Case Name: Fathom Engineering, et al. v. Candesant Biomedical, Inc.
Case No.: 17-CV-315446

Currently before the Court are the following matters: (1) the motion by defendant Candesant Biomedical, Inc. (“Candesant”) for summary judgment of the complaint of plaintiffs Fathom Engineering (“Fathom”) and Devinder Grewal (“Grewal”) (collectively, “Plaintiffs”); and (2) the motion by Candesant to seal documents filed in support of its motion for summary judgment.

Factual and Procedural Background

This is an action for breach of contract and common counts. On June 16, 2016, Fathom allegedly entered into a written agreement with Candesant whereby Fathom agreed to perform engineering consulting services and Candesant agreed to pay Fathom for its services (“Consulting Agreement”). (Complaint, ¶ 7 & Ex. A.) “Compensation for the tasks to be performed was set forth in Schedule A” of the Consulting Agreement. (Ibid.) Schedule A of the Consulting Agreement “provided that, in addition to the monetary payment to Fathom,” Grewal, a third-party beneficiary of the Consulting Agreement, “was to be compensated with 12,500 shares of stock in Candesant.” (Ibid.)

Plaintiffs allegedly “conducted and completed all tasks required by the [Consulting Agreement]” and “performed all conditions, covenants and promises required of [them] in accordance with the terms and conditions of said [Consulting Agreement].” (Complaint, ¶ 8.)

On April 14, 2017, Candesant breached the Consulting Agreement “by failing to make payment to Fathom and transfer shares to [Grewal] as provided for in said agreement.” (Complaint, ¶ 9.) As a result of the breach, Fathom was damaged in the amount of “$51,554.92, together with interest thereon from April 14, 2017, along with costs incurred in legal proceedings to collect the amount due.” (Id. at ¶ 10.) Grewal was damaged “by not receiving 12,500 shares of Candesant.” (Ibid.)

Plaintiffs further allege that Candesant “became indebted to Fathom on an open book account for money due in the sum of $51,544.92 for engineering consulting services and expenses advanced for [Candesant] at the special instance [sic] and request of [Candesant], … and/or for their use and benefit, and said services were fully performed.” (Complaint, ¶ 12.) That sum, plus interest, remains due and owing. (Id. at ¶ 13.)

In addition, Plaintiffs allege that “an account was stated in writing by and between Fathom and [Candesant] … wherein it was agreed that [Candesant] … [was] indebted to Fathom in the sum of $51,554.92 for engineering and consulting services and expenses advanced and/or incurred all at the special instance [sic] and request of [Candesant], … and/or for their use and benefit, and said services were fully performed.” (Complaint, ¶ 15.) That sum, plus interest, remains due and owing. (Id. at ¶ 16.)
Finally, Plaintiffs allege that Candesant “became indebted to Fathom in the sum of $51,554.92 for the reasonable vale of engineering consulting services rendered by Fathom to [Candesant] … and for expenses advanced and/or incurred all at [Candesant’s] special instance [sic] and request and/or for [its] use and benefit.” (Complaint, ¶ 18.) That sum, plus interest, remains due and owing. (Id. at ¶ 19.)

Based on the foregoing allegations, Plaintiffs filed a complaint against Candesant, alleging causes of action for: (1) breach of contract; (2) open book account; (3) account stated; and (4) reasonable value of services.

On December 17, 2018, Candesant filed the instant motion for summary judgment and motion to seal documents filed in support of its motion for summary judgment. Plaintiffs filed papers in opposition to the motion for summary judgment on February 11, 2019.

Discussion

I. Motion for Summary Judgment

Pursuant to Code of Civil Procedure section 437c, Candesant moves for summary judgment of Plaintiffs’ complaint. (Candesant Ntc. Mtn., p. 1:22-27; Candesant Mem. Ps. & As., pp. 6:1-3, 10:4-14, & 23:15-16.)

A. Plaintiffs’ Evidentiary Objections

In connection with their opposition, Plaintiffs filed an objection to “[a]ll of paragraphs [sic] 17 of the Declaration of Niquette Hunt [(‘Hunt’)]”—Candesant’s president and chief executive officer—“and Exhibits, E, F and G to that Declaration.” (Ps’ Evid. Objs., p. 2:6-8.) Plaintiffs provide the following grounds for objection: “[i]mproper lay witness opinion testimony; … Hunt has not been qualified as an expert witness on the issue of oxidization (Evidence Code § 800); [and] lack of foundation for photographs (party seeking to introduce photo, film or video must first produce sufficient evidence to identify the film and to establish that the scene depicted is what the party claims it is …).” (Id. at p. 2:9-14.)

Evidentiary objections must be accompanied by a proposed order that complies with the requirements set forth in California Rules of Court, rule 3.1354(c). Here, Plaintiffs failed to comply with the rule as they did not submit a proposed order. (See Cal. Rules of Ct., rule 3.1354(c) [a party must provide a proposed order that complies with one of the formats described in the rule].)

Because Plaintiffs’ objection does not comply with the California Rules of Court, the Court is not required to rule on the objection. (See Vineyard Spring Estates v. Super. Ct. (2004) 120 Cal.App.4th 633, 642 [trial courts only have duty to rule on evidentiary objections presented in proper format]; see also Hodjat v. State Farm Mut. Auto. Ins. Co. (2012) 211 Cal.App.4th 1, 8 [trial court is not required to rule on objections that do not comply with California Rules of Court, rule 3.1354 and is not required to give objecting party a second chance at filing properly formatted papers].)

Accordingly, the Court declines to rule on Plaintiffs’ objection.

B. Legal Standard

The pleadings limit the issues presented for summary judgment and such a motion may not be granted or denied based on issues not raised by the pleadings. (See Government Employees Ins. Co. v. Super. Ct. (2000) 79 Cal.App.4th 95, 98; see also Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal.App.4th 60, 73 [“the pleadings determine the scope of relevant issues on a summary judgment motion”].)

A motion for summary judgment must dispose of the entire action. (Code Civ. Proc., § 437c, subd. (a); All Towing Services LLC v. City of Orange (2013) 220 Cal.App.4th 946, 954 [“Summary judgment is proper only if it disposes of the entire lawsuit.”].) “Summary judgment is properly granted when no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] A defendant moving for summary judgment bears the initial burden of showing that a cause of action has no merit by showing that one or more of its elements cannot be established or that there is a complete defense. [Citation.] Once the defendant has met that burden, the burden shifts to the plaintiff ‘to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’ [Citation.] ‘There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.’ [Citation.]” (Madden v. Summit View, Inc. (2008) 165 Cal.App.4th 1267, 1272.)

For purposes of establishing their respective burdens, the parties involved in a motion for summary judgment must present admissible evidence. (Saporta v. Barbagelata (1963) 220 Cal.App.2d 463, 468.) Additionally, in ruling on the motion, a court cannot weigh said evidence or deny summary judgment on the ground that any particular evidence lacks credibility. (See Melorich Builders v. Super. Ct. (1984) 160 Cal.App.3d 931, 935; see also Lerner v. Super. Ct. (1977) 70 Cal.App.3d 656, 660.) As summary judgment “is a drastic remedy eliminating trial,” the court must liberally construe evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party. (See Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389; see also Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717-718.)

C. Analysis

For the reasons explained below, Candesant fails to dispose of the first and third causes of action.

1. First Cause of Action

In their first cause of action, Plaintiffs allege a claim for breach of contract.

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 968 (PCC).)

In its moving papers, Candesant argues that Plaintiffs’ first cause of action for breach of contract fails because (1) Fathom did not perform its obligations under the Consulting Agreement and (2) Plaintiffs did not sustain any damages.

a. Plaintiffs’ Performance

Candesant asserts that the Consulting Agreement sets forth four tasks for Fathom to complete, the Consulting Agreement was terminated on March 22, 2017, and Fathom did not complete the four tasks by the termination date, “as required by the contract.” (Candesant Mem. Ps. & As., p. 11:12-20.)

i. Tasks 1 and 2

With respect to Tasks 1 and 2, Candesant states that Fathom was required to perform: (1) “literature review, current industry best practices review, mathematical modeling of the hazard and development of recommendations specific to your exposure”; and (2) “a broad literature search and review” to address “specific issues” that might arise during development. (Candesant Mem. Ps. & As., p. 11:22-24.) Candesant contends that Fathom failed to perform Tasks 1 and 2 because it “did not send any literature or mathematical model during the term of the contract, nor did it ever produce records showing it accomplished those tasks before March 22, 2017 … .” (Id. at p. 11:26-28.) Candesant also contends that Fathom failed to perform because it did not send “recommendations about exposure to sodium” by March 22, 2017. (Id. at p. 12:8.) Candesant further asserts that Fathom’s “witnesses admitted that they had never even read the hodge-podge of literature Fathom belatedly sent months after the termination of the contract.” (Id. at pp. 11:28-12:2.) Finally, Candesant asserts that the Consulting Agreement required Fathom to “keep and maintain adequate and current records … of all Services provided and results thereof,” “[b]ut there are no records to show that anyone at Fathom spent time ‘thinking’ about the relevant issues during the term of the contract” or suggesting that “Fathom had even begun working on these projects before the termination of the contract.” (Id. at pp. 12:28-13:4.)

As is relevant here, Candesant offers undisputed material facts (“UMF”) Nos. 32-35 in support of its assertions. UMF Nos. 32-35 provide that “Defendants had not sent Candesant” any “mathematical model,” “literature about safe handling of sodium,” “written recommendations regarding exposure to sodium,” or “literature about biological and physiological mechanisms in sweat glands and skin pores” before March 22, 2017. Paragraphs 12-15 of Hunt’s declaration are offered in support of UMF Nos. 32-35, and adequately establish the facts set forth in UMF Nos. 32-35.

As an initial matter, Candesant does not establish that Fathom’s purported failure to provide Candesant with literature, a mathematical model, recommendations regarding exposure to sodium, and records of its literature review and mathematical model before March 22, 2017, constituted a failure to perform Fathom’s obligations under the Consulting Agreement. Candesant’s argument is predicated on the erroneous assumption that the Consulting Agreement terminated as of March 22, 2017, and, therefore, Fathom was required to perform Tasks 1 and 2, and provide records of its work on Tasks 1 and 2, by that date. But the Consulting Agreement provides that “[Fathom] or [Candesant] may terminate the Agreement at any time by giving no less than thirty (30) days prior written notice to the other Party.” (Hunt Dec. Mtn. Summ. Judg., Ex. A, ¶ 9.2.) Thus, the Consulting Agreement is terminated once the 30-day notice period expires. Candesant’s UMF and evidence demonstrate that Candesant provided Fathom with its 30-day notice of termination of the Consulting Agreement on March 22, 2017. (UMF No. 26; Hunt Dec. Mtn. Summ. Judg., ¶ 7 & Ex. C.) Consequently, the Consulting Agreement did not terminate on March 22, 2017. Rather, it terminated 30 days later once the notice period elapsed. For these reasons, Candesant fails to establish that Fathom’s purported failure to provide Candesant with literature, a mathematical model, recommendations regarding exposure to sodium, and records of its literature review and mathematical model before March 22, 2017, constituted a failure to perform Fathom’s obligations under the Consulting Agreement.

Candesant’s next argument—that Fathom failed to perform Tasks 1 and 2 because Fathom’s “witnesses admitted that they had never even read the hodge-podge of literature Fathom belatedly sent months after the termination of the contract” (Candesant Mem. Ps. & As., pp. 11:28-12:2)—is not well-taken. Candesant’s argument is predicated on: (1) Grewal’s purported admission at deposition that he never looked at the articles provided to Candesant; and (2) Scott Robertson’s (“Robertson”) purported admission at deposition that “he did not work on the literature review.” (Id. at p. 13:9-15.) However, there are no UMF in the separate statement addressing whether Grewal, Robertson, or anyone at Fathom reviewed the literature that was sent to Candesant. Furthermore, the deposition testimony of Grewal and Robertson referenced in Candesant’s memorandum of points and authorities was omitted from the separate statement. Notably, Plaintiffs do not address this evidence, or Candesant’s argument based on the same, in their opposition. Because the evidence is not referenced in Candesant’s separate statement and Plaintiffs have not addressed the evidence, the Court, in its discretion, declines to consider the evidence. (See Allen v. Smith (2002) 94 Cal.App.4th 1270, 1282 [all material facts must be set forth in the separate statement]; see also Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 175 [“Since we are reviewing a summary judgment, ‘the relevant facts are limited to those set forth in the parties’ statements of undisputed facts, supported by affidavits and declarations, filed in support of and opposition to the motion in the present case, to the extent those facts have evidentiary support. [Citations.] Facts not contained in the separate statements do not exist.’ [Citations.]”]; Oldcastle Precast, Inc. v. Lumbermens Mutual Casualty Co. (2009) 170 Cal.App.4th 554, 572 [whether to consider evidence not referenced in the moving party’s separate statement rests with the sound discretion of the trial court].) Consequently, Candesant’s argument is not well-taken.

Candesant’s final argument—that Plaintiffs have no records showing that Fathom performed work on Tasks 1 and 2—lacks merit. Candesant’s bald assertion that Plaintiffs lack evidence or records of the work Fathom performed on Tasks 1 and 2 does not, in and of itself, shift the burden of production to Plaintiffs. (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855 [to the extent a defendant contends that a plaintiff does not have sufficient evidence to support its claims, it is the defendant’s burden to present evidence that the plaintiff does not possess, and cannot reasonably obtain, the needed evidence—as through admissions by the plaintiff following extensive discovery to the effect that they have discovered nothing].) Candesant does not present any UMF addressing whether Fathom kept, maintained, or possessed records of the work that it performed on Tasks 1 and 2. Thus, Candesant’s argument lacks merit.

ii. Task 3

Regarding Task 3, Candesant states that Fathom was required to “develop a repeatable and controllable process for making first articles in low volume,” and “[t]his process had to ‘create more uniform films, and to allow controlled variation of some desired parameters (such as thickness) of prototypes and first articles.’ ” (Candesant Mem. Ps. & As., p. 13:18-22.) Candesant contends that Fathom failed to perform Task 3 because the process Fathom developed had “no ability to set the desired thickness of the sample” and, consequently, the “process was not controllable.” (Id. at pp. 13:23-14:7.) Next, Candesant asserts that Fathom failed to perform Task 3 because “Fathom’s process did not create uniform samples,” but produced samples that “were inconsistently oxidized.” (Id. at p. 14:8-12.) In support of its argument, Candesant presents evidence that “shortly after” receiving samples from Fathom, Hunt took photographs of the samples and the photographs showed that the samples had not oxidized consistently. (Hunt Dec., ¶¶ 17-18 & Exs. E-G.) Lastly, Candesant argues that that Fathom failed to perform Task 3 because Fathom refused to transfer the roller press and instructions on how to use the roller press to Candesant. (Id. at pp. 14:13-15:8.) Candesant contends that “Fathom’s refusal to transfer the roller press and instructions on how to use the press to make patches was in direct violation of its contractual obligations” because section 5.1 of the Consulting Agreement “provides that Candesant owns all Inventions, including ‘ideas, inventions, technologies, discoveries, improvements, know-how and techniques that the Consultant conceives, reduces to practice or develops during the term of the Agreement.” (Id. at p. 15:1-8.)

With respect to Candesant’s first argument, there is a triable issue of material fact as to whether the process developed by Fathom was controllable. Candesant’s evidence demonstrates that a process is controllable when the process allows the user to control the thickness of the samples produced. (Falkenstien Dec., Ex. B, pp. 107:3-8.) Furthermore, Candesant’s evidence shows that Fathom’s process—the roller press—allowed a user to change how thick a sample would be (i.e., control the thickness of the samples) by tightening bolts on the roller press. (Id. at Ex. C, pp. 77:10-78:5.) Additionally, Plaintiffs present evidence that after Fathom made refinements to its process—such as “making tighter tolerances for the roller, putting it in the glovebox, and trying different roller materials”—the thickness of the samples could be controlled with precision and the process “produced consistent thickness samples.” (Mickelson Dec., Ex. A, pp. 70:18-22, 73:1-17, 74:14-16, 99:9-21.) Thus, there is a triable issue of material fact as to whether the process developed by Fathom was controllable.

Regarding Candesant’s second argument, Candesant fails to meet its initial burden to show that the inconsistent oxidation of the samples constitutes a failure by Fathom to perform its obligations under the Consulting Agreement. With respect to Task 3, the Consulting Agreement provides that “[t]his task will start with the manual process we observed at your lab and develop a more controlled manual process using custom fixtures and tools to create more uniform films, and to allow controlled variation of some desired parameters (such as thickness) of prototypes and first articles.” (Hunt Dec. Mtn. Summ. Judg., Ex. A, p. 7, italics added.) Candesant does not present any reasoned argument, evidence, or legal authority explaining what is meant by “more uniform films.” The Consulting Agreement, on its face, suggests that “more uniform films” simply means films that are more uniform than those created by the “manual process … observed at [the] lab.” Although Candesant submits evidence that the samples produced by Fathom’s process oxidized inconsistently, Candesant does not present reasoned argument, evidence, or legal authority indicating that the samples needed oxidize consistently over time in order to constitute “more uniform films.” (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 [“When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived.”]; see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Therefore, Candesant does not meet its initial burden.

Candesant’s last argument—that Fathom’s refusal to transfer the roller press and instructions on how to use the roller press violated section 5.1 of the Consulting Agreement—is not well-taken. Section 5.1 of the Consulting Agreement states:

[Fathom] shall promptly and fully disclose to [Candesant] any and all ideas, inventions, technologies, discoveries, improvements, know-how and techniques that [Fathom] conceives, reduces to practice or develops during the term of the Agreement, alone or in conjunction with others, during or as a result of performing the Services for [Candesant] under this Agreement (collectively, the “Inventions”). [Fathom] agrees to keep and maintain adequate and current records (in the form of notes, sketches, drawings or in any other form that may be required by [Candesant]) of all Services provided and results thereof and such records shall be available to and remain the sole property of [Candesant] at all times. [Fathom] agrees that any and all Inventions, including all patent rights, copyrights, trade secrets and trademark rights therein, shall be the sole and exclusive property of [Candesant].

(Hunt Dec. Mtn. Summ. Judg., Ex. A, p. 3, ¶ 5.1.) As Fathom persuasively argues, section 5.1 of the Consulting Agreement does not require Fathom to transfer the roller press and instructions on how to use the roller press to Candesant. Instead, section 5.1 merely provides that Fathom must: disclose “any and all ideas, inventions, technologies, discoveries, improvements, know-how and techniques” to Candesant; “keep and maintain adequate and current records” of the services provided and the results thereof; such records must be “available to” Candesant; such records are the property of Candesant; and any and all inventions are the property of Candesant. Consequently, Candesant fails to meet its initial burden to show that the purported failure to transfer the roller press and instructions on how to use the roller press to Candesant constitutes a failure by Fathom to perform its obligations under the Consulting Agreement.

iii. Task 4

As to Task 4, Candesant states that Fathom was required to “attempt to develop an in-vitro skin and pore surrogate suitable for laboratory use,” which could “be used to evaluate specific features of the product.” (Candesant Mem. Ps. & As., p. 15:10-12.) Candesant asserts that “[t]he ‘outcome’ for the task was supposed to be ‘experimentation.’ ” (Id. at p. 15:17-20.) Specifically, Candesant argues that “Task 4 required that Fathom experiment on a skin and pore surrogate to evaluate features of Candesant’s product, including whether the skin would get hot only at the pores and not across the skin more broadly.” (Ibid.) Candesant contends that Fathom failed to perform Task 4 because “Fathom conducted no such experiments … .” (Id. at p. 15:20-22.) Candesant further contends that Fathom failed to perform Task 4 because Fathom “refused to even provide Candesant with the skin surrogate, as required by Section 5.1 of the contract.” (Id. at p. 15:20-23.)

Regarding Candesant’s first argument, Candesant fails to meet its initial burden to show that Fathom’s purported failure to conduct an experiment on the surrogate to evaluate whether the skin would only get hot at the pores constitutes a failure by Fathom to perform its obligations under the Consulting Agreement. With respect to Task 4, the Consulting Agreement provides:

Attempt to develop an in-vitro skin and pore surrogate suitable for laboratory use. This task will look at the development and qualification of surrogates that can be used to evaluate specific features of the product to make laboratory testing of the technology more practical. In this task we will also look at techniques for visualizing and quantifying the underlying technological concept. We propose experimentation rather than a stated outcome for this task.

(Hunt Dec. Mtn. Summ. Judg., Ex. A, p. 7.) Task 4 only requires Fathom to attempt to develop and “in-vitro skin and pore surrogate suitable for laboratory use” that could be “used to evaluate specific features of the product,” such as whether the skin would only get hot at the pores. Under the terms of the Consulting Agreement, the proposed “experimentation” relates to Fathom’s attempt to develop such a surrogate. Task 4, by its terms, does not require Fathom, after it developed an “in-vitro skin and pore surrogate suitable for laboratory use,” to then conduct laboratory experiments with the surrogate evaluating “specific features of the product … .” Therefore, Candesant does not meet its initial burden.

Candesant’s remaining argument—that Fathom’s refusal to provide Candesant with the skin surrogate violated section 5.1 of the Consulting Agreement—is not well-taken. As previously articulated, Section 5.1 of the Consulting Agreement states:

[Fathom] shall promptly and fully disclose to [Candesant] any and all ideas, inventions, technologies, discoveries, improvements, know-how and techniques that [Fathom] conceives, reduces to practice or develops during the term of the Agreement, alone or in conjunction with others, during or as a result of performing the Services for [Candesant] under this Agreement (collectively, the “Inventions”). [Fathom] agrees to keep and maintain adequate and current records (in the form of notes, sketches, drawings or in any other form that may be required by [Candesant]) of all Services provided and results thereof and such records shall be available to and remain the sole property of [Candesant] at all times. [Fathom] agrees that any and all Inventions, including all patent rights, copyrights, trade secrets and trademark rights therein, shall be the sole and exclusive property of [Candesant].

(Hunt Dec. Mtn. Summ. Judg., Ex. A, p. 3, ¶ 5.1.) As Fathom persuasively argues, section 5.1 of the Consulting Agreement does not require Fathom to transfer the surrogate to Candesant. Instead, section 5.1 merely provides that Fathom must: disclose “any and all ideas, inventions, technologies, discoveries, improvements, know-how and techniques” to Candesant; “keep and maintain adequate and current records” of the services provided and the results thereof; such records must be “available to” Candesant; such records are the property of Candesant; and any and all inventions are the property of Candesant. Consequently, Candesant fails to meet its initial burden to show that the purported failure to transfer the surrogate to Candesant constitutes a failure by Fathom to perform its obligations under the Consulting Agreement.
iv. General Argument Regarding Fathom’s Performance

In addition to its arguments regarding Fathom’s performance of specific tasks, Candesant argues that Fathom did not fully perform its obligations under the Consulting Agreement because: Fathom sent Candesant an invoice in December 2016, stating that Tasks 1, 2, and 4 were 50 percent complete and Task 2 was 0 percent complete; Robertson stated in February 2017, that Grewal had not be able to complete the original scope of work, Grewal had been distracted from the originally agreed upon deliverables, and Grewal should commit to hit the original scope of the work; and Robertson sent Candesant a proposal on March 1, 2017, showing there was “remaining work” on all four tasks. (Candesant Mem. Ps. & As., pp. 17:23-19:9.)

As a preliminary matter, the December 2016 invoice, in and of itself, is not sufficient to demonstrate that Fathom did not perform its obligations under the Consulting Agreement. The subject invoice was generated several months before the Consulting Agreement was terminated. Thus, invoice does not show whether Fathom performed all of its obligations under the Consulting Agreement at the time the Consulting Agreement was terminated.

Next, Robertson’s statements regarding Fathom’s work on the project are not sufficient to demonstrate that Fathom did not perform its obligations under the Consulting Agreement. Candesant does not present any evidence showing that Robertson had personal knowledge of Fathom’s work on Tasks 1, 2, 3, and 4. (See People v. McAlpin (1991) 53 Cal.3d 1289, 1308 [ “when a lay witness offers an opinion that goes beyond the facts he personally observed, it is held inadmissible”]; see also Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114 Cal.App.4th 1108, 1117 [an opinion based on assumptions of fact without evidentiary support or speculative or conjectural factors has no evidentiary value]; Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163 [“evidence that gives rise to no more than mere speculation cannot be regarded as substantial”].) Although Candesant asserts that Robertson was an employee of Fathom, Candesant does not provide any UMF or evidence supporting its assertion. Furthermore, in opposition, Plaintiffs submit a declaration by Robertson, in which he declares that: he is not an employee of Fathom; he did not have personal knowledge about what contractual tasks had been completed; his statements regarding the amount of work done were an attempt to place himself in the shoes of Candesant and “see things from their perspective”; and it was his understanding that Fathom’s position regarding the Consulting Agreement was that it had been completed. (Murray Dec., ¶¶ 2, 9-15.) This evidence is sufficient to raise a triable issue of material fact.

b. Damages

With respect to the element of damages, Candesant argues that Fathom did not complete Tasks 1, 2, 3, and 4 as required by the Consulting Agreement and, therefore, it is “not entitled to any compensation listed in the contract.” (Candesant Mem. Ps. & As., p. 19:12-14.) Candesant further argues that “even if Fathom had completed some but not all of the tasks, and therefore were to claim that it is entitled to compensation for those completed tasks (assuming the contract were divisible), it has already been paid more than half of the entire contract compensation.” (Id. at p. 19:15-18.) Candesant concludes that “Fathom therefore cannot show that it suffered any damages unless it shows that it deserves additional compensation above and beyond what Candesant has already paid.” (Id. at p. 19:18-21.)

Candesant’s arguments regarding damages lack merit. For the reasons set forth above, Candesant does not show that Fathom failed to perform any of its obligations under the Consulting Agreement. Consequently, Candesant has not established that Fathom is not entitled to damages alleged in the complaint.

2. Third Cause of Action

In their third cause of action, Plaintiffs allege a claim for account stated.

“An account stated is ‘an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing.’ [Citation.] ‘[A]n element essential to render the account stated is that it receive the assent of both parties, but the assent of the party sought to be charged may be implied from his conduct.’ [Citation.] … When an account stated is ‘ “assented to, either expressly or impliedly, it becomes a new contract.” ’ [Citation.] ‘The theory of an account stated is that it becomes a contract between the parties for payment of the amount computed to be due without proof of the specific items included therein.’ [Citation.] Accordingly, an action on an account stated is not based on the parties’ original transactions, but on the new contract under which the parties have agreed to the balance due. [Citation.]” (PCC, supra, 8 Cal.App.5th at p. 968.)

In its moving papers, Candesant argues that Plaintiffs’ third cause of action for account stated fails because Candesant never agreed that it owed $51,554.92. (Candesant Mem. Ps. & As., p. 22:7-22.) Specifically, Candesant states that it “never agreed that it owed Plaintiffs $51,554.92 under the contract and, Plaintiffs have produced no evidence of any separate agreement about an obligation to pay under the contract.” (Id. at p. 22:19-21.) Candesant asserts that “[t]he only agreement between the parties is the contract itself” and, “[t]hus, there is no account stated … .” (Id. at p. 22:21-22.)

Candesant offers UMF Nos. 47 and 48 in support of its argument.

UMF No. 47 states, “Defendants and Candesant signed a contract under which Defendants agreed to do engineering work for Candesant.” The evidence cited in support of UMF No. 47 is paragraph 3 and Exhibit A of Hunt’s declaration. In paragraph 3 of her declaration, Hunt declares, “On June 15, 2016, I signed a contract with [Fathom] on behalf of Candesant. A true and correct copy of that contract is attached as Exhibit A to this Declaration.” (Hunt Dec. Mtn. Summ. Judg., ¶ 3.) The Consulting Agreement is attached to Hunt’s declaration as Exhibit A.

UMF No. 48 states that “[a]side from the June 2016 contract, there have been no other contracts executed between Defendants and Candesant.” The evidence cited in support of UMF No. 48 is paragraph 4 of Hunts’ declaration. In paragraph 4 of her declaration, Hunt declares, “Aside from the contract attached as Exhibit A, Candesant has not executed any other contract with Fathom.” (Hunt Dec. Mtn. Summ. Judg., ¶ 4.)

Candesant’s UMF and supporting evidence do not establish that, after the Consulting Agreement was signed, Candesant never agreed that it owed Fathom $51,554.92. The UMF and supporting evidence do not address whether Candesant ever agreed that it owed Fathom $51,554.92. Rather, the UMF and supporting evidence merely demonstrate that Candesant signed the Consulting Agreement and Candesant did not sign or perform another contract with Fathom. An account stated can be agreed to in a multitude of ways. The fact that Candesant did not sign or perform another contract with Fathom does not demonstrate that Candesant never agreed that it owed Fathom $51,554.92.

Furthermore, to the extent paragraph 4 of Hunt’s declaration attempts to state Hunt’s opinion that Candesant never entered into a contract with Fathom other than the Consulting Agreement, that statement is a conclusion of law which is ineffective to support a motion for summary judgment. (See Hoover Community Hotel Development Corp. v. Thomson (1985) 167 Cal.App.3d 1130, 1135–1137 [“[a] bare conclusion of law is simply not sufficient even though uncontradicted to support a motion for summary judgment”].)

For these reasons, Candesant fails to meet its initial burden with respect to the third cause of action.

D. Conclusion

Because Candesant did not dispose of the first and third causes of action, Candesant is not entitled to summary judgment. Accordingly, Candesant’s motion for summary judgment is DENIED.

II. Motion to Seal

Pursuant to California Rules of Court, rule 2.550, Candesant moves to seal documents filed in support of its motion for summary judgment.

A. Legal Standard

A court has the authority to order that a record be filed under seal only if it expressly finds facts that establish:

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and

(5) No less restrictive means exist to achieve the overriding interest.

(Cal. Rules Ct., rule 2.550.)

The California Rules of Court do not define what constitutes an “overriding interest.” Instead, this has been left to case law. Different “[c]ourts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298, fn. 3 (In re Providian) [affirming lower court order unsealing certain records over defendants’ objection that the materials contained proprietary trade secrets]; see also NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222, fn. 46 [overriding interests found in various cases include: protection of minor victims of sex crimes from further trauma and embarrassment, privacy interests of a prospective juror during individual voir dire, protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify, protection of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose, safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court, ensuring the fair administration of justice, and preservation of confidential investigative information].)

A declaration supporting a motion to seal should be specific, not conclusory, as to the facts supporting the overriding interest. If the court finds that the supporting declarations are conclusory or otherwise unpersuasive, it may conclude that the moving party has failed to demonstrate an overriding interest that overcomes the right of public access. (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at pp. 301, 305.)

Further, where some material within a document warrants sealing but other material does not, the document should be edited or redacted if possible, to accommodate the moving party’s overriding interest and the strong presumption in favor of public access. (Cal. Rules Ct., rule 2.550, subd. (e)(1)(B); see In re Providian, supra, 96 Cal.App.4th at p. 309.) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (In re Providian, supra, 96 Cal.App.4th at p. 309.)

B. Analysis

Candesant’s motion to seal is unopposed. Candesant asks the Court to seal the unredacted versions of the following documents that it lodged provisionally under seal:

(1) Candesant’s Motion for Summary Judgment;

(2) Candesant’s Separate Statement of Undisputed Material Facts;

(3) Declaration of Hunt in Support of Candesant’s Motion for Summary Judgment;

(4) Exhibits A-G to the Declaration of Hunt in Support of Candesant’s Motion for Summary Judgment;
(5) Exhibits E, H, and J to the Declaration of Murray in Support of Candesant’s Motion for Summary Judgment; and

(6) Exhibits B-D to the Declaration of Falkenstien in Support of Candesant’s Motion for Summary Judgment.

Candesant asserts that the portions of these documents that have been redacted from the public versions of the documents filed with the court contain trade secret information. Specifically, the redactions address the materials that comprise Candesant’s product and how it is made. Candesant states that it has taken pains to keep such information secret. For example, Candesant’s patent applications do not reveal the materials that comprise its product, Candesant requires third parties to sign non-disclosure agreements before it reveals what materials comprise its product, and Candesant does not reveal how its product is made to third parties who are not under non-disclosure agreements. Candesant asserts that this information must remain secret to allow it the opportunity to commercialize its product.

In support of its motion, Candesant offers the declaration of Hunt. Hunt declares that Candesant’s trade secrets are disclosed in the subject documents. Hunt further declares that Candesant’s trade secrets include the materials that comprise its product and the process it uses to produce its product. Finally, Hunt declares that Candesant would suffer economic harm if this information was disclosed to the public.

Upon review of redacted and unredacted versions of the subject documents, the request for sealing appears to be narrowly tailored.

Furthermore, in light Hunt’s declaration regarding Candesant’s trade secret information, the Court finds that: (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest.

C. Conclusion

Accordingly, Candesant’s motion to seal is GRANTED.

The court clerk is directed to seal the following unredacted documents and no public access to the unredacted documents will be allowed without further order from the Court:

(1) Candesant’s Motion for Summary Judgment;

(2) Candesant’s Separate Statement of Undisputed Material Facts;

(3) Declaration of Hunt in Support of Candesant’s Motion for Summary Judgment;

(4) Exhibits A-G to the Declaration of Hunt in Support of Candesant’s Motion for Summary Judgment;

(5) Exhibits E, H, and J to the Declaration of Murray in Support of Candesant’s Motion for Summary Judgment; and

(6) Exhibits B-D to the Declaration of Falkenstien in Support of Candesant’s Motion for Summary Judgment.

Counsel for Candesant shall contact the court clerk to facilitate the sealing of said documents.