Judge Daniel M. Crowley, Case Number: 21STCV25811, Date: 2023-08-04 Tentative Ruling

Defendants Alkaline 88, LLC’s, Richard Wright’s, Frank Chessman’s, and Ryan Chessman’s motion for summary judgment as to Plaintiffs 10K Advertising LLC’s and 10K Advertising, Inc.’s first amended complaint is denied.

Defendants Alkaline 88, LLC’s, Richard Wright’s, Frank Chessman’s, and Ryan Chessman’s motion in the alternative for summary adjudication as to Plaintiffs 10K Advertising LLC’s and 10K Advertising, Inc.’s 1st, 2nd, 3rd, 4th, 5th, 6th, 8th, 9th, and 10th causes of action in their first amended complaint is denied. Defendants’ motion for summary adjudication is granted as to the 7th cause of action.

Defendants Alkaline 88, LLC (“A88”), Richard Wright (“Wright”), Frank Chessman (“Frank”), and Ryan Chessman (“Ryan”) (collectively, “Defendants”) move for summary judgment of Plaintiffs 10K Advertising, LLC’s (“10K LLC”) and 10K Advertising, Inc.’s (“10K Inc.”) (collectively, “Plaintiffs”) first amended complaint (“FAC”) on the grounds that this action has no triable issue of material fact, and Defendants are entitled to judgment as a matter of law. (Notice of MSJ, pg. 2; C.C.P. §437c(a).)

Defendants move in the alternative for summary adjudication of Plaintiffs’ 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, and 10th causes of action in their FAC. (Notice of MSJ, pg. 2; C.C.P. §437c(f).)

Defendants’ 9/29/23 evidentiary objection to Plaintiffs’ Exhibit 5, the Declaration of David White (“White”), is sustained on the grounds that the declaration was not signed. (CRC, Rule 2.257(b).)

Defendants’ 9/29/23 evidentiary objection to Plaintiffs’ Exhibit 6, the Declaration of Nathan Rogers (“Rogers”), is overruled.

Defendants’ 9/29 evidentiary objections to Plaintiffs’ Exhibits 7-41, 42-48, 50-100 are sustained on the grounds that the documents were not properly authenticated (Evid. Code §1401) and no proper foundation was laid for them. (Evid. Code §403). Tara Church, Esq.’s (“Church”) declaration does not provide a foundation for the admissibility of these exhibits. (Sanchez v. Hillerich & Bradsby Co. (2002) 104 Cal.App.4th 703, 720.)

Defendants’ 7/20/23 request for judicial notice of (1) Castello Sales, LLC v. 10K Advertising LLC, et al., LASC Case No. 20STCV43914 (D-RJN, Exh. 1); (2) 10K LLC’s, 10K Inc.’s, Haugesund Group, LLC’s, and Stephen Haugse’s Opposition to Notice of Related Case filed in Castello Sales, LLC v. 10K Advertising LLC, et al., LASC Case No. 20STCV43914 (D-RJN, Exh. 2); (3) 12/6/22 Minute Order and Amended Order/Decision denying Motion for Writ of Attachment (D-RJN, Exh. 3); (4) Exhibit D to the Declaration of Francis Fazzina (“Fazzina”) in support of 10K LLC’s and 10K Inc.’s Motion for Prejudgment Writ of Attachment (D-RJN, Exh. 4); (5) 10K Advertising, LLC Articles of Organization (D-RJN, Exh. 5); (6) 10K Advertising, LLC Statement of Information - Members (D-RJN, Exh. 6); (7) Haugesund Group, LLC Articles of Organization (D-RJN, Exh. 7); (8) Haugesund Group, LLC Statement of Information - Members (D-RJN, Exh. 8); (9) 10K Advertising, Inc. Articles of Incorporation (D-RJN, Exh. 9); and (10) 10K Advertising, Inc. Statement of Information (D-RJN, Exh. 10), is granted. (D-RJN, Exhs. 1-10.)

Plaintiff 10K LLC filed its initial complaint Defendants A88 on July 13, 2021. Plaintiffs 10K LLC and 10K Inc. filed the operative FAC on August 25, 2022, alleging ten causes of action: (1) fraud [by Plaintiffs against Defendants]; (2) interference with contractual relations [by 10K LLC against Defendants]; (3) intentional interference with prospective economic advantage [by 10K LLC against Defendants]; (4) negligent interference with prospective economic advantage [by 10K LLC against Defendants]; (5) statutory unfair business practices in violation of California’s UCL (Bus. & Prof. Code §17200) [by Plaintiffs against A88]; (6) statutory improper disposition of property (Pen. Code §496(c)) [by Plaintiffs against Defendants]; (7) breach of contract [by 10K LLC against A88]; (8) breach of implied or oral contract [by 10K LLC against A88]; (9) breach of implied covenant of good faith and fair dealing [by 10K LLC against A88]; and (10) quantum meruit [by Plaintiffs against A88].

Defendants filed the instant motion on July 20, 2023. Plaintiffs filed their opposition on September 25, 2023. Defendants filed their reply on September 29, 2023.

Plaintiffs allege their and A88’s relationship began in July 2020 when Stephen Haugse, formerly a freelancer assisting A88 with CBD sales through a third party, formed 10K LLC as a full-service agency. (FAC ¶23.) Plaintiffs allege Haugse had previously executed two successful advertising campaigns for A88, retaining 10K Inc. as a vendor to book graphics, printing and billboard space. (FAC ¶23.) Plaintiffs allege A88, through Ryan and Frank, advised Haugse that it wanted to work directly with Haugse and his partners. (FAC ¶23.) Plaintiffs allege that, in September 2020, at A88’s request, 10K LLC became A88’s agency of record to coordinate the strategy, creative design, printing and installation of two advertising campaigns for A88 cobranded with the retailers CBD Plus USA and CBD Emporium, Inc. (FAC ¶23.) Plaintiffs allege 10K LLC designed all aspects of the campaigns and executed them with A88’s direct involvement and express approval resulting in 10K Inc. executing contracts with third-party printing and billboard vendors, causing the placement of over one hundred (100) outdoor billboards throughout several states. (FAC ¶23.)

Plaintiffs further allege that with the express written approval of A88 and Wright and Ryan, 10K LLC incurred hundreds of thousands of dollars in costs and expenses for the production and placement of billboards for the CBD Plus and CBD Emporium campaigns. (FAC ¶24.) Plaintiffs allege Frank and other executives at A88 ratified these actions and accepted their benefit. (FAC ¶24.) Plaintiffs allege that as the agency of record for A88, 10K LLC is liable to its vendor, 10K Inc., which in turn is liable to several national vendors including Circle Graphics, ClearChannel, Outfront Media and Lamar Advertising for advertising produced and placed on A88’s behalf, in addition to 10K LLC’s in-house design, production and printing costs. (FAC ¶24.)

Plaintiffs allege A88 executives, Frank and Ryan, expressly directed 10K LLC to provide invoices to A88 for its work on the CBD Plus and CBD Emporium campaigns (“Invoices”) and promised to pay them. (FAC ¶25.) Plaintiffs allege Invoice A8801 for the CBD Plus campaign in the amount of $508,000 was received and viewed by A88 on September 30, 2020. (FAC ¶25.) Plaintiffs allege Invoice A8801 (Revised) for the CBD Plus campaign in the amount of $360,000 was received and viewed by A88 on November 11, 2020. (FAC ¶25.) Plaintiffs allege Invoice A8802 for the CBD Emporium campaign in the amount of $88,000 was received and viewed by A88 on or about September 9, 2020. (FAC ¶25.)

Plaintiffs allege the invoices addressed from Plaintiff to A88 each contain the following information:

(v) market (i.e., U.S. state) and each city within the market where billboards were installed,

(vi) start date (i.e., when the billboards were installed) and period (in each case, 4 weeks), and

Plaintiffs allege 10K LLC provided “proof of performance” of the campaigns, including photographs and data, to A88 on several occasions between October 2020 and January 2021. (FAC ¶25.) Plaintiffs allege 10K LLC also traveled with A88 representatives, including Ryan, to view the billboards in person and sent real-time photographs of at least one billboard to Defendant Wright. (FAC ¶25.)

Plaintiffs allege they demanded that A88 pay the past due Invoices on numerous occasions between September 2020 and March 2021. (FAC ¶26.) Plaintiffs allege on each such occasion, and others, one or more of Defendants Wright, Ryan, Frank, and others at A88 promised Plaintiffs that they would be paid. (FAC ¶26.) Plaintiffs allege Ryan told Haugse in September, October, November and December 2020, that A88 “always pays [its] bills,” “always keep[s its] word,” and that he and the other Defendants at A88 would “ensure we get this taken care of.” (FAC ¶26.) Plaintiffs allege in early October 2020 at a dinner in Arizona, Frank told 10K LLC that he understood the economics of the marketing and advertising industry because he had worked in it for years and that “Alkaline 88 always takes care of [its] vendors and suppliers.” (FAC ¶26.) Plaintiffs allege he assured Plaintiff that the Invoices would be paid, and that Plaintiff should keep working to help A88 grow its sales. (FAC ¶26.) Plaintiffs allege in the fall of 2020 and again in March 2021, Wright told Plaintiffs that if they would just “be patient,” A88 would get them paid. (FAC ¶26.)

Plaintiffs allege Defendants never disclaimed liability for the Invoices or told Plaintiffs that they would not be paid. (FAC ¶27.) Plaintiffs allege to the contrary, Director of Corporate Marketing, Rosie Cousino, told 10K LLC in September 2020 that she had “heard from everyone [at A88] that there was a lot of evaluation of the plan” to partner with Plaintiff. (FAC ¶27.) Plaintiffs allege Ryan and Frank expressly advised Plaintiff in October 2020 that everyone at A88 was happy with 10K LLC’s work and that the Invoices would be paid. (FAC ¶27.) Plaintiffs allege Ryan repeated this statement in November 2020. (FAC ¶27.) Plaintiffs allege in late November 2020, Cousino expressed A88’s appreciation for 10K LLC’s partnership and in December she asked 10K LLC to resend proof of performance for the billboard campaigns, which Plaintiff did. (FAC ¶27.)

Plaintiffs allege A88 knew that its failure to pay the Invoices was inflicting severe financial and reputational harm upon 10K LLC and 10K Inc. and that the harm would only magnify over time. (FAC ¶28.) Plaintiffs allege as Haugse advised Ryan on November 23, 2020: “10K, Inc[.] booked all the placements and is currently out of pocket to the billboard vendors . . . . Could you please help connect Fran[cis “Ten” Fazzina, 10K Inc.’s President] with David [Guarino, A88 CFO] so they can get the invoices resolved and the vendors paid up in full. Reminder that these are extremely past due.” (FAC ¶28.) Plaintiffs allege getting no response, the next day Fazzina followed up by email to Ryan, writing: “Hi Ryan, Do you have time to jump on a call today? I have reached out to David multiple times with no response. This matter is extremely urgent[.]” (FAC ¶28.) Plaintiffs allege on December 1, 2020, Fazzina emailed Ryan again regarding the past due Invoices to emphasize Plaintiff’s urgent need to be paid: “The reason we need your help getting this taken care of ASAP is due to the fact I have multiple major national vendors putting all of the company’s future biz on a temporary hold until this campaign is paid for. I did put in a call to David today but got a [voicemail]. I'm available to chat 24/7 and once again thanks for your help getting this resolved. Looking forward to many more beautiful A88 campaigns across the nation in 2021!” (FAC ¶28.)

Plaintiffs allege rather than respond to Plaintiffs, or disclaim liability for the debts, Ryan merely forwarded Fazzina’s plea to Frank via email on December 2, 2020, who replied five minutes later: “Please forward this to David [Guarino] and copy me. Thanks.” (FAC ¶29.) Plaintiffs allege another internal A88 document explains Frank’s request. (FAC ¶29.) Plaintiffs allege on November 24, 2020, after Ryan received 10K Inc.’s email emphasizing that payment of the Invoices was “extremely urgent,” he forwarded it to Guarino, Frank, and A88CBD President Lynda Zeman with the following cover note: “Team, FYI- please see the emails below I have received and I am not responding per your direction.” (FAC ¶29, emphasis original.)

Plaintiffs allege that despite months of false promises, and despite its knowledge that A88’s wrongful actions were draining 10K LLC’s resources, preventing its growth with new opportunities and stifling 10K Inc.’s ability to conduct any new business (i.e., booking and placing new outdoor advertising campaigns for other clients), A88 never paid the Invoices. (FAC ¶30.) Plaintiffs allege they have been forced to take out large business loans at prevailing interest rates to cover A88’s debt while Defendants continue to scheme to deprive Plaintiffs of the money they are owed and destroy their business. (FAC ¶30.)

Plaintiffs allege that in July 2020, as the parties were preparing to launch the CBD Plus & CBD Emporium campaigns, A88 asked 10K LLC to broaden the scope of its work to include a larger strategy, marketing and sales initiative for its CBD products. (FAC ¶31.) Plaintiffs allege that A88’s expressed goal in partnering with 10K LLC was to expand the reach of its CBD products into as many retail stores as possible. (FAC ¶31.) Plaintiffs allege that 10K LLC quickly mobilized its team to put together a strategy, marketing, and retail sales distribution plan for A88. (FAC ¶31.) Plaintiffs allege on July 17, 2020, 10K LLC transmitted to Ryan, at his request, an initial Statement of Work (“SOW”) along with forecasts and planning documents. (FAC ¶31.) Plaintiffs allege in its transmittal email to Ryan, 10K LLC advised A88 that it had “been working behind the scenes to get A88CBD into major distributors and key Co Branded retail partners.” (FAC ¶31.) Plaintiffs allege Ryan thanked Plaintiff and agreed to a teleconference that same day. (FAC ¶ 31.)

Plaintiffs allege A88 told 10K LLC to project that the parties’ partnership would continue for at least two years. (FAC ¶32.) Plaintiffs allege on September 10, 2020, Ryan demanded that 10K LLC compile detailed sales projections based upon Plaintiff’s work through 2022 in an Excel spreadsheet “being compiled for leadership and the board.” (FAC ¶32.) Plaintiffs allege that Ryan then took Plaintiff’s financial and sales projections and misrepresented to A88’s “leadership and the board” that the work was his own, for purposes of advancing his career. (FAC ¶32.)

Plaintiffs allege that the SOW is the contract between the parties. (FAC ¶33.) Plaintiffs allege that the initial draft had an effective date of September 1, 2020, although it also alleges that it began performing services under the SOW on A88’s behalf as early as July. (FAC ¶33.) Plaintiffs allege the final version of the SOW is dated October 15, 2020. (FAC ¶33.)

Plaintiffs allege the SOW sets forth all material terms of the contractual arrangement fully performed by 10K LLC and constitutes a binding contract between 10K LLC and A88 including, without limitation, the following key provisions:

c. Payment: A88 pays 10K LLC a monthly management fee of $20,000 per month; A88 pays 10K LLC a commission of 6% of gross purchase orders from independent retailers; A88 pays 10K LLC a commission of 3% of gross purchase orders from distributors;

d. Performance Bonus: 10K LLC receives a performance bonus in the form of A88 stock for achieving certain sales goals from accounts managed by 10K LLC—i.e., 10K LLC receives 110,000 shares upon total sales from 10K LLC’s accounts reaching $6 million in gross sales;

e. Sunset Provision: If the Agreement is terminated, A88 must provide notice and continue paying monthly management compensation for two (2) months and performance bonus for twelve (12) months.

Plaintiffs allege on the morning of October 1, 2020, Wright sent his final changes to the SOW terms in an email to Ryan, Lynda Zeman (“Zeman”) (President of A88CBD), Frank, and A88 employee Leesel Todsen. (FAC ¶34.) Plaintiffs allege later that afternoon, Zeman replied to the same email chain: “All good to me. No additional changes beyond the notes that Ricky sent earlier. Thanks, Lynda.” (FAC ¶34.)

Plaintiffs allege that on October 13, 2020, Ryan confirmed to 10K LLC in writing that the parties were “in agreement” on all material terms. (FAC ¶35.) Plaintiffs allege each of the Defendants was copied on this email, along with other representatives of A88. (FAC ¶35.) Plaintiffs allege on October 19, 2020, 10K LLC transmitted an execution copy of Agreement, including a list of all recent revisions, to A88. (FAC ¶35.) Plaintiffs allege no further changes to the SOW were ever contemplated or discussed. (FAC ¶35.) Plaintiffs allege that A88 promised to sign the SOW at an-in person meeting that would include each of the Defendants but, in the meantime, Ryan assured 10K LLC that it was “as good as signed.” (FAC ¶35.) Plaintiffs allege Defendants instructed 10K LLC to perform all its obligations under the SOW and Plaintiff did so. (FAC ¶35.) Plaintiffs allege specifically, with the approval of A88’s leadership, including Wright and Frank, Ryan directed Plaintiff to continue devoting nearly all of its small staff to A88’s growth between September 2020 and January 2021 because it was understood that 10K LLC would be paid according to the terms of the SOW. (FAC ¶35.)

Plaintiffs allege that between July 2020 and January 2021, Wright, Ryan, Frank, Cousino, Todsen and others at A88 worked closely with 10K LLC to develop co-branded marketing and retail distribution strategies to improve A88’s brand strength and increase sales of A88’s CBD products. (FAC ¶36.) Plaintiffs allege that in reliance upon Defendants’ false promise to pay the outstanding Invoices and Defendants’ repeated representations that the Agreement was “as good as signed” because the parties were “in agreement,” 10K LLC was induced to and did continue providing A88 with valuable services, introductions, creative content and other intellectual property pursuant to the SOW because Defendants Ryan and Frank assured Plaintiff that they “keep [their] word” and “will take care of [10K LLC].” (FAC ¶36.) Plaintiffs allege 10K LLC devoted thousands of hours to A88, incurring expenses for work time, production of creative content, business travel (at the height of the COVID-19 pandemic), as well as out-of-pocket obligations to outside vendors. (FAC ¶36.)

Plaintiffs allege A88, through Ryan and Cousino, demanded that 10K LLC perform its duties under the Agreement and keep A88 apprised of work progress by way of, among other communications, weekly calls and status reports. (FAC ¶37.) Plaintiffs allege they did so, citing as an example 10K LLC’s providing A88 on October 30, 2020, a recap of the prior week’s work:

• Spoke with Pure CBD, The Alchemist Kitchen and Elevated Wellness on getting Gummy orders in.

• Met with Betterment RS regarding activating; discussed offer, in store display assets and timelines for the Yesway rollout.

• Working with Betterment RS to coordinate sample request and setup first meetings with the next 3 new account targets with them.

• Looked at what campaigns have performed (working on updated creative for printer mailer still, new target date is Monday for a draft)

• He would like Print Mail Campaign activated with the approved Tincture offer ASAP He would like an update on the timeline for the Digital Campaign with A88.

Plaintiffs allege at no time was A88 under the mistaken impression that 10K LLC was providing its services and work product to A88 free of charge, as Wright later claimed under oath. (FAC ¶38.) Plaintiffs allege, for example, 10K LLC’s October 30, 2020, status report concluded with the following action items for A88’s “immediate attention”:

• Clarify any other questions on remaining invoices due for Emporium and Plus month 2 outdoor campaign and digital media campaigns

Plaintiffs allege Defendants did not dispute the Invoices or the existence of a written Agreement. (FAC ¶39.)

Plaintiffs allege that according to the terms of the SOW, 10K LLC analyzed market opportunities for A88 and made introductions to distribution partners in support of A88’s goals to expand into thousands of new retail outlets. (FAC ¶40.) Plaintiffs allege A88 publicly touted the successful growth of its CBD product line without mentioning 10K LLC’s crucial role. (FAC ¶40.) Plaintiffs allege in a company presentation published online in or about March 2021, A88 announced “new retail channels” with Yesway and Betterment Retail Solutions (“BettermentRS”). (FAC ¶40.) Plaintiffs allege both opportunities were provided to A88 by 10K LLC under the parties’ Agreement. (FAC ¶40.)

Plaintiffs allege that in September 2020, 10K LLC introduced A88 to one of its longstanding business partners, BettermentRS, and crafted a plan to place A88CBD products in stores affiliated with BettermentRS—Yesway, Allsup’s, Enmarket, and Jiffy Trip—in Texas, New Mexico, Oklahoma, Kansas, Iowa, and South Dakota. (FAC ¶41.) Plaintiffs allege A88 seized upon this opportunity, which it concedes Plaintiff provided. (FAC ¶41.) Plaintiffs allege on September 28, 2020, Todsen at A88 wrote to Haugse: “Hey Steve, Can we please set up a time this week with Dorsey [Sparks, President of BettermentRS] for review?...Thanks!” Plaintiff alleges its introduction of A88 and BettermentRS proved fruitful. As BettermentRS’s President, Ms. Sparks, wrote in an email to 10K LLC on February 4, 2021: “A88 is going into Yesway/Allsup’s – you connected us all and I want to be sure you are in the loop.” (FAC ¶41.)

Plaintiffs allege A88 never advised 10K LLC that it had wrongfully circumvented Plaintiff to pursue a partnership with BettermentRS, and that it has failed to paid 10K LLC resulting commissions and stock bonuses due under the Agreement. (FAC ¶42.) Plaintiffs allege that the partnership 10K LLC facilitated between A88 and BettermentRS should have resulted in at least $1.7 million in revenue to A88 in one year. (FAC ¶42.) Plaintiffs allege 10K LLC is owed 3% of all such revenue for one year, plus shares of A88 stock once certain sales benchmarks are met. (FAC ¶42.)

Plaintiffs allege that on or about October 5, 2020, 10K LLC shared information with A88 about a potential distribution partnership with Bellator Group, LLC, also known as MarketHub (“Bellator”), in connection with the SOW. (FAC ¶43.) Plaintiffs allege A88 was anxious to learn more about Bellator after 10K LLC disclosed that it was pursuing the opportunity on A88’s behalf. (FAC ¶43.) Plaintiffs allege that A88 admits that it had no relationship with Bellator before Plaintiff provided it. (FAC ¶43.) Plaintiffs allege on November 11, 2020, Ryan wrote to 10K LLC: “Guys, Please let me know who Hemp Fusion is. Are they a distributor? . . . our chairman [Board Chair Aaron Keay] is asking. Please advise ASAP.” 10K LLC immediately responded: “Hemp Fusion was a name we were using internally for their counterspace . . . Our distro partner is MarketHub. They are nationwide. They provide a specialty CBD shelf in C[onvenience]-store and Specialty stores.” R. Chessman thanked Plaintiff for the information. (FAC ¶43.)

Plaintiffs allege that on May 11, 2021, A88 issued a press release headlined “Alkaline88® and A88CBD™ to Expand Internationally Through Brokerage Agreement with Bellator Group. Bellator Group Will Also Assist with Domestic Expansion into Select Supermarkets.” (FAC ¶44.) Plaintiffs allege in or around June 2021, Ryan posted on LinkedIn about his “Successful trip to Puerto Rico,” announcing that A88 is “excited to kickoff a long term partnership [] throughout the Caribbean with the Bellatore [sic] team.” (FAC ¶43.) Plaintiffs allege Ryan appended his post with the tags “$wter”, “#Shaq”, “#carribeanexpansion” and “#saluvid” and further tagged “@alkaline88” and “@a88cbd.” (FAC ¶44.)

Plaintiffs allege A88 never advised 10K LLC that it had wrongfully circumvented Plaintiff to pursue a partnership with Bellator, and that it has not paid Plaintiff any commissions or stock bonuses due under the SOW. (FAC ¶45.) Plaintiffs allege on information and belief that A88’s and Bellator’s partnership that 10K LLC introduced resulted in A88’s products being placed in at least 1,500 new stores during the past year, yielding at least $7.2 million in revenue to A88. (FAC ¶45.) Plaintiffs allege under the SOW, 10K LLC is owed 3% of all such revenue for one year, plus shares of A88 stock once certain sales benchmarks are met. (FAC ¶45.)

Plaintiffs allege that in or about mid-September 2020, in order to induce 10K LLC to plan and finance a multi-state trip with A88 representatives—where Plaintiff introduced A88 to BettermentRS and other retail distribution opportunities and viewed the billboards that Plaintiffs had financed for A88—Ryan assured 10K LLC that the SOW was “as good as signed.” (FAC ¶46.) Plaintiffs allege Ryan described Haugse to third parties in Iowa as “Steve with 10K Advertising, a retail consulting partner for A88.” (FAC ¶46.)

Plaintiffs allege that on October 6, 2020, in an email to Haugse at 10K LLC with copies to Ryan and Todsen, Cousino demanded that Plaintiff participate in weekly status meetings, which 10K LLC did or attempted to do on an ongoing basis between October 13, 2020, and January 2021. (FAC ¶47.) Plaintiffs allege at those meetings, 10K LLC provided action items, meeting notes, and agreed to take on additional work requested by A88 in reliance on Defendants’ promises that the Invoices would be paid and the SOW was “as good as signed.” (FAC ¶47.)

Plaintiffs allege that A88 increased its demands for 10K LLC to create more retail sales opportunities for A88 during the month of October 2020. (FAC ¶48.) Plaintiffs allege Ryan specifically instructed 10K LLC to engage in extensive negotiations and travel with him to meet with potential partners it had introduced to A88, including Sherco Racing, Ron Jon Surf Shop, American Hemp Distributors and Yesway. (FAC ¶48.) Plaintiffs allege on October 14, 2020, Ryan organized a conference call with Haugse, Wright, Frank, Zeman and Todsen to “Discuss Yesway Proposal.” (FAC ¶48.)

Plaintiffs allege dozens of third parties introduced to A88 by 10K LLC understood that Plaintiff was performing work on behalf of A88. (FAC ¶49.) Plaintiffs allege on October 7, 2020, 10K LLC orchestrated a dinner in Arizona to solidify A88’s relationship with retailer CBD Emporium attended by CBD Emporium’s CEO, John Flanders, and Wright, Ryan, Frank, and 10K LLC’s Haugse. (FAC ¶49.) Plaintiffs allege that, at that dinner, in front of numerous witnesses, Wright and Frank toasted 10K LLC’s exemplary work with A88 and Frank proclaimed that A88 was excited about its ongoing partnership with 10K LLC. (FAC ¶49.) Plaintiffs allege Frank expressly stated: “we will get the 10K Invoices paid; we always take care of our people.” (FAC ¶49.)

Plaintiffs allege that on October 19, 2020, Ryan directed 10K LLC to set up and attend a meeting in Kansas City, Missouri to introduce A88 to one of 10K LLC’s business partners, American Hemp Distributors, which was listed in the SOW, along with BettermentRS and Bellator, as one of the “new Distributors w/ Door Counts [10K LLC] will turn on and scale for the A88CBD sales team.” (FAC ¶50.) Plaintiffs allege A88 had no business relationship with American Hemp Distributors, BettermentRS, or Bellator before 10K LLC provided the connection to those major distributors pursuant to the terms of the SOW, for which 10K LLC was to be paid commissions and, where earned, a stock bonus. (FAC ¶50.)

Plaintiffs allege Ryan sent 10K LLC new sell sheets for its ingestible CBD products on October 22, 2020, as part of 10K LLC’s obligation under the Agreement to assist A88 with retail sales. (FAC ¶51.)

Plaintiffs allege that at a lunch in Newport Beach, California to discuss the partnership between 10K LLC and A88 on November 6, 2020, Ryan and Todsen expressly confirmed the parties’ Agreement to 10K LLC, and discussed a timeline of action items and deal flow (retail sales opportunities that 10K LLC was bringing to A88 pursuant to the SOW) for the year 2021. (FAC ¶52.) Plaintiffs allege that at that meeting, Ryan misrepresented to Plaintiff that A88’s delay in paying the Invoices was caused solely by A88’s move to new corporate headquarters in Phoenix, Arizona, and that he assured 10K LLC that the Invoices will be paid, that the parties had a deal on the SOW, and further directed 10K LLC to continue working to secure more sales accounts for A88 pursuant to the Agreement. (FAC ¶52.) Plaintiffs further allege that, at that meeting, Ryan pressed 10K LLC to identify more retail and distribution connections in the CBD industry for A88’s benefit. (FAC ¶52.)

Plaintiffs allege three days later, on November 9, 2020, Ryan followed up with a meeting request titled “A88 + 10K Meeting (Review & Finalize),” asking 10K LLC: “How is Thursday next week at 9:30am to meet at our office in Yorba Linda? Myself, [F]rank, and Leesel [Todson] would like to meet to formalize the SOW and timeline.” (FAC ¶53.)

Plaintiffs allege that, in response, 10K LLC again inquired when A88 planned to pay the outstanding Invoices. (FAC ¶54.) Plaintiffs allege Ryan responded that 10K LLC should “work directly with David [Guarino] on the Month 1 for Plus/Emporium as he is the one handling and will resolve the quickest.” (FAC ¶54, emphasis added) Plaintiffs allege they attempted to contact Guarino numerous times; on the rare occasion that Guarino spoke with Plaintiff, he never disputed the amounts owed under the Invoices, never disavowed the Agreement, promised Plaintiffs they would be paid. (FAC ¶54.)

Plaintiffs allege that on November 11, 2020, Ryan asked 10K LLC to clarify the names of the distribution partners that Plaintiff offered connections to under the SOW. (FAC ¶55.) Plaintiffs allege two days later, on November 13, 2020, Ryan sent to the top leadership of Alkaline, Board Chairman Aaron Keay, and Wright, Frank, and Zeman, an email titled “A88CBD Brick N Mortar- Sales Update (Top 20)” wherein he presents what he describes as the “Top Opportunities for A88CBD Brick n Mortar. While we have many more, these include opportunities that are highly likely to close with 9,595 locations.” (FAC ¶55.)

Plaintiffs allege that most of Ryan’s “top opportunities” for retail sales expansion were taken directly from the work of 10K LLC under the Agreement, including the distributor he asked Plaintiff about two days prior, Bellator. (FAC ¶56.) Plaintiffs allege Plaintiff’s work product that Ryan passed off as his own was extremely valuable to Ryan’s job performance and to A88 as the company’s strategic growth depended upon retail sales. (FAC ¶56.)

Plaintiffs allege that on November 13, 2020, A88 directed 10K LLC to devote extensive resources to design and production of a direct mail postcard to advertise A88’s partnership with retailer CBD Emporium. (FAC ¶57.) Plaintiffs allege between mid-November and December 2020, Plaintiff worked with A88 to revise the advertising material in reliance on Defendants’ false promises that the parties had a deal and Plaintiffs would be paid. (FAC ¶57.)

Plaintiffs allege that the meeting that Defendants had requested to execute the SOW never happened. (FAC ¶58.) Plaintiffs allege on November 15, 2020, Ryan emailed 10K LLC the following message: “I need to move this meeting tomorrow unfortunately. Frank would like to be there and Ricky [Wright] would like to call in as well, they have earnings tomorrow and it’s a hectic day with schedules. I will get back to you on another date that works. Appreciate it.” (FAC ¶58.) Plaintiffs allege Ryan followed up that evening with a cancellation of the meeting request bearing a note: “****Will reschedule when it works for Frank and Ricky - thanks guys[.]” (FAC ¶58.)

Plaintiffs allege that 10K LLC nonetheless kept working diligently to build A88’s CBD brand. (FAC ¶59.) Plaintiffs allege in response to a weekly update on November 20, 2020, Ryan wrote: “Thank you Steve, sounds great. Keep you guys posted. Have a terrific weekend.” (FAC ¶59.)

Plaintiffs allege that on November 23, 2020, 10K LLC sent an email to Ryan demanding payment for the Invoices, which he noted were “extremely past due.” (FAC ¶60.) Plaintiffs allege he reminded Ryan that 10K Inc. was out of pocket to the billboard vendors and had attempted multiple times to speak with the appropriate executives at A88. (FAC ¶60.) Plaintiffs allege Ryan responded two days later that he was on vacation but would “follow up again on Monday with David [Guarino] on this for you to ensure we get this taken care of.” (FAC ¶60.) Plaintiffs allege that, to date, A88 has still failed to get the Invoices “taken care of.” (FAC ¶60.)

Plaintiffs allege that on December 1, 2020, Ryan corresponded with Haugse via iMessage to suggest a meeting for the following week with himself and F. Chessman to execute the SOW. (FAC ¶61.) Plaintiffs allege Haugse readily agreed but Ryan failed to arrange the meeting. (FAC ¶61.)

Plaintiffs allege that one week later, Cousino, in response to 10K LLC’s weekly update, emailed that A88 would not be able to attend the weekly call it had required Plaintiff to conduct since October. (FAC ¶62.) Plaintiffs allege Cousino further advised that she was waiting for final approval from A88’s executives for the direct mail piece that 10K LLC had produced. (FAC ¶62.) Plaintiffs allege the following week, on December 15, 2020, Todsen emailed 10K LLC, copying Ryan and Cousino, seeking a status update on campaigns Plaintiff was planning for A88 in conjunction with Elevated Wellness. (FAC ¶62.) Plaintiffs allege Haugse called Todsen directly the same day to advise that the plan was to launch after the holiday season. (FAC ¶62.) Plaintiffs allege A88 and 10K LLC agreed that the parties would reconnect after the New Year to get the campaign going. (FAC ¶62.)

Plaintiffs allege that on December 22, 2020, Todsen declined 10K LLC’s invitation to attend the scheduled weekly marketing meeting, adding the comment: “Hi guys! Rosie’s slammed and this week is tough. Let’s regroup in the new year! Happy Holidays!” (FAC ¶63.)

Plaintiffs allege the following week, on December 29, 2020, Cousino wrote to 10K LLC with courtesy copies to Ryan and Todsen to request that 10K LLC resend proof of performance photos of the billboard installations for CBD Plus and CBD Emporium—the same billboards covered by the Invoices that A88 never paid. (FAC ¶64.) Plaintiffs allege 10K LLC provided the requested photos on December 29, 2020, and followed up with additional photos on January 7, 2021. (FAC ¶64.) Plaintiffs allege on January 7, 2021, Cousino responded to Plaintiff, with reference to the parties’ ongoing partnership: “Thanks so much[.] Here's to making the year ridiculously amazing.” (FAC ¶64.)

Plaintiffs allege that in her final communication with Plaintiff, Todsen declined 10K LLC’s electronic invitation to attend the parties’ scheduled weekly marketing meeting on January 13, 2020, without explanation. (FAC ¶65.) Plaintiffs allege that on or about January 14, 2021, A88 had decided, without telling 10K LLC, that the parties’ relationship was over. (FAC ¶65.) Plaintiffs allege on that date, Matthew Flanders of CBD Emporium sent an email beginning “Good morning A88 Team!” to Cousino and Haugse, with copies to other individuals at CBD Emporium. (FAC ¶65.) Plaintiffs allege two hours later, Cousino responded to Flanders, removing Haugse from the email and copying Ryan and Todsen. (FAC ¶65.) Plaintiffs allege from that point forward, without explanation, A88 largely ceased communicating with 10K LLC and has refused to pay the amounts Plaintiffs are owed. (FAC ¶65.)

Plaintiffs allege all of Defendants’ communications, including requests for meetings, demands for work and introductions under the SOW and promises of payment, were untrue, made for the express purpose of inducing reliance by 10K LLC. (FAC ¶66.) Plaintiffs allege that, unbeknownst to Plaintiffs, Defendants had already decided, as of mid-October 2020 at the latest, not to execute the SOOW, not to pay Plaintiffs for the Invoices and not to pay 10K LLC the contractual amounts owed or the value of their work. (FAC ¶66.)

Plaintiffs allege specifically, on October 20, 2020, 10K LLC sent an email to A88CBD President Zeman with the subject line “Urgent: Confirmation Needed” and the following message: “Hi Lynda, Would you mind officially re-confirming that 10K Advertising was indeed the agency of record in charge for the latest CBD Plus and CBD Emporium outdoor campaign buys during the months of Sept and Oct 2020. This is only for these two campaigns that we have planned, booked and are actively managing.” (FAC ¶67.) Plaintiffs allege Wright and Cousino had approved Plaintiff to proceed with the campaigns in writing on September 2, 2020, and October 7, 2020. (FAC ¶67.) Plaintiffs allege Zeman forwarded the “Urgent” October 20 email to someone but never responded to Plaintiff. (FAC ¶67.) Plaintiffs allege at no point did Zeman, or any of the Defendants, advise 10K LLC that it was not the agency of record for A88 as it and 10K Inc. incurred hundreds of thousands of dollars of costs and expenses on A88’s behalf. (FAC ¶67.)

Plaintiffs allege the next day, on October 21, 2020, Zeman emailed Defendant Wright a message with the subject line “Status Update,” apprising him of numerous recent developments at A88, including the following:

• “Call tomorrow with Ryan and Frank to review Yesway/BettermentRS”—i.e., one of the strategic distribution partners introduced to A88 by 10K LLC under the SOW; and

• “10K Advertising – provided Mike [Reagan, A88 General Counsel] SOW for review – verbally advised to steer clear of any type of agreement with 10k”.

Plaintiffs allege A88 secretly resolved by October 21, 2020, at the latest, never to execute the SOW with 10K LLC or pay the Invoices. (FAC ¶69.) Plaintiffs allege Defendants never told 10K LLC of this decision, behaved at all times as though the SOW was in place, and expressly misrepresented or concealed their true intentions. (FAC ¶69.) Plaintiffs allege specifically that A88 and the individual Defendants (i) falsely promised 10K LLC on numerous occasions that the Invoices would be paid; (ii) consistently assured Plaintiff that the parties were “in agreement,” that they had a “partnership,” that the SOW was “as good as signed,” and that A88 would “take care of” 10K LLC; (iii) demanded the benefit of 10K LLC’s full performance under the Agreement into January 2021 with knowledge that Plaintiffs would never be paid; (iv) derived monetary benefit from the services, work and other things of value Plaintiff was induced to provide; and (v) wrongfully retains the benefit to this day. (FAC ¶69.)

Plaintiffs allege that A88 falsely claims that Plaintiffs are owed nothing on the Invoices, that it never had any agreement with 10K LLC, that 10K LLC never performed any services for A88’s benefit, and that it owes 10K LLC no management fees. (FAC ¶70.) Plaintiffs allege A88 has falsely denied that the strategic introductions 10K LLC facilitated to Betterment RS, Bellator and others resulted in any sales for which 10K is owed a commission or performance bonus. Defendants also falsely deny that they tortiously interfered with Plaintiff’s contractual relations and prospective economic advantage with third parties introduced to them by 10K LLC. (FAC ¶70.)

Plaintiffs allege A88’s own internal communications state: “10k advertising was a small marketing group that was on board when I arrived last year. . . . More to the story – but we no longer have a relationship with them,” Cousino explained to a new A88 executive, Tom Hutchison, in August 2021. (FAC ¶71, emphasis added.) Plaintiffs allege on November 25, 2020, Cousino wrote to 10K LLC, copying Ryan and Todsen: “We appreciate the partnership this year.” (FAC ¶71.) Plaintiffs allege Cousino likewise confirmed the parties’ relationship when she previewed A88’s secret plan to harm 10K LLC in an email to Zeman, Frank, Ryan, and Todsen in December 2020, writing: “CBD Emporium[:] Lynda [Zeman] reviewing Direct Mail piece – will be last project we work with 10k on[.]” (FAC ¶71, emphasis added). Plaintiffs allege on December 29, 2020, Cousino forwarded an email to Ryan and Todsen from 10K LLC containing a link to an educational video Plaintiff had produced for A88 in connection with CBD Emporium. (FAC ¶71.) Plaintiffs allege she wrote: “Found this video… Guessing that we’d need to get a release to use this in the future? . . . . Before we end our relationship with them.” (FAC ¶71, emphasis added.)

Defendants’ Scheme to Interfere with Plaintiff’s Contractual Relationships

Plaintiffs allege that, in early to mid-2021, one or more of A88, Ryan, Frank, and Wright launched a scheme to pressure BettermentRS, Bellator, and other distributors with extensive retail opportunities to breach their current contracts and stop future work with 10K LLC. (FAC ¶72.)

Plaintiffs allege that A88 knew that 10K LLC had long-standing business relationships with these distributors because Plaintiff had described its ongoing deals with them in detail and had introduced them to A88. (FAC ¶73.) Plaintiffs allege Defendants knew that, as a young and growing agency, 10K LLC relied on its carefully cultivated relationships with distributors in order to deliver marketing value and sales growth to all of its clients, as it had for A88. (FAC ¶73.) Plaintiffs allege Defendants knew that the core of 10K LLC’s revenue and profitability depended on its partnership with such distributors. (FAC ¶73.)

Plaintiffs allege on information and belief that throughout 2021, A88, Ryan, Frank, and Wright systematically contacted BettermentRS, Bellator and other third parties with which they knew 10K LLC had ongoing contractual and economic relationships and exerted pressure on them to breach their current contracts and stop working with Plaintiff. (FAC ¶74.) Plaintiffs allege A88 took these actions with the specific aim of further harming 10K LLC’s ability to gain new business and deliver results for its clients. (FAC ¶74.)

Plaintiffs allege A88 interfered with Plaintiff’s contractual relations and prospective economic advantage with BettermentRS and Bellator. (FAC ¶75.) Plaintiffs allege BettermentRS decreased the amount of business it did with 10K LLC in the aftermath of A88’s interference scheme, resulting in financial harm to Plaintiff. (FAC ¶75.) Plaintiffs allege Bellator, which had several contractual deals in place to distribute brands represented by 10K LLC, refused to honor those deals or engage at all with Plaintiff after mid2021 when Defendants successfully destroyed the relationship. (FAC ¶76.)

Plaintiffs allege that prior to Defendants’ interference, as of March 2021, 10K LLC and Bellator had been working together on actual and potential distribution deals for several 10K LLC clients, including the following:

Plaintiffs allege that 10K LLC has been unable to distribute any of these brands through Bellator as a result of Defendants’ actions, which has harmed Plaintiff, its clients, competition and the industry as a whole. (FAC ¶77.)

Plaintiffs alleges 10K LLC has devoted thousands of hours of time and incurred hundreds of thousands of dollars in costs at A88’s direction and for A88’s sole benefit while being paid nothing. (FAC ¶78.) Plaintiffs allege at the same time, A88 reaped millions of dollars of financial reward as a direct result of 10K LLC’s efforts under the Invoices and Agreement. (FAC ¶78.) Plaintiffs allege during the time for performance, there was never any dispute about the amounts owed, whether Plaintiff had fully performed, and that Plaintiffs expected to be paid as promised. (FAC ¶78.) Plaintiffs allege A88 promised to pay—to “take care of 10K,” if it would just “be patient,” in the words of Ryan, Frank, and Wright. (FAC ¶78.)

A motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. (C.C.P. §437c(c).)

Under C.C.P. §437c, a grant of summary adjudication can only be made if it completely disposes of a cause of action, affirmative defense, a claim for damages, or an issue of duty. (C.C.P. §437c(f)(1).)

“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 the cause of action or a defense thereto.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) “The plaintiff . . . may not rely upon the mere allegations or denials of his ‘pleadings to show that a triable issue of material fact exists but, instead, must ‘set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.” (Id.) “If plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

“The elements of fraud,” including a cause of action for fraudulent inducement, “are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.)

Plaintiffs allege on multiple occasions between September 2020 and March 2021, each of the Defendants falsely represented to Plaintiffs that the Invoices would be paid. (FAC ¶82.) Plaintiffs allege Defendants repeatedly supplied Plaintiffs with false excuses for why they had not yet been paid. (FAC ¶82.)

Plaintiffs allege by October 21, 2020, at the latest, Defendants knew that A88 was never going to pay Plaintiffs the amounts owed on the Invoices and each of the Defendants concealed that material fact from Plaintiffs while continuing to assure Plaintiffs that the Invoices would be paid. (FAC ¶83.)

Plaintiffs allege at the time the representations regarding payment of the Invoices were made, they were false. (FAC ¶84.) Plaintiffs allege Defendants concealed A88’s true intentions and made the representations with the intention to deceive Plaintiffs and to cause them to continue providing even more valuable services, work product and introductions to A88, or to cause them to take other actions or refrain from taking certain actions, in reliance on the representations with the expectation that Plaintiffs would so act. (FAC ¶84.)

Plaintiffs allege on numerous dates between September 2020 and January 2021, each of the Defendants misrepresented to 10K LLC verbally and in writing that the SOW was “as good as signed” and the parties were “in agreement” as to all material terms— to wit, that A88 intended imminently to execute and abide by the parties’ Agreement to compensate 10K LLC for its performance under the Agreement. (FAC ¶85.)

Plaintiffs allege by October 21, 2020, at the latest, Defendants knew that A88 was going to “steer clear” of executing the Agreement and that A88 would never pay 10K LLC for its performance under the Agreement and each of the Defendants concealed that material fact from 10K LLC. (FAC ¶86.)

Plaintiffs allege at the time the representations set forth above were made, they were false and Defendants had no intention of abiding by them. (FAC ¶87.) Plaintiffs allege Defendants concealed A88’s true intentions and made the representations with the intention to deceive and defraud 10K LLC and to cause it to act in reliance on the representations with the expectation that 10K LLC would so act. (FAC ¶87.)

Plaintiffs allege in attempting to deceive and defraud Plaintiffs, at all relevant times, A88, Wright, Ryan, and Frank were and are the agents, servants and/or employees of each other, and all of the things alleged to have been done by A88, Wright, Ryan, and Frank individually were also done in the capacity of and as agent of each other. (FAC ¶88.) Plaintiffs allege the agency and/or employee relationships among these parties is undisputed. (FAC ¶88.) Plaintiffs allege at all relevant times, A88, Wright, Ryan, and Frank ratified and/or accepted the benefits of all the actions alleged herein to have been taken by A88, Wright, Ryan, and Frank. (FAC ¶88.)

Plaintiffs allege at the time these representations were made, and material facts were concealed, and at the time Plaintiffs took the actions in reliance herein alleged, Plaintiffs were ignorant of the falsity of Defendants’ representations and believed them to be true. (FAC ¶89.) Plaintiffs allege justifiably relying on these representations, Plaintiffs were induced to and did perform services, create work product, provide intellectual property, make valuable introductions, and incur expenses at Defendants’ request and for their benefit. (FAC ¶89.) Plaintiffs allege had they known the true facts, they would not have taken such actions. (FAC ¶89.)

Plaintiffs allege as a direct and proximate result of Defendants’ fraudulent conduct, Plaintiffs have been damaged in an amount to be proven at trial. (FAC ¶90.) Plaintiffs allege Defendants’ conduct alleged herein was done with fraud, malice and oppression—with the intention on each of their parts to deprive Plaintiffs of property or legal rights or otherwise cause injury and was despicable conduct that subjected Plaintiffs to a cruel and unjust hardship in conscious disregard of Plaintiffs’ rights, so as to justify an award of exemplary and punitive damages. (FAC ¶90.)

Defendants argue the alleged representations, that (1) A88 will pay 10K for the billboards; and that (2) Alkaline will enter into a Statement of Work with 10K LLC, are not supported by evidence.

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for fraud, or that there is a complete defense to the action. Specifically, Defendants submitted evidence that A88 entered into a contract to for the Phoenix Billboards and the 6 State Billboards with Castello Sales. (Defendant’s Disputed Separate Statement of Fact [“D-DSSF”] 8; Decl. of Guarino ¶3, Exhs. B, C.) However, this evidence does not negate Plaintiffs’ allegations of a misrepresentation that justifiably induced Plaintiffs to act in reliance. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for fraud.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 1st cause of action for fraud is denied.

A cause of action for interference with contractual relations requires the following elements: (1) Plaintiff had a valid and existing contract with a third party; (2) defendant had knowledge of the contract; (3) defendant committed intentional and unjustified acts designed to interfere with or disrupt the contract; (4) actual interference with or disruption of the relationship; and (5) resulting damages. (Davis v. Nadrich (2009) 174 Cal.App.4th 1, 10; Shamblin v. Berge (1985) 166 Cal.App.3d 118, 123; see also Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 238 [“Proof the interfering conduct was wrongful, independent from the interference itself, is not required to recover for interference with contractual relations.”].)

Plaintiffs allege prior to entering into a business arrangement with the distributors described herein, including but not limited to Bellator, to gain retail sales of A88’s products and prior to pressuring those companies to cease doing business with 10K LLC, Defendants were fully aware that 10K LLC had a contractual relationship with those distributors. (FAC ¶92.) Plaintiffs allege Defendants knew specifically with which distributors 10K LLC had long-standing contractual relationships to distribute products for Plaintiff’s clients that generated revenue for 10K LLC because they solicited and received this information from 10K LLC under the SOW and because Plaintiff, in fact, took the lead in introducing A88 to certain of those distributors. (FAC ¶93.)

Plaintiffs allege Defendants engaged in the targeted, coercive conduct with these distributors with the intent to cause them to breach their contractual obligations with 10K LLC, and they did so by, at a minimum, refusing to honor existing distribution deals with 10K LLC. (FAC ¶94.) Plaintiffs allege by pressuring the distributors to cease doing business with 10K LLC and using other coercive tactics in an attempt to foreclose Plaintiff’s access to these suppliers, Defendants caused them to breach their contracts with 10K LLC. (FAC ¶94.)

Plaintiffs allege Defendants’ conduct in coercing these distributors to reduce or cease doing business with 10K LLC was independently wrongful because, among other things, they did so to magnify the harm caused by Defendants’ fraudulent scheme against 10K LLC and to cover up the damage they caused. (FAC ¶95.) Plaintiffs allege on information and belief that Defendants intended and still intend to use their financial leverage over these distributors to conceal from Plaintiff the true amounts of commissions and performance bonuses that 10K LLC is due in connection with the Agreement. (FAC ¶95.)

Plaintiffs allege at all relevant times, A88, Wright, Ryan, and Frank were and are the agents, servants and/or employees of each other, and all of the things alleged to have been done by A88, Wright, Ryan, and Frank individually were also done in the capacity of and as agent of each other. (FAC ¶96.) Plaintiffs allege the agency and/or employee relationships among these parties is undisputed. (FAC ¶96.) Plaintiffs allege at all relevant times, A88, Wright, Ryan, and Frank ratified and/or accepted the benefits of all the actions alleged herein to have been taken by A88, Wright, Ryan, and Frank. (FAC ¶96.)

Plaintiffs allege as a proximate result of the wrongful interference with 10K LLC’s contracts, 10K LLC has suffered lost profits and other consequential damages in an amount which will be proved at trial. (FAC ¶97.)

Plaintiffs allege Defendants’ conduct as alleged herein was purposeful and intentional and was engaged in for the purpose of crippling 10K LLC or putting it out of business. (FAC ¶98.) Plaintiffs allege it was despicable conduct, done for no legitimate business reason, and was performed with oppression and malice so as to justify an award of punitive damages against Defendants in an amount according to proof at trial, but sufficient to deter future misconduct of the type in which Defendants engaged. (FAC ¶98.)

Defendants argue Plaintiffs cannot prove the existence of a legally binding contract, and in such an absence, cannot establish interference with such a contract. (Motion, pg. 8.) Defendants argue Plaintiffs’ cause of action further fails because A88 did not knowingly engage in wrongful conduct that was intended to disrupt a contract between 10K and a third party. (Motion, pg. 8.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for intentional interference with contractual relationship, or that there is a complete defense to the action. Specifically, Defendants submitted evidence there is no signed contract between 10K Advertising LLC and A88. (DSSF 2; Dec. of Reagan ¶¶4-7, 15.) Such evidence does not negate the existence of Plaintiffs’ contractual relationship with a third party. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for interference with contractual relations.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 2nd cause of action for interference with contractual relations is denied.

Intentional Interference with Prospective Economic Advantage & Negligent Interference with Prospective Economic Advantage (3rd & 4th COAs)

A cause of action for intentional interference with prospective economic advantage requires the following elements: (1) Economic relationship existing between the plaintiff and third party; (2) probability of future economic benefit to the plaintiff; (3) defendant’s knowledge of the relationship; (4) defendant’s intentional acts designed to disrupt the relationship; (5) defendant engaged in an independently wrongful act in disrupting the relationship beyond just inducing disruption of economic advantage; (6) actual disruption of the relationship; and (7) economic harm to the plaintiff caused by the acts. (See Youst v. Longo (1987) 43 Cal.3d 64, 71.) Further, the interference must be wrongful by some measure beyond the fact of the interference itself. (Della Penna v. Toyota Motor Sales (1995) 11 Cal.4th 376, 393; see also Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 [plaintiff may plead a specific intent to interfere or, alternatively, that defendant knew the interference was certain or substantially certain to occur as a result of its action]; CACI 2202.)

A cause of action for negligent interference with prospective economic relations requires the following elements: (1) Economic relationship between the plaintiff and a third party; (2) that contained a reasonably probable future economic benefit or advantage to plaintiff; (3) defendant knew of the existence of the relationship and was aware, or should have been, that if it did not act with due care, its actions would interfere with the relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage; (4) the defendant was negligent; (5) the negligence caused damage to plaintiff because of actual interference or disruption; and (6) plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786; see also Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 350 [stating as to intentional or negligent interference, a party to the plaintiff’s contract cannot be liable as a defendant, but instead the prescribed cause of action is for breach of contract]; J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 803 [“court must assume the truth of all material allegations in the complaint…, including the allegations of negligence and cause in fact. The only question … is whether a cause of action for negligent loss of expected economic advantage may be maintained under these facts.”].)

Plaintiffs allege prior to entering into a business arrangement with the distributors described herein, including but not limited to BettermentRS and Bellator, to gain retail sales of A88’s products and prior to pressuring those companies to cease doing business with 10K LLC, Defendants were fully aware that 10K LLC had economic relationships with those distributors. (FAC ¶100.) Plaintiffs allege Defendants knew specifically with which distributors 10K LLC had long-standing relationships that generated revenue, and promised to generate future revenue, for 10K LLC because they solicited and received this information from 10K LLC under SOW and because Plaintiff, in fact, took the lead in introducing A88 to certain of those distributors. (FAC ¶101.)

Plaintiffs allege Defendants engaged in targeted, coercive conduct with at least BettermentRS and Bellator, and, on information and belief, others, with the intent to interfere with 10K LLC’s actual and prospective business relationships. (FAC ¶102.) Plaintiffs allege by scheming to pressure these third parties to cease doing business with 10K LLC, Defendants have destroyed economic relationships for Plaintiff. (FAC ¶102.) Plaintiffs allege the conduct of Defendants in coercing these distributors to reduce or cease doing business with 10K LLC was independently wrongful because, among other things, they did so to magnify the harm caused by Defendants’ fraudulent scheme against 10K LLC and to cover up the damage they caused. (FAC ¶102.) Plaintiffs allege on information and belief, Defendants intended and still intend to use their financial leverage over these distributors to conceal from Plaintiff the true amounts of commissions and performance bonuses that 10K LLC is due in connection with the SOW. (FAC ¶102.)

Plaintiffs allege at all relevant times, A88, Wright, Ryan, and Frank were and are the agents, servants and/or employees of each other, and all of the things alleged to have been done by A88, Wright, Ryan, and Frank individually were also done in the capacity of and as agent of each other. (FAC ¶103.) Plaintiffs allege the agency and/or employee relationships among these parties is undisputed. (FAC ¶103.) Plaintiffs allege at all relevant times, A88, Wright, Ryan, and Frank ratified and/or accepted the benefits of all the actions alleged herein to have been taken by A88, Wright, Ryan, and Frank. (FAC ¶103.)

Defendants argue no evidence exists to establish that 10K would have gained an economic advantage if it were not for A88’s alleged interference. (Motion, pgs. 10-11.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its causes of action for negligent or intentional interference with prospective economic advantage, or that there is a complete defense to the actions. Specifically, Defendants submitted evidence there is no signed contract between 10K Advertising LLC and A88. (DSSF 2; Dec. of Reagan ¶¶4-7, 15.) Such evidence does not negate the existence of Plaintiffs’ relationship with a third party. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its causes of action for negligent or intentional interference with prospective economic advantage.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 3rd and 4th causes of action for intentional and negligent interference with prospective economic advantage is denied.

Violation of Unfair Competition Law (“UCL”) (Bus. & Prof. Code §§17200 et seq.) (5th COA)

A cause of action for violation of UCL requires the following elements: (1) a business practice; (2) that is unfair, unlawful, or fraudulent; and (3) authorized remedy. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676; see also Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 337 [although losses are required for standing, “ineligibility for restitution is not a basis for denying standing under section 17204….”]; People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1016 [“An ‘unlawful’ practice requires violation of another statute, and a business practice may be ‘unfair’ even if not otherwise proscribed by statute as long as the practice is not expressly authorized by law.”].)

Plaintiffs allege A88 has committed acts of fraud within the meaning of §17200 of the California Business and Professions Code, California’s unfair competition law (“UCL”), by engaging in the fraudulent business practices described above. (FAC ¶114.) Plaintiffs allege A88’s misconduct has harmed Plaintiffs, their vendors, customers, clients, and other consumers in California and elsewhere and threatens significant harm in the future. (FAC ¶114.) Plaintiffs allege A88’s conduct is a direct and proximate cause of injury to California consumers and to Plaintiffs. (FAC ¶114.)

Plaintiffs allege A88 has engaged in unfair and fraudulent conduct within the meaning of the UCL as described above. (FAC ¶115.) Plaintiffs allege A88 made false representations to 10K LLC for the purpose of inducing Plaintiff to perform services on its behalf, provide work product and other intellectual property to A88, and introduce A88 to distribution partners. (FAC ¶116.) Plaintiffs allege in reliance on A88’s repeated representations that Plaintiffs and their vendors would be paid for the Invoices and 10K LLC would be compensated under the terms of the Agreement, 10K LLC was induced to and did perform services for A88 and incur costs and expenses at A88’s request and for its sole benefit. (FAC ¶116.) Plaintiffs allege A88 then executed a scheme to destroy Plaintiff’s contractual and economic relationships with third parties with malice and no legitimate business purpose. (FAC ¶116.)

Plaintiffs allege A88’s retaliatory conduct toward Plaintiffs and, on information and belief, other growing companies in the advertising, marketing and CBD retail industries which A88 has defrauded has allowed A88 to wrongfully gain economic advantage and unearned market share. (FAC ¶117.) Plaintiffs allege each such company targeted by A88 has suffered and will continue to suffer injury as a direct, proximate and foreseeable result of A88’s coercive and unfair conduct and faces loss of profits, loss of customers, loss of goodwill and product image, and great business uncertainty as A88 seeks to narrow and wrongfully control business opportunities. (FAC ¶117.)

Plaintiffs allege in addition to the harm Plaintiffs suffered and continue to suffer as a result of A88’s wrongful attempts to destroy their businesses, California consumers have been and will continue to be harmed as a direct, proximate, and foreseeable result of A88’s company-wide fraudulent business practices, which include, among other things: (i) duping service providers into providing unpaid products and services for which A88 falsely promises to pay, (ii) misleading shareholders by failing to report material litigation risks and other risks caused by company-wide fraud in its public filings, and (iii) attempting to control the economic relationships between companies in the CBD retail distribution market. (FAC ¶118.)

Defendants argue 10K fails to provide evidence to support its allegations that Alkaline acted “unfairly” to them and the general public. (Motion, pg. 13.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for violation of UCL, or that there is a complete defense to the action. Specifically, Defendants submitted evidence there is no signed contract between 10K Advertising LLC and A88. (DSSF 2; Dec. of Reagan ¶¶4-7, 15.) Such evidence does not negate the existence of the alleged fraudulent scheme stated in Plaintiffs’ cause of action. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its causes of action for violation of UCL.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 5th cause of action for violation of UCL is denied.

Penal Code §496 provides that “any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.” (Pen. Code §496(c).)

“While [Penal Code §496(a)] covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property.” (Switzer v. Wood (2019) 35 Cal.App.5th 116, 126, as modified (May 10, 2019), quoting Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955, 970 [elements of Penal Code §496 offense stated].)

“A violation of section 496(a) may, by its own terms, relate to property that has been “stolen” or “that has been obtained in any manner constituting theft or extortion.” (Id., quoting Pen. Code §496(a).)

Plaintiffs allege Defendants violated Penal Code §496 by receiving labor, creative content and other property belonging to others (e.g., Plaintiffs) by theft or fraud, knowing that the property was so obtained. (FAC ¶122.) Plaintiffs allege Defendants violated this statute by concealing or withholding the property or by aiding others (e.g., one another and third parties, including but not limited to Castello Sales, LLC) in doing so, knowing that the property was so obtained. (FAC ¶122.)

Defendants argue that other than billboards, which A88 paid Castello Sales for in full, no other work of value was provided by 10K, and certainly not millions as alleged in the FAC. (Motion, pg. 15.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for violation of Penal Code §496c, or that there is a complete defense to the action. Specifically, Defendants submitted evidence there is no signed contract between 10K Advertising LLC and A88. (DSSF 2; Dec. of Reagan ¶¶4-7, 15.) Such evidence does not negate Plaintiffs allegation that Defendants violated this statute by concealing or withholding the property or by aiding others. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its causes of action for violation of Penal Code §496c.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 6th cause of action for violation of Penal Code §496c is denied.

To allege a cause of action for breach of contract, Plaintiff must plead the contract, plaintiff’s performance or excuse for non-performance, defendant’s breach, and damage to plaintiff therefrom. (Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913.) Although a written contract is usually pleaded by alleging its making and attaching a copy which is incorporated by reference, a written contract can also be pleaded by alleging the making and the substance of the relevant terms. (Construction Protective Services, Inc. v. TIG Specialty Insurance Co. (2002) 29 Cal.4th 189, 198-199; Perry v. Robertson (1988) 201 Cal.App.3d 333, 341.) “An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words. [Citation.]” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) That plaintiff could not allege with specificity the exact terms of the contract does not preclude statement of a cause of action. (Id.)

Plaintiffs allege 10K LLC and A88 formed a contract pursuant to which 10K LLC agreed to and did design, produce and print advertising materials and contract with vendors on behalf of A88 to place advertisements on outdoor billboards in multiple states as part of A88’s co-branded campaigns with CBD Plus USA and CBD Emporium. (FAC ¶127.) Plaintiffs allege these campaigns have resulted in tens of millions of direct consumer impressions, leading to increased brand strength, market position and economic value for A88. (FAC ¶127.) Plaintiffs allege A88 approved the design and content of the advertising in advance, authorized Plaintiff to execute the campaigns, and A88 timely received and viewed the Invoices associated with 10K LLC’s work on the CBD Plus and CBD Emporium campaigns. (FAC ¶127.) Plaintiffs allege A88 expressly agreed to pay the Invoices numerous times orally and in writing. (FAC ¶127.)

Plaintiffs allege Plaintiff provided these services pursuant to the parties’ express agreement and with Defendant’s express approval. (FAC ¶128.)

Plaintiffs allege Plaintiff has performed all obligations required on its part pursuant to the contractual agreement between the parties. (FAC ¶129.) Plaintiffs allege Defendant confirmed receipt of proof of performance for the campaigns. (FAC ¶129.)

Plaintiffs allege Defendant has breached the contract with 10K LLC by failing to pay the Invoices. (FAC ¶130.) Plaintiffs allege Defendant’s payment obligations were not excused and its debt has not been extinguished. (FAC ¶130.) Plaintiffs allege A88’s decision to pay a third-party indemnitor—who, in A88’s publicly-released statement, “was not involved” with the billboard campaigns because it “did not make the order, interface with the vendor, or pay the vendor”—to indemnify and defend it against 10K LLC does not relieve A88 of its contractual obligations to Plaintiff. (FAC ¶130.)

Plaintiffs allege as a direct and proximate cause of Defendant’s breach, Plaintiff is entitled to damages in an amount to be proven at trial. (FAC ¶131.) Plaintiffs allege Plaintiff’s damages include, but are not limited to, the amounts due on the CBD Plus and CBD Emporium Invoices, plus contractual interest, plus prejudgment interest at the statutory rate of 10% per annum. (FAC ¶131.)

Plaintiffs allege Plaintiff and Defendant formed an Agreement pursuant to which 10K LLC agreed to and did provide business-to-business sales growth, management and marketing services, including extensive content creation, provision of intellectual property and introductions to retail distributors previously unknown to A88, for which 10K LLC would be compensated in the form of monthly management fees, commissions, and a performance bonus. (FAC ¶132.) Plaintiffs allege 10K LLC excelled in its performance under the Agreement and its work has resulted in expansion of A88’s products into thousands of new stores and millions of dollars in revenue for A88. (FAC ¶132.)

Plaintiffs allege Plaintiff provided these services pursuant to the parties’ express Agreement and with Defendant’s express approval and/or ratification. (FAC ¶133.)

Plaintiffs allege Plaintiff has performed all obligations required on its part pursuant to the Agreement. (FAC ¶134.) Plaintiffs allege Defendant has breached the Agreement by failing to pay 10K LLC for the work performed with no valid excuse. (FAC ¶135.) Plaintiffs allege as a direct and proximate cause of Defendant’s breach, Plaintiff is entitled to damages in an amount to be proven at trial. (FAC ¶136.) Plaintiffs allege Plaintiff’s damages include, but are not limited to, the full amounts due to Claimant under each payment provision of the twelve (12)-month Agreement, plus prejudgment interest at the statutory rate of 10% per annum. (FAC ¶136.)

Defendants argue there is no evidence of a written contract, and Plaintiffs cannot prove an oral contract, either. (Motion, pg. 16; Frankenheimer v. Frankenheimer (1964) 231 Cal.App.2d 101, 109.)

Defendants submitted evidence that there is no signed contract between 10K LLC and A88. (D-DSSF 2; D-RJN, Exhs. 3, 4.) Defendants met their burden to negate the existence of a written contract. However, Defendants failed to meet their burden to negate the existence of an oral contract. Therefore, Defendants shift the burden to Plaintiffs to raise a triable issue of material fact as to the existence of a written contract.

Plaintiffs failed to meet their burden to raise a triable issue of material fact as to the existence of a written contract because they failed to provide admissible evidence.

Accordingly, Defendants’ motion for summary adjudication of the 7th cause of action for breach of written contract is granted. Defendants’ motion for summary adjudication of the 8th cause of action for breach of oral or implied contract is denied.

Plaintiffs allege 10K LLC and A88 formed a contract pursuant to which 10K LLC agreed to and did design, produce and print advertising materials and contract with vendors on behalf of A88 to place advertisements on outdoor billboards in multiple states as part of A88’s co-branded campaigns with CBD Plus USA and CBD Emporium. (FAC ¶147.) Plaintiffs allege these campaigns have resulted in tens of millions of direct consumer impressions, leading to increased brand strength, market position and economic value for A88. (FAC ¶147.) Plaintiffs allege A88 approved the design and content of the advertising in advance, authorized Plaintiff to execute the campaigns, specifically instructed 10K LLC to send the Invoices to A88 for payment, and A88 timely received and viewed the Invoices associated with 10K LLC’s work on the CBD Plus and CBD Emporium campaigns. (FAC ¶147.) Plaintiffs allege A88 expressly agreed to pay the Invoices numerous times orally and in writing. (FAC ¶147.)

Plaintiffs allege Plaintiff and Defendant formed an Agreement pursuant to which 10K LLC agreed to and did provide business-to-business sales growth, management and marketing services, including extensive content creation, provision of intellectual property and introductions to retail distributors previously unknown to A88, for which 10K LLC would be compensated in the form of monthly management fees, commissions and a performance bonus. (FAC ¶148.) Plaintiffs allege 10K LLC’s performance delivered exceptional value to A88 and its work has resulted in expansion of A88’s products into thousands of new stores and millions of dollars in revenue for A88 in one year alone. (FAC ¶148.)

Plaintiffs allege Plaintiff has performed all obligations required on its part pursuant to the CBD Plus and CBD Emporium campaigns and the Agreement. (FAC ¶149.) Plaintiffs allege Defendant did not act fairly and in good faith when it induced Plaintiff to perform its obligations under the Agreement while falsely promising that: (i) it would pay the Invoices, and (ii) the parties’ written SOW contract was “as good as signed” because the parties were “in agreement” and it would be executed imminently. Defendant further acted unfairly by not executing the Agreement despite demanding Plaintiff’s performance under its terms for the purpose of later denying the existence of the Agreement. (FAC ¶150.)

Plaintiffs allege A88 has further breached the implied covenant of good faith and fair dealing by enriching itself at Plaintiff’s expense and failing to pay to 10K LLC any of the amounts due. (FAC ¶151.)

Defendants argue Plaintiffs claim fails because A88 had a genuine dispute as to the payment requests 10K made to it, and that is why the payments were not made. (Motion, pg. 18.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements of their cause of action for breach of the covenant of good faith and fair dealing, or that there is a complete defense to the action. Specifically, Defendants submitted evidence there is no signed contract between 10K Advertising LLC and A88. (DSSF 2; Dec. of Reagan ¶¶4-7, 15.) Such evidence does not negate the existence of an oral contract. Accordingly, Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements its cause of action for breach of the covenant of good faith and fair dealing.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 9th cause of action for breach of the covenant of good faith and fair dealing is denied.

A cause of action for quantum meruit requires the following elements: (1) Plaintiff’s performance of services, work or labor; (2) at defendant’s request; and (3) circumstances inferring defendant’s promise to pay a reasonable value. (Maglica v. Maglica (1998) 66 Cal.App.4th 442, 449-450; Palmer v. Gregg (1967) 65 Cal.2d 657, 660; see also MKB Management, Inc. v. Melikian (2010) 184 Cal.App.4th 796, 805 [“Even if the entire contract was illegal and unenforceable, a plaintiff may recover the reasonable value of services rendered provided that those particular services were not legally prohibited.”].)

Plaintiffs allege they designed, produced and printed advertising materials and contracted with vendors on behalf of A88 to place advertisements on over 100 outdoor billboards in multiple states as part of A88’s co-branded campaigns with CBD Plus USA and CBD Emporium. (FAC ¶154.) Plaintiffs allege these campaigns have resulted in tens of millions of direct consumer impressions, leading to increased brand strength, market position and economic value for A88. (FAC ¶154.) Plaintiffs allege A88 approved the design and content of the advertising in advance and timely received and viewed the Invoices associated with 10K’s work on the CBD Plus and CBD Emporium campaigns. (FAC ¶154.) Plaintiffs allege A88 expressly agreed to pay the Invoices numerous times orally and in writing. (FAC ¶154.)

Plaintiffs allege in addition, 10K LLC and Defendant formed an Agreement pursuant to which 10K LLC agreed to and did provide business-to-business sales growth, management and marketing services, including extensive content creation, provision of intellectual property and introductions to retail distributors previously unknown to A88, for which 10K LLC would be compensated in the form of monthly management fees, commissions and a performance bonus. (FAC ¶155.) Plaintiffs allege 10K LLC’s performance delivered exceptional value to A88 and its work has resulted in expansion of A88’s products into thousands of new stores and millions of dollars in revenue for A88. (FAC ¶155.)

Plaintiffs allege they performed these services and provided work product in good faith, with the reasonable expectation that Plaintiffs would be compensated. (FAC ¶156.)

Plaintiffs allege Defendant knew of Plaintiffs’ good faith performance of these services and provision of work product at all times and voluntarily accepted the benefits of Plaintiffs’ services and work. (FAC ¶157.) Plaintiffs allege A88 has failed to pay Plaintiffs for the Invoices, under the terms of the Agreement or any compensation for services performed or work product provided. (FAC ¶158.)

Plaintiffs allege it is therefore entitled to recover the reasonable value of the services it performed and work product provided as measured by the value of the benefit conferred upon A88. (FAC ¶159.)

Defendants argue there is no evidence to demonstrate that A88 requested 10K to perform extra work outside of the Castello-A88 Contract with the expectation that A88 would pay for that work, and no invoice was ever sent for that work. (Motion, pg. 20.)

Defendants failed to meet their burden to demonstrate Plaintiffs cannot establish one or more elements of their cause of action for quantum meruit, or that there is a complete defense to the action.

Accordingly, Defendants’ motion for summary adjudication of Plaintiffs’ 10th cause of action for quantum meruit is denied.

Defendants’ motion in the alternative for summary adjudication is denied as to the 1st, 2nd, 3rd, 4th, 5th, 6th, 8th, 9th, and 10th causes of action. Defendants’ motion for summary adjudication is granted as to the 7th cause of action.

Hon. Daniel M. Crowley

Judge of the Superior Court