Judge: James L. Crandall, Case: 21-1214064, Date: 2022-10-20 Tentative Ruling

Demurrer to Amended Cross-Complaint

Plaintiff and Cross-defendant Banc of America Leasing & Capital, LLC’s (“BALC”) demurrer to the second and third causes of action alleged in the First Amended Cross-Complaint (“FACC”) filed by Vivera Pharmaceuticals, Inc. (“Vivera”) is SUSTAINED with 20-days leave to amend.

The demurrer is made pursuant to Code of Civil Procedure Section 430.10, subdivision (e).

Second Cause of Action for Rescission and Third Cause of Action for Declaratory Relief:

BALC challenges the second and third causes of action alleged in the FACC on the grounds that the causes of action are precluded by the express terms of the financing agreement.

In the FACC, Vivera alleges it entered into two separate contracts.

First, the FACC alleges that “Vivera and Oracle entered into a written Subscription Services Agreement (“Service Agreement”) whereby Oracle promised and agreed to deliver and install its licensed accounting software, NetSuite, including monthly services, upgrades and updates to Vivera’s office.” (FACC, ¶ 8, Ex. 1.)

Second, the FACC alleges that to finance “Vivera’s purchase of the Netsuite Software and related services, Plaintiff entered into a written Payment Plan Agreement (“Payment Agreement”) with Oracle’s affiliate, Cross-Defendant Oracle Credit Corporation (“OCC”), whereby Plaintiff agreed to pay OCC for the Netsuite software and related services provided by Oracle pursuant to a payment schedule.” (FACC, ¶ 9, Ex. 2.)

The FACC also alleges that “Cross-Defendant OCC assigned some or all of its purported rights to payments under the Payment Agreement to Cross-Defendant Banc of America.” (FACC, ¶ 11.)

Paragraph 1 of the Payment Agreement states in pertinent part:

Customer’s obligation to remit Payment Amounts and applicable taxes paid through this Contract to OCC in accordance with the Contract is absolute, unconditional, noncancellable, independent, and shall not be subject to any set-off, recoupment, claim, or defense for any reason, including but not limited to, any termination of or dispute arising under the Order or any related agreements, or performance of the System, or any claim(s) against Supplier. (FACC, ¶ 9, Ex. 2.)

Paragraph 4 of the Payment Agreement states:

Customer consents to the sale or assignment of all or a portion of OCC's rights in the Contract or in the System, including the right to exercise remedies, to third parties (“Assignee”). Assignee will not assume any of Supplier's obligations under the Order. Customer shall pay all amounts due under the Contract, and agrees that it shall not assert against Assignee any claim, defense, or setoff that Customer may have against Supplier or OCC. Customer waives all rights to make any claims against Assignee for any loss, damage of the System or breach of any warranty, express or implied with respect to the System, including the System and service performance, functionality, features, and warranties of merchantability and fitness for a particular purpose, if any, or any indirect, incidental or consequential damages or loss of business. (FACC, ¶ 9, Ex. 2.)

Therefore, the Payment Agreement provides that the parties’ agreed that the Payment Agreement shall be separate and independent of the Service Agreement, and that a breach or failure of consideration of the Service Agreement will not excuse Vivera’s obligations under the Payment Agreement.

Further, the FACC only alleges the breach of the Service Agreement. Specifically, the FACC alleges that “Cross-Defendants breached the Service Agreement by failing to deliver and install a complete and functional licensed NetSuite accounting software to Vivera. Cross-Defendants subsequently revoked Vivera’s access to the NetSuite software altogether.” (FACC, ¶ 14.)

Although the FACC alleges that “both Agreements are unenforceable due to lack of consideration or failure of consideration,” the FACC does not allege any breach of the Payment Agreement.

In its Opposition, Vivera argues that the demurrer should be overruled because BALC seeks to adjudicate an affirmative defense involving Commercial Code Section 9403.

However, the affirmative defense is not the basis of BALC’s demurrer.

Accordingly, the demurrer to the Second and Third causes of action is SUSTAINED with 20-days leave to amend.

BALC to give notice.

Future hearing dates

7/21/23 – MSC

8/28/23 – Jury Trial