Filed 6/25/20 Aldi Law Group, P.C. v. Max Sound Corp. CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

ADLI LAW GROUP, P.C.,

Plaintiff, Cross-defendant and Respondent,

v.

MAX SOUND CORPORATION,

Defendant, Cross-complainant and Appellant.

B294130

(Los Angeles County

Super. Ct. No. BC621886)

APPEAL from a judgment of the Superior Court of Los Angeles County, Richard Rico, Judge. Affirmed in part, reversed in part, and remanded.

Klapach & Klapach and Joseph S. Klapach for Defendant, Cross-complainant and Appellant.

Adli Law Group and Marina Manoukian for Plaintiff, Cross-defendant and Respondent.

Max Sound Corporation (Max Sound) appeals from a judgment entered after the trial court granted Adli Law Group P.C.’s (Adli) motion for summary judgment. Adli, which provided legal representation to Max Sound, sued Max Sound for breach of contract over unpaid attorneys’ fees, and Max Sound cross-claimed for breach of contract, legal malpractice, and related torts. Max Sound contends the trial court erred in entering judgment on Adli’s claims because triable issues of fact existed as to whether Adli agreed to hold another party responsible for payment of its fees and whether Adli breached the parties’ engagement agreement when it made a clerical error on a Max Sound patent application.

Max Sound also contends the trial court erred in entering judgment on Max Sound’s cross-complaint on the basis Max Sound’s corporate status had been forfeited. Max Sound argues the trial court abused its discretion in denying Max Sound’s request for a continuance to obtain a certificate of revivor and later refusing to consider Max Sound’s evidence of a revivor.

The trial court properly granted summary judgment as to Adli’s complaint and summary adjudication of the first and second causes of action of Max Sound’s cross-complaint (for breach of contract). However, the court should have denied summary adjudication of the third through sixth causes of action of the cross-complaint. We therefore affirm in part and reverse in part.

FACTUAL AND PROCEDURAL BACKGROUND

A. Adli’s Representation of Max Sound in the Steele Litigation
B.
In 2010 Max Sound acquired an audio technology company called Audio Genesis and its associated intellectual property from Lloyd Trammell and Robert Wolff. Shortly thereafter, Robert Steele, a former Audio Genesis employee, filed a lawsuit against Trammell, Wolff, Audio Genesis, and Max Sound pertaining to Steele’s employment contract with an alleged predecessor to Audio Genesis (Steele v. Trammell et al. (Super. Ct. San Diego County, 2018, No. 37-2012-00056367-CU-FR-NC) (Steele).

On November 9, 2012 Max Sound engaged Adli to represent it in the Steele litigation. Greg Halpern, the chairman and chief financial officer of Max Sound, read and signed the engagement agreement on behalf of Max Sound. The agreement provided Adli would jointly represent Max Sound, Trammell, Wolff, and Audio Genesis. Recognizing “that defenses may not be identical for each [c]lient,” and therefore “it may not be appropriate to spread the legal fees or costs equally among or between the [c]lients,” the agreement provided Adli would “keep separate billing records and prepare separate billing statements” for Max Sound on the one hand, and Trammell, Wolff, and Audio Genesis on the other. The agreement provided Adli “will look solely to Max Sound Corporation for payment of separate [b]illing [s]tatements submitted to Max Sound Corporation” and “will look solely to Lloyd Trammell and Robert Wolff as jointly responsible for payment of the separate [b]illing [s]tatements submitted to them.” The agreement made clear the “billing arrangement is for the administrative convenience” of Adli and is not intended to alter the clients’ legal rights or remedies among themselves.

Halpern testified in his deposition that at the time Max Sound retained Adli, Trammell told Halpern that because of their earlier indemnity agreement in favor of Max Sound, Trammel would pay Max Sound’s portion of legal fees for the Steele litigation. Max Sound’s chief executive officer, John Blaisure, similarly testified Trammell agreed to indemnify Max Sound for the Steele litigation fees. But Trammell testified he and Halpern had an oral agreement for Trammell to cover Max Sound’s portion of the Steele litigation fees by selling shares of Audio Genesis, which shares Max Sound would replace after the litigation was resolved. Trammell described his agreement to pay Max Sound’s litigation fees as “similar to a loan.”

On February 15, 2013 Adli’s billing administrator, Anabel Rodriguez, e-mailed Trammell, “Mr. Halpern has indicated in an email communication that you have agreed to pay the outstanding invoices and future invoices for Max Sound concerning its representation in the Robert Steele matter. [¶] We have no objection to receiving payment from you to cover the cost of representation for Max Sound. However, we must follow the engagement letter. Bearing this in mind, we will send billing statements as the engagement letter describes (1 to Max Sound and 1 to Mr. Trammell and Mr. Wolff) and also send Mr. Trammell a copy of the Max Sound invoice. [¶] Please let me know if you would like to amend the engagement letter in order to change the billing statement responsibility.”

Trammell testified he never told Adli he wanted to amend the engagement letter, and he was content to leave the engagement agreement unmodified, “[a]s was Greg [Halpern].” At some point Trammell told Dr. Dariush Adli (Dr. Adli), the managing partner at Adli, that Trammell “was going to pay [the] Max Sound share and Greg [Halpern] was going to give me shares to replace those shares,” but he did not tell Adli he would assume responsibility for Max Sound’s portion of the Steele litigation fees or ask Adli to release Max Sound from liability for the fees.

Dr. Adli stated in his declaration, “[N]o one from [Adli] ever told anyone at Max Sound that it would only look to Trammell and Wolff for payment of its invoices and not look to Max Sound.” Dr. Adli added, “Adli never released Max Sound of any liability for legal fees associated with the Steele Litigation. [¶] . . . There is no written document modifying the Steele Engagement or relieving Max Sound of its obligations under the Steele Engagement.” Max Sound concedes there was no written modification of the engagement agreement or other writing in which Adli relieved Max Sound of its obligation to pay its share of the Steele litigation fees.

On December 22, 2015 Nicolette Sawaya, an administrator at Adli, e-mailed Blaisure, “[W]e have received notice that Mr. Lloyd Trammell will no longer be paying for the litigation involving Max Sound.” Trammell terminated his employment relationship with Max Sound in approximately April 2016. At some point in early 2016, the Steele litigation was resolved with Steele’s dismissal of all defendants. On June 30, 2016 Adli terminated its Steele litigation engagement with Max Sound.

C. Adli’s Intellectual Property Representation
D.
On January 15, 2013 Max Sound engaged Adli to prepare and file patent applications for its audio technology. In the course of the representation, Adli filed between 50 and 70 Max Sound patent applications with the United States Patent and Trademark Office (USPTO).

On May 7, 2014 Trammell executed an assignment to Max Sound of a pending patent application covering Max Sound’s audio technology, known commercially as “MaxD.” However, when Adli filed the patent assignment with the USPTO, it erroneously entered its own firm name and address instead of those of Max Sound for the “receiving party data” on the patent assignment cover sheet. Despite Adli’s error, the USPTO correctly identified Max Sound as the assignee on the “filing receipt” and the MaxD patent application it published on November 12, 2015. However, when the USPTO later issued and published the patent on March 29, 2016, the patent stated Adli, not Max Sound, was the MaxD assignee.

After he left Max Sound, Trammell discovered the error on the USPTO patent cover sheet, and on October 18, 2016 he posted on an Internet site that Adli was listed as the assignee of the patent, adding, “Too bad for all of us shareholders left holding your losing bag with a gaping whole [sic] in it.” Halpern learned about the error when he saw Trammell’s post, which Halpern described as saying something to the effect that Max Sound was “so stupid, [it] didn’t know [it] didn’t even own [its] own patent.”

After Trammell’s post, Halpern and Blaisure began to receive calls and e-mails from Max Sound shareholders who had seen Trammell’s post and complained it was “terrible” that Max Sound no longer owned the MaxD patent. Halpern referred the matter to Max Sound’s new patent attorney, but he did not raise the issue with Adli. There is no evidence in the record Max Sound or its new patent attorney took any action to correct the patent.

Adli first learned of the error in November 2016, after it was served with Max Sound’s cross-complaint, and on December 1, 2016 Adli filed a correction of the patent assignment cover sheet with the USPTO. On April 17, 2018 the USPTO issued a certificate of correction stating, “[a]ssignee should read: Max Sound Corporation.”

E. Adli’s Complaint and Max Sound’s Cross-complaint
F.
On June 1, 2016 Adli filed a complaint against Max Sound alleging two causes of action for breach of contract and a common counts cause of action for goods and services rendered. The first cause of action alleged Max Sound failed to pay Adli’s monthly bills for attorneys’ fees and costs incurred in connection with the Steele litigation for 15 months. The second cause of action alleged Max Sound agreed to issue stock to Adli and pay its costs as compensation for legal services related to the “preparation and filing of patent applications and services related to intellectual property,” but Max Sound refused to issue stock or pay the costs. The common counts cause of action pleaded damages in excess of $95,000 for Adli’s services rendered to Max Sound within the past four years. Max Sound answered Adli’s complaint with a general denial and affirmative defenses, including Adli’s alleged breach of contract.

In response, Max Sound filed a cross-complaint against Adli asserting six causes of action: (1) breach of contract as to Adli’s engagement to provide intellectual property services, (2) breach of contract as to Adli’s engagement to defend Max Sound in the Steele litigation, (3) negligence, (4) breach of fiduciary duty, (5) conversion, and (6) fraud. As to the first cause of action, the cross-complaint alleged that in May 2014 Adli facilitated and knowingly accepted a false assignment of Trammell’s MaxD patent rights to itself instead of Max Sound and continued to bill Max Sound for the work Adli performed to secure the MaxD patent. As to the second cause of action, the cross-complaint alleged the parties modified their engagement agreement in writing pursuant to which Adli “agreed that bills for the Steele litigation would be sent to and paid by Trammell and Wolff only,” and Adli breached the agreement by billing Max Sound. (Italics added.) Max Sound’s third cause of action alleged Adli committed legal malpractice in its failure properly to file patent applications and to provide appropriate advice related to Max Sound’s intellectual property. Max Sound alleged in its fourth cause of action Adli breached its fiduciary duty to Max Sound by “failing to protect Max Sound’s interests, concealing material information relevant to the representation of Max Sound, and by engaging in affirmative conduct detrimental and harmful to Max Sound.” Max Sound’s fifth and sixth causes of action for conversion and fraud, respectively, are based on Adli’s alleged taking of the MaxD patent assignment from Trammell.

G. Adli’s Motion for Summary Judgment
H.
On June 22, 2018 Adli filed a motion for summary judgment or, in the alternative, summary adjudication, in which Adli sought adjudication of its three causes of action and Max Sound’s two breach of contract cross-claims. Adli also sought summary judgment as to all cross-claims “on the basis that Max Sound [is] a forfeited California corporation who cannot prosecute any action in California courts.” In support of its motion, Adli filed a separate statement and declarations, deposition testimony, and documentary evidence.

With respect to the Steele litigation, Adli argued the engagement agreement expressly provided Max Sound, not Wolff or Trammell, would be responsible for Max Sound’s share of the litigation fees, and the parties’ written communications and deposition testimony showed there was no modification of the written agreement. Further, although Trammell was paying Max Sound’s fees and may have agreed with Max Sound to indemnify it, Adli never consented to release Max Sound from liability for fees under the Steele engagement. With respect to damages, Dr. Adli submitted a declaration stating, “The unpaid fees and costs for representation of Max Sound in the Steele Litigation amounted to $70,966.32, without interest. The invoices accurately represented the fees and costs incurred in the matter in good faith.” Adli attached 10 invoices for the period December 2014 through May 2016, which Dr. Adli declared were “all invoices in the Steele Litigation issued to Max Sound and the summary of amounts owed.” The first eight invoices, from 2014 and 2015, were addressed to Lloyd Trammell at an address in Thousand Oaks. The final two invoices, dated April and May 2016, were addressed to Max Sound’s office in San Diego. All 10 invoices listed the same client file number (1040.23).

With respect to Adli’s intellectual property engagement, Adli argued Max Sound instructed Adli to file as many patent applications as possible to “bump up” Max Sound’s stock valuation, and the unpaid fees and costs for those services totaled $62,135. Adli argued the misidentification of the assignee on the MaxD patent assignment cover sheet was an immaterial scrivener’s error that did not constitute a breach by Adli and did not excuse Max Sound’s payment. Specifically, Adli argued the underlying assignment agreement was correct, and at no time was the MaxD patent actually assigned to Adli. The misidentification of Adli as assignee on the patent USPTO published in March 2016 went unnoticed by Max Sound until October 2016, when Trammell posted about the error on the Web site; even then, only a half dozen or so shareholders contacted Max Sound about the assignment. Adli also asserted there was no evidence Max Sound or its new intellectual property lawyer took steps to correct the error, which was subsequently corrected by Adli. Adli also argued there was no evidence Max Sound suffered any damages as a consequence of Adli’s error, and it asked the trial court to take judicial notice that Max Sound’s share prices had been on a long decline prior to October 18, 2016 and fluctuated between around $0.01 and $0.02 per share during the weeks before and after Trammell’s Internet post without any direct correlation to the post.

I. Max Sound’s Application for a Continuance and Opposition to Adli’s Summary Judgment Motion
J.
On August 22, 2018—two months after Adli filed its summary judgment motion and the day before Max Sound’s opposition was due—Max Sound applied ex parte for a stay or continuance of all proceedings to allow it time to obtain a revivor to reinstate its California corporate status. Max Sound’s attorney declared that Max Sound learned of its forfeited status only after receiving Adli’s motion for summary judgment, and on subsequent investigation it learned it owed back taxes to the Franchise Tax Board (FTB). Max Sound hired a tax specialist to resolve its tax liability and obtain a corporate revivor, but as of August 22, 2018 it had not yet obtained a revivor. The trial court denied Max Sound’s ex parte application after meeting and conferring with parties’ counsel in chambers.

On August 27, 2018, Max Sound filed a four-page opposition to Adli’s motion for summary judgment, supported by a separate statement and a single declaration signed by Blaisure that was not attested to under penalty of perjury. Max Sound argued there were triable issues whether Adli had performed under the intellectual property engagement agreement, asserting Adli had filed 52 patent applications but obtained only a single patent (the Max D patent), and Adli erroneously assigned the MaxD patent to itself, causing investors to “dump[] the stock” and “tank[]” Max Sound’s share price. Max Sound purported to support this argument with the Blaisure declaration and missing Dirks declaration. With respect to the Steele litigation, Max Sound argued the parties orally agreed Max Sound would not be responsible for the Steele litigation fees, citing to Blaisure’s declaration in which he stated Dr. Adli told Max Sound that Adli would look solely to Trammell for the fees, and not to Max Sound. Finally, Max Sound argued it was no longer a forfeited corporation, pointing to the certificate of revivor from the FTB dated effective August 24, 2018 attached to the Blaisure declaration.

K. The Trial Court’s Ruling
L.
At the September 6, 2018 hearing on Adli’s motion, the parties submitted to the trial court’s tentative ruling, which the court then adopted. With respect to Adli’s first cause of action for breach of the Steele litigation engagement agreement, the court found Adli met its initial burden of presenting evidence on each of the elements of a breach of contract claim and Max Sound failed to present evidence supporting its contention Adli waived its right to collect fees from Max Sound. Specifically, the court found Max Sound’s evidence was limited to the Blaisure declaration, which did not comply with Code of Civil Procedure section 2015.5 because it was not properly signed and dated, and it was also conclusory and failed to establish personal knowledge. On this basis, Adli’s motion was “essentially unopposed.”

With respect to Adli’s second cause of action for breach of the intellectual property engagement, the trial court found the evidence showed the patent assignment cover sheet contained a “typo” that should not have impacted the manner in which the USPTO recorded the assignment, and there was no evidence Max Sound’s patent portfolio was mismanaged or Max Sound incurred damages in connection with the assignment of the MaxD patent. Further, not only was Blaisure’s declaration inadmissible but also his statements that Adli “did not perform a satisfactory job” and the MaxD patent error caused investors to “dump the stock” were speculative and lacked personal knowledge.

Finding Adli’s final cause of action for a common counts was derivative of its contract claims, the trial court granted summary judgment on Adli’s complaint. The court also granted Adli summary judgment against Max Sound’s cross-complaint on the basis “the suspension or forfeiture halts the corporation’s prosecution or defense of litigation.” On September 26, 2018 the trial court entered judgment for Adli in the amount of $176,750.89, including costs and interest. Max Sound timely appealed.

DISCUSSION

A. Standard of Review
B.
Summary judgment is appropriate if there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c); Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618; Delgadillo v. Television Center, Inc. (2018) 20 Cal.App.5th 1078, 1085.) A plaintiff moving for summary judgment “has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (§ 437c, subd. (p)(1); accord, Quidel Corp. v. Superior Court (2019) 39 Cal.App.5th 530, 537 (Quidel) [“If the plaintiff meets its burden, the defendant must set forth specific facts showing a triable issue of material facts exist.”].)

We review the trial court’s ruling on a motion for summary judgment de novo. (Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347; Quidel, supra, 39 Cal.App.5th at p. 537.) “On appeal, we independently assess the correctness of the ruling, applying the same legal standard as the trial court to determine if there are genuine issues of material fact. [Citations.] ‘In performing our review, we view the evidence in a light favorable to the losing party . . . , liberally construing [the] evidentiary submission while strictly scrutinizing the moving party’s own showing and resolving any evidentiary doubts or ambiguities in the losing party’s favor.’” (Quidel, at pp. 537-538; accord, Hampton, p. 347.)

C. No Triable Issues of Fact Exist Regarding Max Sound’s Breach of Its Obligation To Pay the Steele Litigation Fees
D.
“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) It is undisputed the Steele litigation engagement agreement was an enforceable contract, and Max Sound does not contend Adli failed to perform. Further, Max Sound does not dispute it did not pay the Adli invoices at issue, and it does not challenge the accuracy or sufficiency of Adli’s billing invoices as a measure of Adli’s damages. Rather, Max Sound contends two triable issues preclude summary judgment: (1) whether Adli agreed to modify the engagement agreement and look solely to Trammell for payment of Max Sound’s share of the litigation fees; and (2) whether the invoices Adli filed with its motion represented Max Sound’s share of the Steele litigation fees. Adli is correct Max Sound has not created a triable issue of fact to defeat summary judgment.

1. Max Sound has not produced admissible evidence of a modification of the engagement agreement or waiver of its payment obligations
2.
The Steele litigation agreement provided Adli would keep separate billing records for Max Sound and its codefendants and “look solely to Max Sound Corporation for payment of separate [b]illing [s]tatements submitted to Max Sound Corporation.” Max Sound does not dispute “[t]here is no written document modifying the Steele [e]ngagement or relieving Max Sound of its obligations under the Steele [e]ngagement.” Adli presented evidence there was no oral modification of the agreement or waiver of Adli’s right to recover fees from Max Sound. Adli’s February 15, 2013 e-mail to Trammell, copied to Halpern, stated, “We have no objection to receiving payment from you to cover the cost of representation for Max Sound. However, we must follow the engagement letter. . . . [¶] Please let me know if you would like to amend the engagement letter in order to change the billing statement responsibility.” Trammell testified he was content to leave the engagement agreement unmodified, “[a]s was Greg [Halpern].” Halpern admitted in his deposition that after receiving the February 15 e-mail, he did not tell Dr. Adli that Trammell was to solely be responsible for the bills. Dr. Adli stated in his declaration that “no one from [Adli] ever told anyone at Max Sound that it would only look to Trammell and Wolff for payment of its invoices and not look to Max Sound.”

The only responsive evidence offered by Max Sound was Blaisure’s declaration in opposition to the motion for summary judgment, in which Blaisure stated, “Max Sound and Adli orally agreed that Max Sound would not be held jointly and severally responsible for the Steele fees, and that Lloyd Trammell was the responsible party for paying the Steele fees.” However, Blaisure did not attest to the statements in his declaration under penalty of perjury, nor did he state where and when he executed the declaration or, if not signed in California, that it was certified or declared under the laws of the State of California. The declaration is therefore not a valid declaration under section 2015.5 and does not constitute admissible evidence to create a material dispute of fact in opposition to a summary judgment motion. (See Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal.4th 601, 612 [declaration attested to under penalty of perjury that was signed out of California and did not declare it was made under California law was defective under § 2015.5 and inadmissible to oppose summary judgment]; Witchell v. De Korne (1986) 179 Cal.App.3d 965, 975 [“[T]he failure of a declaration to comply with the requirements of Code of Civil Procedure section 2015.5 will preclude its use as an evidentiary document in support of a motion for summary judgment.” (Fn. omitted.)].)

Because Max Sound failed to adduce any evidence of a modification or waiver apart from the inadmissible Blaisure declaration, the trial court correctly deemed Adli’s motion to be “essentially unopposed.” And because Adli met its initial burden of proof on each element of its claim for breach of the Steele litigation engagement agreement, the trial court properly granted summary judgment with respect to the first cause of action.

3. Max Sound forfeited its contention Adli’s invoices do not reflect Max Sound’s share of the Steele litigation fees
4.
Max Sound contends, for the first time on appeal, triable issues of fact exist because the invoices submitted by Adli with its motion do not represent Max Sound’s share of the Steele litigation fees. Specifically, Max Sound points out eight of the 10 invoices at issue were addressed to Trammell at his home address, while only two were addressed to Max Sound at its office. Because the engagement agreement provided Adli will look solely to Trammell and Wolff as responsible for payment of billing statements submitted to them and solely to Max Sound for payment of billing statements submitted to Max Sound, Max Sound contends the invoices addressed to Trammell represented Trammell’s share of fees, not Max Sound’s share. Max Sound forfeited this argument by failing to raise it below.

Generally, a party cannot raise new issues or change the theory of a cause of action for the first time on appeal. (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 603; Franz v. Board of Medical Quality Assurance (1982) 31 Cal.3d 124, 143 [petitioner forfeited contention he was denied a fair hearing because of a panel member’s bias where he did not raise this issue before the agency or the trial court].) “‘“This rule is based on fairness—it would be unfair, both to the trial court and the opposing litigants, to permit a change of theory on appeal . . . .”’” (American Indian Health & Services Corp. v. Kent (2018) 24 Cal.App.5th 772, 789; accord, C9 Ventures v. SVC-West, L.P. (2012) 202 Cal.App.4th 1483, 1492 [“‘opposing party should not be required to defend for the first time on appeal against a new theory’”].) In limited circumstances, an appellate court has discretion to consider an issue for the first time on appeal “‘where the relevant facts are undisputed and could not have been altered by the presentation of additional evidence.’” (American Indian Health & Services Corp., at p. 789; accord, Key v. Tyler (2019) 34 Cal.App.5th 505, 540 [argument raising legal issue concerning interpretation of a written instrument not dependent on disputed facts may be considered for the first time on appeal]; C9 Ventures, at p. 1492.)

Whether the invoices Adli submitted with its motion accurately represented Max Sound’s share of the Steele litigation fees is a factual, not legal question. Dr. Adli declared the invoices constituted “all invoices in the Steele Litigation issued to Max Sound and the summary of amounts owed.” Rodriguez, the Adli employee responsible for billing and collections, submitted a declaration similarly stating the invoices were issued to Max Sound and reflected “fees and costs incurred in good faith in the representation of Max Sound in the Steele Litigation.” In opposition, Max Sound did not contend or submit evidence showing the invoices did not represent Max Sound’s share of billing; to the contrary, Max Sound asserted in its separate statement only that “Max Sound does not owe Adli any money for the Steele litigation.”

Had Max Sound argued in its opposition that the invoices at issue did not accurately reflect its share of litigation expenses, Adli could have submitted evidence to support its position on appeal that the invoices were directed to Trammell based on Max Sound’s instruction, not because Trammell was solely responsible for payment. Because Adli has not had an opportunity to rebut Max Sound’s argument raised for the first time on appeal, forfeiture applies.

E. No Triable Issues of Fact Exist as to Whether Adli Breached the Intellectual Property Engagement Agreement
F.
Max Sound contends the trial court erred in granting summary judgment on Adli’s second cause of action to recover unpaid fees for its intellectual property services because there was evidence Adli materially breached its obligations under the engagement agreement when it incorrectly identified itself as the assignee of Max Sound’s MaxD patent. This contention lacks merit.

“‘It is elementary a plaintiff suing for breach of contract must prove it has performed all conditions on its part or that it was excused from performance. [Citation.]’ [Citation.] Thus, ‘[o]ne who himself breaches a contract cannot recover for a subsequent breach by the other party.’” (Plotnik v. Meihaus (2012) 208 Cal.App.4th 1590, 1602; accord, Brown v. Grimes (2011) 192 Cal.App.4th 265, 277 [“When a party’s failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract.”].) However, only a material breach excuses performance by a contracting party. (Plotnik, at p. 1602; Brown, at p. 277.)

In its moving papers, Adli presented evidence as to each element of its contract cause of action: the parties entered into the intellectual property engagement in January 2013; Adli applied for at least four dozen patents pursuant to that engagement; Max Sound failed to pay all the billed fees and costs; and Adli’s invoices fairly measured its damages. Adli also presented evidence to rebut any argument it had breached the engagement agreement by incorrectly entering its own name and address on the patent assignment cover sheet instead of that of Max Sound.

As discussed, the underlying Max-D assignment was accurate. The cover sheet of the March 29, 2016 patent publication erroneously listed Adli as the assignee, but Adli submitted evidence this did not impact Max Sound. Specifically, Adli presented evidence there were frequent fluctuations in Max Sound’s share prices before and after Trammell posted on the Internet about the incorrect assignment unrelated to the posting. Adli later corrected the error. Accordingly, Adli carried its initial burden to show Max Sound breached the engagement agreement, shifting the burden to Max Sound to show a triable issue Adli materially breached the agreement by incorrectly listing itself as the assignee of the MaxD patent. (§ 437c, subd. (p)(1); Quidel, supra, 39 Cal.App.5th at p. 537.)

Max Sound did not carry its burden on summary judgment because its only responsive evidence was the inadmissible Blaisure declaration. Because Max Sound failed to raise a triable issue as to Adli’s second cause of action, summary judgment was proper.

G. The Trial Court Erred in Entering Judgment on Max Sound’s Cross-complaint Because Max Sound’s Corporate Status Had Been Revived
H.
Adli’s motion for summary judgment on Max Sound’s cross-complaint was premised solely on Max Sound’s lack of capacity to prosecute its claims because of its forfeited corporate status. Max Sound contends the trial court erred in granting judgment because Max Sound obtained a corporate revivor from the FTB prior to the summary judgment hearing on September 6, 2018, which it submitted to the trial court as an attachment to the Blaisure declaration. Although Adli is correct the Blaisure declaration was inadmissible, the trial court should have allowed Max Sound an opportunity to present a proper request for judicial notice of the certificate of revivor instead of imposing the harsh remedy of granting summary judgment.

As a general matter, a “‘corporation may not prosecute or defend an action, nor appeal from an adverse judgment in an action while its corporate rights are suspended for failure to pay taxes.’” (Bourhis v. Lord (2013) 56 Cal.4th 320, 324; accord, Tabarrejo v. Superior Court (2014) 232 Cal.App.4th 849, 862 [“‘Nor, during the period of suspension, may the corporation prosecute or defend an action, seek a writ of mandate, appeal from an adverse judgment, or renew a judgment obtained before suspension.’”].) However, a corporation may be relieved of its forfeited status by paying the taxes owed and obtaining a certificate of revivor from the FTB. (Rev. & Tax. Code, §§ 23305, 23305a.) “[T]he revival of corporate powers enables the previously suspended party to proceed with the prosecution or defense of the action . . . .” (Center for Self-Improvement & Community Development v. Lennar Corp. (2009) 173 Cal.App.4th 1543, 1553.)

“The primary purpose of statutes depriving suspended corporations of privileges enjoyed by a going concern, including the capacity to sue or defend litigation, is to motivate delinquent corporations to pay back taxes . . . . [Citations.] . . . Once the statutory goals underlying suspension are met, no purpose is served by imposing additional penalties. [Citation.] Leniency permits a delinquent corporation to secure a revivor, even at the time of the hearing, at the request of the corporation or on the trial court’s own motion.” (Cadle Co. v. World Wide Hospitality Furniture, Inc. (2006) 144 Cal.App.4th 504, 512 (Cadle) [trial court abused its discretion by entering judgment against forfeited corporation without allowing it an opportunity to obtain a revivor]; see Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 370 [lack of corporate capacity to prosecute an action because of suspended status is “‘a plea in abatement which is not favored in law’”].) “When a corporation’s suspended status ‘comes to light during litigation, the normal practice is for the trial court to permit a short continuance to enable the suspended corporation to effect reinstatement . . . to defend itself in court.’” (Cadle, at pp. 512-513; accord Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1606 [trial court abused its discretion in denying forfeited corporation’s request for a brief continuance of defendant’s motion to dismiss made at beginning of trial to enable corporation to obtain a revivor].)

Max Sound contends the trial court abused its discretion in denying Max Sound’s August 22, 2018 ex parte application to continue the hearing on the summary judgment motion to enable Max Sound to obtain a certificate of revivor. Adli responds Max Sound failed to act diligently in seeking the continuance because it waited two months after being served with Adli’s summary judgment motion to file its ex parte application, filing its request only one day before its opposition was due and two weeks before the hearing. Although we agree Max Sound did not act diligently, we need not reach whether the trial court abused its discretion in denying an initial continuance because Adli does not dispute Max Sound obtained a certificate of revivor before the summary judgment hearing. Yet the trial court found the certificate was not properly before the court because it was attached to Blaisure’s inadmissible declaration. The record does not reflect whether Max Sound requested the trial court take judicial notice of the certificate of revivor, which would have been appropriate upon a proper showing. (See Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1483-1484 [listings on the Secretary of State Web site and certificates of revivor are judicially noticeable documents under Evid. Code, § 452, subd. (c), as official acts of the executive branch].)

Even if Max Sound failed to make a proper request for judicial notice, or a request at the hearing for a continuance to do so, the remedy of granting summary judgment in favor of Adli although Max Sound was no longer a forfeited corporation was too harsh. The holding in Cadle, supra, 144 Cal.App.4th at pages 513 to 514 is on point. There, on the morning of trial the plaintiff moved to preclude two corporate defendants from defending the action because the companies’ corporate powers had been suspended. (Id. at p. 508.) The trial court granted the motion, and the trial proceeded as to the remaining defendant. One of the corporate defendants (Hospitality) obtained a notice of revivor after the trial, but it never notified the court. Three weeks later the trial court issued a statement of decision and entered judgment. (Id. at p. 509.) On appeal Hospitality requested judicial notice of the certificate, which was granted. (Id. at p. 509, fn. 3.) The Court of Appeal reversed the judgment, finding its entry was “too harsh a remedy.” (Id. at p. 513.) The court explained, “By virtue of its revived corporate status, Hospitality is entitled to a reversal—even at this late date—and an opportunity to defend this action. [Plaintiff] does not claim prejudice if required to prosecute an action against Hospitality. Even if it did, any prejudice [Plaintiff] would incur is outweighed by the strong public policy disfavoring pleas in abatement. Suspension of a corporation is intended to encourage it to pay taxes, not to provide a monetary windfall to private parties.” (Id. at pp. 513-514.) Similarly, Adli has not shown prejudice from allowing Max Sound to litigate its claims on the merits, and any prejudice is outweighed by the public policy favoring trial on the merits.

Adli contends even if the trial court erred in rejecting Max Sound’s revived status, we should affirm summary adjudication as to the cross-complaint’s first and second causes of action for breach of contract because the evidence presented by Adli as to its breach of contract claims showed Max Sound’s cross-claims likewise failed on the merits. Adli’s contention has merit. Adli moved for summary adjudication of the cross-complaint’s breach of contract claims, relied on the same evidence submitted as to its affirmative claims, and addressed the claims in its separate statement. Further, Adli was required to show its performance under the agreements to support its breach of contract claims (Oasis West Realty, LLC v. Goldman, supra, 51 Cal.4th at p. 821), and therefore a determination on summary judgment that Max Sound was liable for breach of contract necessarily determined that Adli had performed under the engagement agreements, defeating the breach of contract claims in the cross-complaint.

However, we reach a different result as to Adli’s contention we should also uphold summary adjudication as to the third through sixth causes of action of Max Sound’s cross-complaint. Adli moved for summary adjudication of only the first two causes of action for breach of contract, so we cannot reach on appeal whether Adli should have prevailed in a motion for summary adjudication of the third through sixth causes of action of Max Sound’s cross-complaint. (Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 949 [“[B]ecause [defendant] did not move in the alternative for summary adjudication of specified issues, we will not address whether [defendant] may have prevailed on some issues in this case.”]; Jimenez v. Protective Life Ins. Co. (1992) 8 Cal.App.4th 528, 534-535 [trial court erred in entering judgment on single cause of action where party moved for summary judgment, not summary adjudication].)

DISPOSITION

The judgment is reversed. We affirm the trial court’s order granting Adli’s motion for summary judgment on the complaint. The trial court is ordered to vacate its order granting Adli’s motion for summary judgment on Max Sound’s cross-complaint and to enter an order granting summary adjudication of the first and second causes of action and denying summary adjudication of the third through sixth causes of action. We remand for further proceedings consistent with this opinion. The parties are to bear their own costs on appeal.

FEUER, J.

We concur:

PERLUSS, P. J.

DILLON, J.*