Superior Court, State of California



PLEASE READ: BEGINNING ON JUNE 13, 2022 AND UNTIL FURTHER NOTICE, NO IN-PERSON APPEARANCES ARE PERMITTED IN DEPARTMENT 6 BECAUSE OF A CRITICAL SHORTAGE OF SHERIFF’S DEPUTIES AVAILABLE TO SUPPORT AND SECURE COURT FACILITIES. PARTIES MAY APPEAR BY MICROSOFT TEAMS ONLY. THE COURT SINCERELY REGRETS THE INCONVENIENCE.

PLEASE READ: Beginning on August 15, 2022, the Santa Clara Superior Court will be using MICROSOFT TEAMS for remote hearings (including law and motion hearings, case management conferences, and other conferences), unless otherwise ordered by the Court.

CourtCall is no longer available. The appropriate MS Teams link to use for a particular department can be found by clicking on the link below.

Join MS Teams Meeting: Click on the link below, or copy and paste it into your internet browser, and scroll down to Department 6:



As a reminder, state and local court rules prohibit recording of court proceedings without a court order. This prohibition applies while in the courtroom and while attending on MS Teams.

EFFECTIVE JULY 24, 2017, THE COURT WILL NO LONGER PROVIDE OFFICIAL COURT REPORTERS FOR LAW AND MOTION HEARINGS. If any party wants a court reporter, the appropriate form must be submitted. See court website for policy and forms.

TROUBLESHOOTING TENTATIVE RULINGS

If you do not see this week’s tentative rulings, either they have not yet been posted, or your web browser cache (temporary internet files) is pulling up an older version. You may need to “REFRESH”, or “QUIT” your browser and reopen it – or adjust your internet settings so you only see the current version of the web page. Otherwise, your browser may continue to show an older version of the web page even after the current tentative rulings have been posted.

|LINE # |CASE # |CASE TITLE |RULING |

|LINE 1 | 19 CV342341 |Alessandra Andrisani vs OPLS Los Altos, LLC et |Parties are ordered to appear by TEAMS for hearing on order of |

| | |al |examination. If there is no appearance, the matter will be taken off|

| | | |calendar. |

|LINE 2 |19CV353496 |Bijan Haghighi et al vs Emil Eshagh et al |Parties are ordered to appear by TEAMS for hearing on order of |

| | | |examination. If there is no appearance, the matter will be taken off|

| | | |calendar. |

|LINE 3 |22CV397918 |Devinder Shoker et al vs Venkatapathi Rayapati |Demurrers to First Amended Complaint SUSTAINED as to Vijayasri |

| | |et al |Rayapati and otherwise OVERRULED. |

| | | |Click link at Line 3 or scroll down for full ruling. The Court will |

| | | |prepare the formal order. |

|LINE 4 |22CV397918 |Devinder Shoker et al vs Venkatapathi Rayapati |Demurrers to First Amended Complaint SUSTAINED as to Vijayasri |

| | |et al |Rayapati and otherwise OVERRULED. |

| | | |Click link at Line 3 or scroll down for full ruling. The Court will |

| | | |prepare the formal order. |

|LINE 5 |22CV397918 |Devinder Shoker et al vs Venkatapathi Rayapati |Demurrers to First Amended Complaint SUSTAINED as to Vijayasri |

| | |et al |Rayapati and otherwise OVERRULED. |

| | | |Click link at Line 3 or scroll down for full ruling. The Court will |

| | | |prepare the formal order. |

|LINE 6 |22CV397918 |Devinder Shoker et al vs Venkatapathi Rayapati |Demurrers to First Amended Complaint SUSTAINED as to Vijayasri |

| | |et al |Rayapati and otherwise OVERRULED. |

| | | |Click link at Line 3 or scroll down for full ruling. The Court will |

| | | |prepare the formal order. |

|LINE 7 |20CV3744446 |Harlan Graves, Jr. vs Li Shusen et al |Plaintiff Grave’s Motion to Compel Responses to Form Interrogatories |

| | | |and for Sanctions is unopposed by Defendant Shusen and is GRANTED. |

| | | |Defendant Shusen is ordered to produce written responses to |

| | | |plaintiff’s form interrogatories on or before February 28, 2023 and |

| | | |to pay $220 in sanctions to plaintiff Graves. Moving party to |

| | | |prepare the formal order. |

|LINE 8 |22CV399508 |Bank of America, N.A. vs Brenda Swindall |Plaintiff’s Motion for Order That Matters in Request for Admission of|

| | | |Truth of Facts be Admitted is unopposed and is GRANTED. The truth of|

| | | |the facts specified in the Plaintiff’s Requests for Admissions are |

| | | |deemed true and Attachment 2 is deemed a genuine copy of the original|

| | | |document provided to Defendant. Moving party to prepare the formal |

| | | |order. |

|LINE 9 |21CV375332 |Chris Wilson vs SoundHound Inc. |Plaintiff’s Motion for Leave to File Amended Complaint is unopposed |

| | | |and is GRANTED. Moving party to prepare the formal order. |

|LINE 10 |21CV381433 |Ceesar Fernandez-Gomez et al vs Mirage |Michael D. McLean and Adelson McLean, APC’s Motion to Withdraw as |

| | |Hospitality Inc. et al |attorney is GRANTED. Moving party to prepare the formal order. |

|LINE 11 |2013-1-CV-247406 |P. Kleidman vs N. Shah et al |Joseph A. Bailey III’s Application to Appear Pro Hac Vice in P. |

| | | |Kleidman vs. N. Shah et al is GRANTED. The Court will use the |

| | | |submitted proposed order. |

|LINE 12 |20CV366566 |USAA General Indemnity Company vs Ana Flores |Plaintiff USAA General Indemnity Company’s Motion to Enforce |

| | | |Settlement Agreement and Enter Judgment is GRANTED. Moving party to |

| | | |prepare the formal order. |

- oo0oo -

Calendar Line 1

- oo0oo –

[Text]

Calendar Line 2

- oo0oo -

Calendar Lines 3, 4, 5, 6

Case Name: Devinder Shoker, et al. v. Venkatapathi Rayapati, et al.

Case No.: 22CV397918

Defendants Venkatapathi Rayapati (“Venkatapathi”), Vijayasri Rayapati (“Vijayasri”), System Architecture Information Technology (“SAI”), and Cyber Forza Inc. (“Cyber Forza”) demur to the First Amended Complaint (“FAC”) by plaintiffs Devinder Shoker (“Dr. Shoker”) and Rajwant Shoker (“Rajwant”)(collectively, “Plaintiffs”). [1]

I. Background

A. Factual

This is an action to recover investments Plaintiffs allege were made as a result of fraud and other wrongdoing. According to the allegations in the FAC, in 2010, defendant Sukhjinder Singh Ghuman (“Ghuman”) began visiting Dr. Shoker’s dental office in Fremont. (FAC, ¶ 12.) During these visits, he began cultivating his relationship with Dr. Shoker. (Ibid.) They shared a common background and Ghuman referred to Dr. Shoker as his “brother” and he referred to Rajwant as his “sister”. (Ibid.) He advised Dr. Shoker on financial and business matters. (Ibid.) He told Dr. Shoker that he had access to unique investment opportunities, and that if Dr. Shoker invested with him, he would make Plaintiffs wealthy. (Ibid.)

By September 2010, Ghuman presented Dr. Shoker with an opportunity to invest in SAI. (FAC, ¶ 14.) He advised Plaintiffs to invest a minimum of 50,000 shares at $10.00 per share, thus a $500,000 investment. (Ibid.) Ghuman represented to Plaintiffs that his net worth was $50 million. (Ibid.) He further represented that he had helped other investors reap substantial returns and that he could personally guarantee Plaintiffs’ $500,000 investment. (Ibid.) Ghuman advised Dr. Shoker that Venkatapathi was the president and CEO of SAI. (Ibid.) He further advised him that Venkatapathi was preparing to sell SAI in a matter of months. (Ibid.) Plaintiffs allege, upon information and belief, that such representation was false when it was made and that Ghuman knew of the falsity at the time he made the representation. (Ibid.) Ghuman described Venkatapathi as a highly successful technology entrepreneur who had previously co-founded a company known as Portal Player Inc. and sold it to Nvidia Corporation for hundreds of millions of dollars, which led Dr. Shoker to believe that Venkatapathi was a wealthy, sophisticated, and successful technology entrepreneur. (Ibid.)

Ghuman was apparently in close contact with Venkatapathi about Plaintiffs investing in SAI. (FAC, ¶ 15.) Plaintiff allege, upon information and belief, that Ghuman and Venkatapathi conspired about the matter. (Ibid.) On September 9, 2010, Plaintiffs wired $500,000 to SAI to purchase 50,000 shares at $10.00 per share. (Ibid.) The same day, Vijayasri visited Plaintiffs at their home. (Ibid.) During the visit, she stated that she was part owner of SAI and she explained that the company was doing well. (Ibid.) Plaintiffs allege, upon information and belief, that the representation was false when it was made and Vijayasri knew of the falsity at the time. (Ibid.) She also delivered a share certificate and stock purchase agreement to Plaintiffs, which reflected the purchase 201,613 shares of common stock in SAI at $2.48 per share. (FAC, ¶ 15.) Although the shares and the share price were different than what had been discussed with Ghuman, the total amount of the purchase remained $500,000. (Ibid.) The share certificate was signed by Venkatapathi and Vijayasri and the stock purchase agreement was signed by Venkatapathi. (Ibid.)

Dr. Shoker, Ghuman, and Venkatapathi met soon after the visit and Venkatapathi claimed that SAI was a technology company focused on wireless technology and cybersecurity. (FAC, ¶ 16.) He also claimed that SAI was a large, successful company, with hundreds of employees, numerous Ph.D. level engineers, dozens of graduate level engineers, and several highly valuable products, services, and development projects. (Ibid.) He also represented that SAI’s management team was comprised of executives who each had multiple decades of experience and had worked with household name technology companies such as IBM, Motorola, and Qualcomm. (Ibid.) Additionally, he claimed to have a Ph.D. and claimed to be a professor at U.C. Berkeley. (Ibid.) Plaintiffs allege, upon information and belief, that each representation was false when it was made and Venkatapathi knew of such falsity at the time of making each misrepresentation. (Ibid.) During the meeting, and at numerous points thereafter, Ghuman and Venkatapathi represented to Dr. Shoker that Ghuman was investing substantial sums into SAI. (FAC, ¶ 18.) Plaintiffs allege, upon information and belief, that the representations were false at the time they were made and Ghuman and Venkatapathi knew of the falsity at the time they were making the misrepresentations. (Ibid.)

On April 25, 2011, Venkatapathi informed Plaintiffs in a letter that SAI was meeting its goals and that its share priced had increased by 80%. (FAC, ¶ 19.) Plaintiffs allege, upon information and belief, that such representation was false when it was made and that Venkatapathi knew of such falsity at the time he made the misrepresentation. (Ibid.)

On April 29, 2011, in reliance on the representations made by Ghuman and Venkatapathi, Plaintiffs wired an additional $550,000 to SAI to purchase 214,844 shares of common stock in SAI at a price of $2.56 per share. (FAC, ¶ 20.) Vijayasri again delivered a share certificate to Plaintiffs, which was signed by her and Venkatapathi, and a stock purchase agreement, which was signed by Venkatapathi. (Ibid.)

On May 17, 2012, Venkatapathi informed Plaintiffs in a letter that SAI was meeting its goals and touted SAI’s success in jointly developing a WiFi technology with Qualcomm and a 4G LTE technology licensed to Motorola. (FAC, ¶ 21.) Plaintiffs allege, upon information and belief, that each representation was false when it was made and that Venkatapathi knew of the falsity at the time of making each misrepresentation.

On May 29, 2012, in reliance on the representations by Ghuman and Venkatapathi, Plaintiffs wired an additional $400,000 to SAI to purchase additional shares of common stock in SAI. (FAC, ¶ 22.) Vijayasri again delivered a share certificate, signed by her and Venkatapathi, and a stock purchase agreement, signed by Venkatapathi. (Ibid.)

On or about October 3, 2012, Plaintiffs provided a short-term loan of $500,000 to SAI. (FAC, ¶ 24.) In consideration for the loan, Venkatapathi agreed, in writing, that SAI would issue additional shares to Plaintiffs on June 11, 2014, which Plaintiffs understood to be issued, at least in part, as the promised interest on the loan, as well as compensation in lieu of repayment of the principal. (Ibid.)

On June 11, 2014, Venkatapathi advised Plaintiffs, in a series of letter, that SAI had achieved a major breakthrough with a certain cloud computing technology. (FAC, ¶ 25.) He also advised that SAI had issued additional shares, apparently as the latest in the number of stock splits, and that Plaintiffs accordingly were receiving a substantially large number of shares in SAI. (Ibid.) Plaintiffs allege, upon information and belief, that each representation was false when it was made and that Venkatapathi knew of the falsity at the time of making the representation. (Ibid.)

In August 2014, Venkatapathi presented Dr. Shoker with another investment opportunity regarding founding a dental school. (FAC, ¶ 26.) Venkatapathi told Dr. Shoker that they could form a partnership to pursue the venture. (Ibid.) He further said that it would be necessary to make a substantial investment of $2 million to move forward and that his share of the initial investment would be $1.4 million. (Ibid.) Dr. Shoker’s share of the initial investment was $600,000 and the investment was fully or partly needed as an initial deposit for a process to secure accreditation and governmental approval to open the school. (Ibid.) Plaintiffs allege, upon information and belief, that the representations were false at the time they were made and Venkatapathi knew of the falsity at the time of making such misrepresentations. (Ibid.)

In reliance on Venkatapathi’s misrepresentations, from August 28, 2014 through September 6, 2014, Plaintiffs provided checks to Venkatapathi in the total amount of $600,000. (Ibid.) Dr. Shoker subsequently determined that the startup costs for the school would likely render the venture unprofitable. (Ibid.) Dr. Shoker demanded a return of his payments. (Ibid.) Venkatapathi assured Dr. Shoker that the payments would be refunded, but that the funds were committed for the deposit. (Ibid.) Plaintiffs allege, upon information and belief, that the representations were false when they were made and Venkatapathi knew of the falsity at the time he made the misrepresentations. (Ibid.)

In February 2015, Venkatapathi advised Dr. Shoker that SAI was close to being acquired, but that an infusion of additional funds would be needed in order for the sale to close. (FAC, 27.) Plaintiffs allege, upon information and belief, that such representations were false at the time they were made and Venkatapathi knew of the falsity at the time he made the representations. However, in reliance on the representations, Plaintiffs provided Venkatapathi with a series of checks on the following dates and in the following amounts: $150,000 on February 3, 2015, $50,000 on March 5, 2015, and $100,000 on March 11, 2015. (Ibid.)

On July 27, 2015, Venkatapathi falsely advised Plaintiffs, in a series of letters, that SAI had achieved significant advances in several of its products utilizing 4G LTE and 5G wireless products and technologies. (FAC, ¶ 28.) He also advised them that SAI had issued additional shares, apparently as the latest in a number of stock splits. (Ibid.) He further informed them that they were receiving a substantially larger number of shares in SAI. (Ibid.)

On July 10, 2019, Venkatapathi informed Dr. Shoker that SAI had a new office address and they agreed to meet there the following day. (FAC, ¶ 30.) On or about July 11, 2019, August 12, 2019, and September 12, 2019, Dr. Shoker met with Venkatapathi. (FAC, ¶ 31.) During those meetings, Dr. Shoker noticed that SAI’s name and logo did not appear on the office signage. (FAC, ¶ 31.) Instead, Cyber Forza’s name and logo appeared on the signage, along with that of a company called MontaVista. (Ibid.) This caused Dr. Shoker to inquire as to the relationship between SAI and these other companies. (Ibid.) Venkatapathi represented that Cyber Forza was a subsidiary or division of SAI. (Ibid.) He was unable to provide a satisfactory explanation as to why SAI’s name did not appear on the signage, which caused Dr. Shoker to become suspicious of Venkatapathi, SAI, and Cyber Forza. (Ibid.)

In the months after the September 12, 2019 meeting, Venkatapathi again represented that he was working to position SAI to be acquired. (FAC, ¶ 32.) Plaintiffs allege, upon information and belief, that this representation was false when made and that Venkatapathi knew of the falsity at the time he made it. (Ibid.)

On or about January 18, 2020, Dr. Shoker again met with Venkatapathi, who provided a letter, which purported to be from SAI but did not have the current address on it. (FAC, ¶ 33.) In 2021, Venkatapathi informed Dr. Shoker that Cyber Forza is not a division or subsidiary of SAI but rather is a separate company and it is not owned by SAI. (FAC, ¶ 34.) Dr. Shoker asked a number of questions, but Venkatapathi’s refused to provide further information about the companies or their operations. (Ibid.) Plaintiffs allege, upon information and belief, that Cyber Forza is a mere continuation, and alter ego of SAI because all of the management team at SAI became the management team at Cyber Forza, the two companies claim the same address, and SAI appears to have substantially reduced its operations and existence as a separate entity. (FAC, ¶ 35.)

Based on the ongoing representations by Venkatapathi concerning SAI’s success and resulting likelihood of being acquired, assurances of substantial returns on their investments, and assurances of being repaid for funds provided to SAI and Venkatapathi, Plaintiffs did not discover, and could not discover with reasonable diligence, the circumstances of the fraudulent conduct alleged until July 11, 2019, at the earliest. (FAC, ¶ 36.)

B. Procedural

Based on the foregoing allegations, Plaintiffs initiated this action on April 28, 2022, with the filing of the Complaint, which asserted a claim for fraud, among other things. On October 12, 2022, they filed the FAC, which asserts claims for the following: (1) disclosure of corporate records, (2) fraud, (3) breach of fiduciary duty, (4) unjust enrichment, and (5) violation of Business and Professions Code section 17200. On November 14, 2022, SAI, Cyber Forza, Venkatapathi, and Vijayasri each filed their respective demurrers to the FAC. On January 3, 2023, Plaintiffs filed a single opposition. On January 9, 2023, Venkatapathi, Cyber Forza, and SAI filed a collective reply and Vijayasri filed her reply.

II. Venkatapathi Demurrer

VENKATAPATHI DEMURS TO THE SECOND, THIRD, FOURTH, AND FIFTH CAUSES OF ACTION ON THE GROUNDS THAT THEY FAIL TO STATE SUFFICIENT FACTS AND ARE UNCERTAIN. (CODE CIV. PROC., § 430.10, SUBDS. (E) & (F).)

A. Legal Standard for a Demurrer

AS RELEVANT TO THE INSTANT CASE, “[T]HE PARTY AGAINST WHOM A COMPLAINT OR CROSS-COMPLAINT HAS BEEN FILED MAY OBJECT, BY DEMURRER OR ANSWER AS PROVIDED IN [CODE OF CIVIL PROCEDURE S]ECTION 430.30, TO THE PLEADING ON ANY ONE OR MORE OF THE FOLLOWING GROUNDS: . . . (E) THE PLEADING DOES NOT STATE FACTS SUFFICIENT TO CONSTITUTE A CAUSE OF ACTION, (F) THE PLEADING IS UNCERTAIN.” (CODE CIV. PROC., § 430.10, SUBDS. (E) & (F).) A DEMURRER MAY BE UTILIZED BY “[T]HE PARTY AGAINST WHOM A COMPLAINT [ ] HAS BEEN FILED” TO OBJECT TO THE LEGAL SUFFICIENCY OF THE PLEADING AS A WHOLE, OR TO ANY “CAUSE OF ACTION” STATED THEREIN, ON ONE OR MORE OF THE GROUNDS ENUMERATED BY STATUTE. (CODE CIV. PROC., §§ 430.10, 430.50, SUBD. (A).) A DEMURRER FOR UNCERTAINTY WILL BE SUSTAINED ONLY WHERE THE COMPLAINT IS SO BAD THAT THE DEFENDANT CANNOT REASONABLY RESPOND – I.E., HE OR SHE CANNOT REASONABLY DETERMINE WHAT ISSUES MUST BE ADMITTED OR DENIED, OR WHAT COUNTS OR CLAIMS ARE DIRECTED AGAINST THEM. (KHOURY V. MALY’S OF CALIF., INC. (1993) 14 CAL.APP.4TH 612, 616 (KHOURY).)

The court in ruling on a demurrer treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214 (Committee on Children’s Television).) In ruling on a demurrer, courts may consider matters subject to judicial notice. (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751.) Evidentiary facts found in exhibits attached to a complaint can be considered on demurrer. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.)

1. Uncertainty

VENKATAPATHI ARGUES THAT THE SECOND, THIRD, FOURTH, AND FIFTH CAUSES OF ACTION ARE UNCERTAIN.

Uncertainty is a disfavored ground for demurrer; it is typically sustained only where the pleading is so unintelligible and uncertain that the responding party cannot reasonably respond to or recognize the claims alleged against it. (See Khoury v. Maly’s of Cal, Inc. (1993) 14 Cal.App.4th 612, 616 (Khoury).) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Ibid.)

“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.)

While Venkatapathi cites uncertainty as a basis for his demurrer, he fails to offer any substantive arguments as to how the third, fourth, or fifth claims are uncertain. Thus, his arguments regarding uncertainty as to those claims are without merit.

Venkatapathi argues that the FAC fails to allege that Ghuman was an agent of SAI or Venkatapathi and Vijayasri or that he was authorized to make representations on their behalf. This argument is unavailing as the FAC alleges that each defendant was the “…agent, employee, co-venturer, partner, or in some manner agent or principal, or both, of each and every other defendant and was acting with the course and scope of [such relationship].” (FAC, ¶ 11.)

With regard to the second cause of action, Venkatapathi argues that it is unclear whether the allegations in paragraph 26 pertain to only him or to the other defendants as well. The allegations in paragraph 26 pertain to the dental school venture. In opposition, Plaintiffs argue that the allegations are part of the fraud claim, which is asserted against all the defendants. The fraud claim is asserted against all the defendants and it re-alleges and incorporates each previous allegation in the FAC. Therefore, it appears that paragraph 26 pertains to the other defendants. Moreover, it does not appear that this issue has rendered the pleading so uncertain that Venkatapathi cannot reasonably respond to it. (Khoury, supra, 14 Cal.App.4th at p. 616.) Therefore, his argument here is unavailing.

Accordingly, Venkatapathi’s demurrer on the basis of uncertainty is OVERRULED.

2. Second Cause of Action-Fraud

IN THE SECOND CAUSE OF ACTION, THE FAC ALLEGES VENKATAPATHI MADE EXTENSIVE REPRESENTATIONS TO

Plaintiffs concerning SAI’s management, personnel, products, technologies, business arrangements, and suitability to be acquired. It also alleges that Venkatapathi made the representations knowing they were false at the time they were made, Plaintiffs reasonably relied on the representations by investing in SAI, and Plaintiffs sustained significant damages as a result.

Venkatapathi argues that the second cause of action is barred by the statute of limitations and it fails to state a claim because it does not allege justifiable reliance or damages.

a. Timeliness

FIRST, VENKATAPATHI ARGUES THAT THE CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS. IN OPPOSITION, PLAINTIFFS ARGUE THAT THE STATUTE OF LIMITATIONS IS TOLLED BY THE DELAYED DISCOVERY RULE.

The limitations period for a fraud claim is three years pursuant to Code of Civil Procedure, section 338, subdivision (d). A claim for fraud is not deemed to have accrued until the “discovery, by the aggrieved party, of the facts, constituting fraud or mistake.” (Code Civ. Proc., § 338, subd. (d); Britton v. Girardi (2015) 235 Cal.App.4th 721, 734 (Britton).)

“‘In order to rely on the discovery rule for delayed accrual of a cause of action, “[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” ’ [Citations.]” (NBC Universal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232 (NBC); see also April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832 [“plaintiff must plead facts sufficient to convince the trial judge that delayed discovery was justified”].) “When a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory.” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641 (Mills).)

Here, the FAC alleges that based on ongoing representations by Venkatapathi concerning SAI’s success and resulting likelihood of being acquired, assurances of substantial returns on their investments, and assurances of being paid for funds provided to SAI and Venkatapathi, Plaintiffs did not discover, and could not discover the circumstances of the fraudulent conduct until July 11, 2019, at the earliest. (FAC, ¶ 36; see also FAC, ¶¶ 29, 32.) July 11, 2019 is the date that Dr. Shoker met Venkatapathi at SAI’s new office. Thus, it appears that Plaintiffs allege the time and manner of discovery and the inability to have made earlier discovery despite reasonable diligence. (See NBC, supra, 225 Cal.App.4th at p. 1232.) The Complaint was filed on April 28, 2022, which is within three years of July 11, 2019. Therefore, Plaintiffs have sufficiently alleged the application of the delayed discovery rule and the claim is timely.

b. Failure to State Sufficient Facts

NEXT, VENKATAPATHI ARGUES THAT THE CLAIM FAILS TO STATE JUSTIFIABLE RELIANCE AND DAMAGES. IN OPPOSITION, PLAINTIFFS ARGUE THAT THE FAC SUFFICIENTLY ALLEGES JUSTIFIABLE RELIANCE AND DAMAGES.

In order to state a claim for fraud, a plaintiff must plead the following elements: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar)) “Fraud actions are subject to strict requirements of particularity in pleading. … Accordingly, the rule is everywhere followed that fraud must be specifically pleaded.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) This necessitates pleading facts which show “how, when, where, to whom, and by what means the representations were tendered.”  (Lazar, supra, 12 Cal.4th at 645.) 

Here, the FAC alleges that Plaintiffs reasonably relied on the representations made to them by Venkatapathi regarding SAI’s management, personnel, products, technologies, business arrangement, and suitability to be acquired. (FAC, ¶ 46.) In reliance on those representations, Plaintiffs invested in SAI and provided additional funds to SAI and Venkatapathi. (FAC, ¶ 50.) The FAC specifically alleges the dates and amount of funds that Plaintiffs gave to SAI and Venkatapathi. The FAC further alleges that Plaintiffs have sustained significant damages as a result. (FAC, ¶ 51.) The FAC sufficiently alleges justifiable reliance and damages. Thus, the FAC states sufficient facts to allege the fraud claim.

Accordingly, the demurrer to the second cause of action is OVERRULED.

3. Third Cause of Action- Breach of Fiduciary Duty

IN THE THIRD CAUSE OF ACTION, THE FAC ALLEGES THAT VENKATAPATHI BREACHED HIS FIDUCIARY DUTIES TO PLAINTIFFS BY MAKING MISREPRESENTATIONS AND CONCEALING MATERIAL FACTS REGARDING THE DENTAL SCHOOL VENTURE, AND FAILING TO RETURN THE FUNDS PLAINTIFFS PROVIDED FOR THE VENTURE. VENKATAPATHI ARGUES THAT THE CLAIM IS NOT TIMELY. HE FURTHER ARGUES THAT THE FAC FAILS TO ALLEGE THE OTHER TERMS OF THE JOINT VENTURE OR ANY FACTS THAT VENKATAPATHI USED THE FUNDS FOR ANY PURPOSE OTHER THAN TO ADVANCE THE INTEREST OF THE JOINT VENTURE. IN OPPOSITION, PLAINTIFFS ARGUE THAT THEY HAVE SUFFICIENTLY ALLEGED THE CLAIM.

A. Timeliness

VENKATAPATHI ARGUES THAT THIS CLAIM IS UNTIMELY BECAUSE THE STATE OF LIMITATIONS PERIOD BEGAN TO RUN WHEN PLAINTIFFS ASKED VENKATAPATHI TO RETURN THE INVESTMENT AND HE FAILED TO DO SO. IN OPPOSITION, PLAINTIFFS ARGUE THAT THE SAME DELAYED DISCOVERY ANALYSIS APPLIES HERE AS THE BREACH SOUNDS IN FRAUD.

The statute of limitations for breach of fiduciary duty is three years or four years, depending on whether the breach is fraudulent or nonfraudulent. (See Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 963 [“limitations period is three years ... for a cause of action for breach of fiduciary duty where the gravamen of the claim is deceit, rather than the catchall four-year limitations period that would otherwise apply...”]; William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1312 [“[b]reach of fiduciary duty not amounting to fraud or constructive fraud is subject to the four-year ‘catch-all statute’ of Code of Civil Procedure section 343”]; Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606-607 [same]; City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889 [four-year statute of limitations applies to breach of fiduciary duty, unless the gravamen of the claim is actual or constructive fraud, in which case the statute of limitations is three years].)” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.)

Here, the claim is predicated upon fraud. Thus, it appears the three year statute of limitations applies to Plaintiffs’ breach of fiduciary claim. However, the request for return of the funds is only part of the basis for this claim. The FAC alleges that Venkatapathi breached his fiduciary duties by making misrepresentations, concealing material facts regarding the dental school venture, and failing to return the funds to Plaintiffs, thus Venkatapathi’s argument is unavailing. As the Court has reasoned above, the FAC states sufficient facts to support the application of the delayed discovery rule. Therefore, the demurrer cannot be sustained on this basis.

B. Failure to State Sufficient Facts

NEXT, VENKATAPATHI ARGUES THAT FAC FAILS TO ALLEGE THE OTHER TERMS OF THE JOINT VENTURE OR ANY FACTS THAT VENKATAPATHI USED THE FUNDS FOR ANY PURPOSE OTHER THAN TO ADVANCE THE INTEREST OF THE JOINT VENTURE.

“In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action.” (Brown v. California Pension Administrators & Consultants, Inc. (1996) 45 Cal.App.4th 333, 347 – 348; see also CACI, No. 605.) “While breach of fiduciary duty is a question of fact, the existence of legal duty in the first instance and its scope are questions of law.” (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790.) 

Venkatapathi fails to cite to any authority in support of his assertion that in order to sufficiently state this claim, the FAC must allege other terms of the joint venture, the date of the alleged agreement, and facts regarding whether the funds were used for any other purpose than to advance the interest of the joint venture. Therefore, this argument is unavailing.

The FAC alleges that Venkatapathi persuaded Dr. Shoker to invest in founding a dental school. It further alleges that Venkatapathi owed fiduciary duties to Plaintiffs in connection with the venture. It also alleges that Venkatapathi breached his fiduciary duties by making misrepresentations and concealing material facts regarding the dental venture, and failing to return Plaintiffs’ funds back to them. It further alleges that Plaintiffs sustained substantial damage as a direct and proximate cause of Venkatapathi’s breaches of his fiduciary duties. Thus, the FAC alleges sufficient facts to state a claim for breach of fiduciary duty.

Accordingly, Venkatapathi’s demurrer to the third cause of action is OVERRULED.

4. Fourth Cause of Action- Unjust Enrichment

IN THE FOURTH CAUSE OF ACTION, THE FAC ALLEGES THAT SAI AND VENKATAPATHI WERE UNJUSTLY ENRICHED AND RECEIVED SUBSTANTIAL BENEFITS FROM PLAINTIFFS. IT FURTHER ALLEGES THAT PLAINTIFFS HAVE RECEIVED NO RETURN OF ANY PART OF ANY PAYMENTS, NO DIVIDENDS, NO INTEREST, AND NO PROFIT. VENKATAPATHI ARGUES THE BASIS OF THIS CLAIM IS THE FRAUD ALLEGED IN THE SECOND CAUSE OF ACTION, THEREFORE, IF THE DEMURRER TO THE SECOND CAUSE OF ACTION IS SUSTAINED THEN THE DEMURRER TO THIS CLAIM SHOULD BE SUSTAINED. THE DEMURRER TO THE SECOND CAUSE OF ACTION IS OVERRULED.

Accordingly, the demurrer to the fourth cause of action is OVERRULED.

5. Fifth Cause of Action- Business and Professions Code, section 17200

IN THE FIFTH CAUSE OF ACTION, THE FAC ALLEGES THAT SAI AND VENKATAPATHI ENGAGED IN UNLAWFUL, UNFAIR, AND FRAUDULENT BUSINESS ACTS AND PRACTICES. VENKATAPATHI ARGUES THE BASIS OF THIS CLAIM IS THE FRAUD ALLEGED IN THE SECOND CAUSE OF ACTION, THEREFORE, IF THE DEMURRER TO THE SECOND CAUSE OF ACTION IS SUSTAINED THEN THE DEMURRER TO THIS CLAIM SHOULD BE SUSTAINED. THE DEMURRER TO THE SECOND CAUSE OF ACTION IS OVERRULED. THEREFORE, THE DEMURRER CANNOT BE SUSTAINED ON THIS BASIS.

Next, Venkatapathi argues that the FAC fails to allege that his conduct was “anti-competitive” or an attempt to create a monopoly. He fails to cite to any authority to support this argument. The FAC alleges that SAI and Venkatapathi engaged in unlawful, unfair, and fraudulent business acts and practices which caused Plaintiffs to pay substantial sums of money to them. It further alleges that Plaintiffs are entitled to restitution of the money.

Business and Professions Code section 17200 (“Section 17200”) prohibits any “unlawful, unfair, or fraudulent business practices.” (Bus. & Prof. Code § 17200.) The Unfair Competition Law (“UCL”) covers a wide range of conduct. It embraces anything that can be properly called a business practice and that at the same time is forbidden by law. (Korea Supply Co. v. Lockhead Martin Corp. (2003) 29 Cal.4th 1134, 1143.) Under section 17200, a practice may be deemed unfair or deceptive even if not proscribed by some other law. (Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 48.) There are three varieties of unfair competition: practices which are unlawful, unfair, or fraudulent. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) Pursuant to Section 17200, unfair competition includes, “any unlawful, unfair, or fraudulent business act or practice, and unfair, deceptive, untrue, or misleading advertising…” (Bus. & Prof. Code § 17200.)

Lastly, Venkatapathi states that there is a split in California law on whether the UCL may be invoked to rectify securities violations. He cites to two opposing cases Roskind v. Morgan Stanley Dean Witter & Co. (2000) 80 Cal.App.4th 345 (Roskind), which held that a UCL claim may be predicated on securities law violations, and Bowen v. Ziasun Technologies (2004 116 Cal.App.4th 777 (Bowen), which held that the UCL does not apply to securities transactions. While Venkatapathi offers no further arguments, it appears he wants the Court to follow Bowen. In Bowen, investors were defrauded by a Ponzi scheme and the court compared the scope of the UCL to the scope of the Federal Trade Commission Act. In doing so, the court held that because the Federal Trade Commission Act did not apply to securities transactions, the UCL should not either. This is distinguishable from the case at hand, because, here, the fifth cause of action incorporated all the former allegations, which includes more than securities transactions as the FAC identifies the dental school venture and the additional funds given by Plaintiffs to move the sale of SAI forward. (FAC, ¶¶ 24, 26, 27.) Therefore, the UCL claim is predicated upon more than securities transactions and a demurrer does not lie to part of a cause of action. (See PH II, Inc. v. Superior Court (1995) 44 Cal.App.4th 1680, 1682.) Consequently, this argument is unavailing.

Accordingly, Venkatapathi’s demurrer to the fifth cause of action is OVERRULED.

III. SAI’s Demurrer

SAI DEMURS TO THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTION ON THE GROUNDS THAT THEY FAIL TO STATE SUFFICIENT FACTS AND ARE UNCERTAIN. (CODE CIV. PROC., § 430.10, SUBD. (E) & (F).)

1. Uncertainty

SAI ARGUES THAT THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTION ARE UNCERTAIN.

SAI fails to offer any substantive argument as to why the fourth and fifth causes of action are uncertain. Thus, the demurrer cannot be sustained on this basis.

The remaining arguments asserted by SAI are identical to those asserted by Venkatapathi. As the Court has reasoned above, those arguments are unavailing.

Accordingly, SAI’s demurrer on the basis of uncertainty is OVERRULED.

2. Second Cause of Action-Fraud

I.

SAI ARGUES THAT THE SECOND CAUSE OF ACTION IS BARRED BY THE STATUTE OF LIMITATIONS AND IT FAILS TO ALLEGE JUSTIFIABLE RELIANCE AND DAMAGES. AS THE COURT REASONED ABOVE, THE FAC SUFFICIENTLY ALLEGES DELAYED DISCOVERY, JUSTIFIABLE RELIANCE, AND DAMAGES.

Accordingly, SAI’s demurrer to the second cause of action is OVERRULED.

3. Fourth Cause of Action- Unjust Enrichment

II.

SAI ARGUES THAT THE DEMURRER TO THIS CAUSE OF ACTION SHOULD BE SUSTAINED, IF THE DEMURRER TO THE SECOND CAUSE OF ACTION IS SUSTAINED. THE DEMURRER TO THE FRAUD CAUSE OF ACTION IS OVERRULED, THUS THE DEMURRER TO THIS CLAIM CANNOT BE SUSTAINED ON THAT BASIS.

Accordingly, SAI’s demurrer to the fourth cause of action is OVERRULED.

4. Fifth Cause of Action- Business and Professions Code, section 17200

SAI ARGUES THE BASIS OF THIS CLAIM IS THE FRAUD ALLEGED IN THE SECOND CAUSE OF ACTION, THEREFORE, IF THE DEMURRER TO THE SECOND CAUSE OF ACTION IS SUSTAINED THEN THE DEMURRER TO THIS CLAIM SHOULD BE SUSTAINED. THE DEMURRER TO THE SECOND CAUSE OF ACTION IS OVERRULED. THEREFORE, THE DEMURRER CANNOT BE SUSTAINED ON THIS BASIS.

The remaining arguments asserted by SAI are identical to those asserted by Venkatapathi. As the Court has reasoned above, those arguments are unavailing.

Accordingly, SAI’s demurrer to the fifth cause of action is OVERRULED.

IV. Cyber Forza’s Demurrer

CYBER FORZA DEMURS TO THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTION ON THE GROUNDS THAT THEY FAIL TO STATE SUFFICIENT FACTS AND ARE UNCERTAIN. (CODE CIV. PROC., § 430.10, SUBD. (E) & (F).)

1. Uncertainty

CYBER FORZA ARGUES THAT THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTION ARE UNCERTAIN.

Cyber Forza fails to offer any substantive argument as to why the fourth and fifth causes of action are uncertain.

The remaining arguments asserted by Cyber Forza are identical to those asserted by Venkatapathi and SAI. As the Court has reasoned above, those arguments are unavailing.

Accordingly, Cyber Forza’s demurrer on the basis of uncertainty is OVERRULED.

2. Second Cause of Action-Fraud

CYBER FORZA ARGUES THAT THE SECOND CAUSE OF ACTION IS BARRED BY THE STATUTE OF LIMITATIONS AND IT FAILS TO ALLEGE JUSTIFIABLE RELIANCE AND DAMAGES. AS THE COURT REASONED ABOVE, THE FAC SUFFICIENTLY ALLEGES DELAYED DISCOVERY, JUSTIFIABLE RELIANCE, AND DAMAGES.

Accordingly, Cyber Forza’s demurrer to the second cause of action is OVERRULED.

3. Fourth Cause of Action-Unjust Enrichment

ALTHOUGH CYBER FORZA’S NOTICE OF DEMURRER STATES THAT IT DEMURS TO THE FOURTH CAUSE OF ACTION ON THE BASIS THAT IT FAILS TO STATE SUFFICIENT FACTS, ITS MEMORANDUM OF POINTS AND AUTHORITIES FAILS TO OFFER ANY SUBSTANTIVE ARGUMENT IN SUPPORT.

Accordingly, Cyber Forza’s demurrer to the fourth cause of action is OVERRULED.

4. Fifth Cause of Action-Business and Professions Code, section 17200

ALTHOUGH CYBER FORZA’S NOTICE OF DEMURRER STATES THAT IT DEMURS TO THE FIFTH CAUSE OF ACTION ON THE BASIS THAT IT FAILS TO STATE SUFFICIENT FACTS, ITS MEMORANDUM OF POINTS AND AUTHORITIES FAILS TO OFFER ANY SUBSTANTIVE ARGUMENT IN SUPPORT.

Accordingly, Cyber Forza’s demurrer to the fifth cause of action is OVERRULED.

V. Vijayasri’s Demurrer

VIJAYASRI DEMURS TO THE SECOND CAUSE OF ACTION ON THE GROUND THAT IT IS UNCERTAIN AND IT FAILS TO STATE SUFFICIENT FACTS TO CONSTITUTE A CLAIM FOR FRAUD. (CODE CIV. PROC., § 430.10, SUBD. (E) & (F).)

Vijayasri argues that the claim is uncertain because it does not clearly inform her about the grounds on which she’s being accused of fraud. Her argument is well taken because the second cause of action only references the representations made by Venkatapathi and Ghuman. The FAC fails to allege any facts pertaining to her in the second cause of action. Therefore, she is unable to reasonably respond to the claim. (See Khoury, supra, 14 Cal.App.4th at p. 616.)

Accordingly, Vijayasri’s demurrer on the basis of uncertainty is SUSTAINED with 20 days’ leave to amend.

As the demurrer to this claim has been sustained, the Court declines to consider Vijayasri’s remaining arguments.

VI. Conclusion

VENKATAPATHI’S DEMURRER ON THE GROUND OF UNCERTAINTY IS OVERRULED. HIS DEMURRER TO THE SECOND, THIRD, FOURTH, AND FIFTH CAUSES OF ACTIONS ON THE GROUND OF FAILURE TO STATE SUFFICIENT FACTS IS OVERRULED. SAI’S DEMURRER ON THE GROUND OF UNCERTAINTY IS OVERRULED. ITS DEMURRER TO THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTIONS ON THE GROUND OF FAILURE TO STATE SUFFICIENT FACTS IS OVERRULED. CYBER FORZA’S DEMURRER ON THE GROUND OF UNCERTAINTY IS OVERRULED. CYBER FORZA’S DEMURRER TO THE SECOND, FOURTH, AND FIFTH CAUSES OF ACTION ON THE GROUND OF FAILURE TO STATE SUFFICIENT FACTS IS OVERRULED. VIJAYASRI’S DEMURRER TO THE SECOND CAUSE OF ACTION ON THE GROUND OF UNCERTAINTY IS SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND. PLAINTIFFS ARE REMINDED THAT WHEN A DEMURRER IS SUSTAINED WITH LEAVE TO AMEND, THE LEAVE MUST BE CONSTRUED AS PERMISSION TO THE PLEADER TO AMEND THE CAUSES OF ACTION TO WHICH THE DEMURRER HAS BEEN SUSTAINED, NOT ADD ENTIRELY NEW CAUSES OF ACTION. (SEE PATRICK V. ALACER CORP. (2008) 167 CAL.APP.4TH 995, 1015.)

Calendar line 4

- oo0oo –

Calendar Line 4

Case Name: [text]

Case No.:

- oo0oo -

Calendar Lines 5-6

Case Name:

Case No.:

Calendar Line 6

- oo0oo -

Calendar Line 7

- oo0oo -

Calendar Line 8

- oo0oo -

Calendar Line 9

- oo0oo -

Calendar Line 10

- oo0oo -

Calendar Line 11

- oo0oo -

Calendar Line 12

- oo0oo -

Calendar Line 13

- oo0oo -

-----------------------

[1] Some parties share a surname, thus, for clarity, the Court will refer to those individuals by their first names. (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1136, fn. 1.)

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download