Judge: Edward B. Moreton, Jr., Case: 18SMCV00015, Date: 2022-12-06 Tentative Ruling

Case Number: 18SMCV00015    Hearing Date: December 6, 2022    Dept: 200

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 200

BACKGROUND

            This case arises from a dispute over ownership of 312,500 shares in Aslan Pharmaceuticals Pte. Ltd. (“Shares”), a company involved in the development of cancer-fighting drugs.  Defendant William Jeffery Tomlinson is Aslan’s Chief Business Officer.  Plaintiff Thomas Jones alleges that Defendant convinced him to invest $250,000 to purchase the Shares.  Plaintiff further alleges Defendant represented the Shares would be nominally issued to Defendant’s entertainment company (Big Wonder Studios, Inc. (“BWS”)) but then transferred to Plaintiff once Aslan completed its initial public offering (“IPO”).  Aslan completed its IPO in mid-2017, but Defendant did not transfer the Shares to Plaintiff.  The Shares are currently in the name of Defendant’s private holding company.  As a result, Plaintiff brought suit, alleging claims for fraud, conversion and breach of contract.  Defendant counters that he never promised to purchase Shares on behalf of Plaintiff, and that Plaintiff gave $250,000 to their mutual friend, David Miller, as a “favor.” 

REQUEST FOR JUDICIAL NOTICE

The Court grants Plaintiff’s request for judicial notice of the Court’s prior rulings on Defendant’s demurrer and motion to quash summons, a reporter’s transcript of the hearing on the motion to quash summons, and the Court of Appeal order denying Defendant’s writ of mandate/prohibition re motion to quash summons.  These are all records of a court and judicially noticeable under Evid. Code §452(d)(1).

EVIDENTIARY OBJECTIONS

The Court OVERRULES Plaintiff’s evidentiary objections to the Declarations of David S. Olson and William Tomlinson.  The Court OVERRULES Defendant’s evidentiary objections to the Declaration of Thomas Jones.  The Court OVERRULES Defendant’s objections to Exhibit Nos. 3, 17, 19, 20, 21, 28, 35.  The Court SUSTAINS Defendant’s objections to Exhibit Nos. 5, 34, 36-39.      

LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  CCP §437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Minor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)  “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”  (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67). 

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element or to establish a defense.  (CCP §437c(p)(2); Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

DISCUSSION

Fraud Claim

Defendant claims Plaintiff’s fraud claim is grounded on misrepresentations allegedly made in an in-person meeting in early July 2010 which could not have taken place because Defendant was never in the United States.  While Plaintiff does not dispute that Defendant was not in the United States and that the Complaint incorrectly alleged a face-to-face meeting in July 2010, he alleges the misrepresentations were nonetheless made.  The Court finds Plaintiff’s declaration creates sufficient disputed issues of fact that Defendant made misrepresentations to Plaintiff. 

In his declaration, Plaintiff describes misrepresentations made in July 2010, in a three way telephone call between Defendant, David Miller and Plaintiff, where Defendant solicited an investment from Plaintiff of $250,000 to purchase the Shares with the promise that the Shares would initially be held in the name of BWS but later transferred to Plaintiff.  (Jones Decl. ¶¶13-16.)  The purchase needed to be in BWS’s name so that it appeared Defendant made the purchase as the share purchase was a requirement to secure Defendant’s position as Aslan’s Chief Business Officer.  (Jones Decl. ¶14.)  As further proof of this misrepresentation, Plaintiff offers a July 21, 2010 email between Defendant and Miller, that confirms the representations made to Plaintiff, including that the Shares would be “purchased in the name of BWS until an IPO or M&A of ASLAN” but that the Shares would eventually be transferred to Plaintiff through several possible mechanisms, including an “assignment letter … to assign the stock to [Plaintiff].” (Plaintiff’s Ex. 19.) 

Based on these facts, the Court concludes Plaintiff has presented sufficient disputed issues that Defendant made misrepresentations to him.

Defendant next argues Plaintiff has not alleged reliance on his representations as opposed to representations made by Miller.  The Court disagrees.  Plaintiff attests that in reliance on the July 2020 misrepresentations from Defendant, he agreed to purchase the Shares.  (Jones Decl. ¶31.)  Plaintiff also alleges continuing misrepresentations from Defendant which caused him to continue to rely on the July 2010 misrepresentations.  (Jones Decl. ¶47.)  Specifically, Plaintiff alleges that, at the funeral of their mutual friend, David Miller, Defendant again reassured Plaintiff that the 312,500 shares of Aslan would be transferred from BWS to Plaintiff.  (Jones Decl. ¶¶49-50.).

Based on these facts, the Court concludes Plaintiff has presented sufficient disputed issues that he relied on misrepresentations made by Defendant. 

Defendant further argues that the fraud claim is time-barred.  The Court disagrees.  An action for fraud or deceit must be commenced within three years after discovery of the fraud.  (Bank of Am. Nat. Tr. & Sav. Ass’n v. Vannini (1956) 140 Cal.App.2d 120, 128.)  Here, Plaintiff did not discover the fraud until November 2017 when he learned that Aslan had completed its IPO and the Shares had not been transferred to him.  (Jones Decl. ¶57.)  He filed suit in October 2018, well within the three year statute of limitations for fraud.  Defendant claims Plaintiff should have discovered the fraud sooner (in 2015) because he was promised an assignment letter that he never received.  But Plaintiff was told he would receive the Shares at the time of the IPO which did not occur until 2017, and the absence of an assignment letter did not in and of itself suggest he had been defrauded. 

Defendant next argues that there can be no fraud based on future actions.  That argument overlooks that there is a claim for false promise.  The elements of a false promise claim are: (1) “the defendant made a representation of intent to perform some future action, i.e. the defendant made a promise,” and (2) “the defendant did not really have that intent at the time that the promise was made, i.e. the promise was false.” (See Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060 (emphasis added).)

Defendant also argues there is no evidence that if made, the representations were false when made.  The Court agrees.  “Something more than nonperformance is required to prove the defendant’s intent not to perform his promise.” (People v. Ashley (1954) 42 Cal.2d 246, 263; see also Jacobson v. Mead (1936) 12 Cal. App. 2d 75, 82; Prosser, Torts (5th ed. 1984) § 109, p. 764.)  Fraudulent intent must often be established by circumstantial evidence.  Prosser, for example, cites cases in which fraudulent intent has been inferred from such circumstances as defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assurances after it was clear he would not perform.  (Prosser, supra, at pp. 764-765.)  Here, Plaintiff has not come forward with circumstantial evidence that Defendant did not intend to perform his promise at the time he made the promise.  Plaintiff cites to an Aslan Private Memorandum dated November 2010 (close in time to the July 2010 false promise) that purportedly shows the 312,500 shares that Plaintiff paid for were not registered in BWS’s name as promised but were instead registered in Defendant’s individual name.  This could have been circumstantial proof that Defendant had not intended to perform on his promise at the time it was made but the exhibit was not attached to Plaintiff’s opposition.

Accordingly, the Court grants summary adjudication on Plaintiff’s fraud claim.

Conversion Claim

            Defendant moves for summary adjudication of the conversion claim because Plaintiff neither owned nor possessed the Shares.  These arguments were made and rejected on demurrer.  (Dec. 16, 2020 Minute Order at 5.)  “Conversion is the wrongful exercise of dominion over the property of another.  The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights, and (3) damages.”  (Lee v. Hanley (2015) 61 Cal.4^th 1225, 1240.) 

   According to Defendant, Plaintiff did not own the shares because he did not have title to the Shares; they were to be assigned to him in the future.  But as this Court found on demurrer, “[t]o enable one to recover for the conversion of personal property … [it is] not necessary to have legal title.”  (Dec. 16, 2020 Minute Order at 5 (citing Pendell v. Thomas (1928) 95 Cal.App. 33, 34).)  Defendant also argues Plaintiff never had possession of the shares.  The Court rejected this same argument on demurrer, concluding “[t]he action may be maintained by a person who, although not in possession, had a special interest in the property giving him a right to possession at the time of conversion.”  (Id. (citing Pope v. National Aero Finance Co. (1965) 236 Cal.App.2d 722, 731).)  Plaintiff has alleged a right to possession of the Shares by virtue of an agreement or representation that he would receive the Shares once Aslan completed an IPO.      

Defendant relies on Del E. Webb Corp. v. Structured Materials Co. (1981) 123 Cal.App.3d 593, 610-611 which granted summary judgment on a conversion claim.  There the court acknowledged that “to establish a conversion, plaintiff must establish an actual interference with his ownership or right of possession.”  Id. at 610 (emphasis added.)  But the Court there did not analyze whether the plaintiff had shown a right of possession and concluded only that there was no title or actual possession.  Accordingly, the case is not dispositive of issues presented here.   

Defendant further argues that Plaintiff’s answers to requests for admissions (“RFAs”) warrant summary adjudication of the conversion claim.  The Court disagrees.  Plaintiff admitted in RFAs that “no Aslan stock certificates were issued to him” which does not defeat the conversion claim as Plaintiff claims the Shares were issued to BWS but Plaintiff had a right of possession to the Shares.  (Defendant’s Exs. 1-2 (RFA No. 6).)  Plaintiff also admitted in requests for admissions that Defendant “did not convert any stock certificates issued in YOUR name.”  (Defendant’s Exs. 1-2 (RFA No. 7).)  Again, the Shares were not issued in Plaintiff’s name as Plaintiff admits, so this admission is neither here nor there.  Elsewhere in the responses to the requests for admissions, Plaintiff denies that Defendant “did not convert any of YOUR property” and Defendant “did not convert any of YOUR assets.”  (Defendants’ Exs. 1-2 (RFA Nos. 8-9).)  These responses are more on point.     

Defendant also argues that the conversion claim is time-barred.  This argument was also made and rejected on demurrer.  (Dec. 5, 2020 Minute Order at 6.)  According to Defendant, the claim is time-barred for the same reasons as the fraud claim.  For the same reasons the Court concludes the fraud claim was timely, this conversion claim is also timely.   

Defendant next argues that Plaintiff cannot show it was “his shares” being transferred since Aslan went public in June 2017 and was listed on NASDAQ on May 4, 2018.  The Court agrees.  Plaintiff cites to an Aslan Private Placement Memorandum that purportedly shows the 312,500 shares were registered in Defendant’s name (as opposed to BWS’s) by November 2010 and an Aslan 2016 Annual Report that shows the shares are now registered in Defendant’s private holding company, WJT Holdings Limited.  But neither document was attached to Plaintiff’s opposition.  Accordingly, the Court grants summary adjudication on Plaintiff’s conversion claim.   

Breach of Contract Claim

Defendant argues that the breach of contract claim fails as a matter of law because there was no contract alleged between the parties.  The Court disagrees.  Plaintiff has alleged a contract formed in July 2010, whereby Plaintiff would pay $250,000 which would be used to buy the Shares which would then be transferred to Plaintiff upon the completion of Aslan’s IPO.  (Jones Decl. ¶¶12-16.)

Defendant next argues that there was no breach by him because the Shares were delivered by Defendant to Miller, and Miller was the one who failed to send an assignment letter to Plaintiff.  But the alleged breach here was not the failure to deliver the assignment letter, but rather the failure to deliver the Shares (which are currently in the name of Defendant’s private holding company) to Plaintiff, once Aslan’s IPO was completed. 

Finally, Defendant argues the breach of contract claim is time-barred.  According to Defendant, any breach occurred at the time Miller failed to provide Plaintiff the assignment letter in 2010, more than eight years before Plaintiff filed his Complaint.  The Court disagrees.  The breach occurred at the time Defendant failed to transfer the Shares to Plaintiff once Aslan’s IPO was completed in mid-2017.  Plaintiff filed his breach of contract claim in October 2018, well within the two year statute of limitations for an oral contract (Code Civ. Proc. §339(1)), or the four year statute of limitations for a written contract.  (Code Civ. Proc. §337(a).)  Accordingly, the Court denies summary adjudication as to Plaintiff’s breach of contract claim.      

CONCLUSION

            Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART Defendant William Jeffrey Tomlinson’s motion for summary judgment or alternatively, summary adjudication.

IT IS SO ORDERED.

DATED:  December 6, 2022                                      ___________________________

                                                                                    Edward B. Moreton, Jr.

                                                                                    Judge of the Superior Court