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BRUCE A. SCHEIDT, State Bar No. 155088
bscheidi@kanig.com
CHRISTOPHER ONSTOTT, State Bar No. 225968
constott@kmtg.com
ERROL C. DAUIS, State Bar No. 279313
edauis@kmtg.com
KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD
A Professional Corporation
400 Capitol Mall, 27" Floor
Sacramento, California 95814
Telephone: (916) 321-4500
Facsimile: (916) 321-4555
Attorneys for Plaintiff and Cross-Defendant
GOLDEN PACIFIC BANK, N.A.
ELECTRONICALLY
FILED
Superior Court of Califomia,
County of San Francisco
03/10/2016
Clerk of the Court
BY-:ROMY RISK
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
GOLDEN PACIFIC BANK, N.A.,
Plaintiff,
ve
BILLFLOAT, INC., RYAN GILBERT, SEAN
O'MALLEY, and DOES 1-50, inclusive,
Defendants.
BILLFLOAT, INC.
Cross-Complainant,
v.
GOLDEN PACIFIC BANK, N.A., and ROES
1-50,
Cross-Defendants.
1429518,1 14023-004
Case No. CGC-16-549804
REQUEST FOR JUDICIAL NOTICE IN
SUPPORT OF PLAINTIFF/CROSS-
DEFENDANT'S MOTION TO CHANGE
VENUE
Judge: Hon. Harold E. Kahn
Date: May 11, 2016
Time: 9:30 a.m.
Dept.: 302
Reservation Number: 03100511-01
Case Transferred
from Sacramento County: January 11, 2016
Trial Date: None Set
REQUEST FOR JUDICL - =
CHANGE VENUE10
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In support of Plaintiff and Cross-Defendant GOLDEN PACIFIC BANK's ("Golden
Pacific") Motion to Change Venue, Golden Pacific hereby requests that the Court take judicial
notice of Golden Pacific's Complaint for Damages and Injunctive Relief filed in this action as well
as the following documents pursuant to California Evidence Code sections 452 and 453 and
California Rules of Court, Rule 3.1306:
Attachment 1: Defendant and Cross-Complainant BILLFLOAT, INC.'s ("BillFloat")
Complaint for Declaratory Relief and Judicial Reference, filed in the Superior Court of the State of
California, County of San Francisco ("San Francisco Superior Court") Case No. CGC-15-547679,
on August 28, 2015,
Attachment 2; BillFloat's Memorandum of Points and Authorities in Support of
Defendants’ Motion to Change Venue, filed in the Superior Court of the State of California,
County of Sacramento ("Sacramento Superior Court"), Case No. 34-2015-00185106, on
November 10, 2015.
Attachment 3: Golden Pacific's Non-opposition to Motion to Change Venue, filed in
Sacramento Superior Court, Case No. 34-2015-00185106, on November 24, 2015.
Attachment 4; Sacramento Superior Court's Order Granting Defendants' Motion to
Change Venue, issued in Case No. 34-2015-00185 106, on December 11, 2015.
Attachment 5: BiilFloat's First Amended Complaint, filed in San Francisco Superior
Court, Case No. CGC-15-547679, on November 3, 2015.
Attachment 6; San Francisco Superior Court's Order Granting Leave to File Plaintiff's
Application to Substitute Defendants' (Does 1 through 5) True Names, issued in Case No. CGC-
15-547679, on November 5, 2015.
Attachment 7: BillFloat's Verified Petition for Writ of Mandate for Inspection of
Corporate Books and Records Under Corp. Code § 1601, filed in Sacramento Superior Court,
Case No, 34-2015-80002237, on November 13, 2015
Attachment 8: Golden Pacific's Notice of Motion and Motion to Change Venue, filed in
San Francisco Superior Court, Case No. CGC-15-547679, on November 23, 2015.
it
1429518.1 14023-004 1
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT'S MOTION TO
CHANGE VENUEkw N
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Attachment 9: Golden Pacific's Memorandum of Points and Authorities in Support of
Defendants’ Motion to Change Venue, filed in San Francisco Superior Court, Case No. CGC-15-
547679, on November 23, 2015.
Attachment 10: Declaration of Virginia Varela in Support of Defendants' Motion to
Change Venue, filed in San Francisco Superior Court, Case No. CGC-15-547679, on November
23, 2015.
Attachment 11; BillFloat's Opposition to Defendants’ Motion to Change Venue, filed in
San Francisco Superior Court, Case No, CGC-15-547679, on December 23, 2015.
Attachment 12: San Francisco Superior Court's Order Granting Defendants’ Motion to
Change Venue to Sacramento County Superior Court, issued in Case No. CGC-15-547679, on
January 7, 2016.
Attachment 13: San Francisco Superior Court's Dismissal Without Prejudice of First
Amended Complaint, issued in Case No. CGC-15-547679, on January 22, 2016.
Attachment 14: BillFloat's Cross-Complaint, filed in this action and with this Court on
February 8, 2016.
Attachment 15: BillFloat's Complaint, filed in Superior Court of the State of California,
County of Contra Costa, Case No. C16-00250, on February 8, 2016.
LAW AND ARGUMENT
Evidence Code section 452(d) allows a party to request that a court take judicial notice of
"{rJecords of (1) any court of this state or (2) any court of record of the United States..."
Furthermore, Evidence Code section 452(h) provides that judicial notice may be taken of "[flacts
and propositions that are not reasonably subject to dispute and are capable of immediate and
accurate determination by resort to sources of reasonably indisputable accuracy." A court may
take judicial notice of a legally operative document "not only of the fact of the document and its
recording or publication, but also facts that clearly derive from its /egal effect." Scott v. JPMorgan
Wt
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1429518.1 14023-004 eae)
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLANT T/CROSS-DEFENDANT’S MOTION TO
CHANGE VENUE1] Chase Bank, N.A., 214 Cal.App.4th 743, 754 (2013), as modified on denial of reh'g (Apr. 16,
2 |] 2013), review denied (June 12, 2013) (emphasis in the original) (citing Fontenot v. Wells Fargo
3 || Bank, N.A., 198 Cal.App.4th 256, 265 (2011)).
4
5 || Dated: March 10, 2016 KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD
: A Professional Corporation
7 —
8 By:
Christopher Onstott
9 Attorneys for Plaintiff and Cross-Defendant
10 GOLDEN PACIFIC BANK, N.A.
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1429518.1 14023-004 3
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT'S MOTION TO
CHANGE VENUEEXHIBIT 1WEBB LEGAL GROUP
155 Montgomery Street, Suite 1200
San Francisco, CA 94104
BY FAX
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WILLIAM T. WEBB #193832
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155 Montgomery Street, Suite 1200 ‘ounty of Brot Calfors
San Francisco, CA 94104
(415) 277-7200 AUG 28 2015
(415) 277-7210 (fax) CLERK/OF
Attorneys for BILLFLOAT, INC. BY. COURT
Deputy
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
(Unlimited Jurisdiction)
BILLFLOAT, INC., a Delaware corporation, ] Case No. G0~ 1 5 “54 7679
doing business as Better Finance,
PLAINTIFF BILLFLOAT, INC.’S
Plaintiff COMPLAINT FOR:
ve 1. DECLARATORY RELIEF; AND
2, JUDICIAL REFERENCE
GOLDEN PACIFIC BANK, N.A., a National
Bank, and DOES 1-50, inclusive,
Defendants.
Plaintiff BILLFLOAT, INC., a Delaware corporation doing business as Better Finance
(“Plaintiff” or “Better Finance”), by counsel, hereby states its Complaint against GOLDEN
PACIFIC BANK, N.A., a National Bank (“Defendant” or “GPB”) and DOES 1-50 (collectively
“Defendants”), inclusive, and alleges as follows.
PRELIMINARY ALLEGATIONS
1, Plaintiff Better Finance has its principal place of business in the City and County
of San Francisco, California.
2. Under information and belief, Defendant GPB has its principal place of business in
Sacramento County, California.
3. Better Finance and GPB are sometimes collectively referred to herein as the
“Parties.”
4, A justiciable controversy has arisen between Plaintiff and Defendant regarding the
meaning and import of a certain contract the Parties have entered into, and as to the rights and
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obligations of the Parties thereunder, as set forth herein, entitling Plaintiff to a declaration of the
rights and obligations of the Parties.
5. In addition, GPB has asserted a claim to a sum of money that requires the
examination of a long account, and Better Finance therefore is entitled to a judicial reference
pursuant to California Code of Civil Procedure section 639, subdivisions (a)(1) and (a)(2).
6. Defendants DOES 1 through 50, inclusive, are sued herein by such fictitious
names because their true names and capacities are unknown to Plaintiff. Plaintiff will seek leave
to amend this Complaint when said Defendants’ names and capacities have been ascertained.
Upon information and belief, Plaintiff alleges that said fictitiously named Defendants are in some
manner legally liable for the actions, conduct and damages hereinafter alleged,
7 Plaintiff is informed and believes and thereon alleges that at all times herein
mentioned, each Defendant, both fictitiously and actually named, was the principal, agent, or
employee of the other Defendants, and acting as either such principal or within the course and
scope of such employment or agency, took some part in the acts or omissions hereinafter set forth
by reason of which each Defendant, both fictitiously and actually named, is liable to Plaintiff for
the relief prayed for herein.
8. Venue is proper in this Court pursuant to California Code of Civil Procedure
section 395, subdivision (a}, because the obligation was entered into, and to be performed, in the
City and County of San Francisco.
SPECIFIC ALLEGATIONS
A Better Finance develops a business plan to facilitate U.S. Small Business
Administration 7(a) Loans
9. The United States Small Business Administration (“SBA”) organizes a number of
loan guaranty programs designed for business owners who may have difficulty qualifying for a
traditional bank loan. While lenders originate the loans, the SBA promulgates certain -
underwriting requirements. Ifa loan application meets or exceeds these requirements, it may be
eligible to be guaranteed by the SBA, provided that such loan application also meets the criteria
that the lender applies to its non-SBA loans, Each lender’s own criteria for non-SBA loans may
be unique. One SBA loan program is called the “7(a) program” and an SBA-guaranteed loan
issued thereunder is known as an “SBA 7(a) Loan.”
10. Various lenders in the United States offer SBA 7(a) Loans as a financial product.
ll. Prior to the events at issue, Better Finance developed a business plan that involves
two primary aspects, First, Better Finance intended to enter into referral agent and packaging
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agent relationships with small businesses that wish to apply for SBA 7(a) loans. Better Finance
developed proprietary referral and packaging software to enable applicants to accelerate an
otherwise often burdensome application process. Second, Better Finance intended to, and did,
develop software designed to speed and reduce the lenders’ costs of underwriting and loan
origination for SBA 7(a) loans through a proprietary software system (the “BELIEF System,”
described herein). In such a manner, Better Finance planned to speed up and facilitate an
otherwise burdensome and challenging application experience for small businesses, while at the
same time enabling lenders to streamline the underwriting, loan origination, and account
statement provisioning process.
B. Better Finance creates the BELIEF System Software and the Trade Name
“SmartBiz”
12. Prior to the events at issue, Better Finance had created financial technology known
as the BillFloat Electronic Loan Investigation and Evaluation Framework System (the “BELIEF
System.” The BELIEF System is software that is licensed to lenders that includes (i) an
underwriting system, (ii) an origination management and recordkeeping system, and (iii) a
dashboard system for loan account statement. The BELIEF System can implement the unique
underwriting criteria of each lender.
13. Better Finance had also developed a brand that it calls “SmartBiz,” for which it
filed certain SmartBiz trademarks. Together, the SmartBiz brand and SmartBiz trademarks are
referred to herein as the “SmiartBiz Brand IP.”
c. GPB ts an SBA Preferred Lender
14, Many traditional lenders do not offer SBA 7(a) Loans because of the difficulty,
and resulting cost, in underwriting them. Even lenders that do offer SBA 7(a) Loans often do not
provide such loans in amounts of $25,000 and lower.
15. Atall relevant times, GPB held a Preferred Lender Program (“PLP”) license with
the SBA, permitting it to originate all forms of SBA loans, including SBA 7(a) Loans in amounts
ranging from $5,000 to $5,000,000, .
D. Better Finance seeks lenders to license the BELIEF System
16. In or about 2013, Better Finance sought lenders interested in licensing the BELIEF
System. Better Finance approached lenders, and indicated that it was interested in licensing the
BELIEF System to lenders to enable them to underwrite SBA loans more rapidly, with greater
regulatory compliance, and at a lower cost.277-7200
WEBB LEGAL GROUP
155 Montgomery Street, Suite 1200
‘San Francisco, CA 94104
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E. GPB expresses interest in working with Better Finance; the Parties develop an
underwriting algorithm called the “GOLD Standard”
17. Defendant GPB was among the first lenders to express an interest in working with
Better Finance. From the start, GPB represented that its Board of Directors had only authorized it
to enter into loans valued between $5,000 and $25,000.
18. Accordingly, the Parties discussed the mechanics of how GPB would utilize the
BELIEF System software specifically to underwrite SBA 7(a) Loans. Out of these discussions,
the Parties jointly developed a set of underwriting criteria that would implement GPB’s small
business loan underwriting standards at that time using the BELIEF System software. The Parties
ultimately named these criteria the Guarantor Owner Liquidity Debt-coverage Standard (the
“GOLD Standard”).
19. GPB viewed the GOLD Standard as a potential source of additional revenue, and
requested that Better Finance offer to license the GOLD Standard to other lenders with whom.
Better Finance might do business. The Parties agreed to share in certain costs and revenues
associated with the ongoing improvement and marketing of the GOLD Standard and the SmartBiz
Brand IP and business development that could lead to more loan applications that could be
submitted to GPB.
20. On July 25, 2013, Better Finance and GPB signed a document the Parties termed a
“Key Agreements Summary,” The recitals in the Key Agreements Summary include the
following:
A. Lender desires to engage in the origination, marketing, underwriting, and funding
of loans, as well as the servicing, management, and liquidation of the subsequently
resulting loan portfolios, funded and created under the U.S. Small Business
Administration (“SBA”) 7(a) Loan Program (the “7(a) Program”).
In other words, the Key Agreements Summary provides that the Parties’ deal concerns the
financial product known as SBA 7(a) Loans, which the SBA guarantees in amounts ranging from
$5,000 to $5,000,000 and subject to all the loan permutations permissible under the SBA
Standard Operating Procedures. Notably, the Key Agreements Summary does not define the
“7{a) Program” as only applying to loans in the amount of $5,000 to $25,000 or having a specific
use of proceeds or collateral requirements.
21. In the ensuing months, the Parties decided to implement the Key Agreements
Summary by executing two contracts. ;
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F. The Parties execute the License Agreement
22. The Parties first executed a Software License, Maintenance and Support
Agreement (the “License Agreement”), whereby GPB would license the BELIEF System
platform for use in its own origination of SBA 7(a) loans. The Parties signed the License
Agreement on November 6, 2013. 7
23. The Licensing Agreement provides that the licensed technology — i.e. the BELIEF
System — belongs to Better Finance. It grants GPB a non-exclusive and limited license to use the
BELIEF System platform for underwriting “SBA-guaranteed loans,” without any restriction on
the type of SBA loan or on the size of such SBA loan. The Parties equally understood that Better
Finance was in the process of entering into similar licensing agreements with other lenders.
G. The Parties execute the Marketing Agreement
24. In addition, on December 5, 2013, the Parties executed a second agreement,
termed the “Draft [sic] Joint Marketing and Joint Technology Improvement Agreement” (the
“Marketing Agreement”), Although the parties failed to remove the word “Draft” from the title
of the document, the document was fully executed by both Parties as a final agreement.
25. The Marketing Agreement memorialized the Parties’ agreements concerning
revenue sharing and cost sharing between the Parties related to the GOLD Standard. It provided
that the GOLD Standard technology was jointly owned, and anticipated further development of
such technology. It also provided that the Parties would each receive income when other banks
licensed the GOLD Standard.
26. The Marketing Agreement also provided that the Parties jointly share in certain
profits related to licensing the SmartBiz Brand IP. It provided for certain cost and revenue
sharing regarding the improvement and licensing of the SmartBiz Brand IP to other lenders.
27. The Marketing Agreement required Better Finance to refer 70% of all SBA 7(a)
Loan applications to GPB each month, regardless of the loan amount sought, if such application
would meet GPB’s underwriting criteria. Even though the Marketing Agreement required Better
Finance to refer 70% of all SBA 7(a) Loan applicants, GPB continued to accept only loan
applications in the $5,000 to $25,000 range.
H. = The Parties b doing business even before the License Agreement and the
- Marketing Agreement are signed
28. Even before the License Agreement and Marketing Agreement were signed, in
September 2013, GPB began accepting loan applications from applicants referred to GPB by
Better Finance. GPB told Better Finance that it only wanted to be referred SBA 7(a) loan
5WEBB LEGAL GROUP
(415) 277-7200
155 Montgomery Street, Suite 1200
San Francisco, CA 94104
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| applications seeking $5,000 to $25,000 because it perceived this to be a good market opportunity.
Better Finance requested that GPB accept SBA 7(a) loan applications for larger loan amounts, but
GPB did not want to do so at that time.
29. In April 2014, the GPB Board of Directors authorized GPB to start preliminarily
exploring the possibility of originating SBA 7(a) loans in excess of $25,000 in the indeterminate
future.
i Better Finance enters into an agreement with Celtic Bank
30. ‘In or around early 2014, Better Finance informed GPB that it intended to enter into
an agreement with Celtic Bank, as was its right to do, and to refer to Celtic Bank SBA 7(a) Loan
applicants seeking loans in the $25,000 to $150,000 range, including loans secured by real estate
and those underwritten using different criteria than the GOLD Standard. More than a month after
so notifying GPB, on March 17, 2014, Better Finance executed a contract with Celtic Bank to this
effect, Celtic Bank began originating SBA 7(a) loans referred by Better Finance in April 2014,
31. In June and/or July 2014, Better Finance notified GPB that Celtic Bank intended to
increase the size of SBA 7(a) loans referred by Better Finance that Celtic would underwrite to
$350,000, Based on a referral from Better Finance, Celtic Bank issued its first SBA 7(a) Loan
with a value between $151,000 to $350,000 in August 2014.
i GPB asks to renegotiate the terms of the Marketing Agreement
32. Prior to July 23, 2014, GPB asked Better Finance to re-structure the Marketing
Agreement. On July 23, 2014, the Parties executed a First Amended Joint Marketing Agreement
(the “Amended Marketing Agreement”), a copy of which is attached hereto as Exhibit 1, and
incorporated herein. The Parties’ relationship was materially amended in two ways. First, GPB
received additional compensation under the Amended Marketing Agreement. Second, the
Amended Marketing Agreement placed an upward size limitation on the types of SBA 7(a) loan
applications that Better Finance was obliged to refer to GPB. Henceforth, Better Finance would
only be obligated to refer to GPB 70% of SBA loan applications seeking loans of $25,000 or less,
if such joan applications met GPB’s underwriting criteria,
K. Better Finance begins working with First Home Bank
33. Prior to June 2015, Better Finance provided GPB notice that it intended to refer
loans to First Home Bank, as is its right to do, including loans underwritten using different
criteria than the GOLD Standard, In June 2015, First Home Bank originated its first loans, in the
$25,000 to $350,000 range.San Francisco, CA 94104
(415) 277-7200
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155 Montgomery Street, Suite 1200
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K. GPB’s regulator tells GPB to restructure the Marketing Agreement to eliminate its
liability for cos!
34. Under information and belief, at some point in or prior to January 2015, a
regulator of GPB — probably the Office of the Comptroller of the Currency (“OCC”) — expressed
concern to GPB about its spending on cost sharing under the Amended Marketing Agreement. At
this point in time, GPB could have simply approached Better Finance with a request to terminate
the Amended Marketing Agreement pursuant to section 7 of the Amended marketing Agreement,
based on regulatory concerns about GPB’s capital inadequacy. Instead, it asked Better Finance to
further amend the Marketing Agreement to address the regulator’s concerns.
35. Specifically, on January 8, 2015, GPB asked Better Finance to amend the Parties’
relationship, and in support of the request, stated in part as follows in an e-mail to Better Finance:
The bank is currently losing approximately $60-70K/ month ($40-50K net from the
Marketing Agreement settlement, $20+K from the depreciation of the software asset), and
the pro-forma that was prepared by Better Finance for 2015 indicates the Bank is expected
to experience marketing agreement losses greater than $300K+ in addition to the Bank’s
projected $250K software asset depreciation expense. This creates a situation where our
core bank operations, which after much effort is slightly net positive, swings to a net loss
for the Bank in 2015, with the impact of the Marketing Agreement losses.
36. Better Finance agreed in principal to again re-negotiate the Amended Marketing
Agreement, and has done so in good faith. As set forth herein, the Parties have not agreed upon
terms of any such amendment.
37. From January 2015, the Parties have engaged in several rounds of negotiations.
Each time the parties would reach agreement on the terms of an amended agreement, GPB would
renege at the last minute and demand new concessions when presented with a final draft of an
agreement. In short, GPB has refused to negotiate in good faith.
38. Asan example of its refusal to negotiate in good faith, in July 2015, GPB failed to
make payment to Better Finance for monies owing under the License Agreement and monies
GPB was legally obligated to send to Better Finance from loan disbursements as payment for
referral and packaging fees owed to Better Finance, in a ploy to exert leverage on Better Finance
to concede material points in negotiations. GPB only made the payment after Better Finance
provided it with a notice of breach of contract.
L. GPB foments a dispute simply to exert pressure on Better Finance to amend the
terms of the deal — something Better Finance is under no legal obligation to do
39. Solely in order to exert pressure on Better Finance to amend the Amended
Marketing Agreement, on August 17, 2015, GPB caused its attorneys to send a notice of default
7WEBB LEGAL GROUP
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to Better Finance, alleging four instances where Better Finance is alleged to have breached the
Amended Marketing Agreement (the “Alleged Breaches”). A copy of this notice is attached
hereto as Exhibit 2, and is incorporated herein, without admitting or adopting the allegations
therein, all of which Better Finance expressly denies (the “Notice of Default”). The Notice of
Default constitutes and/or evidences a genuine dispute as to the rights and obligations of the
Parties concerning each of the Alleged Breaches, entitling Better Finance to a declaration as to
the rights and obligations of the Parties concerning them, as set forth herein.
M. First Alleged Breach: alleged failure to provide more detail regarding proposed joint
intellectual property scopes of work
40. _ Inits first alleged breach, GPB argues that Better Finance failed to provide certain
paperwork allegedly required by the Amended Marketing Agreement regarding proposed joint
intellectual property scopes of work (called “Joint IP SOW’s” in the Amended Marketing
Agreement) at points in time when GPB had submitted the paperwork. At the time the paperwork
had been submitted, GPB raised no objection to its form and accepted the paperwork and
submitted payment, Better Finance reasonably relied on GPB’s acceptance of its paperwork and
payment in response, GPB now argues that it is necessary for Better Finance to go back and re-
do the paperwork simply to create busywork and to burden and harass Better Finance in
retaliation for not acquiescing in GPB’s demands to further amend the Parties’ agreement.
Accordingly, Better Finance seeks a declaration that it is under no obligation to perform
unnecessary work after GPB has already accepted the paperwork offered,
N. Second Alleged Breach: alleged failure to account for improvement costs related to
the Parties’ joint intellectual property
41. For its second allegation of breach of contract, GPB alleges that Better Finance
improperly charged it for certain items when it submitted statements to GPB for improvement
costs related to the Parties’ joint intellectual property, called “Joint IP” in the Amended
Marketing Agreement. :
42. Without admitting the truth of such allegation, Better Finance submits that any
such sums owed would be dependent upon an examination of a long account of not only the
improvement costs, but also of revenues paid by Better Finance to GPB, and asserts that these
amounts are also subject to an examination of a long account, and in all likelihood have been
overpaid.
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166. Asa proximate result of Cross-Defendant’s breach of the contract as set forth in
connection with this cause of action, Cross-Complainant has been damaged in an amount to be
proven at trial, including both direct and consequential damages, but not less than $7,582,515,
plus statutory interest on this amount.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set
forth in the Prayer for Relief below.
EIGHTH CAUSE OF ACTION
(For Breach of the Implied Covenant of Good Faith and Fair Dealing in the Joint Venture
Agreement — by Cross-Complainant against Cross-Defendants GPB and Roes 1 — 50)
167. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
168. In addition to the breaches referred to in the foregoing paragraphs of this Cross-
Complaint, the Joint Venture Agreement contains an implied covenant of good faith and fair
dealing whereby each party has a contractual duty not to do anything that would injure the rights
of the other to receive the benefits of the contract, and to do everything to accomplish the
contract’s purposes.
169. The Cross-Defendant GPB breached the implied covenant of good faith and fair
dealing contained within the Joint Venture Agreement in many ways. By way of example only,
Cross-Defendants breached the implied covenant by refusing to perform it as originally intended,
and, instead, insisting that Cross-Complainant perform Cross-Defendant’s duties.
170. Cross-Defendants also breached by evasion of the spirit of the bargain.
171. Cross-Defendants have further breached the covenant by invoking alleged rights
under the Joint Venture Agreement dishonestly as a pretext for other reasons which were not a
part of the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation of the
contract contrary to their own understanding, falsification of facts, evasion of the spirit of the
bargain, lack of diligence, willful rendering of imperfect performance, abuse of power to specify
terms, interference with or failure to cooperate in Cross-Complainant’s performance, harassing
demands for assurances of performance, rejection of performance for unstated reasons, and abuse
of power to determine compliance or to terminate the Joint Venture Agreement. By their actions,
Cross-Defendants acted for reasons beyond the risks that the Cross-Complainant assumed in the
Joint Venture Agreement, and/or acted inconsistently with Cross-Complainant’s justified
expectations, Each of these acts constitutes a breach of the implied covenant of good faith and
fair dealing.
28
‘CROSS-COMPLAINTSan Francisco, CA 94104
(415) 277-7200
WEBB LEGAL GROUP
155 Montgomery Street, Suite 1200
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172. Cross-Complainant has performed, and/or stands ready to perform, all of the
conditions, conditions precedent, covenants, promises and obligations under the terms of the
contract.
173. Asa proximate result of Cross-Defendants’ breaches of the Joint Venture
Agreement, Plaintiff has suffered monetary damages in an amount according to proof at trial.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set
forth in the Prayer for Relief below.
NINTH CAUSE OF ACTION
(For Breach of the Implied Covenant of Good Faith and Fair Dealing in the Amended
Marketing Agreement — by Cross-Complainant against Cross-Defendant GPB)
174. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein, .
175. In addition to the breaches referred to in the foregoing paragraphs of this First
Amended Complaint, the Amended Marketing Agreement contains an implied covenant of good
faith and fair dealing whereby each party has a contractual duty not to do anything that would
injure the rights of the other to receive the benefits of the contract, and to do everything to
accomplish the contract’s purposes.
176. The Cross-Defendant GPB breached the implied covenant of good faith and fair
dealing contained within the Amended Marketing Agreement in many ways. By way of example
only, Defendant breached the implied covenant by refusing to perform it as originally intended,
and, instead, insisting that it be amended to suit its needs.
177. Cross-Defendant GPB also breached by evasion of the spirit of the bargain.
178. Cross-Defendant has further breached the covenant by invoking alleged rights
under the Amended Marketing Agreement dishonestly as a pretext for other reasons which were
not a part of the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation
of the contract contrary to its own understanding, falsification of facts, attempting to take
advantage of the necessitous circumstances of Cross-Complainant to extort a modification of the
Amended Marketing Agreement, evasion of the spirit of the bargain, lack of diligence, willful
rendering of imperfect performance, abuse of power to specify terms, interference with or failure
to cooperate in Cross-Complainant’s performance, harassing demands for assurances of
performance, rejection of performance for unstated reasons, and abuse of power to determine
compliance or to terminate the Amended Marketing Agreement. By its actions, Cross-Defendant
acted for reasons beyond the risks that the Cross-Complainant assumed in the Amended
29
‘CROSS-COMPLAINTWEBB LEGAL GROUP
San Francisco, CA 94104
(415) 277-7200
155 Montgomery Strect, Suite 1200
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Marketing Agreement, and/or acted inconsistently with Cross-Complainant’s justified
expectations. Each of these acts constitutes a breach of the implied covenant of good faith and
fair dealing.
179. | Cross-Complainant has performed, and/or stands ready to perform, all of the
conditions, conditions precedent, covenants, promises and obligations under the terms of the
contract.
180. As a proximate result of Cross-Defendant’s breaches of the Amended Marketing
Agreement, Cross-Complainant has suffered monetary damages in an amount according to proof
at trial.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set
forth in the Prayer for Relief below.
TENTH CAUSE OF ACTION
(For Breach of the Implied Covenant of Good Faith and Fair Dealing in the License
Agreement — by Cross-Complainant against Cross-Defendant GPB)
181. | Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
182, In addition to the breaches referred to in the foregoing paragraphs of this First
Amended Complaint, the License Agreement contains an implied covenant of good faith and fair
dealing whereby each party has a contractual duty not to do anything that would injure the rights
of the other to receive the benefits of the contract, and to do everything to accomplish the
contract’s purposes.
183. The Cross-Defendant GPB breached the implied covenant of good faith and fair
dealing contained within the License Agreement in many ways. By way of example only,
Defendant breached the implied covenant by refusing to perform it as originally intended, and,
instead, insisting that Cross~-Complainant perform Cross-Defendant’s duties.
184, Cross-Defendant GPB also breached by evasion of the spirit of the bargain.
185. | Cross-Defendant has further breached the covenant by invoking alleged rights
under the License Agreement dishonestly as a pretext for other reasons which were not a part of
the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation of the
contract contrary to its own understanding, falsification of facts, evasion of the spirit of the
bargain, lack of diligence, willful rendering of imperfect performance, abuse of power to specify
terms, interference with or failure to cooperate in Cross-Complainant’s performance, harassing
demands for assurances of performance, rejection of performance for unstated reasons, and abuse
30
‘CROSS-COMPLAINTWEBB LEGAL GROUP
(415) 277-7200
155 Montgomery Street, Suite 1200
San Francisco, CA 94104
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of power to determine compliance or to terminate the License Agreement. By its actions, Cross-
Defendant acted for reasons beyond the risks that the Cross-Complainant assumed in the License
Agreement, and/or acted inconsistently with Cross-Complainant’s justified expectations. Each of
these acts constitutes a breach of the implied covenant of good faith and fair dealing.
186, Cross-Complainant has performed, and/or stands ready to perform, all of the
conditions, conditions precedent, covenants, promises and obligations under the terms of the
contract,
187. Asa proximate result of Cross-Defendant’s breaches of the License Agreement,
Plaintiff has suffered monetary damages in an amount according to proof at trial.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set
forth in the Prayer for Relief below.
ELEVENTH CAUSE OF ACTION
(For Intentional Interference with Contractual Relations — by Cross-Complainant against
Cross-Defendants GPB and Roes 1-50)
188. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein. /
189. There was a contract between Better Finance and one or more large retail
concerns.
190, | Cross-Defendants knew of the contracts,
191. Cross-Defendants’ conduct prevented performance or made performance more
expensive or difficult.
192. Cross-Defendants intended to disrupt the performance of the contracts, or, in the
alternative, knew that disruption of performance was certain or substantially certain to occur.
193, Cross-Complainant was harmed.
194. Cross-Defendants’ conduct was a substantial factor in causing Cross-
Complainant’s harm. ;
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set
forth in the Prayer for Relief below.
TWELFTH CAUSE OF ACTION
(For Intentional Interference with Prospective Economic Relations — by Cross-
Complainant against Cross-Defendants GPB and Roes 1 — 50)
195. | Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
31
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196. Cross-Complainant and one or more large retail concerns were in an economic
relationship that probably would have resulted in an economic benefit to Cross-Complainant.
197. Cross-Defendants knew of the relationships.
198, Cross-Defendants engaged in wrongful conduct.
199. By engaging in this conduct, Cross-Defendants intended to disrupt the
relationships, and/or knew that disruption of the relationships was certain or substantially certain
to oceur.
200. The relationships were disrupted.
201. Cross-Complainant was harmed.
202. Cross-Defendants’ conduct was a substantial factor in causing Cross-
Complainant’s harm,
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set
forth in the Prayer for Relief below.
THIRTEENTH CAUSE OF ACTION
(For Judicial Reference necessitated by examination of a long account — by Cross-
Complaint against Cross-Defendant GPB)
203. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
204. The Court should appoint a referee pursuant to Code of Civil Procedure section
639 because the trial of an issue of fact requires the examination of a long account.
205. The taking of an account is necessary for the information of the Court before
judgment, and/or for carrying a judgment or order into effect.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set
forth in the Prayer for Relief below.
FOURTEENTH CAUSE OF ACTION
(For Theft of Trade Secrets — by Cross-Complainant against Cross-Defendants GPB
and Roes 1 — 50)
206. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
207. Cross-Complainant owned trade secrets, including, but not limited to, customer
and contact lists, and the underwriting model that Cross-Complainant developed for use with the
BELIEF System.
208. These items were trade secrets at the time of the misappropriation.
32
CROSS-COMPLAINTSan Francisco, CA 94104
(415) 277-7200
WEBB LEGAL GROUP
155 Montgomery Street, Suite 1200
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209. Cross-Defendants improperly acquired, used and/or disclosed the trade secrets.
210. Cross-Complainant was harmed and/or Cross-Defendants were unjustly enriched.
211. Cross-Defendants’ acquisition, use, and/or disclosure was a substantial factor in
causing Cross-Complainant harm and/or Cross-Defendants to be unjustly enriched.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set
forth in the Prayer for Relief below.
FIFTEENTH CAUSE OF ACTION
(or Unfair, Unlawful and/or Fraudulent Acts or Practices Pursuant to Business and
Professions Code section 17200 — by Cross-Complainant against Cross-Defendant GPB and
Roes 1 —50)
212. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and
incorporates them by reference herein.
213. Cross-Defendants’ conduct as herein alleged constitutes unfair, unlawful and/or
fraudulent business acts or practices as those terms are defined in Section 17200 of the California
Business & Professions Code.
214. Asa proximate result thereof, Cross-Complainant has been injured in fact and has
been deprived of its property by the Cross-Defendants in an amount according to proof at trial.
Cross-Complainant is also entitled to an injunction against Cross-Defendants.
WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set
forth in the Prayer for Relief below.
PRAYER FOR RELIEF
WHEREFORE, Cross-Complainant prays for judgment as follows:
1. For direct damages for Cross-Defendants’ breaches of fiduciary duty;
2. For consequential damages for Cross-Defendants’ breaches of fiduciary duty;
3. For punitive damages for Cross-Defendants’ breaches of fiduciary duty in an
amount to be decided at trial, in an amount designed to punish Cross-Defendant and to deter
future conduct by said Cross-Defendant and others; ;
4, For declaratory relief;
5. For direct damages for Cross-Defendants’ breaches of contract and covenants of
good faith and fair dealing;
6. For consequential damages for Cross-Defendants’ breaches of contract and
covenants of good faith and fair dealing;
7. For damages for interference with contract;
33
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For damages for interference with prospective economic advantage;
For appointment of a judicial referee;
For the amount found to be due from Cross-Defendant to Cross-Complainant as a
result of the accounting and pre-judgment interest on that amount;
11. For damages for theft of trade secrets;
12. For restitution under Business and Professions Code section 17200;
13. For disgorgement under Business and Professions Code section 17200;
14, For attorney’s fees and costs incurred herein; and
15. For such other and further relief as this court may deem just and proper.
Date: February 8, 2016 Respectfully submitted,
WI, T. WEBB #193832
JENNIFER D. YU #291603
Attorneys for BILLFLOAT, INC.
34
‘CROSS-COMPLAINTWEBB LEGAL GROUP
155 Montgomery Street, Suite 1200
San Francisco, CA 94104
(415) 277-7200
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JURY TRIAL REQUEST
Plaintiff requests trial by jury.
Date: February 8, 2016
Respectfully submitted,
T. WEBB #193832
JENNIFER D. YU #291603
Attorneys for BILLFLOAT, INC.
35
‘CROSS-COMPLAINTEXHIBIT 1By
Exhibit B: Mutual Development Plans............s0sss0
. Definitions
. Joint IP Ownership an
. Technology Development
. Insolvency.....
. Confidentiality ..
. Termination .
. Choice of Law
. Dispute Resolution and Deadlock:
. Entire Agreement.
. Severability
|. Waiver
. Headings
Joint Marketing and Joint Technology
Improvement Agreement
Table of Contents
icensiThis FIRST AMENDED JOINT MARKETING AGREEMENT (the “Marketing
Agreement”) is entered into between BillFloat, Inc. a Delaware corporation with its
principal place of business located at 417 Montgomery St,, Suite 500, San Francisco, CA
94104 (“BillFloat”), and Golden Pacific Bank, NA, a National Bank, with its principal
offices located at 980 9th St., Sacramento, CA 95814 (“GPB”), effective July 23, 2014,
The terms “GPB” shall also include the Gold Country Bank division of GPB.
This Marketing Agreement supercedes and wholly replaces the JOINT MARKETING
AGREEMENT between BillFloat and GPB, effective 2013 (the “Original Agreement”.
In consideration of valuable consideration in the mutual promises herein contained, GPB
and BillFloat (each, a “Party”; and collectively, “the Parties”) agree as follows:
1. Definitions
The following terms, when used in this Agreement, shall have the following meanings:
1.1 “Business Development” refers to the development and ongoing
maintenance of relationships, funded by a Joint IP SOW, with
Business Development Sources.
1.2 “Business Development Source” refers to entities that, through ongoing
Business Development, either introduce BillFloat to or hire BillFloat
to find Introduced Businesses that it will refer to GPB.
1.3. “Improvement Expense” refers to the cost of a Joint IP SOW. Exhibit D
provides an illustrative list of the types of expenses that may constitute
an Improvement Cost.
1.4 “Introduced Business” refers to a small business introduced to BiliFloat by
an entity that is, at the time of such introduction, a Business
Development Source.
15 “Joint IP” refers to a combination of the Joint Technology and the
SmartBiz brand and SmartBiz Marks.
16 “Joint IP SOW” refers to a plan to maintain and operate, improve, or
. increase the value of or add to the Joint IP, including, but not limited
to, promoting the SmartBiz Marks and brand and Business
Development. Each Joint IP SOW shall include proposed schedules
which outline the dates of deliverables and the dates that payments are
due from the Parties to fund the work contemplated by such SOW, and
a budget, including timing and type of payments to be made by the
parties, deliverables and criteria for evaluating functionality.
L7 “Joint Technology” refers to a method for applying certain underwriting
4 criteria for small business lending, as further described in Exhibit A,
so it can be run on a software platform (e.g.,.the Licensed Software
described in the License Agreement) in a manner that meets the
underwriting standards of the United States Small Business
Administration for its 7(A) Program.
18 “Joint Technology Development Costs” refers to the cost of developing
the Joint Technology prior to the date of this Agreement.1.9 “Level Two Improvement Costs” refers to new Improvement Costs of a
Joint IP SOW for a Mutual Development as to which GPB’s half
would exceed $50,000 in a particular month.
1.10 “License Agreement” refers to the Parties’ Software License,
Maintenance, and Support Agreement of November 6, 2013.
1.11 “Outstanding Improvement Expenses” shall refer to Improvement Costs
owed to a Party that have not yet been paid either by (i) the other
Party, or (ii) through income from licensing the Joint IP to third
parties.
1.12 “Proceeds” shall refer to a total of BillFloat’s revenues from a particular
activity.
1.13 “Proposer” refers to a Party that presents a Joint IP SOW,
1.14 “Qualified Introduced Business” refers to an Introduced Business that
qualifies for, under the GOLD Standard, and is seeking a SBA 7(A)
loan.
1,15 “Referral Assistance Expenses” refers to fees paid on a per loan or per
introduction basis by BillFloat to Business Development Sources who
introduce BillFloat to small businesses that become SmartBiz
registered users and retain BillFloat to refer such small businesses to a
lender. :
1.16 “Return on Unilateral Improvement Expenses” is defined as one times
(1x) the amount of Outstanding Improvement Expenses multiplied by
the number of months that such Outstanding Improvement Expenses
yemain unpaid.
1.17 “SmartBiz Marks” refers to all trademarks and service marks containing
the phrase “SmartBiz” owned by BillFloat, regardless of whether such
marks have been formally registered.
All other terms in this Marketing Agreement shall have the same meaning as the License
Agreement.
2. Joint IP Ownership and Licensing
" 24 Ownership of Joint Technology.
BillFloat and GPB (or their affiliates) have collaboratively developed the Joint
Technology. The Joint Technology is jointly owned by both Parties. Each Party’s
ownership interest in the Joint Technology is equivalent to that of a co-inventor’s interest
ina patent, Each Party agrees not to practice the Joint Technology except as provided in
this Marketing Agreement. Each Party agrees to maintain the Joint Technology as a trade
secret, adopting precautions and safeguards that are at least reasonable (under the
circumstances) against the non-disclosure and unauthorized use of the Joint Technology.
2.2 Joint IP Licensing. BillFloat shall provide to GPB a non-exclusive, fully paid up
non-revocable license to the SmartBiz brand and SmartBiz Marks, subject to the
requirements for usage described in Exhibit C to this Agreement, which may be amended
as the parties may reasonably agree from time to time. BillFloat agrees to take judiciousand prompt action to secure Federal trademark protection for the SmartBiz Brands and
implement and maintain appropriate policies and procedures to protect the SmartBiz
Brands, including both licensed use and policing against third-party infringement.
BillFloat agrees that it will not sell its rights in the SmartBiz brands without offering
GPB a right of first refusal to purchase the SmartBiz Marks on terms the same or more
preferable to BillFloat,
2.3 Reseller. GPB appoints BillFloat as the exclusive agent for sublicensing GPB’s
tights and interest in the Joint Technology and maintaining, and hosting the Joint
Technology for third party depository institutions.
2.4 Banking Industry Contacts. GPB
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oY DA HA BR WWD a} 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BRUCE A. SCHEIDT, State Bar No. 155088 bscheidi@kanig.com CHRISTOPHER ONSTOTT, State Bar No. 225968 constott@kmtg.com ERROL C. DAUIS, State Bar No. 279313 edauis@kmtg.com KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD A Professional Corporation 400 Capitol Mall, 27" Floor Sacramento, California 95814 Telephone: (916) 321-4500 Facsimile: (916) 321-4555 Attorneys for Plaintiff and Cross-Defendant GOLDEN PACIFIC BANK, N.A. ELECTRONICALLY FILED Superior Court of Califomia, County of San Francisco 03/10/2016 Clerk of the Court BY-:ROMY RISK Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO GOLDEN PACIFIC BANK, N.A., Plaintiff, ve BILLFLOAT, INC., RYAN GILBERT, SEAN O'MALLEY, and DOES 1-50, inclusive, Defendants. BILLFLOAT, INC. Cross-Complainant, v. GOLDEN PACIFIC BANK, N.A., and ROES 1-50, Cross-Defendants. 1429518,1 14023-004 Case No. CGC-16-549804 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF/CROSS- DEFENDANT'S MOTION TO CHANGE VENUE Judge: Hon. Harold E. Kahn Date: May 11, 2016 Time: 9:30 a.m. Dept.: 302 Reservation Number: 03100511-01 Case Transferred from Sacramento County: January 11, 2016 Trial Date: None Set REQUEST FOR JUDICL - = CHANGE VENUE10 11 12 13 14 15 16 17 18 19 20 al 22 23 24 25 26 27 28 om IY A Hh Bw WH In support of Plaintiff and Cross-Defendant GOLDEN PACIFIC BANK's ("Golden Pacific") Motion to Change Venue, Golden Pacific hereby requests that the Court take judicial notice of Golden Pacific's Complaint for Damages and Injunctive Relief filed in this action as well as the following documents pursuant to California Evidence Code sections 452 and 453 and California Rules of Court, Rule 3.1306: Attachment 1: Defendant and Cross-Complainant BILLFLOAT, INC.'s ("BillFloat") Complaint for Declaratory Relief and Judicial Reference, filed in the Superior Court of the State of California, County of San Francisco ("San Francisco Superior Court") Case No. CGC-15-547679, on August 28, 2015, Attachment 2; BillFloat's Memorandum of Points and Authorities in Support of Defendants’ Motion to Change Venue, filed in the Superior Court of the State of California, County of Sacramento ("Sacramento Superior Court"), Case No. 34-2015-00185106, on November 10, 2015. Attachment 3: Golden Pacific's Non-opposition to Motion to Change Venue, filed in Sacramento Superior Court, Case No. 34-2015-00185106, on November 24, 2015. Attachment 4; Sacramento Superior Court's Order Granting Defendants' Motion to Change Venue, issued in Case No. 34-2015-00185 106, on December 11, 2015. Attachment 5: BiilFloat's First Amended Complaint, filed in San Francisco Superior Court, Case No. CGC-15-547679, on November 3, 2015. Attachment 6; San Francisco Superior Court's Order Granting Leave to File Plaintiff's Application to Substitute Defendants' (Does 1 through 5) True Names, issued in Case No. CGC- 15-547679, on November 5, 2015. Attachment 7: BillFloat's Verified Petition for Writ of Mandate for Inspection of Corporate Books and Records Under Corp. Code § 1601, filed in Sacramento Superior Court, Case No, 34-2015-80002237, on November 13, 2015 Attachment 8: Golden Pacific's Notice of Motion and Motion to Change Venue, filed in San Francisco Superior Court, Case No. CGC-15-547679, on November 23, 2015. it 1429518.1 14023-004 1 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT'S MOTION TO CHANGE VENUEkw N au Dw 10 1 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Attachment 9: Golden Pacific's Memorandum of Points and Authorities in Support of Defendants’ Motion to Change Venue, filed in San Francisco Superior Court, Case No. CGC-15- 547679, on November 23, 2015. Attachment 10: Declaration of Virginia Varela in Support of Defendants' Motion to Change Venue, filed in San Francisco Superior Court, Case No. CGC-15-547679, on November 23, 2015. Attachment 11; BillFloat's Opposition to Defendants’ Motion to Change Venue, filed in San Francisco Superior Court, Case No, CGC-15-547679, on December 23, 2015. Attachment 12: San Francisco Superior Court's Order Granting Defendants’ Motion to Change Venue to Sacramento County Superior Court, issued in Case No. CGC-15-547679, on January 7, 2016. Attachment 13: San Francisco Superior Court's Dismissal Without Prejudice of First Amended Complaint, issued in Case No. CGC-15-547679, on January 22, 2016. Attachment 14: BillFloat's Cross-Complaint, filed in this action and with this Court on February 8, 2016. Attachment 15: BillFloat's Complaint, filed in Superior Court of the State of California, County of Contra Costa, Case No. C16-00250, on February 8, 2016. LAW AND ARGUMENT Evidence Code section 452(d) allows a party to request that a court take judicial notice of "{rJecords of (1) any court of this state or (2) any court of record of the United States..." Furthermore, Evidence Code section 452(h) provides that judicial notice may be taken of "[flacts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." A court may take judicial notice of a legally operative document "not only of the fact of the document and its recording or publication, but also facts that clearly derive from its /egal effect." Scott v. JPMorgan Wt Mt Mt 1429518.1 14023-004 eae) REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLANT T/CROSS-DEFENDANT’S MOTION TO CHANGE VENUE1] Chase Bank, N.A., 214 Cal.App.4th 743, 754 (2013), as modified on denial of reh'g (Apr. 16, 2 |] 2013), review denied (June 12, 2013) (emphasis in the original) (citing Fontenot v. Wells Fargo 3 || Bank, N.A., 198 Cal.App.4th 256, 265 (2011)). 4 5 || Dated: March 10, 2016 KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD : A Professional Corporation 7 — 8 By: Christopher Onstott 9 Attorneys for Plaintiff and Cross-Defendant 10 GOLDEN PACIFIC BANK, N.A. 11 12 13 14 15 16 17 18 19 20 21 22, 23 24 25 26 ‘27 28 1429518.1 14023-004 3 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT'S MOTION TO CHANGE VENUEEXHIBIT 1WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 San Francisco, CA 94104 BY FAX come IY AH bh YD (415) 277-7200 nN NY N NY N N NY DY fF & _ —_ BNRRREBRHKRESsBATREERPBE TS WILLIAM T. WEBB #193832 JENNIFER D. YU #291603 F opty colt de,,D 155 Montgomery Street, Suite 1200 ‘ounty of Brot Calfors San Francisco, CA 94104 (415) 277-7200 AUG 28 2015 (415) 277-7210 (fax) CLERK/OF Attorneys for BILLFLOAT, INC. BY. COURT Deputy SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO (Unlimited Jurisdiction) BILLFLOAT, INC., a Delaware corporation, ] Case No. G0~ 1 5 “54 7679 doing business as Better Finance, PLAINTIFF BILLFLOAT, INC.’S Plaintiff COMPLAINT FOR: ve 1. DECLARATORY RELIEF; AND 2, JUDICIAL REFERENCE GOLDEN PACIFIC BANK, N.A., a National Bank, and DOES 1-50, inclusive, Defendants. Plaintiff BILLFLOAT, INC., a Delaware corporation doing business as Better Finance (“Plaintiff” or “Better Finance”), by counsel, hereby states its Complaint against GOLDEN PACIFIC BANK, N.A., a National Bank (“Defendant” or “GPB”) and DOES 1-50 (collectively “Defendants”), inclusive, and alleges as follows. PRELIMINARY ALLEGATIONS 1, Plaintiff Better Finance has its principal place of business in the City and County of San Francisco, California. 2. Under information and belief, Defendant GPB has its principal place of business in Sacramento County, California. 3. Better Finance and GPB are sometimes collectively referred to herein as the “Parties.” 4, A justiciable controversy has arisen between Plaintiff and Defendant regarding the meaning and import of a certain contract the Parties have entered into, and as to the rights and 12 3 a 2 z 3 it 8 2 a oo8 ORS8 Ese Sass eet ages Beas 2 on Bae Bea $a 2 a Cm YN A HW PF wHKH bw oN YP bh N NoN poe oe wm BRRRRPRBBRNREBRGESRDREERBHS ES obligations of the Parties thereunder, as set forth herein, entitling Plaintiff to a declaration of the rights and obligations of the Parties. 5. In addition, GPB has asserted a claim to a sum of money that requires the examination of a long account, and Better Finance therefore is entitled to a judicial reference pursuant to California Code of Civil Procedure section 639, subdivisions (a)(1) and (a)(2). 6. Defendants DOES 1 through 50, inclusive, are sued herein by such fictitious names because their true names and capacities are unknown to Plaintiff. Plaintiff will seek leave to amend this Complaint when said Defendants’ names and capacities have been ascertained. Upon information and belief, Plaintiff alleges that said fictitiously named Defendants are in some manner legally liable for the actions, conduct and damages hereinafter alleged, 7 Plaintiff is informed and believes and thereon alleges that at all times herein mentioned, each Defendant, both fictitiously and actually named, was the principal, agent, or employee of the other Defendants, and acting as either such principal or within the course and scope of such employment or agency, took some part in the acts or omissions hereinafter set forth by reason of which each Defendant, both fictitiously and actually named, is liable to Plaintiff for the relief prayed for herein. 8. Venue is proper in this Court pursuant to California Code of Civil Procedure section 395, subdivision (a}, because the obligation was entered into, and to be performed, in the City and County of San Francisco. SPECIFIC ALLEGATIONS A Better Finance develops a business plan to facilitate U.S. Small Business Administration 7(a) Loans 9. The United States Small Business Administration (“SBA”) organizes a number of loan guaranty programs designed for business owners who may have difficulty qualifying for a traditional bank loan. While lenders originate the loans, the SBA promulgates certain - underwriting requirements. Ifa loan application meets or exceeds these requirements, it may be eligible to be guaranteed by the SBA, provided that such loan application also meets the criteria that the lender applies to its non-SBA loans, Each lender’s own criteria for non-SBA loans may be unique. One SBA loan program is called the “7(a) program” and an SBA-guaranteed loan issued thereunder is known as an “SBA 7(a) Loan.” 10. Various lenders in the United States offer SBA 7(a) Loans as a financial product. ll. Prior to the events at issue, Better Finance developed a business plan that involves two primary aspects, First, Better Finance intended to enter into referral agent and packaging 2e g § gis 8450 728 Otsa not sees oo8sk Sees asa abies Best Bas £6 3 oo rX A HA RW NH RN YP ON NN NY YD Be we ew we em eB eB eB eB BNRREBRRSSESRIARBERETBERETS agent relationships with small businesses that wish to apply for SBA 7(a) loans. Better Finance developed proprietary referral and packaging software to enable applicants to accelerate an otherwise often burdensome application process. Second, Better Finance intended to, and did, develop software designed to speed and reduce the lenders’ costs of underwriting and loan origination for SBA 7(a) loans through a proprietary software system (the “BELIEF System,” described herein). In such a manner, Better Finance planned to speed up and facilitate an otherwise burdensome and challenging application experience for small businesses, while at the same time enabling lenders to streamline the underwriting, loan origination, and account statement provisioning process. B. Better Finance creates the BELIEF System Software and the Trade Name “SmartBiz” 12. Prior to the events at issue, Better Finance had created financial technology known as the BillFloat Electronic Loan Investigation and Evaluation Framework System (the “BELIEF System.” The BELIEF System is software that is licensed to lenders that includes (i) an underwriting system, (ii) an origination management and recordkeeping system, and (iii) a dashboard system for loan account statement. The BELIEF System can implement the unique underwriting criteria of each lender. 13. Better Finance had also developed a brand that it calls “SmartBiz,” for which it filed certain SmartBiz trademarks. Together, the SmartBiz brand and SmartBiz trademarks are referred to herein as the “SmiartBiz Brand IP.” c. GPB ts an SBA Preferred Lender 14, Many traditional lenders do not offer SBA 7(a) Loans because of the difficulty, and resulting cost, in underwriting them. Even lenders that do offer SBA 7(a) Loans often do not provide such loans in amounts of $25,000 and lower. 15. Atall relevant times, GPB held a Preferred Lender Program (“PLP”) license with the SBA, permitting it to originate all forms of SBA loans, including SBA 7(a) Loans in amounts ranging from $5,000 to $5,000,000, . D. Better Finance seeks lenders to license the BELIEF System 16. In or about 2013, Better Finance sought lenders interested in licensing the BELIEF System. Better Finance approached lenders, and indicated that it was interested in licensing the BELIEF System to lenders to enable them to underwrite SBA loans more rapidly, with greater regulatory compliance, and at a lower cost.277-7200 WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 ‘San Francisco, CA 94104 eo we YN AH hw nN by RP RN peer BSRRESBREREBSBRUE SEIT ABDBEBSHEES E. GPB expresses interest in working with Better Finance; the Parties develop an underwriting algorithm called the “GOLD Standard” 17. Defendant GPB was among the first lenders to express an interest in working with Better Finance. From the start, GPB represented that its Board of Directors had only authorized it to enter into loans valued between $5,000 and $25,000. 18. Accordingly, the Parties discussed the mechanics of how GPB would utilize the BELIEF System software specifically to underwrite SBA 7(a) Loans. Out of these discussions, the Parties jointly developed a set of underwriting criteria that would implement GPB’s small business loan underwriting standards at that time using the BELIEF System software. The Parties ultimately named these criteria the Guarantor Owner Liquidity Debt-coverage Standard (the “GOLD Standard”). 19. GPB viewed the GOLD Standard as a potential source of additional revenue, and requested that Better Finance offer to license the GOLD Standard to other lenders with whom. Better Finance might do business. The Parties agreed to share in certain costs and revenues associated with the ongoing improvement and marketing of the GOLD Standard and the SmartBiz Brand IP and business development that could lead to more loan applications that could be submitted to GPB. 20. On July 25, 2013, Better Finance and GPB signed a document the Parties termed a “Key Agreements Summary,” The recitals in the Key Agreements Summary include the following: A. Lender desires to engage in the origination, marketing, underwriting, and funding of loans, as well as the servicing, management, and liquidation of the subsequently resulting loan portfolios, funded and created under the U.S. Small Business Administration (“SBA”) 7(a) Loan Program (the “7(a) Program”). In other words, the Key Agreements Summary provides that the Parties’ deal concerns the financial product known as SBA 7(a) Loans, which the SBA guarantees in amounts ranging from $5,000 to $5,000,000 and subject to all the loan permutations permissible under the SBA Standard Operating Procedures. Notably, the Key Agreements Summary does not define the “7{a) Program” as only applying to loans in the amount of $5,000 to $25,000 or having a specific use of proceeds or collateral requirements. 21. In the ensuing months, the Parties decided to implement the Key Agreements Summary by executing two contracts. ; “ae “iSan Francisco, CA 94104 (415) 277-7200 WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 fo oer AH ew DN by Ny wh RoR wR me = eels Re BSRkRRBSPEBESEBARGERPBEAS F. The Parties execute the License Agreement 22. The Parties first executed a Software License, Maintenance and Support Agreement (the “License Agreement”), whereby GPB would license the BELIEF System platform for use in its own origination of SBA 7(a) loans. The Parties signed the License Agreement on November 6, 2013. 7 23. The Licensing Agreement provides that the licensed technology — i.e. the BELIEF System — belongs to Better Finance. It grants GPB a non-exclusive and limited license to use the BELIEF System platform for underwriting “SBA-guaranteed loans,” without any restriction on the type of SBA loan or on the size of such SBA loan. The Parties equally understood that Better Finance was in the process of entering into similar licensing agreements with other lenders. G. The Parties execute the Marketing Agreement 24. In addition, on December 5, 2013, the Parties executed a second agreement, termed the “Draft [sic] Joint Marketing and Joint Technology Improvement Agreement” (the “Marketing Agreement”), Although the parties failed to remove the word “Draft” from the title of the document, the document was fully executed by both Parties as a final agreement. 25. The Marketing Agreement memorialized the Parties’ agreements concerning revenue sharing and cost sharing between the Parties related to the GOLD Standard. It provided that the GOLD Standard technology was jointly owned, and anticipated further development of such technology. It also provided that the Parties would each receive income when other banks licensed the GOLD Standard. 26. The Marketing Agreement also provided that the Parties jointly share in certain profits related to licensing the SmartBiz Brand IP. It provided for certain cost and revenue sharing regarding the improvement and licensing of the SmartBiz Brand IP to other lenders. 27. The Marketing Agreement required Better Finance to refer 70% of all SBA 7(a) Loan applications to GPB each month, regardless of the loan amount sought, if such application would meet GPB’s underwriting criteria. Even though the Marketing Agreement required Better Finance to refer 70% of all SBA 7(a) Loan applicants, GPB continued to accept only loan applications in the $5,000 to $25,000 range. H. = The Parties b doing business even before the License Agreement and the - Marketing Agreement are signed 28. Even before the License Agreement and Marketing Agreement were signed, in September 2013, GPB began accepting loan applications from applicants referred to GPB by Better Finance. GPB told Better Finance that it only wanted to be referred SBA 7(a) loan 5WEBB LEGAL GROUP (415) 277-7200 155 Montgomery Street, Suite 1200 San Francisco, CA 94104 wc oe YN AW RF WH = Ny oN NY NY WY N KN —_— — eee BRRERRBBESVEERRARSERES | applications seeking $5,000 to $25,000 because it perceived this to be a good market opportunity. Better Finance requested that GPB accept SBA 7(a) loan applications for larger loan amounts, but GPB did not want to do so at that time. 29. In April 2014, the GPB Board of Directors authorized GPB to start preliminarily exploring the possibility of originating SBA 7(a) loans in excess of $25,000 in the indeterminate future. i Better Finance enters into an agreement with Celtic Bank 30. ‘In or around early 2014, Better Finance informed GPB that it intended to enter into an agreement with Celtic Bank, as was its right to do, and to refer to Celtic Bank SBA 7(a) Loan applicants seeking loans in the $25,000 to $150,000 range, including loans secured by real estate and those underwritten using different criteria than the GOLD Standard. More than a month after so notifying GPB, on March 17, 2014, Better Finance executed a contract with Celtic Bank to this effect, Celtic Bank began originating SBA 7(a) loans referred by Better Finance in April 2014, 31. In June and/or July 2014, Better Finance notified GPB that Celtic Bank intended to increase the size of SBA 7(a) loans referred by Better Finance that Celtic would underwrite to $350,000, Based on a referral from Better Finance, Celtic Bank issued its first SBA 7(a) Loan with a value between $151,000 to $350,000 in August 2014. i GPB asks to renegotiate the terms of the Marketing Agreement 32. Prior to July 23, 2014, GPB asked Better Finance to re-structure the Marketing Agreement. On July 23, 2014, the Parties executed a First Amended Joint Marketing Agreement (the “Amended Marketing Agreement”), a copy of which is attached hereto as Exhibit 1, and incorporated herein. The Parties’ relationship was materially amended in two ways. First, GPB received additional compensation under the Amended Marketing Agreement. Second, the Amended Marketing Agreement placed an upward size limitation on the types of SBA 7(a) loan applications that Better Finance was obliged to refer to GPB. Henceforth, Better Finance would only be obligated to refer to GPB 70% of SBA loan applications seeking loans of $25,000 or less, if such joan applications met GPB’s underwriting criteria, K. Better Finance begins working with First Home Bank 33. Prior to June 2015, Better Finance provided GPB notice that it intended to refer loans to First Home Bank, as is its right to do, including loans underwritten using different criteria than the GOLD Standard, In June 2015, First Home Bank originated its first loans, in the $25,000 to $350,000 range.San Francisco, CA 94104 (415) 277-7200 WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 Co eR A HP WN RPReRPBRBPBBRNRRSERSSRERF ER ES ea IAG a Se 5 O60 ® QA A RF HH S&S K. GPB’s regulator tells GPB to restructure the Marketing Agreement to eliminate its liability for cos! 34. Under information and belief, at some point in or prior to January 2015, a regulator of GPB — probably the Office of the Comptroller of the Currency (“OCC”) — expressed concern to GPB about its spending on cost sharing under the Amended Marketing Agreement. At this point in time, GPB could have simply approached Better Finance with a request to terminate the Amended Marketing Agreement pursuant to section 7 of the Amended marketing Agreement, based on regulatory concerns about GPB’s capital inadequacy. Instead, it asked Better Finance to further amend the Marketing Agreement to address the regulator’s concerns. 35. Specifically, on January 8, 2015, GPB asked Better Finance to amend the Parties’ relationship, and in support of the request, stated in part as follows in an e-mail to Better Finance: The bank is currently losing approximately $60-70K/ month ($40-50K net from the Marketing Agreement settlement, $20+K from the depreciation of the software asset), and the pro-forma that was prepared by Better Finance for 2015 indicates the Bank is expected to experience marketing agreement losses greater than $300K+ in addition to the Bank’s projected $250K software asset depreciation expense. This creates a situation where our core bank operations, which after much effort is slightly net positive, swings to a net loss for the Bank in 2015, with the impact of the Marketing Agreement losses. 36. Better Finance agreed in principal to again re-negotiate the Amended Marketing Agreement, and has done so in good faith. As set forth herein, the Parties have not agreed upon terms of any such amendment. 37. From January 2015, the Parties have engaged in several rounds of negotiations. Each time the parties would reach agreement on the terms of an amended agreement, GPB would renege at the last minute and demand new concessions when presented with a final draft of an agreement. In short, GPB has refused to negotiate in good faith. 38. Asan example of its refusal to negotiate in good faith, in July 2015, GPB failed to make payment to Better Finance for monies owing under the License Agreement and monies GPB was legally obligated to send to Better Finance from loan disbursements as payment for referral and packaging fees owed to Better Finance, in a ploy to exert leverage on Better Finance to concede material points in negotiations. GPB only made the payment after Better Finance provided it with a notice of breach of contract. L. GPB foments a dispute simply to exert pressure on Better Finance to amend the terms of the deal — something Better Finance is under no legal obligation to do 39. Solely in order to exert pressure on Better Finance to amend the Amended Marketing Agreement, on August 17, 2015, GPB caused its attorneys to send a notice of default 7WEBB LEGAL GROUP 15S Montgomery Street, Suite 1200 San Francizco, CA 94304 (418) 277-7200 ~o ON DAH F WN BPNReRPRRRBRNXRRERAERE ORE ER OE eo 3 KD on = S FSweMe AAA EHH EHS _ to Better Finance, alleging four instances where Better Finance is alleged to have breached the Amended Marketing Agreement (the “Alleged Breaches”). A copy of this notice is attached hereto as Exhibit 2, and is incorporated herein, without admitting or adopting the allegations therein, all of which Better Finance expressly denies (the “Notice of Default”). The Notice of Default constitutes and/or evidences a genuine dispute as to the rights and obligations of the Parties concerning each of the Alleged Breaches, entitling Better Finance to a declaration as to the rights and obligations of the Parties concerning them, as set forth herein. M. First Alleged Breach: alleged failure to provide more detail regarding proposed joint intellectual property scopes of work 40. _ Inits first alleged breach, GPB argues that Better Finance failed to provide certain paperwork allegedly required by the Amended Marketing Agreement regarding proposed joint intellectual property scopes of work (called “Joint IP SOW’s” in the Amended Marketing Agreement) at points in time when GPB had submitted the paperwork. At the time the paperwork had been submitted, GPB raised no objection to its form and accepted the paperwork and submitted payment, Better Finance reasonably relied on GPB’s acceptance of its paperwork and payment in response, GPB now argues that it is necessary for Better Finance to go back and re- do the paperwork simply to create busywork and to burden and harass Better Finance in retaliation for not acquiescing in GPB’s demands to further amend the Parties’ agreement. Accordingly, Better Finance seeks a declaration that it is under no obligation to perform unnecessary work after GPB has already accepted the paperwork offered, N. Second Alleged Breach: alleged failure to account for improvement costs related to the Parties’ joint intellectual property 41. For its second allegation of breach of contract, GPB alleges that Better Finance improperly charged it for certain items when it submitted statements to GPB for improvement costs related to the Parties’ joint intellectual property, called “Joint IP” in the Amended Marketing Agreement. : 42. Without admitting the truth of such allegation, Better Finance submits that any such sums owed would be dependent upon an examination of a long account of not only the improvement costs, but also of revenues paid by Better Finance to GPB, and asserts that these amounts are also subject to an examination of a long account, and in all likelihood have been overpaid. Me Me3 3 s sié He Sas, Bees ages a 8 = @ 8 = Cm nN AH PF WN YPN YP YP WN YY De ee Be we Be ew ewe Re eo AAA RF BHF SF SCH RAKATEBHE SG 166. Asa proximate result of Cross-Defendant’s breach of the contract as set forth in connection with this cause of action, Cross-Complainant has been damaged in an amount to be proven at trial, including both direct and consequential damages, but not less than $7,582,515, plus statutory interest on this amount. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set forth in the Prayer for Relief below. EIGHTH CAUSE OF ACTION (For Breach of the Implied Covenant of Good Faith and Fair Dealing in the Joint Venture Agreement — by Cross-Complainant against Cross-Defendants GPB and Roes 1 — 50) 167. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 168. In addition to the breaches referred to in the foregoing paragraphs of this Cross- Complaint, the Joint Venture Agreement contains an implied covenant of good faith and fair dealing whereby each party has a contractual duty not to do anything that would injure the rights of the other to receive the benefits of the contract, and to do everything to accomplish the contract’s purposes. 169. The Cross-Defendant GPB breached the implied covenant of good faith and fair dealing contained within the Joint Venture Agreement in many ways. By way of example only, Cross-Defendants breached the implied covenant by refusing to perform it as originally intended, and, instead, insisting that Cross-Complainant perform Cross-Defendant’s duties. 170. Cross-Defendants also breached by evasion of the spirit of the bargain. 171. Cross-Defendants have further breached the covenant by invoking alleged rights under the Joint Venture Agreement dishonestly as a pretext for other reasons which were not a part of the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation of the contract contrary to their own understanding, falsification of facts, evasion of the spirit of the bargain, lack of diligence, willful rendering of imperfect performance, abuse of power to specify terms, interference with or failure to cooperate in Cross-Complainant’s performance, harassing demands for assurances of performance, rejection of performance for unstated reasons, and abuse of power to determine compliance or to terminate the Joint Venture Agreement. By their actions, Cross-Defendants acted for reasons beyond the risks that the Cross-Complainant assumed in the Joint Venture Agreement, and/or acted inconsistently with Cross-Complainant’s justified expectations, Each of these acts constitutes a breach of the implied covenant of good faith and fair dealing. 28 ‘CROSS-COMPLAINTSan Francisco, CA 94104 (415) 277-7200 WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 oO IY DH RF WN PRP YP YP RNR NY NY Ee Be Be Be Be eB ee ee oI A wA BF 8 NH F SGC wM AA HDR HSHR ES 172. Cross-Complainant has performed, and/or stands ready to perform, all of the conditions, conditions precedent, covenants, promises and obligations under the terms of the contract. 173. Asa proximate result of Cross-Defendants’ breaches of the Joint Venture Agreement, Plaintiff has suffered monetary damages in an amount according to proof at trial. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set forth in the Prayer for Relief below. NINTH CAUSE OF ACTION (For Breach of the Implied Covenant of Good Faith and Fair Dealing in the Amended Marketing Agreement — by Cross-Complainant against Cross-Defendant GPB) 174. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein, . 175. In addition to the breaches referred to in the foregoing paragraphs of this First Amended Complaint, the Amended Marketing Agreement contains an implied covenant of good faith and fair dealing whereby each party has a contractual duty not to do anything that would injure the rights of the other to receive the benefits of the contract, and to do everything to accomplish the contract’s purposes. 176. The Cross-Defendant GPB breached the implied covenant of good faith and fair dealing contained within the Amended Marketing Agreement in many ways. By way of example only, Defendant breached the implied covenant by refusing to perform it as originally intended, and, instead, insisting that it be amended to suit its needs. 177. Cross-Defendant GPB also breached by evasion of the spirit of the bargain. 178. Cross-Defendant has further breached the covenant by invoking alleged rights under the Amended Marketing Agreement dishonestly as a pretext for other reasons which were not a part of the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation of the contract contrary to its own understanding, falsification of facts, attempting to take advantage of the necessitous circumstances of Cross-Complainant to extort a modification of the Amended Marketing Agreement, evasion of the spirit of the bargain, lack of diligence, willful rendering of imperfect performance, abuse of power to specify terms, interference with or failure to cooperate in Cross-Complainant’s performance, harassing demands for assurances of performance, rejection of performance for unstated reasons, and abuse of power to determine compliance or to terminate the Amended Marketing Agreement. By its actions, Cross-Defendant acted for reasons beyond the risks that the Cross-Complainant assumed in the Amended 29 ‘CROSS-COMPLAINTWEBB LEGAL GROUP San Francisco, CA 94104 (415) 277-7200 155 Montgomery Strect, Suite 1200 om NA WR WW 10 12 13 14 15 16 7 18 19 20 21 22 23 24 25 26 27 28 Marketing Agreement, and/or acted inconsistently with Cross-Complainant’s justified expectations. Each of these acts constitutes a breach of the implied covenant of good faith and fair dealing. 179. | Cross-Complainant has performed, and/or stands ready to perform, all of the conditions, conditions precedent, covenants, promises and obligations under the terms of the contract. 180. As a proximate result of Cross-Defendant’s breaches of the Amended Marketing Agreement, Cross-Complainant has suffered monetary damages in an amount according to proof at trial. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set forth in the Prayer for Relief below. TENTH CAUSE OF ACTION (For Breach of the Implied Covenant of Good Faith and Fair Dealing in the License Agreement — by Cross-Complainant against Cross-Defendant GPB) 181. | Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 182, In addition to the breaches referred to in the foregoing paragraphs of this First Amended Complaint, the License Agreement contains an implied covenant of good faith and fair dealing whereby each party has a contractual duty not to do anything that would injure the rights of the other to receive the benefits of the contract, and to do everything to accomplish the contract’s purposes. 183. The Cross-Defendant GPB breached the implied covenant of good faith and fair dealing contained within the License Agreement in many ways. By way of example only, Defendant breached the implied covenant by refusing to perform it as originally intended, and, instead, insisting that Cross~-Complainant perform Cross-Defendant’s duties. 184, Cross-Defendant GPB also breached by evasion of the spirit of the bargain. 185. | Cross-Defendant has further breached the covenant by invoking alleged rights under the License Agreement dishonestly as a pretext for other reasons which were not a part of the parties’ agreement, conjuring up a pretended dispute, asserting an interpretation of the contract contrary to its own understanding, falsification of facts, evasion of the spirit of the bargain, lack of diligence, willful rendering of imperfect performance, abuse of power to specify terms, interference with or failure to cooperate in Cross-Complainant’s performance, harassing demands for assurances of performance, rejection of performance for unstated reasons, and abuse 30 ‘CROSS-COMPLAINTWEBB LEGAL GROUP (415) 277-7200 155 Montgomery Street, Suite 1200 San Francisco, CA 94104 CoO ND HW BFW DN BN PN NYY NRK DY SF Be we Be ew ee ew ee eI AA BF 8H KF SO H KX AA RSENS of power to determine compliance or to terminate the License Agreement. By its actions, Cross- Defendant acted for reasons beyond the risks that the Cross-Complainant assumed in the License Agreement, and/or acted inconsistently with Cross-Complainant’s justified expectations. Each of these acts constitutes a breach of the implied covenant of good faith and fair dealing. 186, Cross-Complainant has performed, and/or stands ready to perform, all of the conditions, conditions precedent, covenants, promises and obligations under the terms of the contract, 187. Asa proximate result of Cross-Defendant’s breaches of the License Agreement, Plaintiff has suffered monetary damages in an amount according to proof at trial. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set forth in the Prayer for Relief below. ELEVENTH CAUSE OF ACTION (For Intentional Interference with Contractual Relations — by Cross-Complainant against Cross-Defendants GPB and Roes 1-50) 188. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. / 189. There was a contract between Better Finance and one or more large retail concerns. 190, | Cross-Defendants knew of the contracts, 191. Cross-Defendants’ conduct prevented performance or made performance more expensive or difficult. 192. Cross-Defendants intended to disrupt the performance of the contracts, or, in the alternative, knew that disruption of performance was certain or substantially certain to occur. 193, Cross-Complainant was harmed. 194. Cross-Defendants’ conduct was a substantial factor in causing Cross- Complainant’s harm. ; WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set forth in the Prayer for Relief below. TWELFTH CAUSE OF ACTION (For Intentional Interference with Prospective Economic Relations — by Cross- Complainant against Cross-Defendants GPB and Roes 1 — 50) 195. | Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 31 ‘CROSS-COMPLAINTe g 8 os 5 Sas, Reo Osta aZect 22 68 Bees Boa Bas aes gach € BSs ga a Com YN DH BF YN eB bY PY YN RK RD HF Be Be Be Be ee ew ek oI Aw PF YBNH = SHO wO KAA wD RE OK ES 196. Cross-Complainant and one or more large retail concerns were in an economic relationship that probably would have resulted in an economic benefit to Cross-Complainant. 197. Cross-Defendants knew of the relationships. 198, Cross-Defendants engaged in wrongful conduct. 199. By engaging in this conduct, Cross-Defendants intended to disrupt the relationships, and/or knew that disruption of the relationships was certain or substantially certain to oceur. 200. The relationships were disrupted. 201. Cross-Complainant was harmed. 202. Cross-Defendants’ conduct was a substantial factor in causing Cross- Complainant’s harm, WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set forth in the Prayer for Relief below. THIRTEENTH CAUSE OF ACTION (For Judicial Reference necessitated by examination of a long account — by Cross- Complaint against Cross-Defendant GPB) 203. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 204. The Court should appoint a referee pursuant to Code of Civil Procedure section 639 because the trial of an issue of fact requires the examination of a long account. 205. The taking of an account is necessary for the information of the Court before judgment, and/or for carrying a judgment or order into effect. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendant as set forth in the Prayer for Relief below. FOURTEENTH CAUSE OF ACTION (For Theft of Trade Secrets — by Cross-Complainant against Cross-Defendants GPB and Roes 1 — 50) 206. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 207. Cross-Complainant owned trade secrets, including, but not limited to, customer and contact lists, and the underwriting model that Cross-Complainant developed for use with the BELIEF System. 208. These items were trade secrets at the time of the misappropriation. 32 CROSS-COMPLAINTSan Francisco, CA 94104 (415) 277-7200 WEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 eo ON DAH BF YW NY boN YY Pw RN DN Boe eB Se Bee ee SB Ok FESRR SLSR RESHEES 209. Cross-Defendants improperly acquired, used and/or disclosed the trade secrets. 210. Cross-Complainant was harmed and/or Cross-Defendants were unjustly enriched. 211. Cross-Defendants’ acquisition, use, and/or disclosure was a substantial factor in causing Cross-Complainant harm and/or Cross-Defendants to be unjustly enriched. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set forth in the Prayer for Relief below. FIFTEENTH CAUSE OF ACTION (or Unfair, Unlawful and/or Fraudulent Acts or Practices Pursuant to Business and Professions Code section 17200 — by Cross-Complainant against Cross-Defendant GPB and Roes 1 —50) 212. Cross-Complainant re-alleges all paragraphs in this Cross-Complaint, and incorporates them by reference herein. 213. Cross-Defendants’ conduct as herein alleged constitutes unfair, unlawful and/or fraudulent business acts or practices as those terms are defined in Section 17200 of the California Business & Professions Code. 214. Asa proximate result thereof, Cross-Complainant has been injured in fact and has been deprived of its property by the Cross-Defendants in an amount according to proof at trial. Cross-Complainant is also entitled to an injunction against Cross-Defendants. WHEREFORE, Cross-Complainant prays for judgment against Cross-Defendants as set forth in the Prayer for Relief below. PRAYER FOR RELIEF WHEREFORE, Cross-Complainant prays for judgment as follows: 1. For direct damages for Cross-Defendants’ breaches of fiduciary duty; 2. For consequential damages for Cross-Defendants’ breaches of fiduciary duty; 3. For punitive damages for Cross-Defendants’ breaches of fiduciary duty in an amount to be decided at trial, in an amount designed to punish Cross-Defendant and to deter future conduct by said Cross-Defendant and others; ; 4, For declaratory relief; 5. For direct damages for Cross-Defendants’ breaches of contract and covenants of good faith and fair dealing; 6. For consequential damages for Cross-Defendants’ breaches of contract and covenants of good faith and fair dealing; 7. For damages for interference with contract; 33 ‘CROSS-COMPLAINTe & 8 a 2 25 ONMhes 228 Osa aeen 288 amped 352s aes gee~ Ee BSE $4 8 wu Cwm nr a 10 lL 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8. 9. 10. For damages for interference with prospective economic advantage; For appointment of a judicial referee; For the amount found to be due from Cross-Defendant to Cross-Complainant as a result of the accounting and pre-judgment interest on that amount; 11. For damages for theft of trade secrets; 12. For restitution under Business and Professions Code section 17200; 13. For disgorgement under Business and Professions Code section 17200; 14, For attorney’s fees and costs incurred herein; and 15. For such other and further relief as this court may deem just and proper. Date: February 8, 2016 Respectfully submitted, WI, T. WEBB #193832 JENNIFER D. YU #291603 Attorneys for BILLFLOAT, INC. 34 ‘CROSS-COMPLAINTWEBB LEGAL GROUP 155 Montgomery Street, Suite 1200 San Francisco, CA 94104 (415) 277-7200 Cord A HW AR WN y Nw NNN NN YD ee ee ew Be Be ew eS ear AGA Ee DOD DH F&F FS GH AAA RBH HH BS JURY TRIAL REQUEST Plaintiff requests trial by jury. Date: February 8, 2016 Respectfully submitted, T. WEBB #193832 JENNIFER D. YU #291603 Attorneys for BILLFLOAT, INC. 35 ‘CROSS-COMPLAINTEXHIBIT 1By Exhibit B: Mutual Development Plans............s0sss0 . Definitions . Joint IP Ownership an . Technology Development . Insolvency..... . Confidentiality .. . Termination . . Choice of Law . Dispute Resolution and Deadlock: . Entire Agreement. . Severability |. Waiver . Headings Joint Marketing and Joint Technology Improvement Agreement Table of Contents icensiThis FIRST AMENDED JOINT MARKETING AGREEMENT (the “Marketing Agreement”) is entered into between BillFloat, Inc. a Delaware corporation with its principal place of business located at 417 Montgomery St,, Suite 500, San Francisco, CA 94104 (“BillFloat”), and Golden Pacific Bank, NA, a National Bank, with its principal offices located at 980 9th St., Sacramento, CA 95814 (“GPB”), effective July 23, 2014, The terms “GPB” shall also include the Gold Country Bank division of GPB. This Marketing Agreement supercedes and wholly replaces the JOINT MARKETING AGREEMENT between BillFloat and GPB, effective 2013 (the “Original Agreement”. In consideration of valuable consideration in the mutual promises herein contained, GPB and BillFloat (each, a “Party”; and collectively, “the Parties”) agree as follows: 1. Definitions The following terms, when used in this Agreement, shall have the following meanings: 1.1 “Business Development” refers to the development and ongoing maintenance of relationships, funded by a Joint IP SOW, with Business Development Sources. 1.2 “Business Development Source” refers to entities that, through ongoing Business Development, either introduce BillFloat to or hire BillFloat to find Introduced Businesses that it will refer to GPB. 1.3. “Improvement Expense” refers to the cost of a Joint IP SOW. Exhibit D provides an illustrative list of the types of expenses that may constitute an Improvement Cost. 1.4 “Introduced Business” refers to a small business introduced to BiliFloat by an entity that is, at the time of such introduction, a Business Development Source. 15 “Joint IP” refers to a combination of the Joint Technology and the SmartBiz brand and SmartBiz Marks. 16 “Joint IP SOW” refers to a plan to maintain and operate, improve, or . increase the value of or add to the Joint IP, including, but not limited to, promoting the SmartBiz Marks and brand and Business Development. Each Joint IP SOW shall include proposed schedules which outline the dates of deliverables and the dates that payments are due from the Parties to fund the work contemplated by such SOW, and a budget, including timing and type of payments to be made by the parties, deliverables and criteria for evaluating functionality. L7 “Joint Technology” refers to a method for applying certain underwriting 4 criteria for small business lending, as further described in Exhibit A, so it can be run on a software platform (e.g.,.the Licensed Software described in the License Agreement) in a manner that meets the underwriting standards of the United States Small Business Administration for its 7(A) Program. 18 “Joint Technology Development Costs” refers to the cost of developing the Joint Technology prior to the date of this Agreement.1.9 “Level Two Improvement Costs” refers to new Improvement Costs of a Joint IP SOW for a Mutual Development as to which GPB’s half would exceed $50,000 in a particular month. 1.10 “License Agreement” refers to the Parties’ Software License, Maintenance, and Support Agreement of November 6, 2013. 1.11 “Outstanding Improvement Expenses” shall refer to Improvement Costs owed to a Party that have not yet been paid either by (i) the other Party, or (ii) through income from licensing the Joint IP to third parties. 1.12 “Proceeds” shall refer to a total of BillFloat’s revenues from a particular activity. 1.13 “Proposer” refers to a Party that presents a Joint IP SOW, 1.14 “Qualified Introduced Business” refers to an Introduced Business that qualifies for, under the GOLD Standard, and is seeking a SBA 7(A) loan. 1,15 “Referral Assistance Expenses” refers to fees paid on a per loan or per introduction basis by BillFloat to Business Development Sources who introduce BillFloat to small businesses that become SmartBiz registered users and retain BillFloat to refer such small businesses to a lender. : 1.16 “Return on Unilateral Improvement Expenses” is defined as one times (1x) the amount of Outstanding Improvement Expenses multiplied by the number of months that such Outstanding Improvement Expenses yemain unpaid. 1.17 “SmartBiz Marks” refers to all trademarks and service marks containing the phrase “SmartBiz” owned by BillFloat, regardless of whether such marks have been formally registered. All other terms in this Marketing Agreement shall have the same meaning as the License Agreement. 2. Joint IP Ownership and Licensing " 24 Ownership of Joint Technology. BillFloat and GPB (or their affiliates) have collaboratively developed the Joint Technology. The Joint Technology is jointly owned by both Parties. Each Party’s ownership interest in the Joint Technology is equivalent to that of a co-inventor’s interest ina patent, Each Party agrees not to practice the Joint Technology except as provided in this Marketing Agreement. Each Party agrees to maintain the Joint Technology as a trade secret, adopting precautions and safeguards that are at least reasonable (under the circumstances) against the non-disclosure and unauthorized use of the Joint Technology. 2.2 Joint IP Licensing. BillFloat shall provide to GPB a non-exclusive, fully paid up non-revocable license to the SmartBiz brand and SmartBiz Marks, subject to the requirements for usage described in Exhibit C to this Agreement, which may be amended as the parties may reasonably agree from time to time. BillFloat agrees to take judiciousand prompt action to secure Federal trademark protection for the SmartBiz Brands and implement and maintain appropriate policies and procedures to protect the SmartBiz Brands, including both licensed use and policing against third-party infringement. BillFloat agrees that it will not sell its rights in the SmartBiz brands without offering GPB a right of first refusal to purchase the SmartBiz Marks on terms the same or more preferable to BillFloat, 2.3 Reseller. GPB appoints BillFloat as the exclusive agent for sublicensing GPB’s tights and interest in the Joint Technology and maintaining, and hosting the Joint Technology for third party depository institutions. 2.4 Banking Industry Contacts. GPB