2013-00153788-CU-CO

VSP Labs, Inc. vs. Pro Fit Optix, Inc.

Nature of Proceeding: Motion for Summary Judgment

Filed By: Warne, William R.

Plaintiff/Cross-Defendant VSP Labs, Inc.’s (“VSP”) Motion for Summary Adjudication of Defendant/Cross-Complainant Pro Fit Optix, Inc.’s (“PFO”) Third Amended Cross Complaint (“TACC”) is GRANTED IN PART and DENIED IN PART. VSP’s Motion for Summary Judgment is DENIED.

Request for Judicial Notice

PFO’s request for judicial notice of the existence of Rudolf Suter’s plea agreement and Report and Recommendation Concerning Rudolf Suter’s plea agreement is granted.

Evidentiary Objections

PFO’s objections to the purportedly “attributive statements” in the Separate Statement are overruled. Undisputed facts may be established by deposition testimony. (Weil & Brown, Cal. Practice Guide; Civil Procedure Before Trial (The Rutter Group 2018) ¶ 10:162.) Additionally, Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, relied upon by PFO, is distinguishable from the facts in this case. In Reeves, the moving party improperly used deposition testimony in an effort to set forth “undisputed” material facts, where the facts were “squarely controverted.” (Id. at 106.) Here, that is not the case.

PFO’s Objection nos. 7-19 are overruled.

VSP’s Objection no. 6 to the Declaration of Brigette Rousseau in its entirety is overruled. VSP’s Objection no. 12 to the all excerpts of Bridgette Rousseau’s deposition testimony is overruled. VSP’s Objections no. 13 and 14 to the deposition testimony of Kennith Lewis and Heidi Quy Thi Murphy are overruled.

The Court declines to strike PFO’s response to VSP’s Separate Statement in its entirety.

In ruling on these objections, the Court notes that CCP § 473c(q) provides, “In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.” (CCP § 473c(q).)

Factual Background

On April 20, 2012, VSP, a large company that provides products to optometrists and eye-care professionals, entered into a contract with PFO, an optical technology company. The contract was a four-year Technology Transfer and Development Agreement (the “TTDA”), relating to PFO’s development of eyewear measurement technology for optometrists. The project to develop this technology was referred to as the “otto” project, which stands for “one touch to optical.” The terms of the TTDA were as follows:

In exchange for PFO’s sale and continuous development of its technology in accordance with the Statement of Work (“SOW”), VSP would pay PFO a total of $6 million. (VSP Ex. B at 4.1, 5.1.) VSP was required to make an initial payment of $1 million, which was credited towards the $6 million owed. (Id.) VSP agreed to then make a minimum payment of $1 million during each six month period, until it had paid the total $6 million owed to PFO. (Id.) The TTDA further states that if PFO did not fulfill, “to VSP’s satisfaction, the Milestones set forth in the SOW” within thirty days of the agreed-upon completion dates, “then PFO shall be deemed to be in material breach of this Agreement.” (Id. at 5.4.)

The TTDA also states that if VSP purchased other products from PFO, such as eyeglasses, then those payments “shall be credited when received by PFO as payments against . . . the Total Payment Due.” (Id. at 4.2.)

The TTDA also provided VSP with a “Step-In Right,” which may occur when a “Step-In -Trigger Event” takes place. (Id. at 17.5.) A Step-In Trigger Event is defined as (i) a Defect that VSP “determines is critical, that is not fixed to VSP’s satisfaction within three (3) days of notice of such Defect; or (ii) another breach of the Services Levels that VSP determines has had or may have, in VSP’s reasonable sole business judgment a significant adverse impact on the operation or availability of the Product for forty eight (48) hours continuously.” (Id. at 1.35.) VSP’s Step-In Right allowed it, upon a Step-In Trigger Event, to suspend PFO’s right and obligation to provide some or all of the Services, and to cause itself or engage a third party to carry out the otto project as set forth in the TTDA. (Id. at 17.5.) Under the TTDA, any costs incurred by VSP exercising its Step-In Right would be at VSP’s expense. (Id.)

Upon the execution of the TTDA, VSP was obligated to ultimately pay the full $6 million under the terms of the agreement, and the TTDA provided that “no breach, default, termination, or expiration of [the TTDA] shall relieve either Party from its obligation to pay the other any sums to be paid hereunder at the times specified herein.” (Id. at 23.2.)

The TTDA included an integration clause, stating that it “constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous

understandings, agreements, representations and warranties, both written and oral . . .” (Id. at 24.17.)

Prior to the execution of the TTDA, in December 2011, PFO’s CEO at the time, Rudolph Suter, met with VSP’s Vice President of Corporate Development, Eric Johannessen. (PFO’s Contrary Fact (“PCF”) 2A.) Mr. Suter testified that at that time, Mr. Johannsessen represented that it would be easy for VSP to fulfill any payment obligations to PFO under an agreement between the companies by buying PFO’s products, rather than paying money directly to PFO. (Id.) In March 2012, again prior to the execution of the TTDA, the president of VSP Optics Group, Don Oakley, met with Mr. Suter. (Id.) Both Mr. Suter and Mr. Oakley are the signatories on the TTDA for their respective companies. (VSP Ex. B.) Mr. Suter testified that during that conversation, Mr. Oakley said that VSP would buy $20 million worth of PFO’s products, and that only the first two installment payments under their presumed future agreement would be paid in cash, with the remainder paid through purchases of PFO’s products. (Id.) PFO alleges that in reliance on these oral promises, it entered into the TTDA.

After the TTDA was signed in April 2012, VSP asserts that PFO produced a defective product, and failed to meet numerous critical beta test launch dates, which delayed the otto launch on multiple occasions. (UMF 34.) In February 2013, VSP chose to exercise its Step-In-Rights, and contracted with third parties Managing Innovation and Technology, Inc. (“MINT”) and its division Information Technology & Services Company (“ITS”) to complete the otto launch. (Id.) MINT was a company set up by PFO’s former Vice President of Research & Development/Technology, Hoa Nguyen, and his wife, while Mr. Nguyen still worked for PFO and was developing the otto technology. (UMF 40, PCF 28.34.) PFO alleges that VSP, through its manager of the otto project, Chelsy Pham, assisted Mr. Nguyen in a scheme against PFO to lure PFO’s otto team to MINT. (TTAC ¶¶36-43.) PFO alleges that VSP then contracted with MINT to provide the same services those team members would have otherwise provided as PFO employees, to Mr. Nguyen’s financial benefit. (Id.) PFO alleges that this was in violation of Nguyen’s non-compete agreement with PFO, and that VSP had knowledge of the non-compete agreement but facilitated Nguyen’s misconduct. (PCF 28.19.)

VSP, in turn, claims that PFO wrongly disputed VSP’s exercise of its Step-In-Rights and wrongly refused to pay VSP for expenses incurred by hiring the third parties. Thus, on October 25, 2013, VSP filed this suit against PFO for breach of contract and declaratory relief. PFO filed its cross-complaint against VSP on December 23, 2014.

PFO’s TACC alleges four causes of action against VSP for (1) fraud, (2) breach of contract, (3) aiding and abetting breach of fiduciary duty, and (4) violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 for unlawful, unfair and fraudulent business practices. This motion follows.

Legal Standard

In evaluating a motion for summary judgment or summary adjudication the court engages in a three step process. The Court first identifies the issues framed by the pleadings. The pleadings define the scope of the issues on a motion for summary judgment or summary adjudication. (FPI Dev. Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382). Because a motion for summary judgment or summary adjudication

is limited to the issues raised by the pleadings (Lewis v. Chevron (2004) 119 Cal. App. 4th 690, 694), all evidence submitted in support of or in opposition to the motion must be addressed to the claims and defenses raised in the pleadings. An issue that is “within the general area of issues framed by the pleadings” is properly before the court on a summary judgment or summary adjudication motion. (Lennar Northeast Partners v. Buice (1996) 49 Cal. App. 4th 1576, 1582-1583.) The Court cannot consider an unpleaded issue in ruling on motion for summary judgment or adjudication. Roth v. Rhodes (1994) 25 Cal.App.4th 530, 541. The papers filed in response to a defendant’s motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings. Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1342.

Next, the Court is required to determine whether the moving party has met its burden. A defendant [or, as here, cross-defendant] moving for summary judgment bears the burden of persuasion that one or more elements of the plaintiffs/opposing party’s cause of action cannot be established, or that there is a complete defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal 4th 826, 850, quoting CCP §437c(p)(2)). A defendant is not required to conclusively negate one or more elements of the plaintiffs cause of action; (Saelzer v Advance, Group 400 (2001) 25 Cal. 4th 763, 780-781). Rather, to meet its burden, the defendant is only required to show that the plaintiff cannot prove an element of its cause of action, i.e., that the plaintiff does not possess and cannot reasonably obtain evidence necessary to show this element. Aguilar v Atlantic Richfield Co., supra, 25 Cal 4th at pp. 853-855). Once the moving party has met its burden, the burden shifts to the opposing party to show that a material factual issue exists as to the cause of action alleged or a defense to it. CCP 437c(p). (see, generally Bush v. Parents Without Partners (1993) 17 Cal. App. 4th 322, 326-327). In ruling on the motion, the court must consider the evidence and inferences reasonably drawn from the evidence in the light most favorable to the party opposing the motion. (Aguilar, supra, 25 Cal.4th at p. 843.)

Once the burden shifts, Plaintiff may not rely on mere allegations or denials, but instead must set forth evidence of specific facts. (Code Civ. Proc, § 437c, subd. (o).) Speculation does not constitute the kind of “substantial responsive evidence” plaintiff needs to carry her burden on a motion for summary judgment. (Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1009.)

Fraud in the Inducement

PFO alleges that VSP fraudulently induced PFO to enter into the TTDA through Mr. Oakley’s and Mr. Johannessen’s knowingly false statements to Mr. Suter that VSP would satisfy its obligations under the TTDA by purchasing PFO’s products, rather than paying money. As a result, PFO alleges that it reasonably relied on these statements to its detriment and entered into the TTDA.

VSP moves for summary adjudication of the fraud cause of action on the grounds that

(1) VSP did not promise to purchase PFO’s products while never intending to do so (Issue 1), (2) there is no evidence that VSP did not intend to purchase any products from PFO at the time that VSP allegedly promised to do so (Issue 2), and (3) PFO did not reasonably rely upon any alleged promise that VSP would purchase its products (Issue 3).

To state a fraud cause of action, PFO must plead and prove: (1) a knowingly false

representation by VSP; (2) an intent to deceive or induce PFO’s reliance; (3) justifiable reliance by PFO; and (4) resulting damages. (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)

Here, the undisputed evidence shows that PFO did not reasonably rely on VSP’s purported promise that it would purchase PFO’s products rather than paying PFO the $6 million in cash under the terms of the TTDA.

The TTDA clearly states, and PFO does not dispute, that VSP was not obligated to purchase any of PFO’s products to fulfill its contractual obligations. (VSP Ex. B at Id. at 23.2.) Rather, the TTDA states that VSP had the option to purchase PFO’s products, and that if VSP decided to do so, those payments would serve as a credit towards the $6 million owed to PFO under the TTDA. (Id.)

Moreover Mr. Suter, who negotiated and signed the TTDA on PFO’s behalf, provided unequivocal testimony that, although the purchase of PFO’s products was initially discussed, that “ultimately that was not included in the contract as an obligation of VSP.” (UMF 16.) And when asked under oath, “And you understood that PFO nevertheless agreed to and decided to enter into the contract with its eyes wide open, that VSP was not going to be obligated to buy product, correct?” Mr. Suter responded, “Correct.” (Id.)

When asked specifically about the allegations in the TACC that “PFO would not have entered into [the TTDA] without a firm promise that VSP would buy product,” Mr. Suter unequivocally states that he does not agree with that allegation. (UMF 17.) Then when asked, “[And] you don’t agree with it because PFO entered the contract even though there wasn’t a commitment by VSP to buy that product, correct?” Mr. Suter responded, “Yes. There’s no obligation in the contract.” (Id.)

Finally, the TACC describes the payment terms in the TTDA as follows: “The TTDA provides that VSP owes PFO $6 million for certain technologies and if VSP purchased other products from PFO, then VSP would receive a credit of varying percentages of the other products to be applied to its obligations under the TTDA.” (RJN Ex. B (TACC)

¶ 12) (emphasis added.) Thus, the evidence is clear that there is no obligation under the TTDA for VSP to purchase PFO’s products, and that Mr. Suter, PFO’s CEO and the signatory on the TTDA, understood this at the time the TTDA was signed.

“It has been noted by a number of California courts that a plaintiff in a fraud in the inducement lawsuit cannot rely on a promise or alleged representation that a contract effectively rejects. (L’Garde, Inc. v. Raytheon Space & Airborne Sys. (C.D. Cal., Sept. 6, 2013) 2013 U.S. Dist. LEXIS 199738, *45-47, citing Hinesley v. Oakshade Town Ctr. , 135 Cal. App. 4th 289, 301-03, (and cases cited therein).)

In Hinesley, the plaintiff alleged that when he negotiated a commercial lease, he was falsely told by the lessor’s representative that a Starbucks and Baskin-Robbins would open up nearby, and had he known those representations were false, he would not have entered into the lease. (Id. 292-93.) However, the lease stated that the “Lessee does not rely on the fact nor does Lessor represent that any specific Lessee of [sic] type or number of Lessees shall during the term of this Lease occupy any space in the Shopping Center.” (Id. at 297-98 (Italics in original).) The lease also contained an integration clause, similar to the one in the TTDA. The Third District granted defendant’s motion for summary adjudication on the plaintiff’s claim for fraud in the

inducement, stating:

“We do not suggest [that plaintiff] had an independent obligation to question [defendant] or to tell him that the status of the other tenants’ leases was important to his decision and the timing of his own lease . . . .

However, in this business transaction, [plaintiffs] failure to make such inquiries, discuss such factors or express his intentions when those issues would have been natural and reasonable in the situation is persuasive evidence of [plaintiff’s] state of mind. It is evidence he was not in fact relying on the presence of these tenants in deciding to execute this commercial lease. In the complete absence of any actions taken to question, clarify, or confirm the contractual status of the three cotenants, to notify his attorney of the representations or to modify paragraph 25.33, [plaintiff] could not justifiably rely on his understanding of the representations and gestures made by [defendant].” (Id. at 302-03 (citations omitted)(emphasis added).)

Similarly, in Slivinsky v. Watkins-Johnson Co., 221 Cal. App. 3d 799, plaintiff brought a promissory fraud cause of action against her employer, alleging she was orally promised long-term employment, but was terminated after one year. The Sixth District Court of Appeal granted summary judgment against the plaintiff, finding that the employment agreement between the parties clearly stated that it was not an agreement “for any specific period of employment, nor for continuing or long-term employment. Employee and the Company each have a right to terminate employment, with or without cause.” (Id. at 803.) In reaching its ruling, the Court of Appeal stated that “[plaintiff’s] alleged reliance on [defendant’s] oral promises of continuing employment is simply not justifiable because the representations contradict the parties’ integrated employment agreement which provided that the employment was at will.” ( Id. at 807.)

Here, too, there can be no justifiable reliance where the TTDA indisputably states that it is an obligation, not a requirement, for VSP to purchase PFO’s products. This is clear from the TTDA itself and is further confirmed by PFO’s CEO and the TACC itself. Moreover, PFO’s CEO failed to clarify or confirm the purported representations from Mr. Johannessen and Mr. Oakley regarding their purported statements about VSP’s intent to purchase PFO’s products prior to signing the TTDA.

Accordingly, summary adjudication of the fraud in the inducement cause of action is GRANTED pursuant to Issue no. 3. As the motion is granted as to Issue no. 3, the Court need not address the arguments set forth in Issue nos. 1 & 2, which also address the fraud cause of action.

Breach of Contract

PFO alleges that VSP breached the TTDA by failing to pay installments due under the TTDA. (TACC ¶24.) PFO further alleges that VSP breached the covenant of good faith and fair dealing by preventing PFO’s performance under the TTDA and unfairly frustrating PFO’s right to receive the benefits of the TTDA. (Id. ¶ 25.) Specifically, PFO claims that VSP unreasonably exercised its Step-In Right under section 17 of the TTDA by hiring a third party to complete the otto project when it was very close to completion. VSP then, pursuant to the terms of the TTDA, deducted those expenses from the total amount owed to PFO.

VSP moves for summary adjudication on the grounds that (1) PFO failed to fully perform its own obligations to VSP and was not excused from performing (Issue 4), and (2) VSP did not breach the parties’ contract (Issue 5). The Court finds that there is a dispute of material fact as to each issue.

The “Step-In Right” in the TTDA provides that “VSP may, at PFO’s cost and expense, at any time after a Step-In Trigger Event . . . where VSP considers it necessary to do so, acting reasonably, suspend PFO’s rights and obligations to provide some or all the Services” or engage a third party or other subcontractors to provide services to execute the otto project. (UMF 31.)

VSP argues that PFO failed to meet the deadlines under the SOW, and thus failed to fully perform its obligations under the TTDA, which triggered VSP to exercise its Step-in-Right. (UMF 26-39.) Indeed, Mr. Suter testified that PFO breached the TTDA by failing to meet deadlines under the SOW, and that VSP then rightfully exercised its Step-in Rights. (Id.) Mr. Suter affirmed that the TTDA requires PFO to pay the expenses incurred when VSP exercises its Step-in Rights. (UMF 33.) He also testified that PFO was undercapitalized. (UMF 40.) Additionally, Mr. Nguyen testified that he paid approximately $100,000 of his personal funds to keep the project afloat, and that he felt “so much frustration” and “dishonor” regarding PFO’s execution of the otto project. (UMF 45-27.)

In opposition, PFO produces evidence raising questions of material fact as to whether PFO breached the TTDA by failing to timely complete the otto project and whether VSP breached the TTDA by improperly exercising its Step-In Rights. As set forth above, the TTDA states that if PFO did not fulfill, “to VSP’s satisfaction, the Milestones set forth in the SOW” within thirty days of the agreed-upon completion dates, “then PFO shall be deemed to be in material breach of this Agreement.” (VSP Ex. B at 5.4.) Moreover, VSP may only exercise its Step-In Rights where it considers it “necessary to do so” and is “acting reasonably.” (UMF 31.)

Here, PFO points to evidence that the SOW, which governed the otto project, stated the project close date as “December 31, 2012 +/- 6 weeks.” (PCF 27D.) Thus, VSP exercised its Step-in-Right under Section 17 of the TTDA on or about January 23, 2013, which still appears to be within the time frame set forth in the SOW. (PCF 27D, 28.5.) On February 11, 2013, VSP “signed-off” on the completion of the project.

(28.5.) Additionally, Mr. Suter testified that PFO had sufficient resources to complete the project under the terms of the TTDA. (PCF 34.109-34.112.)

As a result, there are questions of material fact as to whether VSP rightfully and reasonably exercised its Step-in Right and accrued costs, which it then charged to PFO under the TTDA, consequently refusing to pay the remaining balance of $3.7 million under the TTDA.

The Court further notes that the TTDA provides that “no breach, default, termination, or expiration of [the TTDA] shall relieve either Party from its obligation to pay the other any sums to be paid hereunder at the times specified herein.” (Id. at 23.2.) Thus, the TTDA requires that VSP make its full payments to PFO, regardless of PFO’s actions. While VSP was entitled to charge PFO for the expenses incurred where VSP properly exercises its Step-in Right, there is no clear evidence showing that those expenses amount to the amount allegedly left unpaid by VSP, i.e., $3.7 million.

Based on the foregoing, the motion for summary adjudication of the breach of contract cause of action is DENIED (Issue nos. 4 & 5.)

Aiding and Abetting Breach of Fiduciary Duty

PFO alleges that VSP aided and abetted Mr. Nguyen’s breach of his fiduciary duty to PFO through Chelsy Pham. Ms. Pham was VSP’s manager of the otto project, and Mr. Nguyen was PFO’s Vice President of Research & Development/Technology at PFO during the relevant time.

“Liability may … be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” ( Casey v. U.S. Bank Nat. Ass’n (2005) 127 Cal.App.4th 1138, 1144.) “California courts have long held that liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted.” ( Id. at 1145.)

VSP argues that PFO’s aiding and abetting cause of action fails because (1) there is no evidence that Mr. Nguyen breached his fiduciary duties to PFO (Issue 6), (2) there is no evidence that VSP had knowledge of Mr. Nguyen’s alleged breaches (Issue 7),

(3) there is no evidence that VSP substantially assisted or encouraged Mr. Nguyen to breach his fiduciary duties (Issue 8), (4) there is no evidence that any conduct by VSP was a substantial factor in causing harm to PFO (Issue 9), and (5) there is no evidence that VSP had the specific intent to facilitate any purportedly wrongful conduct by Mr.

Nguyen (Issue 10).

Here, the Court finds that there is a dispute of material fact as to each of these issues. PFO provides evidence that Mr. Nguyen was a fiduciary to PFO as the VP of Research

& Development, and that Mr. Nguyen signed an Employment Agreement with PFO, which prohibited him from employing or contracting with any PFO employees to directly or indirectly compete with PFO. (PCF 28.16, 28.19, 28.21.) PFO further provides evidence that Mr. Nguyen set up a competing business, MINT, and then diverted existing and prospective otto workers from PFO to MINT while working for both companies. (PCF 77.35-77.37, 77.47.) There is also evidence that Mr. Nguyen submitted false invoices to PFO on behalf of Reliable Technologies (a division of MINT). (PCF 77.23.)

Although VSP makes much Mr. Suter’s testimony that Mr. Nguyen disclosed his establishment of and relationship with MINT to Mr. Suter, the testimony is unclear as to time. (UMF 79-80.) In other words, it does not indisputably establish that PFO had knowledge of Mr. Nguyen’s actions with respect to MINT at the time of the alleged breach(es).

There is also a question of material fact as to whether Ms. Pham knew of the alleged breaches. “It is well established under California tort law that the conduct of an employee acting within the scope of his employment is imputed to the employer under the doctrine of respondeat superior.” (San Francisco Unified School Dist., supra, 213 Cal.App.4th at 1232.) Here, PFO provided VSP with Mr. Nguyen’s Employment

Agreement, and then Ms. Pham and Mr. Nguyen worked closely together on the otto project. (77.26-77.27.) Ms. Pham also helped Mr. Nguyen craft MINT’s mission statement, Ms. Pham’s aunt want on MINT’s board of directors, Ms. Pham’s husband worked on otto at PFO, VSP, and MINT, and Ms. Pham attended MINT Board of Directors meetings. (77.25-27, 77.56, 77.64, 77.66.) While VSP argues that Ms. Pham was acting solely as a “friend” to Mr. Nguyen when she acquired knowledge of his relevant actions, and thus her actions cannot be imputed onto VSP, there is certainly a question of material fact raised as to whether she was acting within the scope of her employment at the time, as she was working closely in a professional capacity on the otto project with Mr. Nguyen. Moreover, VSP’s argument that Ms. Pham must have been a “managing officer or director” for VSP to be liable for her actions is not supported by law. Rather, Ms. Pham must be acting within the scope of her employment. Here, there is a dispute of material fact as to that issue.

VSP next argues that Ms. Pham could not have substantially assisted in Mr. Nguyen’s purported breach of fiduciary duty because she encouraged him to stay at PFO rather than quit, and had “no idea” that he was going to resign when he chose to do so. (UMF 95-97.) VSP contends that it is undisputed that “VSP gave PFO every opportunity to fulfill its obligations and, when PFO could not meet its obligations under the [TTDA], VSP followed the process outlined in the TTDA to engage MINT/ITS.” (UMF 106-107.)

Again, the evidence set forth above at least raises a question of material fact as to whether Ms. Pham substantially assisted Mr. Nguyen’s breach, regardless of whether she encouraged him to stay at PFO and was surprised by his resignation. There is evidence supporting the finding that Ms. Pham helped Mr. Nguyen establish MINT and then did not disclose Mr. Nguyen’s or her own relationships to MINT to PFO. (PCF

97.77, 34.59, 34.68, 34.70, 34.84-85.) There is also a question of material fact as to whether VSP’s conduct was a substantial factor in causing harm, as there is evidence that Ms. Pham’s purported assistance in the alleged breach assisted in Mr. Nguyen’s diversion of PFO’s otto team to MINT, which resulted in MINT’s acquisition of the otto project and the underlying contractual dispute; i.e., VSP’s purported non-payment of the remaining $3.7 million under the TTDA. (PCF 94-97, 34-39.)

Additionally, VSP attempts to use the Texas District Court’s denial for of PFO’s motion for temporary injunction against MINT, ITS, and Nguyen in 2013 to show that there is no evidence to support Mr. Nguyen’s purported breaches of fiduciary duty. (UMF 82.) However, the federal court’s determination is not binding on this matter, nor is it clear what evidence was presented at the time, nor is the standard on a motion for temporary injunction the same as the standard on a motion for summary adjudication. This argument does not persuade the Court that the aiding and abetting claim is unsupported by any evidence.

Summary adjudication of the Aiding and Abetting cause of action is accordingly DENIED.

Unfair Business Practices

PFO alleges that VSP violated California Business & Professions Code § 17200 (“UCL”) through its unlawful, unfair, and fraudulent business practices. Specifically, PFO alleges that VSP’s fraudulent inducement and aiding and abetting of breach of fiduciary duty provide the predicate for its UCL cause of action. VSP argues that summary adjudication of this cause of action must be granted because PFO cannot

prevail on its cause of actions for fraudulent inducement and aiding and abetting.

While the Court grants the motion for summary adjudication of the fraud cause of action, it denies the motion for the aiding and abetting cause of action. Accordingly, an underlying cause of action for PFO’s UCL claim remains, and the motion for summary adjudication of the UCL cause of action (Issue no. 11) must be DENIED.

Based on the foregoing, the Motion for Summary Adjudication of Issue no. 3 is GRANTED. Summary adjudication of the remaining issues are DENIED. The Motion for Summary Judgment is accordingly DENIED.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.