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GiveMePower Corp. v. Pace Compumetrics

August 14, 2007

GIVEMEPOWER CORPORATION, PLAINTIFF,
v.
PACE COMPUMETRICS, INC.; TERRY RESNICK; JODY RESNICK; RONALD S. BERG; AND RANDOLPH WILLIS, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

(Docs. # 20, 23 & 25)

Three motions are pending before the Court: (1) Defendant Pace Compumetrics, Inc.'s Motion to Dismiss Plaintiff's First Amended Complaint and to Strike Portions of Plaintiff's First Amended Complaint (Doc. # 20); (2) Defendant Ronald S. Berg's Motion To Dismiss Plaintiff's Verified First Amended Complaint, or in the Alternative as to the Seventh Cause of Action, to Strike the Seventh Cause of Action (Doc. # 23);*fn1 and (3) Defendant Terry Resnick's and Defendant Jody Resnick's Motion to Dismiss Plaintiff's First Amended Complaint and to Strike Portions of Plaintiff's First Amended Complaint (Doc. # 25).

I. Background

On January 25, 2007, Plaintiff filed its Complaint against Defendant Pace Compumetrics, Inc. ("Pace"). On March 16, 2007, Plaintiff filed an Application for Temporary Restraining Order ("Application for TRO") and "Verified First Amended Complaint" ("FAC"). (Docs. # 4 & 5.) On March 23, 2007, the Application for TRO was denied. (Doc. # 17.) The FAC names five Defendants: Pace; Terry Resnick, Pace's CEO; Jody Resnick, Pace's President; Ronald S. Berg, Pace's attorney; and Randolph Willis, Plaintiff's former Senior Project Engineer.*fn2 (FAC ¶¶ 3-6.)

A. Allegations of the FAC

On December 13, 2006, Pace retained Plaintiff on a project (the "BAM project") to provide building floor plan drawings (known as "building surveys") for 1,016 Bank of America building sites in Texas, Georgia, Tennessee, North Carolina, South Carolina and Kentucky, pursuant to a written "Agreement for Professional Services" ("Pace Agreement"). (FAC ¶¶ 12-13, Ex. 1.) On January 1, 2007, the Pace Agreement was expanded to include an additional 640 building sites in Florida. (FAC ¶ 12.) As part of the BAM project, Plaintiff agreed to use its proprietary "computer aided design and drafting" ("CAD") software (known as "PowerCAD") and also provide expert consulting services. (FAC ¶ 10.) In consideration for these services, Pace promised to pay Plaintiff approximately $1.337 million. (FAC ¶ 13.)

The Pace Agreement provides, in part: B. While this Agreement is in effect, and for a period of six (6) months following termination of this Agreement for any reason, both parties agree that they shall not hire, solicit, approach or encourage for the purpose of employing or engaging any of the other party's employees, consultants, contractors or subcontractors, without first obtaining the prior written consent of the other party. (FAC, Ex. 1 § 18.) The Pace Agreement further provides that it shall be governed and interpreted by California law. (FAC, Ex. 1 § 24.)

In preparation for deployment pursuant to the Pace Agreement, Plaintiff assembled a team of building surveyors from its proprietary database of prospective field technicians. (FAC ¶ 17.) During December 2006 and early January 2007, Plaintiff paid for the relocation, training and equipping of these team members, in preparation for the January 8, 2007 deployment of the team. (FAC ¶ 17.) Each of the building surveyors retained by Plaintiff for the BAM project entered into Non-Disclosure Agreements and Independent Contractor Agreements with provisions intended to protect Plaintiff's proprietary information and business relationships and to provide for injunctive relief in the event of breach. (FAC ¶ 22, Exs. 3-6.)

Beginning in December 2006, and continuing to January 18, 2007, Plaintiff provided Defendants Jody Resnick and Terry Resnick ("the Resnicks") with Plaintiff's proprietary database of existing and prospective field technicians and confidential business plans and processes developed by Plaintiff for the BAM project. (FAC ¶ 25.) Plaintiff also paid for its business affiliate, Michael Axon, to fly from England to Houston to provide expert training on the use of Plaintiff's PowerCAD software to Pace representatives and to Plaintiff's BAM project team. (FAC ¶ 26.)

Plaintiff leased various computer hardware, laser equipment and accessories from JMA Technology, Inc. ("JMA"), a longtime supplier to Plaintiff, to use in connection with the BAM project. (FAC ¶ 18.) Plaintiff had secured an extremely favorable 30 day deal with JMA for the equipment, delivery and support services. (FAC ¶ 18.)

On January 3, 2007, five Pace representatives, including the Resnicks, traveled to Dallas, Texas to attend a BAM project training session held by Plaintiff. (FAC ¶ 24.) Prior to training commencement, the Resnicks "confirmed that all Pace representatives present were bound by the Non Disclosure Agreement and all provisions of the Pace Agreement previously executed by Pace." (FAC ¶ 24.) "[I]n reliance on the non-disclosure, non-compete, and other related provisions of the various agreements," Plaintiff provided the Resnicks with Plaintiff's "exclusive, proprietary and highly confidential information, and valuable trade secrets," including "Plaintiff's proprietary database of existing and prospective field technicians and business affiliates." (FAC ¶ 25.)

On January 9, 2007, one day after deployment under the Pace Agreement, Pace began its "plan to hijack the BAM Project for themselves, and to cut Plaintiff out of the project altogether." (FAC ¶ 34.) On January 9, 2007, Pace's President, Jody Resnick, induced Plaintiff's lead contractor, Randolph Willis, as well as Michael Axon, to work for Pace directly and terminate their relationships with Plaintiff. (FAC ¶ 27.) Pace also induced Axon to "improperly supply Pace with PowerCAD software for use on the BAM Project, depriving Plaintiff of its rightful income and profits on the licensing of such software." (FAC ¶ 28.) The Resnicks and other Pace representatives then solicited and hired Plaintiff's entire team of building surveyors, consultants and other personnel from Plaintiff's proprietary database. (FAC ¶ 29.)

On January 17, 2007, the Resnicks contacted JMA and advised JMA that Pace was, "'pulling the project' from Plaintiff, and that without the project, Plaintiff would not be able to pay JMA for the equipment supplied under Plaintiff's favorable 30 day terms with JMA." (FAC ¶ 30.) As a result of these "false and misleading statements," JMA repossessed all of the leased equipment. (FAC ¶ 30.)

On January 18, 2007, Jody Resnick arranged a conference call between Defendant Ronald Berg and Plaintiff's entire BAM project team, in which Berg told the BAM project team that he was an attorney for Pace, that Plaintiff had breached the contract with Pace, that Pace had solicited each of them because of Plaintiff's breach of the contract, and that "all Independent Contractor Agreements with Plaintiff were 'null and void,' and of 'no force and effect.'" (FAC ¶ 31.) Berg and Jody Resnick provided advice for how the building surveyors should "resign" from Plaintiff's employ, which they did on January 19, 2007. (FAC ¶ 31.)

On January 18, 2007, Pace notified Plaintiff that it wished to terminate the Pace Agreement "without cause." (FAC ¶ 32.) Pace immediately ceased performing its obligations under the Pace Agreement, and "failed to pay all or any of the amounts due under the Pace Agreement for services performed by Plaintiff." (FAC ¶¶ 32-33.)

Finally, between January 9, 2007 and January 18, 2007, Terry Resnick and other Pace representatives made the following "false and defamatory statements" to the President of Plaintiff's sister company and key supplier, GiveMePower, GmbH: that Plaintiff's CEO misrepresented, prior to entering the Pace Agreement, that he had successfully managed a similar project for McDonalds; and that Plaintiff failed to adequately staff and train its team of building surveyors prior to deployment of the BAM project. (FAC ¶ 34.)

The FAC alleges the following causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) breach of the duty of loyalty; (4) breach of fiduciary duty; (5) intentional interference with contractual relationships; (6) intentional interference with prospective economic advantage; (7) unfair competition; (8) conversion; (9) misappropriation of trade secrets; (10) fraudulent inducement; and (11) injunctive relief.

B. Motions to Dismiss

Pace, the Resnicks and Berg each filed motions to dismiss. Pace moves for the dismissal of the following causes of action: breach of the implied covenant of good faith and fair dealing; intentional interference with contractual relationships; intentional interference with prospective economic advantage; and misappropriation of trade secrets. Pace also moves to strike Plaintiff's unfair competition cause of action.

The Resnicks move for the dismissal of the following causes of action: breach of contract; breach of the implied covenant of good faith and fair dealing; intentional interference with contractual relationships; intentional interference with prospective economic advantage; misappropriation of trade secrets; and fraudulent inducement. The Resnicks also move to strike Plaintiff's unfair competition cause of action.

Berg moves for the dismissal of the following causes of action: intentional interference with contractual relationships; intentional interference with prospective economic advantage; unfair competition; and injunctive relief. Berg alternatively moves to strike Plaintiff's unfair competition cause of action.

II. Discussion

A. Motion to Dismiss Standard of Review

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings. See De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). A complaint may be dismissed for failure to state a claim under Rule 12(b)(6) where the factual allegations do not raise the right to relief above the speculative level. See Bell Atlantic v. Twombly, 127 S.Ct. 1955, 1965 (2007). Conversely, a complaint may not be dismissed for failure to state a claim where the allegations plausibly show that the pleader is entitled to relief. See id. (citing Fed R. Civ. P. 8(a)(2)). In ruling on a motion pursuant to Rule 12(b)(6), a court must construe the pleadings in the light most favorable to the plaintiff, and must accept as true all material allegations ...


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