Judge Yolanda Orozco, Case 20STCV39449 2022-07-25 Tentative Ruling

Judge: Yolanda Orozco, Case: 20STCV39449, Date: 2022-07-25 Tentative Ruling

Case Number: 20STCV39449 Hearing Date: July 25, 2022 Dept: 31

MOTION FOR SUMMARY JUDGMENT/

SUMMARY ADJUDICATION IS DENIED

Background

On October 13, 2020, Plaintiff Gregory Gopman filed this instant action against Defendant Overclock Labs, Inc. The Complaint alleges:

1. Breach of Advisor Agreement

2. Unjust Enrichment

3. Promissory Estoppel

4. Breach of Founder Agreement

On May 06, 2022, Defendant moved for Summary Judgment or Summary Adjudication in the alternative.

On July 11, 2022, Plaintiff filed Opposition Papers. Defendant filed a reply on July 19, 2022.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”¿ (Aguilar v. Atl. Richfield Co. (2001) 25 Cal. 4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (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. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) The moving party is entitled to summary judgment if they can show that there is no triable issue of material fact or if they have a complete defense thereto. (Aguilar v. Atlantic Richfiend Co. (2001) 25 Cal. 4th 826, 843.)¿ Summary adjudication may be granted as to one or more causes of action within an action, or one or more claims for damages. (Cal. Code of Civ. Proc. §437c(f).)

A defendant moving for summary judgment bears two burdens: (1) the burden of production – presenting admissible evidence, through material facts, sufficient to satisfy a directed verdict standard; and (2) the burden of persuasion – the material facts presented must persuade the court that the plaintiff cannot establish one or more elements of a cause of action, or a complete defense vitiates the cause of action. (Code Civ. Proc., § 437c(p)(2);¿Aguilar,¿supra, 25 Cal.4th at p. 850-851.) A defendant may satisfy this burden by showing that the claim “cannot be established” because of the lack of evidence on some essential element of the claim.¿¿(Union Bank v. Superior Court (1995) 31 Cal.App.4th 574, 590.)¿¿Once the defendant meets this 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 defense thereto.”¿(Id.)

“On ruling on a motion for summary judgment, the court is to ‘liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.’” (Cheal v. El Camino Hospital¿(2014) 223 Cal.App.4th 736, 760.)

On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. [Citation.]” (Binder v. Aetna Life Ins. Co.¿(1999) 75 Cal.App.4th¿832, 839.)

Defeating summary judgment requires only a single disputed material fact. (See CCP § 437c(c) [a motion for summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”] [emphasis added].) Thus, any disputed material fact means the court must deny the motion – the court has no discretion to grant summary judgment. (Zavala v. Arce (1997) 58 Cal.App.4th 915, 925, fn. 8; Saldana v. Globe-Weis Systems Co. (1991) 233 Cal.App.3d 1505, 1511-1512.)

Discussion

Defendant Overclock was founded in 2015 by founders Greg Osuri and Adam Bozanich. (Separate Statement of Undisputed Material Facts “SUMF” 63.) Plaintiff Gopman began working for Overclock in June 2017 and Overclock gave Plaintiff Gopman the title of “late-stage cofounder.” (SUMF 1, 63.) During this time, Plaintiff alleges there was a Founder Agreement, whereby the Co-founders of Overclock, including Osuri and Bozanich, would receive Overclock native utility tokens (“tokens”) upon termination. (SUMF 3, 29.)

Plaintiff was allegedly terminated by Defendant after 6 months, purportedly for poor work performance and Plaintiff’s harmful reputation. (SUMF 33, 34, 35.) Plaintiff stopped working as COO for Overclock in March of 2018. (SUMF 11, 38) Overclock maintains it then offered Plaintiff the possibility of serving an advisory role; whereas Plaintiff affirms he was given the role of advisor, and this included additional compensation in the form of Overclock tokens. (SUMF 36; Singh Decl. ¶ 6, Ex. 5; Gopman Decl. ¶ 17, Ex. F.) Eventually, Plaintiff filed this instant action when Overclock refused to give Plaintiff Overclock tokens, as allegedly agreed to in the Founder Agreement, and later the Advisor Agreement.

Defendant Overclock now moves for summary judgment or summary adjudication in the alternative on all of Plaintiff’s causes of action. Defendant maintains no legally binding contracts or promises exist between Overclock and Plaintiff Gopman.

1. Cause of Action: Breach of Advisor of Agreement

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. [Citation.]” (Richmond v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Here, Overclock moves for summary judgment as to the first cause of action on the basis that no Advisor Agreement Exits between the Parties and thus, there is no breach.

Overclock states that to avoid a contentious separation after Plaintiff was asked to leave Overclock on March 9, 2018, Osuri discussed the possibility of Plaintiff serving as some type of advisor for Overclock. (SUMF 36.) Plaintiff asserts that he did accept and serve as an advisor for Overclock, as confirmed in a March 9, 2018, email from Osuri wherein he agreed to Osuri’s offer to serve as an advisor. (SUMF 36; Singh Decl. ¶ 6, Ex. 5; Gopman Decl. ¶ Ex. F.) Therefore, Plaintiff asserts there was mutual assent to the Advisor Agreement. (See Lopez v. Charles Schwab & Co. (2004) 118 Cal. App. 4th 1224, 1230 [“Mutual assent usually is manifested by an offer communicated to the offeree and an acceptance communicated to the offeror. (citation omitted)].”.)

Overclock asserts that in the March 9, 2018, email, Osuri told Plaintiff that Overclock could not offer Overclock tokens as compensation “since they don’t exist yet – this limits us from signing any agreement until such time as our legal council [sic] provides us with the necessary opinion. None of the team members have any agreements in place that promise tokens or rights for tokens. The below outline for a potential contract cannot be considered legally binding until such time we have a resolution from our council [sic].” (SUMF 11, 12.) The March 9, 2018, email also required Overclock’s Board to approve the position. (Zeisler Decl. ¶ 15, Ex. 14; Singh Decl. ¶¶ 12-11, Ex. 2)

Overclock thus asserts that two condition precedents were outlined in the March 9, 2018 email contracts neither of which occurred: (1) that the board approve or make a resolution for an advisor position and (2) that Overclock’s counsel give an opinion, which did not occur (SUMF 11, 12, Zeisler Decl. ¶ 15, Ex. 14.; Singh Decl. ¶¶ 12-11, Ex. 2) Therefore, since the conditions precedent did not occur, the contract is not legally binding. Moreover, Overclock asserts that Plaintiff never signed, nor can he produce any agreement with a signature block attesting to the tokens allocation or the advisor position. (SUMF 23, 24.)

Plaintiff asserts that the two condition precedents were illusory because (1) Osuri and Bozanich are the Board of Overclock and (2) any concerns for securities laws violation were pretextual because Overclock did issue tokens to another advisor, Brandon Goldman on September 19, 2017. (SUMF 11, 71, Overclock Ex. 14) The tokens were granted to Goldman before the March 9, 2018 email. Even if the conditions are valid, it was Overclock who failed to perform under the terms of the March 9, 2018 email because Overclock failed to get a legal opinion from counsel and failed to get a Board resolution. Additionally, since, Osuri was one of two Board Members, Plaintiff asserts there was Board approval. Plaintiff maintains that he performed his duties as an advisor, which Overclock disputes.

Plaintiff further argues that he performed his duties as an advisor, which Overclock disputes. However, Plaintiff maintains that Overclock allowed him to continue working as an advisor and never disavowed the existence of an advisor agreement until June 2020. (Gopman Decl. ¶ ¶ 18, 20.) Despite accepting Plaintiff’s services, Overclock never presented Plaintiff with a written advisor agreement but did present a written agreement and token to another advisor, Brandon Goldman in 2017. (Singh Decl. Ex. 9.) In fact, Goldman testified in his deposition that he believed Gopman had been offered an advisor role pursuant to the March 9, 2018 email. (Singh Decl. Ex. 2.)

Despite evidence of Plaintiff’s communications with Osuri, Overclock asserts that between April 2018 to May 2020, Plaintiff failed to provide services of value as an advisor. Overclock attests that most of the “services” were personal communications with Osuri and that Plaintiff cannot produce time logs or other contemporaneous records of the work he performed as an advisor. (SUMF 47, 48, 54, 55) In his deposition, Plaintiff asserts that there was never any expectation or instructions from Overclocks to maintain such records, nor was he asked to verify the hours worked as “Advisor,” and it was his understanding that his role as advisor required him to be “on call.” (Id.) Plaintiff offers transcripts of communications with Osuri and others pertaining to the services he offered as an advisor. (Singh Decl. Ex. 11 -36.)

Overclock maintains that the communications with Plaintiff were personal communications and not evidence of services Plaintiff provided to Overclock as an advisor. However, the Court will not “weigh the evidence in the manner of a factfinder to determine whose version is more likely true.¿Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Binder, supra, 75 Cal.App.4th at 840.) Therefore, whether or not Plaintiff provided valuable services as an advisor a triable issue of material fact.

Defendant has failed to show no triable issues of material fact exist as to Plaintiff’s first cause of action for breach of the Advisor Agreement. Defendant alleges that there was no Advisor Agreement, but Defendant also alleges Plaintiff failed to provide services of value as an advisor. That Plaintiff’s services were of no value misses the point as to whether Plaintiff was or treated as an advisor. Whether Plaintiff failed to provide valuable services as an advisor remains a triable issue of material fact as does whether or not there was an oral Advisor Agreement in the first place.

For the reasons stated, Defendant’s request for summary judgment as to Plaintiff’s first cause of action is DENIED.

2. Cause of Action: Unjust Enrichment

Overclock states it is entitled to summary judgment or summary adjudication as to Plaintiff’s unjust enrichment claim because Plaintiff was compensated for his past services as an Advisor. Therefore, Overclock asserts it was never unjustly enriched. Additionally, Defendants assert Plaintiff did not perform services of value as an advisor, therefore Overclock received no benefit from Plaintiff.

“An individual is required to make restitution if he or she is unjustly enriched at the expense of another. A person is enriched if the person receives a benefit at another's expense. Benefit means any type of advantage.” (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1662 [internal citations omitted].) Overclock asserts that Plaintiff’s unjust enrichment claims fails because he cannot demonstrate that Overclock unjustly retained a benefit at Plaintiff’s expense. First, Overclock asserts that because Plaintiff was compensated for his past work as COO, there was no unjust enrichment. (SUMF 28, 29.) Secondly, Overclock reiterates that Plaintiff did not provide services of value as an advisor and therefore he cannot show Overclock received a benefit. Thus, “[n[o unjust enrichment results when the promisee has received the reasonable value of his services. (Ruinello v. Murray (1951) 36 Cal.2d 687, 690.)

Plaintiff asserts that he did not receive the reasonable value of his services because, in addition to receiving a salary, Plaintiff was to be compensated in 4% of Overclock tokens as consideration for serving as the COO and performing valuable business development services. (SUMF 1.) In addition, Plaintiff alleges that he entered into an agreement with Overclock to receive 2% of Overclock tokens in exchange for exiting his full-time role as COO to an outside advisor role. (SUMF 40, 47-55.) For their work as co-founders, Osuri and Bozanich, each received a salary but were also compensated with tokens, while Plaintiff was not despite making valuable contributions to Overclock. (Id.) Thus, Overclock unjustly retained a benefit in the form of Overclock tokens that should have gone to Plaintiff. (SUMF 28.)

The fact Plaintiff received a salary is not evidence that he received the full benefit for which he bargained when he became COO or that Overclock was not unjustly enriched when it retained Plaintiff’s portion of Overclock tokens. A triable issue of material fact exists as to whether Plaintiff’s salary was justly compensated for the work he performed as COO of Overclock. Moreover, as previously stated, whether as an advisor Plaintiff performed services of value entitling him to 2% of Overclock tokens remains a triable issue of material fact.

Therefore, because Overclock has failed to show that no triable issue of material fact exists as to the second cause of action summary judgment is DENIED.

3. Cause of Action: Promissory Estoppel

“The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3)[the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’ [Citation.]” (Advanced Choices, Inc. v. State Dept. of Health Services (2010) 182 Cal.App.4th 1661, 1672, citing US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 901.)

Overclock states no promises were made to Plaintiff and, therefore, Plaintiff’s cause of action for Promissory Estoppel fails. Secondly, Overclock asserts Plaintiff cannot show that his purported reliance was reasonable. Overclock has failed to show that no triable issues of material fact exist because Plaintiff has shown an Advisor Agreement may exist. Moreover, as discussed below, a triable issue of fact exists as to the existence of an oral Founder Agreement.

Secondly, Osuri’s disavowal that the Advisor Agreement was not yet legally binding does not show that Plaintiff’s reliance was unreasonable since it did induce Plaintiff to perform such services, with Osuri’s knowledge, as evidenced by Plaintiff’s communications with Osuri. (SUMF 49, 50, 51, 52, 53, 57, 59) Moreover, Plaintiff admits that in reliance to Osuri’s March 9, 2018 email, wherein he agreed to serve as an advisor, he understood he was giving up any right or claim to 4% of Overstock tokens as promised to him in the Founder’s Agreement in exchange for serving as an advisor and getting 2% of Overclock tokens. (SUMF 6, 62.) When Plaintiff reached out to Osuri asking when he would receive the “paperwork” for the tokens, Osuri told Plaintiff “not to worry” and that “everything was fine.” (SUMF 40.) Thus, Overclock cannot show Plaintiff’s reliance was unreasonable.

Accordingly, Defendant’s request for summary judgment as to Plaintiff’s Promissory Estoppel claim is DENIED.

4. Alternative Cause of Action: Breach of Founder Agreement

In the alternative, Plaintiff pled that a Founder Agreement exists, which Overclock denies. “To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. [Citation.]” (Richmond v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Here, Overclock asserts Plaintiff cannot meet the first element, the existence of Founder Agreement because such an agreement was never put in writing.

In Plaintiff’s declaration, he attests that he became a late-stage co-founder of Overclock and assumed the title of COO. (Gopman Decl. ¶ 7, Ex. B). Overstock maintains Plaintiff was an independent contractor, but Plaintiff states that despite being classified as an independent contractor, he was hired to handle all “business aspects” of Overclock and worked full-time for the company. (SUMF 1.) Plaintiff states he was provided with a company-issued laptop and other tools necessary for work. (Gopman Decl. ¶ 6.) Plaintiff also provides pay records from Overclock’s payroll system from July 5, 2017, to March 9, 2018. (Gopman Decl. ¶ 6, Ex. A)

Plaintiff asserts, that as a late-stage co-founder and COO, an oral agreement (“Founder Agreement”) with Overclock exists which was later confirmed and memorialized in writing in an email from Osuri to Overclock’s corporate counsel, Karen Ubell on February 8, 2018. (SUMF 66.) Plaintiff stated that in the email, Osuri specially asked Ubell to prepare agreements for “each of the three founders” so that they would get 4% of Overclock’s upon termination. (SUMF 66., Zeisler Decl. Ex. 12.)

Under the Founder Agreement, 12% of Overclock’s tokens would be evenly split among all three founders, with each receiving 4% of the total amount of tokens that were to be issued. (SUMF 12, 66.) Plaintiff maintains he was never sent a written agreement, despite Osuri and Bozanich being awarded Overclock tokens without any written contract in place, without them paying for the tokens, and with Board approval because Osuri and Bozanich comprise the Board of Overclock. (SUMF 61.) In other words, Osuri and Bozanich, for their roles as CEO and CTO received their tokens but Plaintiff as COO did not.

Overclock maintains that it began to discuss the potential future allocation of tokens to the founders. (SUMF 66.) Osuri maintains the email to Ubell was to discuss the possibility of drafting certain agreements for potential token allocations, but that no such Agreement was ever drafted or approved by Ubell. (SUMF 61, 62, 72, 73.) The February 8, 2018 email to Ubell states

“We need a few agreements drafted to give our advisors, consultants, team members, and founders.

Advisors: Advisors get some tokens in exchange for continues advise pre and post network launch (or crowdsale) with a 1-yr hold and 2-yr vest.

Founders: Each of the three founders gets 4% of token supply -- 40M tokens -- with a 1-yr hold and 2-yr vest. With 10M tokens guaranteed upon termination

[* * *]

Please let me know if you need to get on a call.

Cheers!”

(Zeisler Decl. Ex. 12.)

Plaintiff maintains that Overclock did eventually issue the tokens as agreed to in the February 8, 2018 email because founders Osuri and Bozanich, who comprise the Board of Overclock, received their tokens. (SUMF 71, Zeisler Decl. Ex. 12.) Thus, despite Overclock’s contention that there was no Founder Agreement, co-founders Osuri and Bozanich did get their Overclock tokens, as orally agreed to. (SUMF 61.) Plaintiff further asserts that any concerns for securities laws violations were pretextual because Overclock did award tokens to another advisor, Brandon Goldman, on September 19, 2017. (SUMF 71, Zeisler Decl. Ex. 12.) The award of tokens to Goldman occurred before Osuri sent the email to Ubell. (Id.)

Plaintiff also argues he continued to provide services to Overclock from June 2017 to June 2018 as COO of Overclock. (SUMF 35.) In an August 14, 2017 email to Osuri, Plaintiff writes “Also, we should figure out my deal sooner than later.” (Gopman Decl. ¶10, Ex. C.) Plaintiff also provides evidence of a January 7, 2018, email confirming his understanding of the Founder Agreement and his transition to the role as advisor. (Gopman Decl. ¶ 12, Ex. E.)

Despite not presenting a written Founder Agreement to Plaintiff, in the March 9, 2018 email in which Osuri purports to offer Plaintiff the role of advisor, Osuri writes:

“Since you are refusing to fulfill your obligations as the COO of the company without an exclusive contract – in addition to the founder contracts we have in place – I’d like to present you two options.”

(Zeisler Decl. Ex. 14, Singh Decl. Ex. 2.) In this manner, Osuri validates Plaintiff’s position that a Founder Agreement existed between the Parties.

For the reasons stated, Defendant has failed to show it is entitled to summary judgment as to Plaintiff’s alternative cause of action, breach of the Founder Agreement.

Conclusion

Defendant Overclock’s Motion for Summary Judgment is DENIED.

Defendant to give notice.

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All social distancing protocols will be observed at the Courthouse and in the courtrooms.