Case Number: BC659295 Hearing Date: January 17, 2018 Dept: 40

MOVING PARTY: Plaintiff PS Advanced Engineering

OPPOSTION: Defendants SkinClinical Technologies, LLC, SC SkinCare, LLC, Thibiant Beverly Hills, LLC, True North Equity, LLC, R Lane Associates, Inc., and Qual-Pro Corporation

Plaintiff PS Advanced Engineering sues defendants SkinClinical Technologies, LLC, SC SkinCare, LLC, Thibiant Beverly Hills, LLC, True North Equity, LLC, R Lane Associates, Inc., and Qual-Pro Corporation for misappropriation and related claims.

Plaintiff alleges that it designed and obtained FDA clearances for two medical devices. In summer 2015, Glassmand, Llevat, and Carmi (Thibiant, SC Skincare, and True North principals) approached plaintiff to propose a joint venture to market the devices when plaintiff was seeking a partner to do so. As an incentive to partner with them, defendants offered plaintiff’s chief technology officer, Feak, a consulting agreement with $150,000 annual compensation. Thus, the parties formed SkinClinical with plaintiff and SC SkinCare each as a 50-percent owner and party to an operating agreement that, in part, licenses plaintiff’s intellectual property to SkinClinical. Additionally, Feak entered into the consulting agreement with SkinClinical. In October 2015, Thibiant joined SkinClinical as a member.

While Feak was in Thailand to set up production, he was pressured to enter into a subscription agreement giving SkinClinical ownership of plaintiff’s intellectual property. Carmi told Feak that he needed to do so to allow SkinClinical to obtain funding from other investors. Starting February 2016, when plaintiff refused to sign a bill of sale and assignment of its intellectual property to SkinClinical, SC SkinCare and Thibiant became adversarial and hostile toward plaintiff. Defendants, over plaintiff’s objection, engaged Lane to handle production and supply chain. Lane failed, and production and delivery were delayed. Since February 2016, plaintiff was prevented from accessing SkinClinical’s business and affairs. SkinClinical sold 50,000 units of the device, but paid plaintiff a fraction of the royalty it is owed under the operating agreement and unilaterally terminated the consulting agreement.

In December 2015, plaintiff discovered that SC SkinCare filed a trademark application for the device in contravention of the parties’ agreement to do so for SkinClinical’s benefit only. Defendants attempted to have plaintiff enter into amendments to the operating agreement. On April 20, 2016, SkinClinical, SC SkinCare, and Thibiant requested arbitration. Apparently, the parties arbitrated a dispute. During discovery, plaintiff discovered that its membership interest had been reduced without its knowledge. The arbitration is in abeyance because plaintiff cannot pay a required fee. In May 2016, plaintiff discovered that defendants modified the device and falsely registered it as if defendants designed and developed it.

Procedural History: On April 28, 2017, plaintiff filed a complaint for (1) fraud in the inducement, (2) conspiracy to commit fraud, (3) conversion, (4) misappropriation of intellectual property, (5) interference with economic relations, (6) unfair business practices, (7) breach of fiduciary duty, (8) breach of contract, (9) fraudulent misrepresentation, (10) quantum meruit, and (11) judicial dissolution.

On July 27, 2017, the Court sustained defendant’s demurrer to the second through fifth and ninth causes of action with leave to amend, and overruled it as to the sixth cause of action. Defendants did not demur to the first, seventh, eighth, tenth, or eleventh causes of action.

On August 10, 2017, plaintiff filed the operative first amended complaint for the same 11 causes of action, relabeling the second as civil conspiracy and fourth as misappropriation of trade secret.

On October 16, 2017, the Court sustained without leave defendants’ demurrer to the ninth cause of action and overruled the balance.

On November 15, 2017, defendants filed an answer, admitting and denying certain allegations, and asserting 18 purported affirmative defenses.

Present Proceedings: On November 27, 2017, plaintiff filed this opposed purported demurrer to the affirmative defenses and combined motion to strike. The purported demurrer and motion are not a model of clarity, but the Court understands that plaintiff objects to the affirmative defenses on the ground of insufficient facts. The Court considered the moving, opposition, and reply papers, and rules as follows.

Omission of Table of Contents: Plaintiff’s counsel should note: “A memorandum that exceeds 10 pages must include a table of contents and a table of authorities.” CRC, rule 3.1113(f). Plaintiff’s opening memorandum is 11 pages but omits a table of contents in violation of this rule. All parties are ORDERED to strictly comply with this rule or risk their memoranda of points and authorities being rejected and/or disregarded and/or struck, and/or a monetary sanction.

Omission of Actual Demurrer: Plaintiff’s counsel should note that a demurrer is an independent pleading that should appear on a separate document. See CCP § 430.60; CRC, rules 3.1320, 3.1112(a)(3), 3.1113(a).

Plaintiff did not file an actual demurrer despite the label on his caption page. He filed only a notice of hearing, memorandum of points and authorities, and proof of service. The Court finds that this defect is not fatal. But the Court shall not accept purported demurrers omitting actual demurrers going forward.

Timeliness: The Court finds that the demurrer is not untimely based on plaintiff’s representation in reply that this hearing date was the first available. REPLY 2:8-9.

Plaintiff Failed to Comply with Meet and Confer Requirement: “Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” CCP § 430.41(a). Additionally, “[t]he demurring party shall file and serve with the demurrer a [meet and confer] declaration ….” CCP § 430.41(a)(3).

Here, plaintiff did not file a meet and confer declaration or make any showing that he attempted to meet and confer before filing this demurrer. Nonetheless, the Court declines to summarily overrule the demurrer. CCP § 430.41(a)(4) (“Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.”)

Instead, the parties are ORDERED to immediately and meaningfully meet and confer in the hallway to attempt to resolve the issues plaintiff raises.

This matter shall be recalled.