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Seth W. Wiener, California State Bar No. 203747 FE E D
LAW OFFICES OF SETH W. WIENER DA COUNTY
609 Karina Court ALAME
San Ramon, CA 94582 MAR 0 9 2021
Telephone: (925) 487-5607
Email: seth@sethwienerlaw.com
Attorney for Plaintiff and Cross-Defendant
ANDREW HO
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ALAMEDA
ANDREW HO, Case No.: RG20069958
Plaintiff, ASSIGNED FOR ALL PURPOSES TO JUDGE Paul
D. Herbert
1 DEPARTMENT 20
V.
12 ANDREW HO’S MEMORANDUM OF POINTS
V5 SYSTEMS, INC.; STEVEN YUNG; AND AUTHORITIES IN SUPPORT OF
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MAZIN BEDWAN; AND DOES 1 TO 10, MOTION FOR SANCTIONS AGAINST V5
14 SYSTEMS, INC. AND ANDREW WATTERS
Defendants. :
15 AND RELATED CROSS-ACTION. Date: April 30, 2021
Time: 9:00 a.m.
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Reservation Number: R-2243844
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Memorandum of Points and Authorities — Page 0
L INTRODUCTION
This case arises out of Defendant and Cross-Complainant V5 Systems, Inc.’s (“V5”) failure to
pay $99,000.00 in wages due to Plaintiff and Cross-Defendant Andrew Ho (“Ho”). In an effort to
evade liability for its failure to pay wages, V5 has followed the adage that “the best defense is a good
offense” by filing a First Amended Cross-Complaint against Ho that asserts frivolous claims against
Ho for Fraud, Breach of the Covenant of Good Faith, Breach of Contract, and Declaratory Relief
based on V5’s amorphous contention that Ho did “not render[ ] adequate and honest services to V5
...” The Court should not tolerate V5’s frivolous tactics that are designed to harass Ho from pursuing
his meritorious claim for unpaid wages, and should grant sanctions against V5 and its counsel,
Andrew Watters.
11 IL. PROCEDURAL BACKGROUND
12 A. Ho’s Complaint
13 On August 7, 2020, Ho filed his Complaint against V5 and V5’s officers, Steven Yung and
14 Mazin Bedwan. The pertinent allegations of the Complaint are set forth below.
15 “On January 30, 2019, Ho commenced working as a Director of Channel Sales for V5.”
16 (Complaint § 19.) “Ho’s annual salary at V5 was $132,000 per annum.” (Complaint { 20.) “Ho
17 diligently and competently performed his services for V5.” (Complaint { 21.)
18 “On August 7, 2019, V5’s Senior Vice President of Operations, Jeff Smith, provided a
financial update to Plaintiff, wherein he stated that V5 was going through a ‘tough patch’ and would
20 not be able to deliver payroll until ‘the 30th of August’, and that it was ‘promising a 20% bonus for all
21 of your troubles.’” (Complaint 22.) .
22 “On August 16, 2019, V5 ceased paying Ho’s salary.” (Complaint § 23.)
23 “In order to induce Ho to continue working at V5 without a salary, Yung and Bedwan, on
24 behalf of V5 and themselves, made verbal promises to Ho in mid-August 2019 that he would receive a
25 bonus compromising 20% of his salary for any salary payments that were not timely paid to him.”
26 (Complaint § 24.)
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Memorandum of Points and Authorities — Page 1
“On March 31, 2020, Ho resigned from his employment at V5 due to Defendants’ ongoing
failure to pay his salary.” (Complaint 25.) “Defendants failed to pay the $99,000.00 in wages due to
Ho at the time of his termination ...” (“Complaint { 26.)
The Complaint’s First Cause of Action for Breach of Employment Contract alleges that
“Defendants breached the employment contract by failing to pay wages due to Plaintiff.” (Complaint
32.)
The Complaint’s Second Cause of Action alleges that V5’s failure to pay wages was in
violation of California Labor Code sections 203 and 203.
The Complaint’s Third Cause of Action alleges that Defendants violated Labor Code § 1198.5
by failing to Plaintiffs personnel records available for inspection.
The Complaint’s Fourth Cause of Action alleged that Defendants violated Labor Code § 226
by failing to Plaintiff's payroll records available for inspection.
The Complaint’s Fifth Cause of Action for Promissory Fraud alleges that Defendants
fraudulently promised to Ho in mid-August 2019 that he would receive a bonus compromising 20% of
his salary for any salary payments that were not timely paid to him.
The Complaint’s Sixth Cause of Action for Quantum Meurit seeks recovery for the reasonable
value of the sales services provided by Ho to Defendants.
The Complaint’s Seventh Cause of Action alleges that Ho was constructively discharged in
violation of the public policy of this state to require full and prompt payment of wages.
20 The Complaint’s Eighth Cause of Action is for Violation of California Business and
21 Professions Code Sections 17200, et seg. based on Defendants’ unlawful, unfair and fraudulent
22 business practices. |
23 B. The Court’s Right to Attach Order
24 On October 1, 2020, Plaintiff filed an Ex Parte Application for Right to Attach Order and
25 Order for Issuance of Writ of Attachment against V5 seeking to secure the $99,000 in wages due to
26 Ho.
27 V5 opposed the Ex Parte Application, though the Declaration of V5’s Chief Executive Officer,
28 Steven Yung, admitted that “[w]e are not disputing most of Mr. Ho’s $99,000.00 wage claim ...”
Memorandum of Points and Authorities — Page 2
On October 8, 2020, the Court granted to Ex Parte Application, and found that “Defendant has
failed to pay the debt underlying the requested attachment and is insolvent ...”
V5 has continued not to pay the wages due to Ho, and has not produced any documentary
evidence of its assets in order that Plaintiff can secure the debt.
C. V5’s First Amended Cross-Complaint
On January 26, 2021, V5 filed a Cross-Complaint against Ho, and filed a First Amended
Cross-Complaint (““FACC”) against Ho on February 8, 2021.
The allegations in the First Amended Cross-Complaint are sparse, and are recited below in
their totality. “On or about December 5, 2018, Andrew Ho (‘Ho’), signed an employment agreement
10 (‘Employment’) with V5 Systems (‘V5’) based on the representations that he would serve in a sales
a role with the intention that he would bring sales to the company as Director of Channels Sales.”
12 (FACC { 1.) On March 14, 2019, Ho signed the Commission plan Agreement ("Commission") based
on a sales commitment of three million dollars, which was integral in V5's decision to hire Ho.”
(FACC 2.) “Ho certified in a July 2019 sales forecast report that he had a $6 million sales pipeline
for V5.” (FACC 3.) “Ho only engaged with his former employer, Synnex which he sold only
16 $4,125.00 in products. This accounted for about 11 Synnex customers, which were essentially the
17 only customers Ho even pitched.” (FACC § 4.) “On or about November 6, 2019, Ho ceased all email
18 sales activity and on January 21, 2020 attended his final sales call.” (FACC § 5.) “By not rendering
19 adequate and honest services to V5, Ho cheated the company out of significant financial opportunities
20 as V5 forecasted financial expectations based on Ho’s sales representations.” (FACC ] 6.)
21 Based on the foregoing, the First Amended Cross-Complaint alleges causes of action against
22 Ho for: (1) Fraud, (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Breach of Contract;
23 and (4) Declaratory Relief.
24 D. Plaintiff's Notice of Motion for Sanctions under Code of Civil Procedure § 128.5
25 On February 11, 2021, Plaintiff served a Notice of Motion for Sanctions on V5’s pursuant to
26 Code of Civil Procedure § 128.5, subdivision (f)(1)(B). Concurrently, with the Notice of Motion for
27 Sanctions, Plaintiff also sent V5 a detailed letter explaining the defects with the First Amended Cross-
28 Complaint.
Memorandum of Points and Authorities — Page 3
IH. FACTUAL BACKGROUND
On December 5, 2018, Ho received a written Offer of Employment from V5, that stated his
“fob title will be that of Director of Channel Sales” and that I “will be paid an annual base salary of
$132,000 per year.” The Offer of Employment did not include any sales quota. (Declaration of
Andrew Ho (“Ho Decl.”), 9 2 and Exh. A.)
Ho accepted the Offer of Employment from V5 and commenced working at V5 on January 30,
2019, There was no discussion of any sales quota prior to Ho being hired at V5. (Ho Decl., § 3.)
On March 14, 2019, Ho signed the V5 Systems Sales Incentive Compensation Plan, which
provided for certain incentive compensation if I satisfied a “$3.0 Million in GAAP Revenue” sales _
10 quota for 2019. (Ho Decl., § 4 and Exh. B.)
11 At the time Ho executed the Sales Incentive Compensation Plan, he believed the sales quota
12 was achievable based on his history of sales from his previous position and that V5 would be in full
operation capacity. Unfortunately, in spite of Ho’s diligent sales efforts, he was unable to achieve the
sales quota due to a number of VS issues, including: (1) a three to six month sales cycle; (2) V5’s
product did not work at all customer locations; and (3) V5’s financial issues which caused it to be
unable to pay vendors and partners to execute on marketing activities. (Ho Decl., § 5.)
In a July 2019 Channel Sales Strategy and Forecast Report that Ho’s manager, Ranjan
18 Krishnamurthy, prepared for V5, he represented that there was ““$6M in pipeline for SYNNEX
19 Corporation.” This pipeline forecast did not constitute a commitment to any sales, and Ho made clear
20 to VS during business review meetings that the pipeline was drying up because of V5’s lack of
21 financial and operational support. (Ho Decl., § 6 and Exh. C.)
22 V5’s claim that Ho “ceased all email sales activity by November 6, 2019” is false. Ho sent out
23 more than 200 sales-related emails after November 6, 2019. (Ho Decl., § 7 and Exh. D.)
24 Prior to filing its Cross-Complaint, V5 never raised any issues with Ho’s job performance. Per
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Ho’s letter of resignation to V5, dated March 31, 2020, Ho resigned from V5 on March 31, 2020 “for
26 non-payment on wages since 8/16/2019.” (Ho Decl., 9 8 and Exh. E.)
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IV. LEGAL ARGUMENT
28 A. Code of Civil Procedure Section 128.5
Memorandum of Points and Authorities — Page 4
Code of Civil Procedure section 128.5 “authorizes a trial court to order a party, the party's
attorney or both to pay reasonable expenses, including attorney fees, incurred as a result of bad faith
actions or tactics that are frivolous or solely intended to cause unnecessary delay.” (Nutrition
Distribution, LLC v. Southern SARMs, Inc. (2018) 20 Cal.App.5th 117, 124 [citing Code Civ. Proc. §
128.5, subd. (a).) “For purposes of this section, ‘Actions or facts’ include ... filing and service ofa ...
cross-complaint ...” (Code Civ. Proc. § 128.5, subd. (b)(1).) “‘Frivolous’ means totally and
completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc. §
128.5, subd. (b)(2).)
“? Whether an action is frivolous is governed by an objective standard: any reasonable attorney
id would agree it is totally and completely without merit. [Citations.] There must also be a showing of an
11 improper purpose, i.e., subjective bad faith on the part of the attorney or party to be sanctioned.
12 [citation]’” (in re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 135.) “‘[W]hen
13 a tactic or action utterly lacks merit, a court is entitled to infer the party knew it lacked merit yet
14 pursued the action for some ulterior motive.’ [citation]” (/d. at 144.)
15 Simonian v. Patterson (1994) 27 Cal.App.4th 773, is illustrative of the foregoing standard. In
16 Simonian, the plaintiff filed an amended complaint alleging both contract and tort claims against the
17 defendant based on an alleged failure to return personal property. (/d. at 777-778.) The defendant
demurred to the amended complaint and requested sanctions under Code of Civil Procedure section
128.5. Ud. at 779.) The trial court sustained the demurrer without leave to amend and ordered
plaintiff and his counsel to pay $2,500 in attorney fees for filing a frivolous complaint solely to harass
the defendant. (/d.) The Court of Appeal affirmed the trial court’s ruling, and explained that “any
reasonable person would conclude the contract and tort against [defendant] are completely devoid of
23 merit.” (/d. at 784.) It further noted that the lack of all merit is evidence of subjective bad faith. (/d.)
24 The Court of Appeal concluded:
25 We deem the filing of this meritless suit and the prosecution of this
frivolous appeal to be a serious dereliction of duty by appellants, both lawyers. A
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license to practice law is not a cudgel to wield against laymen, who ordinarily are
27 at a severe disadvantage against lawyers. Having to defend against a lawsuit can
have devastating emotional and financial impact, even if the suit has no chance
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of success. A lawyer has such potential to wreak havoc on a hapless target that
Memorandum of Points and Authorities — Page 5
the power must be constantly kept in check. Responsible lawyers do so by
adhering to our canons and ethical standards. ...
(Id. at 786.)
B. V5’s First Amended Cross-Complaint Is Frivolous
V5’s First Amended Cross-Complaint is both factually and legally meritless. It is predicated
on demonstrably false allegations that: (1) “Ho made representations to V5 during the interview
process that he .... committed to a $3 million sales quota” (FACC § 9), “[o]n or about November 6,
2019, Ho ceased all sales activity” (FACC 4 5), and only brought “in $41,25.00 worth of sales (FACC
4 24). The First Amended Cross-Complaint does not identify any contractual breaches or
misrepresentations by Ho, and does not plead any viable causes of action against him. The clear
purpose of the lawsuit is to punish Ho for filing this lawsuit, and to delay his collection of the $99,000
in wages due to him from VS.
1. The First Cause of Action for Fraud
14 The First Cause of Action for Fraud is based on the allegation that “Unbeknownst to V5, Ho
15 made representations to V5 during the interview process that he was a qualified sales representative,
16 had a viable sales pipeline, and was committed to a $3 million sales quota.” (FACC 99.) “Each
element in a cause of action for fraud or negligent misrepresentation must be factually and specifically
alleged.” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “‘The elements of fraud ...
19 are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of
20 falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e)
21 resulting damage.’” (See Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173 [citation
22 omitted].) “‘Every element of the cause of action for fraud must be alleged in the proper manner and
23 the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to
24 understand fully the nature of the charge made.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73
25 [citation omitted].) “This particularity requirement necessitates pleading facts which ‘show how,
26 when, where, to whom, by what means the representations were tendered.’” (/d. [citation omitted].)
27 V5’s fraud claim does not allege any particulars of the alleged representations, i.e., how they were
28 made, whether they were made orally or in writing, the dates the misrepresentations were made, and
to whom at V5 they were made. Further, V5 does not identify any specific damages resulting from
Memorandum of Points and Authorities — Page 6
the alleged fraud, other than unspecified “lost profits Ho would have gained for V5 had his
representations been true.” (FACC § 16.) Based on the foregoing, the First Cause of Action for Fraud
is meritless. (See Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 75 [finding that trial court acted
within its discretion in sustaining demurrers to “general and imprecise” fraud claims]; see also
Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 21 [finding that trial
court properly sustained demurrer to fraud claim because plaintiff's “allegations of fraud are precisely
the sort of vague allegations that the particularity requirement is intended to guard against.”]; Gil v.
Bank of America, National Association (2006) 138 Cal.App.4th 1371, 1381 [affirming dismissal of
fraud claim because the “allegations are simply not specific enough to show the factual basis of a
10 fraud cause of action.”].)
lt 2. The Second Cause of Action for Breach of the Covenant of Good Faith and
12 Fair Dealing
13 The Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing
14 alleges that “[b]y not attempting to follow through on any of his own sales contacts or the sales
15 opportunities that were brought to him by V5, Ho deprived V5 of the benefits of the contract.” (FACC
16 { 28.) This claim is entirely redundant of the Third Cause of Action for Breach of Contract, and is
17 subject to dismissal as it is invalid and superfluous as demonstrated by the California Supreme Court’s
decision in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317. Guz was a wrongful termination
19 action by a plaintiff who was terminated at age 49 by his longtime employer after his work unit was
20 eliminated. The Supreme Court found there was a triable issue as to whether the plaintiff had an
2) implied in fact agreement with his employer that he would only be terminated for cause. However, the
Guz court affirmed the trial court’s dismissal of a separate claim for breach of the implied covenant of
23 good faith and fair dealing because it was based on the erroneous theory that, even if the plaintiff was
24 an at-will employee, the implied covenant precluded the defendant from “unfairly” terminating him.
25 (Id. at 348-349.) The Guz court rejected the premise of plaintiff's implied covenant claim, i.e., that the
26 covenant can impose substantive terms and conditions beyond those to which the contract parties
27 actually agreed:
28 The covenant of good faith and fair dealing, implied by law in every contract,
exists merely to prevent one contracting party from unfairly frustrating the other
Memorandum of Points and Authorities — Page 7
party’s right to receive the benefits of the agreement actually made. The
covenant thus cannot be endowed with an existence independent of its
contractual underpinnings. It cannot impose substantive duties or limits on the
contracting parties beyond those incorporated in the specific terms of their
agreement. [citations]
(Id. at 349-350.) The Guz court also found that plaintiff's claim for breach of the implied covenant
was superfluous to the extent it was based on precisely the same conduct which supported the
plaintiff's claim for breach of contract since “the remedy for breach of an employment agreement,
including the covenant of good faith and fair dealing implied by law therein, is solely contractual.”
(Ud. at 352.) Guz bars VS’s claim for breach of the implied covenant, since the claim is based on the
erroneous premise that the covenant imposed obligations beyond the terms of the parties’ employment
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contract or is simply redundant of the breach of contract claim.
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3. The Third Cause of Action for Breach of Contract
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The Third Cause of Action for Breach of Contract alleges that “Ho breached and repudiated
the Employment Agreement in numerous material respects, including, without limitation, the
following: a. By failing and refusing to honor the provisions of the Employment Agreement, which
required Ho to do the work of a Director of Channel Sales. b. Not reporting to the VP of Channel
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Relations. c. By misrepresenting to V5 that he had viable potential sales opportunities to enter into
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when he was hired by V5. d. Failing to meet specific sales quota metrics that were agreed upon.”
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(FACC § 28.) “Facts alleging a breach, like all essential elements of a breach of contract cause of
20 action, must be pleaded with specificity.” (Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150
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Cal.App.4th 1, 5.) Thus, general averments that a defendant violated a contract are insufficient;
rather, the pleader must allege facts demonstrating which specific provisions of the contract were
23 breached. (See, e.g., Bentley v. Mountain (1942) 51 Cal.App.2d 95, 98 [general averments that
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defendants violated contract insufficient; pleader must allege facts demonstrating breach]; Thompson
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v. Purdy (1931) 117 Cal.App. 565, 567 [general averments that defendant failed to perform duties or
26 comply with contract insufficient].) The First Amended Cross-Complaint does not identify any
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specific provisions of the Employment Agreement that were breached by Ho. Notably, the
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Employment Agreement did not specify any specific sales quotas to be met by Ho. Further, the
allegations that Ho did not do the work of a Director of Channel Sales are flatly contradicted by the
Memorandum of Points and Authorities — Page 8
allegations in the First Amended Cross-Complaint that he pitched customers, sold products, and
attended sales calls. (FACC 49 4,5.) Third, the Third Cause of Action for Breach of Contract is
meritless.
4. The Fourth Cause of Action for Declaratory Relief Fails
The Fourth Cause of Action for a declaration of the parties’ rights and duties with respect to the
Employment Agreement fails as the parties’ contractual relationship has terminated and there are no
future rights or obligations to be declared by the Court. “Declaratory relief operates prospectively,
serving to set controversies at rest. ... [T]here is no basis for declaratory relief where only past wrongs
are involved. Hence, where there is an accrued cause of action for an actual breach of contract or other
10 wrongful act, declaratory relief may be denied. [Citations omitted.]” (Baldwin v. Marina City
i Properties, Inc. (1978) 79 Cal.App.3d 393, 407; see also Canova v. Trustees of Imperial Irrigation Dist.
12 Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497 [Although Plaintiffs also sought
declaratory relief, the trial court correctly concluded that such relief was inappropriate. Declaratory
relief operates prospectively to declare future rights, rather than to redress past wrongs.”]; (Babb v.
Superior Court (1971) 3 Cal.3d 841, 848 [‘‘[Declaratory] procedure operates prospectively, and not
merely for the redress of past wrongs.’ [citation].” “Where, as here, a party has a fully matured cause
of action for money, the party must seek the remedy of damages, and not pursue a declaratory relief
18 claim.” (See Canova, 150 Cal.App.4th at 1497.)
19 C. Sanctions Should Be Awarded Against V5 and its Counsel
20 “An order for sanctions pursuant to [Code of Civil Procedure § 128.5] shall be limited to what
21 is sufficient to deter repetition of the action or tactic or comparable action or tactic by others similarly
22 situated. ... [T]he sanction may consist of, or include, directives of a nonmonetary nature, an order to
23 pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order
24 directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses
25 incurred as a direct result of the action or tactic described in subdivision (a).” (Code Civ. Proc. §
26 128.5, subd. (f)(2).)
27 Pursuant to section 128.5, Plaintiff requests that the Court dismiss the First Amended Cross-
28 Complaint with prejudice. It further requests that the Court order V5 and its counsel, Andrew
Memorandum of Points and Authorities — Page 9
Watters, to pay $4,860.00 to Ho to compensate Ho for the reasonable attorney’s fees and costs that Ho
incurred as a result of the First Amended Cross-Complaint. (Declaration of Seth W. Wiener, § 3.)
V. CONCLUSION
V5’s cross-claims against Ho are entirely with merit, and V5 and its counsel should be
sanctioned pursuant to Code of Civil Procedure § 128.5 for the frivolous First Amended Cross-
Complaint.
Dated: March 9, 2021 LAW OFFICES OF SETH W. WIENER
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By:
Seth W. Wiener
1] Attorney for Plaintiff and Cross-Defendant
ANDREW HO
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Memorandum of Points and Authorities — Page 10
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UN 2341 1012 Seth W. Wiener, California State Bar No. 203747 FE E D LAW OFFICES OF SETH W. WIENER DA COUNTY 609 Karina Court ALAME San Ramon, CA 94582 MAR 0 9 2021 Telephone: (925) 487-5607 Email: seth@sethwienerlaw.com Attorney for Plaintiff and Cross-Defendant ANDREW HO SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ALAMEDA ANDREW HO, Case No.: RG20069958 Plaintiff, ASSIGNED FOR ALL PURPOSES TO JUDGE Paul D. Herbert 1 DEPARTMENT 20 V. 12 ANDREW HO’S MEMORANDUM OF POINTS V5 SYSTEMS, INC.; STEVEN YUNG; AND AUTHORITIES IN SUPPORT OF 13 MAZIN BEDWAN; AND DOES 1 TO 10, MOTION FOR SANCTIONS AGAINST V5 14 SYSTEMS, INC. AND ANDREW WATTERS Defendants. : 15 AND RELATED CROSS-ACTION. Date: April 30, 2021 Time: 9:00 a.m. 16 Reservation Number: R-2243844 17 18 20 21 22 23 24 ae 25 riled B vi 26 27 28 Memorandum of Points and Authorities — Page 0 L INTRODUCTION This case arises out of Defendant and Cross-Complainant V5 Systems, Inc.’s (“V5”) failure to pay $99,000.00 in wages due to Plaintiff and Cross-Defendant Andrew Ho (“Ho”). In an effort to evade liability for its failure to pay wages, V5 has followed the adage that “the best defense is a good offense” by filing a First Amended Cross-Complaint against Ho that asserts frivolous claims against Ho for Fraud, Breach of the Covenant of Good Faith, Breach of Contract, and Declaratory Relief based on V5’s amorphous contention that Ho did “not render[ ] adequate and honest services to V5 ...” The Court should not tolerate V5’s frivolous tactics that are designed to harass Ho from pursuing his meritorious claim for unpaid wages, and should grant sanctions against V5 and its counsel, Andrew Watters. 11 IL. PROCEDURAL BACKGROUND 12 A. Ho’s Complaint 13 On August 7, 2020, Ho filed his Complaint against V5 and V5’s officers, Steven Yung and 14 Mazin Bedwan. The pertinent allegations of the Complaint are set forth below. 15 “On January 30, 2019, Ho commenced working as a Director of Channel Sales for V5.” 16 (Complaint § 19.) “Ho’s annual salary at V5 was $132,000 per annum.” (Complaint { 20.) “Ho 17 diligently and competently performed his services for V5.” (Complaint { 21.) 18 “On August 7, 2019, V5’s Senior Vice President of Operations, Jeff Smith, provided a financial update to Plaintiff, wherein he stated that V5 was going through a ‘tough patch’ and would 20 not be able to deliver payroll until ‘the 30th of August’, and that it was ‘promising a 20% bonus for all 21 of your troubles.’” (Complaint 22.) . 22 “On August 16, 2019, V5 ceased paying Ho’s salary.” (Complaint § 23.) 23 “In order to induce Ho to continue working at V5 without a salary, Yung and Bedwan, on 24 behalf of V5 and themselves, made verbal promises to Ho in mid-August 2019 that he would receive a 25 bonus compromising 20% of his salary for any salary payments that were not timely paid to him.” 26 (Complaint § 24.) 27 28 Memorandum of Points and Authorities — Page 1 “On March 31, 2020, Ho resigned from his employment at V5 due to Defendants’ ongoing failure to pay his salary.” (Complaint 25.) “Defendants failed to pay the $99,000.00 in wages due to Ho at the time of his termination ...” (“Complaint { 26.) The Complaint’s First Cause of Action for Breach of Employment Contract alleges that “Defendants breached the employment contract by failing to pay wages due to Plaintiff.” (Complaint 32.) The Complaint’s Second Cause of Action alleges that V5’s failure to pay wages was in violation of California Labor Code sections 203 and 203. The Complaint’s Third Cause of Action alleges that Defendants violated Labor Code § 1198.5 by failing to Plaintiffs personnel records available for inspection. The Complaint’s Fourth Cause of Action alleged that Defendants violated Labor Code § 226 by failing to Plaintiff's payroll records available for inspection. The Complaint’s Fifth Cause of Action for Promissory Fraud alleges that Defendants fraudulently promised to Ho in mid-August 2019 that he would receive a bonus compromising 20% of his salary for any salary payments that were not timely paid to him. The Complaint’s Sixth Cause of Action for Quantum Meurit seeks recovery for the reasonable value of the sales services provided by Ho to Defendants. The Complaint’s Seventh Cause of Action alleges that Ho was constructively discharged in violation of the public policy of this state to require full and prompt payment of wages. 20 The Complaint’s Eighth Cause of Action is for Violation of California Business and 21 Professions Code Sections 17200, et seg. based on Defendants’ unlawful, unfair and fraudulent 22 business practices. | 23 B. The Court’s Right to Attach Order 24 On October 1, 2020, Plaintiff filed an Ex Parte Application for Right to Attach Order and 25 Order for Issuance of Writ of Attachment against V5 seeking to secure the $99,000 in wages due to 26 Ho. 27 V5 opposed the Ex Parte Application, though the Declaration of V5’s Chief Executive Officer, 28 Steven Yung, admitted that “[w]e are not disputing most of Mr. Ho’s $99,000.00 wage claim ...” Memorandum of Points and Authorities — Page 2 On October 8, 2020, the Court granted to Ex Parte Application, and found that “Defendant has failed to pay the debt underlying the requested attachment and is insolvent ...” V5 has continued not to pay the wages due to Ho, and has not produced any documentary evidence of its assets in order that Plaintiff can secure the debt. C. V5’s First Amended Cross-Complaint On January 26, 2021, V5 filed a Cross-Complaint against Ho, and filed a First Amended Cross-Complaint (““FACC”) against Ho on February 8, 2021. The allegations in the First Amended Cross-Complaint are sparse, and are recited below in their totality. “On or about December 5, 2018, Andrew Ho (‘Ho’), signed an employment agreement 10 (‘Employment’) with V5 Systems (‘V5’) based on the representations that he would serve in a sales a role with the intention that he would bring sales to the company as Director of Channels Sales.” 12 (FACC { 1.) On March 14, 2019, Ho signed the Commission plan Agreement ("Commission") based on a sales commitment of three million dollars, which was integral in V5's decision to hire Ho.” (FACC 2.) “Ho certified in a July 2019 sales forecast report that he had a $6 million sales pipeline for V5.” (FACC 3.) “Ho only engaged with his former employer, Synnex which he sold only 16 $4,125.00 in products. This accounted for about 11 Synnex customers, which were essentially the 17 only customers Ho even pitched.” (FACC § 4.) “On or about November 6, 2019, Ho ceased all email 18 sales activity and on January 21, 2020 attended his final sales call.” (FACC § 5.) “By not rendering 19 adequate and honest services to V5, Ho cheated the company out of significant financial opportunities 20 as V5 forecasted financial expectations based on Ho’s sales representations.” (FACC ] 6.) 21 Based on the foregoing, the First Amended Cross-Complaint alleges causes of action against 22 Ho for: (1) Fraud, (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Breach of Contract; 23 and (4) Declaratory Relief. 24 D. Plaintiff's Notice of Motion for Sanctions under Code of Civil Procedure § 128.5 25 On February 11, 2021, Plaintiff served a Notice of Motion for Sanctions on V5’s pursuant to 26 Code of Civil Procedure § 128.5, subdivision (f)(1)(B). Concurrently, with the Notice of Motion for 27 Sanctions, Plaintiff also sent V5 a detailed letter explaining the defects with the First Amended Cross- 28 Complaint. Memorandum of Points and Authorities — Page 3 IH. FACTUAL BACKGROUND On December 5, 2018, Ho received a written Offer of Employment from V5, that stated his “fob title will be that of Director of Channel Sales” and that I “will be paid an annual base salary of $132,000 per year.” The Offer of Employment did not include any sales quota. (Declaration of Andrew Ho (“Ho Decl.”), 9 2 and Exh. A.) Ho accepted the Offer of Employment from V5 and commenced working at V5 on January 30, 2019, There was no discussion of any sales quota prior to Ho being hired at V5. (Ho Decl., § 3.) On March 14, 2019, Ho signed the V5 Systems Sales Incentive Compensation Plan, which provided for certain incentive compensation if I satisfied a “$3.0 Million in GAAP Revenue” sales _ 10 quota for 2019. (Ho Decl., § 4 and Exh. B.) 11 At the time Ho executed the Sales Incentive Compensation Plan, he believed the sales quota 12 was achievable based on his history of sales from his previous position and that V5 would be in full operation capacity. Unfortunately, in spite of Ho’s diligent sales efforts, he was unable to achieve the sales quota due to a number of VS issues, including: (1) a three to six month sales cycle; (2) V5’s product did not work at all customer locations; and (3) V5’s financial issues which caused it to be unable to pay vendors and partners to execute on marketing activities. (Ho Decl., § 5.) In a July 2019 Channel Sales Strategy and Forecast Report that Ho’s manager, Ranjan 18 Krishnamurthy, prepared for V5, he represented that there was ““$6M in pipeline for SYNNEX 19 Corporation.” This pipeline forecast did not constitute a commitment to any sales, and Ho made clear 20 to VS during business review meetings that the pipeline was drying up because of V5’s lack of 21 financial and operational support. (Ho Decl., § 6 and Exh. C.) 22 V5’s claim that Ho “ceased all email sales activity by November 6, 2019” is false. Ho sent out 23 more than 200 sales-related emails after November 6, 2019. (Ho Decl., § 7 and Exh. D.) 24 Prior to filing its Cross-Complaint, V5 never raised any issues with Ho’s job performance. Per 25 Ho’s letter of resignation to V5, dated March 31, 2020, Ho resigned from V5 on March 31, 2020 “for 26 non-payment on wages since 8/16/2019.” (Ho Decl., 9 8 and Exh. E.) 27 IV. LEGAL ARGUMENT 28 A. Code of Civil Procedure Section 128.5 Memorandum of Points and Authorities — Page 4 Code of Civil Procedure section 128.5 “authorizes a trial court to order a party, the party's attorney or both to pay reasonable expenses, including attorney fees, incurred as a result of bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.” (Nutrition Distribution, LLC v. Southern SARMs, Inc. (2018) 20 Cal.App.5th 117, 124 [citing Code Civ. Proc. § 128.5, subd. (a).) “For purposes of this section, ‘Actions or facts’ include ... filing and service ofa ... cross-complaint ...” (Code Civ. Proc. § 128.5, subd. (b)(1).) “‘Frivolous’ means totally and completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc. § 128.5, subd. (b)(2).) “? Whether an action is frivolous is governed by an objective standard: any reasonable attorney id would agree it is totally and completely without merit. [Citations.] There must also be a showing of an 11 improper purpose, i.e., subjective bad faith on the part of the attorney or party to be sanctioned. 12 [citation]’” (in re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 135.) “‘[W]hen 13 a tactic or action utterly lacks merit, a court is entitled to infer the party knew it lacked merit yet 14 pursued the action for some ulterior motive.’ [citation]” (/d. at 144.) 15 Simonian v. Patterson (1994) 27 Cal.App.4th 773, is illustrative of the foregoing standard. In 16 Simonian, the plaintiff filed an amended complaint alleging both contract and tort claims against the 17 defendant based on an alleged failure to return personal property. (/d. at 777-778.) The defendant demurred to the amended complaint and requested sanctions under Code of Civil Procedure section 128.5. Ud. at 779.) The trial court sustained the demurrer without leave to amend and ordered plaintiff and his counsel to pay $2,500 in attorney fees for filing a frivolous complaint solely to harass the defendant. (/d.) The Court of Appeal affirmed the trial court’s ruling, and explained that “any reasonable person would conclude the contract and tort against [defendant] are completely devoid of 23 merit.” (/d. at 784.) It further noted that the lack of all merit is evidence of subjective bad faith. (/d.) 24 The Court of Appeal concluded: 25 We deem the filing of this meritless suit and the prosecution of this frivolous appeal to be a serious dereliction of duty by appellants, both lawyers. A 26 license to practice law is not a cudgel to wield against laymen, who ordinarily are 27 at a severe disadvantage against lawyers. Having to defend against a lawsuit can have devastating emotional and financial impact, even if the suit has no chance 28 of success. A lawyer has such potential to wreak havoc on a hapless target that Memorandum of Points and Authorities — Page 5 the power must be constantly kept in check. Responsible lawyers do so by adhering to our canons and ethical standards. ... (Id. at 786.) B. V5’s First Amended Cross-Complaint Is Frivolous V5’s First Amended Cross-Complaint is both factually and legally meritless. It is predicated on demonstrably false allegations that: (1) “Ho made representations to V5 during the interview process that he .... committed to a $3 million sales quota” (FACC § 9), “[o]n or about November 6, 2019, Ho ceased all sales activity” (FACC 4 5), and only brought “in $41,25.00 worth of sales (FACC 4 24). The First Amended Cross-Complaint does not identify any contractual breaches or misrepresentations by Ho, and does not plead any viable causes of action against him. The clear purpose of the lawsuit is to punish Ho for filing this lawsuit, and to delay his collection of the $99,000 in wages due to him from VS. 1. The First Cause of Action for Fraud 14 The First Cause of Action for Fraud is based on the allegation that “Unbeknownst to V5, Ho 15 made representations to V5 during the interview process that he was a qualified sales representative, 16 had a viable sales pipeline, and was committed to a $3 million sales quota.” (FACC 99.) “Each element in a cause of action for fraud or negligent misrepresentation must be factually and specifically alleged.” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “‘The elements of fraud ... 19 are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of 20 falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) 21 resulting damage.’” (See Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173 [citation 22 omitted].) “‘Every element of the cause of action for fraud must be alleged in the proper manner and 23 the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to 24 understand fully the nature of the charge made.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 25 [citation omitted].) “This particularity requirement necessitates pleading facts which ‘show how, 26 when, where, to whom, by what means the representations were tendered.’” (/d. [citation omitted].) 27 V5’s fraud claim does not allege any particulars of the alleged representations, i.e., how they were 28 made, whether they were made orally or in writing, the dates the misrepresentations were made, and to whom at V5 they were made. Further, V5 does not identify any specific damages resulting from Memorandum of Points and Authorities — Page 6 the alleged fraud, other than unspecified “lost profits Ho would have gained for V5 had his representations been true.” (FACC § 16.) Based on the foregoing, the First Cause of Action for Fraud is meritless. (See Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 75 [finding that trial court acted within its discretion in sustaining demurrers to “general and imprecise” fraud claims]; see also Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 21 [finding that trial court properly sustained demurrer to fraud claim because plaintiff's “allegations of fraud are precisely the sort of vague allegations that the particularity requirement is intended to guard against.”]; Gil v. Bank of America, National Association (2006) 138 Cal.App.4th 1371, 1381 [affirming dismissal of fraud claim because the “allegations are simply not specific enough to show the factual basis of a 10 fraud cause of action.”].) lt 2. The Second Cause of Action for Breach of the Covenant of Good Faith and 12 Fair Dealing 13 The Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing 14 alleges that “[b]y not attempting to follow through on any of his own sales contacts or the sales 15 opportunities that were brought to him by V5, Ho deprived V5 of the benefits of the contract.” (FACC 16 { 28.) This claim is entirely redundant of the Third Cause of Action for Breach of Contract, and is 17 subject to dismissal as it is invalid and superfluous as demonstrated by the California Supreme Court’s decision in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317. Guz was a wrongful termination 19 action by a plaintiff who was terminated at age 49 by his longtime employer after his work unit was 20 eliminated. The Supreme Court found there was a triable issue as to whether the plaintiff had an 2) implied in fact agreement with his employer that he would only be terminated for cause. However, the Guz court affirmed the trial court’s dismissal of a separate claim for breach of the implied covenant of 23 good faith and fair dealing because it was based on the erroneous theory that, even if the plaintiff was 24 an at-will employee, the implied covenant precluded the defendant from “unfairly” terminating him. 25 (Id. at 348-349.) The Guz court rejected the premise of plaintiff's implied covenant claim, i.e., that the 26 covenant can impose substantive terms and conditions beyond those to which the contract parties 27 actually agreed: 28 The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other Memorandum of Points and Authorities — Page 7 party’s right to receive the benefits of the agreement actually made. The covenant thus cannot be endowed with an existence independent of its contractual underpinnings. It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement. [citations] (Id. at 349-350.) The Guz court also found that plaintiff's claim for breach of the implied covenant was superfluous to the extent it was based on precisely the same conduct which supported the plaintiff's claim for breach of contract since “the remedy for breach of an employment agreement, including the covenant of good faith and fair dealing implied by law therein, is solely contractual.” (Ud. at 352.) Guz bars VS’s claim for breach of the implied covenant, since the claim is based on the erroneous premise that the covenant imposed obligations beyond the terms of the parties’ employment 11 contract or is simply redundant of the breach of contract claim. 12 3. The Third Cause of Action for Breach of Contract 13 The Third Cause of Action for Breach of Contract alleges that “Ho breached and repudiated the Employment Agreement in numerous material respects, including, without limitation, the following: a. By failing and refusing to honor the provisions of the Employment Agreement, which required Ho to do the work of a Director of Channel Sales. b. Not reporting to the VP of Channel 17 Relations. c. By misrepresenting to V5 that he had viable potential sales opportunities to enter into 18 when he was hired by V5. d. Failing to meet specific sales quota metrics that were agreed upon.” 19 (FACC § 28.) “Facts alleging a breach, like all essential elements of a breach of contract cause of 20 action, must be pleaded with specificity.” (Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 21 Cal.App.4th 1, 5.) Thus, general averments that a defendant violated a contract are insufficient; rather, the pleader must allege facts demonstrating which specific provisions of the contract were 23 breached. (See, e.g., Bentley v. Mountain (1942) 51 Cal.App.2d 95, 98 [general averments that 24 defendants violated contract insufficient; pleader must allege facts demonstrating breach]; Thompson 25 v. Purdy (1931) 117 Cal.App. 565, 567 [general averments that defendant failed to perform duties or 26 comply with contract insufficient].) The First Amended Cross-Complaint does not identify any 27 specific provisions of the Employment Agreement that were breached by Ho. Notably, the 28 Employment Agreement did not specify any specific sales quotas to be met by Ho. Further, the allegations that Ho did not do the work of a Director of Channel Sales are flatly contradicted by the Memorandum of Points and Authorities — Page 8 allegations in the First Amended Cross-Complaint that he pitched customers, sold products, and attended sales calls. (FACC 49 4,5.) Third, the Third Cause of Action for Breach of Contract is meritless. 4. The Fourth Cause of Action for Declaratory Relief Fails The Fourth Cause of Action for a declaration of the parties’ rights and duties with respect to the Employment Agreement fails as the parties’ contractual relationship has terminated and there are no future rights or obligations to be declared by the Court. “Declaratory relief operates prospectively, serving to set controversies at rest. ... [T]here is no basis for declaratory relief where only past wrongs are involved. Hence, where there is an accrued cause of action for an actual breach of contract or other 10 wrongful act, declaratory relief may be denied. [Citations omitted.]” (Baldwin v. Marina City i Properties, Inc. (1978) 79 Cal.App.3d 393, 407; see also Canova v. Trustees of Imperial Irrigation Dist. 12 Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497 [Although Plaintiffs also sought declaratory relief, the trial court correctly concluded that such relief was inappropriate. Declaratory relief operates prospectively to declare future rights, rather than to redress past wrongs.”]; (Babb v. Superior Court (1971) 3 Cal.3d 841, 848 [‘‘[Declaratory] procedure operates prospectively, and not merely for the redress of past wrongs.’ [citation].” “Where, as here, a party has a fully matured cause of action for money, the party must seek the remedy of damages, and not pursue a declaratory relief 18 claim.” (See Canova, 150 Cal.App.4th at 1497.) 19 C. Sanctions Should Be Awarded Against V5 and its Counsel 20 “An order for sanctions pursuant to [Code of Civil Procedure § 128.5] shall be limited to what 21 is sufficient to deter repetition of the action or tactic or comparable action or tactic by others similarly 22 situated. ... [T]he sanction may consist of, or include, directives of a nonmonetary nature, an order to 23 pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order 24 directing payment to the movant of some or all of the reasonable attorney’s fees and other expenses 25 incurred as a direct result of the action or tactic described in subdivision (a).” (Code Civ. Proc. § 26 128.5, subd. (f)(2).) 27 Pursuant to section 128.5, Plaintiff requests that the Court dismiss the First Amended Cross- 28 Complaint with prejudice. It further requests that the Court order V5 and its counsel, Andrew Memorandum of Points and Authorities — Page 9 Watters, to pay $4,860.00 to Ho to compensate Ho for the reasonable attorney’s fees and costs that Ho incurred as a result of the First Amended Cross-Complaint. (Declaration of Seth W. Wiener, § 3.) V. CONCLUSION V5’s cross-claims against Ho are entirely with merit, and V5 and its counsel should be sanctioned pursuant to Code of Civil Procedure § 128.5 for the frivolous First Amended Cross- Complaint. Dated: March 9, 2021 LAW OFFICES OF SETH W. WIENER 10 By: Seth W. Wiener 1] Attorney for Plaintiff and Cross-Defendant ANDREW HO 12 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Memorandum of Points and Authorities — Page 10