Case Name: Carman v. C3, Inc., et al.
Case No.: 2014-1-CV-274598

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

According to the allegations of the third amended cross-complaint (“3AXC”), in June 2014, while plaintiff and cross-defendant Gregg Carman (“Carman”) was employed by defendant and cross-complainant C3, Inc. dba C3 Energy (“C3”) as Vice President of Sales, Carman was unhappy with his commissions due under C3’s compensation plan, and decided to exact revenge against his employer by providing strategic advice to C3’s foremost competitor, Space-Time Insight (“STI”), for use in pitching in customer accounts for which STI and C3 directly competed. (See 3AXC, ¶ 4.) Carman planned with STI to join STI, soliciting and managing the exact same customer accounts at STI that he had overseen at C3, and provided advice to STI in derogation of his duty of loyalty to C3. (Id.) Carman also downloaded and failed to return or destroy sensitive and C3’s valuable client related proprietary information in violation of his employment agreement, the employee handbook, and an employee Confidential Information and Inventions Assignment Agreement (“CIIAA”). (See 3AXC, ¶¶ 5-8.) C3 also paid unearned commissions to Carman based on his misrepresentations that certain transactions were signed, committed, binding and non-cancellable in an amount higher than the actual amount. (See 3AXC, ¶¶ 9-10.) Carman also was paid a cash advance that was to be repaid through future earned commissions that Carman has yet to repay. (See 3AXC, ¶¶ 11-12.)

On April 26, 2017, C3 filed the 3AXC against Carman, asserting causes of action for:
1) Conversion—HQ;
2) Conversion—NU;
3) Conversion—advance;
4) Conversion—no entitlement to HQ commission payment;
5) Conversion—no entitlement to NU commission payment;
6) Breach of contract—HQ;
7) Breach of contract—NU;
8) Breach of contract—advance;
9) Intentional misrepresentation—HQ;
10) Intentional misrepresentation—NU;
11) Attorney’s fees;
12) Breach of contract—CIIAA;
13) Breach of contract—employment letter and C3 handbook;
14) Breach of the duty of loyalty; and,
15) Violation of the California Uniform Trade Secrets Act.

On May 2, 2018, C3 dismissed the sixth, seventh, ninth and fifteenth causes of action from the 3AXC without prejudice. Carman moves for summary adjudication of the tenth through fourteenth causes of action of the 3AXC.

Cross-defendant’s burden on summary judgment

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted; emphasis added.)

“The ‘tried and true’ way for defendants to meet their burden of proof on summary judgment motions is to present affirmative evidence (declarations, etc.) negating, as a matter of law, an essential element of plaintiff’s claim.” (Weil et al., Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) ¶ 10:241, p.10-91, citing Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 334; emphasis original.) “The moving party’s declarations and evidence will be strictly construed in determining whether they negate (disprove) an essential element of plaintiff’s claim ‘in order to avoid unjustly depriving the plaintiff of a trial.’” (Id. at § 10:241.20, p.10-91, citing Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.)

“Another way for a defendant to obtain summary judgment is to ‘show’ that an essential element of plaintiff’s claim cannot be established. Defendant does so by presenting evidence that plaintiff ‘does not possess and cannot reasonably obtain, needed evidence’ (because plaintiff must be allowed a reasonable opportunity to oppose the motion.) Such evidence usually consists of admissions by plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action.” (Id. at ¶ 10:242, p.10-92, citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)

There are triable issues with regards to the tenth cause of action for intentional misrepresentation regarding the NU account.

The elements of a cause of action for fraud are: (1) a misrepresentation, which includes a concealment or nondisclosure; (2) knowledge of the falsity of the misrepresentation, i.e., scienter; (3) intent to induce reliance on the misrepresentation; (4) justifiable reliance; and (5) resulting damages. (Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal. 4th 631, 638.) Carman asserts that the tenth cause of action for intentional misrepresentation is without merit because: he did not make any misrepresentations as his misrepresentations were accurate; he believed that his representations were accurate and thus did not have knowledge of the misrepresentations’ inaccuracy; and C3 cannot establish that it reasonably relied on Carman’s misrepresentations. (See Carman’s memorandum of points and authorities in support of motion for summary adjudication (“Carman’s memo”), pp.7:11-28, 8:1-28, 9:1-16.)

In support of his assertion that he did make any misrepresentations, Carman presents portions of his own deposition testimony, his declaration and a brief statement from Andrew Hill’s deposition in which he stated that he was not aware of anyone at C3 misrepresenting anything with respect to the terms of a deal to secure Siebel’s approval. (See evidence cited by Carman’s separate statement of undisputed material facts, nos. 12-13.) Carman similarly relies on his declaration and his own and Hill’s deposition testimony with regards to his knowledge of his purported misrepresentations. (See evidence cited by Carman’s separate statement of undisputed material facts, nos. 12-13, 21-22.) As to reasonable reliance, Carman relies on portions of Hill’s, Peter Eidelman’s and Thomas Siebel’s depositions. (See evidence cited by Carman’s separate statement of undisputed material facts, nos. 15-20, 23-33.) However, Carman’s arguments appear to address only “[t]he representations that Carman made about the NU agreement at the time it was signed on May 29, 2014….” (Carman’s memo, pp.8:1-28, , 9:1-16.) However, the tenth cause of action also alleges that Carman subsequently sought commission payment for the transaction based on the continued representation, and was in fact paid such commission. Thus, Carman fails to meet his initial burden as to the tenth cause of action. Regardless, even if Carman had met his initial burden, C3 presents a substantial amount of evidence to demonstrate the existence of a triable issue of material fact as to each of these elements. (See evidence cited by C3’s separate statement in opposition to Carman’s motion for summary adjudication, nos. (“UMFs”) 1, 3, 6, 8-10, 12-14, 16, 17, 19-23, 25, 28-32.) For example, Carman omits portions of Eidelman’s deposition testimony that contradicts Carman’s assertion that NU Agreement obligated parties to commit to a go-live date in 2014, much less July 11, 2014. Carman also omits deposition testimony of himself, Eidelman and Hill that indicates that Carman made certain misrepresentations with regards to the schedule of the deal. Carman’s motion for summary adjudication is DENIED as to the tenth cause of action.

There is a triable issue as to whether C3 is entitled to nominal damages on its twelfth cause of action for breach of contract

Carman moves for summary adjudication of the twelfth cause of action for breach of contract—CIIAA—arguing that C3 cannot establish damages. (See Carman’s memo, pp.10:1-28, 11:1-6.) Apparently, Carman believes that he cannot have breached is CIIAA by sharing information of which he was aware regarding C3 client National Grid because such information was discussed at industry conferences, press releases and publically posted requests for proposals. (See UMFs 41, 43-56.) However, a defendant’s breach is an element in a breach of contract cause of action that is distinct from damages to the plaintiff. (See Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913.) Nevertheless, Carman presents portions of Siebel’s deposition in which Siebel states that the damages resulting from Carman’s usage of information derived from C3 in violation of the CIIAA has not been calculated and is thus unable to testify as to the amount of damages. (See UMFs 63-66.) Carman meets his initial burden to demonstrate that C3 cannot establish damages to support its twelfth cause of action.

In opposition, C3 argues that the law allows the contract cause of action to survive because it is entitled to recover nominal damages. Indeed, Civil Code section 3360 states that “[w]hen a breach of duty has caused no appreciable detriment to the party affected, he may yet recover nominal damages.” (Civ. Code § 3360; see also Knoch v. Haizlip (1912) 163 Cal. 146, 153 (stating that “[e]ven without any finding of the amount, the plaintiffs were entitled to nominal damage”); see also Sweet v. Johnson (1959) 169 Cal.App.2d 630, 632 (stating that “[a] plaintiff is entitled to recover nominal damages for the breach of a contract, despite inability to show that actual damage was inflicted upon him [citation], since the defendant’s failure to perform a contractual duty is, in itself, a legal wrong that is fully distinct from the actual damages… nominal damages, which are presumed as a matter of law to stem merely from the breach of a contract… may properly be awarded for the violation of such a right”); see also Robinson v. Raquet (1934) 1 Cal.App.2d 533, 544 (stating that “[i]n actions for breach of contract nominal damages are presumed to follow as a conclusion of law from proof of the breach”); see also Silicon Image, Inc. v. Analogix Semiconductor (N.D. Cal. 2008) 642 F.Supp.2d 957, 964 (stating that “[e]ven where no actual damages can be established, a plaintiff who has established that a contract was breached is entitled to an award of nominal damages as the breach itself is a legal wrong that is fully distinct from the actual damages”); see also ProMex, LLC v. Hernandez (C.D. Cal. 2011) 781 F.Supp.2d 1013, 1019 (stating same).) C3 presents evidence and Carman’s presented evidence demonstrates a triable issue of material fact as to whether Carman breached the CIIAA, and thus, as to whether C3 is entitled to nominal damages. (See evidence cited by both C3 and Carman, UMFs 34-66.) Accordingly, the motion for summary adjudication of the twelfth cause of action is DENIED.

There are at least triable issues as to whether the thirteenth cause of action lacks merit due to C3’s inability to demonstrate Carman’s breach of the employment letter and C3 handbook, or damages to C3.

Carman moves for summary adjudication of the thirteenth cause of action for breach of contract—employment letter and C3 handbook, on the ground that it lacks merit because C3 cannot demonstrate that Carman breached the agreements or that C3 was damaged as a result. As to the issue of breach, Carman presents his own declaration that stated that he did not share any of the confidential information or otherwise use any information from C3 to assist STI. (See evidence cited by UMF 41.) However, as discussed earlier, Carman asserts that he has not breached the confidentiality provisions because the information disclosed was publicized at industry conferences, in press releases and publically posted requests for proposals. However, this argument focuses on the confidentiality of National Grid’s information, not C3’s usage of, and information gleaned from National Grid’s information. Regardless, even if Carman met his initial burden as to breach, C3 demonstrates the existence of a triable issue of material fact. (See UMFs 41, 47, 49, 57, 58.)

Carman also argues that the thirteenth cause of action lacks merit, again citing to deposition testimony of Thomas Siebel. (See UMFs 63-66.) For identical reasons as with the twelfth cause of action, there is a triable issue of material fact as to whether C3 is entitled to nominal damages. (See Civ. Code § 3360; see also Knoch v. Haizlip (1912) 163 Cal. 146, 153; see also Sweet v. Johnson (1959) 169 Cal.App.2d 630, 632; see also Silicon Image, Inc. v. Analogix Semiconductor (N.D. Cal. 2008) 642 F.Supp.2d 957, 964; see also ProMex, LLC v. Hernandez (C.D. Cal. 2011) 781 F.Supp.2d 1013, 1019.) (See evidence cited by both C3 and Carman, UMFs 34-66.) Accordingly, the motion for summary adjudication of the thirteenth cause of action is DENIED.

There likewise is a triable issue as to the fourteenth cause of action.

Carman similarly asserts that the fourteenth cause of action lacks merit because C3 cannot demonstrate damages, citing again to the identical evidence cited in support of his motion for summary adjudication of the twelfth and thirteenth causes of action. For identical reasons, there are triable issues of material fact as to whether C3 is entitled to nominal damages. (See Civ. Code § 3360; see also Knoch v. Haizlip (1912) 163 Cal. 146, 153; see also Sweet v. Johnson (1959) 169 Cal.App.2d 630, 632; see also Silicon Image, Inc. v. Analogix Semiconductor (N.D. Cal. 2008) 642 F.Supp.2d 957, 964; see also ProMex, LLC v. Hernandez (C.D. Cal. 2011) 781 F.Supp.2d 1013, 1019.) (See evidence cited by both C3 and Carman, UMFs 34-66.) Accordingly, the motion for summary adjudication of the fourteenth cause of action is DENIED.

The motion for summary adjudication of the eleventh cause of action is DENIED.

Lastly, Carman argues that the Court should grant summary adjudication of the eleventh cause of action because, although Labor Code section 218.5 permits courts to award attorney’s fees in cases involving claims for unpaid wages where a plaintiff has brought a claim in bad faith, it does not create a cause of action. Carman does not cite to any evidence; the cause of action is not referenced in Carman’s separate statement of undisputed material facts. Carman cites to Plancich v. United Parcel Service, Inc. (2011) 198 Cal.App.4th 308, 314, to support his contention; however, the case merely restates Labor Code section 218.5 and concludes that the employer was entitled to costs and fees. (Id. at pp.314-316.) It is unclear as to how this case is helpful to Carman. The treatment in his supporting memorandum is also extremely terse, consisting merely of three sentences. As Carman neither cites to any authority to support his proposition, nor elaborates why there can be no affirmative cause of action for the presentation of frivolous pleadings or claims so as to harass or cause unnecessarily delay, or needlessly increase the cost of litigation, Carman fails to sufficiently substantiate his argument, and the motion for summary adjudication of the eleventh cause of action is DENIED.