Case Number: BC482987    Hearing Date: July 23, 2014    Dept: 46

Posted 7-22-2014 at 10:55 a.m.
For hearing on 7-23-2014 at 8:30 a.m. Cal. #6

Case Number: BC482987
MAHFOUZ M MICHAEL MD INC ET AL VS MSO INC ET AL
Filing Date: 04/17/2012
Case Type: Othr Breach Contr/Warr-not Fraud (General Jurisdiction)

07/23/2014
MOTIONS OF SUMMARY JUDGMENT and SUMMARY ADJUDICATION

TENTATIVE RULING: As to Defendant Don Phan, the motion for summary judgment is GRANTED. Defendant to prepare order of dismissal and judgment as to Phan. As to Defendant Lan N. Pham the motion for summary adjudication is GRANTED AS TO THE 7th CAUSE OF ACTION. Defendant to prepare order of dismissal as to Pham as to the 7th CAUSE OF ACTION. As to MSO, Inc. of Southern California, the motion for summary adjudication is GRANTED AS TO THE 6th CAUSE OF ACTION. Defendant to prepare order of dismissal as to Pham as to the 6th CAUSE OF ACTION.

Motion #1: Don Phan (“Phan”) – Motion for Summary Judgment as to then entire Third Amended Complaint is GRANTED.

1. Phan’s motion CCP §437c is for an order granting him summary judgment on the entire third amended complaint [“TAC”] or, in the alternative, summary adjudication of the 5th COA for conversion, 8th COA for conspiracy to commit fraud and the claim for punitive damages.

2. The MSA issues raised by Defendant Phan are as follows:

Issue #1: Plaintiffs’ complaint against Phan fails, because he neither personally participated in, nor did he specifically authorize, any alleged act which Plaintiffs contend constitutes conversion, and he made no fraudulent statements to the Plaintiffs;

Issue #2: Plaintiffs’ 5th cause of action [“COA”] against Phan fails, because he neither personally participated in, nor did he specifically authorize, any alleged act which Plaintiffs contend constitutes conversion;

Issue #3: Plaintiffs’ 8th COA against Phan fails, because he made no fraudulent statements to Plaintiffs;

Issue #4: The claim for punitive damages against Phan fails, because Plaintiffs cannot establish that he committed any act with malice;

Issue #5: The claim for punitive damages against Phan fails, because Plaintiffs cannot establish that he committed any act with oppression; and

Issue #6: The claim for punitive damages against Phan fails, because Plaintiffs cannot establish that he committed any act with fraud.

3. The facts found from the undisputed evidence indicates the following:

3.a. Phan is the CFO of MSO. D MSO is a medical management services organization which provides management and administrative services to independent physician practice associations (hereinafter, “IPAs”) and medical groups, such as Plaintiff.

3.b. Plaintiff is MSO’s former client.

3.c. The 5th COA contends that Phan is personally liable to P for the purported conversion by MSO of a check made payable to Plaintiff.

3.d. The 8th COA alleges that Phan misrepresented during negotiation for a proposed extension of an agreement between MSO and Plaintiff that MSO would deal with Pliantiff in good faith and manage its business in accordance with the terms of the proposed extended agreement, and not for MSO’s own gain.

4. Defendant Phan contends that he did not participate in, know about, direct, authorize or consent to any alleged conversion of a check made payable to Plaintiff by MSO and as such, he cannot be held vicariously liable for any of MSO’s alleged torts. Phan further contends that the claimed misrepresentations are at most claims about statements of future events which do not give rise to actionable fraud and that at any rate, he did not make any misrepresentations about MSO’s intention to comply with the terms of the parties’ extended contract during the negotiations for that agreement.

5. Phan request for judicial notice [“RJN”] is DENIED because the TAC attached is not conformed.

5. Regarding the 5th COA for Conversion against Phan

5.a. Plaintiff’s allegations are in relevant part (as alleged in the TAC at paragraphs 60-64), as follows:

“60. On or about June 23, 2010, VALLEY PRESBYTERIAN issuedcheck number 048135, dated June 23, 2010, in the amount of $179,306.00 (One Hundred Seventy Nine Thousand, Three Hundred Six Dollars, and No Cents). This check was endorsed payable to ‘SAN MIGUEL I.P.A.’ which is the operating name of the Plaintiff SAN MIGUEL. This check was delivered to MSO, INC. for processing pursuant to the agreement between MSO, INC. and SAN MIGUEL.
61. This check represented payment by VALLEY PRESBYTERIAN for services rendered to VALLEY PRESBYTERIAN by MAHFOUZ M. MICHAEL, M.D., INC.
62. This check was tendered by the Defendant MSO, INC., and the proceeds of the check were deposited into a Bank of America banking account owned by MSO, INC.
63. On information and belief, this check was endorsed and tendered by an agent, servant, or employee of MSO, INC., at the behest and with the knowledge and approval of the Defendant DON PHAN. This wrongful conduct of DON PHAN was ultra vires and outside the scope of PHAN’s lawful authority as an agent, servant, or employee of MSO, INC., thereby subjecting PHAN to personal liability.
64. Neither DON PHAN nor MSO, INC., have accounted to SAN MIGUEL for this money, which belongs to SAN MIGUEL…” (TAC, ¶¶ 60-64).

5.b. Requirements of a cause of action for conversion:

i. “’A cause of action for conversion requires allegations of plaintiff’s ownership or right to possession of property; defendant’s wrongful act toward or disposition of the property, interfering with plaintiff’s possession; and damage to plaintiff. [Citation.] Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment. [Citation.]’ (McKell v. Washington Mutual, Inc. (2006) 142 C.A.4th 1457, 1491…).” PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 C.A.4th 384, 395.

ii. “It is well settled that corporate directors cannot be held vicariously liable for the corporation’s torts in which they do not participate. Their liability, if any, stems from their own tortious conduct, not from their status as directors or officers of the enterprise. (See United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 C.3d 586, 595). ‘[A]n officer or director will not be liable for torts in which he does not personally participate, of which he has no knowledge, or to which he has not consented. … While the corporation itself may be liable for such acts, the individual officer or director will be immune unless he authorizes, directs, or in some meaningful sense actively participates in the wrongful conduct.’ (Teledyne Industries, Inc. v. Eon Corporation (S.D.N.Y. 1975) 401 F.Supp. 729, 736-737 (applying Cal.law), affd. (2d Cir. 1976) 546 F.2d 495).” Frances T. v. Village Green Owners Assn. (1986) 42 C.3d 490

5.b. Phan should prevail on the motion for summary judgment on this cause of action:

i. Phan has been the CFP of MSO since 2003. (UMF No. 2);

ii. In response to Defendants’ Special Interrogatory No. 50 (i.e., which asked Plaintiffs to “[s]tate all facts which support YOUR contention in Paragraph 63 of the COMPLAINT that Check No. 048135 was endorsed and tendered by an agent, servant, or employee of MSO, INC., with the ‘knowledge and approval of the Defendant DON PHAN”), Plaintiffs advised that they “believe[d] that the check was tendered with the knowledge and approval of Don Phan because MSO, Inc., is a small company that is controlled by Don Phan, and Don Phan must have known that a large check such as this one was being tendered on his behalf.” (Declaration of Robert Bohner [hereinafter, “Bohner”], Exhibit “A,” 13:6-9 and Exhibit “B,” 9:18-21).

iii. Phan attests as follows:

“17. In my capacity as CFO, I have general oversight of MSO’s financial functions an I am aware of the financial activities that MSO provides to its IPA and medical group clients. As part of the financial services it provides to its IPA and medical group clients, including San Miguel, MSO receives revenue checks on its clients’ behalf from hospitals, health plans and other medical payors and deposits those checks into a client bank account which is used in the disbursement of funds in accordance with their respective management agreements.

18. MSO typically receives checks in large amounts from hospitals, health plans and other medical payors on behalf of its IPA and medical group clients for deposit into their bank accounts at least once or twice a month. MSO also typically receives checks in large amounts from its IPA and medical group clients in payment to MSO for its management services once or twice a month. It is not unusual for MSO to receive a check in an amount of over $100,000 once or twice a month.

19. The MSO accounting department reviews checks when they are received. If a check needs to be endorsed prior to deposit into a bank account, the accounting department will present the check to either the Chief Executive Officer, Lan N. Pham, or myself to sign. I do not personally review every check that is received by MSO. Day to day accounting practices are only brought to my attention if there is an emergency or inconsistency.

20. On or about June 24, 2010, MSO received a check from Valley Hospital Presbyterian in the amount of $179,306. This check was made payable to ‘San Miguel I.P.A., c/o MSO Inc. of Southern California.’ I never saw this check nor did I endorse it or deposit it. The check was not endorsed or deposited at my behest.

21. It is my understanding that this check was endorsed by MSO Chief Executive Officer Lan N. Pham and inadvertently deposited into the MSO bank account. I do not review the MSO bank account on a regular basis. I did not notice that this check had been inadvertently deposited into the MSO bank account. I did not authorize the endorsement or the deposit of this check into the MSO bank account.

22. I did not purposefully conceal the fact that these check funds were deposited into the MSO bank account, as I was not aware that this check was mistakenly deposited into the MSO bank account until it was first brought to my attention in June of 2011.

23. On or about June 7, 2011, Lan N. Pham informed me that she had received a letter from Scott Carroll of San Miguel inquiring as to whether the check had been inadvertently remitted to MSO after the severance of the parties’ management relationship and deposited by MSO into its bank account. A true and correct copy of this June 7, 2011 letter was kept in MSO’s records in the ordinary course of business at or near the
time of its preparation and receipt; and is attached hereto as Exhibit ‘E’.

24. At no point in time have I used these check funds for any personal gain. I also did not make the decision for MSO to retain these check funds. I do not have the authority to authorize the return of the check funds…” (D Phan Declaration, ¶¶ 17-24; emphasis added).

iv. Plaintiffs citation to other evidence does not create a triable issue of material fact regarding Phan’s knowledge of the endorsed and tendered check.

(1) Michael’s attestation that “[b]ased on my frequent personal interactions with Don Phan,…I understand that he knew about every large check deposited into MSO’s bank accounts.” (Michael Declaration, ¶26) is pure speculation and unfounded conjecture and is not competent evidence.

(2) Phan, moreover, testified in the deposition as follows:

“Q. On paragraph 23, you declare that,

A. ‘On or about June 7, 2011, Lan N. Pham informed me that she had received a letter from Scott Carroll of San Miguel inquiring as to whether the check had been inadvertently remitted to MSO after the severance of the parties’ management relationship and deposited by MSO into its bank account.’

Q. How did Lan Pham inform you of this? Was it a face-to-face conversation? Was it in an e-mail? Was it in writing? How did you learn about this?

A. I think it was face-to-face in our offices. Probably something very short. Lan is always in a hurry. She always has 20 things on her mind. I mean, she probably sends me 20 e-mails a day, and she sends another 80 to other people. I would suggest that it was probably a pretty short conversation.

Q. And during that short conversation, did you have a discussion with Lan Pham about what to do with the check, or the proceeds of the check?

A. Hm, I don’t think so. I think it was more like, you know, say—one of us suggested we speak to counsel about it. I wasn’t sure if it was me or Lan, but I believe one of us, I think, suggested that we speak to counsel about it.

Q. Paragraph 24 you declare, ‘At no point in time have I used these check funds for any personal gain. I also did not make the decision for MSO to retain these check funds.’

Who did make the decision?

A. Lan made the decision after seeking advice of counsel.” (Declaration of Matthew Karanian [hereinafter, “Karanian”], Exhibit “C,” 210:8-211:17; emphasis added).

iv. Lan Pham confirmed the testimony by Don Pham as quoted above:

“Q. BY MR KARANIAN: In Paragraph 25 on Page 6.

A. Yes.

Q. You say here, ‘In June 2011 when MSO first became aware that the check had inadvertently been deposited into MSO’s own bank account, San Miguel owed MSO for its management services in an amount which was in excess of the amount of the check. San Miguel had refused, and continues to refuse to pay MSO for its management services which were due and owing at the time that the agreement was terminated, effective May 3, 2010. Consequently I made a decision on behalf of MSO to apply the proceeds of the check towards unpaid management services which San Miguel owed MSO.’

When you made that decision on behalf of MSO to apply the proceeds of the check toward unpaid management services, who did you reach that decision with?

A. My counsel, Paul Bloom.

Q. Did you have a discussion with anyone else at MSO, Inc.?

A. I think I just informed Don that it was a decision that I made based on advice by counsel.

Q. Did Don Phan participate in your decision to apply the proceeds
of the check towards unpaid management services which San Miguel
owed MSO?

A. No. I told him after I decided, that that’s the advice of counsel. I
believe this is what we should do.” (Karanian Declaration, Exhibit “B,”
288:5-289:3; emphasis added).

vi. It therefore clear to the court, based upon the foregoing, that there is no admissible evidence which suggests that the Valley check was endorsed or deposited into MSO’s bank account at the behest of, and with the knowledge and approval of Don Phan, or that Don Phan authorized, directed, or participated in any way with the endorsement and deposit of the check. There is also no evidence suggesting that he made the decision to retain the funds.

6. Regarding the 8th COA for Conspiracy to Commit Fraud

6.a. The pertinent allegations of the TAC are in paragraphs 98 to 110 of the TAC. These paragraphs state in relevant part as follows:

“98. During the calendar year 2009, the Defendant MSO, INC., entered into negotiations with the Plaintiff SAN MIGUEL for an extension of the agreement of the parties, a copy of which is attached hereto as Exhibit ‘A.’

99. These negotiations were conducted by MSO, INC., through its agents, servants, or employees LAN N. PHAM and DON PHAN.

100. The Defendant MSO, INC., through its agents, servants, or employees LAN. N. PHAM and DON PHAN, proposed to the Plaintiff SAN MIGUEL that they extend their agreement, which by its terms was due to expire on December 1, 2009. The extension sought by MSO, INC. was for ten years, so this new agreement, if accepted by SAN MIGUEL, would expire on December 1, 2019.

101. A material term offered to SAN MIGUEL by MSO, INC, pursuant to this new proposed ten-year agreement called for SAN MIGUEL to pay to MSO, INC., specified sums for providing management and other services as outlined in the Exhibit ‘A’ agreement.

102. A further material term offered to SAN MIGUEL by MSO, INC., pursuant to this new proposed ten-year agreement called for MSO, INC , to deal with SAN MIGUEL in good faith, and to manage its business according to the terms of the agreement.

103. On information and belief, at the time that this ten-year contract extension was offered to SAN MIGUEL, the Defendant MSO, INC., did not intend to fulfill its term or to deal with SAN MIGUEL in good faith. MSO, INC. instead intended to use its ongoing association with SAN MIGUEL to enable it to convert to its own use funds belonging to SAN MIGUEL, as well as funds to which SAN MIGUEL was entitled to receive in the future.

104. The representations made by MSO, INC., to SAN MIGUEL were false and the Defendant MSO, INC., did not intend to abide by the terms of the agreement.

105. The Defendant DON PHAN knew, at the time MSO, INC., made these representations, that MSO, INC., did not intend to abide by the terms of the agreement, and the Defendant DON PHAN encouraged, aided, and abetted MSO, INC., in advancing, developing, and facilitating its plan to use the agreement with SAN MIGUEL for its own financial gain.

106. The actions of Defendant DON PHAN in coordinating DON PHAN’s effort with those of MSO, INC., to induce and persuade SAN MIGUEL to accept the extension of its management agreement with MSO, INC., constituted a conspiracy with MSO, INC. to commit fraud against SAN MIGUEL.

107. SAN MIGUEL rejected the overtures of MSO, INC., and did not agree to a ten-year extension of the agreement. SAN MIGUEL did agree, however, to an extension of less than 30 days in reliance upon the fraudulent misrepresentations made by MSO, INC. and DON PHAN.

108. SAN MIGUEL, at the time that it agreed to the extension of their agreement for less than 30 days, was ignorant of the falsity of the claims made by MSO, INC., and DON PHAN, and further had no reason to believe that the claims made by MSO, INC., and DON PHAN were false.

109. Had SAN MIGUEL known that the representations of MSO, INC. and DON PHAN, regarding its intentions, were false, SAN MIGUEL would not have extended its agreement with MSO, INC.

110. As a direct and proximate result of the fraud and deceit of the Defendant MSO, INC., and DON PHAN, the Plaintiff SAN MIGUEL has sustained damages in an amount greater than $1 million, according to proof at time of trial, together with interest at the legal rate.” (TAC, ¶¶ 98-110).

6.b. Applicable authorities relevant to this cause of action:

i. “A civil conspiracy does not give rise to a cause of action unless a civil wrong has been committed resulting in damage. The elements of an action for civil conspiracy are (1) formation and operation of the conspiracy and (2) damage resulting to plaintiff (3) from an act done in furtherance of the common design. (Doctor’s Co. v. Superior Court (1989) 49 C.3d 39, 44).” Thompson v. California Fair Plan Assn. (1990) 221 C.A.3d 760, 767. “To maintain such an action, ‘there must be alleged an act in furtherance of the conspiracy which is itself a tort.’ (Selby Realty Co. v. San Buenaventura (1973) 10 C.3d 110, 127). Civil conspiracy is not a tort but rather a theory of joint liability whereby all who cooperate in another’s wrong may be held liable. (Petherbridge v. Altadena Fed. Sav. & Loan Assn. (1974) 37 C.A.3d 193, 202, fn. 3). In a civil case, liability attaches only for action taken pursuant to the conspiracy. (Citizens Capital Corp. v. Spohn (1982) 133 C.A.3d 887, 889).” Id.

ii. “’The basis of a civil conspiracy is the formation of a group of two or more persons who have agreed to a common plan or design to commit a tortious act.’ (1 Levy et al., Cal. Torts (1995) Civil Conspiracy, § 9.03[2], p. 9-12; see Youst v. Longo (1987) 43 C.3d 64, 79 [‘the conspirators must agree to do some act which is classified as a “civil wrong”’].) The conspiring defendants must also have actual knowledge that a tort is planned and concur in the tortious scheme with knowledge of its unlawful purpose. (Wyatt v. Union Mortgage Co. (1979) 24 C.3d 773, 784-786 [‘a plaintiff is entitled to damages from those defendants who concurred in the tortious scheme with knowledge of its unlawful purpose’]; People v. Austin, supra, 23 C.A.4th 1596, 1607 [‘without knowledge of the illegal purpose there is no basis for inferring an agreement’].).” Kidron v. Movie Acquisition Corp. (1995) 40 C.A.4th 1571, 1582.

iii. “[A]ctual knowledge of the planned tort, without more, is insufficient to serve as the basis for a conspiracy claim. Knowledge of the planned tort must be combined with intent to aid in its commission. ‘The sine qua non of a conspiratorial agreement is the knowledge on the part of the alleged conspirators of its unlawful objective and their intent to aid in achieving that objective.’ (Schick v. Lerner (1987) 193 C.A.3d 1321, 1328; see also Michael R. v. Jeffrey B. (1984) 158 C.A.3d 1059, 1069 [‘[m]ere knowledge, acquiescence, or approval of an act, without cooperation or agreement to cooperate is insufficient to establish liability’].).” Id. “While knowledge and intent “may be inferred from the nature of the acts done, the relation of the parties, the interest of the alleged conspirators, and other circumstances” (Wyatt v. Union Mortgage Co., supra, 24 C.3d at p. 785), ‘”[c]onspiracies cannot be established by suspicions. There must be some evidence. Mere association does not make a conspiracy. There must be evidence of some participation or interest in the commission of the offense.’”’ (Davis v. Superior Court (1959) 175 C.A.2d 8, 23). An inference must flow logically from other facts established in the action. (See People v. Austin, supra, 23 C.A.4th at p. 1604).” Id. (emphasis added).

6.c. Plaintiffs have not shown that there is any disputed material fact as to this cause of action. Plaintiffs have not alleged an underlying tort; to the extent that this COA is determined to encompass both a fraud and a conspiracy to defraud COA, it nevertheless fails. “’The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (citations omitted). “’Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” Id. (citations omitted).

i. As Phan points out, “[a]ll of the alleged ‘promises’ identified by Plaintiff in its separate statement of additional material facts as part of a ‘plot’ to defraud San Miguel involve activity purportedly taken after Lan Pham terminated the parties’ Agreement in her letter dated May 1, 2010—not as part of the earlier negotiations for a ten year extension of the Agreement. That Don Phan allegedly conspired with MSO to make false promises as part of the earlier negotiations for a ten year extension of the Agreement is the entire premise underlying the eighth cause of action for conspiracy to commit fraud against Don Phan.” (Reply, 7:5-12).

ii. “The pleadings serve as the ‘outer measure of materiality’ in a summary judgment motion, and the motion may not be granted or denied on issues not raised by the pleadings. [Laabs v. City of Victorville (2008) 163 C.A.4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. Co. (2010) 181 C.A.4th 60, 73—‘the pleadings determine the scope of relevant issues on a summary judgment motion;’ Hutton v. Fidelity Nat’l Title Co. [(2013)] 213 C.A.4th [486], at 493—summary judgment defendant need only ‘negate plaintiff’s theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings (emphasis in original; internal quotes omitted)].” Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2013) ¶ 10:51.1, pp. 10-21 & 10-22.

7. Based upon the foregoing, the court finds that defendant has met his initial burden of showing that there is no merit to the Plaintiff’s contentions as to Don Phan and that all issues identified are established in favor of Defendant Phan. The burden therefore shifted to Plaintiffs to show that there is at least one triable issue of material fact regarding the cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, supra, at p. 849 [Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850]; Jessen, supra, at p. 1484 [Jessen v. Mentor Corp. (2008) 158 Cal.App.4th 1480, 1484] “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.” (Aguilar, supra, at p. 850, fn. omitted; accord, Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003.)

Motion #2 – Lan Pham– Motion for Summary Adjudication of the 7th Cause of Action is GRANTED.

1. Lan Pham moves this court, per CCP §437c, for an order granting her summary adjudication of Ps’ 7th COA for conversion and claim for punitive damages.

2. The MSA issues as to Lam Pham [“Pham”] are as follows:

Issue #1: Ps’ 7th COA against Pham fails, because she made no fraudulent statements to the Ps;

Issue #2: The claim for punitive damages against Pham fails, because Plaintiffs cannot establish that she committed any act with malice;

Issue #3: The claim for punitive damages against Pham fails, because Plaintiffs cannot establish that she committed any act with oppression; and,

Issue #4: The claim for punitive damages against Pham fails, because Plaintiffs cannot establish that she committed any act with fraud.

3. Pham’s RJN is DENIED (i.e., as to non-conformed copy of TAC).

4. Hutton v. Fidelity Nat’l Title Co. (2013) 213 C.A.4th 486 held at page 493 that a summary judgment defendant need only ‘negate plaintiff’s theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings (emphasis in original; internal quotes omitted).” Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2013) ¶ 10:51.1, pp. 10-21 & 10-22. As such the court reviews the allegations of the TAC. Plaintiff has alleged:

“83. During the calendar year 2009, the Defendant MSO, INC., entered into negotiations with the Plaintiff SAN MIGUEL for an extension of the agreement of the parties, a copy of which is attached hereto as Exhibit ‘A.’

84. These negotiations were conducted by MSO, INC., through its agents, servants, or employees LAN N. PHAM and DON PHAN.

85. The Defendant MSO, INC., through its agents, servants, or employees LAN. N. PHAM and DON PHAN, proposed to the Plaintiff SAN MIGUEL that they extend their agreement, which by its terms was due to expire on December 1, 2009. The extension sought by MSO, INC. was for ten years, so this new agreement, if accepted by SAN MIGUEL, would expire on December 1, 2019.

86. A material term offered to SAN MIGUEL by MSO, INC. pursuant to this new proposed ten-year agreement called for SAN MIGUEL to pay to MSO, INC., specified sums for providing management and other services as outlined in the Exhibit ‘A’ agreement. (Exhibit ‘A’)

87. further [sic] material term offered to SAN MIGUEL by MSO, INC., pursuant to this new proposed ten-year agreement called for MSO, INC., to deal with SAN MIGUEL in good faith, and to manage its business according to the terms of the agreement.

88. [O]n information and belief, at the time that this ten-year contract extension was offered to SAN MIGUEL, the Defendant MSO, INC., did not intend to fulfill its terms or to deal with SAN MIGUEL in good faith. MSO, INC. instead intended to use its ongoing association with SAN MIGUEL to enable it to convert to its own use funds belonging to SAN MIGUEL, as well as funds to which SAN MIGUEL was entitled to receive in the future.

89. The representations made by MSO, INC., to SAN MIGUEL were false and the Defendant MSO, INC., did not intend to abide by the terms of the agreement.

90. The Defendant LAN N. PHAM knew, at the time MSO, INC., made These representations, that MSO, INC., did not inten[d] to abide by the terms of the agreement, and the Defendant LAN N. PHAM encouraged, aided, and abetted MSO, INC., in advancing, developing, and facilitating its plan to use the agreement with SAN MIGUEL for its own financial gain.

91. The actions of Defendant LAN N. PHAM in coordinating LAN N. PHAM’ s effort with those of MSO, INC., to induce and persuade SAN MIGUEL to accept the extension of its management agreement with MSO, INC., constituted a conspiracy with MSO, INC. to commit fraud against SAN MIGUEL.

92. SAN MIGUEL rejected the overtures of MSO, iNC., and did not agree to a ten-year extension of the agreement. SAN MIGUEL did agree, however, to an extension of less than 30 days in reliance upon the fraudulent misrepresentations made by MSO, INC. and LAN N. PHAM.

93. SAN MIGUEL, at the time that it agreed to the extension of their agreement for less than 30 days, was ignorant of the of the claims made by MSO, INC., and LAN N. PHAM, and further had no reason to believe that the claims made by MSO, INC., and LAN N. PHAM were false.

94. Had SAN MIGUEL known that the representations of MSO, INC. and LAN N. PHAM, regarding its intentions, were false, SAN MIGUEL would not have extended its agreement with MSO, INC.

95. As a direct and proximate result of the fraud and deceit of the Defendant MSO, INC., and LAN N. PHAM, the Plaintiff SAN MIGUEL has sustained damages in an amount greater than $1 million, according to proof at time of trial, together with interest at the legal rate.

96. In doing the acts alleged herein, the Defendants MSO, INC., and LAN N. PHAM acted with oppression, fraud, malice, and in conscious disregard of the Plaintiffs rights in that the Defendant knew that by encouraging the Plaintiff to extend its agreement, that the Plaintiff would be damaged and would suffer severe financial harm, as well as harm to its business and reputation in the business community. Such wrongful conduct justifies an award of punitive or exemplary damages against MSO, INC., according to proof at time of trial.” (TAC, ¶¶ 83-96).

5. Plaintiffs’ COA against Pham fails, for the reasons set forth as the basis for the failure as to Defendant Don Phan as referenced above in the motion by Phan. A conspiracy to defraud requires “an act in furtherance of the conspiracy which is itself a tort.” Ps have not alleged any underlying tort.

6. Plaintiffs have not alleged an underlying tort; to the extent that this COA is determined to encompass both a fraud and a conspiracy to defraud COA, it nevertheless fails. “’It is hornbook law that an actionable misrepresentation must be made about past or existing facts; statements regarding future events are merely deemed opinions. [Citations.]’ (San Francisco Design Center Associates v. Portman Companies (1995) 41 C.A.4th 29, 43-44; see generally 5 Witkin, Summary of Cal. Law [(9th ed. 1988)] Torts, § 678, pp. 779-780.).” Neu-Visions Sports, Inc. v. Soren/McAdams/Bartells (2000) 86 C.A.4th 303, 309-310. As Pham points out, “even if we accept…the truth of San Miguel’s allegations that Lan Pham misrepresented during negotiations for a proposed extended Agreement that MSO would deal with San Miguel in good faith and manage its business in accordance with the terms of the proposed extended Agreement, and not for MSO’s own gain, and the like, such statements are not actionable fraud[; rather,] [t]hey are merely statements about future events and not ones made about past of existing facts.” (Motion, 6:10-15).

7. Moreover, “[a]ll of the alleged ‘promises’ identified by Plaintiff…as part of a ‘plot’ to defraud San Miguel involve activity purportedly undertaken after Lan Pham terminated the parties’ Agreement in her letter dated May 1, 2010—not as part of the earlier negotiations for a ten year extension of the Agreement.” (Reply, 2:14-17; emphasis theirs). Since these promises were not set forth in the TAC, they cannot now be used in an attempt to defeat Pham’s MSA.

8. Based upon the foregoing, the court finds that defendant Pham has met her initial burden of showing that there is no merit to the Plaintiff’s contentions as to Pham and that all issues identified are established in favor of Defendant Pham. The burden therefore shifted to Plaintiffs to show that there is at least one triable issue of material fact regarding the cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, supra, at p. 849 [Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850]; Jessen, supra, at p. 1484 [Jessen v. Mentor Corp. (2008) 158 Cal.App.4th 1480, 1484] “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.” (Aguilar, supra, at p. 850, fn. omitted; accord, Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003.) Under this standard, as stated above, Pham is entitled to judgment on this cause of action. Further, inasmuch as Pham is entitled to MSA on the 7th COA, so too is she entitled to MSA on the issue of punitive damages as this is the only cause of action seeking punitive damages against Pham.

MSO – Motion for Summary Adjudicationi of the 6th Cause of Action is GRANTED.

1. MSO moves this court, per CCP § 437c, for an order granting it summary adjudication of Plaintiffs’ 6th COA for fraud and claim for punitive damages.

2. The MSA issues are as follows:

Issue #1: Plaintiffs’ 6th COA against MSO fails, because it did not make any misrepresentation of fact and thus committed no fraud;

Issue #2: The claim for punitive damages against MSO fails, because Ps cannot establish that it acted with malice;

Issue #3: The claim for punitive damages against MSO fails, because Ps cannot establish that it acted with oppression; and

Issue #4: The claim for punitive damages against MSO fails, because Ps cannot establish that it acted with fraud.

3. Hutton v. Fidelity Nat’l Title Co. (2013) 213 C.A.4th 486 held at page 493 that a summary judgment defendant need only ‘negate plaintiff’s theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings (emphasis in original; internal quotes omitted).” Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2013) ¶ 10:51.1, pp. 10-21 & 10-22. As such the court reviews the allegations of the TAC. Plaintiff has alleged:

“70. During the calendar year 2009, the Defendant MSO, INC., entered into negotiations with the Plaintiff SAN MIGUEL for an extension of the agreement of the parties, a copy of which is attached hereto as Exhibit ‘A’.

71. These negotiations were conducted by MSO, INC., through its agents, servants, or employees LAN N. PHAM and DON PHAN.

72. The Defendant MSO, INC., proposed to the Plaintiff SAN MIGUEL that they extend their agreement, which by its terms was due to expire on December 1, 2009. The extension sought by MSO, INC. was for ten years, so this new agreement, if accepted by SAN MIGUEL, would expire on December 1, 2019.

73. A material term offered to SAN MIGUEL by MSO, INC, pursuant to this new proposed ten-year agreement called for SAN MIGUEL to pay to MSO, INC., specified sums for providing management and other services as outlined in the Exhibit ‘A’ agreement. (Exhibit ‘A’)

74. A further material term offered to SAN MIGUEL by MSO, INC., pursuant to this new proposed ten-year agreement called for MSO, INC., to deal with SAN MIGUEL in good faith, and to manage its business according to the terms of the agreement.

75. On information and belief, at the time that this ten-year contract extension was offered to SAN MIGUEL, the Defendant MSO, INC., did not intend to fulfill its terms or to deal with SAN MIGUEL in good faith. MSO, NC. instead intended to use its ongoing association with SAN MIGUEL to enable it to convert to its own use funds belonging to SAN MIGUEL, as well as funds to which SAN MIGUEL was entitled to receive in the future.

76. The representations made by MSO, INC., to SAN MIGUEL were false and the Defendant MSO, NC., did not intend to abide by the terms of the agreement.

77. SAN MIGUEL rejected the overtures of MSO, INC., and did not agree to a ten-year extension of the agreement. SAN MIGUEL did agree, however, to an extension of less than 30 days in reliance upon the fraudulent misrepresentations made by MSO, INC.

78. SAN MIGUEL, at the time that it agreed to the extension of their agreement for less than 30 days, was ignorant of the falsity of the claims made by MSO, INC., and further had no reason to believe that the claims made by MSO, INC., were false.

79. Had SAN MIGUEL known that the representations of MSO, INC., regarding its intentions, were false, SAN MIGUEL would not have extended its agreement with MSO, INC.

80. As a direct and proximate result of the fraud and deceit of the Defendant MSO, INC., the Plaintiff SAN MIGUEL has sustained damages in an amount greater than $1 million, according to proof at time of trial, together with interest at the legal rate.

81. In doing the acts alleged herein, the Defendant MSO, INC., acted with oppression, fraud, malice, and in conscious disregard of the Plaintiff’s rights in that the defendant knew that by encouraging the Plaintiff to extend its agreement, that the Plaintiff would be damaged and would suffer severe financial harm, as well as harm to its business and reputation in the business community. Such wrongful conduct justifies an award of punitive or exemplary damages against MSO, INC., according to proof at time of trial.” (TAC, ¶¶ 70-81).

4. MSO’s MSA is GRANTED for the reasons set forth in the analysis on Motions #1 and #2. Inasmuch as MSO is entitled to MSA on the 6th COA, so too is it entitled to MSA on the issue of punitive damages.