Preview
1 DAVID P. NEMECEK, JR. (State Bar No. 194402)
david@fortress-law.com
2 THE FORTRESS LAW FIRM, INC. 12/11/2020
50 California Street, Suite 1500
3 San Francisco, CA 94111
Telephone: (415) 277-5400
4 Facsimile: (415) 723-7370
Attorneys for Plaintiffs and Cross-Defendants
5 BOOTUP VENTURES, LLC and BOOSTCARE dba
BOOTUP WORLD and Cross-Defendants MARCO
6 TEN VAANHOLT and MUKUL AGARWAL
7 SUPERIOR COURT OF THE STATE OF CALIFORNIA
8 COUNTY OF SAN MATEO
9 UNLIMITED JURISDICTION
10
11
BOOTUP VENTURES, LLC and Case No. 18CIV06232
12 BOOSTCARE dba BOOTUP WORLD,
MEMORANDUM OF POINTS AND
13 Plaintiffs, AUTHORIITES IN SUPPORT OF
DEMURRER TO FIRST AMENDED CROSS-
14 v. COMPLAINT BY CROSS-DEFENDANTS
BOOTUP VENTURES, LLC, BOOSTCARE
15 TARUN GAUR, TRINGAPPS INC., DBA BOOTUP WORLD, MARCO TEN
JINIGRAM, LLC, DIAL2BUY.COM, LLC, VAANHOLT AND MUKUL AGARWAL
16 RAVI KUMAR aka SHAWN KUMAR and
DOES 1-20, Date: 03/01/2021
17 Time: 2:00 PM
Defendants. Dept.: 23
18
Action Filed: November 19, 2018
19 Trial Date: None
20 AND RELATED CROSS-COMPLAINT.
21
22 I. INTRODUCTION
23 The nuisance First Amended Cross-Complainant (the “FACC”) filed by Tarun Gaur,
24 Jinigram, LLC and Dial2buy.com, LLC in this matter alleges three causes of action that are not
25 viable. The eighth cause of action in the FACC for breach of contract fails because it is based
26 upon a fundamental misunderstanding of trademark law. The twelfth cause of action in the
27 FACC for violation of Business & Professions Code section 17200 fails because it seeks
28
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
damages, which are not available on such a claim. The fourth cause of action in the FACC for
2
declaratory relief fails because the declaratory relief operates prospectively rather than to address
3
past wrongs. The Court should sustain this demurrer in its entirety.
4
II. THE ALLEGATIONS OF THE COMPLAINT AND THE FIRST AMENDED
5 CROSS-COMPLAINT
6
A. THE ALLEGATIONS OF THE FIRST AMENDED COMPLAINT
7 Plaintiff BootUp Ventures serves as an “accelerator” for startups and early stage
8 technology companies. (First Amended Complaint [“FAC”], ¶ 3.) BootUp Ventures provides its
9 clients with office space as well as access to its network of entrepreneurs, investors and
10 innovators and mentoring in order to promote growth and innovation by its clients. Id. BootUp
11 World is an affiliate of BootUp Ventures and serves as the lessor of office space in the
12 commercial office building that serves as the headquarters of BootUp Ventures in Menlo Park,
13 California. Id. at ¶ 4.
14 On or about November 1, 2016, BootUp Ventures and Defendant and Cross-Complainant
15 Tarun Gaur entered into a Memorandum of Understanding (the “MOU”). Id. at ¶ 16, Exhibit A.
16 The object of the MOU concerns multiple joint business ventures contemplated by BootUp
17 Ventures and Gaur, including outsourcing skilled labor for technology development work to
18 corporate clients and startup companies under the brand name “BootUp Talent” and the formation
19 of one or more accelerators in India. Id., Exhibit A at ¶¶ 2 and 5. BootUp Ventures agreed to
20 license its trademark that it registered with the U.S. Patent and Trademark Office to Gaur in
21 furtherance of those projects. Id., Exhibit A at ¶¶ 3, 3.1.
22 Pursuant to paragraph 4.1 of the MOU, BootUp Ventures agreed to act as an advisor on
23 the board of directors for certain startup companies that are owned and controlled by Gaur –
24 namely, Defendants and Cross-Complainants Jinigram, LLC (“Jinigram”) and Dial2Buy.com,
25 LLC (“Dial2buy.com”). Id. at ¶ 17, Exhibit A. BootUp Ventures agreed to provide advisory
26 services, assist with fundraising and provide discounted office space for Jinigram and
27 Dial2Buy.com pursuant to paragraph 4.1 of the MOU. Id.
28 2
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
Pursuant to paragraphs 4.2 and 4.3 of the MOU, Gaur agreed to cause Jinigram and
2
Dial2Buy.com to issue warrants with an expiration date of ten years from the date they were
3
issued granting BootUp Ventures the right to purchase equity representing twenty percent of the
4
fully-diluted capitalization of each of those companies immediately upon the execution of the
5
MOU in exchange for the services to be rendered by BootUp Ventures that are described above.
6
Gaur failed to cause Jinigram and Dial2Buy.com to issue those warrants. Id. at ¶ 18, Exhibit A.
7
Paragraph 4.4 of the MOU provides that Gaur shall cause Jinigram and Dial2Buy.com to
8
issue equity to BootUp Ventures representing twenty percent of the fully-diluted capitalization of
9
those companies that would vest in equal installments every month for twenty-four months
10
beginning on the effective date of the MOU. Id. at ¶ 19, Exhibit A. To date, the equity in
11
Jinigram and Dial2Buy.com that is owed to BootUp Ventures pursuant to paragraph 4.4 of the
12
MOU has not been issued. Id.
13
The FAC alleges causes of action for Breach of Fiduciary Duty by BootUp Ventures
14
against Gaur as well as Account Stated, Open Book Account, Unjust Enrichment and for Specific
15
Performance to compel transfer of the warrants and equity owed by Jinigram and Dial2buy.com
16
to BootUp Ventures.
17
B. THE ALLEGATIONS OF THE FIRST AMENDED CROSS-COMPLAINT
18
Gaur, Jinigram and Dial2buy.com filed their First Amended Cross-Complaint (“FACC”)
19
against BootUp Ventures, BootUp World, Marco ten Vaanholt and Mukul Agarwal. Agarwal and
20
ten Vaanholt are co-founders of BootUp Ventures. FACC, ¶¶ 4-5.
21
The FACC alleges that BootUp Ventures “was falsely introduced to Gaur as a venture
22
capital firm, with access to a solid platform of investors through BootUp’s fund finding and fund
23
raising services.” Id. at ¶ 30. Gaur claims that he was directed to the webpage and Facebook
24
page for BootUp Ventures and was misled to believe that BootUp Ventures “was a venture capital
25
firm with a global footprint.” Id. at ¶ 35. The FACC further alleges that “In reality, BootUp
26
Venture [sic] is not a venture capital firm and it does not invest in startups. It does not provide
27
investor’s relation service [sic], fund finding and/or fund raising services.” Id. at ¶ 39. The
28 3
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
FACC further alleges that those services “are outside the scope of BootUp Ventures’ trademark,
2
as described on the U.S. Patent and Trademark Office’s website for Trademark registration No.
3
86540931.” Id. at ¶ 40. A copy of a printout from the website for the U.S. Patent and Trademark
4
Office that contains information concerning a service mark registered to BootUp Ventures is
5
attached to the FACC as Exhibit C.
6
The FACC alleges twelve causes of action, including two separate claims for rescission of
7
the MOU, a claim for “cancellation” of the MOU, a claim for declaratory relief, two claims for
8
fraud, five separate claims for breach of the MOU and a claim for violation of Business &
9
Professions Code section 17200.
10
III. THE STANDARD OF REVIEW ON A DEMURRER
11
A demurrer tests the legal sufficiency of a cross-complaint. Code Civ. Proc. § 430.10(e);
12
Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, 637. It is fundamental that each
13
essential element of each cause of action is pled based on ultimate facts which establish liability.
14
Berger v. Cal. Ins. Guarantee Ass’n (2005) 128 Cal.App.4th 989, 1006; Careau & Co. v. Security
15
Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1390. The court should sustain a
16
demurrer where the cross-complaint itself is incomplete or discloses some defense that would bar
17
recovery. Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-72. Facts
18
appearing in exhibits attached to the cross-complaint are given precedence over inconsistent
19
allegations in the complaint. Moran v. Prime Healthcare Mgmt., Inc. (2016) 3 Cal.App.5th 1131,
20
1145-46.
21
22 IV. THE COURT SHOULD SUSTAIN CROSS-DEFENDANTS’ DEMURRER TO THE
FOURTH, EIGHTH AND TWELFTH CAUSES OF ACTION ALLEGED IN THE
23 FACC
24 A. THE EIGHTH CAUSE OF ACTION FOR BREACH OF CONTRACT
THAT IS ALLEGED IN THE FACC FAILS TO STATE A CAUSE OF
25 ACTION
26 The eighth cause of action alleged in the FACC is for breach of contract. Paragraph 140
27 of the FACC alleges that the Cross-Defendants “promised to abide by the terms of the MOU,
28 4
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
Section 3” and “defaulted because investment management services were outside the scope of
2
BootUp Ventures’ trademark.” This is claim nonsensical.
3
In order to state a claim for breach of contract, a party must allege: (1) the existence of a
4
contract; (2) performance of the contract or excuse for nonperformance; (3) a breach of the
5
contract; and (4) damages proximately caused by the breach of the contract. Richman v. Hartley
6
(2014) 224 Cal.App.4th 1182, 1186. The alleged failure by a party to perform tasks that are not
7
set forth in the terms of the contract does not constitute a breach. P. & J. Artukovich, Inc. v.
8
Simpson (1954) 128 Cal.App.2d 440.
9
Section 3.1 of the MOU provides that BootUp Ventures agrees to grant a license to
10
Defendant Gaur to use its trademark in connection with the business ventures contemplated by
11
the MOU – specifically, outsourced development under the brand name “BootUp Talent” (section
12
2), one or more accelerators in India that would be established using the BootUp name (section 5)
13
and any other revenues that might be generated using the BootUp brand (see section 6). The
14
MOU does not state that BootUp Ventures will provide investment management services for any
15
of the Cross-Defendants.
16
The allegations concerning BootUp Ventures’ trademark cannot form the basis for a claim
17
for breach of the MOU. BootUp Ventures did precisely what it agreed to do in section 3.1 of the
18
MOU, which is license the trademark to Gaur for use in connection with the parties’
19
contemplated business ventures set forth in the MOU. The FACC does not allege a breach of any
20
provision contained in the MOU concerning BootUp’s trademark.
21
Exhibit C to the FACC shows that BootUp Ventures submitted an application to the U.S.
22
Patent and Trademark Office (the “PTO”) to register a service mark on February 20, 2015. A
23
service mark is a type of trademark used in the sale or advertising of services to identify and
24
distinguish the services offered by the holder of the mark from the services of others and to
25
indicate the source of the services. 15 U.S.C. § 1127. Registration provides prima facie evidence
26
of the validity of the mark and of the registrant’s ownership and the exclusive right to use the
27
mark. 15 U.S.C. § 1057(b). However, registration is not necessary to establish the validity of a
28 5
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
service mark. A service mark can be established without registration by simply using the mark.
2
Windows User, Inc. v. Reed Business Pub. Ltd. (S.D.N.Y. 1992) 795 F.Supp. 103.
3
In order to facilitate trademark searches and examinations, the PTO uses numerical
4
classification schedules to organize marks according to their associated goods and services. 15
5
U.S.C. § 1112. The PTO’s classifications of trademarks exist solely for administrative purposes
6
and do not affect the substantive rights of a mark’s owner in any way. Patsy’s Italian Rest., Inc.
7
v. Banas (2d Cir. 2011) 658 F.3d 254, 269. Exhibit C to the FACC shows that the application
8
that BootUp Ventures submitted to the PTO to register its service mark indicates that the mark is
9
associated with class 35 (advertising and business services) and class 41 (education and
10
entertainment services).
11
Thus, the allegation in paragraph 140 of the FACC that BootUp Ventures “defaulted
12
because investment management services were outside the scope of BootUp Ventures’
13
trademark” is nonsensical. The classifications that are associated with that trademark do not
14
affect the intellectual property rights that BootUp Ventures possesses as the holder of the mark.
15
The Court should therefore sustain Cross-Defendants’ demurrer to the eighth cause of
16
action alleged in the FACC for breach of contract.
17
B. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR VIOLATION
18 OF BUSINESS & PROFESSIONS CODE SECTION 17200
19 The twelfth cause of action alleged in the FACC is for violation of Business & Professions
20 Code section 17200. The FACC alleges that the Cross-Defendants violated section 17200 by
21 making various misrepresentations in connection with the MOU. FACC, ¶¶ 166-169. The FACC
22 further alleges that the Cross-Complainants suffered general, consequential and special damages
23 as a result of Cross-Defendants’ violation of section 17200. Id. at ¶ 172. The sole relief sought in
24 the prayer for relief in the FACC in connection with Cross-Complainants’ claim for violation of
25 section 17200 is an award of punitive damages.
26 Compensatory damages are not recoverable on a claim for violation of section 17200.
27 Bank of the West v. Superior Court (1992) 2 Cal.4th 1254. Punitive damages are also not
28 6
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
recoverable on a claim for violation of section 17200. People v. Superior Court (1973) 9 Cal.3d
2
283, 287.
3
The sole monetary relief that is available on a claim for a violation of section 17200 is
4
restitution. Bus. & Prof. Code § 17203. A plaintiff seeking restitution must show that a
5
defendant took something of value from the plaintiff and that the thing of value should be
6
restored to the plaintiff. Baugh v. CBS, Inc. (1993) 828 F.Supp. 745, 757-758.
7
In this case, Cross-Complainants’ counsel agreed to withdraw Defendant Gaur’s claim for
8
restoration of “all consideration” in connection with his claims for rescission of the MOU,
9
thereby conceding that Gaur provided nothing of value to Cross-Defendants. The FACC does not
10
allege that any of the Cross-Complainants provided anything of value to Cross-Defendants.
11
Accordingly, Cross-Complainants cannot state a claim for restitution and therefore cannot
12
allege a claim for violation of Business & Professions Code section 17200. The Court should
13
sustain Cross-Defendants demurrer to the claim alleged in the FACC for violation of section
14
17200 without leave to amend.
15
C. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR
16 DECLARATORY RELIEF
17 The fourth cause of action alleged in the FACC is for declaratory relief by which Cross-
18 Complainants seek a judicial declaration regarding ten factual and legal issues: (a) That
19 Dial2buy.com and Jinigram are not parties to the MOU; (b) That investment management
20 services are somehow outside the scope of the trademark registered by BootUp Ventures with the
21 U.S. PTO; (c) that the MOU is voidable for fraud and/or lack of consideration; (d) that BootUp
22 Ventures never provided any services to Gaur, Jinigram or Dial2buy.com pursuant to the MOU;
23 (e) that BootUp Ventures “represented Tarun Gaur to its audience, current and potential
24 customers, as a BootUp representative,” a Managing Director and a “Serial Entrepreneur”; and (f)
25 that the parties never created any BootUp branded co-working spaces in India or any other parts
26 of the world. None of those issues are the proper subject of a claim for declaratory relief.
27 Declaratory relief operates prospectively rather than to address past wrongs. Gafcon v.
28 7
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403. For instance, a party may obtain a
2
declaration of its rights under an agreement in order to avoid breaching the terms of the
3
agreement in the future. See Tolle v. Struve (1932) 124 Cal.App. 263. With respect to tort causes
4
of action, a party may bring an action for declaratory relief in advance of actual tortious conduct
5
to enable that party to avoid engaging in tortious conduct in the future. See Babb v. Superior
6
Court (1971) 3 Cal.3d 841, 848.
7
The factual and legal issues that are listed in paragraph 106, subparagraphs (a)-(c) and (f)-
8
(j) in the FACC concern events that allegedly occurred before the execution of the MOU or the
9
performance (or lack thereof) of the terms of the MOU. The remaining two issues listed in
10
subparagraphs (d) and (e) concern requests for judicial declarations “That the MOU is void or
11
voidable for fraud” and “That the MOU is void or voidable for lack of consideration.” None of
12
these requests concern prospective events and they are not the proper subject of declaratory relief.
13
In addition, in order for a plaintiff to be entitled to declaratory relief, there must be a real
14
dispute between the parties involving justiciable questions relating to their rights and obligations.
15
Taxpayers for Improving Safety v. Schwarzenegger (2009) 172 Cal.App.4th 749. A claim for
16
declaratory relief is defective if the complaint fails to allege the existence of an actual or present
17
controversy between the parties. Code Civ. Proc. § 1060; Lee v. Silvera (2016) 6 Cal.App.4th
18
527. Cross-Complainants seek a judicial declaration that Jinigram, LLC and Dial2buy.com, LLC
19
are not parties to the MOU. Those claims are defective for the reasons set forth above as well as
20
the fact that they do not allege the existence of an actual or present controversy between the
21
parties, as the only parties to the MOU are BootUp Ventures and Gaur.
22
Accoringly, the FACC fails to allege a single issue that constitutes a valid basis for a
23
claim for declaratory relief. The Court should sustain Cross-Defendants’ demurrer to that cause
24
of action.
25
V. CONCLUSION
26
The eighth cause of action for breach of contract that is alleged in the FACC fails to state
27
facts to show that BootUp Ventures breached the contract it entered into with Tarun Gaur. The
28 8
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
1
FACC also fails to allege sufficient facts to state a claim for Violation of Business & Professions
2
Code section 17200 and Declaratory Relief. Cross-Defendants respectfully request that the court
3
sustain their demurrer.
4
5
Dated: December 1, 2020 THE FORTRESS LAW FIRM, INC.
6
7
8
9 By:
DAVID P. NEMECEK, JR.
10 Attorneys for Plaintiffs and Cross-Defendants BOOTUP
VENTURES, LLC and BOOSTCARE dba BOOTUP
11 WORLD and Cross-Defendants MARCO TEN
VAANHOLT and MUKUL AGARWAL
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 9
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED
CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP
WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL
Preview
1 DAVID P. NEMECEK, JR. (State Bar No. 194402) david@fortress-law.com 2 THE FORTRESS LAW FIRM, INC. 12/11/2020 50 California Street, Suite 1500 3 San Francisco, CA 94111 Telephone: (415) 277-5400 4 Facsimile: (415) 723-7370 Attorneys for Plaintiffs and Cross-Defendants 5 BOOTUP VENTURES, LLC and BOOSTCARE dba BOOTUP WORLD and Cross-Defendants MARCO 6 TEN VAANHOLT and MUKUL AGARWAL 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 COUNTY OF SAN MATEO 9 UNLIMITED JURISDICTION 10 11 BOOTUP VENTURES, LLC and Case No. 18CIV06232 12 BOOSTCARE dba BOOTUP WORLD, MEMORANDUM OF POINTS AND 13 Plaintiffs, AUTHORIITES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS- 14 v. COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE 15 TARUN GAUR, TRINGAPPS INC., DBA BOOTUP WORLD, MARCO TEN JINIGRAM, LLC, DIAL2BUY.COM, LLC, VAANHOLT AND MUKUL AGARWAL 16 RAVI KUMAR aka SHAWN KUMAR and DOES 1-20, Date: 03/01/2021 17 Time: 2:00 PM Defendants. Dept.: 23 18 Action Filed: November 19, 2018 19 Trial Date: None 20 AND RELATED CROSS-COMPLAINT. 21 22 I. INTRODUCTION 23 The nuisance First Amended Cross-Complainant (the “FACC”) filed by Tarun Gaur, 24 Jinigram, LLC and Dial2buy.com, LLC in this matter alleges three causes of action that are not 25 viable. The eighth cause of action in the FACC for breach of contract fails because it is based 26 upon a fundamental misunderstanding of trademark law. The twelfth cause of action in the 27 FACC for violation of Business & Professions Code section 17200 fails because it seeks 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 damages, which are not available on such a claim. The fourth cause of action in the FACC for 2 declaratory relief fails because the declaratory relief operates prospectively rather than to address 3 past wrongs. The Court should sustain this demurrer in its entirety. 4 II. THE ALLEGATIONS OF THE COMPLAINT AND THE FIRST AMENDED 5 CROSS-COMPLAINT 6 A. THE ALLEGATIONS OF THE FIRST AMENDED COMPLAINT 7 Plaintiff BootUp Ventures serves as an “accelerator” for startups and early stage 8 technology companies. (First Amended Complaint [“FAC”], ¶ 3.) BootUp Ventures provides its 9 clients with office space as well as access to its network of entrepreneurs, investors and 10 innovators and mentoring in order to promote growth and innovation by its clients. Id. BootUp 11 World is an affiliate of BootUp Ventures and serves as the lessor of office space in the 12 commercial office building that serves as the headquarters of BootUp Ventures in Menlo Park, 13 California. Id. at ¶ 4. 14 On or about November 1, 2016, BootUp Ventures and Defendant and Cross-Complainant 15 Tarun Gaur entered into a Memorandum of Understanding (the “MOU”). Id. at ¶ 16, Exhibit A. 16 The object of the MOU concerns multiple joint business ventures contemplated by BootUp 17 Ventures and Gaur, including outsourcing skilled labor for technology development work to 18 corporate clients and startup companies under the brand name “BootUp Talent” and the formation 19 of one or more accelerators in India. Id., Exhibit A at ¶¶ 2 and 5. BootUp Ventures agreed to 20 license its trademark that it registered with the U.S. Patent and Trademark Office to Gaur in 21 furtherance of those projects. Id., Exhibit A at ¶¶ 3, 3.1. 22 Pursuant to paragraph 4.1 of the MOU, BootUp Ventures agreed to act as an advisor on 23 the board of directors for certain startup companies that are owned and controlled by Gaur – 24 namely, Defendants and Cross-Complainants Jinigram, LLC (“Jinigram”) and Dial2Buy.com, 25 LLC (“Dial2buy.com”). Id. at ¶ 17, Exhibit A. BootUp Ventures agreed to provide advisory 26 services, assist with fundraising and provide discounted office space for Jinigram and 27 Dial2Buy.com pursuant to paragraph 4.1 of the MOU. Id. 28 2 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 Pursuant to paragraphs 4.2 and 4.3 of the MOU, Gaur agreed to cause Jinigram and 2 Dial2Buy.com to issue warrants with an expiration date of ten years from the date they were 3 issued granting BootUp Ventures the right to purchase equity representing twenty percent of the 4 fully-diluted capitalization of each of those companies immediately upon the execution of the 5 MOU in exchange for the services to be rendered by BootUp Ventures that are described above. 6 Gaur failed to cause Jinigram and Dial2Buy.com to issue those warrants. Id. at ¶ 18, Exhibit A. 7 Paragraph 4.4 of the MOU provides that Gaur shall cause Jinigram and Dial2Buy.com to 8 issue equity to BootUp Ventures representing twenty percent of the fully-diluted capitalization of 9 those companies that would vest in equal installments every month for twenty-four months 10 beginning on the effective date of the MOU. Id. at ¶ 19, Exhibit A. To date, the equity in 11 Jinigram and Dial2Buy.com that is owed to BootUp Ventures pursuant to paragraph 4.4 of the 12 MOU has not been issued. Id. 13 The FAC alleges causes of action for Breach of Fiduciary Duty by BootUp Ventures 14 against Gaur as well as Account Stated, Open Book Account, Unjust Enrichment and for Specific 15 Performance to compel transfer of the warrants and equity owed by Jinigram and Dial2buy.com 16 to BootUp Ventures. 17 B. THE ALLEGATIONS OF THE FIRST AMENDED CROSS-COMPLAINT 18 Gaur, Jinigram and Dial2buy.com filed their First Amended Cross-Complaint (“FACC”) 19 against BootUp Ventures, BootUp World, Marco ten Vaanholt and Mukul Agarwal. Agarwal and 20 ten Vaanholt are co-founders of BootUp Ventures. FACC, ¶¶ 4-5. 21 The FACC alleges that BootUp Ventures “was falsely introduced to Gaur as a venture 22 capital firm, with access to a solid platform of investors through BootUp’s fund finding and fund 23 raising services.” Id. at ¶ 30. Gaur claims that he was directed to the webpage and Facebook 24 page for BootUp Ventures and was misled to believe that BootUp Ventures “was a venture capital 25 firm with a global footprint.” Id. at ¶ 35. The FACC further alleges that “In reality, BootUp 26 Venture [sic] is not a venture capital firm and it does not invest in startups. It does not provide 27 investor’s relation service [sic], fund finding and/or fund raising services.” Id. at ¶ 39. The 28 3 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 FACC further alleges that those services “are outside the scope of BootUp Ventures’ trademark, 2 as described on the U.S. Patent and Trademark Office’s website for Trademark registration No. 3 86540931.” Id. at ¶ 40. A copy of a printout from the website for the U.S. Patent and Trademark 4 Office that contains information concerning a service mark registered to BootUp Ventures is 5 attached to the FACC as Exhibit C. 6 The FACC alleges twelve causes of action, including two separate claims for rescission of 7 the MOU, a claim for “cancellation” of the MOU, a claim for declaratory relief, two claims for 8 fraud, five separate claims for breach of the MOU and a claim for violation of Business & 9 Professions Code section 17200. 10 III. THE STANDARD OF REVIEW ON A DEMURRER 11 A demurrer tests the legal sufficiency of a cross-complaint. Code Civ. Proc. § 430.10(e); 12 Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, 637. It is fundamental that each 13 essential element of each cause of action is pled based on ultimate facts which establish liability. 14 Berger v. Cal. Ins. Guarantee Ass’n (2005) 128 Cal.App.4th 989, 1006; Careau & Co. v. Security 15 Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1390. The court should sustain a 16 demurrer where the cross-complaint itself is incomplete or discloses some defense that would bar 17 recovery. Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-72. Facts 18 appearing in exhibits attached to the cross-complaint are given precedence over inconsistent 19 allegations in the complaint. Moran v. Prime Healthcare Mgmt., Inc. (2016) 3 Cal.App.5th 1131, 20 1145-46. 21 22 IV. THE COURT SHOULD SUSTAIN CROSS-DEFENDANTS’ DEMURRER TO THE FOURTH, EIGHTH AND TWELFTH CAUSES OF ACTION ALLEGED IN THE 23 FACC 24 A. THE EIGHTH CAUSE OF ACTION FOR BREACH OF CONTRACT THAT IS ALLEGED IN THE FACC FAILS TO STATE A CAUSE OF 25 ACTION 26 The eighth cause of action alleged in the FACC is for breach of contract. Paragraph 140 27 of the FACC alleges that the Cross-Defendants “promised to abide by the terms of the MOU, 28 4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 Section 3” and “defaulted because investment management services were outside the scope of 2 BootUp Ventures’ trademark.” This is claim nonsensical. 3 In order to state a claim for breach of contract, a party must allege: (1) the existence of a 4 contract; (2) performance of the contract or excuse for nonperformance; (3) a breach of the 5 contract; and (4) damages proximately caused by the breach of the contract. Richman v. Hartley 6 (2014) 224 Cal.App.4th 1182, 1186. The alleged failure by a party to perform tasks that are not 7 set forth in the terms of the contract does not constitute a breach. P. & J. Artukovich, Inc. v. 8 Simpson (1954) 128 Cal.App.2d 440. 9 Section 3.1 of the MOU provides that BootUp Ventures agrees to grant a license to 10 Defendant Gaur to use its trademark in connection with the business ventures contemplated by 11 the MOU – specifically, outsourced development under the brand name “BootUp Talent” (section 12 2), one or more accelerators in India that would be established using the BootUp name (section 5) 13 and any other revenues that might be generated using the BootUp brand (see section 6). The 14 MOU does not state that BootUp Ventures will provide investment management services for any 15 of the Cross-Defendants. 16 The allegations concerning BootUp Ventures’ trademark cannot form the basis for a claim 17 for breach of the MOU. BootUp Ventures did precisely what it agreed to do in section 3.1 of the 18 MOU, which is license the trademark to Gaur for use in connection with the parties’ 19 contemplated business ventures set forth in the MOU. The FACC does not allege a breach of any 20 provision contained in the MOU concerning BootUp’s trademark. 21 Exhibit C to the FACC shows that BootUp Ventures submitted an application to the U.S. 22 Patent and Trademark Office (the “PTO”) to register a service mark on February 20, 2015. A 23 service mark is a type of trademark used in the sale or advertising of services to identify and 24 distinguish the services offered by the holder of the mark from the services of others and to 25 indicate the source of the services. 15 U.S.C. § 1127. Registration provides prima facie evidence 26 of the validity of the mark and of the registrant’s ownership and the exclusive right to use the 27 mark. 15 U.S.C. § 1057(b). However, registration is not necessary to establish the validity of a 28 5 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 service mark. A service mark can be established without registration by simply using the mark. 2 Windows User, Inc. v. Reed Business Pub. Ltd. (S.D.N.Y. 1992) 795 F.Supp. 103. 3 In order to facilitate trademark searches and examinations, the PTO uses numerical 4 classification schedules to organize marks according to their associated goods and services. 15 5 U.S.C. § 1112. The PTO’s classifications of trademarks exist solely for administrative purposes 6 and do not affect the substantive rights of a mark’s owner in any way. Patsy’s Italian Rest., Inc. 7 v. Banas (2d Cir. 2011) 658 F.3d 254, 269. Exhibit C to the FACC shows that the application 8 that BootUp Ventures submitted to the PTO to register its service mark indicates that the mark is 9 associated with class 35 (advertising and business services) and class 41 (education and 10 entertainment services). 11 Thus, the allegation in paragraph 140 of the FACC that BootUp Ventures “defaulted 12 because investment management services were outside the scope of BootUp Ventures’ 13 trademark” is nonsensical. The classifications that are associated with that trademark do not 14 affect the intellectual property rights that BootUp Ventures possesses as the holder of the mark. 15 The Court should therefore sustain Cross-Defendants’ demurrer to the eighth cause of 16 action alleged in the FACC for breach of contract. 17 B. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR VIOLATION 18 OF BUSINESS & PROFESSIONS CODE SECTION 17200 19 The twelfth cause of action alleged in the FACC is for violation of Business & Professions 20 Code section 17200. The FACC alleges that the Cross-Defendants violated section 17200 by 21 making various misrepresentations in connection with the MOU. FACC, ¶¶ 166-169. The FACC 22 further alleges that the Cross-Complainants suffered general, consequential and special damages 23 as a result of Cross-Defendants’ violation of section 17200. Id. at ¶ 172. The sole relief sought in 24 the prayer for relief in the FACC in connection with Cross-Complainants’ claim for violation of 25 section 17200 is an award of punitive damages. 26 Compensatory damages are not recoverable on a claim for violation of section 17200. 27 Bank of the West v. Superior Court (1992) 2 Cal.4th 1254. Punitive damages are also not 28 6 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 recoverable on a claim for violation of section 17200. People v. Superior Court (1973) 9 Cal.3d 2 283, 287. 3 The sole monetary relief that is available on a claim for a violation of section 17200 is 4 restitution. Bus. & Prof. Code § 17203. A plaintiff seeking restitution must show that a 5 defendant took something of value from the plaintiff and that the thing of value should be 6 restored to the plaintiff. Baugh v. CBS, Inc. (1993) 828 F.Supp. 745, 757-758. 7 In this case, Cross-Complainants’ counsel agreed to withdraw Defendant Gaur’s claim for 8 restoration of “all consideration” in connection with his claims for rescission of the MOU, 9 thereby conceding that Gaur provided nothing of value to Cross-Defendants. The FACC does not 10 allege that any of the Cross-Complainants provided anything of value to Cross-Defendants. 11 Accordingly, Cross-Complainants cannot state a claim for restitution and therefore cannot 12 allege a claim for violation of Business & Professions Code section 17200. The Court should 13 sustain Cross-Defendants demurrer to the claim alleged in the FACC for violation of section 14 17200 without leave to amend. 15 C. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR 16 DECLARATORY RELIEF 17 The fourth cause of action alleged in the FACC is for declaratory relief by which Cross- 18 Complainants seek a judicial declaration regarding ten factual and legal issues: (a) That 19 Dial2buy.com and Jinigram are not parties to the MOU; (b) That investment management 20 services are somehow outside the scope of the trademark registered by BootUp Ventures with the 21 U.S. PTO; (c) that the MOU is voidable for fraud and/or lack of consideration; (d) that BootUp 22 Ventures never provided any services to Gaur, Jinigram or Dial2buy.com pursuant to the MOU; 23 (e) that BootUp Ventures “represented Tarun Gaur to its audience, current and potential 24 customers, as a BootUp representative,” a Managing Director and a “Serial Entrepreneur”; and (f) 25 that the parties never created any BootUp branded co-working spaces in India or any other parts 26 of the world. None of those issues are the proper subject of a claim for declaratory relief. 27 Declaratory relief operates prospectively rather than to address past wrongs. Gafcon v. 28 7 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403. For instance, a party may obtain a 2 declaration of its rights under an agreement in order to avoid breaching the terms of the 3 agreement in the future. See Tolle v. Struve (1932) 124 Cal.App. 263. With respect to tort causes 4 of action, a party may bring an action for declaratory relief in advance of actual tortious conduct 5 to enable that party to avoid engaging in tortious conduct in the future. See Babb v. Superior 6 Court (1971) 3 Cal.3d 841, 848. 7 The factual and legal issues that are listed in paragraph 106, subparagraphs (a)-(c) and (f)- 8 (j) in the FACC concern events that allegedly occurred before the execution of the MOU or the 9 performance (or lack thereof) of the terms of the MOU. The remaining two issues listed in 10 subparagraphs (d) and (e) concern requests for judicial declarations “That the MOU is void or 11 voidable for fraud” and “That the MOU is void or voidable for lack of consideration.” None of 12 these requests concern prospective events and they are not the proper subject of declaratory relief. 13 In addition, in order for a plaintiff to be entitled to declaratory relief, there must be a real 14 dispute between the parties involving justiciable questions relating to their rights and obligations. 15 Taxpayers for Improving Safety v. Schwarzenegger (2009) 172 Cal.App.4th 749. A claim for 16 declaratory relief is defective if the complaint fails to allege the existence of an actual or present 17 controversy between the parties. Code Civ. Proc. § 1060; Lee v. Silvera (2016) 6 Cal.App.4th 18 527. Cross-Complainants seek a judicial declaration that Jinigram, LLC and Dial2buy.com, LLC 19 are not parties to the MOU. Those claims are defective for the reasons set forth above as well as 20 the fact that they do not allege the existence of an actual or present controversy between the 21 parties, as the only parties to the MOU are BootUp Ventures and Gaur. 22 Accoringly, the FACC fails to allege a single issue that constitutes a valid basis for a 23 claim for declaratory relief. The Court should sustain Cross-Defendants’ demurrer to that cause 24 of action. 25 V. CONCLUSION 26 The eighth cause of action for breach of contract that is alleged in the FACC fails to state 27 facts to show that BootUp Ventures breached the contract it entered into with Tarun Gaur. The 28 8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL 1 FACC also fails to allege sufficient facts to state a claim for Violation of Business & Professions 2 Code section 17200 and Declaratory Relief. Cross-Defendants respectfully request that the court 3 sustain their demurrer. 4 5 Dated: December 1, 2020 THE FORTRESS LAW FIRM, INC. 6 7 8 9 By: DAVID P. NEMECEK, JR. 10 Attorneys for Plaintiffs and Cross-Defendants BOOTUP VENTURES, LLC and BOOSTCARE dba BOOTUP 11 WORLD and Cross-Defendants MARCO TEN VAANHOLT and MUKUL AGARWAL 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO FIRST AMENDED CROSS-COMPLAINT BY CROSS-DEFENDANTS BOOTUP VENTURES, LLC, BOOSTCARE DBA BOOTUP WORLD, MARCO TEN VAANHOLT AND MUKUL AGARWAL