judicial notice will be stricken (and therefore removed from the calendar) unless the omission of the signature on all of these documents is corrected at or before the hearing.

Meet and Confer

Assuming that the lack of signature is corrected at or before the hearing, the Declaration of Kevin D. Gamarnik reflects that the meet and confer requirement set forth in CCP § 430.41 was satisfied.

Requests For Judicial Notice

Defendants request that the Court take judicial notice of excerpts of the transcript of the June 13, 2018 hearing on the IRG Defendants’ demurrer to the third amended complaint. Assuming that Defendants correct the lack of signature on their request, the request is GRANTED per Evidence Code § 452(d) (court records). (Hart v. Darwish (2017) 12 Cal.App.5th 218, 224 [concluding that the trial court did not abuse its discretion in taking judicial notice of a court’s decision contained in its minute orders “and in its statements from the bench as reflected in the reporter’s transcript,” as “[r]ecords” of a “court of this state” under Evidence Code § 452(d)].)

In opposition, Plaintiffs request that the Court take judicial notice of the following: (1) Limited Liability Company Articles of Organization for CMB Export LLC filed in office of the California Secretary of State on January 13, 1997; (2) Certificate of Merger for CMB Export LLC filed in the office of the California Secretary of State on June 2, 2016; (3) the Third Amended Complaint filed in this action; (4) Defendants’ Demurrer to the Third Amended Complaint, filed in this action; and (5) the Court’s Order on the Demurrer to the Third Amended Complaint.

Requests 1 and 2 are GRANTED. The Court may take judicial notice of a business entity’s corporate status as reflected in the Secretary of State’s records. (Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1286; Pedus Bldg. Servs. v. Allen (2002) 96 Cal.App.4th 152, 156 n.2.) Requests 3, 4, and 5 are GRANTED per Evidence Code § 452(d) (court records).

Analysis

1. Fifth Cause of Action (Unfair Competition).

Defendants demur to the fifth cause of action for unfair competition under Business & Professions Code § 17200 against ADC and IRG on the grounds that (1) the Court has no subject-matter jurisdiction; (2) Plaintiffs do not have legal capacity to sue; and (3) it fails to state facts sufficient to constitute a cause of action. (CCP § 430.10(a), (b), (e).)

A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint, or answer.

(CCP § 430.41(b).)

Here, a demurrer was sustained as to this cause of action (then the third cause of action) in the second amended complaint, and it was then amended after the demurrer in the third amended complaint. (Ruling on Demurrers to Second Amended Complaint, 3/9/2018, at p. 7.) Other than renumbering of the allegations, the cause of action is now identical to that alleged in the third amended complaint. It is therefore improper for Defendants to demur on grounds that could have been raised previously.

In addition, to the extent that Defendants argue that this cause of action fails because it involves acts outside of California, they are essentially attempting to make a procedurally improper motion for reconsideration. As candidly acknowledged in Defendants’ brief, this argument was already briefed and argued previously. (Demurrer, at p. 4.) It was also rejected previously. (Ruling on Demurrer to 3AC; Plaintiffs’ RJN, Exh. E.) The Court previously noted that nothing precludes Defendants from demonstrating at a later stage that much—perhaps all—of their conduct occurred outside California, such that B & P Code § 17200 would not apply. By “later stage,” however, the Court was not referring to a later demurrer.

If the Court were to consider Defendants’ argument that could have been raised earlier – that this cause of action is preempted by the California Uniform Trade Secrets Act (“CUTSA”) – that argument would also fail.

In general, “statutes do not supplant the common law unless it appears that the Legislature intended to cover the entire subject or, in other words, to ‘occupy the field.’” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 953.) CUTSA is one of those exceptions to the general rule: it “occupies the field” in California, “[a]t least as to common law trade secret misappropriation claims.” (Id. at 954 (bold emphasis added).)

As to statutory causes of action, CUTSA provides that it “does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets.” (Civil Code § 3426.7(a).) Nor does it supersede “(1) contractual remedies, whether or not based upon misappropriation of a trade secret,” or “(2) other civil remedies that are not based upon misappropriation of a trade secret.” (Civil Code § 3426.7(b)(1), (2).) It does, however, “implicitly preempt[] alternative civil remedies based on trade secret misappropriation.” (K.C. Multimedia, supra, 171 Cal.App.4th at 954 (citation omitted).) This means that it preempts “common law claims that are ‘based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.’” (Id. at 958 (citation omitted).) In K.C. Multimedia, “the complaint as a whole rest[ed] on factual allegations of trade secret misappropriation.” (Id. at 959.) Thus, causes of action for “breach of confidence, interference with contract, and unfair competition” were preempted. (Ibid.)

Unlike K.C. Multimedia, however, here Plaintiffs’ allegations are not solely based on trade secret misappropriation. For example, Plaintiffs allege that that Defendants unfairly competed with them by “repeatedly palming off CMB’s accomplishments in the EB-5 industry as their own to potential foreign investors located in China and Vietnam, among other countries.” (¶ 121.)

As in the 3AC, Plaintiffs allege in the 4AC that Defendants have used Plaintiff CMB’s accomplishments and falsely and fraudulently claimed such accomplishments as their own in promotional materials distributed to potential investors. (¶ 125.)

When a plaintiff who claims to have suffered injury from a direct competitor's "unfair" act or practice invokes section 17200, the word "unfair" in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.

(Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 186 (bold emphasis added).)

Plaintiffs also allege that they have lost customers/clients and revenue as a result of Defendants’ actions, as they did in the 3AC. (¶ 126.)

“The purpose of the UCL ‘is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. [Citation.]’ [Citations.]” (Drum v. San Fernando Valley Bar Assn. (2010) 182 Cal.App.4th 247, 252 [106 Cal. Rptr. 3d 46].) “The UCL sets out three different kinds of business acts or practices that may constitute unfair competition: the unlawful, the unfair, and the fraudulent. [Citations.]” (Rose v. Bank of America, N.A. (2013) 57 Cal.4th 390, 394 [159 Cal. Rptr. 3d 693, 304 P.3d 181].) “‘“… California courts have consistently interpreted the language of section 17200 broadly.”’ [Citation.]” (Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1007 [144 Cal. Rptr. 3d 4].) Nevertheless, in addition to proving the elements of his or her claim,  a private party must establish standing to bring a UCL action. (Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1097–1098 [61 Cal. Rptr. 3d 716] (Daro).)

. . .

A “private person has standing to sue under the UCL only if that person has suffered injury and lost money or property ‘as a result of such unfair competition.’ [Citation.]” (Daro, supra, 151 Cal.App.4th at p. 1098, italics omitted.) To satisfy the UCL standing requirement, the plaintiff must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322 [120 Cal. Rptr. 3d 741, 246 P.3d 877], italics omitted (Kwikset).)

(Two Jinn, Inc. v. Government Payment Service, Inc. (2015) 233 Cal.App.4th 1321, 1331 (bold emphasis and underlining added).)

As it did in ruling on the demurrers to the 3AC, in light of the policy of liberal construction[1] in ruling on a demurrer, the Court finds that Plaintiffs have sufficiently alleged loss of money from investors. If it reached the preemption issue, the Court would also find that these allegations are not preempted by CUTSA, because Plaintiffs’ allegations are not solely based on the same nucleus of fact as their trade secret misappropriation claims. “No matter how unlikely or improbable, plaintiff's allegations must be accepted as true for the purpose of ruling on the demurrer. (Citation omitted.) Furthermore, plaintiff's possible inability or difficulty in proving the allegations of the complaint is of no concern.” (Kerivan v. Title Ins. & Trust Co. (1983) 147 Cal.App.3d 225, 229.)

Accordingly, the demurrer to the fifth cause of action for unfair competition is OVERRULED.

2. Sixth Cause of Action (Unfair Competition)

Defendants demur to the sixth cause of action for unfair competition on the same grounds as it demurred to the fifth cause of action: that (1) the Court has no subject-matter jurisdiction; (2) Plaintiffs do not have legal capacity to sue; and (3) it fails to state facts sufficient to constitute a cause of action. (CCP § 430.10(a), (b), (e).)

As with the fifth cause of action, Plaintiffs’ allegations in the sixth cause of action are not limited to the same nucleus of operative fact as their trade secret allegations. Rather, Plaintiffs allege that Defendants used CMB’s materials to “unfairly secure business from foreign investors and operate Defendants’ regional center without the expense and burden associated with preparing limited partnership agreements, private placement memorandum and subscription agreements that are acceptable to the USCIS.” (¶ 137.) Plaintiffs also allege that they lost customers/clients and revenue as a result of these actions. (¶ 138.) As alleged, Defendants’ actions could cause those losses without Defendants having misappropriated any trade secrets. Therefore, this cause of action is not preempted by CUTSA.

3. Seventh Cause of Action (Conversion)

Defendants demur to the seventh cause of action for conversion on the same grounds as the previous causes of action, arguing that it is preempted and fails to allege sufficient facts.

“Conversion is the wrongful exercise of dominion over the property of another.” (Oakdale Village Group v. Fong (1996) 43 Cal.App.4th 539, 543 [50 Cal. Rptr. 2d 810].) Proof of conversion requires a showing of ownership or right to possession of the property at the time of the conversion, the defendant’s conversion by a wrongful act or disposition of property rights, and resulting damages.

(Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1452.)

Here, Plaintiffs allege that Defendants “improperly acquired CMB’s confidential information and materials including the CMB Limited Partnership Agreement, the CMB Confidential Private Placement Memorandum and the CMB Subscription Agreement and kept such information and materials in their possession,” causing CMB damages. (¶¶ 142, 148, 150.) These allegations are sufficient to state a cause of action for conversion.

Defendants argue that these allegations fail because they allegedly “copied” the materials, and therefore they could not have “taken” them as required for a conversion claim. (Demurrer, at p. 7.) Plaintiffs do not allege only a taking of the “information,” however; they allege Defendants “improperly acquired CMB’s confidential . . . materials . . . and kept such . . . materials in their possession.” (¶ 142 (bold emphasis added).) At the demurrer stage, these allegations are sufficient. Furthermore, a conversion claim may lie based on conversion of a “copy” of a plaintiff’s materials; the original need not be taken away from Plaintiffs for a conversion cause of action to lie. (Civil Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1017 [concluding that a claim of conversion of “a copy” of architectural plans was not preempted by copyright law].)

As to preemption, Plaintiffs specifically allege this cause of action only “[t]o the extent any portion of those materials do not qualify as trade secrets.” (¶ 142.) Thus, Plaintiffs are explicitly not relying on the same nucleus of facts for their conversion cause of action as for their claims of trade secret misappropriation.

Accordingly, the demurrer is OVERRULED as to the seventh cause of action for conversion.

4. Eighth Cause of Action (Civil RICO)

Defendants demur to the eighth cause of action for civil RICO on the same bases as the previous causes of action, arguing that Plaintiffs have not alleged two or more RICO predicate acts because some of the alleged acts are preempted and others are based on the fraudulent sale of securities and are therefore barred as a matter of law.

As to preemption, as discussed above, the predicate acts alleged by Plaintiffs are not preempted by CUTSA.

As to the argument that civil RICO claims based on fraudulent sale of securities are barred as a matter of law, Defendants made the same argument when Plaintiffs sought leave to file the 4AC. As the Court concluded then, however, Plaintiffs’ civil RICO claim is not based on securities fraud. The 4AC alleges that Defendants engaged in a “scheme to access and exploit CMB’s proprietary information and trade secrets for purposes of illegally eroding CMB’s well-earned competitive advantage in the EB-5 marketplace and thus secure for Defendants an unfair advantage in their competitive efforts against CMB.” (¶ 155.) Thus, the “lynchpin” of the alleged scheme does not involve fraudulent sale of EB-5 securities, but rather the exploitation of CMB’s proprietary information and trade secrets. (Swarz v. KPMG LLP (9th Cir. 2007) 476 F.3d 756, 761.)

In addition, the Court finds that Plaintiffs have alleged civil RICO with sufficient specificity. (¶¶ 38-47, 58-74, 94-119.)

Accordingly, the demurrer is OVERRULED as to the eighth cause of action for civil RICO.

5. Ninth Cause of Action (Intentional Interference with Prospective Economic Advantage)

Defendants demur to the ninth cause of action for intentional interference with prospective economic advantage on the same bases as the previous causes of action.

The elements of intentional interference with prospective economic advantage are:

(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.

(Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 (citation omitted).)

Plaintiffs allege that Defendants knew of their relationships with third parties and disrupted those relationships by “using CMB’s confidential and proprietary information . . . , falsely taking credit for CMB’s EB-5 program successes, and unfairly competing with CMB,” causing Plaintiffs economic harm. (¶¶ 163-167.) These allegations are sufficient.

In addition, for the reasons discussed in connection with Plaintiffs’ sixth and seventh causes of action, this cause of action is not preempted. As with the previous causes of action, Plaintiffs’ allegations of intentional interference with prospective economic advantage do not rely exclusively on the same facts as their claims of trade secret misappropriation. Plaintiffs allege, for example, that Defendants intentionally interfered with their relationships by “falsely taking credit for CMB’s EB-5 program successes.” (¶ 165.) This allegation and others do not rely solely on any trade secret misappropriation claims.

Accordingly, the demurrer is OVERRULED as to the ninth cause of action for intentional interference with prospective economic advantage.

6. Tenth Cause of Action (Common Law Unfair Competition).

Defendants demur to the tenth cause of action for common law unfair competition on the same bases as the previous causes of action, arguing primarily that this cause of action sounds in fraud and Plaintiffs have not alleged it with sufficient particularity. Common law unfair competition does not, however, have to meet a heightened pleading standard. (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261 [concluding that unfair competition causes of action “must be stated with reasonable particularity, which is a more lenient pleading standard than is applied to common law fraud claims”].)

As with their statutory unfair competition claims discussed above, Plaintiffs’ common law unfair competition claim does not rely exclusively on the same facts as their trade secret misappropriation claims. Plaintiffs allege, inter alia, that Defendants unfairly competed with them by “taking credit for and palming off CMB’s accomplishments and track record as their own (including the allegations set forth in paragraphs 38 through 43 and in paragraphs 47 through 57).” (¶ 170.) As discussed above, these allegations are sufficient to state a cause of action for unfair competition.

Accordingly, the demurrer is OVERRULED as to the tenth cause of action for common law unfair competition.

Defendants are to answer the 4AC within 30 days of the date of this order.

Defendants’ Alternative Motion for Judgment on the Pleadings

Defendants’ alternative motion for judgment on the pleadings is DENIED without prejudice.

In explaining when a judgment on the pleadings may be filed, CCP § 438 provides:

The motion provided for in this section may be made only after one of the following conditions has occurred:

* * *

(2) If the moving party is a defendant, and the defendant has already filed his or her answer to the complaint and the time for the defendant to demur to the complaint has expired.

(CCP § 438(f)(2) (bold emphasis added).)

Here, Defendants have not answered the 4AC. Accordingly, any motion for judgment on the pleadings is premature under CCP § 438(f)(2).

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: January 27, 2020 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

[1]

In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) Described as a “cornerstone jurisprudential polic[y], … complaints are to be liberally construed … and disputes should be resolved on their merits.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1149 [16 Cal. Rptr. 3d 555].) “A fact may appear by inference as well as by direct allegation.” (United B. & T. Co. v. Fidelity & Deposit Co. (1928) 204 Cal. 460, 465 [268 P. 907].) “Consistent with the applicable rules of pleading, we adopt a liberal construction of plaintiffs' [proposed] amended complaint, drawing all reasonable inferences in favor of their allegations.” (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1170, fn. 16 [278 Cal. Rptr. 614, 805 P.2d 873].) The proposed amended complaint, as construed in light of the exhibits filed in support of the motion to amend, should be “fairly read.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43 [77 Cal. Rptr. 2d 709, 960 P.2d 513]; see id. at p. 48; Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 987 [74 Cal. Rptr. 3d 47]; Paul v. Friedman (2002) 95 Cal.App.4th 853, 866 [117 Cal. Rptr. 2d 82].)

(Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136, 1141-1142.)