LANCE WARE VS. ROBERT HELLMAN, ET AL

Plaintiff alleges that APIF breached the joint venture contract by failing to perform its duties, including failing to fund the joint venture as agreed upon, failing to deliver post office sites for use as promised, failing to create a “parent entity” or providing Plaintiff with ownership interests as promised, and failing to follow through with grant applications. SAC ¶35. As a result, the venture fell apart by July of 2024 when Hellman stopped taking Plaintiff’s calls, effectively terminating the joint venture. SAC ¶ 29. Plaintiff alleges that Defendants have continued to use the technology and trade secrets disclosed to them by Plaintiff, without Plaintiff’s consent. SAC, ¶¶ 31, 54.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 18 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________

Order Sustaining Demurrer to FAC

This Court previously sustained Defendants’ demurrer as to each claim in Plaintiff’s FAC, which largely pled the same facts as the SAC here.

The Court sustained the demurrer as to the breach of contract claim for failure to establish the existence of a written contract, as required by the Terms Sheet preceding the alleged oral contract, and failure to establish “clearly manifested mutual assent to be bound notwithstanding the Term Sheet’s express nonbinding language.” March 3, 2026 Order Sustaining Demurrer. The Court sustained the demurrer as to the Fraud and Negligent Misrepresentation claims, finding that they were contradicted by the written Term Sheet and that Plaintiff failed to plead facts supporting the claims with the requisite specificity and failed to establish justifiable reliance.

Finally, the Court sustained the demurrer as to Plaintiff’s misappropriation of trade secrets claim for failure to allege the trade secret with sufficient factual specificity, failure to show reasonable attempts to maintain secrecy, and failure to specify the manner in which Defendants improperly acquired, disclosed, or used the trade secret.

The Court granted leave to amend as to all four claims.

Amendments Made in the SAC

Amendments to the “Background Facts” section of the SAC include:

• “Ware (and Snyder) repeatedly asked Hellman to document the terms of their agreement, particularly to confirm Ware’s profit sharing rights. Hellman repeatedly promised that he would have APIF’s counsel prepare appropriate document (sic.). In July 2023, Hellman (on behalf of American Postal Infrastructure SPV, I, LLC, an affiliate of APIF), Ware and Snyder executed a document entitled “Limited Liability Company Agreement of LOCAL2U, LLC.” A copy of such agreement is attached hereto as Exhibit 4. The document identifies APIF, Ware and Snyder as members of LOCAL2U, LLC.” SAC ¶ 22(b).;

• “In May 2023, Harrison Hayes, and agent of APIF, sent a number of email (sic.) to APIF’s counsel, Ware, Snyder, and others (a copy of which is attached hereto as Exhibit 6) discussing setting up additional LLC’s to operate in Virginia and Kentucky to carry forth the business of the joint venture and designating Ware as the Chief technology Officer and Snyder as CEO of such to be formed entities.” SAC ¶ 23; and

• “Additionally, there are literally hundreds of emails and text messages exchanged between Hellman and other agents and employees of APIF, on the one hand, and Ware and Snyder, on the other hand, related to the day to day operations of the joint venture which were exchanged over a period of more than 2 years while the venture was in operation.” SAC ¶ 23.

Plaintiff attached nine exhibits to the SAC, described briefly below. The FAC did not include any of the nine exhibits, but described the substance of Exhibits 3, 5, 7, 8, and 9.

Legal Standard

July 6, 2026, LAW AND MOTION CALENDAR PAGE 19 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ A general demurrer under Section 430.10(e) of the Code of Civil Procedure for failure to state a cause of action challenges defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. Blank v. Kirwan (1985) 39 C3d 311, 318.

“It is not necessary that the cause of action be the one intended by plaintiff. The test is whether the complaint states any valid claim entitling plaintiff to relief. Thus, plaintiff may be mistaken as to the nature of the case, or the legal theory on which plaintiff can prevail. But if the essential facts of some valid cause of action are alleged, the complaint is good against a general demurrer.” Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A (citations omitted)

“For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded (i.e., all ultimate facts alleged, but not contentions, deductions or conclusions of fact or law).” Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A (citations omitted).

Discussion

Breach of Contract

This Court previously ruled that Plaintiff’s breach of contract claim failed because the facts alleged in the FAC did not demonstrate that the parties subsequently executed definitive agreements or otherwise clearly manifested mutual assent to be bound to a joint venture notwithstanding the Term Sheet’s nonbinding language. The Court granted leave to amend to allow Plaintiff to allege, if possible, facts demonstrating a binding agreement independent of the Term Sheet’s non-binding provision, sufficiently definite terms, and facts addressing statute of frauds concerns.

The amendments to the SAC do not cure the deficiencies of the FAC. The SAC includes nine exhibits, which were not previously attached to the FAC:

• Exhibit 1 is PowerPoint presentation allegedly presented to APIF’s Investment Board for their approval of the joint venture, as contemplated in the Term Sheet. It does establish any agreement nor does it address any contract terms.

• Exhibit 2 is an email that, according to Plaintiff, confirms that the APIF Investment Board approved the joint venture. However, the email does not appear to approve anything and does not even reference Plaintiff or any joint venture or other contract. Further, the emails are dated July 10, 2023 – nearly one year after the alleged PowerPoint presentation to the board, which targeted September 30, 2022 as the launch date for the project if approved.

• Exhibit 3 is a Limited Liability Company Agreement of LOCAL2U, LLC, under Delaware law. The documents lists APIF as a “member” but does not reference or otherwise describe or identify Plaintiff at all. The effective date is August 29, 2022. This document was described in the FAC.

• Exhibit 4 is a separate, incomplete Limited Liability Company Agreement of LOCAL2U, LLC from March of 2023. It is explicitly labeled as a “draft” and does not have an effective date. Critically, the vesting terms are left blank.

• Exhibit 5 is LOCAL2U, LLC Designation of Authority designating Plaintiff as the Chief Technology Officer (“CTO”), effective from May 30, 2023 to December 31, 2023. The document states that the delegation may be renewed in writing. This document was described in the FAC.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 20 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________

• Exhibit 6 is an email chain with LOCAL2U’s counsel which discusses establishing LLC’s in Virginia and Kentucky and proposes that Plaintiff be listed as the CTO, if LOCAL2U wishes to have officers for the entities.

• Exhibit 7 is a letter written by Bob Hellman, AIP Managing Director and CEO, stating that Troy Synder is authorized to review the grounds and parking lot areas of post offices owned by AIP in West Virginia. It does not mention Plaintiff. This document was described in the FAC.

• Exhibit 8 is an email from Bob Hellman acknowledging that Plaintiff and Troy Snyder are leading Local2U. This document was described in the FAC.

• Exhibit 9 is email from Bob Hellman instructing Troy Snyder to order essential materials and explaining they can be paid for in the term and that the SVB bank account has been a “monumental pain in the rear to set up.” Plaintiff is not mentioned or included on the email. This document was described in the FAC.

“[W]here the parties understood that the proposed agreement is not complete until reduced to formal writing and signed, no binding contract results until this is done.” Louis Lesser Enterprises, Limited v. Roeder (1962) 209 Cal.App.2d 401, 405. Here, the parties agreed pursuant to their Term Sheet, signed August 29, 2022, that the terms therein were did not constitute a binding agreement and that the parties do not intend to be bound by “any agreement until they agree to and sign definitive agreements and no party may reasonably rely on any promises inconsistent with that paragraph.” RJN, Ex. 1, LOCAL2U Term Sheet..

As briefly described above, the nine exhibits do not establish an executed contract as contemplated by the Terms Sheet or a binding agreement to form a joint venture independent of the Term Sheet’s non-binding provision, much less address sufficiently definite terms of any alleged agreement.

Accordingly, Defendants’ demurrer is sustained as to Plaintiff’s breach of contract claim.

Fraud and Negligent Misrepresentation

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” Id. (citation omitted).

As in the FAC, Plaintiff alleges that Defendants Hellman and Sick falsely told him that AFIP had the right under their leases with the Postal Service to install the flag poles on the post office properties, and that Hellman told Plaintiff APIF was able to fund the venture from APIF from partnership funds, when in fact that was questionable.

The Court ruled that Plaintiff’s allegation regarding the AFIP’s right to install flag polls on post office properties was contradicted by the Term Sheet, which identified as a “next step” that, upon term sheet acceptance, “applications will immediately be made . . . [t]o the USPS for approval of utilization of excess land on targeted post offices.” RJN Ex.

1. The Court further ruled that Plaintiff failed adequately to plead justifiable reliance and failed to distinguish specific representations made by each Defendant, when and how they were made, and how they were false in light of the written terms. Thus, the Court

July 6, 2026, LAW AND MOTION CALENDAR PAGE 21 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ ruled to plead fraud with the required specificity. The Court ruled that Plaintiff failed to adequately plead negligent misrepresentation on those same bases.

Here, Plaintiff’s only amendment regarding those claims is that the PowerPoint presentation made to APIF (SAC Ex. 1) in September of 2022, did not address applying for permits from USPS. However, as discussed above, the Terms Sheet establishes that Hellman, on behalf of APIF, disclosed to Plaintiff that it would be necessary to apply for permits from USPS to install flagpoles for the proposed venture. Thus, regardless whether permits were addressed in the PowerPoint presentation, Plaintiff was or should have been aware that application for permits was necessary and that the APIF did not have a broad right to use or modify post office property however it wished.

Accordingly, as Plaintiff’s amendment to fraud and negligent misrepresentation claims has not resolved their pleading insufficiencies, the Court adopts its prior ruling as to those claims. Defendants’ demurrer is SUSTAINED as to Plaintiffs’ fraud and negligent misrepresentation claims.

Misappropriation of Trade Secrets

Misappropriation of a trade secrets cause of action has only two elements: (1) existence of a trade secret, and (2) misappropriation of a trade secret through improper acquisition, use, or disclosure. Civ. Code, § 3426.1(b); Applied Medical Distribution Corp. v. Jarrells (2024) 100 Cal.App.5th 556, 569-70.

As to the first element, a “trade secret” is information, including a formula, pattern, compilation, program, device, method, technique, or process, that satisfies two requirements: (1) independent economic value from secrecy, and (2) reasonable efforts to maintain secrecy. A trade secret is valuable because it is unknown to others; the inquiry is on whether the information is generally known or readily ascertainable to business competitors and therefore derives no value from not being generally known. Civ. Code, § 3426.1 (d)(1); Altaian, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 61.

As to the second element, misappropriation takes two primary forms: (1) acquisition by improper means, and (2) disclosure or use without consent. Civ. Code, § 3426.1(b).

“One who seeks to protect his trade secrets from wrongful use or disclosure does not have to spell out the details of the trade secret to avoid a demurrer to a complaint. To so require would mean that the complainant would have to destroy the very thing for which he sought protection by making public the secret itself.” Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 252. “The plaintiff must nevertheless allege the ultimate facts showing the existence of a trade secret or other confidential data to state such a cause of action. An averment simply that the plaintiff has a ‘secret process’ is a bare legal conclusion.” Id.

Notably, Code Civ. Proc., § 2019.210 requires that, before commencing discovery on the issue, a party pleading misappropriation of a trade secret must identify the trade secret with “reasonable particularity.” Code Civ. Proc., § 2019.210. The plaintiff must make a showing that is fair, proper, just, and rational under all the circumstances, sufficient to: (1) allow the trial court to control the scope of subsequent discovery; (2) protect all parties’ proprietary information; and (3) allow the parties a fair opportunity to prepare and present their best case or defense at a trial on the merits. Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 836.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 22 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ However, the requirement under § 2019.210 is triggered at the pre-discovery stage, after the complaint is filed but before discovery begins. It is not a pleading standard imposed on demurrer. Accordingly, the Court analyzes the sufficiency of Plaintiff’s pleading in the SAC under the standard in Diodes.

Here, Plaintiff describes the alleged trade secret as an “economically feasible methodology for providing broadband connectivity to unserved/underserved populations.” SAC ¶ 52. Plaintiff further describes the trade secret as follows:

What it does: In many areas throughout the United States, consumers are unable to obtain access to broadband internet service because providing access is not economically feasible in the eyes of major providers, such as AT&T, for reasons including low population density or adverse terrain. For example, internet providers are unwilling to expend the necessary capital to install cables for internet connections into homes in sparsely populated areas due to the expense. Similarly, wireless providers are unwilling to build towers for access points for similar reasons. Ware's trade secret uses "off the shelf" technology in a unique meshed configuration that allows a consumer to connect wirelessly to high-speed internet in areas where the user does not have line of sight to a traditional transmission tower.

How it works: Ware's trade secret uses radio receivers and transmitters to extend the connectivity provided by a single wireless access point by essentially daisy-chaining receivers/transmitters, using one receiver/transmitter installed on a customer/end user's property to connect to both the access point and to the property of another customer who does not have line of sight to the access point. The access point is located on a rooftop, tower, or in the case of Local2U, a flagpole on the grounds of a post office, and "hard wired" to an internet backbone by fiber optic cable.

The internet "signal" is broadcast from the access point to customers whose receivers/transmitters have line of sight to the access point. The signal is subsequently transmitted from those customers who have line of sight to the access point to additional customers who have line of sight to the first set of customers, and from those customers to other customers, and so on. Transmission from customers is relayed back to the access point using the same equipment.

The Court finds Plaintiff has pled facts sufficient to show the existence of a trade secret or other confidential data to state such a cause of action, for the purposes of a demurrer. While Plaintiff does not explicitly plead “ownership,” such may be inferred from Plaintiff’s allegation that he developed the technology independently, prior the events giving rise to this action. SAC ¶¶ 17(e), 19(f). Plaintiff has adequately described the alleged trade secret and claimed that that Defendants have misappropriated the trade secret by continuing to use it after Plaintiff’s involuntary departure, without his consent. SAC, ¶ 54.

Accordingly, Defendants’ demurrer is OVERRULED as to Plaintiff’s claim for misappropriation of trade secrets.

Leave to Amend

“It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action... But the court should deny leave to amend where the facts are not in dispute and no liability exists under substantive law... It is not up to the judge to figure out how the complaint can be amended to state a cause of action. Rather, the burden is on plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading.” Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A (citations omitted).

July 6, 2026, LAW AND MOTION CALENDAR PAGE 23 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ While opposing the demurrer and asking for leave to amend, Plaintiff has failed to identify any facts that Plaintiff contends Plaintiff could allege and that would cure the legal defects in the Second Amendment Complaint, which does not substantially add to the First Amendment Complaint as to the deficiencies now identified twice. Accordingly, leave to amend is tentatively DENIED.

If Plaintiff believes it is possible to address the deficiencies identified in this tentative, Plaintiff must notice and contest the tentative and appear to explain in detail what facts Plaintiff can allege to cure.

Any party who contests a tentative ruling must email Dept.11@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the defendant shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to California Rules of Court, rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the California Rules of Court. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be efiled only, do not email or mail a hard copy to the Court.