PBT Insurance Services, LLC v. Lee, et al.

The ultimate burden of persuasion rests on defendant, as the moving party. The initial burden of production is on defendant to show by a preponderance of the evidence, that it is more likely than not that a given element cannot be established or that a given defense can be established. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)

If defendant carries this initial burden of production, the burden of production shifts to plaintiff to show that a triable issue of material fact exists. Plaintiff does this if he can show, by a preponderance of the evidence, that it is more likely than not that a given element can be established or that a given defense cannot be established. (Aguilar, supra, 25 Cal.4th at pp. 850, 852.)

“In moving for summary judgment, “[t]he defendant may ... present evidence that the plaintiff does not possess, and 4

cannot reasonably obtain, needed evidence—as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 855.) If plaintiffs respond to comprehensive interrogatories seeking all known facts with boilerplate answers that restate their allegations, or simply provide laundry lists of people and/or documents, the burden of production will almost certainly be shifted to them once defendants move for summary judgment and properly present plaintiffs' factually devoid discovery responses.”

(Andrews v. Foster Wheeler LLC (2006) 138 Cal.App.4th 96, 106-07.)

It is not enough for a defendant to show merely that a plaintiff ‘has no evidence’ on a key element of plaintiff's claim. The defendant must also produce evidence showing the plaintiff cannot reasonably obtain evidence to support that claim. (Aguilar, supra, 25 Cal.4th at pp. 854-855; Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.)

Here, defendants Dennis Lee, Jennifer Gadams, and Aaron Lee move for summary judgment or in the alternative, for summary adjudication of each cause of action.

Intentional and Negligent Misrepresentation

Defendants assert that plaintiff cannot establish that defendants made a false representation by indicating that Dennis1 planned to retire following the sale of the assets of Dennis Lee Insurance Services, Inc. (“DLIS”), and concealing his intent to continue operating an insurance business. Defendants argue that plaintiff cannot identify any specific false statement made by defendants concerning the future business activities of DLIS. However, defendants have not met its burden in providing any evidence to support this contention. Nor have defendants shown whether plaintiffs are able to reasonably obtain such evidence.

Next, defendants challenge the reliance element by providing evidence indicating that plaintiff was aware that Dennis would continue to service one client, who was unwilling to change brokers at the time the Agreement for Purchase and Sale of Assets of DLIS was executed. (UMF 15.) Defendant argues that this knowledge defeats plaintiff’s fraud causes of action, because the alleged misrepresentation was known to plaintiff. However, evidence indicating that plaintiff was aware of Dennis’ intent to service one client does not suggest that plaintiff was otherwise aware that Dennis would continue to operate a full-scale insurance business servicing other clients, including their own.

Accordingly, defendants have not met their burden in showing that there is no triable issue of material fact as to the fraud causes of action. Therefore, the motion for summary adjudication as to first and second causes of action is denied.

Breach of Contract

1 Defendant Dennis Lee is referred to by his first name in this ruling for clarity, because he and

defendant Aaron Lee share the same last name. No disrespect is intended. 5

Defendants contend that plaintiff has no evidence establishing Dennis’ breach of the subject agreement, because the contract only prohibited solicitation by Dennis Lee. Regardless of the language of the contract, defendants have failed to address the question of whether plaintiff cannot reasonably obtain evidence to support plaintiff’s claim of defendant’s breach. As such, defendant has not met its initial burden of production in moving for summary adjudication. Therefore, the motion is denied as to the third cause of action.

Breach of Implied Covenant of Quiet Enjoyment

Defendants argue that plaintiff cannot prove substantial interference of the leased premises to support its breach of implied covenant of quiet enjoyment cause of action. Defendants indicate that all parties were aware that Dennis continued to occupy portions of the premises not included within the lease agreement, i.e., the garage and a storage area. (UMF Nos. 21-23.) Evidence is provided showing that after being instructed to provide 24-hours’ notice prior to entering the property, Dennis complied and thereafter stopped entering the property without notice. (UMF 24.)

Defendants also present evidence suggesting that plaintiff was not prohibited from placing its company logo on the property, only that Dennis was unwilling to remove his existing logo. (UMF 26.) Defendants further argue that directing mail to the subject property does not constitute substantial interference, because Dennis was occupying the garage and storage area. Defendants have not shown the absence of a triable issue of material fact, and rather have only presented evidence suggesting that there may be a triable issue as to the substantial interference element.

Therefore, the motion for summary adjudication as to the fourth case of action is denied.

Intentional Interference with Contractual Relations and Prospective Advantage

Defendants contend that plaintiff has no evidence to support these causes of action and argues that plaintiff relies only on speculation. Defendants provide little support more than their own speculations to establish that plaintiffs have no evidence. Further, defendants have again failed to address whether plaintiff can reasonably obtain evidence to support these causes of action. Therefore, the motion for summary adjudication as to the fifth and sixth causes of action is denied.

Conversion

It is undisputed that Dennis owned the computer systems alleged to have been removed from the leased premises. (UMF 4.) The parties agree that the subject property of the conversion claim is the information allegedly contained within them. Defendants argue that plaintiff cannot prove substantial interference of the electronic information, because Robert Twidwell, co-owner of plaintiff, has testified that he already has all of the information on his email. (UMF 38.) Whether taking electronic information when the owner has a copy of that electronic information constitutes as substantial interference to support conversion is a triable issue of material fact. Therefore, the motion for summary adjudication as to the seventh cause of action is denied.

Misappropriation of Trade Secrets

Defendants argue that plaintiff has no evidence to establish the existence of a legally protectable trade secret. Defendants further contend that plaintiff cannot show that plaintiff attempted to keep the information secret.

The basis of the plaintiff’s misappropriation cause of action is a client file containing the name, telephone number, email address, financial information, and other proprietary information. (Compl., ¶¶ 26, 107.) It is undisputed that this client information was at least contained within an electronic storage location, which the parties refer to as the “Dropbox.” Regardless of whether plaintiff may establish the existence of a trade secret, defendants present undisputed evidence that Dennis had known access to plaintiff’s electronic storage location, the “Dropbox,” because Dennis kept his client file that was excluded from the sale in the same location. (UMF No. 42.)

Since the client file was at all times accessible by Dennis, defendants have shown that plaintiff did not attempt to keep the information hidden. Therefore, the motion for summary adjudication of the eighth cause of action is granted.

Accordingly, the motion for summary judgment is denied. The motion for adjudication is granted as to the eighth cause of action only.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: KCK on 08/11/26. (Judge’s initials) (Date)

7