Case Name: Mattoo, et al. v. 24/7 Customer, Inc.
Case No.: 1-13-CV-240918

Defendant 24/7 Customer, Inc. (“24/7”) moves for summary judgment, or in the alternative, summary adjudication, of the claims filed by plaintiff Arvind Mattoo and Kanchan Gupta, as Trustees of the Rajat K. Gupta Family Irrevocable Trust (the “Trust”) (collectively, “Plaintiff”). Plaintiff moves for summary adjudication of its first cause of action for breach of contract.

24/7’s request for judicial notice filed in support of its reply papers on its motion for summary judgment, or in the alternative, summary adjudication, is GRANTED. (See Evid. Code, § 452, subd. (d).)

24/7’s objections to the evidence submitted by Plaintiff in support of its opposition to 24/7’s motion for summary judgment, or in the alternative, summary adjudication, are SUSTAINED as to nos. 2, 6, 9, 11, 14, 16 and 19 and otherwise OVERRULED.

24/7’s motion for summary judgment is DENIED.

24/7’s alternative motion for summary adjudication is GRANTED IN PART and DENIED in part. The motion is GRANTED as to the second (trespass to chattels) and third (conversion) causes of action and DENIED as to the first (breach of contract) and fifth (quiet title) causes of action.

After full consideration of the evidence, separate statements and authorities submitted by each party, the Court finds that 24/7 has demonstrated that the second and third causes of action are time-barred based on the triggering of the applicable limitations periods on September 30, 2009, at the latest, when 24/7 advised Rajit K. Gupta via email that “[t]here are no stock options that has [sic] been exercised validly from our standpoint. (24/7’s Separate Statement of Undisputed Material Facts (“UMF”) Nos. 19, 20.) Plaintiff fails to raise a triable issue of material fact thereto.

With regard to the first cause of action for breach of contract, the Court finds that Plaintiff has demonstrated a triable issue of material fact as to when the Option Agreement was repudiated, i.e., breached, and thus when its claim for breach of that agreement accrued, triggering the four-year limitations period. (See Plaintiff’s Response to UMF Nos. 15-25; Potts Decl. at ¶¶ 4, 13, 14, Exhs. A (Kannan Depo. at 252:21-252:12) J, K and M; also see Romano v. Rockwell Int’l Inc. (1996) 14 Cal.4th 479, 489 [where a breach has occurred but there are ongoing contractual obligations between the parties, “the plaintiff may elect to rely on the contract despite [the] breach, and the statute of limitations does not begin to run until the plaintiff elected to treat the breach as terminating the contract”].)

As 24/7 is challenging the sufficiency of the pleadings with respect to the fourth cause of action (breach of the duty of good faith and fair dealing), its motion is treated as a motion for judgment on the pleadings in that regard and is GRANTED WITHOUT LEAVE TO AMEND. The implied covenant of good faith and fair dealing “cannot be endowed with an existence independent of its contractual underpinnings. It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.) Thus, where breach of an actual term is alleged, a separate implied covenant claim that is based on the same breach is superfluous. (Id. at 327.) Here, the allegations of the fourth cause of action are identical to Plaintiff’s breach of contract claim and therefore no claim for breach of the implied covenant has been stated.

24/7’s request for judicial notice in support of its opposition to Plaintiff’s motion for summary adjudication is GRANTED. (See Evid. Code, § 452, subd. (d).)

24/7’s objections to the evidence submitted by Plaintiff in support of its motion for summary adjudication are OVERRULED.

The Court declines to rule on Plaintiff’s objections to the evidence submitted by 24/7 in support of its opposition to Plaintiff’s motion for summary adjudication. While Plaintiff has submitted a proposed order, the order fails to comply with California Rules of Court, rule 3.1354(b), as each objection is not “numbered consecutively” as required.

Plaintiff’s motion for summary adjudication of the breach of contract claim is GRANTED. After full consideration of the evidence, separate statements and authorities submitted by each party, the Court finds that Plaintiff has established by admissible evidence that: the Trust paid fair market value for the shares of common stock of 24/7 pursuant to the Option Agreement executed between the parties (UMF No. 8); the options for those shares all vested on April 11, 2005 (UMF Ns. 10, 14, 15, 17, 18); and 24/7 never exercised its unvested option repurchase rights to completion prior to that time (UMF No. 18.) The Court finds that the Option Agreement was a fully integrated agreement and that 24/7’s evidence purporting to establish the existence of a collateral oral agreement between the parties for the provision of advisory services in exchange for the vesting of shares violates the parol evidence rule as a matter of law (see Civ. Code, § 1856). This alleged oral agreement is not one which might “naturally be made as a separate contract” (see Banco Do Brasil, S.A. v. Latian, Inc. (1991) 234 Cal.App.3d 973, 1002), especially in light of the fact that the Option Agreement explicitly discusses how the shares were to vest and be repurchased. (See e.g., Salyer Grain & Milling Co. v. Henson (1970) 13 Cal.App.3d 493, 502 [holding that collateral oral agreement regarding collision insurance was not one which would naturally have been made in a collateral oral agreement and not included in written agreements because the latter carefully provided for different types of insurance in specified amounts].)

24/7 fails to raise a triable issue of material fact with regard to each of the elements of Plaintiff’s claim, including the lack of sufficient consideration for the Option Agreement. Further, 24/7 fails to provide evidence which establishes each element of the affirmative defenses discussed in its opposing memorandum.