Goldsholle v. Brisco CA2/2

Filed 11/6/14 Goldsholle v. Brisco CA2/2 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

M. DAVID GOLDSHOLLE, et al., B250183

Plaintiffs and Appellants, (Los Angeles County Super. Ct. No. YC063849) v.

ROBERT N. BRISCO,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County. Cary Nishimoto and Stuart Rice, Judges. Affirmed.

Michael R. Hambly and Robert K. Scott, Advocate Law Group P.C., for Plaintiffs and Appellants.

Wendy Gilberti, iGeneral Counsel, P.C., and Steven Schuman, Leonard, Dicker & Schreiber LLP, for Defendant and Respondent.

******

Are a prospective buyer’s assurances that it “has a plan” to increase the seller’s website traffic actionable as fraud under California securities law? They are not, and we accordingly affirm the summary adjudication of that claim in the buyer’s favor. FACTUAL AND PROCEDURAL BACKGROUND DoItYourself.com (“Website”) is a website aimed at helping people make home improvements. Since 2005, the Website has generated revenue through advertising, not selling products. The Website (and other related domain names) was owned by DoItYourself.com, Inc. (the corporation). The corporation’s shareholders are Plaintiffs M. David Goldsholle, Lenore L. Goldsholle, Gerry H. Goldsholle and Advice Company, Inc. (collectively, Plaintiffs). In late 2006, Plaintiffs began negotiating a sale of the Website to Defendant Internet Brands, Inc. (IB). During those negotiations, Plaintiffs met with IB’s chief executive officer, Defendant Robert Brisco (Brisco). Brisco told them that the Website would be one of IB’s “key” and “critically important propert[ies]” whose success would affect IB’s “credibility . . . with Wall Street”; that IB “had the experience, the talent, and the resources” to increase Internet traffic to the Website; that IB “had a plan in place” to do so; and that IB would “put [its] full resources behind” promoting the Website and put its “pedal to the metal.” Plaintiffs and IB thereafter signed an Agreement and Plan of Merger (Agreement), under which IB would acquire the Website. Instead of selling the Website outright, Plaintiffs sold their stock in the corporation to IB; in exchange, IB agreed to pay Plaintiffs $8.5 million up front, with the potential for an additional $7 million triggered by benchmarks keyed to the Website’s traffic (and hence its revenue). The first three benchmarks turned on traffic alone; the last, on advertising revenues. The Agreement obligated IB to “operate the Website[] . . . in good faith” and “commit resources” to that task as if no further contingency payment obligation existed. When the Website’s traffic did not meet any of the first three benchmarks, IB paid Plaintiffs $183,893 under the final benchmark. Plaintiffs then sued IB for breach of contract and breach of the covenant of good faith and fair dealing, and both IB and Brisco