Judge: Maurice A. Leiter, Case: 22STCV21509, Date: 2023-01-11 Tentative Ruling

Case Number: 22STCV21509    Hearing Date: January 11, 2023    Dept: 54

Hearing Date: January 11, 2023

Department 54, Judge Maurice A. Leiter

Demurrer to First Amended Complaint

Moving Party: Defendants Raj Vir and NGL Labs LLC

Responding Party: Plaintiff Iconic Hearts Holdings, Inc.

T/R:     DEFENDANTS’ DEMURRER IS OVERRULED.

DEFENDANTS TO FILE AND SERVE AN ANSWER TO THE FIRST AMENDED COMPLAINT WITHIN 15 DAYS OF NOTICE OF RULING.

DEFENDANTS TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing. 

The Court considers the moving papers, opposition, and reply.

BACKGROUND

            On September 6, 2022, Plaintiff Iconic Hearts Holdings, Inc. filed the operative first amended complaint against Defendants Raj Vir and NGL Labs LLC, asserting causes of action for (1) breach of contract; and (2) misappropriation of trade secrets.[1] Plaintiff alleges its founder Hunter Rice and Defendant Raj Vir were longtime friends. Plaintiff alleges that while Vir worked as a consultant and developer for Plaintiff’s app “sendit” he breached a confidentiality agreement and misappropriated Plaintiff’s trade secrets to create a competing app called “NGL.”

REQUEST FOR JUDICIAL NOTICE

            Defendants’ request for judicial notice is DENIED.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

A. First Cause of Action for Breach of Contract

“The standard elements of a claim for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) 

Plaintiff alleges that Defendant Vir entered into a “Master Development Agreement” with Plaintiff on September 1, 2018. The MDA contains a confidentiality provision, which states: “[d]uring and after the term of this Agreement, Developer will hold in the strictest confidence, and take all reasonable precautions to prevent any unauthorized use or disclosure of Confidential Information, and Developer will not (i) use the Confidential Information for any purpose whatsoever other than as necessary for the performance of the Services on behalf of Company, or (ii) disclose the Confidential Information to any third party without the prior written consent of an authorized representative of Company.” (FAC Exh. A. § 6.2.) Plaintiff alleges Vir violated this provision, using Plaintiff’s confidential information to create a competing app.

Defendants demur to this cause of action on the ground that Plaintiff’s discovery responses purportedly contradict these allegations. Defendants point to Plaintiff’s responses showing Vir completed the work order that was subject to the MDA in 2018. Defendants say this shows the MDA and its confidentiality provision “expired” in 2018. These responses do not contradict Plaintiff’s allegations. And the express language of the confidentiality provision states that it applies during and “after the term” of the agreement. The demurrer cannot be sustained on this basis.

Defendants’ demurrer to the first cause of action is OVERRULED.

B. Second Cause of Action for Misappropriation of Trade Secrets

            Defendants assert the second cause of action similarly fails because the confidentiality agreement expired in 2018, so anything told to Vir after that is not a “secret.” For the reasons discussed, this argument fails.

            Defendants’ demurrer to the second cause of action is OVERRULED.