Preview
ant aun F&F Ww NY
oO
10
1
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
IINSHAW & CULBERTSON UP
50 South Grand Ave., Suto 3600
Los Angeles, CA 90071-2402
"213-880-2800
16CV300096
Santa Clara — Civil
Electronically Filed
jpenn@kinshawien coms 302350) by Superior Court of CA,
SHALINI BHASKER (SBN CA 326729) County of Santa | Clara:
sbhasker@hinshawlaw.com on 4/27/2022 4:57 PM
HINSHAW & CULBERTSON LLP Reviewed By: R. Walker
350 South Grand Ave., Suite 3600 Case #16CV300096
Los Angeles, CA 90071-3402 Envelope: 8854998
Telephone: 213-680-2800
Facsimile: 213-614-7399
Attorneys for Plaintiff and Cross-Defendant Velocity
Investments, LLC and Cross-Defendant Velocity Portfolio
Group, Inc.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
VELOCITY INVESTMENTS, LLC, Case No,; 16CV300096
Plaintiff,
CROSS-DEFENDANT VELOCITY
vs. PORTFOLIO GROUP, INC.’S REPLY IN
SUPPORT OF SPECIAL MOTION TO
MARIA CANUL, STRIKE
Defendant. [Filed Concurrently with Evidentiary
Objection]
MARIA ANTONIA CANUL, Date: May 11, 2022
Time: 1:30 p.m.
Cross-Complainant, Dept: 3
vs.
VELOCITY INVESTMENTS, LLC, a New
Jersey limited liability company; VELOCITY
PORTFOLIO GROUP, INC., a Delaware
corporation; and ROES 2 through 10, inclusive,
Cross-Defendants.
Complaint Filed: | December 10, 2018
TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD:
Cross-Defendant VELOCITY PORTFOLIO GROUP, INC. (“VPGI”) hereby submits its
Reply in support of its Special Motion to Strike Cross-Complainant MARIA ANTONIA CANUL’s
(“Canul”) First Amended Cross-Complaint (“FACC”) as follows:
1
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\310631231.v128
IINSHAW & CULBERTSON 11
{50 South Grand Ave., Suite 2600
‘Los Angeles, CA 90071-2402
243-680-2000
I. INTRODUCTION
Canul’s Opposition to VPGI’s Special Motion to Strike (the “AntiSLAPP”), and her
corresponding Motion to Conduct Discovery, both miss the mark. When a defendant files an
AntiSLAPP, the Court is to first determine if the relief sought arises from protected activity. That is
clearly the case here. At that point, the burden shifts to the plaintiff to demonstrate the legal
sufficiency of the claims, as well as a prima facie showing of facts sufficient to sustain a favorable
judgment. Canul fails.
Despite the fact that Canul has known about the relationship between Velocity Investments,
LLC (“Velocity”) and VPGI for years, and despite the fact that Canul has sought, and Velocity
provided both answers to interrogatories and hundreds of pages of documents related to Velocity
and VPGI’s business and finances, Canul still fails to meet her clear burden of establishing a prima
facie case of alter ego liability against VPGI. She instead seeks additional discovery on a wide
panoply of topics. That request is not appropriate in the absence of a prima facie showing. Indeed,
the entire point of an AntiSLAPP is to stay discovery unless and until the Canul shows a prima facie
factual basis for the claims. Where, as here, the AntiSLAPP is met with unsupported speculation, it
fails.
In support of her Opposition, Canul admits the following:
= All of the claims of the FACC arise from petition activity;
= VPGI had no involvement in any of the activity underlying the FACC’s claims; and
= The only theory of liability she asserts against VPGI is through the alter ego doctrine.
To that end, VPGI has met its burden of establishing that each of the claims against it arise
from petition activity. The burden then shits to Canul. In an attempt to meet her burden, Canul
incorrectly claims that because VPGI had no involvement in the underlying activities of her
allegations, that VPGI cannot avail itself of the AntiSLAPP statute. Not so. The alter ego doctrine
is not a separate cause of action. “An alter ego defendant has no separate primary liability to the
plaintiff[;] rather, [a] plaintiffs claim against the alter ego defendant is identical with that claimed
by plaintiff against the already-named defendant.” Hennessey’s Tavern, Inc. v. American Air Filter
Co., 204 Cal. App. 3d 1351, 1358-59 (1988). The claims against Velocity are therefore identical to
2
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\310631231.v1ont nun fF W WN
10
ll
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
INSHAW & CULBERTSON ue
50 South Grand Avo.. Sute 3600
‘Los Angeles, CA 80071-2402
213-680-2800
the claims asserted against VPGI — all arising from petition activity.
With the first prong satisfied, Canul must show a probability of prevailing on her claims by
establishing her prima facie case for alter ego liability. Her Opposition is devoid of any competent
evidence to meet this burden despite the extensive: discovery already completed in this case.
Consider the following:
. The evidence submitted in support of the Opposition, namely in the Declaration of
Fred Schwinn, as to unity of interest is inadmissible as explained in VPGI’s evidentiary objections.
The scant admissible evidence that is submitted relates to a shared address and insurance policy,
which, alone, are insufficient to draw any inference that the two entities share such a unity of interest
that their corporate forms should be disregarded.
. The evidence submitted as to the inequitable result or unjust prong of alter ego
liability is similarly inadmissible (as explained in the evidentiary objections), Canul’s
unsubstantiated claims of “debt” or undercapitalization are nothing more than improper and
inadmissible attorney characterizations of documents not before the court.
Where the alter ego doctrine is a sparingly used and drastic remedy, Canul needs to show
more than unauthenticated websites and attorney conjecture, especially in light of everything already
provided to her in this case. This is underscored by the fact that Canul’s counsel has admittedly been
in possession of documents in this and other actions concerning the relationship, financials, and
corporate forms of the two entities at issue for years, and only now brings this claim. Canul had
every opportunity to present these documents in this action to meet her prima facie burden, She did
not. And, this Court has already denied the very same speculative and unsupported arguments
Canul’s counsel presented in the Jayawardena action that counsel asserts here. See Declaration of
Justin Penn in support of AntiSLAPP, § 7, Exh. E. Canul’s Opposition provides nothing new or
different. The Court should grant VPGI’s AntiSLAPP and dismiss it from this action.
Il. ARGUMENT
A. Each Claim Arises From Petition Activity
Canul confusingly argues that VPGI cannot succeed on the first prong of the AntiSLAPP
analysis because it was not the entity that filed the underlying complaint and thus did not engage in
3
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\3 1063123 1.v1eee cc eemaeeeC eee
\o
10
11
12
13
14
ie)
16
17
18
19
20
21
22
23
24
25
26
27
28
IINSHAW & CULBERTSON uP
50 South Grand Ave,, Suto 3600
Los Angeles, CA 90071-8402
218-680-2800
an act “in furtherance of [its] right of petition.” Cal. Civ. Proc. Code § 425.16(b)(1); See Opposition,
p. 8:11-24. Preliminarily, Canul admits that VPGI was not involved in any of the activities
underlying the FACC’s claims and that she has no independent basis to allege liability against it.
Setting this aside, the Court should disregard Canul’s mental gymnastics. Each claim
asserted in the FACC relates to the protected right of petition activity, i.e. the filing of the underlying
complaint. The alter ego doctrine — the only basis on which Canul alleges liability against VPGI -
“is not itself a claim for substantive relief, e.g. breach of contract...but rather, procedural.”
Greenspan v, LADT LLC, 191 Cal. App. 4th 486, 516 (2010); Favila v. Pasquarella, 65 Cal. App.
Sth 934, 946 (2021) (Alter ego “is not a ‘cause of action.””). Therefore, “[a]n alter ego defendant
has no separate primary liability to the plaintiff[;] rather, [a] plaintiff's claim against the alter ego
defendant is identical with that claimed by plaintiff against the already-named defendant.”
Hennessey’s Tavern, Inc. vy. American Air Filter Co., 204 Cal. App. 3d 1351, 1358-59 (1988),
To that end, Canul’s claims against Velocity Investments, which all arise from petition
activity, are inherently identical to those claimed against VPGI. Because the claims against Velocity
and VPGI are identical, the claims against VPGI arise out of petition activity, too. Taken differently,
if Canul’s novel theory were correct, a purely alter ego defendant could never succeed on an
AntiSLAPP motion because the alter ego defendant would, by definition, not have been involved
with the underlying petition activity, This would create an unfortunate opportunity for malicious
litigators to strategically include actual defendants as alter ego’s in an effort to evade AntiSLAPP
liability. As with the rest of her Opposition, Canul provides no authority or support that this is true.
B. Canul Provides No Competent Evidence Supporting an Alter Ego Relationship
Given that the claims all arise from protected activity, VPGI has satisfied the first prong of
the AntiSLAPP analysis. The burden then shifts to Canul to demonstrate a probability of success on
her claims, which depend on her establishing the alter ego theory. As explained below, her evidence
in support is either inadmissible or insufficient to establish a prima facie case.
As a threshold matter, Canul contends that the “only claim of the FAXC VPGI alleges is
without merit is Canul’s alter ego, joint venture, or agency allegations.” See Opposition, p. 12:27-
13:1. As explained above, this misstates the posture of the action against VPGI and the alter ego
4
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\310631231.v1oI DAW PB wWN
‘oO
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
ge)
28
IINSHAW & CULBERTSON wp
‘50 South Grand Ave, Sue 3800
‘Los Angeles, CA 90071-3402
213-680-2800
doctrine, Alter ego is not a claim or cause of action, but a theory of pass through liability — the only
theory that Canul alleges connects VPGI to the underlying claims. This court need only evaluate
Canul’s inability to present competent evidence establishing a prima facie case for alter ego to
dismiss the action against VPGI.
The requisite elements of an alter ego theory of liability are (1) that the entities are so unified
in interest and ownership that their separate personalities no longer exist and (2) that the failure to
disregard their separate identities would result in fraud or injustice. Sonora Diamond Corp. v.
Superior Court, 83 Cal. App. 4th 523, 538 (2000). In evaluating the Opposition’s support, it is clear
that Canul has not met her burden. The evidence she submits, comprised entirely in the Declaration
of Fred Schwinn, is either inadmissible or insufficient to support alter ego. Consider the following:
. Mr. Schwinn’s attorney characterizations of evidence from other actions is
inadmissible hearsay and without foundation. This applies to paragraphs 5, 6, 7, and 10. The Court
can disregard what is no more than argument and conjecture concerning documents not before the
Court. Mr, Schwinn’s characterization of any purported, unidentified “debt” in paragraph 6, like the
rest of his characterizations, is speculative and has no probative value.
: Mr. Schwinn’s submission of website pages (paragraphs 5, 8 and 9) concerning
purported information about Velocity and/or VPGI lack foundation and authentication, His
characterizations of what is found on them are inadmissible hearsay and improper speculation and
must be disregarded. Even if accepted, the evidence is insufficient.
. The only admissible evidence provided in Mr. Schwinn’s declaration relates to
addresses provided in discovery responses and a Certificate of Insurance showing Velocity and
VPGI share the same insurance policy. Once again, this is insufficient to sustain Canul’s prima facie
burden.
This court need not evaluate Canul’s inadmissible and vague evidence. Even if it did, what
Canul submits is insufficient to establish alter ego liability. As to unity of interest, nothing is
presented that suggests that Velocity is a mere shell of VPGI, rather than a wholly owned subsidiary.
The websites, which are inadmissible, do not establish that VPGI controls Velocity in a manner
sufficient to disregard the corporate form, and that the two entities share an insurance policy or
5
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\3 10631231.v1on nA vA fF WN
\o
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
INSHAW & CULBERTSON up
50 South Grand Ave. Suite 3600
Los Angoles, CA 90071-3402
243-680-2800
addresses is common and not evidence of an alter ego relationship. Meadows v. Emett & Chandler,
99 Cal. App. 2d 496, 499. To the extent that Canul suggests Velocity is undercapitalized, she
presents no competent evidence in support despite possessing hundreds of pages of financials.
Rather, she presents nothing other than mere speculation — too vague to support a finding in equity
that there exists between Velocity and VPGI “such unity of interest and ownership” that the separate
entities “do not in reality exist.” Sonora Diamond Corp. y. Superior Court, supra, 83 Cal. App. 4th
at 538,
Canul similarly fails to provide any competent support for the second element of the alter
ego doctrine. There is no evidence that a fraud or injustice will occur should the two entities be
treated as legally distinct. Moreover, some evidence of bad faith or wrongful conduct is required.
Leek v. Cooper, 194 Cal. App. 4th 399, 418 (2011). Canul’s unsupported speculation concerning
undercapitalization or a lesser potential recovery is neither probative nor sufficient. Sonora
Diamond Corp. v. Superior Court, supra, 83 Cal. App. 4th at 539; Tomaselli v. Transamerica Ins.
Co., 25 Cal. App. 4th 1269, 1285-86 (1994).
Having provided no admissible evidence sufficient to establish a probability of success on
her claims, VPGI’s AntiSLAPP should be granted.
c. Canul Is Not Entitled Leave to Conduct Discovery
As explained in VPGI’s opposition to Pascul’s Motion to Conduct Discovery, there has been
extensive discovery in this case, Despite this, and contrary to the goals and protections provided by
an AntiSLAPP motion, Canul seeks additional discovery on a wide array of costly and intrusive
issues, To reiterate, Velocity produced all documents and information that exist concerning the
following:
" Financial statements, current balance sheets, and annual reports;
= Credit applications and insurance documents;
" Corporate formation documents for itself and any entity to which it is affiliated,
including VPGI;
= Operation manuals, policies, and procedures;
= Various account information concerning debtors, including about the entities involved
6
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\3 10631231.v1aon nA un fF WH
\o
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
es
26
27
28
IINSHAW & CULBERTSON up
{50 South Grand Ave,, Sule 3600
‘Los Angeles, CA 90071-2402
213-680-2800
in retaining the information, communicating with debtors, servicing the loan or accounts,
or otherwise having involvement with any of the allegations contained in the Cross-
Complaint. Declaration of Justin M. Penn in support of Opposition to Motion to Conduct
Discovery (“Penn Decl. ISO Opp”), { 4.
VPGI and Velocity are unaware of any request by Canul to use any of the previously
produced documents from other actions in this action for the purposes of the AntiSLAPP. Jd. 7.
After reviewing the Motion to Conduct Discovery in a nearly identical matter, counsel for Cross-
Defendants emailed counsel for Canul to request the withdrawal of the motion to conduct discovery
in that case in exchange for extending the protective order and production of documents from this
action. Id. J 8, Exh. B. Counsel for Canul responded that the offer was late and that they wanted
additional discovery as well. Jd., Exh. C. Counsel for Cross-Defendants responded that Canul’s
counsel should have all documents, asked what else they wanted. Jd., Exhs. D and E., Canul’s
counsel did not respond. Jd.
This silence is telling. Despite being offered an opportunity to come to a mutually agreeable
scope of discovery, Canul’s counsel was unwilling or unable to do so, In reality, this conduct is
squarely the conduct that should be addressed by an AntiSLAPP, Even when given the opportunity
to cooperate in a reasonable manner, Canu!’s counsel refused to do so, and the refusal gives the
game away. The volume of discovery produced in this case is exhaustive, as Canul admits in her
Motion to Conduct Discovery: “CANUL’s counsel has actual knowledge that many of the
documents requested actually exist because VELOCITY and/or VPGI have produced them in other
litigation!...” See Motion to Conduct Discovery, p. 15:23-25; Schwinn Decl. ISO Motion to
Conduct Discovery, { 11. There is nothing more to be produced on the issues of the AntiSLAPP,
and Canul has purposely not even attempted to avail herself of what her counsel is in possession of
for the purposes of her Opposition; leading one to only conclude that this is yet another example of
gamesmanship on the part of counsel for cross-claimant, using the legal system to burden cross-
' This statement appears to reference “other litigation” as an assertion made in the Sipin case. Indeed, the documents to
which this refers were produced in this case, and not in other litigation. While it was accurate to state in Sipin that the
documents were produced in “other litigation,” this case is the “other litigation.” Velocity and VPGI would, of course,
be willing to show these documents to the Court in camera or otherwise at the Court’s direction.
i
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\3 1063123 1.v128
IINSHAW & CULBERTSON Lp
50 South Grand Ave., Suite 3800
‘Los Angeles, CA 90071-3402
218-680-2800
defendant rather than taking constructive efforts to come to meaningful resolutions. All of the
discovery that they refer to as existing based on their knowledge in other cases is actually in their
position by way of this case. They are simply demanding that all parties go through discovery
exercises again to acquire what they already have for no imaginable purpose other than to burden
VPGI. Their demands are identical to that made in another litigation and thus counsel for Canul has
determined that they would rather cut and paste their demands and waste the court’s time and the
resources of VPGI than actually seek what they need, all of which they already have. This conduct
is exactly what an AntiSLAPP is intended to avoid.
That Canul and her counsel did not utilize any discovery produced in this case for the
purposes of opposing the AntiSLAPP motion does not entitle her to delay VPGI’s dismissal from
this action. Her innuendo that the evidence helps her is unavailing. If the documents were useful to
Canul (they are not), they would have been used in her opposition. Counsel’s decision to not use
any of the documents negates the claimed “necessity” that might otherwise warrant leave. It also
runs counter to the proscriptions of the AntiSLAPP statute which is specifically crafted to promote
expeditious treatment of claims arising from petition activity.
For this reason, and all of the reasons submitted in VPGI’s Opposition to the Motion to
Conduct Discovery, the Court should deny any attempt by Canul to delay the hearing on the
AntiSLAPP motion or otherwise open discovery before a ruling on the same.
Ill. CONCLUSION
Based on the foregoing, Cross-Defendant VELOCITY PORTFOLIO GROUP, INC.
respectfully requests that this Court grant its Special Motion to Strike.
DATED: = April 27, 2022 HINSHAW & CULBERTSON LLP
By: /s/ Justin Penn
Justin Penn
Shalini Bhasker
Attorneys for Plaintiff and Cross-Defendant
Velocity Investments, LLC and Cross-
Defendant Velocity Portfolio Group, Inc.
8
REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
A4304\3 1063123 1.v128
INSHAW & CULBERTSON wP
‘50 South Grand Ave,, Suite 3600
‘Los Angeles, CA 90071-2402
249-880-2800
PROOF OF SERVICE
Velocity Investments, LLC vs. Maria Canul, et al. and X-Action
Case No. 20CV300096
(STATE OF CALIFORNIA, COUNTY OF LOS ANGELES)
I am employed in the County of Los Angeles, State of California. I am over the age of 18
and not a party to the within actions; my business address is 350 South Grand Ave., Suite 3600, Los
Angeles, CA 90071-3476.
On April 27, 2022, I served the document(s) entitled: CROSS-DEFENDANT VELOCITY
PORTFOLIO GROUP, INC.’S REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE
on the interested parties in this action by placing true copies thereof enclosed in a sealed envelope(s)
addressed as stated below:
SEE ATTACHED SERVICE LIST
O (BY MAIL): I placed the envelope for collection and mailing at Los Angeles,
California, The envelope was mailed with postage fully prepaid. I am readily familiar
with this firm’s practice of collection and processing corres ondence for mailing.
Under that practice it would be deposited with the U.S. postal service on that same
day with postage thereon fully prepaid at Los Angeles, California, in the ordinary
course of business. I am aware that on motion of party served, service is presumed
invalid if postal cancellation date or postage meter date is more than | day after date
of deposit for mailing in affidavit.
C1 (BY FACSIMILE TRANSMISSION): I caused a true copy thereof from sending
facsimile machine telephone number 213-614-7399 to be sent via facsimile to the
above listed names and facsimile numbers and received confirmed transmission
oe ioeieeane that this document was successfully transmitted to the parties
named above.
M (VIA OVERNIGHT MAIL): | am "readily familiar" with the firm's practice of
collection and processing correspondence for, overnight delivery. Under that practice
it would be deposited in a box or other facility regularly maintained by the express
service carrier, or delivered to an authorized courier or driver authorized by the
express service carrier to receive documents, in an envelope or packa e designated
by the express service carrier with delivery fees paid or provided for, addressed to the
person on whom it is to be served, at the office address as last given by that person on
any document filed in the cause and served on the party making service; otherwise at
that party's place of residence.
O (BY E-MAIL OR ELECTRONIC TRANSMISSION): Based on a court order
or an agreement of the parties to accept service by e-mail or electronic transmission,
I caused the document(s) to be sent to the persons] at the e-mail address[es] set forth
herein, I did not receive, within a reasonable time after the transmission, any
electronic message or other indication that the transmission was unsuccessful. See
Cal.R.Ct.R. 206
UO (BY HAND DELIVERY): I caused to be delivered by hand each sealed envelope
to the addressee(s) mentioned in the attached service/mailing list.
:
PROOF OF SERVICE
A4304\310631231.v1©. mA DHA FPF WN
RYN NY NH NNN Fe ee ee ee ee
By ON ON |e 0) 0) et oe Oe cor ON A St et
28
IINSHAW & CULBERTSON itp
50 South Grand Avo., Sue 3600
‘Los Angeles, CA 90071-2402
213-880-2800
LC) (BY PERSONAL SERVICE): I caused such envelope to be delivered to a
commercial messenger service with instructions to personally deliver same to the
offices of the addressee as shown on the attached mailing list on this date.
I declare under penalty of perjury under the laws of the State of California that
the foregoing is true and correct.
Executed on April 27, 2022, at Los Angeles, California.
Bari V. Vesa
Gloria Valles
v
PROOF OF SERVICE
A4304\310631231.v1onan wn fF WN
oO
10
u
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
INSHAW & CULBERTSON up
50 South Grand Ave, Suit 3600
tos Angeles, CA 90071-2402
213-680-2800
SERVICE LIST
Velocity Investments, LLC vs. Maria Canul, et al. and X-Action
Case No. 20CV300096
Fred W. Schwinn (SBN 225575)
Raeon R. Roulston (SBN 255622)
Matthew C, Salmonsen (SBN 302854)
CONSUMER LAW CENTER, INC.
1435 Koll Circle, Suite 104
San Jose, California 95112-4610
Telephone Number: (408) 294-6100
Facsimile Number: (408) 294-6190
Email Address:
fred.schwinn@sjconsumerlaw.com;
raeon.roulston@sjconsumerlaw.com;
matthew.salmonsen@sjconsumerlaw.com
Attorneys for Defendant/Cross-Complainant
MARIA CANUL
1
PROOF OF SERVICE
A4304\3 1063123 1.v1
Preview
ant aun F&F Ww NY oO 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IINSHAW & CULBERTSON UP 50 South Grand Ave., Suto 3600 Los Angeles, CA 90071-2402 "213-880-2800 16CV300096 Santa Clara — Civil Electronically Filed jpenn@kinshawien coms 302350) by Superior Court of CA, SHALINI BHASKER (SBN CA 326729) County of Santa | Clara: sbhasker@hinshawlaw.com on 4/27/2022 4:57 PM HINSHAW & CULBERTSON LLP Reviewed By: R. Walker 350 South Grand Ave., Suite 3600 Case #16CV300096 Los Angeles, CA 90071-3402 Envelope: 8854998 Telephone: 213-680-2800 Facsimile: 213-614-7399 Attorneys for Plaintiff and Cross-Defendant Velocity Investments, LLC and Cross-Defendant Velocity Portfolio Group, Inc. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA VELOCITY INVESTMENTS, LLC, Case No,; 16CV300096 Plaintiff, CROSS-DEFENDANT VELOCITY vs. PORTFOLIO GROUP, INC.’S REPLY IN SUPPORT OF SPECIAL MOTION TO MARIA CANUL, STRIKE Defendant. [Filed Concurrently with Evidentiary Objection] MARIA ANTONIA CANUL, Date: May 11, 2022 Time: 1:30 p.m. Cross-Complainant, Dept: 3 vs. VELOCITY INVESTMENTS, LLC, a New Jersey limited liability company; VELOCITY PORTFOLIO GROUP, INC., a Delaware corporation; and ROES 2 through 10, inclusive, Cross-Defendants. Complaint Filed: | December 10, 2018 TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD: Cross-Defendant VELOCITY PORTFOLIO GROUP, INC. (“VPGI”) hereby submits its Reply in support of its Special Motion to Strike Cross-Complainant MARIA ANTONIA CANUL’s (“Canul”) First Amended Cross-Complaint (“FACC”) as follows: 1 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\310631231.v128 IINSHAW & CULBERTSON 11 {50 South Grand Ave., Suite 2600 ‘Los Angeles, CA 90071-2402 243-680-2000 I. INTRODUCTION Canul’s Opposition to VPGI’s Special Motion to Strike (the “AntiSLAPP”), and her corresponding Motion to Conduct Discovery, both miss the mark. When a defendant files an AntiSLAPP, the Court is to first determine if the relief sought arises from protected activity. That is clearly the case here. At that point, the burden shifts to the plaintiff to demonstrate the legal sufficiency of the claims, as well as a prima facie showing of facts sufficient to sustain a favorable judgment. Canul fails. Despite the fact that Canul has known about the relationship between Velocity Investments, LLC (“Velocity”) and VPGI for years, and despite the fact that Canul has sought, and Velocity provided both answers to interrogatories and hundreds of pages of documents related to Velocity and VPGI’s business and finances, Canul still fails to meet her clear burden of establishing a prima facie case of alter ego liability against VPGI. She instead seeks additional discovery on a wide panoply of topics. That request is not appropriate in the absence of a prima facie showing. Indeed, the entire point of an AntiSLAPP is to stay discovery unless and until the Canul shows a prima facie factual basis for the claims. Where, as here, the AntiSLAPP is met with unsupported speculation, it fails. In support of her Opposition, Canul admits the following: = All of the claims of the FACC arise from petition activity; = VPGI had no involvement in any of the activity underlying the FACC’s claims; and = The only theory of liability she asserts against VPGI is through the alter ego doctrine. To that end, VPGI has met its burden of establishing that each of the claims against it arise from petition activity. The burden then shits to Canul. In an attempt to meet her burden, Canul incorrectly claims that because VPGI had no involvement in the underlying activities of her allegations, that VPGI cannot avail itself of the AntiSLAPP statute. Not so. The alter ego doctrine is not a separate cause of action. “An alter ego defendant has no separate primary liability to the plaintiff[;] rather, [a] plaintiffs claim against the alter ego defendant is identical with that claimed by plaintiff against the already-named defendant.” Hennessey’s Tavern, Inc. v. American Air Filter Co., 204 Cal. App. 3d 1351, 1358-59 (1988). The claims against Velocity are therefore identical to 2 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\310631231.v1ont nun fF W WN 10 ll 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INSHAW & CULBERTSON ue 50 South Grand Avo.. Sute 3600 ‘Los Angeles, CA 80071-2402 213-680-2800 the claims asserted against VPGI — all arising from petition activity. With the first prong satisfied, Canul must show a probability of prevailing on her claims by establishing her prima facie case for alter ego liability. Her Opposition is devoid of any competent evidence to meet this burden despite the extensive: discovery already completed in this case. Consider the following: . The evidence submitted in support of the Opposition, namely in the Declaration of Fred Schwinn, as to unity of interest is inadmissible as explained in VPGI’s evidentiary objections. The scant admissible evidence that is submitted relates to a shared address and insurance policy, which, alone, are insufficient to draw any inference that the two entities share such a unity of interest that their corporate forms should be disregarded. . The evidence submitted as to the inequitable result or unjust prong of alter ego liability is similarly inadmissible (as explained in the evidentiary objections), Canul’s unsubstantiated claims of “debt” or undercapitalization are nothing more than improper and inadmissible attorney characterizations of documents not before the court. Where the alter ego doctrine is a sparingly used and drastic remedy, Canul needs to show more than unauthenticated websites and attorney conjecture, especially in light of everything already provided to her in this case. This is underscored by the fact that Canul’s counsel has admittedly been in possession of documents in this and other actions concerning the relationship, financials, and corporate forms of the two entities at issue for years, and only now brings this claim. Canul had every opportunity to present these documents in this action to meet her prima facie burden, She did not. And, this Court has already denied the very same speculative and unsupported arguments Canul’s counsel presented in the Jayawardena action that counsel asserts here. See Declaration of Justin Penn in support of AntiSLAPP, § 7, Exh. E. Canul’s Opposition provides nothing new or different. The Court should grant VPGI’s AntiSLAPP and dismiss it from this action. Il. ARGUMENT A. Each Claim Arises From Petition Activity Canul confusingly argues that VPGI cannot succeed on the first prong of the AntiSLAPP analysis because it was not the entity that filed the underlying complaint and thus did not engage in 3 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\3 1063123 1.v1eee cc eemaeeeC eee \o 10 11 12 13 14 ie) 16 17 18 19 20 21 22 23 24 25 26 27 28 IINSHAW & CULBERTSON uP 50 South Grand Ave,, Suto 3600 Los Angeles, CA 90071-8402 218-680-2800 an act “in furtherance of [its] right of petition.” Cal. Civ. Proc. Code § 425.16(b)(1); See Opposition, p. 8:11-24. Preliminarily, Canul admits that VPGI was not involved in any of the activities underlying the FACC’s claims and that she has no independent basis to allege liability against it. Setting this aside, the Court should disregard Canul’s mental gymnastics. Each claim asserted in the FACC relates to the protected right of petition activity, i.e. the filing of the underlying complaint. The alter ego doctrine — the only basis on which Canul alleges liability against VPGI - “is not itself a claim for substantive relief, e.g. breach of contract...but rather, procedural.” Greenspan v, LADT LLC, 191 Cal. App. 4th 486, 516 (2010); Favila v. Pasquarella, 65 Cal. App. Sth 934, 946 (2021) (Alter ego “is not a ‘cause of action.””). Therefore, “[a]n alter ego defendant has no separate primary liability to the plaintiff[;] rather, [a] plaintiff's claim against the alter ego defendant is identical with that claimed by plaintiff against the already-named defendant.” Hennessey’s Tavern, Inc. vy. American Air Filter Co., 204 Cal. App. 3d 1351, 1358-59 (1988), To that end, Canul’s claims against Velocity Investments, which all arise from petition activity, are inherently identical to those claimed against VPGI. Because the claims against Velocity and VPGI are identical, the claims against VPGI arise out of petition activity, too. Taken differently, if Canul’s novel theory were correct, a purely alter ego defendant could never succeed on an AntiSLAPP motion because the alter ego defendant would, by definition, not have been involved with the underlying petition activity, This would create an unfortunate opportunity for malicious litigators to strategically include actual defendants as alter ego’s in an effort to evade AntiSLAPP liability. As with the rest of her Opposition, Canul provides no authority or support that this is true. B. Canul Provides No Competent Evidence Supporting an Alter Ego Relationship Given that the claims all arise from protected activity, VPGI has satisfied the first prong of the AntiSLAPP analysis. The burden then shifts to Canul to demonstrate a probability of success on her claims, which depend on her establishing the alter ego theory. As explained below, her evidence in support is either inadmissible or insufficient to establish a prima facie case. As a threshold matter, Canul contends that the “only claim of the FAXC VPGI alleges is without merit is Canul’s alter ego, joint venture, or agency allegations.” See Opposition, p. 12:27- 13:1. As explained above, this misstates the posture of the action against VPGI and the alter ego 4 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\310631231.v1oI DAW PB wWN ‘oO 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ge) 28 IINSHAW & CULBERTSON wp ‘50 South Grand Ave, Sue 3800 ‘Los Angeles, CA 90071-3402 213-680-2800 doctrine, Alter ego is not a claim or cause of action, but a theory of pass through liability — the only theory that Canul alleges connects VPGI to the underlying claims. This court need only evaluate Canul’s inability to present competent evidence establishing a prima facie case for alter ego to dismiss the action against VPGI. The requisite elements of an alter ego theory of liability are (1) that the entities are so unified in interest and ownership that their separate personalities no longer exist and (2) that the failure to disregard their separate identities would result in fraud or injustice. Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523, 538 (2000). In evaluating the Opposition’s support, it is clear that Canul has not met her burden. The evidence she submits, comprised entirely in the Declaration of Fred Schwinn, is either inadmissible or insufficient to support alter ego. Consider the following: . Mr. Schwinn’s attorney characterizations of evidence from other actions is inadmissible hearsay and without foundation. This applies to paragraphs 5, 6, 7, and 10. The Court can disregard what is no more than argument and conjecture concerning documents not before the Court. Mr, Schwinn’s characterization of any purported, unidentified “debt” in paragraph 6, like the rest of his characterizations, is speculative and has no probative value. : Mr. Schwinn’s submission of website pages (paragraphs 5, 8 and 9) concerning purported information about Velocity and/or VPGI lack foundation and authentication, His characterizations of what is found on them are inadmissible hearsay and improper speculation and must be disregarded. Even if accepted, the evidence is insufficient. . The only admissible evidence provided in Mr. Schwinn’s declaration relates to addresses provided in discovery responses and a Certificate of Insurance showing Velocity and VPGI share the same insurance policy. Once again, this is insufficient to sustain Canul’s prima facie burden. This court need not evaluate Canul’s inadmissible and vague evidence. Even if it did, what Canul submits is insufficient to establish alter ego liability. As to unity of interest, nothing is presented that suggests that Velocity is a mere shell of VPGI, rather than a wholly owned subsidiary. The websites, which are inadmissible, do not establish that VPGI controls Velocity in a manner sufficient to disregard the corporate form, and that the two entities share an insurance policy or 5 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\3 10631231.v1on nA vA fF WN \o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INSHAW & CULBERTSON up 50 South Grand Ave. Suite 3600 Los Angoles, CA 90071-3402 243-680-2800 addresses is common and not evidence of an alter ego relationship. Meadows v. Emett & Chandler, 99 Cal. App. 2d 496, 499. To the extent that Canul suggests Velocity is undercapitalized, she presents no competent evidence in support despite possessing hundreds of pages of financials. Rather, she presents nothing other than mere speculation — too vague to support a finding in equity that there exists between Velocity and VPGI “such unity of interest and ownership” that the separate entities “do not in reality exist.” Sonora Diamond Corp. y. Superior Court, supra, 83 Cal. App. 4th at 538, Canul similarly fails to provide any competent support for the second element of the alter ego doctrine. There is no evidence that a fraud or injustice will occur should the two entities be treated as legally distinct. Moreover, some evidence of bad faith or wrongful conduct is required. Leek v. Cooper, 194 Cal. App. 4th 399, 418 (2011). Canul’s unsupported speculation concerning undercapitalization or a lesser potential recovery is neither probative nor sufficient. Sonora Diamond Corp. v. Superior Court, supra, 83 Cal. App. 4th at 539; Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269, 1285-86 (1994). Having provided no admissible evidence sufficient to establish a probability of success on her claims, VPGI’s AntiSLAPP should be granted. c. Canul Is Not Entitled Leave to Conduct Discovery As explained in VPGI’s opposition to Pascul’s Motion to Conduct Discovery, there has been extensive discovery in this case, Despite this, and contrary to the goals and protections provided by an AntiSLAPP motion, Canul seeks additional discovery on a wide array of costly and intrusive issues, To reiterate, Velocity produced all documents and information that exist concerning the following: " Financial statements, current balance sheets, and annual reports; = Credit applications and insurance documents; " Corporate formation documents for itself and any entity to which it is affiliated, including VPGI; = Operation manuals, policies, and procedures; = Various account information concerning debtors, including about the entities involved 6 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\3 10631231.v1aon nA un fF WH \o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 es 26 27 28 IINSHAW & CULBERTSON up {50 South Grand Ave,, Sule 3600 ‘Los Angeles, CA 90071-2402 213-680-2800 in retaining the information, communicating with debtors, servicing the loan or accounts, or otherwise having involvement with any of the allegations contained in the Cross- Complaint. Declaration of Justin M. Penn in support of Opposition to Motion to Conduct Discovery (“Penn Decl. ISO Opp”), { 4. VPGI and Velocity are unaware of any request by Canul to use any of the previously produced documents from other actions in this action for the purposes of the AntiSLAPP. Jd. 7. After reviewing the Motion to Conduct Discovery in a nearly identical matter, counsel for Cross- Defendants emailed counsel for Canul to request the withdrawal of the motion to conduct discovery in that case in exchange for extending the protective order and production of documents from this action. Id. J 8, Exh. B. Counsel for Canul responded that the offer was late and that they wanted additional discovery as well. Jd., Exh. C. Counsel for Cross-Defendants responded that Canul’s counsel should have all documents, asked what else they wanted. Jd., Exhs. D and E., Canul’s counsel did not respond. Jd. This silence is telling. Despite being offered an opportunity to come to a mutually agreeable scope of discovery, Canul’s counsel was unwilling or unable to do so, In reality, this conduct is squarely the conduct that should be addressed by an AntiSLAPP, Even when given the opportunity to cooperate in a reasonable manner, Canu!’s counsel refused to do so, and the refusal gives the game away. The volume of discovery produced in this case is exhaustive, as Canul admits in her Motion to Conduct Discovery: “CANUL’s counsel has actual knowledge that many of the documents requested actually exist because VELOCITY and/or VPGI have produced them in other litigation!...” See Motion to Conduct Discovery, p. 15:23-25; Schwinn Decl. ISO Motion to Conduct Discovery, { 11. There is nothing more to be produced on the issues of the AntiSLAPP, and Canul has purposely not even attempted to avail herself of what her counsel is in possession of for the purposes of her Opposition; leading one to only conclude that this is yet another example of gamesmanship on the part of counsel for cross-claimant, using the legal system to burden cross- ' This statement appears to reference “other litigation” as an assertion made in the Sipin case. Indeed, the documents to which this refers were produced in this case, and not in other litigation. While it was accurate to state in Sipin that the documents were produced in “other litigation,” this case is the “other litigation.” Velocity and VPGI would, of course, be willing to show these documents to the Court in camera or otherwise at the Court’s direction. i REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\3 1063123 1.v128 IINSHAW & CULBERTSON Lp 50 South Grand Ave., Suite 3800 ‘Los Angeles, CA 90071-3402 218-680-2800 defendant rather than taking constructive efforts to come to meaningful resolutions. All of the discovery that they refer to as existing based on their knowledge in other cases is actually in their position by way of this case. They are simply demanding that all parties go through discovery exercises again to acquire what they already have for no imaginable purpose other than to burden VPGI. Their demands are identical to that made in another litigation and thus counsel for Canul has determined that they would rather cut and paste their demands and waste the court’s time and the resources of VPGI than actually seek what they need, all of which they already have. This conduct is exactly what an AntiSLAPP is intended to avoid. That Canul and her counsel did not utilize any discovery produced in this case for the purposes of opposing the AntiSLAPP motion does not entitle her to delay VPGI’s dismissal from this action. Her innuendo that the evidence helps her is unavailing. If the documents were useful to Canul (they are not), they would have been used in her opposition. Counsel’s decision to not use any of the documents negates the claimed “necessity” that might otherwise warrant leave. It also runs counter to the proscriptions of the AntiSLAPP statute which is specifically crafted to promote expeditious treatment of claims arising from petition activity. For this reason, and all of the reasons submitted in VPGI’s Opposition to the Motion to Conduct Discovery, the Court should deny any attempt by Canul to delay the hearing on the AntiSLAPP motion or otherwise open discovery before a ruling on the same. Ill. CONCLUSION Based on the foregoing, Cross-Defendant VELOCITY PORTFOLIO GROUP, INC. respectfully requests that this Court grant its Special Motion to Strike. DATED: = April 27, 2022 HINSHAW & CULBERTSON LLP By: /s/ Justin Penn Justin Penn Shalini Bhasker Attorneys for Plaintiff and Cross-Defendant Velocity Investments, LLC and Cross- Defendant Velocity Portfolio Group, Inc. 8 REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE A4304\3 1063123 1.v128 INSHAW & CULBERTSON wP ‘50 South Grand Ave,, Suite 3600 ‘Los Angeles, CA 90071-2402 249-880-2800 PROOF OF SERVICE Velocity Investments, LLC vs. Maria Canul, et al. and X-Action Case No. 20CV300096 (STATE OF CALIFORNIA, COUNTY OF LOS ANGELES) I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within actions; my business address is 350 South Grand Ave., Suite 3600, Los Angeles, CA 90071-3476. On April 27, 2022, I served the document(s) entitled: CROSS-DEFENDANT VELOCITY PORTFOLIO GROUP, INC.’S REPLY IN SUPPORT OF SPECIAL MOTION TO STRIKE on the interested parties in this action by placing true copies thereof enclosed in a sealed envelope(s) addressed as stated below: SEE ATTACHED SERVICE LIST O (BY MAIL): I placed the envelope for collection and mailing at Los Angeles, California, The envelope was mailed with postage fully prepaid. I am readily familiar with this firm’s practice of collection and processing corres ondence for mailing. Under that practice it would be deposited with the U.S. postal service on that same day with postage thereon fully prepaid at Los Angeles, California, in the ordinary course of business. I am aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date is more than | day after date of deposit for mailing in affidavit. C1 (BY FACSIMILE TRANSMISSION): I caused a true copy thereof from sending facsimile machine telephone number 213-614-7399 to be sent via facsimile to the above listed names and facsimile numbers and received confirmed transmission oe ioeieeane that this document was successfully transmitted to the parties named above. M (VIA OVERNIGHT MAIL): | am "readily familiar" with the firm's practice of collection and processing correspondence for, overnight delivery. Under that practice it would be deposited in a box or other facility regularly maintained by the express service carrier, or delivered to an authorized courier or driver authorized by the express service carrier to receive documents, in an envelope or packa e designated by the express service carrier with delivery fees paid or provided for, addressed to the person on whom it is to be served, at the office address as last given by that person on any document filed in the cause and served on the party making service; otherwise at that party's place of residence. O (BY E-MAIL OR ELECTRONIC TRANSMISSION): Based on a court order or an agreement of the parties to accept service by e-mail or electronic transmission, I caused the document(s) to be sent to the persons] at the e-mail address[es] set forth herein, I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. See Cal.R.Ct.R. 206 UO (BY HAND DELIVERY): I caused to be delivered by hand each sealed envelope to the addressee(s) mentioned in the attached service/mailing list. : PROOF OF SERVICE A4304\310631231.v1©. mA DHA FPF WN RYN NY NH NNN Fe ee ee ee ee By ON ON |e 0) 0) et oe Oe cor ON A St et 28 IINSHAW & CULBERTSON itp 50 South Grand Avo., Sue 3600 ‘Los Angeles, CA 90071-2402 213-880-2800 LC) (BY PERSONAL SERVICE): I caused such envelope to be delivered to a commercial messenger service with instructions to personally deliver same to the offices of the addressee as shown on the attached mailing list on this date. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 27, 2022, at Los Angeles, California. Bari V. Vesa Gloria Valles v PROOF OF SERVICE A4304\310631231.v1onan wn fF WN oO 10 u 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INSHAW & CULBERTSON up 50 South Grand Ave, Suit 3600 tos Angeles, CA 90071-2402 213-680-2800 SERVICE LIST Velocity Investments, LLC vs. Maria Canul, et al. and X-Action Case No. 20CV300096 Fred W. Schwinn (SBN 225575) Raeon R. Roulston (SBN 255622) Matthew C, Salmonsen (SBN 302854) CONSUMER LAW CENTER, INC. 1435 Koll Circle, Suite 104 San Jose, California 95112-4610 Telephone Number: (408) 294-6100 Facsimile Number: (408) 294-6190 Email Address: fred.schwinn@sjconsumerlaw.com; raeon.roulston@sjconsumerlaw.com; matthew.salmonsen@sjconsumerlaw.com Attorneys for Defendant/Cross-Complainant MARIA CANUL 1 PROOF OF SERVICE A4304\3 1063123 1.v1