Case Name: WonderWorks Pte. Ltd. v. Hewlett-Packard Co., et al.
Case No.: 2014-1-CV-273632

I. Background

This lawsuit arises from a dispute over a software development project. WonderWorks Pte. Ltd. (“Plaintiff”) agreed to work as a subcontractor for Hewlett-Packard (M) Sdn. Bhd. (“HP Malaysia”) on a project to develop financial-reporting software for Malaysia’s central bank, Bank Negara Malaysia. (Second Amended Complaint (“SAC”), ¶¶ 17-20.) Before the software could be completed and launched, HP Malaysia and Bank Negara Malaysia agreed to terminate the project. (SAC, ¶ 45.) Plaintiff alleges HP Malaysia did not pay for all the work it did to develop the software for Bank Negara Malaysia, did not pay all licensing fees for the use of its own proprietary software during development, and did not follow through on a promise to spin off the software being developed into a cloud-based system that could be marketed to regulators and reporting entities worldwide for which it expected to earn millions of dollars in profits. (SAC, ¶¶ 21, 25-27.) Plaintiff claims defendants Hewlett-Packard Company (“HP Co.”) and HP Enterprise Services, LLC (“HP Enterprise”) (collectively, the “American Entities”) participated in the project as well and are also responsible for these losses. (SAC, ¶¶ 6, 8-10.)

Plaintiff asserts causes of action against HP Malaysia and the American Entities (collectively, “Defendants”) for: (1) fraud (against Defendants); (2) fraudulent inducement (against Defendants); (3) negligent misrepresentation (against Defendants); (4) fraudulent concealment (against Defendants); (5) intentional interference with contractual relations (against the American Entities); (6) intentional interference with prospective economic advantage (against Defendants); (7) intentional interference with contractual relations (against the American Entities); (8) breach of contract based on failure to pay for services provided (against Defendants); (9) breach of contract based on failure to pay licensing fees (against Defendants); (10) breach of contracts with third parties (against Defendants); (11) breach of the implied covenant of good faith and fair dealing (against Defendants); (12) negligence (against Defendants); (13) defamation and commercial disparagement and/or trade libel (against Defendants); and (14) quantum meruit (against Defendants).

Currently before the Court are three motions, namely: (1) the American Entities’ motion for summary judgment or summary adjudication of each cause of action; (2) HP Malaysia’s motion for summary judgment or summary adjudication of each cause of action asserted against it; and (3) Defendants’ motion to strike portions of the SAC. Only the motions for summary judgment or summary adjudication, lines 5 and 6, are addressed herein. The Court prepared a separate tentative ruling for the motion to strike, which is line 7.

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II. Standard of Review

A. Summary Judgment

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit [ ].” (Code Civ. Proc., § 437c, subd. (a)(1).) “A defendant [ ] 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, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) To carry this burden, the defendant must present evidence, such as “affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” (Code Civ. Proc., § 437c, subd. (b)(1).)

“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).) The plaintiff “must make an independent showing by a proper declaration or by reference to a deposition or another discovery product that there is sufficient proof of the matters alleged to raise a triable question of fact if the moving party’s evidence, standing alone, is sufficient to entitle the party to judgment.” (Wiz Technology, Inc. v. Coopers & Lybrand LLP (2003) 106 Cal.App.4th 1, 10-11; Code Civ. Proc., § 437c, subd. (b)(2); see also Code Civ. Proc., § 437c, subd. (p)(2) [“The plaintiff [ ] shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.”].)

“The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).)

B. Summary Adjudication

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Code Civ. Proc., § 437c, subd. (f)(1).)

“A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.” (Code Civ. Proc., § 437c, subd. (f)(2).) “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).)

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III. Evidentiary Matters

Plaintiff filed written objections, numbered one through twenty, to portions of the evidence presented by HP Malaysia and the American Entities.

Plaintiff objects to nearly all of the challenged evidence on the ground there is a “lack of foundation.” “Foundation” is a colloquial term used to describe a wide variety of requirements for the admissibility of evidence. (See People v. Porter (1947) 82 Cal.App.2d 585, 588; People v. Modell (1956) 143 Cal.App.2d 724, 729-30.) Because that term is so broad, a generic objection on the ground there is a lack of foundation for the evidence is inadequate. (Modell, supra, 143 Cal.App.2d at pp. 729-30.) To make a proper objection, a party must identify the “alleged defect so that the ruling may be made understandingly and the objection obviated if possible.” (Porter, supra, 82 Cal.App.2d at 588.) Plaintiff has not done so. Consequently, the objections on the ground of a lack of foundation are overruled.

Plaintiff also objects to most of the challenged evidence on the ground it consists of improper lay opinions about the law. It is true that “[t]he manner in which the law should apply to particular facts is a legal question and is not subject to expert, much less lay, opinion.” (Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1444-45.) But except for one challenged statement made by Ms. Hamani-Samaan, the statements about the contracts at issue and the business operations of the parties are not actually conclusions about the legal effect or status of those agreements and entities. The statement by Ms. Hamani-Samaan that a particular allegation in the SAC is legally incorrect does qualify as an improper legal conclusion. (See ibid.) Although Ms. Hamani-Samaan is an attorney, she purports to provide lay testimony about business operations based on her observations as Associate General Counsel for HP Enterprise. The legal conclusion she offers is generally improper. (See ibid.) Accordingly, Objection No. 5 to the statement of Ms. Hamani-Samaan is sustained, and Plaintiff’s remaining objections on the ground the evidence consists of improper lay opinions about the law are overruled.

It is unnecessary to rule on the balance of Plaintiff’s objections on the grounds of relevance and hearsay because the purportedly objectionable evidence is not material to the disposition of the motion; these objections are preserved. (Code Civ. Proc., § 437c, subd. (q).)

IV. Merits of American Entities’ Motion

The American Entities move for summary judgment or summary adjudication of each cause of action in the SAC. The Court first addresses the contract-based causes of action before addressing the tort causes of action.

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A. Contract-Based Causes of Action

Plaintiff asserts three causes of action for breach of contract against the American Entities, namely the eighth, ninth, and tenth causes of action, as well as causes of action for breach of the implied covenant of good faith and fair dealing and quantum meruit, which are the eleventh and fourteenth causes of action. Because the tenth cause of action is based on different agreements than the other four contract-based claims, the eighth, ninth, eleventh, and fourteenth causes of action are addressed first.

1. Eighth and Ninth Causes of Action

In the eighth and ninth causes of action, Plaintiff alleges “HP” — defined as HP Malaysia and the American Entities collectively — “entered into contracts, in the form of the Statement of Work, Standard Terms and Conditions, Purchase Orders, Change Requests, EULAs and oral and email agreements, whereby HP agreed to pay [it] for”: (1) “software and services”; and (2) “license fees and related services on all installations of [its] Composer Online Server, Composer Batch Server, and Composer Submission Server software on HP and [Bank Negara Malaysia] computers.” (SAC, ¶¶ 97, 103.) Plaintiff alleges “HP” breached these contracts by failing to pay all invoices for software and services as well as licensing fees.

The American Entities argue the eighth and ninth causes of action lack merit because Plaintiff cannot establish the existence of an agreement with them or otherwise hold them liable based on an alter ego theory of liability.

i. American Entities’ Liability as Parties to the Contract

The American Entities argue Plaintiff cannot establish an essential element of its breach of contract claim, namely the existence of an agreement, because the allegations in the pleading and evidence reflect there was in fact one integrated agreement between Plaintiff and HP Malaysia, to which they were not parties. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Although Plaintiff uses the term “contracts,” plural, in the eighth and ninth causes of action, it appears these causes of action are actually based on one agreement and that the “contracts” it lists are simply writings alleged to contain the terms of that agreement. (See generally Holguin v. DISH Network, LLC (2014) 229 Cal.App.4th 1310, 1320-21.)

As the American Entities aptly point out, this construction of the pleading is reinforced by the allegation in paragraph 25 of the SAC that “Plaintiff entered into a contract. . . comprised of three form documents — a Statement of Work (“SOW”), a Global Supply Chain [ ] Standard Terms and Conditions for Services and Software (“GSCS Standard Terms”), and Purchase Orders. . . .” It is also supported by the American Entities’ evidence. (See Lim Decl., ¶ 27.)

Thus, the central issue here is whether these writings embody an agreement between Plaintiff and the American Entities. The evidence shows they do not.

The very first page of the SOW states it is “entered into. . . between” HP Malaysia and Plaintiff. (Lim Decl., Ex. A.) The SOW also states it is governed by the GSCS Standard Terms and that, collectively, these two documents make up “one complete and fully integrated document” governing the project. (Lim Decl., Ex. A; see also Lim Decl., Ex. B, §§ 1, 17.12 [integration clauses in GSCS Standard Terms].) The American Entities are not identified anywhere in the SOW and GSCS Standard Terms as participants in the project or parties to the agreement between HP Malaysia and Plaintiff.

While the GSCS Standard Terms do contain some generic references to “HP,” defined as “HP Co. and its Affiliates,” this does not support the conclusion that the American Entities are parties to the agreement between Plaintiff and HP Malaysia. (See Lim Decl., Ex. B, §§ 18.1, 18.8.) It is obvious the definition of the term “HP,” which term is used only sparingly, is not intended to define the parties to the agreement, especially given the explicit identification of Plaintiff and HP Malaysia as the contracting parties. To be sure, the American Entities are not “Affiliates,” defined as “a corporation or other business entity anywhere in the world in which a party to this Agreement owns or controls, directly or indirectly, an equitable interest representing the right to elect the majority of the directors or persons performing similar functions or, if the law of the applicable jurisdiction does not permit such majority interest, then the maximum allowable under such law.” (Lim Decl., Ex. B, §§ 18.1, 18.8.) Plaintiff does not allege and the evidence in fact shows neither of them is owned or controlled by a party to the agreement, namely HP Malaysia. (Lim Decl., ¶¶ 7-13.) Furthermore, the definition would be circular if interpreted as a definition of the parties. Finally, the financial terms setting forth the conditions and means for paying Plaintiff, which are arguably the most relevant to this payment dispute, define “HP” as the “HP entity identified on the Purchase Order as being responsible for payment[,]” specifically HP Malaysia. (Lim Decl., Ex. B, § 18.8.) Accordingly, the language of the GSCS Standard Terms, even accounting for the more expansive definition of “HP” as used in some portions thereof, does not support the conclusion that the American Entities had any agreement with Plaintiff.

Finally, the Purchase Orders identify Plaintiff as the supplier and HP Malaysia as the party receiving and paying for the software, licensing fees, and related services. (See Lim Decl., Exs. C-F.) The American Entities are not identified anywhere in the Purchase Orders.

In summary, the American Entities demonstrate they were not parties to the agreement between Plaintiff and HP Malaysia.

In opposition, Plaintiff appears to concede the American Entities were not parties to the agreement with HP Malaysia and focuses on whether they are liable as alter egos, which issue is addressed below. (Opp. at pp. 20-21.) Although Plaintiff also argues there were other agreements with the American Entities, it cannot successfully oppose their motion by raising new, unpleaded issues in its opposition. (See Government Employees Insurance Co. v. Super. Ct. (2000) 79 Cal.App.4th 95, 98, fn. 4.) Furthermore, Plaintiff does not present any evidence to support its assertion. Thus, Plaintiff does not raise any triable issue of material fact with respect to the existence of an agreement with the American Entities.

ii. American Entities’ Liability as Alter Egos of HP Malaysia

Because the American Entities were not parties to the agreement between Plaintiff and HP Malaysia, the only other means for holding them liable for breach of contract is an alter ego theory. (See Minton v. Caveney (1961) 56 Cal.2d 576, 580-81.)

“[T]o prevail on an alter ego theory, the plaintiff must show that ‘(1) there is such a unity of interest that the separate personalities of the corporations no longer exist; and (2) inequitable results will follow if the corporate separateness is respected.’ [Citation.]” (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811.) The American Entities focus on this first element and persuasively argue that they cannot be held liable for breach of contract as alter egos of HP Malaysia because Plaintiff cannot establish a unity of interest.

There are many iterations of the factors to be considered for purposes of determining whether there is a unity of interest between two entities. (See Zoran Corp., supra, 185 Cal.App.4th at pp. 811-12.) These factors generally relate to the finances and operations of the entities and include: “commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other.” (Sonora Diamond Corp. v. Super. Ct. (2000) 83 Cal.App.4th 523, 538-39 [internal quotation marks and citations omitted].) “Other factors which have been described in the case law include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers.” (Id. at p. 539.) “No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied.” (Ibid.)

First and foremost, there is no corporate relationship between HP Malaysia and HP Enterprise; each has “zero ownership interest” in the other. (Lim Decl., ¶ 8.) With respect to HP Co., it has only an indirect relationship with HP Malaysia. (Lim Decl., ¶ 7.) “HP Co. held no direct ownership interest in HP Malaysia[, which] was a direct subsidiary of Hewlett-Packard The Hague B.V.” (Giusti-Donnelly Decl., ¶ 7.) HP Malaysia’s parent is “a Dutch super-holding company of the majority of HP’s non-US operating companies located within a Luxembourg partnership.” (Giusti-Donnelly Decl., ¶ 7.) Thus, the evidence does not show a direct parent-subsidiary relationship between HP Malaysia and the American Entities or that there is identical equitable ownership of these entities.

Next, the evidence shows the American Entities and HP Malaysia operated separately because they had: (1) separate offices; (2) separate officers and employees; and (3) separate bank accounts. (Hamani-Samaan Decl., ¶¶ 9-13; Ogden Decl., ¶ 5; Lim Decl., ¶¶ 7-15.) These three entities did not commingle or divert each other’s funds and maintained corporate formalities, such as “holding regular board meetings, keeping accurate board minutes, and submitting key strategy and operations decisions for approval by the board of directors.” (Lim Decl., ¶¶ 11-12; Hamani-Samaan Decl., ¶¶ 9, 12; Ogden Decl., ¶ 5.) “HP Malaysia had ample capital to fund its own operations, and did not rely financially on [the American Entities] or any other entity.” (Lim Decl., ¶ 11.)

To summarize, the evidence shows HP Malaysia operated as a separate and independent entity from the American Entities such that it was not a mere shell or conduit for their affairs and vice versa. Consequently, the American Entities substantiate their argument that they cannot be held liable for breach of contract as alter egos of HP Malaysia because Plaintiff cannot establish a unity of interest.

In opposition, Plaintiff explicitly declines to address alter ego liability relative to HP Enterprise. (Opp. at p. 10, fn. 4.) Thus, Plaintiff apparently concedes HP Malaysia was not an alter ego of HP Enterprise. Accordingly, the following discussion is limited to HP Co. alone.

Plaintiff discusses four factors relative to whether HP Malaysia was an alter ego of HP Co., namely: (1) the existence of a parent-subsidiary relationship; (2) capitalization; (3) shared offices and employees; and (4) control over business affairs.

First, Plaintiff addresses whether there is a parent-subsidiary relationship between HP Co. and HP Malaysia. Although the alter ego doctrine typically applies to entities with a parent-subsidiary relationship, this is not itself a factor courts consider. (See Sonora Diamond, supra, 183 Cal.App.4th at pp. 538-39.) And in any event, Plaintiff does not establish there is a parent-subsidiary relationship here. Plaintiff does not actually dispute the fact that HP Malaysia is owned by Hewlett-Packard The Hague B.V and is not directly owned by HP Co. (See Opp. at p. 11:5-16; Sep. Stat., ¶ 5.) Instead, Plaintiff asserts that, as a matter of law, “one cannot shield oneself from the incidents of ownership by conveniently interjecting a corporate shell between parent and subsidiary.” (Opp. at p. 11:17-18.) In other words, Plaintiff’s position is apparently that an indirect ownership interest is sufficient to render HP Co. an alter ego of HP Malaysia. But Plaintiff does not cite any legal authority to support its position. To the extent Plaintiff actually intended to argue the equitable owners of HP Malaysia and HP Co. are the same, it presents no evidence to support such an argument.

Second, Plaintiff argues “[t]here is an issue as to whether HP [Malaysia] is adequately capitalized.” (Opp. at p. 12:9.) Inadequate capitalization is a factor courts consider for purposes of determining whether entities are alter egos and occurs when an entity is formed but never funded. (See Platt v. Billingsley (1965) 234 Cal.App.2d 577, 583-84 [insolvent entity without capital contributions upon acquisition was inadequately capitalized].)
To support its argument, Plaintiff states it is “unknown” whether HP Malaysia could satisfy a judgment. (Opp. at p. 12:24.) But Plaintiff cannot successfully oppose the motion through “conjecture and speculation” about whether a particular fact is known or unknown; it must present evidence. (Wiz Technology, supra, 106 Cal.App.4th at p. 9.) Additionally, Plaintiff does not cite any authority to support its argument. And in any event, its argument does not actually appear to be based on the legal standard for determining whether an entity is inadequately capitalized.

Plaintiff also presents evidence showing HP Malaysia has at times received funds from HP Co. But the mere fact that a parent provides a subsidiary with funds for the purpose of helping it meet its financial obligations does not establish inadequate capitalization for purposes of alter ego liability. (Sonora Diamond, supra, 83 Cal.App.4th at p. 539.) If an entity was initially funded and “was formed with the intention of making a profit[, the fact] that it did not do so [as] the result of market and production factors” does not establish inadequate capitalization. (Id. at p. 546.) Plaintiff does not actually argue or present evidence showing HP Malaysia was inadequately capitalized from the start. Consequently, Plaintiff does not demonstrate HP Malaysia is inadequately capitalized.

Third, Plaintiff argues that HP Malaysia and HP Co. “effectively ‘shared offices’ and employees.” (Opp. at p. 13:7.) Although “sharing” offices and employees is not a factor courts consider, courts do consider “use of the same office and employees.” (Sonora Diamond, supra, 83 Cal.App.4th at p. 538.) Use of the same office and employees occurs when two entities simultaneously employ the very same individuals in the very same office. (See, e.g., Pan Pacific Sash & Door Co. v. Greendale Park, Inc. (1958) 166 Cal.App.2d 652, 657; see also Thomson v. L.C. Roney & Co. (1952) 112 Cal.App.2d 420, 424.) But Plaintiff does not argue or present evidence showing individuals were simultaneously employed by both HP Malaysia and HP Co. who had but one office.

Rather, Plaintiff presents evidence showing collaboration between employees of different entities when a particular employee’s expertise was needed and that employees sometimes switched jobs and began working for a different HP entity. (See Sep. Stat., ¶¶ 42-44.) It is not obvious and Plaintiff does not cite any authority to demonstrate this constitutes “use of the same office and employees” for purposes of establishing alter ego liability.

Finally, Plaintiff argues HP Malaysia “was a mere conduit for HP Co. and did not direct its own affairs.” (Opp. at p. 11:20-21.) In support, Plaintiff presents evidence showing HP Co. became more involved in the software development project and made some decisions about the project when it appeared it might not be going according to plan. (See Sep. Stat., ¶ 10.) But it is unclear how providing assistance and exercising some control over a particular project is equivalent to exercising control over HP Malaysia as an entity and to such an extent that it is a mere conduit for HP Co. Plaintiff does not cite any authority to support its argument.

In conclusion, Plaintiff does not raise a triable issue of material fact with respect to whether the American Entities and HP Malaysia are alter egos.

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iii. Conclusion

For the reasons articulated above, the American Entities carry their initial burden of demonstrating Plaintiff cannot establish one or more essential elements of the eighth and ninth causes of action for breach of contract. Plaintiff does not raise a triable issue of material fact in opposition. Consequently, the eighth and ninth causes of action, whether asserted based on direct or alter ego liability, lack merit.

2. Eleventh Cause of Action

The eleventh cause of action is for breach of the implied covenant of good faith and fair dealing.

The American Entities argue the lack of any agreement between them and Plaintiff demonstrates the eleventh cause of action lacks merit because the existence of an agreement is an essential element of a cause of action for breach of the implied covenant of good faith and fair dealing. (Racine & Laramie, Ltd. v. Dept. of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031.) For the same reasons discussed with respect to the eighth and ninth causes of action, the American Entities demonstrate Plaintiff cannot establish the existence of an agreement for purposes of this particular claim as well. Additionally, for the reasons stated above, the American Entities cannot be liable for this particular contract claim as alter egos of HP Malaysia.

Although not clearly articulated by the American Entities, they appear to take the position that even assuming they were parties to the agreement, Plaintiff cannot assert a cause of action for breach of the implied covenant of good faith and fair dealing because it is not a recognized cause of action under Malaysia law. This argument is meritorious for the reasons set forth in the discussion of HP Malaysia’s motion.

In opposition, Plaintiff does not present any different or additional arguments with respect to this particular claim. Consequently, there are no triable issues of material fact, and the eleventh cause of action lacks merit.

3. Fourteenth Cause of Action

The fourteenth cause of action is for quantum meruit. The American Entities argue Plaintiff cannot pursue recovery based on a quantum meruit theory when it simultaneously seeks to enforce a contract. In support, they cite Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, in which the Second District relied heavily on its previous decision in Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410.

For context, “[a] quantum meruit or quasi-contractual recovery rests upon the equitable theory that a contract to pay for services rendered is implied by law for reasons of justice.” (Hedging Concepts, supra, 41 Cal.App.4th at p. 1419.) Typically, recovery based on a quantum meruit theory operates to prevent one party from being unjustly enriched when, despite what the parties believe, no valid contract was formed. (Id. at p. 1420, fn. 8.)

In Hedging Concepts, the Second District reviewed a post-trial judgment awarding a plaintiff the reasonable value of services rendered based on a quantum meruit theory. (Hedging Concepts, supra, 41 Cal.App.4th at pp. 1418-19.) The Second District held the trial court erroneously made an award based on a quantum meruit theory because the trial court simultaneously found the parties had an enforceable contract containing a “contingent-compensation term,” which contingency had yet to occur. (Id. at pp. 1419-20.) The Second District explained it was unnecessary to rely on an implied contract when the parties had an enforceable agreement. (Ibid.) It also emphasized that the trial court should not have made an award based on an implied contract that directly contradicted the terms of the parties’ actual agreement. (Ibid.) Put differently, the trial court erred because it found the parties agreed the right to compensation was contingent and the contingency had yet to occur such that the plaintiff was not entitled to payment but simultaneously and unconditionally awarded the plaintiff payment for services performed based on a quantum meruit theory. (Ibid.)

Hedging Concepts does not support the proposition that a plaintiff may not pursue quantum meruit recovery as an alternative to damages for breach of contract. (Hedging Concepts, supra, 41 Cal.App.4th at p. 1420, fn. 8.) Rather, it supports the proposition that once a determination has been made that a contract actually exists, a court cannot elect to rely on a quantum meruit theory to award a sum that could not be recovered based on the terms of compensation in the parties’ actual agreement. (Id. at pp. 1419-20.) Accordingly, Hedging Concepts does not support the American Entities’ argument. It follows that Klein similarly does not support the American Entities’ argument.

To be sure, in Klein, the Second District applied Hedging Concepts in the context of a motion for judgment on the pleadings. (Klein, supra, 202 Cal.App.4th at pp. 1389-90.) As a preliminary matter, its decision to do so was arguably misguided given the primary problem in Hedging Concepts was the contradictory findings made following trial. In any event, the Second District in Klein acknowledged a plaintiff could pursue inconsistent theories of recovery but had, in the particular pleading under review, alleged inconsistent facts. (Id. at pp. 1389-90.) Thus, Klein does not support the proposition for which it is cited. More specifically, it does not support the proposition that a plaintiff cannot simultaneously pursue damages for breach of contract and recovery based on a quantum meruit theory.

In summary, the American Entities’ argument is not supported by the law. Even accepting the rule they espouse, their argument is misguided. The American Entities were not parties to the agreement between Plaintiff and HP Malaysia and thus cannot be liable for breach of contract. Accordingly, recovery based on a quantum meruit theory necessarily is not inconsistent with any breach of contract claim.

With that said, the American Entities also assert Plaintiff cannot establish entitlement to recovery based on a quantum meruit theory because it performed work at the request of and for the benefit of HP Malaysia, not them. (See Pacific Bay Recovery, Inc. v. California Physicians’ Services, Inc. (2017) 12 Cal.App.5th 200, 214-15 [plaintiff must show work performed at request of and for benefit of the defendant].) The evidence supports their assertion. (See Lim Decl., ¶¶ 10, 14, 24, 60.) Consequently, the American Entities carry their initial burden by showing Plaintiff cannot establish it performed work for them for which it is entitled to compensation.

The points raised by Plaintiff in opposition are not especially clear and it does not cite legal authority to support and illuminate its position. Plaintiff first argues it performed work beyond the scope of its agreement with HP Malaysia. But Plaintiff does not actually assert or present evidence showing it performed work at the behest and for the benefit of the American Entities. Otherwise, Plaintiff simply lists facts about the American Entities’ involvement in the project that are not clearly material to this issue. To the extent Plaintiff is arguing the additional work it performed was effectively for the American Entities as alter egos of HP Malaysia, this argument lacks merit because Plaintiff cannot establish alter ego liability.

In conclusion, the American Entities carry their initial burden of showing Plaintiff cannot establish one or more essential elements of its quantum meruit claim. Plaintiff does not raise a triable issue of material fact. Thus, the fourteenth cause of action lacks merit.

4. Tenth Cause of Action

The tenth cause of action for breach of contract is based on the allegation that “HP,” inclusive of the American Entities, had contracts with “numerous Reporting Entities including at least Bank of Tokyo. . . ” and that, “as a result of entering into the contracts,” these reporting entities would have to license software from Plaintiff. (SAC, ¶ 107.) Plaintiff alleges it was an intended beneficiary of these contracts, which were breached by a failure “to provide [the reporting entities] with a system that would allow for the use of [its] software.” (SAC, ¶ 108.)

The American Entities argue the tenth cause of action lacks merit because Plaintiff does not allege facts sufficient to state a cause of action for breach of contract as an intended beneficiary. Because the pleading delimits the issues for purposes of a motion for summary judgment and/or summary adjudication, such a motion necessarily tests the sufficiency of the pleading. (Hansra v. Super. Ct. (1992) 7 Cal.App.4th 630, 638-39.) “Where a complaint does not state a cognizable claim, it is not necessary to [consider the defendant’s evidence], since a defendant has no obligation to present evidence to negate a legally inadequate claim.” (Ibid.; accord Leek v. Cooper (2011) 194 Cal.App.4th 399, 412.) For the reasons that follow, the American Entities’ argument about the sufficiency of the pleading is persuasive.

First, Plaintiff does not allege the essential elements of a cause of action for breach of contract as a general matter. Nowhere in the SAC does Plaintiff allege facts showing there were valid contracts, who all of the parties to each contract were, what the terms of the contracts were, and that the American Entities breached these contracts after the other parties either performed or were excused from performing. (Oasis West Realty, supra, 51 Cal.4th at p. 821; see also Pry Corp. of America v. Leach (1960) 177 Cal.App.2d 632, 639.) To be sure, Plaintiff essentially concedes this in its opposition to the motion, stating its allegations are “not a model of clarity. . . .” (Opp. at p. 19, fn. 10.)

Second, Plaintiff does not allege facts demonstrating it was an intended beneficiary. Only a contract “‘made expressly for the benefit of a third [party]’” may be enforced by the third party. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1021-22, quoting Civ. Code, § 1559.) Such a third party is typically referred to as an intended beneficiary. (Spinks, supra, 171 Cal.App.4th at pp. 1021-22.) In contrast, an incidental beneficiary may not sue to enforce a contract. (Id. at pp. 1022-23.)

“The test for determining whether a contract was made for the benefit of a third person is whether an intent to benefit a third person appears from the terms of the contract.” (Spinks, supra, 171 Cal.App.4th at p. 1022 [internal quotation marks and citations omitted].) “If the terms of the contract necessarily require the promisor to confer a benefit on a third person, then the contract, and hence the parties thereto, contemplate a benefit to the third person.” (Ibid.) If the third party merely stands to benefit if the agreement between the parties is carried out, he or she is an incidental beneficiary. (Ibid.)

Plaintiff does not allege the American Entities’ agreements with the reporting entities, by their terms, reflect an intent to benefit it. For example, Plaintiff does not allege the American Entities or the reporting banks intended that it receive payment in a particular amount or some specific goods or services. (See, e.g., Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1193 [employees were intended beneficiaries of agreement between their employer and a customer containing a minimum wage requirement]; see also Lucas v. Hamm (1961) 56 Cal.2d 583, 590 [“It is true that under a contract for the benefit of a third person performance is usually to be rendered directly to the beneficiary. . . .”].)

Rather, the SAC reflects Plaintiff apparently believed it might make secondary sales of additional software “as a result of” the purported agreements between the American Entities and the reporting entities. (SAC, ¶ 107.) Plaintiff subsequently confirmed that this is, indeed, its theory when it stated in response to an interrogatory that it “expected to provide software, services, and maintenance to each and every one of the [r]eporting [e]ntities.” (Wong Decl., Ex. A at p. 21:13-14.) But when a buyer and seller enter into a sales contract, they are not concerned with what happens after the sale. (See Eastern Aviation Group, Inc. v. Airborne Express, Inc. (1992) 6 Cal.App.4th 1448, 1452.) Thus, a third party’s expectation that an additional transaction may take place after the underlying sale occurs does not make him or her an intended beneficiary of the sales contract. (Id. at pp. 1452-53.) Consequently, Plaintiff’s theory is not legally cognizable.

In summary, Plaintiff does not allege facts sufficient to state a cause of action for breach of contract as an intended beneficiary. Under these circumstances, the Court may simply conclude the cause of action lacks merit for purposes of evaluating the motion for summary judgment or summary adjudication or treat the motion as one for judgment on the pleadings. (Hansra, supra, 7 Cal.App.4th at pp. 647-48.) This first approach is permissible when the pleading defect cannot be cured, but if the defect can be cured through amendment, courts typically follow the latter approach and give the plaintiff leave to amend. Here, Plaintiff failed to cure these pleading defects when given an opportunity to do so relative to a prior motion for judgment on the pleadings that was granted with leave to amend. Additionally, Plaintiff relies on a legally insufficient theory that it might incidentally benefit in the future. Thus, there is no risk of unjustly dismissing a meritorious claim based on a curable pleading defect. (See ibid.)

To be sure, Plaintiff does not present any explanation or authority to support the proposition that the tenth cause of action is adequately pleaded or that its legal theory is cognizable. Instead, Plaintiff appears to present a new legal theory that is not alleged in the pleading. Although Plaintiff alleges in the pleading that it anticipated selling its own software “as a result of” the American Entities entering into agreements with the reporting entities, it states in opposition that HP Malaysia resold its software to the reporting entities. Put differently, Plaintiff’s new theory is that sales of its software by HP Malaysia to the reporting entities were made for its benefit. Because Plaintiff is presenting an entirely new theory which is not based on contracts between the American Entities and the reporting entities, there is no basis for concluding it can amend the pleading to state a cause of action against the American Entities.

Accordingly, it is unnecessary to treat the motion as one for judgment on the pleadings. (See Robinson v. Hewlett-Packard Corp. (1986) 183 Cal.App.3d 1108, 1131.) The tenth cause of action lacks merit and may be summarily adjudicated on that basis.

B. Tort Causes of Action

Plaintiff’s tort causes of action include the fifth and seventh causes of action for intentional interference with contractual relations, sixth cause of action for intentional interference with prospective economic advantage, twelfth cause of action for negligence, first cause of action for fraud, second cause of action for fraudulent inducement, third cause of action for negligent misrepresentation, fourth cause of action for fraudulent concealment, and thirteenth cause of action for “defamation and commercial disparagement/trade libel.” (SAC at p. 41:9.)

The arguments relative to the American Entities’ direct liability for each cause of action are addressed before the arguments relative to their liability based on agency, conspiracy, and aiding and abetting theories. Because the alter ego theory is addressed above, it is not addressed herein.

1. Fifth, Sixth, and Seventh Causes of Action

Plaintiff asserts causes of action for contractual interference and interference with prospective economic advantage. These two types of interference are separate torts with distinct essential elements despite the presence of some similarities between them. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1154-55.) “‘[T]he tort of interference with contract is merely a species of the broader tort of interference with prospective economic advantage.’ [Citations.]” (Id. at p. 1157.) To establish a cause of action for contractual interference, a plaintiff must prove the existence of a valid contract. (Id. at pp. 1157-58.) Whereas an economic relationship and the likelihood that a contract, although not yet formed, “is certain to be consummated” is sufficient for purposes of establishing interference with prospective economic advantage. (Ibid.) As the California Supreme Court explained, “a plaintiff who believes that he or she has a contract but who recognizes that the trier of fact might conclude otherwise might bring claims for both torts so that in the event of a finding of no contract, the plaintiff might prevail on a claim for interference with prospective economic advantage.” (Id. at p. 1158.)

With this legal context in mind, each cause of action is addressed in turn.

i. Fifth Cause of Action

The fifth cause of action is for interference with Plaintiff’s contract with HP Malaysia. To establish this claim, Plaintiff must prove: (1) a valid contract with HP Malaysia; (2) the American Entities had knowledge of that contract; (3) the American Entities intentionally acted to induce a breach or disruption of the contractual relationship; (4) a breach or disruption of the relationship actually occurred; and (5) the damages incurred as a result. (See Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 997.) The American Entities argue Plaintiff cannot establish the second and third elements of this cause of action.

The American Entities’ supporting analysis is not a model of clarity. Their position is apparently that Plaintiff cannot establish the second and third elements because Plaintiff’s Chief Executive Officer Sri Rajan (“Rajan”) admitted at his deposition that he never actually spoke with “either of the two individuals affiliated with HP Co., to whom the SAC makes only passing reference.” (Mem. of Pts. & Auth. at p. 17:9-11.) The American Entities do not explain and it is not particularly clear how, even accepting the truth of their factual assertion, it negates the second and third essential elements of this claim. Additionally, the American Entities do not substantiate their assertion because some of the deposition excerpts upon which they rely are not actually included with their evidence. Furthermore, the deposition testimony pertains only to HP Co. and does not negate these essential elements relative to HP Enterprise. Consequently, the American Entities do not carry their initial burden of demonstrating the fifth cause of action lacks merit.

ii. Sixth Cause of Action

The sixth cause of action is for intentional interference with prospective economic advantage and is based on Plaintiff’s plan to sell additional software to Bank Negara Malaysia and reporting entities.

The essential 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., supra, 29 Cal.4th at p. 1153 [internal quotation marks and citations omitted].)

The American Entities argue Plaintiff “has no evidence to support the third element of this tort because it has failed to identify any specific conduct by employees of [HP Enterprise] or HP Co. directed at [its] affairs. . . .” (Mem. of Pts. & Auth. at p. 17:24-25.) But a party cannot carry its initial burden at summary judgment by simply pointing out the absence of evidence. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-55.)

The American Entities also state this cause of action lacks merit for the same reasons as the fifth cause of action. But those points were not persuasive, and so they are unavailing relative to the sixth cause of action as well.

Finally, the American Entities assert Plaintiff has no evidence of an existing economic relationship with Bank Negara Malaysia or the reporting entities. The American Entities are correct that it is essential for there to be “an existing economic relationship.” (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 517-18 [original italics].) This is because “the tort ‘protects the expectation that the relationship eventually will yield the desired benefit, not necessarily the more speculative expectation that a potentially beneficial relationship will eventually arise.’ [Citation.]” (Id. at pp. 516-17.) Thus, a plaintiff cannot establish such a claim based on “a hope for an economic relationship and a desire for future benefit.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 331.) With that said, the American Entities do not substantiate their assertion because they do not provide any legal analysis or evidence to support it. (See Dougherty, supra, 138 Cal.App.3d at p. 282.) They simply point out that Plaintiff has no evidence, which is insufficient. (Aguilar, supra, 25 Cal.4th at pp. 854-55.)

Consequently, although the California Supreme Court has emphasized that “‘courts should. . . firmly distinguish the two kinds of business contexts, bringing a greater solicitude to those relationships that have ripened into agreements, while recognizing that relationships short of that subsist in a zone where the rewards and risks of competition are dominant.’” (Korea Supply Co., supra, 29 Cal.4th at p. 1157, quoting Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392.) And while it is true that “a cause of action for tortious interference [will be] found lacking when either the economic relationship with a third party is too attenuated or the probability of economic benefit too speculative.” (Roy Allan Slurry Seal, supra, 2 Cal.5th at p. 515; see also Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507, 526 [plaintiff cannot rely on potential relationship with entire market of purchasers].) The American Entities do not demonstrate the sixth cause of action lacks merit for this reason.

In conclusion, the American Entities do not carry their initial burden of demonstrating Plaintiff cannot establish one or more essential elements of the sixth cause of action.

iii. Seventh Cause of Action

The seventh cause of action is for interference with the contracts that are the subject of the tenth cause of action, namely the contracts with reporting entities of which Plaintiff was purportedly an intended, third-party beneficiary. Like a claim for breach of contract, an essential element of a claim for contractual interference is the existence of a contract. (See Redfearn, supra, 20 Cal.App.5th at p. 997.) As the American Entities persuasively argue, because Plaintiff does not and cannot allege the existence of valid contracts that were intended to benefit it for purposes of the tenth cause of action, it cannot do so for purposes of the seventh cause of action as well. Plaintiff does not advance any different or additional points with respect to the seventh cause of action. Accordingly, for the same reasons set forth above relative to the tenth cause of action, the American Entities are entitled to summary adjudication of the seventh cause of action because no cause of action has or can be stated.

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2. Twelfth Cause of Action

The twelfth cause of action is for negligence. “Liability for negligent conduct may only be imposed where there is a duty of care owed by the defendant to the plaintiff. . . .” (J’aire Corp. v. Gregory (1979) 24 Cal.3d 799, 803.) “A duty of care may arise through statute or by contract.” (Ibid.) “Alternatively, a duty may be premised upon the general character of the activity in which the defendant engaged” as evaluated under the criteria set forth in Biakanja v. Irving (1958) 49 Cal.2d 647. (Id. at pp. 803-04.)

Here, Plaintiff’s theory is apparently that the American Entities owed it a duty to “perform the prime contract [they] had with [the bank] and with reasonable care” because they had “exclusive control. . . over the prime contract” and the prime contract directly impacted its work on the project. (SAC, ¶ 115.) In other words, Plaintiff specifically alleges it was owed a legal duty arising from a contract.

As the American Entities point out, they were not parties to the contract between HP Malaysia and Bank Negara Malaysia. (Lim Decl., ¶¶ 19-20.) Consequently, that particular contract could not possibly have given rise to a legal duty owed by the American Entities to Plaintiff. The American Entities thus demonstrate Plaintiff cannot establish they owed it a legal duty to perform the contract with Bank Negara Malaysia, which duty is an essential element of the negligence claim. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 551.)

The American Entities also argue the twelfth cause of action lacks merit because, “in California, the economic loss rule precludes a tort claim in connection with a contract where no independent duty is violated.” (Mem. of Pts. & Auth. at p. 25:8-10.) This argument is not an additional basis for finding Plaintiff cannot establish one or more essential elements of its negligence claim because it is not supported by any analysis and the American Entities appear to conflate the economic loss rule with the distinct legal standard for whether a legal duty exists in the first instance. (See generally Erlich, supra, 21 Cal.4th at p. 551; see also Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 988 [explaining economic loss rule].)

In opposition, Plaintiff does not explain how the contract between HP Malaysia and Bank Negara Malaysia could have given rise to a legal duty owed by the American Entities when they were not a party to the contract. Additionally, Plaintiff does not present any explanation or authority to support the conclusion that it was otherwise owed a legal duty based on a statute or the factors set forth in Biakanja. Instead, Plaintiff lists ways in which the American Entities were involved in the project. Plaintiff does not explain and it is not obvious how such facts are in any way material to the issue of duty.

Plaintiff otherwise concludes, without elaboration, the American Entities have “secondary liability.” (Opp. at p. 24:11.) It appears this reference is to Plaintiff’s alternative theories of liability, which are addressed in a separate section below. Accordingly, Plaintiff does not raise a triable issue of material fact with respect to whether the American Entities themselves owed it a duty and are thus directly liable for its negligence claim.

For these reasons, it is indisputable the American Entities cannot be directly liable for negligence.

3. First, Second, Third, and Fourth Causes of Action

The first, second, third, and fourth causes of action are for fraud, fraudulent inducement, negligent misrepresentation, and fraudulent concealment. Each cause of action essentially consists of a bare recitation of the elements. Thus, while Plaintiff incorporates by reference the entire section of background facts alleged in the pleading into each cause of action, it is not particularly clear what allegations provide the basis for each of the fraud causes of action.

The Court pointed out this problem in the order on the motion for judgment on the pleading and gave Plaintiff an opportunity to fix it to avoid confusion at summary judgment and trial. Plaintiff added some additional details and the phrase “specifically” to some of the background factual allegations, such as those in paragraphs 30 and 34, but inexplicably chose not to identify which facts provide the basis for each of its different fraud claims. It appears the misrepresentations upon which the first, second, and third causes of action are based are those set forth in paragraph 30 and that the fourth cause of action is based on the allegations in paragraph 34.

An essential element of any species of fraud claim is a “‘misrepresentation (false representation, concealment, or nondisclosure).’ [Citation.]” (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638; see also Small v. Fritz Cos. (2003) 30 Cal.4th 167, 173-74.) The American Entities argue Plaintiff cannot establish this element of its fraud claims, addressing them collectively. According to the American Entities, Plaintiff does not allege and has no evidence that any of the misrepresentations are attributable to them. This argument is not persuasive because Plaintiff does allege the individuals who purportedly misrepresented and concealed facts were affiliated with the American Entities, and the American Entities otherwise cannot simply assert there is no evidence, without more. (See Aguilar, supra, 25 Cal.4th at pp. 854-55.)

Although not clearly articulated by the American Entities, they also appear to be attempting to prove that the individuals who allegedly misrepresented and concealed facts did not work for them. But their evidence demonstrates only that some of those individuals worked for HP Malaysia, HP Australia, and HP Singapore and not them. (Lim Decl., ¶ 60.) They do not address all of the misrepresentations and acts of concealment alleged. Consequently, the American Entities do not carry their initial burden of demonstrating an essential element of the first, second, third, and fourth causes of action cannot be established to the extent the causes of action are asserted against them directly. (See McCaskey v. Cal. State Auto Assn. (2010) 189 Cal.App.4th 947, 975 [a defendant must address the entirety of the cause of action].)

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4. Thirteenth Cause of Action

The thirteenth cause of action is for “defamation and commercial disparagement/trade libel.” (SAC at p. 41:9.) Plaintiff alleges Defendants told others that problems with the software were its fault when they were actually caused by Defendants’ decision to use certain software components. (SAC, ¶ 119.)

As a preliminary matter, “[c]onfusion surrounds the tort of ‘commercial disparagement’ because not only is its content blurred and uncertain, so also is its very name. [Citation.]” (Hartford Casualty Insurance Co. v. Swift Distribution, Inc. (“Swift”) (2014) 59 Cal.4th 277, 289.) “The tort has received various labels, such as ‘commercial disparagement,’ ‘injurious falsehood,’ ‘product disparagement,’ ‘trade libel,’ ‘disparagement of property,’ and ‘slander of goods.’” (Ibid.) “In fact, all these labels denominate the same basic legal claim.” (Ibid.) Thus, despite using several of these different terms in the label on the thirteenth cause of action, it appears Plaintiff simply asserts a cause of action for commercial disparagement.

To establish a claim for commercial disparagement, a plaintiff must show the defendant made a knowingly false or misleading statement that derogated his or her property or business and caused him or her to incur damages. (Swift, supra, 59 Cal.4th at p. 284.) It must be shown that the statement “(1) specifically refers to the plaintiff’s product or business and (2) clearly derogates that product or business.” (Ibid.) Both of these requirements “must be satisfied by express mention or by clear implication.” (Ibid.)

The American Entities first argue Plaintiff cannot establish they made disparaging statements and that employees of HP Malaysia and other HP entities, in fact, made the alleged statements. But the American Entities do not cite any evidence or authority to support this assertion. Thus, their argument is deemed to be without foundation and requires no further discussion. (See Dougherty, supra, 138 Cal.App.3d at p. 282.)

The American Entities next argue the thirteenth cause of action is time-barred because Plaintiff admitted the disparaging statements upon which its claim is based were made more than a year before it commenced this action.
To substantiate their argument, the American Entities must demonstrate (1) which statute of limitations applies and (2) when the cause of action accrued. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315-16.)

The American Entities assert the one-year statute of limitations set forth in Code of Civil Procedure section 340, subdivision (c) applies here. Code of Civil Procedure section 340, subdivision (c) states the limitations period for traditional libel and slander claims is one year. But this statute does not, on its face, apply to commercial disparagement claims, and the American Entities do not cite any authority to support the conclusion that it should, nevertheless, apply. Perhaps this is because courts have explicitly distinguished claims for commercial disparagement or “trade libel” from traditional libel and slander claims brought by individuals and held these business torts are not subject to the one-year statute of limitations in section 340. (Guess, Inc. v. Super. Ct. (1986) 176 Cal.App.3d 473, 478-79.) Accordingly, the American Entities’ assertion of law is incorrect and the thirteenth cause of action is not subject to a one-year statute of limitations.

Additionally, the American Entities do not substantiate their assertion about the accrual of the thirteenth cause of action. They do not cite any legal authority about accrual of claims for commercial disparagement and their evidence does not actually show when all of the disparaging statements were made.

In summary, the American Entities do not substantiate their statute of limitations argument.

Because the American Entities do not demonstrate Plaintiff cannot establish one or more essential elements of its commercial disparagement claim or that they have a complete defense thereto based on the statute of limitations, they do not carry their initial burden.

5. Alternative Theories of Liability

As explained above, the American Entities do not carry their initial burden of demonstrating the first, second, third, fourth, fifth, sixth and thirteenth causes of action lack merit to the extent they are based on a theory of direct liability. Accordingly, the American Entities are not entitled to summary judgment or to summary adjudication of these causes of action irrespective of the sufficiency of Plaintiff’s alternative theories of liability.

The American Entities carry their initial burden relative to the seventh cause of action and are entitled to summary adjudication of this cause of action irrespective of Plaintiff’s alternative theories of liability because this cause of action suffers from a foundational pleading defect.

As for the twelfth cause of action for negligence, the American Entities demonstrate it lacks merit to the extent it is asserted against them directly. And so the only remaining issue is whether the twelfth cause of action lacks merit to the extent it is based on the alternative theories of liability as well. Accordingly, these alternative theories are addressed below.

i. Agency

Plaintiff alleges the American Entities are liable for the tortious conduct alleged in the SAC based on an agency theory of liability. (SAC, ¶ 6.)

Although agency and alter ego liability are distinct theories of liability, courts consider similar facts when evaluating whether an entity may be liable for the acts of an agent entity. (See Sonora Diamond, supra, 83 Cal.App.4th at p. 541; accord F. Hoffman-La Roche, Inc. v. Super. Ct. (2005) 130 Cal.App.4th 782, 798.) “Control is the key characteristic of the agent/principal relationship.” (Sonora Diamond, supra, 83 Cal.App.4th at p. 541.) “Accordingly, if a parent corporation exercises such a degree of control over its subsidiary corporation that the subsidiary can legitimately be described as only a means through which the parent acts, or nothing more than an incorporated department of the parent, the subsidiary will be deemed to be the agent of the parent. . . .” (Ibid.)

“The parent’s general executive control over the subsidiary is not enough; rather there must be a strong showing beyond simply facts evidencing ‘the broad oversight typically indicated by [the] common ownership and common directorship’ present in a normal parent-subsidiary relationship. [Citations.]” (Sonora Diamond, supra, 83 Cal.App.4th at p. 542.) “As a practical matter, the parent must be shown to have moved beyond the establishment of general policy and direction for the subsidiary and in effect taken over performance of the subsidiary’s day-to-day operations in carrying out that policy.” (Ibid., original italics.)

The American Entities acknowledge the test for agency liability is distinct but largely based on the same considerations as alter ego liability. And so they argue, for the same reasons advanced relative to the alter ego theory, that Plaintiff cannot establish they had such extensive control over HP Malaysia sufficient to demonstrate it was merely their agent. The American Entities’ evidence indeed shows HP Malaysia was not controlled by them to such a degree that it was merely their agent. (See Lim Decl., ¶¶ 7-12; Hamani-Samaan Decl., ¶¶ 9-13; Ogden Decl., ¶ 5; Giusti-Donnelly Decl., ¶ 7.)

In opposition, Plaintiff argues the American Entities did in fact control HP Malaysia’s day-to-day operations sufficient to establish they are liable for its acts as their agent. Plaintiff also relies on the points advanced relative to the alter ego theory of liability, which are unpersuasive for the same reasons previously discussed. Significantly, Plaintiff does not explain or cite any authority to support the conclusion that the American Entities’ assistance with the project when it appeared to be in jeopardy qualifies as usurpation of control over HP Malaysia’s day-to-day operations as an entity. Accordingly, Plaintiff does not raise a triable issue of material fact.

For these reasons, Plaintiff’s agency theory of liability is unmeritorious.
ii. Conspiracy

“Civil conspiracy is not an independent tort.” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 823.) “Rather, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (Ibid. [internal quotation marks and citations omitted].) To establish liability based on a civil conspiracy, a plaintiff must prove “the defendant had knowledge of and agreed to both the objective and the course of action that resulted in the injury, that there was a wrongful act committed pursuant to that agreement, and that there was resulting damage.” (Ibid.)

The American Entities argue they cannot be liable based on a conspiracy theory of liability because they did not knowingly agree to engage in any tortious conduct and thereafter act in furtherance of the conspiracy. The evidence they present supports their argument because the Chief Executive Officer of HP Malaysia states she supervised the software development project and did not involve the American Entities in the project. (Lim Decl., ¶¶ 23-25.)

In opposition, Plaintiff presents evidence contradicting the American Entities’ evidence, which shows individuals working at various levels of HP entities worldwide, including at HP Co. and HP Enterprise, were involved in determining the course of the project and making decisions about the project at its later stages. (See Harvey Decl., Exs. 21-23.) Accordingly, Plaintiff raises a triable issue of material fact with respect to whether the American Entities knowingly agreed to and participated in the tortious conduct alleged here.

With that said, “in California[,] a civil conspiracy to commit tortious acts can, as a matter of law, only be formed by parties who are already under a duty to the plaintiff, the breach of which will support a cause of action against them — individually and not as conspirators — in tort.” (Chaver v. Gatke Corp. (2003) 107 Cal.App.4th 606, 614, original italics.) But the American Entities were not a party to the contract between HP Malaysia and Bank Negara Malaysia and thus did not owe Plaintiff a legal duty arising from that contract. Consequently, although there are triable issues of material fact with respect to the existence of a conspiracy, the American Entities cannot be held liable for negligence as coconspirators. Thus, the triable issues relative to the conspiracy theory of liability do not preclude summary adjudication of the twelfth cause of action. (See Navarette v. Meyer (2015) 237 Cal.App.4th 1276, 1293, fn. 5.)

iii. Aiding and Abetting

Plaintiff also alleges the American Entities are liable because they aided and abetted HP Malaysia’s tortious conduct. (SAC, ¶ 10.) “California has adopted the common law rule for subjecting a defendant to liability for aiding and abetting a tort.” (Casey v. U.S. Bank, N.A. (2005) 127 Cal.App.4th 1138, 1144.) Liability for aiding and abetting tortious conduct may be imposed “on one who knows that another’s conduct constitutes a breach of duty and substantially assists or encourages the breach.” (American Master Lease, LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1476.) Although aiding and abetting liability is distinct from liability based on a conspiracy, a defendant’s knowledge of and participation in the tortious conduct are material to both. (See ibid.) Accordingly, it is unsurprising that both the American Entities and Plaintiff rely on the same evidence for purposes of addressing this additional theory of liability. It follows that, for the same reasons set forth above with respect to civil conspiracy, there are triable issues of material fact with respect to whether the American Entities knowingly assisted HP Malaysia’s tortious conduct.

Although aiding and abetting and conspiracy are similar theories of liability, there is a significant distinction between these two theories that is implicated here. Specifically, the law allows “imposition of aider and abettor liability in the absence of a duty owed directly to the plaintiff.” (American Master Lease, supra, 225 Cal.App.4th at p. 1476 [internal quotation marks and citation omitted].) Thus, the fact that the American Entities did not themselves owe Plaintiff a duty does not preclude the claim against them as aiders and abettors. (See Orser v. Vierra (1967) 252 Cal.App.2d 660, 667.) Accordingly, the twelfth cause of action is not wholly without merit and cannot be summarily adjudicated. (See Code Civ. Proc., § 437c, subd. (f)(1).)

C. Conclusion

In conclusion, with respect to the first, second, third, fourth, fifth, sixth, twelfth, and thirteenth causes of action, the American Entities do not carry their initial burden of showing Plaintiff cannot establish one or more essential elements of these claims or that they have a complete defense thereto and/or there are triable issues of material fact. Accordingly, the American Entities’ motion for summary judgment is DENIED and the motion for summary adjudication is DENIED with respect to these causes of action. (See Lopez v. Super. Ct. (1996) 45 Cal.App.4th 705, 713-14.)

Because the American Entities demonstrate the seventh, eighth, ninth, tenth, eleventh, and fourteenth causes of action lack merit, their motion for summary adjudication of these causes of action is GRANTED.

V. Merits of HP Malaysia’s Motion

HP Malaysia moves for summary judgment and/or summary adjudication of the causes of action asserted against it in the SAC, which include all but the fifth and seventh causes of action.

Although Plaintiff asserts some tort causes of action, this lawsuit generally arises from a contractual relationship between Plaintiff and HP Malaysia. The GSCS Standard Terms governing this relationship includes a choice-of-law clause. (See Lim Decl., Ex. B, § 17.3.) Accordingly, it is necessary to first determine whether California or Malaysia law applies before evaluating Plaintiff’s claims based on the applicable law.

Although both parties acknowledge this issue, their discussion of it is grossly inadequate. This is a significant failure on both sides.

HP Malaysia’s choice-of-law analysis is not a model of clarity. Its position is apparently that Malaysia law applies to the breach of contract claims and perhaps some of the tort claims. HP Malaysia first addresses this issue in a footnote, stating “Plaintiff’s tort claims are subject to a choice of law analysis given that the conduct underlying the claim[s] took place in Malaysia.” (Mem. of Pts. & Auth. at p. 9, fn. 3.) It goes on to state that “[b]ecause [Malaysia] law is substantially similar to the law in California for these claims, California courts may opt to apply their own law. . .” and cites cases discussing the governmental interest test. (Mem. of Pts. & Auth. at p. 9, fn. 3.) Subsequently, in addressing Plaintiff’s disparagement claim, HP Malaysia states the claim is “subject to a choice of law analysis” but does not take a position on the outcome of that analysis and discusses both California and Malaysia law. (Mem. of Pts. & Auth. at p. 16, fn. 9.) Eventually, towards the end of its memorandum of points and authorities, it states “[Malaysia] law governs all breach of contract claims” and discusses the standard set forth in Nedlloyd Lines B.V. v. Superior Court (“Nedlloyd”) (1992) 3 Cal.4th 459. (Mem. of Pts. & Auth. at p. 19:8.) Ultimately, although HP Malaysia submitted the declaration of an attorney practicing in Malaysia accompanied by Malaysian authorities on tort and contract law, it almost exclusively discusses California law in its memorandum.

To summarize, HP Malaysia does not clearly articulate its position on the law applicable to each and every cause of action at issue or consistently apply either the law of California or Malaysia in accordance with its apparent position. Additionally, it appears HP Malaysia may be conflating distinct legal standards used for purposes of evaluating the parties’ choice of law.

Plaintiff’s choice-of-law analysis is also deficient because it does not take a position on what law should apply to any of the causes of action. For example, in its discussion of the tenth cause of action for breach of contract, Plaintiff simply states “[a]ssuming for the sake of argument that Malaysian law applies. . . .” (Opp. at p. 14:19-20.) Otherwise, with respect to the eleventh cause of action for breach of the implied covenant of good faith and fair dealing, Plaintiff generically states there is a dispute over the applicable law but does not take a clear position relative thereto and ultimately argues its cause of action is in fact recognized under Malaysia law. Thus, Plaintiff’s opposition is unilluminating.

Although HP Malaysia bears the initial burden at summary judgment, (Code Civ. Proc., § 437c, subd. (p)(2)), Plaintiff brought this action. Thus, Plaintiff should have already taken and must, at the very least, take a position now as to the law upon which its claims are based.

Because the failure here is attributable to both parties and HP Malaysia does cite some relevant legal authorities in its attempt to address this issue, the Court undertakes a choice-of-law analysis in lieu of simply denying the motion outright.

“California has two different analyses for selecting which law should be applied in an action.” (Washington Mutual Bank, FA v. Super. Ct. (2001) 24 Cal.4th 906, 914-15.) “When the parties have an agreement that another jurisdiction’s law will govern their disputes, the appropriate analysis for the trial court to undertake is set forth in Nedlloyd, supra, 3 Cal.4th 459 [ ], which addresses the enforceability of contractual choice-of-law provisions.” (Ibid.) “Alternatively, when there is no advance agreement on applicable law, but the action involves the claims of residents from outside California, the trial court may analyze the governmental interests of the various jurisdictions involved to select the most appropriate law.” (Ibid.)

Here, there is a contractual choice-of-law provision, and so the proper legal standard for evaluating its enforceability is the standard set forth in Nedlloyd. The governmental interest test, which HP Malaysia also references, does not apply.

In Nedlloyd, the California Supreme Court held that when “determining the enforceability of arm’s-length contractual choice-of-law provisions, California courts shall apply the principles set forth in Restatement section 187, which reflect a strong policy favoring enforcement of such provisions.” (Nedlloyd, supra, 3 Cal.4th at pp. 464-65.)

“Briefly restated, the proper approach under Restatement section 187, subdivision (2) is for the court first to determine either: (1) whether the chosen state has a substantial relationship to the parties or their transaction, or (2) whether there is any other reasonable basis for the parties’ choice of law.” (Nedlloyd, supra, 3 Cal.4th at p. 466.) “If neither of these tests is met, that is the end of the inquiry, and the court need not enforce the parties’ choice of law.” (Ibid.) “If, however, either test is met, the court must next determine whether the chosen state’s law is contrary to a fundamental policy of California.” (Ibid., original italics.) “If there is no such conflict, the court shall enforce the parties’ choice of law.” (Ibid.) “If, however, there is a fundamental conflict with California law, the court must then determine whether California has a ‘materially greater interest than the chosen state in the determination of the particular issue. . . .’ [Citation.]” (Ibid.) “If California has a materially greater interest than the chosen state, the choice of law shall not be enforced, for the obvious reason that in such circumstance we will decline to enforce a law contrary to this state’s fundamental policy.” (Ibid.)

The choice-of-law clause relevant here is contained in the GSCS Standard Terms and states the parties’ agreement “shall be interpreted and governed by the laws of Malaysia, without giving effect to any choice of law rules.” (Lim Decl., Ex. B, § 17.3; see also Lim Decl., Ex. B., § 17.10 [conflicts clause giving GSCS Standard Terms and accompanying SOW precedence].)

Malaysia clearly has a substantial relationship to the parties and their transaction. The software at the heart of this dispute was being developed by a Malaysian company, HP Malaysia, for a Malaysian customer, the central bank of Malaysia, in partnership with a corporation from Singapore, a neighboring country that used to be part of Malaysia. Additionally, many of the events giving rise to this dispute, such as meetings about the software development project, took place in Malaysia. For these same reasons, there is also a reasonable basis for the parties’ choice of law. Consequently, the Court must enforce the parties’ choice of Malaysia law unless it is contrary to a fundamental public policy of California.

The parties do not identify and it does not appear there is any conflict between Malaysia law and a fundamental public policy of California. To be sure, courts have held that even a material difference between foreign and California law, such as a difference in whether a party may sue in tort for breach of the implied covenant of good faith and fair dealing, does not amount to a conflict between the foreign law and a fundamental public policy. (See, e.g., Tri-Union Seafoods, LLC v. Starr Surplus Lines Insurance Co. (S.D.Cal. 2015) 88 F.Supp.3d 1156, 1166-68, citing Nedlloyd, supra, 3 Cal.4th at p. 468.) Thus, even accepting that there are some differences between Malaysia and California law, there is no basis for concluding Malaysia law conflicts with a fundamental public policy in California. The Court must therefore enforce the parties’ choice of Malaysia law.

With respect to the scope of the clause, “a valid choice-of-law clause, which provides that a specified body of law ‘governs’ the ‘agreement’ between the parties, encompasses all causes of action arising from or related to that agreement, regardless of how they are characterized, including tortious breaches of duties emanating from the agreement or the legal relationships it creates.” (Nedlloyd, supra, 3 Cal.4th at p. 470; see generally John F. Coyle, The Canons of Construction for Choice-of-Law Clauses (2017) 92 Wash. L. Rev. 631, 666.) Thus, the Court should apply Malaysia law to both the contract claims as well as the related tort claims for fraud, negligence, commercial disparagement, and interference. (See, e.g., Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1298-99.) Indeed, neither party identifies any basis for applying Malaysia law to only some of the claims asserted.

Having established the applicable law, it is now possible to evaluate the merits of the motion relative to each cause of action. As with the discussion of the American Entities’ motion, the contract-based causes of action are addressed first followed by the tort causes of action

A. Contract-Based Causes of Action

The contract-based causes of action include the eighth, ninth, tenth, eleventh, and fourteenth causes of action.

1. Eighth Cause of Action

The eighth cause of action for breach of contract is based on HP Malaysia’s purported failure to pay Plaintiff for all of the work it performed to develop the reporting software.

To establish a claim for breach of contract under Malaysia law, a plaintiff must establish the existence of a valid contract and “breach of that contract warranting a discharge of performance or a claim in damages.” (Sreenevasan Decl., ¶ 79, citing Contracts Act of 1950, §§ 2, 40.)

Although not clearly articulated by HP Malaysia, it appears its position is that Plaintiff cannot establish any breach of their agreement or damages.

In support, HP Malaysia repeatedly states “[t]his claims fails under the plain terms of the agreement because there is no evidence that a contractual obligation was ever triggered to pay the invoices at issue.” (Mem. of Pts. & Auth. at p. 20:3.) But this approach is problematic because pointing out the absence of evidence is not sufficient to show Plaintiff cannot establish an essential element of its claim. (Aguilar, supra, 25 Cal.4th at pp. 854-55.)
HP Malaysia also asserts Plaintiff did not perform sufficient to entitle it to payment for some of the work it did and that other work was beyond the scope of the SOW. But HP Malaysia’s discussion thereafter is unclear and not adequately supported by analysis of contractual terms and language, evidence, the allegations in the pleading, and Malaysia law. HP Malaysia’s presentation is best characterized as generic and imprecise.

For example, HP Malaysia asserts several provisions in the SOW demonstrate “Plaintiff understood that it was required to successfully deliver the services promised in the SOW in order to trigger a contractual right to payment.” (Mem. of Pts. & Auth. at p. 20:26-28.) Even accepting the truth of this assertion, HP Malaysia does not thereafter address what the standard for successful delivery was, either based on Malaysia law or the parties’ agreement, and how Plaintiff’s performance deviated from that standard. It is fundamentally unclear what work was performed and what work remained outstanding, both as a general matter and relative to the phases of the project set forth in the SOW. To this point, HP Malaysia does not actually address the payment schedules in the SOW, which schedules provide for partial payments upon reaching various development milestones and not necessarily one lump sum payment upon submission of an invoice. (See Wong Decl., Ex. A, § 5.2.)

In summary, although it is uncontroversial that a plaintiff cannot recover more than what was bargained for, (see Sreenevasan Decl., ¶¶ 56-58), HP Malaysia does not demonstrate, here, that Plaintiff seeks to recover damages for work that it is not entitled to be compensated for either because its performance was inadequate or the work was beyond the scope of the agreement. (See Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 934 [A “trial court [has] no obligation to undertake its own search of the record ‘backwards and forwards to try to figure out how the law applies to the facts’ of the case. [Citation.]”].) HP Malaysia thus does not demonstrate Plaintiff cannot establish a breach of their agreement.

HP Malaysia also asserts Plaintiff cannot recover “consequential or special damages” based on a clause in the parties’ agreement limiting its liability for such damages. (Mem. of Pts. & Auth. at p. 21:12-13.) There are several problems with this assertion. First, it is fundamentally unclear how this assertion demonstrates Plaintiff cannot establish a breach of contract claim under Malaysia law. For example, HP Malaysia does not demonstrate that these same concepts exist or how they pertain to Plaintiff’s claim under Malaysia law. Second, it appears HP Malaysia does not understand or is improperly using the terms “consequential damages” and “special damages” as they are used in California because it treats them as though they describe two separate and distinct categories of damages when, in fact, they are simply two different terms used to describe the same category of damages. (See Lewis Jorge Construction Management, Inc. v Pomona Unified School Dist. (2004) 34 Cal.4th 960, 968.) To this point, to the extent HP Malaysia intended to demonstrate Plaintiff has not suffered any damages, it fails to do so because it discusses only “consequential damages” or “special damages” and not what are referred to in California as “general” or “direct” damages. (See ibid.) Plaintiff’s claim is not based solely on special or consequential damages; Plaintiff alleges it is entitled to general damages. Accordingly, HP Malaysia’s damages argument is not persuasive and does not support the conclusion that Plaintiff cannot establish a breach of contract claim under either California or Malaysia law.

Based on the foregoing, HP Malaysia does not carry its initial burden of demonstrating Plaintiff cannot establish one or more essential elements of its breach of contract claim.

2. Ninth Cause of Action

The ninth cause of action is also for breach of contract. Plaintiff alleges HP Malaysia licensed its software, including its Composer Online Server, Composer Batch Server, and Composer Submission Server. (SAC, ¶ 102.) Plaintiff alleges HP Malaysia breached their agreement because it installed software on additional computer processing units (“CPUs”) and “cores” without paying for additional licenses to do so. (SAC, ¶¶ 27, 34, 104.)

HP Malaysia does not carry its initial burden relative to the ninth cause of action because it does not clearly identify what essential element(s) it is challenging, address the entirety of the cause of action, or discuss applicable legal authority. (See Quantum Cooking Concepts, supra, 197 Cal.App.4th at p. 934.)

HP Malaysia first asserts Plaintiff agreed to license its software on a “per-CPU” basis and not on a “per-core” basis. (Mem. of Pts. & Auth. at p. 22:2-3.) The evidence does show the parties agreed to license software on a “per-CPU” basis. (Lim Decl., Ex. A, § 5.1.) Even so, HP Malaysia does not articulate and it is not otherwise obvious what conclusion supposedly follows therefrom.

HP Malaysia does not explain or present evidence showing what exactly the parties meant when they agreed to license the software on a “per-CPU” basis. This term does not appear to be defined in the parties’ agreement. (See, e.g., Actuate Corp. v. Construction Specialties, Inc. (N.D.Cal. June 8, 2012, No. 10-CV-4444-CW) 2012 WL 2072841 at p. 1.) Furthermore, to the extent the parties’ understanding of this term is based on some technical definition within the industry, HP Malaysia does not establish what that definition is. This omission is significant.

“With the advent of multi-core technology, the term ‘processor’ has become context-sensitive, and is largely ambiguous when describing large multi-core systems.” (See Knowledge Base, Indiana University, at [as of May 16, 2018].) For example, depending on the context, “a processor could describe either a single execution core or a multi-core chip.” (Ibid.) HP Malaysia’s own evidence illustrates this ambiguity. (Lim Decl., ¶ 50.) Thus, in the absence of any information about the number of cores in each CPU, either in practice or for purposes of the parties’ agreement, it is impossible to determine whether HP Malaysia could breach the parties’ agreement by installing the software on additional cores.

In any event, HP Malaysia’s assertion does not pertain to all of the purported breaches alleged. Plaintiff also alleges HP Malaysia installed the software on additional CPUs, not just on additional cores. Thus, even assuming HP Malaysia is correct about additional per-core installations, its argument does not demonstrate Plaintiff cannot establish breach based on additional per-CPU installations. “If a cause of action is not shown to be barred in its entirety, no order for summary judgment — or adjudication — can be entered.” (See McCaskey, supra, 189 Cal.App.4th at p. 975.) Consequently, HP Malaysia’s argument is insufficient standing alone.

HP Malaysia also asserts it “could not and did not install additional copies of the software’ because Plaintiff was tasked with installing the software. . . .” (Mem. of Pts. & Auth. at p. 22:3-6.) HP Malaysia does not explain and it is not obvious what conclusion it intends for the Court to draw from this statement. Furthermore, it does not necessarily follow that HP Malaysia did not, in fact, install additional copies of Plaintiff’s software simply because Plaintiff was generally responsible for completing installations.

For these reasons, HP Malaysia does not carry its initial burden of showing Plaintiff cannot establish one or more of the essential elements of this breach of contract claim.

3. Tenth Cause of Action

The tenth cause of action for breach of contract is based on the allegation that HP Malaysia had contracts with “numerous Reporting Entities including at least Bank of Tokyo. . . ” and that, “as a result of entering into the contracts,” these reporting entities would have to license software from Plaintiff. (SAC, ¶ 107.) Plaintiff alleges it was an intended beneficiary of these contracts, which were breached by HP Malaysia’s failure “to provide [the reporting entities] with a system that would allow for the use of [its] software.” (SAC, ¶ 108.)

HP Malaysia argues, like the American Entities, that Plaintiff fails to allege facts sufficient to state a cause of action for breach of contract. Because the existence of a valid contract is an essential element of a breach of contract claim under Malaysia law, (see Sreenevasan Decl., ¶ 79), Plaintiff fails to allege the existence of a valid agreement for the same reasons set forth above relative to the American Entities’ motion.

HP Malaysia also argues that a third-party beneficiary cannot enforce a contract under Malaysia law. HP Malaysia presents legal authority to support this argument. (See Sreenevasan Decl., ¶ 49, citing Tan Poh Yee v. Tan Boon Thien (2017) 3 C.L.J. 569.) Under Malaysia law, “only a party to a contract can sue on it and only the parties to a contract have enforceable rights and obligations under such contract.” (Tan Poh Yee, supra, 3 C.L.J. at p. 582.) A nonparty cannot enforce a contract even if the contract was made for his or her benefit. (Ibid.) While Plaintiff disputes this point of law, it does not actually present any legal authority to support its position. Plaintiff’s legal expert also asserts only a party can enforce a contract and does not assert a party can enforce a contract as a third-party beneficiary. (See Kwan Decl., ¶¶ 41-47.)

Consequently, HP Malaysia demonstrates Plaintiff does not and cannot state a viable claim for breach of contract as an intended beneficiary. Because Plaintiff does not otherwise articulate how it could amend the pleading to state a viable claim based on some other contractual theory recognized under Malaysia law, it is unnecessary to treat the motion as one for judgment on the pleadings to give Plaintiff an opportunity to amend. (See Hansra, supra, 7 Cal.App.4th at pp. 647-48.) The tenth cause of action is subject to summary adjudication based on the deficiency is Plaintiff’s legal theory. (See ibid.)

4. Eleventh Cause of Action

HP Malaysia argues the eleventh cause of action for breach of the implied covenant of good faith and fair dealing lacks merit because no such implied covenant or cause of action based thereupon is recognized under Malaysia law. HP Malaysia’s legal authority, indeed, supports its argument. (See Sreenevasan Decl., ¶ 51, citing Contracts Act of 1950 and Aseambankers Malaysia Bhd. & Ors. v. Shencourt Sdn. Bhd. & Anor (2014) 4 M.L.J. 619, 663-66 [rejecting cause of action for breach of implied covenant; distinguishing American jurisprudence].)

In opposition, Plaintiff argues Malaysia law does recognize a cause of action for breach of the implied covenant of good faith and fair dealing. But Plaintiff provides no legal authority to support this argument. Its own expert states that no such implied covenant exists, relying on the same case cited above. (Kwan Decl., ¶¶ 23-25.)

It is indisputable the implied covenant of good faith and fair dealing does not exist under Malaysia law. Consequently, Plaintiff cannot assert a claim for breach of this implied covenant.

With that said, Plaintiff’s expert appears to suggest that some other “duty of good faith and fair dealing can be implied into the contract if such implication can be derived by the construction of the particular contract against its contractual background and context.” (Kwan Decl., ¶ 26.) But this suggestion is simply based on the principle that courts generally interpret the terms of a contract so as to give effect to the intent of the parties. (Kwan Decl., ¶ 30.) And Plaintiff does not argue it can state a cause of action based on some other implied contractual term that can be derived from the language of the parties’ agreement under Malaysia law. Accordingly, there is no basis for concluding Plaintiff can or should be given an opportunity to amend the complaint to state some other contractual claim.

For these reasons, the legally insufficient eleventh cause of action is subject to summary adjudication. (See Hansra, supra, 7 Cal.App.4th at pp. 647-48.)

5. Fourteenth Cause of Action

HP Malaysia argues the fourteenth cause of action for quantum merit lacks merit because Plaintiff cannot pursue recovery on that basis when it simultaneously seeks to enforce a contract. This is the same unmeritorious argument the American Entities’ advanced, and so it is unavailing for the same reasons articulated above in the discussion of their motion. HP Malaysia does not advance any other arguments. Consequently, HP Malaysia does not carry its initial burden of demonstrating Plaintiff cannot establish one or more essential elements of its quantum meruit claim.

B. Tort Causes of Action

1. Sixth Cause of Action

The sixth cause of action is for intentional interference with prospective economic advantage. It is based on the allegation that Plaintiff planned to sell other related software to Bank Negara Malaysia and entities reporting to the bank once it finished developing the software for HP Malaysia.

HP Malaysia argues Plaintiff cannot establish an existing relationship with Bank Negara Malaysia or the reporting entities. The first problem with HP Malaysia’s argument is that it relies on California law and not Malaysia law. The other problem with HP Malaysia’s argument is that it is based on the assertion that Plaintiff “has no evidence” of an existing relationship with the bank or the reporting entities. (Mem. of Pts. & Auth. at pp. 15:10, 16:3.) It is insufficient to simply point out the absence of evidence when moving for summary judgment and/or summary adjudication. (Aguilar, supra, 25 Cal.4th at pp. 854-55.)

Otherwise, HP Malaysia’s assertion that Plaintiff was prohibited from working directly with Bank Negara Malaysia and did not work directly with the reporting entities during the project is not persuasive. Even assuming the truth of this assertion, it does not directly or logically follow that Plaintiff did not have an existing relationship with the any of these entities. Rather, it is possible Plaintiff’s relationships preexisted this software development project.

For these reasons, HP Malaysia does not carry its initial burden of demonstrating Plaintiff cannot establish one or more essential elements of its interference claim.

2. Twelfth Cause of Action

The twelfth cause of action is for negligence. Plaintiff’s theory is apparently that HP Malaysia owed it a duty to “perform the prime contract [it] had with [Bank Negara Malaysia] and with reasonable care” because HP Malaysia had “exclusive control. . . over the prime contract” and the prime contract directly impacted its work on the project as a subcontractor. (SAC, ¶ 115.)

HP Malaysia argues the twelfth cause of action lacks merit “because it is nothing more than a claim for contractual breach by HP Malaysia. . . .” (Mem. of Pts. & Auth. at p. 24:20-22.) But the twelfth cause of action is not based on any contractual duty owed by HP Malaysia to Plaintiff. Rather, Plaintiff alleges HP Malaysia owed it a legal duty arising from HP Malaysia’s contractual relationship with Bank Negara Malaysia. And so HP Malaysia’s characterization of the twelfth cause of action is inapt. It follows that HP Malaysia does not substantiate any of its arguments because they are all based on this flawed underlying premise. Furthermore, HP Malaysia’s arguments lack merit for the additional reasons below.

HP Malaysia first asserts, just as the American Entities did, that the twelfth cause of action is precluded by the economic loss rule. This argument is not persuasive for the same reasons set forth above with respect to the American Entities’ motion and because it is based on California law and not Malaysian law.

HP Malaysia also asserts that “under Malaysian law, while a tort claim may proceed parallel to a breach of contract claim as a matter of form, a party is confined to recovering contract damages for such a claim and cannot recover tort damages above and beyond the breach of contract.” (Mem. of Pts. & Auth. at p. 25:1-4.) HP Malaysia relies on Mr. Sreenevasan’s statement that: “It is trite that the parties can bring a tortious claim based solely on a breach of contract. . . [but] there is [ ] no benefit to doing so given that the measure of damages that the court will adopt will be the contractual measure of damages.” (Sreenevasan Decl., ¶ 113.) But HP Malaysia does not clearly articulate how these assertions about the proper measure of damages support its overall position that Plaintiff alleges breach of a contractual duty and not a legal duty. Furthermore, the case upon which Mr. Sreenevasan relies does not otherwise support HP Malaysia’s position.

The central issue in Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. (1985) 3 W.L.R. 317 was whether and to what extent a customer owed his or her bank a duty to prevent the processing of forged and fraudulent checks. But the court explicitly declined to “embark on an investigation as to whether in the relationship of bank and customer it is possible to identify tort as well as contract as a source of the obligations owed by the one to the other.” (Id. at p. 330.) Thus, it does not appear the court actually reached a conclusion as to whether a legal duty existed for purposes of establishing a tort claim. (Ibid.) Furthermore, the court considered only whether the duties between two parties were based on contract or tort law and not, as is the issue here, whether a contract between two parties could give rise to a legal duty of care owed to a third party. (Ibid.) Thus, this legal authority does not support HP Malaysia’s argument.

For these reasons, HP Malaysia does not substantiate its argument that the twelfth cause of action is actually just a breach of contract claim. HP Malaysia does not advance any other arguments. Accordingly, it does not carry its initial burden of demonstrating Plaintiff cannot establish an essential element of its negligence claim.

3. First, Second, Third, and Fourth Causes of Action

The first through fourth causes of action are for various species of fraud, particularly: (1) fraud; (2) fraudulent inducement; (3) negligent misrepresentation; and (4) fraudulent concealment. HP Malaysia argues all four causes of action lack merit because they are not pleaded with adequate specificity and Plaintiff cannot establish misrepresentations or concealment of facts and damages resulting therefrom.

As acknowledged in connection with the American Entities’ motion, Plaintiff does not clearly identify in the fraud causes of action what misrepresentations and acts of concealment are at issue for purposes of each. This is because Plaintiff incorporates a large quantity of background factual allegations in each cause of action and otherwise generically recites the elements of each cause of action. With that said, it is possible to determine from reviewing these background factual allegations that the first, second, and third causes of action are based on the misrepresentations alleged in paragraph 30 and the fourth cause of action is based on the acts of concealment alleged in paragraph 34. Construing the pleading in this manner, it is not obvious there is a lack of specificity. Significantly, HP Malaysia does not take issue with or provide any legal analysis to support the conclusion that the factual allegations in paragraphs 30 and 34 are not pleaded with adequate specificity. Accordingly, HP Malaysia does not substantiate its argument about the specificity of the allegations in the SAC.

Additionally, even if it had, it does not demonstrate a lack of specificity is the type of pleading defect that justifies summarily adjudicating a cause of action or granting a motion for judgment on the pleadings without leave to amend. If there is a curable pleading defect, a court may treat a motion for summary judgment or summary adjudication as a motion for judgment on the pleadings and give the plaintiff an opportunity to amend the pleading. (Hansra, supra, 7 Cal.App.4th at pp. 647-48.) If the pleading defect cannot be cured, a court may simply summarily adjudicate the cause of action or, if otherwise warranted, grant the motion for summary judgment. (Ibid.) HP Malaysia does not cite any authority to support the conclusion that a lack of specificity is an incurable defect, either generally or under these circumstances. Accordingly, there is no basis for summarily adjudicating or dismissing with prejudice the fraud claims as HP Malaysia requests here.

The next issue is whether Plaintiff can establish actionable misrepresentations and acts of concealment as well as damages resulting therefrom. HP Malaysia argues Plaintiff cannot. For the reasons that follow, HP Malaysia does not substantiate its argument.

First, HP Malaysia’s arguments are based on California law, not Malaysia law. This is problematic because HP Malaysia does not articulate any basis for concluding the parties’ choice of law does not extend to Plaintiff’s fraud claims.

It is worth acknowledging that the elements of a fraud claim are generally the same under Malaysia and California law; this is not particularly surprising given the law in both jurisdictions is rooted in English common law. (See Sreenevasan Decl., ¶ 83, citing Derry v. Peek (1889) 14 App.Cas. 337, 376.) But the law establishing the essential elements of fraud as a general matter is not in dispute for purposes of this motion. Rather, this motion turns on whether Plaintiff can establish an actionable misrepresentation or act of concealment and resulting damages under Malaysia law. Although HP Malaysia’s legal expert provides some basic information and legal authority on fraud under Malaysia law, HP Malaysia does not discuss this authority or the finer contours of what suffices to establish the essential elements it challenges. Thus, HP Malaysia’s analysis is insufficient.

Second, the primary argument HP Malaysia advances based on California law is not persuasive. HP Malaysia focuses almost exclusively on the fact that many of the alleged misrepresentations are about how the software development project would proceed in the future. HP Malaysia attempts to characterize many of these misrepresentations as nonactionable statements about the future. But HP Malaysia’s characterization is overly simplistic.

“A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638.) Plaintiff alleges HP Malaysia made promises without the intention of performing them. (See SAC, ¶ 30.) Accordingly, HP Malaysia’s characterization of the misrepresentations as simply nonactionable statements about the future is inapt.

Additionally, because it appears Malaysia law also recognizes a fraud claim may be based on a promise made without an intention to perform, there is no basis for concluding HP Malaysia’s argument would otherwise be meritorious had it relied thereupon. (See Sreenevasan Decl., ¶ 92, citing Travelsight (M) Sdn. Bhd. & Anor v. Atlas Corp. Sdn. Bhd. (2003) 6 M.L.J. 658.)

Finally, although HP Malaysia purports to address all four fraud causes of action, it focuses on misrepresentations and does not clearly address the fourth cause of action for fraudulent concealment, which is distinct. (See generally Sreenevasan Decl., ¶ 86.)

In summary, HP Malaysia does not demonstrate Plaintiff will be unable to establish one or more of the essential elements of each fraud cause of action. Consequently, HP Malaysia does not carry its initial burden relative to the first, second, third, and fourth causes of action.

4. Thirteenth Cause of Action

With respect to the thirteenth cause of action for commercial disparagement, HP Malaysia advances the same statute of limitations argument as the American Entities. This argument is unavailing for the same reasons articulated above in the discussion of their motion.

HP Malaysia advances some additional arguments as well, but its presentation is not a model of clarity. For the following reasons, the additional arguments advanced by HP Malaysia are insufficient to carry its initial burden of demonstrating Plaintiff cannot establish one or more essential elements of its claim.

First and foremost, it is not particularly clear whether HP Malaysia is attacking the sufficiency of Plaintiff’s allegations or attempting to prove it cannot establish an essential element of its claim. For example, HP Malaysia states Plaintiff “has not and cannot identify” actionable disparaging statements. (Mem. of Pts. & Auth. at p. 16:20-23.) It is not particularly clear what this means and it is not otherwise apparent from the other statements in its memorandum of points and authorities whether HP Malaysia is arguing there is a curable pleading defect or that Plaintiff cannot establish an essential element of its claim based on evidence or as a matter of law.

Second, HP Malaysia’s additional arguments are not clearly supported by applicable law. (See Quantum Cooking Concepts, supra, 197 Cal.App.4th at p. 934.) HP Malaysia argues the alleged statements about the quality of Plaintiff’s software are nonactionable opinions and are privileged under California law. But HP Malaysia does not articulate a basis for applying California law to this claim. Although HP Malaysia attempts to hedge its bet by asserting in a conclusory manner that Malaysian law is “similar,” this conclusory assertion is not sufficient to substantiate these arguments to the extent they could reasonably be advanced based on Malaysian law as well. (Mem. of Pts. & Auth. at p. 17:2.)

In conclusion, HP Malaysia does not carry its initial burden of demonstrating Plaintiff cannot establish one or more essential elements of its commercial disparagement claim.

C. Conclusion

In conclusion, with respect first, second, third, fourth, sixth, eighth, ninth, twelfth, thirteenth, and fourteenth causes of action, HP Malaysia does not carry its initial burden of showing Plaintiff cannot establish one or more essential elements of these claims or that it has a complete defense thereto. Accordingly, HP Malaysia’s motion for summary judgment is DENIED and the motion for summary adjudication is DENIED with respect to these causes of action. (See Lopez, supra, 45 Cal.App.4th at pp. 713-14.) HP Malaysia does demonstrate Plaintiff’s tenth and eleventh causes of action are not recognized under Malaysia law, and so its motion for summary adjudication is GRANTED with respect thereto.