Case Name: E-Infochips, Inc., et al. v. Sentry 360 Security, Inc.
Case No.: 2015-1-CV-284077

On August 8, 2014, Sentry 360 Security, Inc. (“Sentry”) entered into a written contract with E-Infochips, Ltd. for the provision of software development services and deliverables. (See first amended cross-complaint (“FAXC”), ¶ 10.) The agreement, attached to the complaint, is incorporated by reference to the FAXC. (Id.) On August 1, 2014, with the intent to induce Sentry to enter into the agreement, E-Infochips (“EIC”) employees Shreyans Shirmal (“Shirmal”) and Dipak Agrawal (“Agrawal”) represented to Sentry’s Chief Technology Officer, Jeff Mueller, that EIC had the resources, skillset and expertise to provide the services necessary to complete the project prior to November 2014, and would dedicate engineers having at least eight years of experience in the field of software development to the project, despite their knowledge that such representations were false. (See FAXC, ¶¶ 71.) Further, on September 15, 2014, and on October 16, 2014, Shirmal again restated these misrepresentations to Mueller. (See FAXC, ¶¶ 81-82.)

Thereafter, after November 2014 had passed, Shirmal and Agrawal represented that they had the resources, skillset and expertise to complete the project but needed Sentry to pay an additional $201,213. (See FAXC, ¶¶ 85-93.) In reliance on those representations, Sentry was induced to continue its relationship with EIC and issue additional purchase orders to fund the completion of the project. (See FAXC, ¶ 101.) On January 25, 2016, Sentry filed the FAXC, asserting causes of action for: breach of contract; breach of warranty; and, fraud. EIC demurs to the fraud cause of action.

Here, EIC argues that Sentry fails to allege that: Shirmal and Agrawal had authority to speak for EIC; EIC had knowledge of the alleged falsity of the alleged misrepresentations; EIC had an intent to defraud; and, Sentry justifiably relied on the misrepresentations. (See EIC’s memorandum of points and authorities in support of demurrer (“EIC’s memo”), pp.6:26-28, 7:1-26.) However, the third cause of action plainly alleges those facts.

EIC also complains that allegations concerning certain alleged misrepresentations: are not pled with particularity because they are made “upon information and belief” and do not otherwise state “the facts upon which the belief is founded”; and, are contradicted by the express terms in the contract. (See EIC’s memo, pp.4:7-27, 5:1-28, 6:1-25.) However, EIC fails to address the alleged promise that induced Sentry to enter the contract that EIC “had the resources, skillset, and expertise to provide the information technology services necessary to complete Sentry 360’s projects….” (FAXC, ¶ 61, 84, 86, 87, 89, 94.) Although the agreement states that “completion dates shall not be binding and are estimates only,” this statement does not relate to whether EIC had the resources, skillset, and expertise to be able to meet those target dates. As “a demurrer cannot rightfully be sustained to part of a cause of action” (see Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047), the demurrer is OVERRULED.

The Court will prepare the order.