Judge: Malcolm Mackey, Case: 21STCV15670, Date: 2023-09-13 Tentative Ruling
Case Number: 21STCV15670 Hearing Date: September 13, 2023 Dept: 55
ALEXANDER
GHATAN v. SHIRAZY 21STCV15670
Hearing Date: 9/13/23,
Dept. 55
#6: MOTION FOR SUMMARY ADJUDICATION.
Notice: Okay
Opposition
MP:
Plaintiffs/Cross-Defendants ALEXANDER
GHATAN and ALEXANDER GHATAN, DO, INC.
RP:
Defendants/Cross-Complainants PEJMAN ELI
SHIRAZY, M.D.; ORTHOPEDIC PAIN MANAGEMENT CENTER; and ORTHOPEDIC PAIN
MANAGEMENT INJURY INSTITUTE, INC.
Summary
On 4/26/21, plaintiffs filed a Complaint alleging: On 7/3/20,
Plaintiff Doctor ALEXANDER GHATAN, and
corporations owned by Defendant Doctor Shirazy, entered into a written
Professional Services Agreement (“PSA”) for Plaintiff to provide medical
services to defendants’ patients, but defendants conversely contend that
Plaintiff is entitled to the professional fee liens for just 11 of
approximately 270 procedures, and that defendants have not had any duty to
exclusively use Plaintiff for some of the listed exclusive procedures. Additionally, defendants used Plaintiff’s
likeness on marketing material without Plaintiff’s consent.
On 6/7/21, defendants filed a Cross-Complaint
against plaintiffs, alleging that misrepresentations about revisions to a Professional
Services Agreement caused Cross-Complainant it to sign it, and Cross-Defendant failed
to pay for billing and collections services rendered, and having causes of
action for:
1. BREACH OF WRITTEN
CONTRACT;
2. FRAUD – INTENTIONAL
MISREPRESENTATION;
3. VIOLATION OF UNFAIR
COMPETITION LAW, BUS. & PROF. CODE § 17200 ET SEQ.
4. VIOLATION OF THE
COMPUTER DATA ACCESS AND FRAUD ACT, PEN. CODE § 502
5. MISAPPROPRIATION OF
TRADE SECRETS, CIVIL CODE § 3426 ET SEQ.
6. SERVICES RENDERED -
QUANTUM MERUIT.
MP
Positions
Moving party requests an order summarily adjudicating
issues of Cross-Complainant’s claims of fraud, computer access, trade secret
misappropriation and quantum meruit, as follows:
The cause of action for fraud fails
because as to the first change at issue, there was no intent to defraud and no
reliance and as to the second change at issue, there was no statement that
could be construed as a misappropriation. The causes of action for Violation of
the Computer Data Access & Fraud Act and for Misappropriation of Trade
Secrets fail because Cross-Defendant did not attempt to download anything
protected and has not used any of the data downloaded. The cause of action for
Quantum Meruit fails because there is no evidence that Cross-Defendant wanted
Cross-Complainant to perform the work at issue, Cross-Defendant asked
Cross-Complainant desist, and Cross-Defendant ultimately performed the work
himself.
(Motion, pp. 15 – 16.)
RP
Positions
Opposing party advocates denying, for reasons
including the following:
·
Fraud:
After reading Ghatan’s email message about counsel not changing the
substance of the contract, opposing party reasonably assumed that the several
edits Ghatan proposed in his attached, edited version would contain no
substantive changes to Shirazy’s PSA proposal.
As a result, opposing party signed the contract having unwanted
provisions, such as a change that would provide Ghatan with thousands of
additional dollars in revenues and, in many instances, would constitute “double
payment” to Ghatan for services rendered.
·
Computer Data Access Violation and Trade
Secrets: Cross-Defendant Dr. Ghatan
violated the Computer Data Access and Fraud Act, Penal Code §502. On or about
January 15, 2021, Dr. Ghatan’s final day working as an independent contractor
for OPMII, Dr. Ghatan went over to the desk of Leslie Calvillo, OPMII’s
employee in charge of billing, and asked to see billing records for services he
performed at OPMII. (UMF 71) Ms. Calvillo was the only OPMII employee
authorized to access the drive where the billing records were located, in
addition to many other confidential documents. (Declaration of Leslie
Calvillo.) Ms. Calvillo opened the drive and permitted Dr. Ghatan to view the
billing record pertaining to Dr. Ghatan’s patients by opening the appropriate
billing folders and files and displaying to him his billing, files with her
supervision. (UMF 71) The billing files relating to patients that Dr. Ghatan
treated contain confidential Protected Health Information, including patients’
names, residence addresses, telephone numbers, dates of birth, employment
statuses, names of treating physicians, diagnosis codes, and descriptions of
procedures performed. (UMF 71) Ms. Calvillo then got up and went to the
restroom. (UMF 71) When she returned she saw a thumb drive in her computer
port. (UMF 71) Dr. Ghatan reached down, removed the thumb drive from the
computer tower, and quickly departed. (UMF 71)
Template forms uploaded and retrieved by Dr. Ghatan onto his hard drive
was misappropriation of Trade Secrets under Civil Code §3426 et seq.
·
Quantum Meruit: In the executed PSA, Cross-Complainants
offered to perform billing services pertaining to Cross-Defendant’s private
practice personal injury patients in exchange for seven percent of
Cross-Defendant’s collections on those procedures. (UF 40) Cross-Complainants
performed billing services for Cross-Defendant with respect to approximately 11
of Cross-Defendant’s liens between July 2020 and January 2021. (UF 31) To date,
Cross-Defendant has not paid. (UF 41)
Tentative
Ruling
The motion is denied, as to all issues.
Fraud
As to fraud, there are triable issues, including
whether Plaintiff sent email inaccurately minimalizing drastic contract
modifications, thereby causing Defendant’s reasonable reliance on the email,
instead of more carefully reading the changed, highlighted contract provisions (e.g., Plaintiff’s decl., verses opp. Ex. E (Defendant
PEJMAN SHIRAZI, M.D. depo.) 39:18 (“email that he send me with that attachment
of the final agreement he stated that there were no changes made to what we
agreed on….”)).
Reasonable reliance on the other contracting party’s
misrepresentations, resulting in the failure to read a full agreement before
signing, can be fraud in the execution, permitting avoidance of unread contract
provisions. E.g., Metters v. Ralphs Grocery Co. (2008)
161 Cal.App.4th 696, 702. “Reliance exists when the misrepresentation or
nondisclosure was an immediate cause of the plaintiff's conduct which altered
his or her legal relations, and when without such misrepresentation or
nondisclosure he or she would not, in all reasonable probability, have entered
into the contract or other transaction.”
Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239. Whether fraud claims for damages are barred,
due to plaintiffs’ negligent failure to read the documents, is a question of
fact, particularly where it was induced by reliance upon the fraudulent
representations. Gentry v. Kelley Kar
Co. (1961) 193 Cal.App.2d 324, 336.
Computer
Data Access and Trade Secrets
With regard to whether there was knowing, unauthorized
computer access and trade secret misappropriation, there are triable issues of
material fact and reasonable inferences, such as whether moving party copied
confidential medical and patient files from a computer (e.g., Dr. Alexander Ghatan decl., ¶¶ 9 – 10
(“I uploaded files to a flash drive with the help of Dr. Shirazy’s employee….”);
versus opp., ex. J (Leslie Calvillo decl.) ¶¶ 5, 11).
Merely improperly acquiring trade secrets can be actionable,
even without using them. See
generally FLIR Systems, Inc. v.
Parrish (2009) 174 Cal. App. 4th 1270, 1279
(Trade Secrets Act requires actual or threatened misappropriation,
beyond mere possession of trade secrets by employees); PMC, Inc. v. Kadisha (2000) 78 Cal.
App. 4th 1368, 1385 (“misappropriation is not limited to the initial act of
improperly acquiring trade secrets; the use and continuing use of the trade
secrets is also misappropriation.”); Silvaco
Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 229 (involving summary judgment and demurrer, and
holding that use under CUTSA requires knowledge of a trade secret), disapproved on other grounds by Kwikset Corp. v. Sup. Ct. (2011) 51
Cal.4th 310, 337; Ajaxo Inc. v.
E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 66 (“A trade secret is misappropriated if a
person (1) acquires a trade secret knowing or having reason to know that the
trade secret has been acquired by ‘improper means,’ (2) discloses or uses a
trade secret the person has acquired by ‘improper means’ or in violation of a
nondisclosure obligation, (3) discloses or uses a trade secret the person knew
or should have known was derived from another who had acquired it by improper
means or who had a nondisclosure obligation or (4) discloses or uses a trade
secret after learning that it is a trade secret but before a material change of
position.”).
Quantum
Meruit
As for quantum meruit, the Court determines that there
are triable issues of material fact including whether there was no payment for
agreed services rendered (e.g.,. sep.
stmnts., fact 31, and proof referenced thereat).
The elements of a claim for quantum meruit are:
E.g., Maglica v. Maglica (1998) 66 Cal. App.
4th 442, 449-50; Palmer v. Gregg
(1967) 65 Cal. 2d 657, 660. See also
Advanced Choices, Inc. v. Dept. of Health Services (2010) 182
Cal.App.4th 1661, 1673 (“ ‘plaintiff
must establish both that he or she was acting pursuant to either an express or implied request for such
services from the defendant and that the services rendered were intended to and
did benefit the defendant.’ ”); 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.”).