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SUNDANCE IMAGE TECHNOLOGY, INC. v. INKJETMALL.COM

United States District Court, S.D. California


October 3, 2005.

SUNDANCE IMAGE TECHNOLOGY, INC. and R9 CORPORATION, Plaintiff,
v.
INKJETMALL.COM, LTD., JONATHAN CONE, and DOES 1-10, Defendants. INKJETMALL.COM, LTD., Counterclaimant, v. GARY ROGERS, d/b/a "SUNDANCE IMAGE TECHNOLOGY, INC." and "R9 CORPORATION," and DOES 1-100, Counterdefendants.

The opinion of the court was delivered by: RUDI BREWSTER, Senior District Judge

ORDER: GRANTING SUMMARY ADJUDICATION OF NO PERSONAL (ALTER EGO) LIABILITY [259-1, 259-2] AND GRANTING SUMMARY ADJUDICATION OF NO PROMISSORY FRAUD [266-1]
I. INTRODUCTION
Following a convoluted procedural history, Plaintiffs Sundance Image Technology, Inc. and R9 Corporation (collectively referred to as "Sundance") are bringing claims for unfair trade practices, copyright infringement, and promissory fraud against Defendants Inkjetmall.com ("IJM") and Jonathan Cone and a claim of alter ego liability against Defendant Jonathan Cone. The Court granted Defendants IJM and Jonathan Cone's Motion for Summary Adjudication of No Copyright Infringement in a prior order. Defendant Jonathan Cone now brings a Motion for Summary Adjudication of No Personal (Alter Ego) Liability. Defendants IJM and Jonathan Cone also bring a Motion for Summary Adjudication of no promissory fraud.

II. FACTUAL BACKGROUND

  Plaintiff R9 entered into a software license agreement with Cone Editions Press (CEP) for the sale and distribution of certain software in which R9 holds a copyright. Cone Editions Press copied the software onto computer discs and transferred the discs to IJM, a web-based retailer for CEP. IJM, in turn, sold the discs to the public. IJM is a close corporation that is incorporated in Vermont. Mr. Cone is the President of IJM, and he and his wife Kathy Cone are the sole shareholders of the company. Following a falling out by the parties, R9 terminated the software license. This termination was effective as of September 2002.

  A few months after the software license agreement was executed, Sundance entered into another agreement with CEP for the exclusive sale to CEP of Magma Inks, which are designed for performance with the R9 software. The Magma inks were incorporated into continuous ink systems for use in printing digital photos in black and white using inkjet printers. Pursuant to its agreement, Sundance sold ink to CEP but shipped the ink to IJM. IJM, in turn, sold the ink systems to the public. IJM paid Sundance for some of CEP's outstanding invoices for the ink products. At the time the business relationship between Sundance and CEP went sour, there was $28,405.20 in outstanding invoices for ink merchandise. Sundance never entered into a contract with IJM for ink products. III. PROCEDURAL HISTORY

  R9 brought suit against CEP and IJM, but CEP entered bankruptcy and has been severed from this case by stipulation. Thus, the only remaining Defendants are IJM and its President Jonathan Cone. Plaintiffs Sundance are bringing claims for unfair trade practices, copyright infringement, and promissory fraud against Defendants IJM and Jonathan Cone. Plaintiffs Sundance are also claiming that IJM is a sham entity and the alter ego of Mr. Cone.

  On March 10, 2005, Defendants filed a motion for summary judgment of no copyright infringement and requested attorney's fees. Because the only copyright asserted in the case is held by R9, the Court dismissed Sundance's copyright claim in a prior order. R9 requested that the Court stay ruling on this motion until it had been able to conduct further discovery. The Court granted R9's request and gave both parties additional time to file evidence supporting or rebutting R9's copyright claim. Discovery has now closed, and the Court has received additional filings by both R9 and Inkjetmall.

  On August 23, 2005, the Court issued a partial order granting Defendants' Motion for summary judgment of no copyright infringement and setting oral arguments on the issue of attorney's fees for September 12, 2005. After oral arguments, the Court granted prevailing Defendants' Motion for Attorneys fees on September 26, 2005.

  On August 8, 2005, Defendant Jonathan Cone filed the instant motion for summary judgment or partial summary judgment of no personal (alter ego) liability on the grounds that Plaintiffs have not provided evidence that warrants piercing the corporate veil of IJM to find him personally liable. Also on August 8, 2005, Defendants Jonathan Cone and IJM filed the instant motion for partial summary judgment of no promissory fraud on the grounds that Plaintiffs have not produced evidence that Defendants did not intend to pay for the Sundance ink products at the time the ink products were ordered. Both motions were heard on September 12, 2005. IV. Summary Judgment and Summary Adjudication

  Summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See Fed.R.Civ.P. 56 (c) (2005); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is "material" when, under the governing substantive law, it could affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.

  A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See id. at 322-23. Here, Defendant Cone argues that Plaintiffs Sundance have failed to make a sufficient showing that IJM is his alter ego, and both Defendants argue that Plaintiffs have failed to make a sufficient showing that Defendants made a promise to Plaintiffs with no intention of keeping the promise at the time the promise was made.

  Once the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment by merely demonstrating "that there is some metaphysical doubt as to the material facts." See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (citing Anderson, 477 U.S. at 252) ("The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient."). Rather, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by `the depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" See Celote, 477 U.S. at 324 (quoting Fed.R.Civ.P. 56(e)).

  However, all inferences drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co., 475 U.S. at 587. "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when] he [or she] is ruling on a motion for summary judgment." See Anderson, 477 U.S. at 255. The Court must determine whether evidence has been presented that would enable a reasonable jury to find for the nonmoving party. Liberty Lobby, Inc., 477 U.S. at 249-252.

  If the Court is unable to render summary judgment upon an entire case and finds that a trial is necessary, it shall, if practicable, grant summary adjudication for any issues as to which, standing alone, summary judgment would be appropriate. See Fed.R.Civ.P. 56(d) (2005); see also California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998), cert. denied (Oct. 5, 1998). Thus, partial summary judgment is a mechanism through which the Court deems certain issues established before trial. Lies v. Farrell Lines, Inc., 641 F.2d 765, 769 n. 3 (9th Cir. 1981) (quoting 6 Moore's Federal Practice ¶ 56.20 (3.-2) (2d ed. 1976)).

  A. Inkjetmall as an Alter Ego of Jonathan Cone

  Plaintiffs Sundance assert claims against Jonathan Cone, President of IJM, by asking the Court to pierce the corporate veil of IJM under an alter ego theory of liability. Under the equitable doctrine known as "piercing the corporate veil," a separate corporate entity may be disregarded and "a corporation and the individual or individuals owning all its stocks and assets will be treated as identical." 18 Am. Jur. 2d Corporations § 43 (2004). Thus, piercing the corporate veil allows a court to hold a corporation's shareholders and their personal assets liable for the debts of the corporation.

  In order for piercing to occur, an alter ego relationship must exist such that the corporation's liabilities may be imposed on an individual. California law only recognizes an alter ego relationship when (1) "there is such a unity of interest and ownership that the individuality, or separateness, of the said person and corporation has ceased," and (2) "an adherence to the fiction of the separate existence of the corporation would . . . sanction a fraud or promote injustice." Firstmark Capital Corp. v. Hempel Financial Corp., 859 F.2d 92, 94 (9th Cir. 1988). Under Vermont law, courts are reluctant to pierce corporate veils and do so only when it is necessary to prevent fraud or injustice. See In re Vermont Toy Works, 135 B.R. 762, 770 (D. Vt. 1991). Vermont courts engage in veil piercing for factors such as "using the corporation to perpetrate a fraud; the personal use of corporate funds; the failure to observe corporate formalities; and undercapitalization." See id. Because the factors for piercing the corporate veil are similar under California and Vermont law, the analysis of the motion for summary judgment will be done using California law.

  1. Unity of interest and ownership

  To determine whether a corporate entity and individual possess a unity of interest characteristic of an alter ego relationship, courts in California have looked to a number of factors, including (1) "commingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses;" (2) "the treatment by an individual of the assets of the corporation as his own;" (3) "the holding out by an individual that he is personally liable for the debts of the corporation;" (4) "the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities;" (5) "the identical equitable ownership in the two entities;" (6) "the use of the same office or business location, and the employment of the same employees and/or attorney;" (7) "the failure to adequately capitalize a corporation, the total absence of corporate assets and undercapitalization;" (8) "the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation;" (9) "the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities;" (10) "the disregard of legal formalities and the failure to maintain arm's length relationships among related entities;" (11) "the use of the corporate entity to procure labor, services or merchandise for another person or entity;" (12) "the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another;" and (13) "the formation and use of a corporation to transfer to it the existing liability of another person or entity." Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 839-40 (Cal.Ct.App. 1962) (citations omitted). Thus, the alter ego test involves a consideration of relevant factors, none of which, standing alone, may be dispositive of veil piercing.

  Considering these factors, the Court finds that Plaintiffs Sundance have not presented admissible evidence that IJM is the alter ego of Mr. Cone. For example, Plaintiffs Sundance have demonstrated that (1) Kathy and Jonathan Cone are the sole shareholders of both CEP and IJM; (2) Mr. Cone directed the activities and made the policy decisions of both CEP and IJM; (3) Prior to its incorporation, IJM was a fictitious name for CEP; (4) IJM and CEP had key employees in common; (5) IJM was the online presence for CEP; (6) Mr. Cone has directed the litigation of both CEP and IJM; and (7) IJM paid for some of CEP's invoice obligations to Sundance. Sundance has also demonstrated that IJM and CEP were not acting like distinct entities as evidenced by their handling of ink invoices. In particular, when IJM submitted to Plaintiff Sundance purchase orders for ink, Sundance returned the purchase orders to IJM because Sundance had a contract for ink products with CEP and not with IJM. Defendant IJM crossed out the name "IJM" as the purchaser, manually wrote in "CEP" as the purchaser, and wrote in the name "IJM" as the place of shipment.

  When viewing this evidence in the light most favorable nonmovants, there is an inference that CEP was the alter ego of IJM or vice versa. However, in the present action Plaintiffs are not alleging that CEP is the alter ego of IJM or vice versa because this would be a matter for the bankruptcy court. Instead, Plaintiffs are alleging that IJM is the alter ego of Mr. Cone, but the evidence that Plaintiff provides does not demonstrate alter ego liability. For example, there is no admissible evidence that Mr. Cone (1) commingled IJM funds with his own funds, (2) used corporate assets to pay for personal expenses or otherwise treated corporate assets as his own, (3) completely dominated and controlled IJM to the point where he and IJM were indistinguishable, (4) undercapitalized IJM at the time of its incorporation, or (5) held himself out as liable for the debts of IJM. Thus, Plaintiff has submitted no evidence that demonstrates that Mr. Cone and IJM are a single entity.

  Instead, there is evidence that Mr. Cone delegated the daily operations of IJM to managers while he oversaw the big decisions. The Court finds that this activity is consistent with Mr. Cone's role as President and co-shareholder of IJM. Delegation of duties to subordinates and co-ownership of IJM by Mr. Cone do not establish complete domination and control that would justify piercing the corporate veil of IJM. Therefore, the Court finds that IJM was not a façade of Mr. Cone and that there is no evidence of unity of interest that warrants piercing the corporate veil.

  2. Inequitable Result

  Because Plaintiffs have not satisfied the unity of interest prong of alter ego liability, there is no need to address the second prong of inequitable result. However, in this case, there would be no injustice or fraud if the Court does not pierce the corporate veil. Plaintiffs contracted with CEP, not with IJM. At the time that Plaintiffs shipped ink cartridges to IJM or otherwise dealt with IJM, they knew that IJM was a corporation and that Mr. Cone was an officer and shareholder of that corporation. Now that Plaintiffs have not received for what they have bargained and are owed money, they want to cry foul, fraud, and injustice. Dissatisfaction of creditors is not inequitable and is not a proper reason to pierce the corporate veil. Therefore, the Court finds that there is no evidence of inequitable result that warrants piercing the corporate veil. Because Plaintiffs have not demonstrated unity of interest and inequitable result, the Court finds that IJM is not the alter ego of Mr. Cone as a matter of law and accordingly GRANTS Defendant Cone's motion for summary adjudication of no personal (alter ego) liability based on his relationship with IJM. 3. Direct Liability of Jonathan Cone

  Because the Court has found that there is no alter ego liability for Mr. Cone based on his interactions with Defendant IJM, the only way for Plaintiffs to hold Mr. Cone personally liable is under a theory of direct liability based on his alleged participation in wrongful conduct as an individual. In a prior order, the Court has already ruled that there is no personal liability for Mr. Cone for copyright infringement. The remaining claims against Defendants IJM and Mr. Cone the individual are for promissory fraud and unfair competition. However, unfair competition is not the subject of the present motion for partial summary judgment.

  B. Promissory Fraud

  Plaintiffs Sundance's claim of promissory fraud is based on their allegations that IJM and Mr. Cone promised to pay invoices for ink products*fn1 but did not have the intent to perform this promise at the time the promise was made. The Supreme Court of California has recognized "promissory fraud" as a "subspecies of the action for fraud and deceit." Lazar v. Superior Ct., 12 Cal. 4th 631, 638, (Cal. 1996). The elements of promissory fraud are (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. Id. (internal quotation marks and citations omitted); see also City Solutions, Inc. v. Clear Channel Communications, Inc., 365 F.3d 835 (9th Cir. 2004).

  A misrepresentation relating to a promise of future conduct is actionable only if the promise was made with no intention to perform. See Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 158-59 (Cal.Ct.App. 1991) ("Making a promise with an honest but unreasonable intent to perform is wholly different from making one with no intent to perform and, therefore, does not constitute a false promise.") A false promise is actionable on the theory that a promise implies an intention to perform, and a false promise misrepresents the person's present state of mind. Id. at 159 (internal citations omitted). Movants IJM and Mr. Cone assert that there is no evidence of a promise to perform or of an intent not to perform a promise at the time the promise was made. The issues of promise and intent to perform are addressed for each defendant separately.

  1. Defendant IJM

  a. Promise

  Movants argue that Plaintiffs have not submitted evidence that a promise was made by IJM to pay for the ink cartridges Sundance shipped them. The issue of whether there was a valid promise will be analyzed both (1) at the time the order for ink cartridges was placed with Sundance and (2) after the merchandise was shipped to IJM.

  (1) No Promise by IJM at Time Orders were Placed

  Plaintiff Sundance Image has demonstrated that it refused to deal with IJM directly for ink purchase orders. Plaintiff admits that whenever IJM placed a purchase order for ink, it refused to fill the order until CEP submitted the order. Plaintiff admits that its rationale for the refusal was that it had a contract to sell ink to CEP, not to IJM. Plaintiff also admits that it returned improperly filled out invoices to IJM, who, in turn, corrected the orders by writing in the name "CEP" as the party that should be billed and the name "IJM" as the party to whom the goods should be shipped. Thus, CEP was the party responsible for the invoice bills, not IJM. Therefore, the Court finds that CEP promised to pay for invoices at the time of ordering, and not IJM. Because IJM did not make any promises to pay Plaintiffs Sundance at the time of order placement, Plaintiffs, as a matter of law, have not demonstrated promissory fraud by IJM during this time period.

  (2) Promise by IJM to pay outstanding invoices

  Sundance billed the ink invoices to CEP but shipped the ink to IJM for sale to customers. Although all unpaid invoices from Sundance state "Bill to CEP," Plaintiffs provide evidence that "in early 2002, IJM promised to pay the outstanding invoices of Cone Editions Press, and Sundance would not have shipped product to IJM if they had not been receiving payment for the outstanding orders." Doc. No. 291 (Plaintiffs' Oppn.) at 11. Defendants submit evidence of photocopies of checks by IJM payable to Sundance for outstanding ink invoices, with the last check dated May 22, 2002. See Doc. No. 268 (Cone Decl.), Exh 5. Although the submitted evidence, when viewed most favorably for nonmovants, demonstrates that IJM promised to pay some of the outstanding invoices of CEP, it does not demonstrate that IJM promised to pay for all of CEP's outstanding invoices.

  More important, the scope of IJM's promise covers invoices that were outstanding in early 2002. The promise does not cover invoices that were placed later in 2002. To hold otherwise would be to hold IJM liable for a promise to pay for the future actions of a third party (i.e. placement of orders by CEP), which is not actionable. See Daniels v. Oldenburg, 100 Cal. App. 2d 724, 727 (Cal.Ct.App. 1950). A promise to pay the future actions of a third party is not a promise at all and does not fall within promissory fraud. Id. For example, a promise to pay outstanding invoices relates to a past or existing fact i.e. to old or current outstanding invoices. A promise to pay for future outstanding invoices, which may or may not occur in the future, is a prediction that relates to future facts and is not actionable as fraud. See Richard P. v. Vista Del Mar Child Care Service, 106 Cal. App. 3d 860, 865 (Cal.Ct.App. 1980).

  Thus, any promises that IJM made to Sundance in early 2002 to pay for outstanding invoices can only relate to invoices that were outstanding in early 2002 in order for the promises to be actionable as fraud. Here, there is no evidence that after early 2002 IJM promised to pay the outstanding invoices of CEP. Therefore, the Court finds that Plaintiffs have demonstrated that there was an actionable promise to pay invoices that were outstanding as of early 2002 but have not demonstrated actionable promises to pay outstanding invoices that occurred after early 2002. As discussed below, IJM paid the early 2002 invoices.

  b. Intent

  Even though Plaintiffs have demonstrated there was a promise by IJM to pay for outstanding invoices in early 2002, a mere promise or failure to honor a promise is not evidence of promissory fraud. See Tarmann, 2 Cal. App. 4th at 159. Plaintiffs must show that at the time the promise was made, Defendants had no intention to perform or honor that promise. Id. Where intent is a primary issue, cases are generally inappropriate for summary judgment unless all reasonable inferences that could be drawn from the evidence defeat the plaintiff's claims. Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674, 683-84 (9th Cir. 1976). However, in opposing a motion for summary judgment on a promissory fraud claim, a plaintiff must present probative evidence, i.e. beyond mere conclusory allegations, on the issue of intent, e.g., the time, place, or nature of the alleged fraudulent activities. See Vaughn v. Teledyne, Inc., 628 F.2d 1214, 1220 (9th Cir. 1980) (citing Bosse v. Crowell Collier and Macmillan, 565 F.2d 602, 611 (9th Cir. 1977) and Fed.R.Civ.P. 56(e)). Nonperformance of a promise does not show intent not to perform the promise. Tenzer v. Superscope, Inc., 39 Cal. 3d 18, 32 (Cal. 1985).

  Nonmoving Plaintiffs attempt to demonstrate intent to deceive, i.e. intent not to perform a promise to pay for the Sundance invoices that were outstanding in early 2002, by showing that IJM developed replacement products secretly, accepted returns from customers so that it could eventually take credits against Sundance, and paid Sundance just enough money to stay below a $30,000 credit limit Sundance imposed. However, Plaintiffs contradict themselves by offering evidence that Defendant IJM paid the invoices that were outstanding in early 2002. First, Plaintiffs admit that the $30,000 credit limit that it set for Defendants in January 2002, forced Defendants to pay more quickly. See Doc No. 291 (Plaintiff's Oppn.) at 15. Defendants "rather quickly brought down the outstanding balances to within the limits imposed." Id. at 16.

  Additionally, Plaintiffs provide A/R Aging Detail Reports (i.e. reports that show the status of invoices) that prove that as of May 15, 2002, CEP had no outstanding invoices prior to April 18, 2002. See Doc. No. 294 (Dyson Decl.), Exh. 55; Doc. No. 268, (Cone Decl.), Exh. 5. Thus, this evidence clearly demonstrates that invoices that were outstanding in January 2002 had been paid by April 18, 2002. In fact, Plaintiffs admit that they received a check from IJM as late as May 30, 2002, and the outstanding receivables at that point were below $30,000. The evidence that IJM paid for the early 2002 invoices refutes Plaintiffs' assertions that IJM had no intention to pay for these invoices when it made its promise to pay for these invoices.

  The crux of Plaintiff's promissory fraud complaint appears to be that Defendants kept the balance of their invoices right at the $30,000 limit Sundance imposed. Sundance did not have to provide this credit limit but could have completely cut off CEP and/or IJM. Sundance received what it bargained for when it implemented the credit limit and now seek to hold Defendants liable for the balance under a theory of promissory fraud. However, maintaining balances below the credit limit set by Plaintiff Sundance is not evidence of IJM's intent not to pay Sundance at the time promises were made.

  Another one of Plaintiff's grievances is that Defendants secretly plotted to make replacement ink. Making replacement parts is evidence of intent to use different ink merchandise in the future but is not evidence of an intent not to pay for outstanding invoices. Lastly, Plaintiffs complain that Defendants secretly planned to take customer-returned items and charge them against Sundance in the form of credits. However, the evidence clearly shows that there was an informal credit procedure between Sundance and CEP. As such, there was no indication that CEP and/or IJM exceeded the scope of their rights as retailers to seek credits or that IJM forced Sundance to issue credits. At any rate, a credit system is not indicia of IJM's intent not to pay Sundance at the time promises were made. In fact, a credit system, when properly applied, is indicia of an intent to pay Sundance.

  Although courts are reluctant to grant summary judgment on the issue of subjective intent, there is no genuine issue of material fact about IJM's intent to pay invoices that were outstanding as of January 2002, particularly in view of the evidence of IJM's payment of the invoices that were outstanding in early 2002 and in view of its track record of paying outstanding invoices from January 2002 to May 2002. Because Plaintiffs have not raised a legitimate issue of material fact that Defendant IJM lacked the intent to pay for outstanding invoices in early 2002, the Court finds that Defendant IJM is entitled to judgment as a matter of law. 2. Defendant Jonathan Cone

  a. No Promise by Mr. Cone at Time Orders were Placed

  Plaintiffs have not demonstrated that Mr. Cone, the individual, placed orders to Sundance for ink products. Although, plaintiffs have demonstrated that Ms. O'Hara placed orders with Sundance in her capacity as a dual employee of IJM and CEP, there is no evidence that Ms. O'Hara placed orders on behalf of Mr. Cone, the individual. Plaintiffs have not provided evidence that orders were billed directly to Mr. Cone in his individual capacity. Instead, all invoices were billed directly to CEP. As such, Plaintiffs have failed to establish that Mr. Cone, the individual, promised to pay for ink orders at the time the orders were placed and have thus failed to raise an actionable promise as a matter of law for this time period.

  b. No Promise by Mr. Cone to pay Outstanding Invoices

  Plaintiffs also do not provide evidence that after the ink merchandise arrived at IJM, Mr. Cone, in his individual capacity, promised to pay for the orders. Instead, Plaintiffs demonstrate that "in early 2002, IJM promised to pay the outstanding invoices of Cone Editions Press. Doc. No. 291 (Plaintiffs' Oppn.) at 11. As discussed above, these outstanding invoices were paid by IJM.

  Plaintiffs admit that Mr. Cone signed checks for both companies. Even if this were true, no inference can be drawn that Mr. Cone signed checks on behalf of himself or that Mr. Cone, as an individual, promised to pay Sundance for CEP's bills. Additionally, there is no evidence that Mr. Cone, the individual, promised to pay for invoices beyond early 2002. Because Plaintiffs have not demonstrated that Mr. Cone promised to pay for the ink products, they cannot by law establish that Mr. Cone, the individual, intended not to perform any promise to pay for the Sundance ink products. As such, the Court finds that there is no actionable promise against Mr. Cone, the individual, for this time period as a matter of law.

  Plaintiffs' only claim of promissory fraud against Mr. Cone, the individual, must be based on a theory of alter ego liability. However, as discussed above, Plaintiffs have not demonstrated that IJM is the alter ego of Mr. Cone. Therefore, the Court finds that Defendant Jonathan Cone is entitled to judgment as a matter of law. Accordingly, the Court GRANTS Defendants IJM and Jonathan Cone's Motion for Summary Adjudication of No Promissory Fraud.

  VI. CONCLUSION

  For the reasons given above, the Court GRANTS Defendant Jonathan Cone's motion for summary adjudication of no alter ego liability and GRANTS Defendants IJM and Jonathan Cone's Motion for summary adjudication of no promissory fraud.

  IT IS SO ORDERED.

20051003

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