UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
January 5, 2011
STARNET INTERNATIONAL AMC INC., DBA ALL CHEER INTERNATIONAL LIMITED AND KERRY INTERNATIONAL,
MOUSA KAFASH DBA BAPAZ GARMENTS, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Lucy H. Koh United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SUMMARY JUDGMENT
On November 29, 2010, Defendant Mousa Kafash moved for summary judgment on all of Plaintiff Starnet International AMC Inc.'s*fn1 claims in this matter. Dkt. No. 56 ("Mot."); see also Dkt. No. 62 ("Reply Br."). Starnet opposes the motion. Dkt. No. 57 ("Opp'n"). For the foregoing reasons, the Court GRANTS in part and DENIES in part Kafash's motion for summary judgment.
Starnet filed this collection action against Kafash on September 16, 2009. Dkt. No. 1 ("Compl."). Starnet claims that Kafash has failed to pay for $132,298.32 in goods that he ordered 25 and received from Starnet. See Compl. ¶¶ 5-10. In addition, Starnet alleges that based on Kafash's intentional misrepresentations to Starnet's employees, Starnet extended Kafash a line of credit. Id.
Plaintiff is identified as Starnet International AMC Inc. Starnet has failed to clarify this discrepancy. For purposes of this motion, the Court will refer to Plaintiff as Starnet.
¶ 19. According to Starnet, if its employees had known Kafash's representations were false, it 2 would not have manufactured, shipped, or sold goods to Kafash without first requiring advance 3 payment. Id. ¶ 25. 4
Based on these allegations, Starnet has brought five claims against Kafash: (1) open book account, (2) account stated, (3) reasonable value of goods sold and delivered, (4) intentional 6 misrepresentation, and (5) negligent misrepresentation. See id. ¶¶ 11-29. Starnet seeks (1) 7 payment in the sum of $132,298.32 plus ten percent per annum interest from December 31, 2008, 8 (2) costs for its suit, (3) attorneys' fees under California Civil Code § 1717.5, and (4) exemplary 9 damages. Id. at 6-7. 10
In his answer, Kafash denied all of Starnet's factual allegations. See Dkt. No. 5 ("Answer").
Kafash's position, as stated in his summary judgment motion, is that he has never done business with Starnet in his individual capacity. Mot. 1. According to Kafash, he has neither ordered nor 13 received any goods from Starnet, and he has never made any representations to Starnet. Id. Kafash 14 claims that Bapaz Garments Corporation, a New York corporation of which he is the owner and 15 CEO, has done business with Starnet in its corporate capacity and that Bapaz has paid for all goods 16 received from Starnet. Id. at 1-2. 17
II. LEGAL STANDARD
"The court shall grant summary judgment if the movant shows that there is no genuine 19 dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The party seeking summary judgment bears the initial burden of showing an absence 21 of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 22 2548, 91 L. Ed. 2d 265 (1986)). "Once the moving party carries its initial burden, the adverse party 23
'may not rest upon the mere allegations or denials of the adverse party's pleading,' but must provide 24 affidavits or other sources of evidence that 'set forth specific facts showing that there is a genuine 25 issue for trial.'" Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc) (citations 26 omitted). "On an issue as to which the nonmoving party will have the burden of proof" at trial, 27 "the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) 2 (citation omitted). 3
"As to materiality, the substantive law will identify which facts are material. Only disputes 4 over facts that might affect the outcome of the suit under the governing law will properly preclude 5 the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 6 2505, 2510, 91 L. Ed. 2d 202 (1986). "A scintilla of evidence or evidence that is merely colorable 7 or not significantly probative does not present a genuine issue of material fact." Addisu v. Fred 8 Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000) (citing United Steelworkers of Am. v. Phelps 9 Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989)). 10
"The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Liberty Lobby, 477 U.S. at 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); see 13 also Sluimer v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010) ("In deciding a motion for summary 14 judgment, the evidence is viewed in the light most favorable to the non-moving party, and all 15 justifiable inferences are to be drawn in its favor . . . .") (citation omitted). Nevertheless, in order 16 to survive summary judgment, "[t]he evidence must be enough for a 'reasonable trier of fact' to find 17 for the plaintiff." Schmidt v. Burlington N. and Santa Fe Ry. Co., 605 F.3d 686, 689 (9th Cir. 18 2010) (citation omitted). 19
consider whether each of Starnet's claims can survive in turn.*fn2
Kafash has moved for summary judgment on all of Starnet's claims. The Court will
A. Open Book Account
A book account, stated in somewhat simplified terms, is "a detailed statement of debit/credit transactions kept by a creditor in the regular course of business, and in a reasonably permanent 25 manner." Imperial Merch. Servs., Inc. v. Hunt, 47 Cal. 4th 381, 397, 97 Cal. Rptr. 3d 464, 476, 212 P.3d 736, 746 (2009) (quoting Reigelsperger v. Siller, 40 Cal. 4th 574, 579 n.5, 53 Cal. Rptr.
3d 887, 150 P.3d 764 (2007)) (quotation marks omitted).*fn3
A book account is open when there is a 2 balance due on the
account. See Interstate Grp. Adm'rs, Inc. v. Cravens, Dargan & Co.,
174 Cal. 3
App. 3d 700, 708, 220 Cal. Rptr. 250 (1985). In California, a book account may furnish the basis 4 for a cause of action "when it contains a statement of the debits and credits of the transactions 5 involved completely enough to supply evidence from which it can be reasonably determined what 6 amount is due to the claimant." Id. (quoting Tillson v. Peters, 41 Cal. App. 2d 671, 678, 107 P.2d 7 434 (1940)) (quotation marks omitted). To sustain a cause of action the book must also show 8 against whom the charges are made and in whose favor the charges run. See id. (quoting Joslin v. 9 Gertz, 155 Cal. App. 2d 62, 65, 317 P.2d 155 (1957)). 10
Kafash argues that Starnet cannot prove the necessary elements to make out its book account claim. Mot. 3. According to Kafash, Bapaz is a corporation duly organized under the laws of the State of New York. Dkt. No. 56-2 ("Kafash Decl."), at ¶ 2. In support of this claim, Kafash 13 submitted a copy of Bapaz Garments Corporation's entity status page from the New York Secretary 14 of State website. Id., Ex. A. This copy shows that Bapaz Garments Corporation is a domestic 15 business corporation that initially filed its incorporating documents with New York's Department 16 of State on February 6, 2004. Id., Ex. A. According to the website copy, Bapaz Garments 17 Corporation is currently an active entity. Id., Ex. A. 18
In addition to his claim regarding the existence of Bapaz Garments Corporation, Kafash 19 also claims that Bapaz, not Kafash, did business with Starnet. Kafash Decl. ¶¶ 4-5. According to 20 Kafash, he never made any representations to Starnet. Id. Moreover, Kafash claims that Bapaz has 21 paid for all goods ordered from Starnet. Id. ¶ 7. 22
In response, Starnet submitted a declaration of its Chief Financial Officer Kurt Miller. Dkt. No. 59 ("Miller Decl."). Despite the evidence presented by Kafash to the contrary, Miller claims 24 that there is no corporation listed as Bapaz Garments in the State of New York corporate records. 2
Id. at 2. In addition, Miller claims that all of Starnet's documents show that Starnet*fn4 transacted 3 business with Kafash, an individual doing business as Bapaz Garments, and not with a corporation 4 named Bapaz Garments Corporation. Miller Decl. 2. Stated another way, Miller claims that 5
Kafash did business with Starnet as a personal business entity called Bapaz Garments and not as a 6 corporation. Id. According to Miller, Starnet's book account with Kafash is for "Mousa Kafash 7 dba Bapaz Garments." Id. Moreover, Miller states that no one ever informed Starnet that Kafash 8 was doing business as a corporation and that no purchase orders or invoices support that assertion. 9
These dueling declarations create a dispute as to whether Starnet did business with Kafash
as an individual or with a corporation named Bapaz Garments.*fn5 Moreover, Miller's claim that
Starnet maintains a book account for Kafash dba Bapaz Garments also creates a genuine dispute as 13 to the existence of a book account sufficient to maintain a book account claim. Therefore, Kafash's 14 motion for summary judgment on Starnet's open book account claim is denied.
B. Account Stated
There are three essential elements of a claim for account stated: "(1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between 18 the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by 19 the debtor, express or implied, to pay the amount due." Zinn v. Fred R. Bright Co., 271 Cal. App. 2d 597, 600, 76 Cal. Rptr. 663, 665-66 (1969).
Kafash's argument in support of its motion for summary judgment on
this count mirrors his
argument on the open book account claim. Kafash claims that he
never had any transactions with
Starnet. According to Kafash, only Bapaz Garments Corporation-a duly
entity-transacted business with Starnet. Furthermore, according to
Kafash, Bapaz Garments
Corporation has paid for any and all goods received from Starnet.
Similarly, Miller's counterarguments here are nearly identical to his
above. Miller claims that Kafash, as an individual entity, has done
business with Starnet in the 5 past, that Kafash sent Starnet three
purchase orders, that Starnet delivered those goods to Kafash, 6 that
Starnet sent invoices to Kafash detailing the amount due in payment
for the goods delivered, 7 and that Kafash has failed to pay. Miller
Decl. 2-3. These claims go beyond the pleadings and 8 support an
account stated claim.
Therefore, Kafash's motion for summary judgment on Starnet's account stated claim is denied.
C. Reasonable Value of Goods Sold and Delivered
California recognizes a "common count*fn6 of quantum valebant for the reasonable value of goods sold and delivered." Weitzenkorn v. Lesser, 40 Cal. 2d 778, 792, 256 P.2d 947, 958 (1953).
Quantum valebant is a type of quasi-contract action. See Jogani v. Superior Court, 165 Cal. App. 15 4th 901, 905-06, 81 Cal. Rptr. 3d 503 (2008); see also 4 WITKIN, CALIFORNIA PROCEDURE § 567 (5th ed. 2008) ("The count on quantum valebant is similar to that on quantum meruit, except that it 17 seeks recovery of the reasonable value of goods sold.") (internal citations omitted). "Quasi-18 contracts, unlike true contracts, are not based on the apparent intention of the parties to undertake 19 the performances in question, nor are they promises." Weitzenkorn, 40 Cal. 2d at 794, 256 P.2d at 20 959 (quotation omitted). "They are obligations created by law for reasons of justice." Id. 21 (quotation omitted). 22
"The theory of quasi-contractual recovery is that one party has accepted and retained a 23 benefit with full appreciation of the facts, under circumstances making it inequitable for him to 24 retain the benefit without payment of its reasonable value." Day v. Alta Bates Med. Ctr., 98 Cal. 25
App. 4th 243, 248, 119 Cal. Rptr. 2d 606, 609 (2002) (quoting Truestone, Inc. v. Simi W. Indus. 26
Park II, 163 Cal. App. 3d 715, 724, 209 Cal. Rptr. 757 (1984)) (quotation marks omitted); see also
Weitzenkorn, 40 Cal. 2d at 794, 256 P.2d at 959 ("Quasi contractual recovery is based upon benefit 2 accepted or derived for which the law implies an obligation to pay. Where no benefit is accepted 3 or derived there is nothing from which such contract can be implied.") (quoting Rowell v. Crow, 93 4
Cal. App. 2d 500, 503, 209 P.2d 149, 151 (1949)) (quotation marks omitted). 5
Kafash maintains that he has never ordered any goods from Starnet and that Bapaz Garments Corporation has paid for all goods received from Starnet. 7
According to Miller, Kafash ordered and received $135,833.32 in goods from Starnet. Miller Decl. 3. Miller alleges that after deducting $3,535.00 in advance payments made by Kafash, 9 the balance on Kafash's account is $132,298.32. Id. In further support of its claim that Kafash has 10 not paid for ordered and received goods, Starnet submitted copies of bank documents that it received from Bapaz. Dkt. No. 60, Ex. 3, at 2. According to Miller, Bapaz gave Starnet these documents as proof that Bapaz had wired Starnet payments for the goods received. Miller Decl. 4. 13
Miller claims that Starnet's banks told him that these wire transfers could not have gone through 14 because they contain the wrong SWIFT code. Id. Miller further claims that he passed this 15 information on to Bapaz but has received no response. Id. 16
Thus, Miller's declaration not only creates a genuine dispute as to who ordered the goods but also creates a dispute as to whether Starnet received payment for the goods it shipped on the 18 Bapaz Garments account. Therefore, Kafash's motion for summary judgment on Starnet's claim for 19 the reasonable value of goods sold and delivered is denied.
D. Intentional Misrepresentation
Intentional misrepresentation is a claim for fraud. See Anderson v. Deloitte & Touche, 56 Cal. App. 4th 1468, 1474, 66 Cal. Rptr. 2d 512 (1997). "The elements of fraud are: (1) a 23 misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity 24 (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting 25 damage." Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 990, 22 Cal. Rptr. 3d 352, 26 359, 102 P.3d 268, 274 (2004) (citing Lazar v. Superior Court, 12 Cal. 4th 631, 638, 49 Cal. Rptr. 27 2d 377, 909 P.2d 981 (1996)); see also R & B Auto Center, Inc. v. Farmers Group, Inc., 140 Cal. 28 App. 4th 327, 377, 44 Cal. Rptr. 3d 426 (2006) ("The elements of a claim for intentional misrepresentation are a misrepresentation, made with knowledge of its falsity and with an intent to 2 defraud or induce reliance, justifiable reliance, and resulting damage.") (citing 5 WITKIN, SUMMARY OF CALIFORNIA LAW Torts § 772 (10th ed. 2005)).
Kafash claims that Starnet has not provided any evidence that Kafash made any 5 representation to Starnet. Mot. 4. Kafash argues that, as a result, the Court should grant his motion 6 for summary judgment on Starnet's intentional misrepresentation claim. Id. 7
In its complaint, Starnet details a specific intentional misrepresentation made by Kafash.
These allegations are as follows. Starnet originally required Kafash to pay in advance for goods 9 ordered. Compl. ¶ 18. Kafash, allegedly knowing that Starnet's president was away on business, 10 contacted Starnet's employees and intentionally misrepresented that Starnet's president had agreed to extend him credit. Id. ¶ 19. In reliance on this misrepresentation, Starnet manufactured and sent goods to Kafash on credit. Id. ¶¶ 20-22. Starnet claims that Kafash has refused to pay off this 13 credit. Id. ¶ 24. 14
While these allegations appear to support a claim for intentional misrepresentation,*fn7 Starnet cannot rely solely on its pleading to survive a motion for summary judgment. See Devereaux, 263 16 F.3d at 1076. According to Miller, Starnet's employees did communicate with Kafash. Miller 17 Decl. 2. Moreover, Miller claims that Kafash sent Starnet three purchase orders. Id. at 2-3. 18
Nevertheless, Miller never alleges that Kafash made any misrepresentations to Starnet in the course 19 of these communications. Other than its complaint, Starnet has not put forth any evidence that 20 Kafash made any intentional misrepresentations to Starnet. Therefore, Kafash's motion for 21 summary judgment on Starnet's claim for intentional misrepresentation is granted. 22
E. Negligent Misrepresentation
"The elements of negligent misrepresentation are (1) the misrepresentation of a past or 24 existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to 25 induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage." Nat. Union Fire Ins. Co. of Pittsburgh, PA v. 2 Cambridge Integrated Servs. Grp., Inc., 171 Cal. App. 4th 35, 89 Cal. Rptr. 3d 473 (2009) (quoting 3 Apollo Capital Fund LLC v. Roth Capital Partners, LLC, 158 Cal. App. 4th 226, 243, 70 Cal. Rptr. 3d 199 (2007)) (quotation marks omitted).
For the reasons outlined in the Court's consideration of Kafash's motion for summary judgment on Starnet's intentional misrepresentation claim, Kafash's motion for summary judgment 7 on Starnet's claim for negligent misrepresentation is granted. Starnet has not presented any 8 evidence beyond its pleadings supporting its claim that that Kafash made any misrepresentation of 9 a past or existing material fact. 10
For the foregoing reasons, Kafash's motion for summary judgment is GRANTED in part and DENIED in part as follows: 13
(1) Kafash's motion for summary judgment on Starnet's open book account claim is DENIED.
(2) Kafash's motion for summary judgment on Starnet's account stated claim is DENIED.
(3) Kafash's motion for summary judgment on Starnet's claim for the reasonable value of goods sold and delivered is DENIED. 18
(4) Kafash's motion for summary judgment on Starnet's intentional misrepresentation claim is GRANTED. 20
(5) Kafash's motion for summary judgment on Starnet's negligent misrepresentation claim is GRANTED.
IT IS SO ORDERED.