Preview
1 Collin J. Vierra (State Bar No. 322720)
EIMER STAHL LLP
2
99 Almaden Blvd., Suite 600
3 San Jose, CA 95113-1605
Telephone: (408) 889-1668
4 Email: cvierra@eimerstahl.com
5 Attorney for Plaintiffs
6
7 SUPERIOR COURT OF THE STATE OF CALIFORNIA
8 COUNTY OF SAN MATEO
9
Robert Arntsen; Mary Lee; Arntsen Family Case No. 22-CIV-01148
10
Partnership, LP; and Brian Christopher Dunn
11 Custodianship; Date: May 26, 2023
Time: 9:00am
12 Plaintiffs, Dept. 21
v.
13 Hon. Robert D. Foiles
14 David M. Bragg; Silicon Valley Real Ventures
LLC; SVRV 385 Moore, LLC; SVRV 387 PLAINTIFFS’ OPPOSITION TO
15 Moore, LLC; Gregory J. Davis; Kevin Wolfe; MOTION TO STRIKE OF
Jason Justesen; Paramont Woodside, LLC; DEFENDANTS SVRV 385 MOORE,
16 and Paramont Capital, LLC; LLC, SVRV 387 MOORE, LLC,
GREGORY J. DAVIS, KEVIN WOLFE,
17 Defendants. JASON JUSTESEN, PARAMONT
18 WOODSIDE, LLC, AND PARAMONT
CAPITAL, LLC
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PLAINTIFFS’ OPPOSITION TO DEMURRER
TABLE OF CONTENTS
1
2 INTRODUCTION .......................................................................................................................... 4
3 BACKGROUND ............................................................................................................................ 5
4 MOTIONS TO STRIKE ARE DISFAVORED AND ARE GOVERNED BY STRICT
STANDARDS................................................................................................................................. 7
5
6 DEFENDANTS’ MOTION TO STRIKE SHOULD BE DENIED ............................................... 8
7 CONCLUSION ............................................................................................................................. 11
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PLAINTIFFS’ OPPOSITION TO DEMURRER
TABLE OF AUTHORITIES
1
Cases
2
Cates Constr., Inc. v. Talbot Partners
3 (1999) 21 Cal.44th 28, 61 ........................................................................................................... 7
4 Clauson v. Super. Ct.
(1998) 67 Cal.App.4th 1253 ....................................................................................................... 5
5
Goncharov v. Uber Techs., Inc.
6 (2018) 19 Cal.App.5th 1157 ....................................................................................................... 8
7 In re ChinaCast Educ. Corp. Secs. Litig.
(2015) 809 F.3d 471 ................................................................................................................... 8
8
Perkins v. Super. Ct.
9 (1981) 117 Cal.Ap.3d 1 .............................................................................................................. 5
10 PH II, Inc. v. Super. Ct.
(1995) 33 Cal.App.4th 1680 ....................................................................................................... 5
11
Tarmann v. State Farm Mut. Auto. Ins. Co.
12 (1991) 2 Cal.App.4th 153 ........................................................................................................... 8
13 Williams v. Prudential Ins. Co.
(N.D. Cal. 2010) 2010 WL 431968 ............................................................................................ 5
14
Other Authorities
15
3 Witkin, California Practice and Procedure § 7:181 ..................................................................... 5
16
Rules
17
Bus. & Prof. Code § 17206 ............................................................................................................. 4
18
Civ. Code § 1761 ............................................................................................................................ 5
19
Civ. Code § 3345 ............................................................................................................................ 5
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Code Civ. P. § 3294 ............................................................................................................... passim
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Code Civ. P. § 436 .......................................................................................................................... 5
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Code Civ. P. § 437 .......................................................................................................................... 5
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Code Civ. P. § 452 .......................................................................................................................... 5
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PLAINTIFFS’ OPPOSITION TO DEMURRER
INTRODUCTION
1
Defendants SVRV 385 Moore, LLC, SVRV 387 Moore, LLC (the “Moore Road LLCs”),
2
Gregory J. Davis, Kevin Wolfe, Jason Justesen, Paramont Capital, LLC, and Paramont Woodside,
3
LLC (collectively, the “Paramont Defendants,” and together with the Moore Road LLCs, the
4
“Moving Defendants”) engaged in egregious misconduct over the course of several years that
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damaged Plaintiffs in the amount of several hundred thousand dollars. The Moving Defendants
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committed this misconduct with a willful and conscious disregard of Plaintiffs’ rights.
7
Plaintiffs’ First Amended Complaint (“FAC”) alleges that Plaintiffs invested hundreds of
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thousands of dollars in the Moore Road LLCs between late 2017 and mid-2018 and thus were the
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initial members of those LLCs. They made their investments pursuant to the terms of the Effective
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Operating Agreements that governed the Moore Road LLCs, which Defendants Bragg and Kludt
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drafted and provided to Plaintiffs in connection with their investments, and to which Plaintiffs.
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Pursuant to the Effective Operating Agreements, upon sale of the Moore Road properties, all debts
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were to be paid off first, and then all members in the Moore Road LLCs were to share in the net
14
profits proportional to their membership interest in the LLCs. But in November 2018, the Moving
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Defendants conspired in secret with the Moore Road LLCs’ Manager, Bragg, to unlawfully sign
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Unapproved Operating Agreements that purported to abrogate Plaintiffs’ membership in the
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Moore Road LLCs, even though the Moore Road LLCs had been operating with Plaintiffs’ money
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for several months. Defendants concealed these Unapproved Operating Agreements from
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Plaintiffs for more than half a year. When Plaintiffs learned of the Unapproved Operating
20
Agreements, they refused to ratify them.
21
Several months before Plaintiffs learned of the Unapproved Operating Agreements, the
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Moore Road LLCs solicited an additional $200,000 in short-term loans from Plaintiffs. The Moore
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Road LLCs told Plaintiffs that these loans would be repaid promptly with 12% interest. But they
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were never repaid. In March 2020, the Moore Road LLCs solicited additional loans from Plaintiffs,
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telling them that if Plaintiffs did not extend further loans, the bank would foreclose on the Moore
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Road properties, completely wiping out Plaintiffs’ investments. The Moore Road LLCs again
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promised Plaintiffs 12% interest. But once again, Plaintiffs were never repaid.
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PLAINTIFFS’ OPPOSITION TO DEMURRER
1 In May 2020, the Paramont Defendants—who were already the majority shareholders of
2 the Moore Road LLCs by virtue of their $2,000,000 investment—also seized managerial control
3 of the Moore Road LLCs. The Moving Defendants immediately conspired again to amend the
4 Unapproved Operating Agreements to further subordinate Plaintiffs’ rights and increase their
5 return from the Moore Road Project at Plaintiffs’ expense. The Moving Defendants again
6 concealed this takeover, and these amendments, from Plaintiffs.
7 The Moving Defendants sold the Moore Road properties in September and October 2020
8 and distributed all of the profits to themselves and Bragg, while returning no money to Plaintiffs.
9 In November 2020, they yet again amended the Unapproved Operating Agreements to subordinate
10 Plaintiffs’ rights. The Moving Defendants again concealed this from Plaintiffs, and Plaintiffs did
11 not learn of this conspiracy until well after the Moore Road properties sold.
12 As a consequence of the Moving Defendants’ misconduct, they reaped hundreds of
13 thousands of dollars in profits for themselves, while inflicting hundreds of thousands of dollars in
14 losses on Plaintiffs. They engaged in this conspiracy and concealed it from Plaintiffs with a willful
15 and conscious disregard of Plaintiffs’ rights. Indeed, as they finalized their conspiracy, they even
16 gloated to their own investors that they were reaping a profit while Plaintiffs were left with nothing.
17 The FAC meticulously details the Moving Defendants’ misconduct and clearly provides a
18 basis for punitive damages. In contending that the FAC fails to identify any specific misconduct
19 on their part, the Moving Defendants flagrantly misconstrue (or simply ignore) Plaintiffs’
20 allegations. But the Moving Defendants cannot strike a request for punitive damages by rewriting
21 the complaint to whitewash their actions. Accepting the allegations in the FAC as true, Plaintiffs
22 have adequately alleged that the Moving Defendants are guilty of “oppression, fraud, [and] malice”
23 towards Plaintiffs. (Code Civ. P. § 3294(a).) Accordingly, the Court should deny the Moving
24 Defendants’ motion to strike.
25 BACKGROUND
26 Plaintiffs allege that they “were the initial members” of the Moore Road LLCs, which were
27 “created by Defendants Kludt, Bragg, and SVRV to purchase, improve, and sell the propert[ies]
28 located at” 385 and 387 Moore Road. (FAC ¶¶ 25–6.) Between 2017 and 2018, Plaintiffs invested
5
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 several hundred thousand dollars in the Moore Road LLCs. (Id. ¶ 4.) In so doing, “Plaintiffs made
2 clear that they were not investing in SVRV generally, but rather were investing in the Moore Road
3 Project specifically.” (Id. ¶ 5.) Plaintiffs made their investments pursuant to the Effective
4 Operating Agreements for the Moore Road LLCs, which listed Plaintiffs as “Passive Members”
5 and listed SVRV as the “Active Member.” 1 (Id. ¶ 55.) Bragg was the sole Manager of the Moore
6 Road LLCs from their inception in mid-2018 through May 2020. 2 (Id. ¶¶ 54, 120).
7 In November 2018, the Moore Road LLCs, via their Manager, Bragg, conspired with the
8 Paramont Defendants to create Unapproved Operating Agreements, which purported to replace
9 the Effective Operating Agreements and abrogate Plaintiffs’ rights in the LLCs. (Id. ¶¶ 78–80, 97–
10 9.) Davis and Justesen, the President and Vice President of Paramont Capital, respectively, were
11 personally involved with this conspiracy. (Id. ¶¶ 6, 27, 29.) Through this conspiracy, Paramont
12 Woodside, which was created and capitalized by Paramont Capital for the express purpose of
13 investing in the Moore Road Project, obtained a controlling stake in the Moore Road LLCs. (Id.
14 ¶¶ 6, 31.) The Moore Road LLCs used Plaintiffs’ invested capital to pay Paramont Capital a
15 $20,000 due diligence and legal fee, and eventually paid Paramont Capital a management fee. (Id.
16 ¶¶ 12, 79.) Defendants concealed this conspiracy from Plaintiffs for seven months. (Id. ¶ 7.) When
17 Plaintiffs finally learned of the conspiracy to eliminate their ownership interest in the Moore Road
18 LLCs, they refused to sign the Unapproved Operating Agreements, “which directly contradicted
19 the arrangements set forth in” the Effective Operating Agreements that “they had approved in
20 February 2018” and which “governed the Moore Road LLCs.” (Id. ¶¶ 10, 99.)
21 In March 2019, the Moore Road LLCs, via their Manager, Bragg, fraudulently solicited an
22 additional $200,000 in loans from Plaintiffs. (Id. ¶¶ 87–8.) Both Plaintiffs’ and Defendants’
23 records reflected that these loans were for the Moore Road LLCs—not for SVRV. (Id.) At this
24 time, Plaintiffs still had not been told about the Unapproved Operating Agreements. (Id. ¶ 7.) In
25
26 1
Although SVRV did not invest any capital into the Moore Road LLCs, its “ownership interest” was “derived from
project management.” (FAC ¶ 55.)
27 2
While Bragg was the individual Manager of the Moore Road LLCs, Kludt also had actual and apparent authority to
act on behalf of the Moore Road LLCs, as he was a Managing Director of SVRV which, in turn, was the Active
28 Member of the Moore Road LLCs. (FAC ¶¶ 23, 55, 79; see Pls’ Opp. to Demurrer (May 15, 2023), at 9.)
6
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 March 2020, the Moore Road LLCs, again via their Manager, Bragg, fraudulently solicited
2 additional loans from Plaintiffs for the Moore Road LLCs, telling them that if they failed to make
3 these loans, the lender would foreclose on the properties and wipe out the entirety of Plaintiffs’
4 investments. (Id. ¶¶ 11, 110–2.)
5 In May 2020, Paramont Woodside, 3 invoking terms in the Unapproved Operating
6 Agreements, assumed management of the Moore Road LLCs. (Id. ¶¶ 12, 120.) Defendants then
7 conspired to further amend the Unapproved Operating Agreements to increase the Paramont
8 Defendants’ putative return from Moore Road LLCs and to recharacterize Plaintiffs’ recent loans
9 to the Moore Road LLCs as subordinate equity contributions. (Id. ¶ 123.) After the Moore Road
10 LLCs sold the properties in September and October 2020, Defendants again conspired to secretly
11 amend the Unapproved Operating Agreements to secure for themselves hundreds of thousands of
12 dollars in profits from the Moore Road LLCs while leaving Plaintiffs with nothing. (Id. ¶¶ 137–
13 40.) Defendants concealed each of these actions from Plaintiffs. (Id. ¶¶ 128, 140.)
14 The Moving Defendants have done nothing to rectify Plaintiffs’ losses, nor have they
15 expressed any remorse for their actions. To the contrary, upon selling the Moore Road properties,
16 the Paramont Defendants gloated that they were able to obtain “a full return of [] capital” for
17 themselves—plus hundreds of thousands of dollars in unauthorized profits—while Plaintiffs were
18 “losing money.” (Id. ¶ 139.)
19 MOTIONS TO STRIKE ARE DISFAVORED AND
ARE GOVERNED BY STRICT STANDARDS
20
A motion to strike may be sought for only two limited purposes, namely, to strike (1)
21
“irrelevant, false, or improper matter inserted in any pleading,” or (2) “part of any pleading not
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drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”
23
(Code Civ. P. § 436.) “The grounds for a motion to strike shall appear on the face of the challenged
24
pleading or from any matter of which the court is required to take judicial notice.” (Id. § 437.)
25
26 3
Paramont Woodside was incorporated and capitalized by Paramont Capital for the express purpose of investing in
27 the Moore Road Project. (FAC ¶ 31.) Davis, Wolfe, and Justesen were the officers of the Paramont LLCs. (Id. ¶¶ 27–
9, 31) Davis also became the individual Manager of Paramont Woodside. (Id. ¶ 12.) Like Kludt, each of the Paramont
Defendants had actual and apparent authority to act on behalf of the Moore Road LLCs after taking over management
28 via Paramont Woodside. (See supra n.2.)
7
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 Motions to strike allegations in a complaint are highly disfavored, as plaintiffs’ “allegations must
2 be liberally construed.” (Id. § 452.) “Judges read allegations of a pleading subject to a motion to
3 strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Super. Ct. (1998)
4 67 Cal.App.4th 1253, 1255.) Use of motions to strike must be “cautious and sparing,” as courts
5 “have no intention of creating a procedural ‘line item veto’ for the civil defendant.” (PH II, Inc. v.
6 Super. Ct. (1995) 33 Cal.App.4th 1680, 1683.) Even “conclusory allegations will not be stricken
7 where they are supported by other, factual allegations in the complaint.” (3 Witkin, California
8 Practice and Procedure § 7:181 [citing Perkins v. Super. Ct. (1981) 117 Cal.Ap.3d 1, 6].)
9 Each of the Plaintiffs in this case is, and at all relevant times was, a senior citizen. (FAC
10 ¶ 192; see also Civ. Code § 1761; id. § 17206.1(b)(1).) Accordingly, Plaintiffs may also receive a
11 trebling of any punitive damages award. (Civ. Code § 3345; Williams v. Prudential Ins. Co. (N.D.
12 Cal. 2010) 2010 WL 431968, at *4 [Section 3345 “limits treble damages not to statutory causes of
13 action, but to statutory awards of punitive damages” including under section 3294].)
14 DEFENDANTS’ MOTION TO STRIKE SHOULD BE DENIED
15 Punitive damages area available “where it is proven by clear and convincing evidence that
16 the defendant has been guilty of oppression, fraud, or malice.” (Code Civ. P. § 3294(a).)
17 “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in
18 conscious disregard of that person's rights.” (Id. subd. (c).) “‘Fraud’ means an intentional
19 misrepresentation, deceit, or concealment of a material fact known to the defendant with the
20 intention on the part of the defendant of thereby depriving a person of property or legal rights or
21 otherwise causing injury.” (Id.) “‘Malice’ means conduct which is intended by the defendant to
22 cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a
23 willful and conscious disregard of the rights or safety of others.” (Id.) Plaintiffs allege with
24 specificity that each of the Moving Defendants was guilty of “oppression, fraud, [and] malice” in
25 carrying out the misconduct that caused Plaintiffs hundreds of thousands of dollars in losses.
26 First, Plaintiffs allege that months after Plaintiffs invested hundreds of thousands of dollars
27 in the Moore Road LLCs pursuant to the Effective Operating Agreements, Davis, Justesen, and
28 others at Paramont Capital secretly conspired with Bragg to draft and sign the Unapproved
8
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 Operating Agreements, which purported to remove Plaintiffs from membership in the Moore Road
2 LLCs. (FAC ¶¶ 6, 54, 67, 74.) They did so in “conscious disregard” of Plaintiffs’ rights, and “with
3 the intention . . . of depriving” Plaintiffs of membership in the Moore Road LLCs. (Code Civ. P.
4 § 3294(c); FAC ¶¶ 78–80, 204, 223.) Paramont Capital created and capitalized Paramont
5 Woodside expressly for this purpose, and Davis, Wolfe, and Justesen acted as the officers of these
6 entities. (FAC ¶¶ 27–9, 31.) And while the Moore Road LLCs used Plaintiffs’ money to purchase
7 and develop the Moore Road properties, the Moving Defendants concealed the Unapproved
8 Operating Agreements from Plaintiffs for seven months. (Code Civ. P. § 3294(c); FAC ¶ 7.)
9 Alsowhile the Unapproved Operating Agreements were still concealed from Plaintiffs, the Moore
10 Road LLCs fraudulently solicited another $200,000 in loans from Plaintiffs. (Id. ¶¶ 87–8, 166,
11 185.) Later, in March 2020, the Moore Road LLCs—acting through their manager, Bragg—
12 solicited additional loans from Plaintiffs with the promise of a 12% return that would have priority
13 over any equity distribution. (Id. ¶¶ 11, 110–2, 168, 187.)
14 In May 2020, Paramont Woodside, itself managed by Davis, became Manager of the
15 Moore Road LLCs. (Id. ¶¶ 27, 120.) Paramont Woodside had already become the Majority
16 Shareholder as of November 2018. (Id. ¶¶ 6, 30) Wolfe, meanwhile, “was the primary individual
17 in charge of the finances” for the Moore Road LLCs. (Id. ¶ 28.) With their power cemented, the
18 Paramont Defendants doubled down on their “willful and conscious disregard” for Plaintiffs’
19 rights. (Code Civ. P. § 3294(c).) After the Paramont Defendants seized full control of the Moore
20 Road LLCs, “Davis and Wolfe forced Bragg to agree to amend the [U]napproved [O]perating
21 [A]greements” to further increase the Paramont Defendants’ putative return from the Moore Road
22 LLCs at Plaintiffs’ expense. (FAC ¶ 12.) They also retroactively and unilaterally declared that
23 Plaintiffs’ recent loans, which were made to prevent the bank from foreclosing on the properties,
24 would instead be treated as equity contributions entitled to deprioritized repayment (and without
25 interest). (Id. ¶ 123.) They concealed all of this from Plaintiffs. (Id.)
26 After selling the Moore Road properties, the Paramont Defendants again unilaterally
27 amended the Unapproved Operating Agreements with “willful and conscious disregard” for
28 Plaintiffs’ rights. (Code Civ. P. § 3294(c); FAC ¶ 140.) This time, they amended the Unapproved
9
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 Operating Agreements to state that no money was owed to Plaintiffs from the Moore Road LLCs,
2 even though Plaintiffs were the initial members of the Moore Road LLCs and their contributions
3 had been essential to get the Moore Road Project off the ground and to keep it from ruin. (Id. ¶¶ 6,
4 46, 59, 110–2, 140.) This, again, was concealed from Plaintiffs. (Id. ¶ 140.) The Moving
5 Defendants secured the remaining Defendants’ cooperation in purporting to abrogate Plaintiffs’
6 rights by sharing with them a cut of the proceeds. (Id. ¶¶ 12, 124, 137.)
7 The Moving Defendants committed this fraud despite having been on notice since 2018
8 that the Moore Road LLCs were already governed by the Effective Operating Agreements and that
9 any revisions to those agreements required Plaintiffs’ authorization, and despite having received
10 documents reflecting Plaintiffs’ substantial investments in the Moore Road LLCs and loans made
11 to the Moore Road LLCs. (Id. ¶¶ 76, 83, 120.) And after securing their profits of approximately
12 half-a-million dollars, they gloated about Plaintiffs’ losses of approximately three-quarters-of-a-
13 million dollars. (Id. ¶¶ 136–39.) 4
14 The Motion to Strike asserts that “Defendants Bragg, Kludt, and/or SVRV made a series
15 of representations to Plaintiffs in order to procure investments from them,” but that “Plaintiffs and
16 [the Moving] Defendants had no interactions with each other, did not enter into any contracts with
17 each other, and did not owe any duties to each other.” (MTS 2.) But that both mischaracterizes and
18 ignores the numerous allegations described above that highlight the Moving Defendants’
19 malicious, oppressive, and fraudulent acts. Plaintiffs have also alleged facts showing that the
20 Moving Defendants owed fiduciary duties to Plaintiffs by virtue of their management of the Moore
21 Road LLCs and their position as majority owner. (See Pls’ Opp. to Demurrer (May 15, 2023), at
22 9–11.)
23 Plaintiffs also expressly allege that prior to May 2020, Bragg was the Manager of the
24 Moore Road LLCs and that SVRV, “whose ownership interest[] [was] derived from project
25 management,” was its Active Member. (FAC ¶¶ 22–3, 55.) Plaintiffs further allege that Bragg and
26
27
4
Plaintiffs do not contest that that they would not be entitled to punitive damages if they succeeded only in proving
breach of contract “[i]in the absence of an independent tort” (Cates Constr., Inc. v. Talbot Partners (1999) 21 Cal.4th
28, 61), or if they were entitled to relief only under section 17200, but as discussed supra, Plaintiffs allege ample
28 tortious conduct by each of the Moving Defendants, which conduct forms the basis of Plaintiff’s claims.
10
PLAINTIFFS’ OPPOSITION TO DEMURRER
1 Kludt were the Managing Directors of SVRV, and therefore had both actual and apparent authority
2 to act on behalf of the Moore Road LLCs. (Id.; see also Pls. Opp. to Demurrer (May 15, 2023), at
3 2 n.2, 9.) Moreover, Plaintiffs specifically allege that the Moore Road LLCs—acting through
4 Bragg and Kludt—made material misrepresentations to Plaintiffs to procure investments and
5 loans. (See, e.g., FAC ¶¶ 166, 168, 170, 172, 185, 187, 189, 191, 212–15, 255, 257.) It is thus
6 beyond dispute that Plaintiffs have “allege[d] the names of the persons who made the allegedly
7 fraudulent representations [and] their authority to speak.’” (Dem. 3 [quoting Tarmann v. State
8 Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157].)
9 In short, the only “reasonable interpretation” of Plaintiffs’ FAC, “reading it as a whole and
10 its parts in their context,” is that the allegedly fraudulent statements made by Bragg and Kludt
11 were also made on behalf of the Moore Road LLCs for which Plaintiffs’ contributions were sought,
12 and which Bragg and Kludt managed and controlled. (Goncharov v. Uber Techs., Inc. (2018) 19
13 Cal.App.5th 1157, 1165 [citation omitted].) And it is black-letter law that fraudulent
14 misrepresentations, including scienter, of a corporation’s officer may be imputed to the
15 corporation. (In re ChinaCast Educ. Corp. Secs. Litig. (9th Cir. 2015) 809 F.3d 471, 472–73
16 [imputing fraudulent misrepresentations, including scienter, to corporation even though officer
17 was “looting” from corporation and therefore was adverse to it].) Therefore, as Plaintiffs expressly
18 allege, the Moore Road LLCs themselves made intentional, fraudulent misrepresentations to
19 Plaintiffs in “conscious disregard” of Plaintiffs’ rights and “with the intention . . . of depriving”
20 Plaintiffs of their membership in the Moore Road LLCs, justifying an award of punitive damages.
21 (E.g., FAC ¶¶ ¶¶ 166, 168, 170, 172, 185, 187, 189, 191, 212–15, 255, 257; Civ. Code § 3294(c).)
22 CONCLUSION
23 Plaintiffs allege oppression, fraud, and malice on the part of each of the Moving
24 Defendants. The Motion to Strike should be denied in full.
25
Dated: May 15, 2023 By: ______________________
26
Collin J. Vierra
27 EIMER STAHL, LLP
28 Attorney for Plaintiffs
11
PLAINTIFFS’ OPPOSITION TO DEMURRER
Preview
1 Collin J. Vierra (State Bar No. 322720) EIMER STAHL LLP 2 99 Almaden Blvd., Suite 600 3 San Jose, CA 95113-1605 Telephone: (408) 889-1668 4 Email: cvierra@eimerstahl.com 5 Attorney for Plaintiffs 6 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 COUNTY OF SAN MATEO 9 Robert Arntsen; Mary Lee; Arntsen Family Case No. 22-CIV-01148 10 Partnership, LP; and Brian Christopher Dunn 11 Custodianship; Date: May 26, 2023 Time: 9:00am 12 Plaintiffs, Dept. 21 v. 13 Hon. Robert D. Foiles 14 David M. Bragg; Silicon Valley Real Ventures LLC; SVRV 385 Moore, LLC; SVRV 387 PLAINTIFFS’ OPPOSITION TO 15 Moore, LLC; Gregory J. Davis; Kevin Wolfe; MOTION TO STRIKE OF Jason Justesen; Paramont Woodside, LLC; DEFENDANTS SVRV 385 MOORE, 16 and Paramont Capital, LLC; LLC, SVRV 387 MOORE, LLC, GREGORY J. DAVIS, KEVIN WOLFE, 17 Defendants. JASON JUSTESEN, PARAMONT 18 WOODSIDE, LLC, AND PARAMONT CAPITAL, LLC 19 20 21 22 23 24 25 26 27 28 1 PLAINTIFFS’ OPPOSITION TO DEMURRER TABLE OF CONTENTS 1 2 INTRODUCTION .......................................................................................................................... 4 3 BACKGROUND ............................................................................................................................ 5 4 MOTIONS TO STRIKE ARE DISFAVORED AND ARE GOVERNED BY STRICT STANDARDS................................................................................................................................. 7 5 6 DEFENDANTS’ MOTION TO STRIKE SHOULD BE DENIED ............................................... 8 7 CONCLUSION ............................................................................................................................. 11 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 PLAINTIFFS’ OPPOSITION TO DEMURRER TABLE OF AUTHORITIES 1 Cases 2 Cates Constr., Inc. v. Talbot Partners 3 (1999) 21 Cal.44th 28, 61 ........................................................................................................... 7 4 Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253 ....................................................................................................... 5 5 Goncharov v. Uber Techs., Inc. 6 (2018) 19 Cal.App.5th 1157 ....................................................................................................... 8 7 In re ChinaCast Educ. Corp. Secs. Litig. (2015) 809 F.3d 471 ................................................................................................................... 8 8 Perkins v. Super. Ct. 9 (1981) 117 Cal.Ap.3d 1 .............................................................................................................. 5 10 PH II, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680 ....................................................................................................... 5 11 Tarmann v. State Farm Mut. Auto. Ins. Co. 12 (1991) 2 Cal.App.4th 153 ........................................................................................................... 8 13 Williams v. Prudential Ins. Co. (N.D. Cal. 2010) 2010 WL 431968 ............................................................................................ 5 14 Other Authorities 15 3 Witkin, California Practice and Procedure § 7:181 ..................................................................... 5 16 Rules 17 Bus. & Prof. Code § 17206 ............................................................................................................. 4 18 Civ. Code § 1761 ............................................................................................................................ 5 19 Civ. Code § 3345 ............................................................................................................................ 5 20 Code Civ. P. § 3294 ............................................................................................................... passim 21 Code Civ. P. § 436 .......................................................................................................................... 5 22 Code Civ. P. § 437 .......................................................................................................................... 5 23 Code Civ. P. § 452 .......................................................................................................................... 5 24 25 26 27 28 3 PLAINTIFFS’ OPPOSITION TO DEMURRER INTRODUCTION 1 Defendants SVRV 385 Moore, LLC, SVRV 387 Moore, LLC (the “Moore Road LLCs”), 2 Gregory J. Davis, Kevin Wolfe, Jason Justesen, Paramont Capital, LLC, and Paramont Woodside, 3 LLC (collectively, the “Paramont Defendants,” and together with the Moore Road LLCs, the 4 “Moving Defendants”) engaged in egregious misconduct over the course of several years that 5 damaged Plaintiffs in the amount of several hundred thousand dollars. The Moving Defendants 6 committed this misconduct with a willful and conscious disregard of Plaintiffs’ rights. 7 Plaintiffs’ First Amended Complaint (“FAC”) alleges that Plaintiffs invested hundreds of 8 thousands of dollars in the Moore Road LLCs between late 2017 and mid-2018 and thus were the 9 initial members of those LLCs. They made their investments pursuant to the terms of the Effective 10 Operating Agreements that governed the Moore Road LLCs, which Defendants Bragg and Kludt 11 drafted and provided to Plaintiffs in connection with their investments, and to which Plaintiffs. 12 Pursuant to the Effective Operating Agreements, upon sale of the Moore Road properties, all debts 13 were to be paid off first, and then all members in the Moore Road LLCs were to share in the net 14 profits proportional to their membership interest in the LLCs. But in November 2018, the Moving 15 Defendants conspired in secret with the Moore Road LLCs’ Manager, Bragg, to unlawfully sign 16 Unapproved Operating Agreements that purported to abrogate Plaintiffs’ membership in the 17 Moore Road LLCs, even though the Moore Road LLCs had been operating with Plaintiffs’ money 18 for several months. Defendants concealed these Unapproved Operating Agreements from 19 Plaintiffs for more than half a year. When Plaintiffs learned of the Unapproved Operating 20 Agreements, they refused to ratify them. 21 Several months before Plaintiffs learned of the Unapproved Operating Agreements, the 22 Moore Road LLCs solicited an additional $200,000 in short-term loans from Plaintiffs. The Moore 23 Road LLCs told Plaintiffs that these loans would be repaid promptly with 12% interest. But they 24 were never repaid. In March 2020, the Moore Road LLCs solicited additional loans from Plaintiffs, 25 telling them that if Plaintiffs did not extend further loans, the bank would foreclose on the Moore 26 Road properties, completely wiping out Plaintiffs’ investments. The Moore Road LLCs again 27 promised Plaintiffs 12% interest. But once again, Plaintiffs were never repaid. 28 4 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 In May 2020, the Paramont Defendants—who were already the majority shareholders of 2 the Moore Road LLCs by virtue of their $2,000,000 investment—also seized managerial control 3 of the Moore Road LLCs. The Moving Defendants immediately conspired again to amend the 4 Unapproved Operating Agreements to further subordinate Plaintiffs’ rights and increase their 5 return from the Moore Road Project at Plaintiffs’ expense. The Moving Defendants again 6 concealed this takeover, and these amendments, from Plaintiffs. 7 The Moving Defendants sold the Moore Road properties in September and October 2020 8 and distributed all of the profits to themselves and Bragg, while returning no money to Plaintiffs. 9 In November 2020, they yet again amended the Unapproved Operating Agreements to subordinate 10 Plaintiffs’ rights. The Moving Defendants again concealed this from Plaintiffs, and Plaintiffs did 11 not learn of this conspiracy until well after the Moore Road properties sold. 12 As a consequence of the Moving Defendants’ misconduct, they reaped hundreds of 13 thousands of dollars in profits for themselves, while inflicting hundreds of thousands of dollars in 14 losses on Plaintiffs. They engaged in this conspiracy and concealed it from Plaintiffs with a willful 15 and conscious disregard of Plaintiffs’ rights. Indeed, as they finalized their conspiracy, they even 16 gloated to their own investors that they were reaping a profit while Plaintiffs were left with nothing. 17 The FAC meticulously details the Moving Defendants’ misconduct and clearly provides a 18 basis for punitive damages. In contending that the FAC fails to identify any specific misconduct 19 on their part, the Moving Defendants flagrantly misconstrue (or simply ignore) Plaintiffs’ 20 allegations. But the Moving Defendants cannot strike a request for punitive damages by rewriting 21 the complaint to whitewash their actions. Accepting the allegations in the FAC as true, Plaintiffs 22 have adequately alleged that the Moving Defendants are guilty of “oppression, fraud, [and] malice” 23 towards Plaintiffs. (Code Civ. P. § 3294(a).) Accordingly, the Court should deny the Moving 24 Defendants’ motion to strike. 25 BACKGROUND 26 Plaintiffs allege that they “were the initial members” of the Moore Road LLCs, which were 27 “created by Defendants Kludt, Bragg, and SVRV to purchase, improve, and sell the propert[ies] 28 located at” 385 and 387 Moore Road. (FAC ¶¶ 25–6.) Between 2017 and 2018, Plaintiffs invested 5 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 several hundred thousand dollars in the Moore Road LLCs. (Id. ¶ 4.) In so doing, “Plaintiffs made 2 clear that they were not investing in SVRV generally, but rather were investing in the Moore Road 3 Project specifically.” (Id. ¶ 5.) Plaintiffs made their investments pursuant to the Effective 4 Operating Agreements for the Moore Road LLCs, which listed Plaintiffs as “Passive Members” 5 and listed SVRV as the “Active Member.” 1 (Id. ¶ 55.) Bragg was the sole Manager of the Moore 6 Road LLCs from their inception in mid-2018 through May 2020. 2 (Id. ¶¶ 54, 120). 7 In November 2018, the Moore Road LLCs, via their Manager, Bragg, conspired with the 8 Paramont Defendants to create Unapproved Operating Agreements, which purported to replace 9 the Effective Operating Agreements and abrogate Plaintiffs’ rights in the LLCs. (Id. ¶¶ 78–80, 97– 10 9.) Davis and Justesen, the President and Vice President of Paramont Capital, respectively, were 11 personally involved with this conspiracy. (Id. ¶¶ 6, 27, 29.) Through this conspiracy, Paramont 12 Woodside, which was created and capitalized by Paramont Capital for the express purpose of 13 investing in the Moore Road Project, obtained a controlling stake in the Moore Road LLCs. (Id. 14 ¶¶ 6, 31.) The Moore Road LLCs used Plaintiffs’ invested capital to pay Paramont Capital a 15 $20,000 due diligence and legal fee, and eventually paid Paramont Capital a management fee. (Id. 16 ¶¶ 12, 79.) Defendants concealed this conspiracy from Plaintiffs for seven months. (Id. ¶ 7.) When 17 Plaintiffs finally learned of the conspiracy to eliminate their ownership interest in the Moore Road 18 LLCs, they refused to sign the Unapproved Operating Agreements, “which directly contradicted 19 the arrangements set forth in” the Effective Operating Agreements that “they had approved in 20 February 2018” and which “governed the Moore Road LLCs.” (Id. ¶¶ 10, 99.) 21 In March 2019, the Moore Road LLCs, via their Manager, Bragg, fraudulently solicited an 22 additional $200,000 in loans from Plaintiffs. (Id. ¶¶ 87–8.) Both Plaintiffs’ and Defendants’ 23 records reflected that these loans were for the Moore Road LLCs—not for SVRV. (Id.) At this 24 time, Plaintiffs still had not been told about the Unapproved Operating Agreements. (Id. ¶ 7.) In 25 26 1 Although SVRV did not invest any capital into the Moore Road LLCs, its “ownership interest” was “derived from project management.” (FAC ¶ 55.) 27 2 While Bragg was the individual Manager of the Moore Road LLCs, Kludt also had actual and apparent authority to act on behalf of the Moore Road LLCs, as he was a Managing Director of SVRV which, in turn, was the Active 28 Member of the Moore Road LLCs. (FAC ¶¶ 23, 55, 79; see Pls’ Opp. to Demurrer (May 15, 2023), at 9.) 6 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 March 2020, the Moore Road LLCs, again via their Manager, Bragg, fraudulently solicited 2 additional loans from Plaintiffs for the Moore Road LLCs, telling them that if they failed to make 3 these loans, the lender would foreclose on the properties and wipe out the entirety of Plaintiffs’ 4 investments. (Id. ¶¶ 11, 110–2.) 5 In May 2020, Paramont Woodside, 3 invoking terms in the Unapproved Operating 6 Agreements, assumed management of the Moore Road LLCs. (Id. ¶¶ 12, 120.) Defendants then 7 conspired to further amend the Unapproved Operating Agreements to increase the Paramont 8 Defendants’ putative return from Moore Road LLCs and to recharacterize Plaintiffs’ recent loans 9 to the Moore Road LLCs as subordinate equity contributions. (Id. ¶ 123.) After the Moore Road 10 LLCs sold the properties in September and October 2020, Defendants again conspired to secretly 11 amend the Unapproved Operating Agreements to secure for themselves hundreds of thousands of 12 dollars in profits from the Moore Road LLCs while leaving Plaintiffs with nothing. (Id. ¶¶ 137– 13 40.) Defendants concealed each of these actions from Plaintiffs. (Id. ¶¶ 128, 140.) 14 The Moving Defendants have done nothing to rectify Plaintiffs’ losses, nor have they 15 expressed any remorse for their actions. To the contrary, upon selling the Moore Road properties, 16 the Paramont Defendants gloated that they were able to obtain “a full return of [] capital” for 17 themselves—plus hundreds of thousands of dollars in unauthorized profits—while Plaintiffs were 18 “losing money.” (Id. ¶ 139.) 19 MOTIONS TO STRIKE ARE DISFAVORED AND ARE GOVERNED BY STRICT STANDARDS 20 A motion to strike may be sought for only two limited purposes, namely, to strike (1) 21 “irrelevant, false, or improper matter inserted in any pleading,” or (2) “part of any pleading not 22 drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” 23 (Code Civ. P. § 436.) “The grounds for a motion to strike shall appear on the face of the challenged 24 pleading or from any matter of which the court is required to take judicial notice.” (Id. § 437.) 25 26 3 Paramont Woodside was incorporated and capitalized by Paramont Capital for the express purpose of investing in 27 the Moore Road Project. (FAC ¶ 31.) Davis, Wolfe, and Justesen were the officers of the Paramont LLCs. (Id. ¶¶ 27– 9, 31) Davis also became the individual Manager of Paramont Woodside. (Id. ¶ 12.) Like Kludt, each of the Paramont Defendants had actual and apparent authority to act on behalf of the Moore Road LLCs after taking over management 28 via Paramont Woodside. (See supra n.2.) 7 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 Motions to strike allegations in a complaint are highly disfavored, as plaintiffs’ “allegations must 2 be liberally construed.” (Id. § 452.) “Judges read allegations of a pleading subject to a motion to 3 strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Super. Ct. (1998) 4 67 Cal.App.4th 1253, 1255.) Use of motions to strike must be “cautious and sparing,” as courts 5 “have no intention of creating a procedural ‘line item veto’ for the civil defendant.” (PH II, Inc. v. 6 Super. Ct. (1995) 33 Cal.App.4th 1680, 1683.) Even “conclusory allegations will not be stricken 7 where they are supported by other, factual allegations in the complaint.” (3 Witkin, California 8 Practice and Procedure § 7:181 [citing Perkins v. Super. Ct. (1981) 117 Cal.Ap.3d 1, 6].) 9 Each of the Plaintiffs in this case is, and at all relevant times was, a senior citizen. (FAC 10 ¶ 192; see also Civ. Code § 1761; id. § 17206.1(b)(1).) Accordingly, Plaintiffs may also receive a 11 trebling of any punitive damages award. (Civ. Code § 3345; Williams v. Prudential Ins. Co. (N.D. 12 Cal. 2010) 2010 WL 431968, at *4 [Section 3345 “limits treble damages not to statutory causes of 13 action, but to statutory awards of punitive damages” including under section 3294].) 14 DEFENDANTS’ MOTION TO STRIKE SHOULD BE DENIED 15 Punitive damages area available “where it is proven by clear and convincing evidence that 16 the defendant has been guilty of oppression, fraud, or malice.” (Code Civ. P. § 3294(a).) 17 “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in 18 conscious disregard of that person's rights.” (Id. subd. (c).) “‘Fraud’ means an intentional 19 misrepresentation, deceit, or concealment of a material fact known to the defendant with the 20 intention on the part of the defendant of thereby depriving a person of property or legal rights or 21 otherwise causing injury.” (Id.) “‘Malice’ means conduct which is intended by the defendant to 22 cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a 23 willful and conscious disregard of the rights or safety of others.” (Id.) Plaintiffs allege with 24 specificity that each of the Moving Defendants was guilty of “oppression, fraud, [and] malice” in 25 carrying out the misconduct that caused Plaintiffs hundreds of thousands of dollars in losses. 26 First, Plaintiffs allege that months after Plaintiffs invested hundreds of thousands of dollars 27 in the Moore Road LLCs pursuant to the Effective Operating Agreements, Davis, Justesen, and 28 others at Paramont Capital secretly conspired with Bragg to draft and sign the Unapproved 8 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 Operating Agreements, which purported to remove Plaintiffs from membership in the Moore Road 2 LLCs. (FAC ¶¶ 6, 54, 67, 74.) They did so in “conscious disregard” of Plaintiffs’ rights, and “with 3 the intention . . . of depriving” Plaintiffs of membership in the Moore Road LLCs. (Code Civ. P. 4 § 3294(c); FAC ¶¶ 78–80, 204, 223.) Paramont Capital created and capitalized Paramont 5 Woodside expressly for this purpose, and Davis, Wolfe, and Justesen acted as the officers of these 6 entities. (FAC ¶¶ 27–9, 31.) And while the Moore Road LLCs used Plaintiffs’ money to purchase 7 and develop the Moore Road properties, the Moving Defendants concealed the Unapproved 8 Operating Agreements from Plaintiffs for seven months. (Code Civ. P. § 3294(c); FAC ¶ 7.) 9 Alsowhile the Unapproved Operating Agreements were still concealed from Plaintiffs, the Moore 10 Road LLCs fraudulently solicited another $200,000 in loans from Plaintiffs. (Id. ¶¶ 87–8, 166, 11 185.) Later, in March 2020, the Moore Road LLCs—acting through their manager, Bragg— 12 solicited additional loans from Plaintiffs with the promise of a 12% return that would have priority 13 over any equity distribution. (Id. ¶¶ 11, 110–2, 168, 187.) 14 In May 2020, Paramont Woodside, itself managed by Davis, became Manager of the 15 Moore Road LLCs. (Id. ¶¶ 27, 120.) Paramont Woodside had already become the Majority 16 Shareholder as of November 2018. (Id. ¶¶ 6, 30) Wolfe, meanwhile, “was the primary individual 17 in charge of the finances” for the Moore Road LLCs. (Id. ¶ 28.) With their power cemented, the 18 Paramont Defendants doubled down on their “willful and conscious disregard” for Plaintiffs’ 19 rights. (Code Civ. P. § 3294(c).) After the Paramont Defendants seized full control of the Moore 20 Road LLCs, “Davis and Wolfe forced Bragg to agree to amend the [U]napproved [O]perating 21 [A]greements” to further increase the Paramont Defendants’ putative return from the Moore Road 22 LLCs at Plaintiffs’ expense. (FAC ¶ 12.) They also retroactively and unilaterally declared that 23 Plaintiffs’ recent loans, which were made to prevent the bank from foreclosing on the properties, 24 would instead be treated as equity contributions entitled to deprioritized repayment (and without 25 interest). (Id. ¶ 123.) They concealed all of this from Plaintiffs. (Id.) 26 After selling the Moore Road properties, the Paramont Defendants again unilaterally 27 amended the Unapproved Operating Agreements with “willful and conscious disregard” for 28 Plaintiffs’ rights. (Code Civ. P. § 3294(c); FAC ¶ 140.) This time, they amended the Unapproved 9 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 Operating Agreements to state that no money was owed to Plaintiffs from the Moore Road LLCs, 2 even though Plaintiffs were the initial members of the Moore Road LLCs and their contributions 3 had been essential to get the Moore Road Project off the ground and to keep it from ruin. (Id. ¶¶ 6, 4 46, 59, 110–2, 140.) This, again, was concealed from Plaintiffs. (Id. ¶ 140.) The Moving 5 Defendants secured the remaining Defendants’ cooperation in purporting to abrogate Plaintiffs’ 6 rights by sharing with them a cut of the proceeds. (Id. ¶¶ 12, 124, 137.) 7 The Moving Defendants committed this fraud despite having been on notice since 2018 8 that the Moore Road LLCs were already governed by the Effective Operating Agreements and that 9 any revisions to those agreements required Plaintiffs’ authorization, and despite having received 10 documents reflecting Plaintiffs’ substantial investments in the Moore Road LLCs and loans made 11 to the Moore Road LLCs. (Id. ¶¶ 76, 83, 120.) And after securing their profits of approximately 12 half-a-million dollars, they gloated about Plaintiffs’ losses of approximately three-quarters-of-a- 13 million dollars. (Id. ¶¶ 136–39.) 4 14 The Motion to Strike asserts that “Defendants Bragg, Kludt, and/or SVRV made a series 15 of representations to Plaintiffs in order to procure investments from them,” but that “Plaintiffs and 16 [the Moving] Defendants had no interactions with each other, did not enter into any contracts with 17 each other, and did not owe any duties to each other.” (MTS 2.) But that both mischaracterizes and 18 ignores the numerous allegations described above that highlight the Moving Defendants’ 19 malicious, oppressive, and fraudulent acts. Plaintiffs have also alleged facts showing that the 20 Moving Defendants owed fiduciary duties to Plaintiffs by virtue of their management of the Moore 21 Road LLCs and their position as majority owner. (See Pls’ Opp. to Demurrer (May 15, 2023), at 22 9–11.) 23 Plaintiffs also expressly allege that prior to May 2020, Bragg was the Manager of the 24 Moore Road LLCs and that SVRV, “whose ownership interest[] [was] derived from project 25 management,” was its Active Member. (FAC ¶¶ 22–3, 55.) Plaintiffs further allege that Bragg and 26 27 4 Plaintiffs do not contest that that they would not be entitled to punitive damages if they succeeded only in proving breach of contract “[i]in the absence of an independent tort” (Cates Constr., Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 61), or if they were entitled to relief only under section 17200, but as discussed supra, Plaintiffs allege ample 28 tortious conduct by each of the Moving Defendants, which conduct forms the basis of Plaintiff’s claims. 10 PLAINTIFFS’ OPPOSITION TO DEMURRER 1 Kludt were the Managing Directors of SVRV, and therefore had both actual and apparent authority 2 to act on behalf of the Moore Road LLCs. (Id.; see also Pls. Opp. to Demurrer (May 15, 2023), at 3 2 n.2, 9.) Moreover, Plaintiffs specifically allege that the Moore Road LLCs—acting through 4 Bragg and Kludt—made material misrepresentations to Plaintiffs to procure investments and 5 loans. (See, e.g., FAC ¶¶ 166, 168, 170, 172, 185, 187, 189, 191, 212–15, 255, 257.) It is thus 6 beyond dispute that Plaintiffs have “allege[d] the names of the persons who made the allegedly 7 fraudulent representations [and] their authority to speak.’” (Dem. 3 [quoting Tarmann v. State 8 Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157].) 9 In short, the only “reasonable interpretation” of Plaintiffs’ FAC, “reading it as a whole and 10 its parts in their context,” is that the allegedly fraudulent statements made by Bragg and Kludt 11 were also made on behalf of the Moore Road LLCs for which Plaintiffs’ contributions were sought, 12 and which Bragg and Kludt managed and controlled. (Goncharov v. Uber Techs., Inc. (2018) 19 13 Cal.App.5th 1157, 1165 [citation omitted].) And it is black-letter law that fraudulent 14 misrepresentations, including scienter, of a corporation’s officer may be imputed to the 15 corporation. (In re ChinaCast Educ. Corp. Secs. Litig. (9th Cir. 2015) 809 F.3d 471, 472–73 16 [imputing fraudulent misrepresentations, including scienter, to corporation even though officer 17 was “looting” from corporation and therefore was adverse to it].) Therefore, as Plaintiffs expressly 18 allege, the Moore Road LLCs themselves made intentional, fraudulent misrepresentations to 19 Plaintiffs in “conscious disregard” of Plaintiffs’ rights and “with the intention . . . of depriving” 20 Plaintiffs of their membership in the Moore Road LLCs, justifying an award of punitive damages. 21 (E.g., FAC ¶¶ ¶¶ 166, 168, 170, 172, 185, 187, 189, 191, 212–15, 255, 257; Civ. Code § 3294(c).) 22 CONCLUSION 23 Plaintiffs allege oppression, fraud, and malice on the part of each of the Moving 24 Defendants. The Motion to Strike should be denied in full. 25 Dated: May 15, 2023 By: ______________________ 26 Collin J. Vierra 27 EIMER STAHL, LLP 28 Attorney for Plaintiffs 11 PLAINTIFFS’ OPPOSITION TO DEMURRER