The People of the State of Cal. Ex Rel. Michael Strathmann v. Acacia Research Corp.

The court DENIES the motions for summary judgment or summary adjudication brought by Defendants COMBIMATRIX CORP., ACACIA RESEARCH CORP., and AMIT KUMAR for the reasons set forth below.

I. CombiMatrix’s Motion for Summary Judgment

A. Defendants Submitted No False Claim to National Union

1. No Evidence of Penal Code 550 Violation

CombiMatrix merely asserts that Plaintiff has no evidence of any Penal Code 550 violations. (Motion a pp. 10-11.) But CombiMatrix fails to cite any evidence in the form of devoid discovery responses to prove that Plaintiffs do not possess and cannot reasonably obtain needed evidence. So CombiMatrix fails to carry its initial burden of production and the burden does not shift to Plaintiff.

Even assuming the burden does shift, Plaintiff shows there is a triable issue of fact as to whether it does have evidence of statutory violations by Defendants. (See Plaintiff’s Response to Defts. Separate Statement, Nos. 21-53.)

2. Litigation Privilege

CombiMatrix argues that the litigation privilege of Civil Code 47 (b) bars Plaintiff from suing it for tort liability arising from communications made during the federal lawsuit. (Motion at pp. 11-12.) But this argument fails.

Plaintiff is not bringing a tort suit solely based on privileged communications arising from the prior federal litigation. Plaintiff is also suing Defendants for filing false insurance claims, which occurred before litigation was threatened or commenced.

3. National Union Breached its Duty to Defend as a Matter of Law

CombiMatrix argues that the federal district court has already found that National Union breached its duty to defend as a matter of law. So CombiMatrix argues that it is irrelevant whether the insurance policy excluded coverage for the Nanogen lawsuit. (Motion at pp. 12-13.)

But these arguments fail. Collateral estoppel does not apply because there is no showing that Strathmann was a party to the federal lawsuit or was in privity with a party thereto. Accordingly, there is no conclusive evidence before the court that National Union breached its duty to defend.

4. National Union Owed a Duty to Defend even if Defendants Intentionally Violated Nanogen’s Patent Rights

CombiMatrix argues that National Union owed a duty to defend even if it engaged in intentional misconduct. (Motion at pp. 13-14.) But this argument is irrelevant. The relevant misconduct in this case is the alleged intentional and fraudulent submission of a false insurance claim. That National Union owed a duty to defend is not a defense.

Moreover, Plaintiff has demonstrated there is a triable issue of fact as to whether National Union owed any duty to defend under its policy.

5. CombiMatrix Owed No Duty to Disclose Facts that would Defeat Coverage

CombiMatrix argues that it owed no duty to disclose to National Union facts that would have defeated coverage. But CombiMatrix fails to cite any relevant controlling authority to establish this principle. (Motion at pp. 16-17.) So the burden does not shift to Plaintiff.

In Opposition, Plaintiff shows that such a duty to disclose relevant facts does exist. (Penal Code 550 (b)(3).) (Corrected Opposition at pp. 40-42.)

B. Court Lacks Jurisdiction

1. No Misconduct in California

First, CombiMatrix argues that none of the alleged acts of misconduct occurred in California. in Opposition, Plaintiff presents sufficient evidence to show a triable issue of material fact as to whether some acts of misconduct occurred in California. (Plaintiff’s Response to Defts. Separate Statement Nos. 12-19.)

2. Strathmann Not an Original Source

Plaintiff presents sufficient evidence to show a triable issue of material fact as to whether Strathmann was an original source. (Plaintiff’s Response to Defts. Separate Statement Nos. 77-79.)

C. Statute of Limitations

CombiMatrix argues that the 8-year statute of limitations of Ins. Code 1871.7 (l) bars this action because CombiMatrix submitted its claim to National Union on 12/5/2000. So the statute of limitations ran on 12/5/2008, but Plaintiff did not file this action until 11/19/2010.

CombiMatrix fails to carry its initial burden of production, because it fails to make a prima facie showing as to precisely what fraudulent acts Plaintiff is attacking and precisely when they allegedly occurred. Plaintiff is alleging violations of Penal Code 550 (a)(1), (a)(5), and (b)(1)–(b)(3), which encompassed many unspecified acts over a range of time, including Nov. 2002 and dates in 2003 that fell within the 8-year period.

Defendant CombiMatrix’s motion for summary adjudication is DENIED on procedural grounds because the notice of motion and separate statement are both defective.

The notice of motion and the separate statement fail to properly identify the specific issues to be decided and the headings are not repeated verbatim in both documents and in the memo in support. The notice of motion and separate statement contains no headings at all to identify the various issues and sub-issues. The issues are not properly numbered in sequence for ease of identification. (CRC 3.1350 (b), (d).)

II. Acacia and Kumar

A. Joinder

Acacia and Kumar may not join in CombiMatrix’s motion and may not adopt its separate statement. (Frazee v. Seeley (2002) 95 Cal.App.4th 627, 636.) To the extent they seek join in CombiMatrix’s motion, the motion is DENIED.

B. Separate Issues

Acacia and Kumar raise separate issues at pp. 1-2 of their Motion. The issues are as follows:

Neither Acacia nor Kumar (1) submitted a claim to National Union, (2) made any written or oral communications with National Union, (3) prepared any writing to be presented to National Union, or (4) concealed any information from National Union.

Acacia is not liable for the actions of its subsidiary, CombiMatrix.

Kumar is not liable as CEO for the actions of CombiMatrix.

The issues and sub-issues are as follows:

Neither Acacia nor Kumar (1) submitted a claim to National Union, (2) made any written or oral communications with National Union, (3) prepared any writing to be presented to National Union, or (4) concealed any information from National Union. (Facts 46-52.)

Acacia is not liable for the actions of its subsidiary, CombiMatrix.

Kumar is not liable as CEO for the actions of CombiMatrix. (Fact 46.)

But in Opposition, Plaintiff shows that there are triable issues of fact as to:

whether Kumar directed Burrell’s communications with National Union and either personally presented or caused another to present an oral or written communication, knowing it to be false (Response to CombiMatrix Facts 18, 38, 47; 4/28/14 Errata Facts 86-88; RJN at Ex. 12 at pp. 47-49, 63-64; PF 101-102 [4/16/14 Strathmann Decl. Exs. 6-7]; PF 107 [Goldfarb Decl. at Ex. 2 pp. 26-27]; PF 109 [Goldfarb Decl. at Ex. 30 –3/12/14 Harris Depo at 106-108].)

whether Burrell’s acts at Kumar’s behest were acts of Acacia, whether Burrell reported on his discussions with National Union to Kumar, his direct supervisor, and whether Burrell reported on his progress to Chip Harris, President of Acacia (Response to CombiMatrix Facts 38, 47; 4/28/14 Errata Facts 86-88; RJN at Ex. 12 at pp. 47-49, 63-64; PF 101-102 [4/16/14 Strathmann Decl. Exs. 6-7]; PF 107 [Goldfarb Decl. at Ex. 2 pp. 26-27]; PF 109 [Goldfarb Decl. at Ex. 30 –3/12/14 Harris Depo at 106-108].)

whether as of Dec. 2002 due to merger CombiMatrix had ceased to be an independent entity but was a division of Acacia, and whether Acacia was liable for the acts of CombiMatrix (PF 101-102 [4/16/14 Strathmann Decl. Exs. 6-7]);

whether Kumar was the only CombiMatrix employee who ever spoke with anyone at National Union or whether CombiMatrix represented to the federal court that its general counsel Patrick de Maynadier had several oral conversations with National Union in 2000. (4/17/14 RJN at Ex. 20 & ¶¶ 129-132; PF 101-102 [4/16/14 Strathmann Decl. Exs. 6-7]; PF 107 [Goldfarb Decl. at Ex. 2 pp. 26-27]; PF 109 [Goldfarb Decl. at Ex. 30 –3/12/14 Harris Depo at 106-108];

Defendants’ Acacia and Kumar’s motion for summary adjudication is DENIED on procedural grounds because the notice of motion and separate statement are both defective.

The notice of motion fails to properly identify the specific issues to be decided and the separate statement does not adequately identify the issues to be decided. Furthermore, there are no headings in the separate statement and they are not repeated verbatim in the memo in support. The issues are not numbered. (CRC 3.1350.)

Also, in the memo in support, Defendants make numerous factual assertions without citing any evidence and without citing any material facts from the separate statement. So it is not possible to determine whether Defendant met his initial burden to make a prima facie showing, by a preponderance of the evidence, that Plaintiff cannot establish an element of his claim, that Plaintiff does not possess or cannot reasonably obtain needed evidence, or that Defendants have a complete defense.

III. Requests for Judicial Notice

The court grants the following requests to take judicial notice that the documents were filed in various court proceedings, but the court does not take judicial notice of the truth of facts alleged therein, to the extent they are reasonably subject to dispute.

4/17/14 Strathmann’s RJN part 1: Exs. 1-30

4/17/14 Strathmann’s RJN part 2: Exs. 22-30

2/28/14 Defendants’ attachments 1-13.

2/14/14 Defendants’ exhibits 1-13.

IV. Objections to Evidence

4/28/14 Defendants’ objections to Strathmann Decl. 1-44. The court declines to rule. Not in the proper format. No proposed order. And no verbatim quote of language objected to. (CRC 3.1354.)

4/25/14 Defendants’ objections to Goldfarb Decl. 1-33. OVERRULED.

4/25/14 Defendants’ objections to the Strathmann Decl. 1-16. OVERRULED.

4/25/14 Defendants’ objections to the Soward Decl. 1-5. OVERRULED.

4/25/14 Defendants’ objection to the requests for judicial notice. SUSTAINED as to facts reasonably subject to dispute.

4/16/14 Strathmann’s objection to the requests for judicial notice. SUSTAINED as to facts reasonably subject to dispute.

4/16/14 Strathmann’s objections to the Kumar Decl., to the Specter Decl., and to the Burrell Decl. The court declines to rule because the objections are not in the proper format. They are not numbered and much of the language objected to is not set forth

Defendants to give notice and submit formal order.

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