Judge: Salvatore Sirna, Case: 19PSCV01160, Date: 2023-02-02 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on the tentative rulings by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 19PSCV01160    Hearing Date: February 2, 2023    Dept: G

Plaintiff Mohammed Khodabakhsh’s Application for Default Judgment

Respondent: NO OPPOSITION

TENTATIVE RULING

Plaintiff Mohammed Khodabakhsh’s Application for Default Judgment is DENIED without prejudice.

BACKGROUND

This is an action between two former business partners. Plaintiff Mohammed Khodabakhsh is an engineer and inventor in the clean energy technology field. Defendant Terry L. Vechik is a marketer of inventions. In 2008, Plaintiff began working with Defendant to help monetize clean energy technology developed by Plaintiff. Subsequently, Plaintiff alleges Defendant began falsely claiming to be an equal partner in Plaintiff’s work. Plaintiff then claims Defendant took a laptop computer and flash drive from Plaintiff that contained designs, drawings, and marketing materials for Plaintiff’s technology and refused to return it. When Plaintiff confronted Defendant about the laptop computer and flash drive, Plaintiff alleges Defendant threatened to kill Plaintiff. After that, Plaintiff claims a mutual friend informed Plaintiff that Defendant told the friend how Defendant was going to “put a bullet in [Plaintiff’s] head.” Another friend informed Plaintiff that Defendant had offered the friend money to conduct surveillance on Plaintiff and inform Defendant of Plaintiff’s whereabouts.  

On December 30, 2019, Plaintiff filed a complaint against Defendant; Rudd Koekkoek, also known as Rudoph Koekkoek; Matchcorp Fin. Services BV; Rene Aemig; Hyperion Capital; Ali Mir Zadeh; Vesten Food Concept AG, Hofstr. 2 CH 6004; and Does 1-25, alleging the following causes of action: (1) declaratory relief, (2) injunctive relief, and (3) conversion.

On September 30, 2020, Plaintiff filed a First Amended Complaint (FAC) against Defendant and Does 1-25, alleging the following causes of action: (1) conversion, (2) violation of the California Data Access and Fraud Act, (3) intentional interference with prospective economic advantage, (4) misappropriation of trade secrets, (5) violation of Penal Code section 496, (6) intentional infliction of emotional distress, and (7) violations of Business and Professions Code section 17200.

On September 22, 2022, after Defendant repeatedly refused to comply with discovery orders by the court and pay sanctions, the court granted Plaintiff’s request to impose terminating sanctions on Defendant and struck Defendant’s answer.

On October 26, 2022, default was entered against Defendant. On January 4, 2023, Plaintiff applied for a default judgment that the court denied without prejudice on January 10.  

On January 26, 2023, Plaintiff filed the present application for default judgment. An OSC Re: Default Judgment is set for February 2, 2023.

LEGAL STANDARD

Code of Civil Procedure section 585 permits entry of a default judgment after a party has filed to timely respond or appear.  A party seeking judgment on the default by the court must file a Request for Court Judgment, and: (1) a brief summary of the case; (2) declarations or other admissible evidence in support of the judgment requested; (3) interest computations as necessary; (4) a memorandum of costs and disbursements; (5) a proposed form of judgment; (6) a dismissal of all parties against whom judgment is not sought or an application for separate judgment under CCP § 579, supported by a showing of grounds for each judgment; (7) exhibits as necessary; and (8) a request for attorneys’ fees if allowed by statute or by the agreement of the parties.  (Cal. Rules of Court 3.1800.) 

ANALYSIS

Plaintiff seeks default judgment against Defendant in the total amount of $8,616,656, including $7,527,191 in damages and $1,089,465 in interest. Because Plaintiff fails to establish the amount of damages to which Plaintiff is entitled, the court DENIES Plaintiff’s application without prejudice.

A defaulting party confesses to the material allegations of a complaint. (Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 262.) The requesting party can present evidence in the form affidavits and “[t]he facts stated in the affidavit or affidavits shall be within the personal knowledge of the affiant and shall be set forth with particularity, and each affidavit shall show affirmatively that the affiant, if sworn as a witness, can testify competently thereto.” (Code Civ. Pro., § 585, subd. (d).) However, a court can reject a default application if the requesting party fails to present evidence establishing a prima facie case and entitlement to damages, (Taliaferro v. Hoogs (1963) 219 Cal.App.2d 559, 560.)

As an initial matter, the court notes Plaintiff’s first cause of action for conversion and third cause of action for intentional interference with prospective economic advantage are preempted by Plaintiff’s statutory claim for misappropriation of trade secrets because the claims are based on the same facts and allegations. (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 958-959.)

Plaintiff’s second cause of action for violation of Penal Code section 502 claims compensatory damages for expenses incurred by Plaintiff to verify a computer system, computer network, computer program, or data was not altered, damaged, or deleted by access. (FAC, ¶ 42) However, Plaintiff does not provide any evidence of the expenses occurred. (Penal Code, § 502, subd. (e)(1).) While Plaintiff’s fifth cause for violation of Penal Code section 496 claims treble damages and sixth cause of action for intentional infliction of emotional distress claims compensatory damages of $1,000,000, Plaintiff does not request these amounts in the present application for default judgment.

Lastly, Plaintiff’s fifth cause of action for misappropriation of trade secrets claims $7,527,191 in damages. Plaintiff provided the declaration of an accountant who determined the future business income for the patented technology at issue is $183,590.018 with a 4.1% royalty rate or $7,527,191. (Holstrom Decl., p. 7.)

Pursuant to Civil Code section 3426.3, damages are allowed (1) “for the actual loss caused by misappropriation”; (2) “for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss”; and (3) if “neither damages nor unjust enrichment caused by misappropriation are provable, the court may order payment of a reasonable royalty.” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 66.)

Thus, before the court awards payment of a reasonable royalty, the court must determine whether the first two types of damages are provable. (Id., at p. 66.) Based on the representations made in Plaintiff’s declaration and FAC, the court finds actual damages or unjust enrichment could be provable. First, Plaintiff’s FAC alleges Defendant’s use of Plaintiff’s trade secrets caused potential investors to back out of deals with Plaintiff. (FAC, ¶ 57.) While this allegation could establish Plaintiff suffered actual damages, Plaintiff’s declaration does not provide any further details for damage calculations to be made or state specifically how Defendant’s actions damages Plaintiff’s business.

However, even if Plaintiff cannot prove actual loss, Plaintiff’s allegations suggest Plaintiff should be able to prove unjust enrichment. Plaintiff alleges in the FAC and Plaintiff’s declaration that Defendant used Plaintiff’s technology to solicit investments. (FAC, ¶ 57; Khodabakhsh Decl., ¶ 15.) Plaintiff also provides some more specifics, including that Plaintiff was using the trade secrets to create technology for Smiljan Power Solutions AG and had applied for a patent in Europe. (Khodabakhsh Decl., ¶ 15-19.) However, Plaintiff does not provide a valuation for Defendant’s European patent or Plaintiff’s work with Smiljan Power Solutions AG.

Because royalty damages are only allowed if actual damages or unjust enrichment cannot be proven, Plaintiff is not entitled to claim damages in the form of a percentage of royalties when Plaintiff has alleged facts that suggest other damages are provable and has not argued such damages are unprovable.

CONCLUSION

Based on the foregoing, Plaintiff’s application for default judgment is DENIED without prejudice.