Jennifer Blakely v. SBC Xicato Corporation, et al.

4. Defendant demurs to the Third Cause of Action for Negligent Misrepresentation on the grounds that Plaintiff failed to plead specific false statements of past or existing fact, and fails to allege justifiable reliance under Code of Civil Procedure Section 430.10(e);

5. Defendant demurs to the Fourth Cause of Action for Declaratory Judgment on the grounds that Plaintiff seeks declaratory relief that is derivative of, and duplicative of, defective substantive claims and therefor fails to state a n independent cause of action under Code of Civil Procedure Section 430.10(e);

6. Defendant demurs to the Fifth Cause of Action for Violation of Business & Professional Code Section 17200 et seq. on the grounds that Plaintiff’s claims are based entirely on fraud and misrepresentation and therefor stands or falls with the defective substantive claims under Code of Civil Procedure Section 430.10(e); and

7 7. Defendant demurs to the Sixth Cause of Action for Receiving Stolen Property under California Penal Code Section 496 on the grounds that Plaintiff has failed to alleged facts showing Defendant received any stolen property or acted with the requisite knowledge or intent under Code of Civil Procedure Section 430.10(e).

Not ice of Demurrer (the “Demurrer) at 1:26-3:14 (filed Sept. 25, 2025).

Defendant also moves to strike the following portions of the FAC:

1. All of the Sixth Cause of Action for Receiving Stolen Property (FAC ¶¶91-96);

2. All requests for punitive damages throughout the FAC (e.g., FAC ¶¶ 65, 73, Prayer ¶ g);

3. All requests for treble damages associated with the Sixth Cause of Action (FAC ¶96, Prayer ¶h); and

4. All requests for attorneys fees’ based on the Second or Sixth Causes of Action (FAC ¶¶ 72, 96, Prayer ¶ j). Notice of Motion to Strike (the “Motion to Strike”) at 1:26-3:11 (filed Sept. 25, 2025).

The Demurrer and Motion to Strike came on for hearing on May 13, 2026, at 9:00 AM in Department 16. After reviewing all the papers and the record, and giving counsel for all parties the full and fair opportunity to be heard, the Court finds and rules as follows.

I. Fact Allegations of the FAC and Procedural Posture

According to the FAC, Defendants SBC Xicato Corporation (“Xicato”), Zee, and Amir Zoufonoun (“Zoufonoun”), Xicato’s chief executive officer (collectively, “Defendants”), fraudulently induced Blakely to invest $400,000 in Xicato by convincing her that millions of dollars would be invested in the company concurrently with he r investment. (FAC, ¶¶ 1-2.) In or around October 2022, Zee approached Blakely to invest in Xicato. (FAC, ¶ 19.) He informed her that Xicato “already had all of the intellectual property, a huge customer pipeline, global partners, and manufacturing capabilities necessary to be highly successful” and it SBC only needed capital. (Ibid.)

On or around November 15, 2022, Zee and Zoufonoun pitched the investment to Blakely over Zoom. (FAC, ¶ 23.) The pitch contained several misrepresentations, including Xicato’s “presence and sales in the Middle East where Zee and Zoufonoun had strong and lucrative connections, and that Xicato had experienced senior management with 20+ employees” and that Xicato had nearly $10 million in revenue in 2022. (FAC, ¶¶ 25, 27.) Defendants repeatedly represented that Blakely’s investment would be made concurrently with other investments of at least $2 million. (FAC, ¶ 28.)

At the same time, Zee and Zoufonoun had grave doubts about the status of the other investments. (FAC, ¶¶ 20-23.)

8 Despite Blakely’s repeated inquiries regarding other investors, Zee and Zoufonoun continued to assure her that other investments would be made at the same time. (FAC, ¶¶ 29-31, 37-38, 39-41, 44-46.) As a result of these misrepresentations, Blakely executed a Simple Agreement for Future Equity (“SAFE”) and invested a total of $400,000 with Xicato. (FAC, ¶ 2.) In August 2024, Blakely sought return of her funds but Zee told her it was too late. (FAC, ¶¶ 53, 55.)

Blakely filed her initial Complaint on June 5, 2024. On August 27, 2025, after a successful motion to amend, Blakely filed the FAC alleging the following causes of action: (1) fraud in the inducement, (2) violations of Corporations Code sections 25401 and 25501, (3) negligent misrepresentation, (4) declaratory judgment, (5) violation of Business and Professions Code section 17200, and (6) receiving stolen property under Penal Code section 496. Blakely filed a notice of errata on September 10, 2025, adding two exhibits to the FAC.

II. Zee’s Demurrer

A. Legal Standard on Demurrer

“The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: . . . (e) The pleading does not state facts sufficient to cons titute a cause of action.” (Code Civ. Proc. § 430.10, subd. (e).) 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. (§§ 430.10, 430.50, subd. (a).)

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 i n 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.) 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.)

Under California law, even if a demurrer is sustained, leave to amend the complaint is routinely granted. “Liberality in permitting amendment is the rule, if fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal. App. 4th 1217, 1227.) “Unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion, irrespective of whether leave to amend is requested or not.” (McDonald v. Sup. Ct. (Flintkote Co.) (1986) 180 Cal. App. 3d 297, 303-304.)

9 B. Analysis of the Demurrer

1. The Demurrer to the First Cause of Action for Fraud in the Inducement and to the Third Cause of Action for Negligent Misrepresentation is Overruled. Zee argues that the first cause of action for fraud in the inducement is subject to demurrer because it improperly lumps together Zee and Zoufonoun, referring to them together as “Defendants” rather than specifying who made the representations at issue. (Memorandum of Points and Authorities (“MPA”), p. 6:2-17.) He also argues that “forward- looking predictions” are insufficient to constitute fraud and the FAC fails to state any misrepresentation of present facts. (Id. at pp. 6:19-7:3.) He further asserts that the allegations of reliance and causation are implausible and conclusory allegations of “reasonable reliance” are insufficient to overcome the parties’ written agreement. (Id. at p. 7:4-9.)

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 relian ce; (4) ju stifiable 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 s pecifically 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.)

As mentioned above, Zee asserts that the FAC “lumps” Zee and Zoufonoun together and, therefore, does not meet the particularity requirement. (MPA, p. 6:2-17.) They point to paragraphs 2, 10, 12(a) –(d), 18 –20, 23 –33, 58(a) –(k), 67(a) –(k), 75(a) – (k)) of the FAC. (Id. at p. 6:2-5.) The Court agrees with Blakely that the FAC has met the specificity requirement as against Zee’s “lumping” argument.

Paragraph 19 of the FAC, for example, pleads that “[i]n or around October 2022, Zee —acting on behalf of SBC Xicato, upon information and belief —approached Ms. Blakely about investing in SBC Xicato, expressing his desire to ‘maximize the solid foundation” of the Company. Zee explained to Ms. Blakely that he and Amir Zoufonoun (the CEO of Xicato, Inc., and now of SBC Xicato) acquired Xicato, Inc., which already had all of the intellectual property, a huge customer pipeline, global partners, and manufacturing capabilities necessary to be highly successful, and that SBC Xica to only needed capital to be the phoenix. . . . Zee further explained that Ms. Blakely would be very lucky to invest in SBC Xicato because Defendants already secured millions of funding from investors in the United Arab Emirates (‘UAE’), and millions more were coming.” (FAC, ¶ 19, italics added.)

Paragraph 23 of the FAC alleges, “Notwithstanding these clear doubts regarding the purported funding and discomfort in providing projections regarding Xicato, on or

10 around November 15, 2022, Zee and Zoufonoun presented the opportunity to invest in SBC Xicato to Ms. Blakely over Zoom, describing the investment opportunity and reviewing a pitch deck entitled ‘Xicato Confidential Overview – Spring 2022’ (the ‘Pitch Deck’).” (FAC, ¶ 23, italics added.)

Paragraph 44 states that “in order to induce Ms. Blakely to wire her remaining $200,000, on January 5, 2023, Zee texted Ms. Blakely that the ‘[a]dditional funding [was] being released imminently’ to SBC Xicato and that ‘even more funding’ could be coming in. Zee again texted Ms. Blakely on January 12, 2023, stating that the ‘Xicato initial money [was] locked in at least and good line of sight to more.’ Finally, on February 2, 2023, Zee texted Ms. Blakely, ‘Amir inquiring about the next $200k tranche. $2M foreign investment confirmed to arrive this week.’ Ms. Blakely responded ‘This week? Like tomorrow?’ to which Zee replied, ‘Yes.’ ” (FAC, ¶ 44, italics added.)

Zee further argues that Blakely’s allegations of misrepresentations are forwardlooking and, therefore, not actionable. He points to statements regarding “hoped-for investments or revenue projections —e.g., that ‘millions of dollars would be invested,’ that ‘millions more were coming,’ or that Plaintiff would ‘get a return on her investment in just two to three years[.]’ ” (MPA, p. 6:22-26, citing FAC ¶¶ 2, 19, 25, 28 –33, 58(a), (b), (h), 75(a) –(k)). “To be actionable, a negligent misrepresentation must ordinarily be as to past or existing material facts. ‘[P]redictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud.’ [Citations.]” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 (Tarmann).)

As Blakely points out, in Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 241 (Apollo), the Court of Appeal indicated that the following allegations were “rather clearly . . . a proper basis for a fraud claim” including that one defendant “told several investors that the series A preferred stock offering ‘was already, in effect, a “done deal” and early pre-payment [of the bridge notes was] “guaranteed,” ’ and that ‘most of the preferred stock placement had already been raised and was set to clo se within three weeks of the Bridge Notes closing ... .’ ”

Here, the representations that Zee and Zoufonoun had already secured funding are more akin to those Apollo than the non-actionable forward-looking representations in the cases cited by Zee. (See, e.g., Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 [misrepresentations non- actionable where the “gist of both Tarmann’s fraud and negligent misrepresentation claims is that State Farm said it would pay for her repairs immediately upon their completion ”]; Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469 [misrepresentations non-actionable where “defendants’ ‘lending personnel’ represented that plaintiffs’ property was appreciating and that plaintiffs could obtain several years of appreciation in their property so that they could sell or refinance before having to make higher monthly payments or pay a future accumulated principal of $ 620,000”].)

Further, Blakely points to allegations in the FAC that the “pitch deck” stated that Xicato had existing revenue of nearly $10 million for 2022, that it had more than 20

11 employees. (FAC, ¶¶ 26-27.) Because a demurrer does not lie to a portion of a cause of action, (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682), any forwardlooking representations are not fatal to the claim at the pleading stage.

Zee also asserts that the causation and reliance allegations are conclusory and implausible. He argues that the SAFE contains no requirement that the $2 million to be secured from other sources must close simultaneously with Blakely’s own promised investment. (FAC, p. 7:4-9.) These arguments are undeveloped, unfounded, and unpersuasive. (See People v. Dougherty (1982) 138 Cal.App.3d 278, 282 [a point asserted without argument or authority in support is without foundation and requires no discussion].)

Accordingly, the Demurrer to the First Cause of Action for Fraud in the Inducement is OVERRULED.

Zee also argues that Third Cause of Action for Negligent Misrepresentation fails for the same reasons as the First Cause of Action. (MPA, pp. 9:24-10:16.) But as the Court above has rejected all of Zee’s arguments with respect to the First Cause of Action, it follows as a matter of logic and law that the Demurrer to the Third Cause of Action is likewise OVERRULED. 1

2. The Demurrer to the Second Cause of Action under Corporations Code sections 25401 and 25501 is Overruled.

As to the Second Cause of Action for violations of Corporations Code sections 25401 and 25501, Zee argues that these sections apply only to one who has sold or offered a security but he did not sign the SAFE, nor did he control corporate policy. (MPA, p. 7:16-21.) He argues that no material misrepresentations were made, repeating his arguments that the misrepresentations are forward-looking and non-actionable. (Id. at pp. 7:20-25, 8:15-27.) He further argues that the SAFE is not adequately alleged t o be a security. (Id. at p. 8:1-14.) He further maintains that the recission and tender requirements are not adequately pled and that punitive damages are unavailable. (Id. at p. 9:1-21.)

Taking the last argument first, Zee’s contention that punitive damages are unavailable for this claim and that the punitive damages request should be stricke n is more appropriately raised in a motion to strike. Accordingly, the Court rejects this

1 For the first time in his Reply papers, Zee also argues that the fraud in the inducement and negligent misrepresentation claims must be based on a misrepresentation of a material fact and alleged misrepresentation regarding the imminent arrival of $2 to $3 million in outside funding is not a material fact because it is not contained in t he SAFE. (Defendant Michael Zee’s Reply (“Reply”), pp. 2:23-3:16.) But the Court declines to address this argument as it was made for the first time in Reply. (See St. Mary v. Superior Court (2014) 223 Cal.App.4th 762, 783 [points raised in the first time in reply should not be considered].)

12 argument in this Demurrer. (See Caliber Bodyworks, Inc. v. Super. Ct. (2005) 134 Cal.App.4th 365, 385 [“The appropriate procedural device for challenging a portion of a cause of action seeking an improper remedy is a motion to strike.”]; see also Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047 [“a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy”].)

The Court further rejects the argument that no material misrepresentations were made because the misrepresentations are all forward-looking for the reasons discusse d above in connection with the first cause of action.

As to the recission and tender requirements, Corporations Code section 25501 provides, in pertinent part, “Any person who violates Section 25401 shall be liable to the person who purchases a security from, or sells a security to, that person, who may sue either for rescission or for damages (if the plaintiff or the defendant, as the case may be, no longer owns the security), unless the defendant proves that the plaintiff knew the facts concerning the untruth or omission or that the defendant exercised reasonable care and did not know (or if the defendant had exercised reasonable care, wou ld not have known) of the untruth or omission.

Upon rescission, a purchaser may recover the consideration paid for the security, plus interest at the legal rate, less the amount of any income received on the security, upon tender of the security. Upon rescission, a seller may recover the security, upon tender of the consideration paid for the security plus interest at the legal rate, less the amount of any income received by the defendant on the security. ” (Corp. Code, § 25501.)

The cases Zee cites do not support his argument. First, he relies on Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 for the proposition that tender is required for recission. (See MPA, p. 9:2-5.) But, that case never mentions either tender or recission. Next, he relies on Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 135 (Linear Technology) for the proposition that damages must be specifically calculated and traced. That case does not so hold, nor did it a ddress a claim for recission. Zee appears to have abandoned this argument in reply.

Next, Zee contends that the FAC does not adequately plead that the SAFE is a security. (FAC, p. 8:1-14.) As explained by the Sixth District Court of Appeal in People v. Black: California courts have relied on two distinct tests in evaluating an alleged security: the risk-capital test and the federal or Howey test. The riskcapital test, articulated by the California Supreme Court in Silver Hills Country Club v. Sobieski (1961) 55 Cal.2d 811, 815 (Silver Hills), describes “‘[1] an attempt by an issuer to raise funds for a business venture or enterprise; [2] an indiscriminate offering to the public at large where the persons solicited are selected at random; [3] a passive position on the part of the investor; and [4] the conduct of the enterprise by the issuer with other people’s money.’” This test reflects the Court ’s assessment that the term “security” is defined broadly in order “to protect the public against

13 spurious schemes, however ingeniously devised, to attract risk capital.” (Id. at p. 814.)

The federal or Howey test, formulated by the United States Supreme Court in [SEC v. W. J. Howey Co. (1946) 328 U.S. 293, 301], asks “whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.” A common enterprise “may be established by showing ‘that the fortunes of the investors are l inked with those of the promoters,’” such as by a profitsharing arrangement. (S.E.C. v. R.G. Reynolds Enterprises, Inc. (9th Cir. 1991) 952 F.2d 1125, 1130.)

An expectation of profits produced by the efforts of others exists “when ‘“the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the fai lure or success of the enterprise.”’” (Id. at p. 1131.) It is generally accepted that both the risk-capital and federal tests may be applied, either separately or together; a transaction is a security if it satisfies either test. People v. Black (2017) 8 Cal. App. 5th 889, 900.

Here, the FAC alleges that Blakely invested money in what she believed was a common enterprise because she was told that others had invested in the corporation. (See, e.g., FAC, ¶¶ 2, 17, 19, 23.) The FAC also indicates that Blakely was told that she would receive a return on her investment due to the efforts of others, namely the ef forts of Xicato and its employees to increase its business. (See, e.g., FAC, ¶¶ 3, 9, 19, 25.) Accordingly, the Court agrees with Blakely that she has adequately pled t hat the SAFE is a security under the Howey test.

As to the argument that the FAC does not adequately plead that Zee sold the security, where the complaint alleges that the “defendants promoted, marketed, and participated in the sales ” it states a viable claim for a violation of the Corporations Code on an aiding and abetting theory. (Moss v. Kroner (2011) 197 Cal.App.4th 860, 871; see also Corp. Code, § 25504 [“every broker-dealer or agent who materially aids in the act or transaction constituting the violation, are also liable jointly and severally wi th and to the same extent as such person, unless the other person who is so liable had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which the liability is alleged to exist”].)

Here, the FAC alleges that Zee was an agent or coconspirator of the other defendants and that the defendants acted in concert. (FAC, ¶ 12.) It further alleges that Zee was involved in the misrepresentations that induced Blakely to invest. (See, e.g., FAC, ¶¶ 19, 24-25.) So the Court rejects this argument.

Accordingly, the Demurrer is OVERRULED as to the Second Cause of Action under Corporations Code sections 25401 and 25501.

14 3. The Demurrer to the Fourth Cause of Action for Declaratory Judgment is Overruled.

Zee argues that the Fourth Cause of Action is duplicative of the fraud and securities claims and does not seek any additional relief; therefore, he argues that it is superfluous and must be dismissed. (See Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324 [where issues raised in declaratory relief cause of action were “fully engaged” with other causes of action, “declaratory relief was unnecessary and superfluous”].) “The Court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” (§ 1061.)

Blakely counters that she seeks a declaration that the SAFE is null and vo id to avoid receiving payment of “damages for fraud only to then be required to make a payment under the SAFE.” (Opp., p. 12:12-13, citing FAC, ¶ 84.) She also asserts that she seeks a declaration regarding Defendants’ joint and several and vicarious liability for their shared misconduct. (Id. at p. 12:14-16, citing FAC, ¶ 85.) She maintains that this relief is distinct from her requests for damages and is necessary because Defendants refuse to return her funds and cancel the SAFE.

Here, the first cause of action contains a request for recission in addition to recovery of her initial consideration and damages. (FAC, ¶ 64.) But, in no other cause of action does the FAC request a declaration regarding liability. Accordingly, the Court finds that the declaratory relief cause of action seeks a different remedy from the other causes of action —and so is not superfluous.

Accordingly, the Demurrer is OVERRULED as to the Fourth Cause of Action for Declaratory Relief.

4. The Demurrer to the Fifth Cause of Action under Business and Professions Code Section 17200 is Overruled.

Zee argues that the fifth cause of action alleging violations of Business and Professions Code section 17200 is based on the underlying wrongs alleged in the prior causes of action. Accordingly, he maintains that it fails because the prece ding causes of action fail. As discussed above, the fraud-based causes of action surv ive the demurrer. Accordingly, the Court rejects this argument.

Zee also argues that an unlawful competition claim was meant to protect the public from unfair competition and harmful business practices, not to provide an additional remedy for private disputes between sophisticated parties. (MPA, p. 12:3 -19.) Blakely counters that she is an individual who was defrauded by Def endants and that this case presents a matter of public concern because Defendants continue to see k investors for Xicato. (Jennifer Blakely’s Memorandum in Opposition [], p. 13:5-21.)

The unfair competition law (“UCL”) “was enacted ‘to protect both consumers and competitors by promoting fair competition in commercial markets for goods and

15 services.’ [Citations.]” (Linear Technology, supra, 152 Cal.App.4th at p. 135.) The cases Zee relies on hold that corporate plaintiffs may not bring such claims based on breach of contract because adequate remedies exist. Thus, in Linear Technology, supra, 152 Cal.App.4th at p. 135, the Court explained that “where a UCL action is based on contracts not involving either the public in general or individual consumers who are parties to the contracts, a corporate plaintiff may not rely on the UCL for the relief it seeks.” For this proposition, the Linear Technology Court relied on Rosenbluth Int’l v. Superior Court (2002) 101 Cal.App.4th 1073, 1077-1079, another case on which Zee relies. So these cases do not hold that an individual consumer who enters into a contract may not raise a claim under the UCL.

Accordingly, as the Court rejects Zee ’s argument here, the Demurrer to the Fifth Cause of Action under Business and Professions Code Section 17200 is OVERRULED.

5. The Demurrer to the Sixth Cause of Action for Receiving Stolen Property is Overruled.

In his Demurrer, Zee contends that the Sixth Cause of Action for Receiving Stolen property is subject to Demurrer because Penal Code section 496 was not meant to address a situation where the defendants obtained the funds via misrepresent ation and refused to return them. Zee argues that courts have dismissed improper attempts to expand contract disputes or fraud claims into allegations of criminal theft. (MP A, pp. 12:23-13:15.) Zee further contends that the FAC fails to plead that the funds were obtained via theft or that he knew the funds were stolen. (MPA, p. 13:7-9.)

And in Zee ’s Reply papers, he improperly attempts to expand his arguments, asserting that the funds were paid to Xicato pursuant to the SAFE, that he was not a party to the SAFE and did not receive the funds, and that he could not have known the funds were stolen because they were voluntarily paid pursuant to the SAFE. (Reply, pp. 9:8-19:8) These arguments, made for the first time in Reply, must be rejected. (See St. Mary v. Superior Court, supra, 223 Cal.App.4th at p. 783.)

As to Zee’s argument made in the Demurrer itself, the cases he cites do not support his argument. In Bell v. Feibush (2013) 212 Cal.App.4th 1041, on which Zee relies, the Court of Appeal explained that Penal Code “[s]ection 496(a) extends liability to ‘[e]very person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft.” (Italics added.) Penal Code section 484, subdivision (a) describes the acts constituting theft to include theft b y false pretense, which is the consensual but fraudulent acquisition of property from its o wner. (Pen.

Code, §§ 484, subd. (a), 532.) Feibush was found liable for fraud, i.e., for the fraudulent acquisition of property (money) from its owner (Bell). “Anything that could be the subject of a theft can also be property under section 496.” [Citation.] A principal in the actual theft of the property may be convicted for either theft or receiving s tolen property under section 496(a).” (Id. at p. 1049.) In Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361, on which Zee also relies, the California Supreme Court confirmed, “A plaintiff may recover treble damages and attorney’s fees

16 under [Penal Code] section 496(c) when property has been obtained in any manner constituting theft.”

To the extent Zee argues in the Demurrer that the FAC fails to plead that he had knowledge of the stolen character of the property, Zee is wrong: the FAC pleads that Zee was involved in the theft itself. (See FAC, ¶¶ 19-33, 38-44 [describing misrepresentations causing Blakely to invest with Xicato].)

To the extent Zee contends in the demurrer that he did not receive the stolen property because Blakely paid her funds to Xicato, Zee is wrong: the FAC plead s that Zee received a commission or increased equity for his actions in causing her to invest. (FAC, ¶ 94.) These allegations are sufficient.

Accordingly, the Demurrer to the Sixth Cause of Action for Receiving Stolen Property is OVERRULED. 2

Moreover, as the Court has OVERRULED the Demurrer as to every Cause of Action for the reasons set forth above, the Demurrer is OVERRULED in its entirety.

III. Zee’s Motion to Strike

In his Motion to Strike, Zee seeks to strike the entirety of the Sixth Cause of Action, arguing that the statute of limitations has passed and that the FAC fails to al lege the knowledge element of the claim for receipt of stolen property. (See Defendant’s Notice of Motion and Motion to Strike [] (“Motion to Strike”), pp. 2:1-8, 5-16.) He also seeks to strike all requests for punitive damages because the Corporations Code provides an exclusive remedial scheme, because the FAC fails to make the re quisite factual showing of “oppression, fraud, or malice” for the purposes of Civil Code section 3294, and the punitive damages requests are time barred because the underlying conduct occurred in 2019 and 2020. (Id. at p. 2:9-27.)

Finally, he requests that the Court strike the requests for treble damages and reimbursement for attorney’s fees associated with the Sixth Cause of Action. (Id. at pp. 2:28-3:11.)

A. Blakely’s Request for Judicial Notice

Blakely requests Judicial Notice of (1) the Declaration of Matthew J. Olson in Support of Defendant SBC Xicato Corporation’s Opposition to Plaintiff Jennifer Blakely’s Motion to Compel Further Production of Documents and Production of

2 The Court also notes that Zee argued in the Notice of Demurrer that the Sixth Ca use of Action was barred by the statute of limitations. He does not flesh out this argument in the memorandum of points and authorities. Accordingly, as this argument is undeveloped and unfounded, the Court rejects this argument. (Notice of Demurrer, p. 2:1-3.) (See People v. Dougherty (1982) 138 Cal.App.3d 278, 282 [a point asserted without argument or authority in support is without foundation and requires no discussion].)

17 Unredacted Documents, filed on April 20, 2026, (2) Blakely’s Motion for Leave to Amend, filed on May 23, 2025, and (3) the Declaration of Hong-An Vu in Support of Plaintiff’s Motion for Leave to Amend, filed on May 23, 2025.

The request for Judicial Notice is GRANTED under Evidence Code section 452, subdivision (d), with the caveat that while the Court takes Judicial Not ice of the existence of these documents in the Court ’s file, it may not and does not take Judicial Notice of the truth of hearsay statements contained therein. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.)

B. The Motion to Strike the Sixth Cause of Action for Receipt of Stolen Property, including its request for treble damages and attorneys’ fees, is Denied.

Zee moves to strike the Sixth Cause of Action for Receipt of Stolen Property because the statute of limitations has passed and because the FAC fails t o allege his knowledge of the stolen character of the property. (Motion to Strike, p. 8:1-16.) But the Court rejects Zee ’s argument here that the FAC fails to allege Zee’s knowledge of the stolen character of the property because, as the Court explained above in the contex t of analyzing the Demurrer to the Sixth Cause of Action, the FAC adequately plea ds that Zee was involved in the theft.

As for Zee ’s argument that the Sixth Cause of Action is time barred, Zee fails to flesh this argument out. He asserts that the statute of limitations is three years pursuant to section 338, subdivision (a). But he fails to address the fact that the FAC plead s that Blakely signed the SAFE in December 2022 and wired the initial $200,000 shortly thereafter. (FAC, ¶ 33.) Thus, the Court finds and rules that both the initial Complaint and the FAC were filed within three years after the alleged receipt of stolen property. (See FAC, filed August 27, 2025, and Complaint filed June 5, 2024; see also People v.

Allen (1999) 21 Cal.4th 846, 861, fn. 14 [“the statute of limitations on receiving, buying, or selling stolen property in violation of section 496 begins to run when the defendant receives, buys, or sells the property with the requisite intent”].) Thus, as the earliest the statute of limitations could have begun to run is December 2022, the Sixth Cause of Action is not time barred.

Zee also argues that the request for treble damages under Penal Code section 496, subdivision (c) is subject to a one-year statute of limitations under section 340 and because the Sixth Cause of Action fails and therefore cannot support the clai m for treble damages. But the Court has already rejected this argument that the Sixth Ca use of Action fails both in the context of analyzing the Demurrer above and in analyzing t he statute-of-limitations argument in the Motion to strike above on this same point.

As for the one-year-statute-of-limitations issue, Zee relies on cases hol ding that the one-year statute of limitations under section 340 applies to requests for treble damages because they are penal in nature. (See, e.g., G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 278 [section 340 is applicable to treble-damages causes under federal antitrust laws where cause of action accrued before federal limitations period be came

18 effective]; Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 133 [section 340 is applicable to mandatory penalties], disapproved on another ground in Rodriguez v. FCA US LLC (2024) 17 Cal.5th 189, 205.) But none of the cases Zee cited in his motion discuss this issue in the context of Penal Code section 496, subdivision (c).

In his Reply papers, for the first time, Zee cites an unpublished decision of the Northern District of California, May v. Google, LLC (N.D. Cal. Nov. 4, 2024, No. 24-cv- 01314-BLF), in which the Court held that the one-year statute of limitations in section 340 applies to a request for treble damages under Penal Code section 496, subdivision (c). (May v. Google LLC (N.D.Cal. Nov. 4, 2024, No. 24-cv-01314-BLF) 2024 U.S.Dist.LEXIS 200398, at *24.) While the decisions of lower federal courts are not binding on this Court, the Court may consider them for their persuasive force. (Hargrove v. Legacy Healthcare, Inc. (2022) 80 Cal.App.5th 782, 789, fn. 4.) And this decision is based on California law. (May v. Google LLC, supra, 2024 U.S.Dist.LEXIS 200398, at *25, citing Prudential Home Mortgage Co. v. Superior Court (1998) 66 Cal.App.4th 1236, 1242.)

But even if the one-year-statute of limitations applies, the FAC alleges conduct that occurred that could form the basis of a receipt of stolen property claim that occurred within the limitations period. Specifically, the FAC alleges that Blakely requested return of her funds on August 4, 2023 but Defendants failed to return them. (FAC, ¶ 53; see Bell v. Feibush, supra, 212 Cal. App. 4th at p. 1049 [“The evidence established that Feibush violated section 496(a) not only by receiving property from Be ll by false pretense, but also by withholding that property when she asked for it back.”].) The original complaint was filed in June 2024, well before the one-year statute of limitations would have run.

Blakely also argues that the Penal Code section 496 claim relates back to the original complaint. (Opposition to Motion to Strike, p. 6:16- 18.) “An amended complaint is considered a new action for purposes of the statute of limitations only if the clai ms do not ‘relate back’ to an earlier timely filed complaint. Under the relation-back doctrine, an amendment relates back to the original complaint if the amendment (1) rests on the same general set of facts; (2) involves the same injury; and (3) refers to the sa me instrumentality. [Citations.]

An amended complaint relates back to an earli er complaint if it is based on the same general set of facts, even if the plaintiff alleges a diff erent legal theory or new cause of action. [Citations.] However, the doctrine will not apply if the ‘the plaintiff seeks by amendment to recover upon a set of facts entirely unrelated to those pleaded in the original complaint.’ [Citation.]” (Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 276-277.) “In determining whether the amended complaint alleges facts that are sufficiently similar to those alleged in the original complaint, the critical inquiry is whether the defendant had adequate notice of the claim based on the original pleading.” (Id. at p. 277.)

Here, although the original Complaint did not contain the receipt of stolen property cause of action, it alleged the misrepresentations made by Zee and that Defendants refused to return Blakely’s funds. (Complaint, ¶¶ 2-33.) The receipt of stolen

19 property claim merely states a new theory of liability. Accordingly, the Court fi nds that the FAC relates back to the original Complaint. Accordingly, Zee ’s statute-of-limitation argument fails. Zee further contends that the request for attorney fees associated with the Sixt h Cause of Action also fails because the FAC fails to identify the statutory basis for the fees. (Motion to Strike, pp. 6:27-7:2.) But that argument is unfounded because Zee cite s no authority requiring that the statutory basis for recovery of attorney fees be pled. (People v.

Dougherty, supra, 138 Cal.App.3d at p. 282 [a point asserted without argument or authority in support is without foundation and requires no discussion].) Zee also contends that the request for attorney fees associated with the second cau se of action should be stricken for the same reason. (Motion to Strike, pp. 6:27-7:2.) So the Court rejects this argument for the same reason.

Accordingly, for all these reasons, the Court DENIES the Motion to Strike the Sixth Cause of Action in its entirety, and the Court likewise DENIES the Motion to Strike the requests for treble damages or attorneys ’ fees in the Sixth Cause of Action. 3

C. The Motion to Strike Punitive Damages in the FAC is Denied, except for Paragraph 73 of the FAC that is struck.

Zee requests that all requests for punitive damages in the FAC be stricken because the Corporations Code contains the exclusive remedies for violations of its provisions and these do not include punitive damages, because the FAC fails to plead “oppression, fraud, or malice” as required by Civil Code section 3294, and because the allegations that form the basis of the fraud claims allegedly occurred in 2019 to 2020 and therefore they are time barred. (Motion to Strike, p. 2:9-27.)

As to Zee’s first argument, Blakely concedes that the request for punitive damages made in Paragraph 73 in connection with the Second Cause of Action for violations of Corporations Code sections 25401 and 25501 should be stricken. (Opposition to Motion to Strike, p. 4:17-19.) Accordingly, the Motion to Strike is GRANTED only as to paragraph 73 of the FAC, which pleads a request for punitive damages as to the Second Cause of Action for violations of Corporations Code sections 25401 and 25501.

As to Zee’s second argument, an adequately pleaded fraud claim is sufficient to support a request for punitive damages. (See Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610 [pleading of fraud is sufficient for punitive damages].) As the fraud-based causes of action survived the demurrer, they remain to form the basis of Blakely’s punitive damages requests. Hence, the Motion to Strike punitive damages from the fraud claims is DENIED.

3 For the same reasons and by the same logic, the Court DENIES the Motion to Strike the request for attorneys ’ fees made in the Second Cause of Action for violations of Corporations Code sections 25401 and 25501.

20 Finally, Zee contends that the allegations that form the basis of the fraud claims occurred in 2019 to 2020. But he fails to flesh out this argument with citations to the FAC or any reasoned argument. The FAC mentions no facts that occurred in 2019 or 2020. In fact, it alleges that Xicato was formed in 2022 and that Zee approached Blakel y with this investment opportunity in October 2022. (FAC, ¶¶ 15, 19.) Accordingly, this argument DENIED as undeveloped and unfounded.

Accordingly, the Motion to Strike punitive damages is DENIED in its entirety except that the Motion to Strike punitive damages is GRANTED only as paragraph 73 of the FAC.

IV. Conclusion & Order

The Demurrer is OVERRULED in its entirety.

The Motion to Strike punitive damages is DENIED in its entirety except that the Motion to Strike punitive damages is GRANTED only as paragraph 73 of the FAC. So paragraph 73 of the FAC, and only paragraph 73 of the FAC, is ORDERED stricken.

SO ORDERED.

Date: May 13, 2026 Hon. Vincent I. Parrett Superior Court of the State of California, County of Santa Clara

21 Line 2 Case Name: Jennifer Blakely v. SBC Xicato Corporation, et al.

Case No.: 24CV440608

[See Line 1 above for complete tentative ruling, where the Court addressed this Motion to Strike in the same tentative ruling that addressed Defendant’s Demurrer.]