After full consideration of the evidence, the separate statements submitted by each party, and the authorities submitted by each party, the court makes the following rulings:

Defendants Deron and Janette Robertson (“the Robertsons”) and Greenlee’s Best Cinnamon Bread and More (“Greenlee’s”) (collectively, “Defendants”) move for summary adjudication of the first, third, sixth and ninth causes of action of the complaint.

The motion for summary adjudication of the third cause of action and Defendant’s dependent arguments as to the first and ninth causes of action

The motion as to the first and ninth causes of action for declaratory relief and breach of fiduciary duty, respectively, are dependent on their motion as to the third cause of action for breach of contract. (See Defs.’ memorandum of points and authorities in support of motion for summary adjudication, pp.16:14-22 (stating that “[f]or all the same reasons that Plaintiffs cannot prevail on a claim for breach of contract, i.e., they cannot show that the parties ever entered into an enforceable contract to form a 50/50 partnership, they cannot prevail on a claim for declaratory relief that that same contract was formed and exists… [and] they also cannot prevail on what appear to be demands for relief related thereto, i.e., ‘an accounting, operation and management, and a division of profits after payment of business expenses, and damages’”); 17:7-23 (stating that “as detailed in section VI.A, supra, the evidence establishes that Plaintiffs cannot prove that an agreement to form a partnership ever existed… [and a]s a result, Plaintiffs cannot prove the existence of a fiduciary duty derived from a partnership relationship… [and thus] Plaintiffs cannot prevail on a breach of fiduciary duty claim and Defendants are entitled to judgment as to Plaintiffs’ breach of fiduciary duty claim”).)

As to the motion for summary adjudication of the third cause of action for breach of contract, Defendants argue that the third cause of action for breach of contract lacks merit because Plaintiffs cannot prove mutual assent regarding material contract terms, namely: the amount of money the Garretts would invest; the share of investment the Garretts would receive for that investment; the timing of the payments; the form of how those payments could be made; the amount of monies that Bryan would be paid for his services; the persons of who would retain control of the company; and, the type of business entity as the evidence shows that they intended to and actually formed a S-Corporation.

The bulk of Defendants’ submitted evidence—the Harper deposition testimony, the credit application, the email chains—support Defendants’ contention that the agreement was that Plaintiffs would only have a 49% interest in Greenlee’s. Defendants cite to Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, for their belief that there is no contract based on a lack of consent between parties on material terms. However, as stated by Defendants, Weddington states that “‘[t]he existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.’” (Weddington, supra, 60 Cal.App.4th at p.811 (also stating that “[m]utual assent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding”), quoting Meyer v. Benko (1976) 55 Cal.App.3d 937, 942-943.) Among Defendants’ proffered evidence is an October 28, 2011 email in which Deron states that there was an “agreement… that once [Bryan] put in the cash, which he did…[Deron] will hold the shares for them.” (See Maltzer decl., Exh. 2.) The reasonable meaning of the words and subsequent acts of the parties demonstrates the existence of an agreement. As pointed out by Plaintiffs in opposition, a partnership “agreement is not invalid because of indefiniteness in respect to its details.” (Andrews v. Bush (1930) 109 Cal.App. 511, 517-518 (finding a joint venture created because “there is no question but that the parties intended to go into the deal together so that each might derive profit therefrom”; also stating that “a partnership… is none the less a partnership though there be no definite agreement as to how the profits shall be divided”); see also San Francisco Iron & Metal Co. v. American Milling & Industrial Co. (1931) 115 Cal.App. 238, 245-247 (quoting Andrews, and also noting that “[t]he great majority of contracts of joint adventure and of partnership… do not point out precisely what each party is to do under them”; also stating that “the joint adventure is consummated when the minds of the parties meet upon the point of entering into it and their mutual promises are exchanged”; also stating that “[i]t is not necessary that there should be a specific formal agreement to enter into a joint enterprise, or that the interests of the parties should be definitely settled in such agreement, or that there should be a formal agreement as to the sharing in the profits”); see also Holmes v. Lerner (1999) 74 Cal.App.4th 442, 457 (stating that “parties who expressly agree to associate as co-owners with the intent to carry on a business for profit, have established a partnership”; also stating that “[t]he parties [to a partnership] need only possess the general intent to engage in the acts that constitute a partnership rather than the specific intent to be partners”; also stating that “[Under the UPA] Parties who act as partners in conducting their business will likely be treated as partners for legal purposes”).) Contrary to Defendants’ assertion, there appears to be the existence of a contract—the element of a breach of contract cause of action that Defendants are attacking in this motion. (See Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913 (stating that the existence of a contract is the first element of a breach of contract cause of action).) Defendants fail to meet their burden to demonstrate that the third cause of action lacks merit based on this argument.

Defendants also argue that the breach of contract claim must fail because the claim alleges that the parties had an oral agreement to form a partnership but that the parties actually intended to form a S corporation in which they would each be shareholders, and in fact, actually did form such a corporation. However, whether the parties attempted to form a S Corporation does not alter the fact that Greenlee’s is still a partnership. “[T]he association of two or more persons to carry on as coowners a business for profit forms a partnership, whether or not the persons intend to form a partnership.” (Corp. Code § 16202, subd. (a).) Defendants did not keep any assets in that separate S Corporation that Bryan would not agree to forming, and Greenlee’s—the original business entity that Bryan contributed monies and work towards—still exists. Defendants fail to meet their initial burden to demonstrate that the third cause of action lacks merit based on the S Corporation argument.

Defendants’ remaining arguments regarding the amount of Bryan’s “salary” and who ultimately retained control of the company and that the parties now disagree as to how and when payment should be made does not alter Defendants’ own proffered evidence that reflects that the parties generally intended to engage in acts to constitute a partnership—the primary requirement for the formation of a partnership according to Holmes, supra. Accordingly, Defendants fail to meet their initial burden to demonstrate that there is no agreement based on these remaining arguments, and the motion for summary adjudication of the first, third and ninth causes of action is DENIED.

The motion for summary adjudication of the sixth cause of action for conversion

Defendants solely rely on paragraphs 8-12 and 40 of the complaint to demonstrate that the sixth cause of action for conversion lacks merit, arguing that Plaintiffs cannot prove that they have any present ownership rights in or right to possess the money that they claim was converted because the money belonged to either the Robertsons or the partnership when it was given. (See Defs.’ separate statement of undisputed material facts, nos. (“UMFs”) 24-25.) However, this argument ignores the allegations that the Robertsons embezzled money from the partnership funds solely for their personal use. (See complaint, ¶¶ 20-22, 31-39.) In Oakdale Village Group v. Fong (1996) 43 Cal.App.4th 539, the appellate court rejected the same argument now presented by Defendants, stating:

The trial court, in finding no conversion, reasoned since a partner has an ownership share of the partnership property, a partner cannot convert what he partly owns. Though we appreciate the logic underlying the court’s decision, we reject it in favor of the rationale set forth in People v. Sobiek (1973) 30 Cal.App.3d 458. The court in Sobiek, in holding a partner may be held liable for embezzlement of partnership funds, examined at length prior case law to the contrary. The court traced the rule’s history to states whose statutes omitted the category of partner from a list of persons who could be guilty of embezzlement. [Citation.] The underlying rationale for the rule was the theory that since each partner is the owner of an undivided interest in all of the partnership property, and since no one can be guilty of stealing what belongs to him, a partner cannot be convicted of embezzling or stealing partnership property. For theft to occur the property must be ‘of another.’ [Citation.] In this formulation, the rule requires not only that the property be ‘of another,’ but that it must be ‘wholly of another.’ [Citation.]

The Sobiek court opined that in interpreting California criminal statutes it was ‘totally inappropriate’ to adopt a judicial rule requiring that the stolen property be wholly of another. [Citation.] The court noted the rule was mere dictum in many early cases and had been soundly criticized and rejected by the American Law Institute and in the Model Penal Code. [Citation.] Finally, the court reasoned that allowing prosecution of embezzling partners was consistent with the trend of the law recognizing partnerships as separate legal entities and not merely an aggregate of individuals. We agree with Sobiek: ‘It is both illogical and unreasonable to hold that a partner cannot steal from his partners merely because he has an undivided interest in the partnership property. Fundamentally, stealing that portion of the partners’ shares which does not belong to the thief is no different from stealing the property of any other person.’ [Citation.]

While the trial court distinguished Sobiek as a criminal prosecution, we find the reasoning of Sobiek applicable in the civil context, and see no reason to permit a partner to escape civil liability when he or she absconds with partnership property. Sobiek’s theoretical underpinnings, which treat the partnership as a separate legal entity, also support a finding of damage to the partnership when a partner misbehaves and steals partnership assets.

(Id. at pp.545-546.)

It is clear that Defendants also fail to meet their initial burden with respect to the motion for summary adjudication of the sixth cause of action for conversion. Accordingly, Defendants’ motion for summary adjudication of the sixth cause of action is DENIED.

As Defendants failed to meet their initial burden to show that the subject causes of action lacked merit, the burden did not shift to Plaintiffs to demonstrate the existence of a triable issue of material fact (see Code Civ. Proc. § 437c, subd. (p)(2)), and thus the Court did not consider Plaintiffs’ request for judicial notice in support of their opposition to the motion.

Defendants’ motion to place documents under seal is DENIED for failure to provide the required factual support for the motion. Defendants shall arrange with the clerk a time to have the lodged documents returned.

The Court will prepare the order.