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Robert Albergo, et al v. Immunosyn Corporation

January 19, 2011

ROBERT ALBERGO, ET AL.,
PLAINTIFFS,
v.
IMMUNOSYN CORPORATION, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER GRANTING IN PART PLAINTIFFS' SPECIAL MOTION TO STRIKE DEFENDANTS' COUNTERCLAIM

Pending before the Court is Plaintiffs' special motion to strike Defendants' Counterclaim. For the following reasons, Plaintiffs' motion is granted in part.

I.

BACKGROUND Plaintiffs Robert Albergo and David Irwin allege in early 2006, they were induced to invest a combined $1,025,000 in unrestricted stock of a "start-up" company called Nurovysn Biotech Corporation (now Immunosyn) through Argyll Equities. (First Amended Complaint ("FAC"), ¶¶ 65-68, 72, 76.) Based upon representations made to them by Defendants and their agent, Plaintiffs were induced to enter into what the Parties have called the First Argyll Contracts. (Id. at ¶¶ 65, 72.) Under these contracts, executed in March and April 2006, Plaintiff Albergo paid $1,000,000 and Plaintiff Irwin paid $25,000 in exchange for 100,000 and 2,500 free-trading shares of common stock in Immunosyn, respectively. (Id. at ¶¶ 65-68, 72, 76.) Neither Plaintiff received the stock. (Id. at ¶¶ 128,137.) Then, on May 7, 2007, Plaintiffs received a letter from Defendant James Miceli requiring them to sign new contracts, the so-called Second Argyll Contracts, in order to receive their original stock certificates. (Id. at ¶ 79.) The Second Argyll Contracts contained terms and conditions not present in the First Argyll Contracts. (Id. at ¶ 80.) However, according to Plaintiffs, because of the alleged false representations of Defendants, and given the requirement that Plaintiffs sign the Second Argyll Contracts in order to receive the original stock they purchased, both Plaintiffs signed the Second Argyll Contracts. (Id. at ¶ 81.)

On November 24, 2009, Plaintiffs filed suit in this Court. (Doc. 1.) They subsequently filed a FAC. (Doc. 18.) In their FAC, Plaintiffs assert eight claims for relief: (1) breach of contract, (2) violation of the Securities Exchange Act, (3) fraud and fraud in the inducement, (4) violation of RICO,(5) conspiracy to violate RICO, (6) civil conspiracy, (7) unjust enrichment, and (8) fraudulent conveyance. On September 22, 2010, Defendants filed an Answer and Counterclaim to Plaintiffs' FAC. (Doc. 38.) The Counterclaim sets forth four claims for relief: (1) breach of contract, (2) fraud,(3) intentional interference with economic advantage, and (4) negligent interference with economic advantage. On October 1, 2010, Plaintiffs filed a special motion to strike Defendants' Counterclaim pursuant to California Code of Civil Procedure § 425.16 ("anti-SLAPP motion"). (Doc. 47.) In opposition to Plaintiffs' anti-SLAPP motion, Defendants contend Plaintiffs signed agreements rescinding the First Argyll Contracts (the "rescission agreements") and subsequently entered into the Second Argyll Contracts. (McClain Decl. ¶¶ 6-7, Exs. G-I.)

II.

LEGAL STANDARD California's anti-SLAPP statute is intended to provide a procedural remedy to dispose of lawsuits that are brought to chill or punish an individual's exercise of his or her constitutional rights. See Rusheen v. Cohen, 37 Cal.4th 1048, 1055-56 (2006);Cal. Code Civ. P. § 425.16. The statute provides "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." Cal. Code Civ. P. § 425.16(b)(1). An "act in furtherance of a person's right of petition or free speech" includes: "(1) any written or oral statement or writing made before a . . . judicial proceeding . . .; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body . . .; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." Id. at § 425.16(e).

"In evaluating an anti-SLAPP motion, the trial court first determines whether the defendant has made a threshold showing that the challenged cause of action arises from protected activity. . . . A cause of action 'arising from' defendant's litigation activity may appropriately be the subject of a section 425.16 motion to strike." Rusheen, 37 Cal.4th at 1056 (citations and quotations omitted). If the court determines the party bringing the anti-SLAPP motion has made the threshold showing, then it determines whether the opposing party has demonstrated a probability of prevailing on the challenged claim. Cal. Code Civ. P. § 425.16(b)(1). To do so, the party must "demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." Rusheen, 37 Cal.4th at 1056 (citations and quotations omitted). If the movant prevails on a special motion to strike, she or he is "entitled to recover his or her attorney's fees and costs." Cal. Code Civ. P. § 425.16(c)(1).

III.

DISCUSSION Plaintiffs argue the Counterclaim is based upon factual allegations of conduct that is protected under the anti-SLAPP statute, including that Plaintiffs seek to enforce the Argyll Contracts through their Complaint, have made false claims through their Complaint, and have interfered with Defendants' attempt to sell shares by seeking relief through this Court. Defendants contend the gravamen of their Counterclaim is that Plaintiffs signed the agreements rescinding the First Argyll Contracts and subsequently breached the contractual agreements contained in the rescission agreements to release and hold harmless all Defendants for claims arising out of the First Argyll Contracts. They claim, because of the rescission agreements, the Second Argyll Contracts are in fact the operative documents and Defendants committed fraud in entering into those contracts. Defendants further contend Plaintiffs have intentionally and negligently interfered with Defendants' economic advantage through their actions. The Court addresses each of Defendants' counterclaims in turn.

A. Breach of Contract

Defendants do not dispute the anti-SLAPP statute is triggered by their counterclaim for breach of contract. Rather, they argue they have made the requisite prima facie showing of probability of prevailing on this counterclaim. Defendants point to the indemnification provision in the rescission agreements and claim, by attempting to prosecute claims under the First Argyll Contracts, Plaintiffs have breached the rescission agreements. The elements of a breach of contract claim are (1) a contract,(2) plaintiff's performance or excuse for nonperformance, (3) breach by the defendant, and (4) damages resulting from the breach. CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). Defendants claim they have submitted factual evidence supporting each of these elements.

The Court finds Defendants have not sufficiently established a probability of prevailing on the merits of their breach of contract claim to survive Plaintiffs' anti-SLAPP motion. Although Defendants allege the existence of each of the necessary elements of a breach of contract claim, they do not submit adequate proof of each element. As an initial matter, Defendants have failed to allege a cognizable basis for damages in the form of attorneys' fees because the rescission agreements do not contain an attorneys' fees clause. See Navellier v. Sletten, 106 Cal. App. 4th 763, 776-77 (2003)(dismissing breach of contract claim under anti-SLAPP statute in part based on "the prevailing rule that such fees and costs are not recoverable in an action for breach of a release unless the agreement or a statute specifically provides for them"). In the McClain declaration submitted by Defendants, Defendant McClain, Jr. states, as a result of Plaintiffs' assertion of claims allegedly released in the rescission agreements, Defendants "have been forced to dedicate time, effort and resources, including retaining and paying lawyers, to refute [Plaintiffs'] claims, to defend this lawsuit, and to marshal the documentary evidence necessary to disprove these claims. But for these claims, Defendants could have used the time and resources on other, productive and profitable ventures." (McClain Decl. ¶ 8.) Accordingly, Defendants' major items of damages are attorneys' fees and costs of litigation. However, the rescission agreements do not contain an attorneys' fees provision and Defendants have not provided evidence that they are otherwise entitled to such damages.

Defendants further state in their opposition that they "performed all obligations under the [rescission agreements], including releasing all claims against plaintiffs." (Immunosyn Opp. at 4.) However, the rescission agreements themselves provide that Plaintiffs were entitled to the immediate return of all consideration made pursuant to the First Argyll Contracts, "including, without limitation, the return by Argyll Equities to the Purchaser of the Purchase Funds." (McClain Decl. Ex. G at § 1; Id. at Exs. H-I.) It is undisputed that Defendants never returned the funds paid by Plaintiffs in connection with the First Argyll Contracts. Rather, apparently as evidence of excuse for nonperformance, Defendant McClain, Jr. states in his declaration that, pursuant to the directions of Plaintiffs, Argyll Equities continued to hold the funds paid by Plaintiffs after the rescission agreements were entered into in anticipation of a new transaction. (Id. at ¶¶ 9-10.) However, to demonstrate a probability of prevailing on the merits, Defendants' showing of facts must consist of evidence that would be admissible at trial. Hall v. Time Warner, Inc., 153 Cal. App. 4th 1337, 1346 (2007); Christian Research Inst. v. Alnor, 148 Cal. App. 4th 71, 80 (2007). In opposing an anti-SLAPP motion, "declarations that lack foundation or personal knowledge, or that are argumentative, speculative, impermissible opinion, hearsay, or conclusory are to be disregarded." Gilbert v. Sykes, 147 Cal. App. 4th 13, 26 (2007). Here, McClain, Jr.'s representation lacks foundation and fails to indicate his basis for making such a representation. Both Plaintiffs declare they never spoke with Defendant McClain, Jr. regarding the rescission agreements nor gave such a direction. (Irwin Decl.¶¶ 4-5; Albergo Decl. ¶¶ 6-7.) Regardless, Defendants provide no evidence that any such direction was in writing, as would be necessary under the terms of the rescission agreements to excuse Defendants' performance of their contractual obligation to return the purchase funds. (McClain Decl. Ex. G at § 5 ...


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