Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-03728/USCOURTS-cand-3_15-cv-03728-5/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Fraud

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United States District Court

Northern District of California

*NOT FOR PUBLICATION*

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LES FIELDS/C.C.H.I. INSURANCE 

SERVICES,

Plaintiff,

v.

STUART M HINES, et al.,

Defendants.

Case No. 15-cv-03728-MEJ 

ORDER RE: DEFENDANTS’ MOTIONS

FOR SUMMARY JUDGMENT; 

PLAINTIFF’S MOTION FOR 

JUDGMENT ON THE PLEADINGS OR 

IN THE ALTERNATIVE, SUMMARY 

JUDGMENT

Dkt. Nos. 54, 57, 59

INTRODUCTION

Plaintiff Les Fields (“Fields”)/C.C.H.I. Insurance Services (“C.C.H.I.”) (collectively 

“Plaintiff”) sued his former employees and the new company they formed, accusing them of 

conspiring to form a competing company and steal C.C.H.I.’s clients. Pending before the Court 

are three dispositive motions: (1) Defendant Stuart M. Hines’ (“Hines”) Motion for Summary 

Judgment, Dkt. No. 54 (“Hines Mot.”); (2) a Motion for Summary Judgment filed by the 

InterRemedy Defendants,1 Dkt. No. 57 (“IR Mot.”); and (3) Plaintiff’s Motion for Judgment on 

the Pleadings or in the alternative for Summary Judgment,

2 Dkt. No. 59 (“Pl.’s Mot.”). The Court 

previously vacated the hearing on the Motions (Dkt. Nos. 69, 74) and finds them suitable for 

disposition without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7-1(b). 

The Court is taking the unusual step of marking this Order “Not for Publication” as it is

strictly limited to the parties’ particular arguments and the evidence explicitly identified by them.

Having considered the parties’ positions, relevant legal authority, and the record in this 

 

1

The “InterRemedy Defendants” are InterRemedy Insurance Services LLC (“InterRemedy”), 

Debbie Canadas, Joyce Sykes McGuire, and Kim Willoughby.

2

 Plaintiff’s Motion is directly solely to Defendant Risk Management and Reinsurance Services 

LLC, which the parties refer to as “RISK” or “RMRS.”

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case, the Court, for the reasons stated below, (1) GRANTS IN PART and DENIES IN PART

Defendant Hines’ Motion; (2) GRANTS IN PART and DENIES IN PART the InterRemedy

Defendants’ Motion; and (3) DENIES Plaintiff’s Motion for Judgment on the Pleadings, and 

DENIES WITHOUT PREJUDICE Plaintiff’s Motion for Summary Judgment. 

LEGAL STANDARD

Summary judgment is proper where the pleadings, discovery and affidavits demonstrate 

that there is “no genuine dispute as to any material fact and [that] the movant is entitled to 

judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party moving for summary judgment 

bears the initial burden of identifying those portions of the pleadings, discovery and affidavits that 

demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 

317, 323 (1986). Material facts are those that may affect the outcome of the case. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is 

sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id.

Where the moving party will have the burden of proof on an issue at trial, it must 

affirmatively demonstrate that no reasonable trier of fact could find other than for the moving 

party. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where 

the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by 

pointing out to the district court that there is an absence of evidence to support the nonmoving 

party’s case. Celotex, 477 U.S. at 324-25.

If the moving party meets its initial burden, the opposing party must go beyond the 

pleadings and set forth specific facts showing that there is some genuine issue for trial in order to 

defeat the motion. Fed. R. Civ. P. 56(c)(1); Anderson, 477 U.S. at 250. All reasonable inferences 

must be drawn in the light most favorable to the nonmoving party. Olsen v. Idaho State Bd. of 

Med., 363 F.3d 916, 922 (9th Cir. 2004). However, it is not the task of the Court to scour the 

record in search of a genuine issue of triable fact. Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 

1996). The Court “rel[ies] on the nonmoving party to identify with reasonable particularity the 

evidence that precludes summary judgment.” Id.; see also Simmons v. Navajo Cty., Ariz., 609 

F.3d 1011, 1017 (9th Cir. 2010). Thus, “[t]he district court need not examine the entire file for 

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evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing 

papers with adequate references so that it could conveniently be found.” Carmen v. S.F. Unified 

Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001). If the nonmoving party fails to make this 

showing, the moving party is entitled to a judgment. See Celotex, 477 U.S. at 323.

Additionally, at the summary judgment stage, parties must set out facts they will be able to 

prove at trial. At this stage, courts “do not focus on the admissibility of the evidence’s form . . . .

[but] instead focus on the admissibility of its contents.” Fraser v. Goodale, 342 F.3d 1032, 1036 

(9th Cir. 2003) (citation omitted). “While the evidence presented at the summary judgment stage 

does not yet need to be in a form that would be admissible at trial, the proponent must set out facts 

that it will be able to prove through admissible evidence.” Norse v. City of Santa Cruz, 629 F.3d 

966, 973 (9th Cir. 2010) (citations omitted). Accordingly, “[t]o survive summary judgment, a 

party does not necessarily have to produce evidence in a form that would be admissible at trial, as 

long as the party satisfies the requirements of Federal Rules of Civil Procedure 56.” Block v. City 

of L.A., 253 F.3d 410, 418-19 (9th Cir. 2001); Celotex, 477 U.S. at 324 (a party need not “produce 

evidence in a form that would be admissible at trial in order to avoid summary judgment.”); see 

also Fed. R. Civ. P. 56(c)(4) (“An affidavit or declaration used to support or oppose a motion must 

be made on personal knowledge, set out facts that would be admissible in evidence, and show that 

the affiant or declarant is competent to testify on the matters stated.”).

PRELIMINARY ISSUES

A. Plaintiff’s Objections and Request for Judicial Notice

Plaintiff filed evidentiary objections to both sets of Defendants’ Motions, but did so 

outside of his Opposition briefs. See Pl.’s Hines Objs., Dkt. No. 77-8; Pl.’s IR Objs., Dkt. No. 80-

2.3 These separate filings violate Civil Local Rule 7-3(a), which requires “[a]ny evidentiary and 

procedural objections to the motion be contained within the brief or memorandum.” Any 

objections not contained in Plaintiff’s Oppositions or specifically raised in his Controverted 

Statement of Facts (see Pl.’s Hines Stmt. of Controverted Facts, Dkt. No. 77-7; Pl.’s IR Stmt. of 

 

3

In citing documents in this Order, the Court refers to the Motion with which they are associated: 

“Hines” or the InterRemedy Defendants (“IR”))

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Controverted Facts, Dkt. No. 82), are overruled for failure to comply with the Local Rule. See 

Hennigan v. Insphere Ins. Sols., Inc., 38 F. Supp. 3d 1083, 1094-95 (N.D. Cal. 2014) (striking 

separately filed evidentiary objections for failure to comply with Local Rule 7-3(a) and (c)); 

Beauperthuy v. 24 Hour Fitness USA, Inc., 772 F. Supp. 2d 1111, 1119 (N.D. Cal. 2011) (denying 

parties’ separately-filed motions to strike evidence on ground that they violate Local Rule 7-3(b) 

and (c), and characterizing motions as “attempt[s] to evade the briefing page limits”).

Plaintiff also filed a request for judicial notice (“RJN”) asking the Court to take notice of 

pleadings and motions he and Defendants already filed on the ECF docket in this action. See Pl.’s 

RJN, Dkt. No. 80-3. The Court need not take judicial notice of these documents, as they are 

already part of the record. Plaintiff’s request is moot.

B. Hines’ Objections and RJN

Hines also filed evidentiary objections (see Dkt. No. 84-2) that are outside of his Reply 

Brief; the Court overrules them on the same grounds it overruled Plaintiff’s separately-filed 

objections. Hines also asks the Court to take judicial notice of the Complaint Plaintiff filed in 

Superior Court. Hines RJN, Dkt. No. 55. The request is moot; Plaintiff filed the Complaint with 

his notice of removal. See Compl., Dkt. No. 2, Ex. A.

C. InterRemedy Defendants’ Objections

The InterRemedy Defendants also filed objections but did so properly in their Reply briefs

in compliance with Local Rule 7-3(c). See IR Reply at 16-17, Dkt. No. 85. They object to 

passages of the declarations filed by Fields, Robert Chapman, and Michael Nealy. Id.

4

 

Specifically, the InterRemedy Defendants object to (1) paragraphs 5, 6, 8, 10, 14, 15, 19, 20, and 

21 of the Fields Declaration; (2) the entire Chapman Declaration, Dkt. No. 77-5; and (3) portions 

of the Nealy Declaration. IR Reply at 16-17. 

A declaration used to oppose summary judgment “must be made on personal knowledge, 

set out facts that would be admissible in evidence, and show that the . . . declarant is competent to 

 

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Plaintiff has filed declarations in opposition to the InterRemedy Defendants’ Motion that are in 

all material respects identical to the declarations he filed in opposition to Defendant Hines’ 

Motion. See Fields Decl., Dkt. Nos. 77-1 & 82-1; Kenneally Decl., Dkt. Nos. 77-2 & 80-1; Rich 

Decl., Dkt. Nos. 77-4 & 80-6; and Nealy Decl., Dkt. Nos. 77-3 & 81-1. 

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testify on the matters stated.” Fed. R. Civ. P. 56(c)(4); see also Civil L.R. 7-5(b) (“An affidavit or 

declarations may contain only facts, must conform as much as possible to the requirements of Fed. 

R. Civ. P. 56(e), and must avoid conclusions and argument. Any statement made upon 

information or belief must specify the basis therefor. An affidavit or declaration not in compliance 

with this rule may be stricken in whole or in part”). Fields is not an expert witness in this case, but 

he makes numerous statements in his declaration that are not based on personal knowledge and for 

which he does not lay foundation. To the extent they pertain to material facts the Court relies on 

in this Order, the Court will address the InterRemedy Defendants’ evidentiary objections in the 

Discussion below; they are otherwise denied as moot.

The Court overrules the general objections to the Chapman Declaration. The objections 

argue the Declaration should be stricken in its entirety because Plaintiff’s counsel instructed 

Chapman (Plaintiff’s expert witness) not to answer deposition questions as a percipient witness, 

but the InterRemedy Defendants provide no legal support for why the Court should wholesale 

strike the declaration. The Court overrules the objection for purposes of deciding these Motions. 

The Court will address specific evidentiary objections to the Chapman and Nealy Declarations 

below to the extent they pertain to material facts the Court relies upon in this Order; they are 

otherwise denied as moot.

D. Materials Considered by the Court

Plaintiff argues that “[t]his is a document rich case” and that the Motions must be denied 

because “[d]ocumentary evidence substantiates Defendants’ theft of C.C.H.I.’s book of business 

and SalesForce cloud data.” Pl.’s Hines Opp’n at 3, Dkt. No. 77; Pl.’s IR Opp’n at 3, Dkt. No. 80. 

But instead of citing evidence to support his contentions in his Oppositions, Plaintiff instead sets

forth six pages of “Basic Facts” followed by a statement that: “C.C.H.I. contends the above factual 

summary is true. Fields Dec. ¶ 6; see also Rich Dec. ¶¶ 6, 7; Nealy Dec. ¶¶ 4, 5.” Pl.’s Hines 

Opp’n at 9; Pl.’s IR Opp’n at 9. Similarly, deeming it “redundant and cumulative to produce 

hundreds of pages of evidence to support C.C.H.I.’s Complaint allegation” that Defendants stole 

data and/or C.C.H.I.’s business[,]” Plaintiff instead refers the Court to “the documentation 

attached to Fields Declaration” and argues it “reveals a clear Modus Operandi (‘MO’) regarding 

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the Defendants’ theft of business, money, and client data plus false data inputting and Defendants’ 

attempt to cover-up their wrongful conduct.” Pl.’s IR Opp’n at 14. This approach is insufficient 

to defeat summary judgment; Plaintiff does not “cit[e] to particular parts of materials in the 

record” (Fed. R. Civ. P. 56(c)(1)(A)), set forth the evidence the evidence that precludes summary 

judgment “with reasonable particularity” (Keenan, 91 F.3d at 1279), or provide “adequate 

references so that [the evidence] could conveniently be found” (Carmen, 237 F.3d 1026, at 1031). 

Where Defendants meet their initial burden of establishing no genuine question of fact exists, the 

Court only relies on competent evidence the parties have identified and addressed with reasonable 

particularity and adequate references in their briefs, separate statements of facts

5

, and declarations. 

Plaintiff also purports to include portions of the Complaint by reference in his Declaration. 

See Fields Decl. ¶ 6 (“Before the filing of this Opposition, I carefully read it as well as the 

‘Allegations Common to all Claims’ within the Complaint. . . . All the facts as stated I deem true 

to the best of my knowledge and recollection.”). Although a verified complaint may be used as an 

opposing affidavit under Rule 56, the verified complaint6“must be based on personal knowledge 

and set forth specific facts admissible in evidence.” Schroeder v. McDonald, 55 F.3d 454, 460 

(9th Cir. 1995); see also Hiramanek v. Clark, 2016 WL 6277237, at *2 (N.D. Cal. Oct. 27, 2016) 

(single sentence in declaration purporting to incorporate allegations of complaint “as though 

within my personal knowledge and attested by me” did not transform complaint into verified 

 

5

The Court ordered the parties to file separate statements of facts and controverting statements of 

facts. The parties did so, albeit belatedly. Instead of responding to the facts listed by Defendants, 

however, Plaintiff disputed the characterization of certain facts, generally referred the Court to a 

half-dozen exhibits attached to Fields’ Declaration, and asserted “contentions.” See Pl.’s Hines

Stmt. of Controverted Facts; Pl.’s IR Stmt. of Controverted Facts. Plaintiff failed to identify any 

additional facts for the Court’s consideration. See id. (both). The Court has reviewed the parties’ 

statements and considered any evidence specifically identified by the parties therein; the Court 

will not rely on any evidence that the parties only identified in their separate statements but not in 

their briefs.

6

 California law provides for the verification of complaints. “In all cases of a verification of a

pleading, the affidavit of the party shall state that the same is true of his own knowledge, except as 

to the matters which are therein stated on his or her information or belief, and as to those matters

that he or she believes it to be true . . . A person verifying a pleading need not swear to the truth or 

his or her belief in the truth of the matters stated therein but may, instead, assert the truth or his or 

her belief in the truth of those matters ‘under penalty of perjury.’” Cal. Code Civ. Proc. § 446.

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complaint; plaintiff did not swear under penalty of perjury that contents of the complaint were 

true). Fields did not verify the Complaint, much of the Complaint is not based on personal 

knowledge, and it does not set forth specific facts admissible in evidence. See Compl. Moreover, 

Plaintiff fails to cite any specific portions of the Complaint in his Declarations or in his 

Oppositions. Finally, and most importantly, the paragraph of the Complaint that contains the core 

factual allegations against Defendants is pleaded on information and belief—it is specifically not 

based on personal knowledge, and it does not set forth specific facts admissible in evidence. See 

id. ¶ 21 (“On information and belief, after [Fields] disclosed to [Hines] the possible Asset Sale [to 

Integro], he conspired with [Canadas] and they proceeded to engage in the following conduct . .

.”). Plaintiff’s attempt to incorporate the Complaint by reference does not meet the most basic 

requirements of Rule 56, and the Court accordingly may not treat the allegations of the Complaint 

as evidence. 

PROCEDURAL BACKGROUND

On October 21, 2013, Plaintiff filed the Complaint in California state court. Plaintiff 

asserts claims against Hines, Canadas, InterRemedy and 99 Doe Defendants for Breach of 

Contract; Breach of the Implied Covenant of Good Faith and Fair Dealing; Breach of Fiduciary 

Duty; Negligence; Intentional and Negligent Interference with Prospective Economic Advantage; 

Unfair Competition; Fraud and Deceit-False Promise; Conversion; Civil Conspiracy; and Demand 

for Accounting. See Compl. Plaintiff substituted Defendants McGuire and Willoughby for 

several Doe Defendants on particular claims. See Dkt. No. 2, Ex. B (substituting McGuire); id., 

Ex. C (substituting Willoughby). 

His claims are based on overlapping allegations that can be summarized into four

categories: (1) Hines stole money owed to C.C.H.I.; (2) Hines and Canadas manipulated Canadas’ 

salary while she was employed by C.C.H.I. to increase her compensation without the knowledge 

or approval of Plaintiff; (3) Defendants copied C.C.H.I.’s data from its Salesforce cloud7and 

 

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“Cloud computing is quickly replacing the traditional model of having software applications 

installed on on-premise hardware, from desktop computers to rooms full of servers, depending on 

the size of the business. With cloud computing, businesses access applications via the internet. 

It’s called Software As A Service (or SaaS). Businesses are freed up from having to maintain or 

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deleted the data, which constituted a theft of C.C.H.I.’s book of business, caused a company

interested in purchasing C.C.H.I.’s assets to lower its offering price, and prevented C.C.H.I. from 

competing with InterRemedy; and (4) Defendants solicited C.C.H.I. clients. See Compl.; see also

Pl.’s Hines Opp’n at 3. 

Plaintiff removed the action to this Court in August 2015 after Hines declared bankruptcy. 

Not. of Removal, Dkt. No. 1. He did not amend the Complaint after removal, the parties did not 

engage in any preliminary motion practice, and they did not attempt to narrow any of the claims at 

issue before these Motions. Now, in his Opposition, Plaintiff states he elects to no longer pursue 

his good faith and fair dealing claim. See Compl.; Pl.’s Hines Opp’n at 17. 

FACTUAL BACKGROUND

The following facts are undisputed for purposes of summary judgment, unless otherwise 

noted:

A. Fields, C.C.H.I., & RISK

Fields started C.C.H.I. in 1989 as “a wholesaler of stop-loss insurance and reinsurance. 

And as the company grew, additional services were added, auditing services, risk management, 

billing, collection, claim facilitation.” Lucier Decl., Ex. 1 (Fields Dep. Pt. 1) at 19:1-5, Dkt. No. 

54-2. 

In July 2003, a state court entered a $2 million judgment against Fields and C.C.H.I. in an 

unrelated matter. Pl.’s Hines Controverting Stmt. I.A.2. Around the same time, Hines and other 

C.C.H.I. employees Michael Nealy and John Mengarelli started RISK as a limited liability 

company to take over C.C.H.I.’s business in 2003, at least temporarily. Hines Decl. ¶ 3, Dkt. No. 

54-6; Fields Decl. ¶ 6. Fields states he reached “a simple gentlemen’s understanding” with Hines 

and Nealy that RISK “would be acting as C.C.H.I.’s exclusive agent for representing certain 

C.C.H.I. clients and/or clients’ money” during the pendency of the state court action. See

 

upgrade software and hardware. Just log on and get to work, from anywhere and, in many cases, 

any device.” Salesforce.com, http://www.salesforce.com/cloudcomputing (last visited Nov. 2, 

2016).

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Kenneally Decl., Ex. F (C.C.H.I. Am. Resp. to Special Interrog. No. 17 (“C.C.H.I. Resp.”)).

8

 

Hines denies he ever reached any type of understanding with Fields regarding his duties and 

obligations with RISK. Hines Decl. ¶ 4. When the state court action ended in late 2006, RISK 

began to transfer “most of C.C.H.I.’s clients and/or client’s money began flowing back to 

C.C.H.I.,” and all of C.C.H.I.’s former employees who had been employed at RISK returned to the 

employ of C.C.H.I. See C.C.H.I. Resp.; see also Nealy Decl. ¶ 10. Fields told Hines he could do 

whatever he wanted with RISK now that the company had served its purpose. C.C.H.I. Resp.

B. Hines and the Swiss Re Funds

Fields hired Hines as a trainee at C.C.H.I. around 1999. See Hines Decl. ¶ 2. In May 

2003, Hines and C.C.H.I. entered into a written Independent Contractor Agreement. Id.; see also

Fields Decl., Ex. H (“Agreement”). The Agreement contained a confidentiality clause prohibiting 

Hines from using information proprietary to C.C.H.I. for his own benefit. See Agreement. It also 

contained a clause requiring Hines to give 30 days’ written notice for his resignation. Id. The 

parties have not produced any other employment agreement with Hines. Hines understood that as 

“a result of C.C.H.I. ceasing operations, the formation of Risk, and my being compensated by Risk 

. . . the independent contractor agreement . . . with C.C.H.I. was terminated.” Hines Decl. ¶ 3. 

C.C.H.I. Secretary and Chief Financial Officer Nealy declares C.C.H.I. paid Hines on this contract 

until he resigned in 2013. Nealy Decl. ¶ 10. 

Fields declares Hines was eventually elected to C.C.H.I.’s Board of Directors and acted as 

C.C.H.I.’s Chief Operating Officer. Id. ¶ 17. Hines declares that “to [his] knowledge,” he “was 

never formally appointed as an officer of the company by way of corporate resolution or other 

corporate filings.” Hines Decl. ¶ 2. 

Between 2008 and 2013, one of C.C.H.I.’s clients, Swiss Re, paid C.C.H.I. a total of 

$701,379.03; Swiss Re paid these funds into an account held in the name of RISK, which Hines 

controlled. Nealy Decl. ¶ 8. At some point, Nealy discovered Hines had “possibly 

 

8

Plaintiff argues “the gentleman’s agreement constituted an ‘implied-in-fact’ contract that was 

performed by the conduct of the parties and all the paper that was generated during the 

performance” (Pl.’s Hines Stmt. of Controverted Facts at I.A.5 & I.A.6), but the parties have not 

produced any written agreement governing Hines’ duties and obligations with RISK. 

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misappropriated” $605,030.59 of those funds. Id. ¶ 5. Nealy “confronted” Hines before Hines left 

C.C.H.I., and Hines returned $503,707.90 via two money wires. Id.

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 Hines sent one of the money 

transfers while still employed at C.C.H.I. and another after his departure. Id. Nealy calculates 

$101,322.69 of the Swiss Re payments are still “outstanding” at this point. Id. C.C.H.I. submitted 

a claim to its insurers to recover a loss of $101,322.69 it attributed to theft by Hines of payments 

due to C.C.H.I. Valeriano Decl., Ex. A (“Release”), Dkt. No. 77-6. The insurers paid that claim

in November 2015. Id. (“Part A totaled $101,322.69 and arose from Hines’ alleged theft of 

payments due to the Insured . . . The Insurers agreed to indemnify the Insured for Part A of the 

Claim”). C.C.H.I. transferred its rights under the claim to the insurers and agreed to repay its 

insurers should C.C.H.I. recover damages for the covered claims. Valeriano Decl. ¶¶ 5-6 & 

Release. 

Hines resigned from C.C.H.I. on October 4, 2013. Nealy Decl. ¶ 4. Hines did not give 

C.C.H.I. written notice thirty days before resigning. Id. ¶ 10; see also Fields Decl. ¶ 16.

C. Canadas and Salary Manipulation

On May 4, 2006, C.C.H.I. sent Canadas a letter offering her a position as “Sales 

Executive” with an annual base salary and 17.5% commission on all revenue generated by her 

sales efforts. Canadas Decl., Ex. A (“Offer Letter”), Dkt. No. 57-2; see also id. ¶¶ 1, 3. The offer 

provided that “[o]nce your commission equals your base salary . . . we will increase your 

commission to 35% on existing and new accounts, and discontinue your base salary.” Offer 

Letter. Canadas renegotiated her terms of employment at some point. Id. ¶ 12. In January 2013, 

Nealy emailed Canadas about the terms of her employment. Id., Ex. E (email). Canadas replied: 

“My initial 2006 offer letter was re-negotiated w/ [Hines] & [Fields] w/in my first 1-2 yrs of 

employment. I’m not sure if [Hines and Fields] drew up a new offer letter to reflect (I did not 

receive a copy). The Agreement was that I continue to receive my salary and receive 35% 

commission on cases that I develop. . . . Basically, the compensation that has been provided are

 

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The Court sustains in part the InterRemedy Defendants’ objections to those portions of 

Paragraphs 8 and 15 of the Fields Declaration that are not based on personal knowledge and which 

lack foundation. The Court accordingly strikes Fields’ argumentative and conclusory 

characterizations that money was “stolen.”

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the terms of the Agreement. . . .” Id. 

After Canadas resigned from C.C.H.I., Plaintiff filed a claim with C.C.H.I.’s insurance 

carriers, claiming Canadas and Hines had manipulated her salary to increase it, without Plaintiff’s 

knowledge or approval. Plaintiff and Nealy were “deposed by C.C.H.I.’s Insurer regarding the 

Employee Theft of [Hines] and [Canadas]. [They] provided substantiation . . . for . . . the payroll 

manipulation . . . [Canadas] committed. The claim was paid.” Nealy Decl. ¶ 9; see also Fields 

Decl. ¶ 810 (same). The Release executed by C.C.H.I.’s insurance shows it only paid a claim 

associated with Hines’ “alleged theft of payments due to the Insured”—it did not pay the claim 

based on “an alleged conspiracy between Hines and Canadas to increase her salary beyond the 

terms of her employment agreement with the Insured.” Release Recitals ¶¶ C, E, H. 

Canadas declares she resigned from C.C.H.I. on Friday, October 4, 2013; Nealy declares 

Canadas “quit” on Monday, October 7, 2013. Compare Canadas Decl. ¶ 6 & Ex. B (sent 

resignation letter on October 4, 2013), with Nealy Decl. ¶ 4 (Canadas’ “quit date” is October 7, 

2013). Canadas was never an officer, director, principal, or shareholder of C.C.H.I. Canadas 

Decl. ¶ 7. 

D. Defendant Joyce Sykes McGuire

McGuire began working for C.C.H.I. in 2002. McGuire Decl. ¶ 1; Dkt. No. 57-3. 

McGuire was a registered nurse who provided risk management services to Plaintiff’s clients. Id. 

¶ 3. She was never an officer, director, principal, or shareholder of C.C.H.I. Id. ¶ 4. She resigned 

from C.C.H.I. on October 11, 2013. Nealy Decl. ¶ 4. 

E. Defendant Kim Willoughby

Willoughby began working for C.C.H.I. in August 2014; she resigned on October 4, 2013. 

Nealy Decl. ¶ 4. After Willoughby left C.C.H.I., C.C.H.I. discovered some renewal information

was missing relating to her clients. Rich Decl. ¶ 8. 

//

//

 

10 The Court sustains Defendant’s objection to Fields’ conclusion that Hines and Canadas 

“manipulated” her salary.

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F. Defendant InterRemedy

1. Formation and Capitalization

In the spring of 2013, Hines became worried about his job security and understood 

Canadas, McGuire, and Willoughby “felt the same way.” Hines Decl. ¶ 10; see also Canadas 

Decl., Ex. B (resignation letter explaining same). Hines and Canadas retained an attorney who 

“could advise us about how to start the [competing] business without adversely affecting C.C.H.I. 

Counsel . . . instructed us that we could advise prior customers of our new affiliation, as long as 

we were careful not to use any words of solicitation.” Id. 

Hines and Canadas filed Articles of Organization of a Limited Liability Company for

InterRemedy Insurance Services, LLC on August 7, 2013. Kenneally Decl., Ex. C (Articles of 

Organization). Hines lent money to InterRemedy in September 2013 to fund its initial operations. 

Canadas Decl. ¶¶ 13-16. InterRemedy repaid Hines those funds in the following months. Id. 

2. Solicitation of C.C.H.I. Employees and Clients

Hines, Canadas, McGuire, and Willoughby left C.C.H.I. to join InterRemedy between 

October 4 and October 11, 2013; Sarah Mayer and Eric Sanchez, two other employees, who are 

not defendants in this action, also left C.C.H.I. to join InterRemedy on October 30 and November 

7, 2013. Rich Decl. ¶ 10; Nealy Decl. ¶ 4. McGuire and Willoughby asked Canadas “if there was 

a job for them at InterRemedy. [Canadas] did not solicit them to join InterRemedy.” Canadas 

Decl. ¶ 11. 

Canadas sent communications to potential clients providing her new business contact 

information. Id. ¶ 10. She attaches one of those communications as an “example of form” of her 

communications. Id., Ex. D. The email is dated October 7, 2013, and states: “It was good talking 

with you today! Below is my new contact information & I’ll be in touch with a complete contact 

list and marketing material over the next week or so. In the meantime, feel free to be in touch with 

me for any requests. At your convenience, please provide an authorization email authorizing 

InterRemedy representatives to obtain stop loss quotes and/or pertinent information for” the client. 

Id. Hines declares he followed his counsel’s advice, notified potential clients of his new 

affiliation with InterRemedy, but did not use “words of solicitation.” Hines Decl. ¶ 10. 

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Some C.C.H.I. clients left C.C.H.I. for InterRemedy and renewed their policies with 

InterRemedy rather than with C.C.H.I. Rich Decl. ¶ 9; Fields Decl. ¶ 11. Fields declares Canadas 

began signing up clients through InterRemedy two days after leaving C.C.H.I., and asserts that, 

“[f]rom a practical standpoint, it is impossible to walk out of C.C.H.I.’s door and have a turn-key 

operation running (with business signing contracts) two days later.” Fields Decl. ¶ 20. Five 

clients emailed Canadas ten days after she left C.C.H.I., and Plaintiff represents Canadas moved 

those clients to InterRemedy. Rich Decl. ¶ 8.

3. Loss of C.C.H.I. Data

C.C.H.I. maintained client lists and “key client contracts with its larger clients [‘SSAs’]” 

on a Salesforce cloud. Chapman Decl. ¶ 6(d); Fields Decl. ¶ 11. Data as to one particular client, 

Masonry, existed as of January 1, 2013, “but it was all gone on January 1, 2014.” Fields Decl. ¶ 

11. Before Hines left C.C.H.I., he provided Fields with a list of his business prospects listed on 

the Salesforce cloud; after Hines left, “there were no prospects for [Hines] on the cloud.” Id. The 

list of business prospects indicates it was generated by Hines of RMRS, Inc., not C.C.H.I.; it also

does not indicate the document was generated from C.C.H.I.’s Salesforce cloud. Id., Ex. D

(spreadsheet). When Rich joined C.C.H.I. in October 2013, he “learned data was missing from 

[Willoughby’s] renewal cases.” Rich Decl. ¶ 8. 

G. C.C.H.I. Post-Employee Departure

1. The Integro Transaction

No later than May 2013, Fields began negotiating an asset sale of C.C.H.I. to Integro 

Insurance Brokers. See generally Chapman Decl.; see id., Ex. B (Integro Proposal 5/14/2013). 

On September 13, 2013, Integro withdrew its offer. Id., Ex. E. The sale fell through when Integro 

informed Fields that certain documents were “missing from the SalesForce cloud,” Fields “became 

alarmed, and [ ] knew something was wrong.” Fields Decl. ¶ 10. He “pass[ed] on the Integro 

deal; [he] needed to investigate.” Id. Robert Chapman, Fields’ expert witness, declares Integro 

revised its offering price downwards after it was “unable to verify the revenues in their review of 

the financial records of C.C.H.I. and were unable to locate key client contracts . . . inside 

C.C.H.I.’s SalesForce cloud.” Chapman Decl. ¶ 6(d); see also id. ¶ 6(e) (representing that Integro 

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representatives expressed concerns to Chapman about “the fact C.C.H.I.’s revenues appeared to be 

dropping while the due diligence was taking place. C.C.H.I. provided Integro with a password to 

its SalesForce cloud. . . . Integro’s monitoring of the cloud revealed irregularities regarding 

C.C.H.I.’s client data that it was tracking and in particular the inability for Integro and [Fields] to 

locate key client SSA Agreements.”). Chapman contends Plaintiff turned the transaction down 

after receiving Integro’s revised proposal: “Integro still wanted to deal, but [Plaintiff] refused in 

the best interest of C.C.H.I., his Trust, and his employees.” Id. ¶ 7. 

2. Business Continuity

C.C.H.I. experienced difficulties after the departure of its employees, including: (1) it “had 

no information on clients needing year-end attention [or the] work in progress of the departed 

employees” (Rich Decl. ¶ 7); (2) Fields “had no idea what clients were up for renewal or what 

clients to contact before December 31, 2013” (Fields Decl. ¶ 19); and (3) “Given the time of the 

year, C.C.H.I. also did not have trained employees to reconstruct the client data that was missing. . 

. . [O]ver 80% of the employee were gone. . . it takes numerous employees to operate and 

administer C.C.H.I.’s business” (id.).

DISCUSSION - DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT

Defendants move for summary judgment on the ground that Plaintiff cannot produce 

admissible evidence to support the facts necessary to support his claims. See Hines Mot.; IR Mot.

The Court addresses each of Plaintiff’s claims below.

A. Business Interference Claims (Hines, Canadas, InterRemedy)

Plaintiff groups his common law claims for interference with prospective economic 

advantage (negligent and intentional) with his statutory claim for unfair business competition 

under California’s Unfair Competition Law (“UCL”), and identifies the same evidence to support 

these claims. See Pl.’s Hines Opp’n at 17-23; Pl.’s IR Opp’n at 12-20. 

1. Legal Standards

To state a claim for intentional interference with prospective economic advantage, Plaintiff 

must show: “(1) an economic relationship between the plaintiff and some third party, with the 

probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the 

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relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; 

(4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused 

by the acts of the defendant.” Youst v. Longo, 43 Cal. 3d 64, 71 n.6 (1987) (citation omitted). To 

state a claim for negligent interference with economic advantage, Plaintiff must show: “(1) an 

economic relationship existed between the plaintiff and a third party which contained a reasonably 

probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence 

of the relationship and was aware or should have been aware that if it did not act with due care its 

actions would interfere with this relationship and cause plaintiff to lose in whole or in part the 

probable future economic benefit or advantage of the relationship; (3) the defendant was 

negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually 

interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or 

advantage reasonably expected from the relationship.” N. Am. Chem. Co. v. Super. Ct., 59 Cal. 

App. 4th 764, 786 (1997). As a matter of law, a threshold causation requirement exists for 

maintaining a cause of action for either tort, namely, proof that it is reasonably probable that the 

lost economic advantage would have been realized but for the defendant’s interference. Youst, 43 

Cal. 3d at 71.

California’s UCL, Cal. Bus. & Profs. Code § 17200, “prohibits any unlawful, unfair or 

fraudulent business act or practice. . . . Its coverage has been described as ‘sweeping,’ and its 

standard for wrongful business conduct is ‘intentionally broad.’ . . . Each of the three ‘prongs’ of 

the UCL provides a separate and distinct theory of liability and an independent basis for relief.” 

Rojas-Lozano v. Google, Inc., 159 F. Supp. 3d 1101, 1117 (N.D. Cal. 2016) (citations and internal 

quotation marks omitted). A business practice is unlawful if it is forbidden by law; unfair if it 

violates established public policy or if it is immoral, unethical, oppressive or unscrupulous, and 

the injury it causes to customers outweighs the benefits of the practice; and fraudulent if members 

of the public are likely to be deceived by the practice. Id. at 1118. 

2. Analysis

Defendants show there is no plausible evidence to support Plaintiff’s claims that they 

interfered with C.C.H.I.’s prospective economic advantage or competed with their employer 

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unfairly. See Hines Mot. at 7-14, 18-19; IR Mot. at 8-15. Plaintiff relies on five categories of 

evidence that he argues demonstrate that Canadas, Hines, and InterRemedy engaged in conduct 

the goal of which was to interfere “with C.C.H.I.’s ‘book of business’ and diverting it to their own 

by improper methods.” Pl.’s Hines Opp’n at 17-23; Pl.’s IR Opp’n at 12-20; Fields Decl. ¶¶ 11-

15, 20-21, Exs. B-G, I-J; Rich Decl. ¶¶ 7-10; Hines Decl. ¶ 10; Keneally Decl. ¶ 5. The Court 

addresses each category below.

i. Timing and Number of Departures

Defendants formed InterRemedy in August 2013, but waited to quit until the last quarter of 

the year (traditionally an extremely busy time for C.C.H.I.), and then six C.C.H.I. employees 

resigned within a month. There is evidence in the record that, at the height of C.C.H.I.’s busy 

season, six of C.C.H.I.’s employees left within a month of each other to join InterRemedy. The 

mass departures constituted 80% of C.C.H.I.’s workforce, and left C.C.H.I. in a position where it 

could not determine what clients were up for renewal, and could not compete with InterRemedy 

for those clients. A reasonable jury could find this constitutes circumstantial evidence that Hines, 

Canadas, and InterRemedy coordinated the timing of the employees’ departures to, and did, 

interfere with C.C.H.I.’s business. 

ii. Consulting an Attorney

Plaintiff argues the fact that Defendants sought legal advice from an attorney regarding the 

formation of InterRemedy “due to their consciousness of guilt . . . they knew their conspiracy to 

steal C.C.H.I.’s business was wrong.” Pl.’s IR Opp’n at 21. It is undisputed Defendants consulted 

an attorney when setting up their competing enterprise, but Plaintiff offers no foundation for his 

argument that Defendants sought legal advice because they were engaged in a conspiracy to steal 

his business, or because they were “guilty” of any wrongdoing. Plaintiff’s conclusory statement 

does not constitute evidence that Defendants intended to, or did, compete unfairly with C.C.H.I.

iii. Capitalization of InterRemedy

Plaintiff contends InterRemedy was capitalized with money stolen from RISK and that 

documents reveal embezzlement and a cover up by Defendants. Specifically, Plaintiff argues 

Hines used RISK to divert C.C.H.I. funds to InterRemedy. The basis for this argument is his 

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“belief” that worksheets created by Nealy show that Hines and his wife, through another company, 

invested money in InterRemedy, and his “contention” that the “money came from stolen RISK 

money.” Fields Decl. ¶ 15. 

The Court sustains in part the InterRemedy Defendants’ objections to Paragraph 15 of 

Plaintiff’s Declaration. The Court strikes the following: (1) 15:1, as this statement is based on 

Fields “belief” rather than his personal knowledge; (2) 15:11-12, as Plaintiff’s “contention” is not 

based on his personal knowledge, and Plaintiff lays no foundation for belief that Hines and his 

wife invested $150,000 that was stolen from RISK to fund InterRemedy; (3) 15:15-17, as Plaintiff 

has no personal knowledge and lays no foundation for his interpretation of documents; and (4) 

Exhibit G to the Fields Declaration, as Plaintiff has not demonstrated how he has any personal 

knowledge about worksheets created by Nealy based on RISK bank account information, or about 

contents of worksheets. In addition, Paragraph 15 is based on hearsay to the extent Fields 

represents he learned of the funds allegedly used to capitalize InterRemedy by reviewing 

spreadsheets Nealy created based on his review of InterRemedy’s and RISK’s bank accounts. 

The Court also strikes the following portions of the Fields Declaration that pertain to a 

“cover up plan with Symetra” (a former C.C.H.I. client) and “embezzling”: (1) ¶ 14:3-6 which 

provides only conclusions and arguments that a “cover-up plan” existed, that Defendants 

“embezzled money” that InterRemedy received C.C.H.I. bonus money, and that C.C.H.I. funded 

InterRemedy’s start up; and (2) Exhibit F in its entirety, as Plaintiff lacks personal knowledge of 

the document and lays no foundation for the “highlights” he purports to provide regarding the 

meaning of the third party documents. 

Plaintiff identified no competent evidence that InterRemedy was capitalized with money 

stolen from RISK and/or C.C.H.I. 

iv. Data Theft

Plaintiff argues Defendants stole data from the SalesForce cloud, which prevented C.C.H.I. 

from knowing what clients to contact for renewals. Specifically, he argues Hines, Canadas, and 

McGuire had passwords that granted them access to C.C.H.I.’s Salesforce cloud; that they copied 

C.C.H.I.’s data from the Salesforce to InterRemedy’s Salesforce cloud; or that they deleted or 

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altered data from C.C.H.I.’s Salesforce cloud. See Pl.’s Hines Opp’n at 8 (citing Fields Decl. ¶¶ 

10-14, 19, 21). These arguments are not supported by Plaintiff’s Declaration. 

The Court has carefully reviewed the paragraphs of the Fields Declaration Plaintiff cites in 

support of this argument, but finds they do not show these Defendants had access to C.C.H.I.’s 

Salesforce cloud, that they deleted or altered data from the cloud, or that they copied C.C.H.I. data 

to InterRemedy’s cloud. Fields declares Hines provided him “with his business prospects listed 

from the Salesforce cloud” (Fields Decl. ¶ 12), but does not state Hines accessed the Salesforce 

cloud to do so. The document Fields attaches does not indicate it was generated from the 

Salesforce cloud; it is a spreadsheet titled “All Prospects by Account Manager” that is generated 

by Hines of RMRS—not C.C.H.I. See id., Ex. D. Plaintiff has offered evidence that data 

pertaining to Masonry, one of the clients that eventually left C.C.H.I. for InterRemedy, 

disappeared from the Salesforce cloud at some point between January 2013 and January 2014. See

Fields Decl. ¶ 11 & Ex. C. Plaintiff, however, offers no evidence—direct or circumstantial—that 

Hines, Canadas, or McGuire deleted information or copied it to InterRemedy’s cloud. The Court 

accordingly finds Plaintiff offers no competent evidence Defendants had access to its Salesforce 

database, deleted information from the database, or copied information from the database. 

To further support his argument Defendants “stole data,” Plaintiff argues Willoughby “was 

not placing client data on the Salesforce cloud.” Pl.’s Hines Opp’n at 14 (citing Rich Decl. ¶ 8). 

Rich declares he “learned data was missing from [Willoughby’s] renewal cases.” Rich Decl. ¶ 8. 

In support, Rich attaches an email from another C.C.H.I. employee Eric Sanchez, which states: 

“[W]hile putting together a status report for [Fields], I also noticed that there is data missing from 

a few of [Willoughby’s] renewal cases. I actually have had this matter come up before when I 

covered for [her] while she was out on vacation – there were certainly times when pertinent data 

was not saved to Salesforce/NetDocs. I think Kim worked mainly off of an external hard drive 

where the old C.C.H.I. database was housed. It’s likely that she inadvertently failed to transfer the 

data before her departure.” Id., Ex. A. The evidence upon which Plaintiff relies accordingly does 

not support the contention that Willoughby deleted information from the Salesforce database or 

stole data—it suggests Willoughby worked on her local hard drive and routinely did not save the 

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information on the cloud. See also Lucier Decl., Ex. 2 (Fields Dep.) at 278:4-279:18 (recalling 

email where Sanchez complained that Willoughby was “biggest offender” who worked on her C: 

drive and “frequently didn’t upload material to the cloud” at the end of the day), 282:12-17

(concerned Willoughby’s information never was uploaded to cloud).

Plaintiff identified no competent evidence Defendants stole C.C.H.I. data or deleted it from 

the Salesforce cloud.

v. Soliciting C.C.H.I. Clients While Employed by C.C.H.I.

Plaintiff surmises that because policy renewals take a long time to complete, Defendants 

must have moved C.C.H.I.’s business to InterRemedy while still being employed by C.C.H.I., and 

he argues documents show Defendants solicited C.C.H.I. clients while still employed there. 

Plaintiff recognizes Defendants were allowed to make preparations to compete while still 

employed by C.C.H.I., but contends they went beyond what was allowed when they solicited 

C.C.H.I. clients. See Pl.’s Hines Opp’n at 14-16; Pl.’s IR Opp’n at 12-20. As Plaintiff 

acknowledged, “California law does permit an employee to seek other employment and even to 

make some ‘preparations to compete’ before resigning . . . , [but] California law does not authorize 

an employee to transfer his loyalty to a competitor. During the term of employment, an employer 

is entitled to its employees’ ‘undivided loyalty.’” Fowler v. Varian Assocs., Inc., 196 Cal. App. 

3d 34, 41 (1987) (quotations omitted); see also Huong Que, Inc. v. Luu, 150 Cal. App. 4th 400, 

413-14 (2007) (recognizing Fowler permits employees to make preparations to compete, but 

finding employees “would still breach a duty of loyalty by diverting plaintiffs’ customers to [the 

new entity] while ostensibly remaining plaintiffs’ employees or agents”). While employed, an 

employee may not take any action that is “inimical to the best interest of the employer.” Huong 

Que, 150 Cal. App. 4th at 414. 

Plaintiff contends he has identified evidence that, while they were still employed at 

C.C.H.I., Defendants did more than simply prepare to compete, and that in fact they stole four 

C.C.H.I. clients: Propel, HCC, Voya, and Pajaro. 

Propel. In his declaration, Plaintiff explains that renewing stop loss contracts takes a 

significant amount of time and effort and that “from a practical standpoint, it is impossible to walk 

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out of C.C.H.I.’s door and have a turn-key operation running (with business signing contracts) two 

days later.” Fields Decl. ¶ 20. But Plaintiff offers no evidence InterRemedy was signing contracts 

“two days later.” Defendants left C.C.H.I. between October 4 and October 11, 2013. While it is 

undisputed that C.C.H.I. clients renewed contracts with InterRemedy, the evidence shows this 

occurred weeks after Canadas and Hines left C.C.H.I. Plaintiff provides an email from Patti 

Warren of Propel Insurance Service, a broker that had used C.C.H.I. to issue policies for a number 

of clients. See Rich Decl. ¶ 9 & Ex. B. Warren emailed Canadas on October 17, 2013, at least ten 

days after Canadas resigned from C.C.H.I., asking Canadas to “accept this email as authorization 

to assume the renewal representation for Propel’s stop loss policies” for five clients; the subject 

line reads “1-1-14 Stop Loss Renewals.” Id., Ex. B. Rich declares the five clients listed in the 

email did not renew with C.C.H.I. but instead renewed with InterRemedy. Id. ¶ 9. Rich 

represents Sanchez provided this email to him. Id. It is unclear whether Warren sent the email to 

Canadas at C.C.H.I. or InterRemedy, as Canadas’ email address is not identified in the document. 

It also is unclear how Sanchez received the email. To the extent the email constitutes evidence of 

anything, it does not show Canadas had been working on renewals for these clients before her 

departure, solicited these clients away from C.C.H.I., or breached her duties to C.C.H.I. Plaintiff 

offers no evidence regarding what “assuming the renewal representation” means, and the Court 

cannot find from the document itself that InterRemedy signed a contract with Propel days after 

opening for business. In fact, Plaintiff provides a signed contract between InterRemedy and one 

of the Propel clients (Lile), showing the contract was prepared on November 21, 2013, and signed 

by the client on November 22, 2013—at least six weeks after Defendants left C.C.H.I. See Fields 

Decl., Ex. B (Business Associate Contract between Lile and InterRemedy). 

HCC. Fields argues Sanchez “struck a deal with HCC Life Insurance Company for 

InterRemedy. He then had HCC correct the Proposal to read C.C.H.I. [Sanchez], however, failed 

to remove this from the Salesforce cloud (where it was found). Regardless, HCC is believed to 

have signed with InterRemedy, for C.C.H.I. no longer has it as a client.” Fields Decl. ¶ 13 (citing 

Ex. E). Exhibit E is an email from Luana Davis at HCC to Sanchez, dated October 30, 2013, 

which states “Here is our proposal based on the information provided through 8/31/13. We can 

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finalize and lock in without the need for additional information upon notification. I will send the 

notice I received from Propel separately.” Id., Ex. E. The cover sheet for the attachment reads 

“Presented by InterRemedy Insurance Services, LLC.” Id. In a second email on the same day, 

Davis writes “Here is the correction;” the cover sheet for the attachment reads “Presented by 

C.C.H.I. Cost Contained Health Innovations, Inc.” Id. Plaintiff has not shown he has personal 

knowledge of the document. He also lays no foundation for his statements that Sanchez “struck a 

deal on behalf of InterRemedy”; “had HCC correct the proposal to read C.C.H.I.”; or that the 

client is now a client of InterRemedy’s. Plaintiff offers no competent evidence Sanchez “struck a 

deal” on behalf of InterRemedy with respect to HCC. 

Voya/ING Reliastar. Plaintiff argues that documents produced by former C.C.H.I. client 

Voya show Canadas and Willoughby were discussing “Stop Loss Placements days after quitting 

C.C.H.I.’s employ. There are even Voya emails struggling with how to handle renewing groups 

with InterRemedy and not C.C.H.I. The documentation speaks for itself; solicitation by the 

Defendants had been taking place while the Defendants were still employed with C.C.H.I.” Pl.’s 

Hines Opp’n at 22; Pl.’s IR Opp’n at 16. Plaintiff cites Paragraph 20 of his Declaration and 

Exhibit I as evidence supporting his argument. See id. (both). The Court sustains in part the 

InterRemedy Defendants’ objections to certain portions of Plaintiff’s Declaration. The Court 

strikes ¶ 20 (p.7:2-3

11 (“This material . . . ‘Stop Loss Placements’”)), as Plaintiff has no personal 

knowledge of these facts, lays no foundation for his interpretation, and furthermore, this 

constitutes argument and is conclusory. The Court also strikes ¶ 21:12-20 (addressing Pajaro and 

Voya documents), as Plaintiff has no personal knowledge of these facts and lays no foundation for 

his interpretation of the third party documents; and ¶ 21 (p.8:7-10 (“Of critical interest . . . to 

steal”)), as Plaintiff has no personal knowledge of these facts, lays no foundation for his 

interpretation, this constitutes argument and is conclusory. Finally, the Court strikes Exhibit I to 

Plaintiff’s Declaration consists of documents produced by Defendants and third parties, of which 

Plaintiff has no personal knowledge, and for which he lays no foundation. Plaintiff thus has 

 

11 Paragraphs 20 and 21 of the Fields Declaration cover multiple pages. Where necessary, the 

Court clarifies the page of the Declaration on which the stricken material appears.

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identified no competent evidence regarding the Voya documents and what they purportedly show.

Pajaro Valley Unified School District. Plaintiff further argues documents produced about 

Pajaro Unified School District provide “evidence of theft, solicitation, cover-up, and false data 

inputting to Salesforce cloud.” Pl.’s Hines Opp’n at 22; Pl.’s IR Opp’n at 16-17. Plaintiff cites 

Paragraphs 20 and 21 of his Declaration and Exhibits I and J as evidence supporting his argument. 

See id. (both). The Court has stricken portions of both paragraphs, as well as Exhibit I. In the 

remaining portions of Paragraph 21 of his declaration, Plaintiff explains that Pajaro was a former 

C.C.H.I. client, information on C.C.H.I.’s Salesforce cloud shows an effective date for that policy 

of July 1, 2013 while Defendants were still employed by C.C.H.I. Fields Decl. ¶ 21.12 Plaintiff 

represents Exhibit J is a print out from C.C.H.I.’s Salesforce cloud showing documents associated 

with Pajaro. The screenshots show the status of Pajaro is “inactive,” and that Sanchez wrote at 

some point “[Hines] Said Do Not Complete this Form” next to a document entitled “PVUS 

comp_disclosure.” Id., Ex. J. Fields lays no foundation for his interpretation of this Exhibit, for 

the meaning or effect of Sanchez’s note about Hines’ instruction, or for his conclusion that this 

document “is the evidence of a cover up and false entries being entered on the SalesForce cloud.” 

Fields Decl. ¶ 21. 

In conclusion, the Court finds that none of the evidence Plaintiff identifies creates a 

genuine dispute that Defendants stole any C.C.H.I. clients while employed by C.C.H.I.

13

 

12 The Court already struck Exhibit I in its entirety, but highlights that Plaintiff lacks personal 

knowledge of the Pajaro policy he describes in his Declaration, of which he only attaches the first 

page, and for which he does not include the signature date. See id., Ex. I at p.00081 (ING 

Commission Agreement for Writing Agents and Brokers). Furthermore, Plaintiff lays no 

foundation for his interpretation that the “effective date of the policy” represents the date the 

policy was signed by InterRemedy and Pajaro. 

13 While Plaintiff has identified no evidence that Defendants competed unfairly while soliciting 

clients while they were still employed by C.C.H.I., the Court addresses a redacted email provided 

by Canadas to illustrate the type of emails she sent to potential client announcing her new business 

affiliation. See Canadas Decl., Ex. D (Canadas email to unidentified person). In this exemplar 

email, Canadas asks the unidentified client to “please provide an authorization email authorizing 

InterRemedy representatives to obtain stop loss quotes and/or pertinent information for” the client. 

Id. In so doing, Canadas does more than simply inform customers of her change of employment; 

she in fact asks the unidentified client for permission to proceed with procuring its business. This 

type of email, if sent to an existing C.C.H.I. client while she was still employed by C.C.H.I., 

arguably would constitute evidence of improper solicitation. See Am. Credit Indemn. Co. v. Sacks, 

213 Cal. App. 3d 622, 636-37 (1989) (individuals may announce new affiliations, but 

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vi. Solicitation after Departure from C.C.H.I. 

To the extent Plaintiff argues Defendants’ conduct after resigning from C.C.H.I. 

constitutes unfair or unlawful conduct, the Court grants Defendants summary judgment. Former 

employees are not necessarily barred from “soliciting” clients of their former employers. On the 

contrary, “a former employee may use general knowledge, skill, and experience acquired in his or 

her former employment in competition with a former employer, [but] the former employee may 

not use confidential information or trade secrets in doing so.” Morlife, Inc. v. Perry, 56 Cal. App.

4th 1514, 1519-20 (1997). California courts “‘have repeatedly held a former employee may be 

barred from soliciting existing customers to redirect their business away from the former employer 

and to the employee’s new business if the employee is utilizing trade secret information to solicit 

those customers.” Richmond Techs., Inc. v. Aumtech Bus. Sols., 2011 WL 2607158, at *18 (N.D. 

Cal. July 1, 2011) (emphasis added) (quoting Retirement Grp. v. Galante, 176 Cal. App. 4th 1226, 

1237 (2009)). “[I]t is not the solicitation of the former employer’s customers, but is instead the 

misuse of trade secret information, that may be enjoined.” Galante, 176 Cal. App. 4th at 1237

(citation omitted; emphasis in original); see also Allied N. Am. Ins. Brokerage Corp. of Cal. v. 

Woodruff-Sawyer, 2005 WL 6583937, at *11 (N.D. Cal. Feb. 22, 2005) (“[A] former employee’s 

use of confidential information obtained from his former employer to compete with his old 

employer and to solicit business of his former employer’s customers, is regarded as unfair 

competition.” (quoting Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 594, 606 (1982))). 

And to the extent Plaintiff’s contention that Defendants stole C.C.H.I.’s “book of business” 

is an attempt to argue Defendants stole C.C.H.I.’s customer lists, Plaintiff has not argued, much 

less identified any evidence, that the client list qualifies as a trade secret. “[C]ourts are reluctant to 

 

announcement becomes solicitation when it also discusses new company’s services and invites 

inquiries). But ultimately there is no evidence that Canadas actually sent this type of email to a 

C.C.H.I. client while she was employed by C.C.H.I. The email is dated October 7, 2013 at 9:30 

p.m. Canadas declares her last day at C.C.H.I. was October 4, 2013, but Plaintiff contends her last 

day was October 7, 2013. Even assuming Plaintiff is correct, this email was sent at 9:30 p.m., 

well after the conclusion of regular business hours, and it does not indicate when the phone call it 

references took place. Plaintiff does not address this email in his Opposition nor does he argue it 

constitutes evidence of unfair competition. Accordingly, the Court finds the email does not create 

a genuine dispute that Canadas solicited C.C.H.I. clients while still employed by C.C.H.I. 

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protect customer lists to the extent they embody information [that is]‘readily ascertainable’ 

through public sources, such as business directories[, but] where the employer has expended time 

and effort identifying customers with particular needs or characteristics, courts will prohibit 

former employees from using this information to capture a share of the market. Such lists are to 

be distinguished from mere identities and locations of customers where anyone could easily 

identify the entities as potential customers.” Galante, 176 Cal. App. 4th at 1238 (quoting Morlife, 

56 Cal. App. 4th at 1521-22). Plaintiff has not provided any evidence or argument that the 

information used to solicit any former C.C.H.I. clients constituted a trade secret.

4. Summary

Plaintiff has identified circumstantial evidence based on the timing and number of 

departures of C.C.H.I. employees who subsequently joined InterRemedy that Defendants intended 

to compete unfairly with, and/or interfere with the prospective economic advantage of, C.C.H.I. 

The Court accordingly denies summary judgment to Defendants to the extent Plaintiff’s claim is 

based on the timing and number of defections from C.C.H.I. to InterRemedy. The Court grants 

summary judgment to Defendants on these claims to the extent they are based on (1) consulting an 

attorney in connection with the formation of InterRemedy; (2) data theft; (3) the sources of funds 

that were used to capitalize InterRemedy; and (4) solicitation of C.C.H.I. clients before or after 

Defendants’ departure from C.C.H.I. 

B. Breach of Fiduciary Duty (Hines, Canadas, McGuire)

To establish a claim for breach of fiduciary duty, Plaintiff must show (1) the existence of a 

fiduciary duty, (2) its breach, and (3) damages proximately caused by the breach. Hasso v. Hapke, 

227 Cal. App. 4th 107, 140 (2014). “[B]efore a person can be charged with a fiduciary obligation, 

he must either knowingly undertake to act on behalf and for the benefit of another, or must enter 

into a relationship which imposes that undertaking as a matter of law. . . . Fiduciary duties are 

imposed by law in certain technical, legal relationships such as those between partners or joint 

venturers . . . trustees and beneficiaries, principals and agents, and attorneys and clients[.]” Id. 

(citations omitted). 

//

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1. Canadas and McGuire

The InterRemedy Defendants move for summary judgment on the ground that neither 

Canadas nor McGuire owed a fiduciary duty to C.C.H.I. IR Mot. at 2, 10. Canadas was a Sales 

Executive, and McGuire was a registered nurse who provided risk management services to 

Plaintiff’s clients. Neither Canadas nor McGuire was an officer, director or shareholder of 

C.C.H.I. Plaintiff appears to concede the fact neither Canadas nor McGuire was an officer, 

director, or shareholder of C.C.H.I., and argues instead that they “were high-ranking employees” 

and therefore “stand in a fiduciary relation with C.C.H.I.”; he also argues they “held positions of 

trust” over the money and book of business he contends they stole. Pl.’s IR Opp’n at 10-11; see 

also Fields Decl. ¶ 22 (Canadas and McGuire “held positions of trust”). 

Corporate directors and officers typically are deemed to owe fiduciary duties to their 

employer, and non-officers also have been found to owe fiduciary duties if they participate in 

management. See generally Thomas Weisel Partners LLC v. BNP Paribas, 2010 WL 1267744, at 

*5-6 (N.D. Cal. Apr. 1, 2010) (citing California cases). “[An] officer who participates in 

management of the corporation, exercising some discretionary authority, is a fiduciary of the 

corporation as a matter of law. Conversely, a ‘nominal’ officer with no management authority is 

not a fiduciary.” GAB Bus. Servs., Inc. v. Lindsey & Newsom Claim Servs., Inc., 83 Cal. App. 4th 

409, 420-21 (2000), disapproved of on other grounds by Reeves v. Hanlon, 33 Cal. 4th 1140 

(2004). Plaintiff fails to explain how these Defendants held “positions of trust” at C.C.H.I. and 

cites no evidence to support his contention. For example, he offers no evidence of their duties, 

whether they participated in the management of C.C.H.I., or exercised discretionary authority at 

C.C.H.I. He also cites no law to support his argument they would be subject to fiduciary 

obligations if they did hold “positions of trust.” Plaintiff simply offers no legal authority or 

evidence that, even though they were not officers, directors, or shareholders of C.C.H.I., Canadas 

and McGuire owed C.C.H.I. fiduciary duties.14 

 

14 Instead, Plaintiff attempts to recast his breach of fiduciary duty claim as a claim for breach of 

the duty of undivided loyalty. See Pl.’s IR Opp’n at 11. But “[a]lthough they are similar, breach 

of fiduciary duty and breach of the duty of loyalty are two distinct claims under California law.” 

E.D.C. Techs., Inc. v. Seidel, 2016 WL 6216805, at *3-4 (N.D. Cal. Oct. 25, 2016). Plaintiff is 

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The Court accordingly grants summary judgment on Plaintiff’s claim for breach of 

fiduciary duty as to these two Defendants.

2. Hines

Hines also argues Plaintiff lacks evidence showing Hines was a fiduciary of C.C.H.I. or 

that Hines did anything to breach those duties if he did owe them. Fields declares Hines was a 

Director of C.C.H.I. and its Chief Operating Officer; Hines declares he does not recall ever being 

formally elected as such. Compare Fields Decl. ¶ 17, with Hines Decl. ¶ 2. 

At the very least, a genuine dispute exists whether Hines was an officer of C.C.H.I. and 

therefore owed it a fiduciary duty. However, as to Hines’ breach of this duty, while Plaintiff 

generally argues Hines deprived C.C.H.I. of opportunities (see Pl.’s Hines Opp’n at 10), he does 

not explicitly identify the wrongful conduct at issue, nor does he offer evidence of the missed 

opportunities (see id. (citing Fields Decl. ¶ 17, which states without elaboration that Hines’ 

“wrongful conduct injured C.C.H.I. and deprived it of opportunities.”)). Such a conclusory 

statement that Hines’ conduct was “wrongful” is insufficient to create a genuine dispute of fact. 

The Court also previously found Plaintiff offered no evidence Hines stole data from the Salesforce 

cloud; solicited clients improperly during or after his employment with C.C.H.I.; breached the 

confidentiality provision of his contract; or caused the Integro transaction to fall through. 

Nevertheless, the Court finds a genuine question of material fact exists whether Hines 

breached his fiduciary duty to C.C.H.I. in at least two ways: (1) the timing and number of C.C.H.I.

employee departures, and (2) the misappropriation of Swiss Re funds. The Court addressed the 

coordination of employee departures above. With respect to the misappropriation, while much of 

Nealy’s declaration is based on hearsay and lacks foundation, his statements that Hines returned 

 

correct that even lower-level employees may owe their employer a duty of loyalty. See id. 

(“[T]his Court previously concluded that California courts generally have not distinguished 

between managerial employees and lower-level employees with respect to the duty of loyalty, ‘but 

rather use[ ] broad language suggesting that all employees owe a duty of loyalty to their 

employers’” (quoting Otsuka v. Polo Ralph Lauren Corp., 2007 WL 3342721, at *2 (N.D. Cal. 

Nov. 9, 2007))); cf. Integral Dev. Corp. v. Tolat, WL 5781581, at *3 (N.D. Cal. Oct. 25, 2013) 

(“California law recognizes that an employer may bring an independent claim against an employee 

with managerial duties for breach of the duty of loyalty.” (emphasis added)). Plaintiff has not 

pleaded a claim for breach of the duty of loyalty; he pleaded a claim for breach of fiduciary duty. 

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more than $500,000 after Nealy confronted him about the missing funds is competent evidence. 

See Nealy Decl. ¶¶ 5, 8. This, combined with the fact C.C.H.I.’s insurer reimbursed it for the loss 

in the amount of $101,322.69 (see Release), constitutes circumstantial evidence that Hines 

improperly diverted funds owed to C.C.H.I. The Court accordingly denies Hines summary 

judgment on the breach of fiduciary duty claim to the extent it is based on the nature and timing of 

employee resignations and on the misappropriation of Swiss Re funds, but grants Hines’ Motion in 

all other respects as to this claim.

C. Negligence (Hines, Canadas, McGuire)

“The elements of negligence are duty, breach, causation, and damages.” Green v. ADT, 

LLC, 2016 WL 5339800, at *2 (N.D. Cal. Sept. 23, 2016) (applying California law).

1. Canadas and McGuire

Plaintiff’s negligence claim against Canadas and McGuire is based on the theory that they 

were negligent in performing their fiduciary duty or their duty of loyalty as employees. See Pl.’s 

IR Opp’n at 11. The Court already found Plaintiff had failed to identify any evidence that 

Canadas and McGuire owed C.C.H.I. any fiduciary duties, but it is undisputed under California 

law that Canadas and McGuire owed their employer a duty of loyalty during their term of 

employment. As such, they had “a duty to refrain from competing” with the C.C.H.I. “and from 

taking action on behalf of or otherwise assisting” C.C.H.I.’s competitors—including InterRemedy. 

Blackbird Techns., Inc. v. Joshi, 2015 WL 5818067, at *4 (N.D. Cal. Oct. 6, 2015) (applying 

California law), appeal dismissed (Nov. 23, 2015). 

Canadas and McGuire argue there is no evidence to support the elements of causation, 

breach, or damages conclusorily alleged in the Complaint. See IR Mot. at 10-11. Plaintiff 

contends he has sufficient evidence to establish Canadas and McGuire were negligent in 

performing their duty of loyalty. See Pl.’s IR Opp’n at 11 (citing Fields Decl. ¶ 19, which states 

“[t]he departure of the Defendants and their conduct (before and after leaving) placed C.C.H.I. in a 

position where it could not compete with InterRemedy (even if it wanted to). . . .”). The Court 

sustains the InterRemedy Defendants’ objections to Paragraph 19 in part, specifically to ¶ 19:10-

12 (“Consequently, it was by design that the crux of C.C.H.I.’s staff was involved and conspired 

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to move C.C.H.I.’s business to InterRemedy”) on the ground it contains argument, is conclusory,

is not based on personal knowledge, and lays no foundation for Fields’ statement. Plaintiff fails to 

explain what conduct he is referencing, and his conclusory statement regarding the conduct is 

insufficient to create a genuine dispute of fact. Nevertheless, the Court already found the fact six 

employees resigned C.C.H.I. to join C.C.H.I.’s new competitor InterRemedy within the same 

month constituted circumstantial evidence of unfair competition. The Court accordingly denies 

the InterRemedy Defendants’ Motion to the extent it is based on the timing and number of 

employee departures, but grants it to the extent it is based on any other ground.

2. Hines

Plaintiff fails to identify any evidence in support of his negligence claim against Hines, 

arguing only that this cause of action “is directly related to [Hines’] fiduciary duty to C.C.H.I. He 

was negligent in performing those duties under the Contract and as an Officer/Director of 

C.C.H.I.” Pl.’s Hines Opp’n at 17. 

The Court already addressed Plaintiff’s contract claim against Hines and concluded no 

reasonable jury could find Hines breached the confidentiality clause of that contract, or that Hines’ 

breach of the notification provision caused C.C.H.I. any damages. The Court also already found 

that Plaintiff established a genuine issue of fact existed whether Hines improperly appropriated the 

Swiss Re funds. This is also sufficient to establish a breach for purposes of Plaintiff’s negligence 

claim. The Court accordingly denies Hines’ Motion for Summary judgment to the extent it is 

based on the misappropriation of Swiss Re funds, or on the timing and nature of the employee 

resignations, and otherwise grants the Motion for Summary Judgment.

D. Conversion (Hines, Canadas, InterRemedy)

“The elements of a conversion claim are: (1) the plaintiff’s ownership or right to 

possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of 

property rights; and (3) damages.” Lee v. Hanley, 61 Cal. 4th 1225, 1240 (2015) (quotation 

omitted). Plaintiff argues Hines’ conduct constitutes conversion of C.C.H.I.’s book of business. 

Pl.’s Hines Opp’n at 23; Pl.’s IR Opp’n at 20-21. He holds the other Defendants liable based on 

his conspiracy theory. See id. 

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As addressed earlier, Plaintiff has failed to identify evidence creating a genuine issue of 

material fact that Defendants deleted or copied data from the Salesforce cloud, solicited C.C.H.I. 

clients while employed, or used trade secrets to do so thereafter. The Court accordingly grants 

summary judgment to Defendants on the conversion claim.

E. Breach of Written Contract (Hines)

To establish a breach of contract claim, Plaintiff must show “(1) the existence of the 

contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, 

and (4) resulting damages[.]” Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011). 

Hines argues Plaintiff cannot produce admissible evidence to support this claim because the 2003 

agreement is void and there is no evidence that he breached the confidentiality provision of his 

contract. Hines Mot. at 15-16. Plaintiff argues he can produce evidence in support of this claim 

because Hines “breached the Notice of Termination provision and the Confidentiality provision” 

of the written May 2003 Agreement. Pl.’s Hines Opp’n at 16. 

As an initial matter, the Court finds a genuine dispute of fact exists as to the continued 

validity of the Agreement. Nealy declares that Hines continued to be paid on the contract until he 

left C.C.H.I. in 2013. Nealy Decl. ¶ 10. The Court therefore finds Hines has not met his burden 

of showing Plaintiff cannot produce evidence in support of the first element of this claim. The 

Agreement requires Hines (1) not to use “any information that is proprietary to C.C.H.I.” and (2) 

to provide 30-days’ written notice of termination. See Agreement. The agreement further declares 

“there are no other promises or conditions in any other agreement whether oral or written.”15 Id. 

The Court next evaluates whether there is evidence of Hines’ breach of either of these provisions, 

or resulting damages. 

//

 

15 Plaintiff offered evidence he and Hines entered into a “gentlemen’s agreement” regarding 

Hines’ role with RISK; Hines denies such an agreement existed. Plaintiff does not argue the 

gentlemen’s agreement is a basis for his breach of contract claim, but instead focuses exclusively 

on the May 2003 written agreement. Furthermore, it is undisputed the gentlemen’s agreement is 

not written, and the Complaint specifically asserts the breach of contract claim is for breach of a 

written contract, referencing the May 2003 written agreement with no mention of a gentlemen’s 

agreement. See Compl. ¶¶ 16, 17, 22-26. Plaintiff’s breach of contract claim accordingly is based 

exclusively on the 2003 Agreement.

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1. Confidentiality Provision

Instead of citing evidence establishing a breach of the Agreement, Plaintiff “contends the 

Complaint satisfied the elements and the facts addressed herein establish [Hines’] breach of 

Contract.” Pl.’s Hines Opp’n at 17. He provides no evidence or even argument to support his 

claim. It is elementary that Plaintiff cannot rest on the allegations of the Complaint on summary 

judgment and must “go beyond the pleadings.” Celotex Corp., 477 U.S. at 324-26. Plaintiff failed 

to oppose the Motion or identify any evidence establishing his ability to prove the elements of his

claim, and on this basis alone, the Court could grant summary judgment to Hines. 

Moreover, to the extent Plaintiff argues Hines violated the confidentiality provisions of his 

contract by stealing data from C.C.H.I.’s Salesforce cloud and using that data to steal C.C.H.I.’s 

clients for InterRemedy (see Pl.’s Hines Opp’n at 14-16 (“C.C.H.I. has Sufficient Evidence to 

Establish that Defendants Stole Data and/or Business”)), the Court already found Plaintiff fails to 

produce any admissible evidence supporting this contention. As a result, the Court finds Plaintiff 

has offered no evidence that Hines breached the confidentiality provision of the Agreement.

2. Termination Provision

The Court observes the Complaint makes no mention of the 30-day notice provision when 

discussing the 2003 Agreement (see Compl. ¶ 16), which may explain why Hines did not 

specifically address the issue in his Motion. With respect to Hines’ breach of the termination 

provision, it is undisputed Hines did not provide C.C.H.I. with 30-days’ written notice before 

leaving its employ. Instead of explaining how that new theory of breach caused any damage, 

Plaintiff contends the “Complaint satisfied the elements and the facts addressed herein establish 

[Hines’] breach of Contract.” Pl.’s Hines Opp’n at 17. But the Complaint does not address the 

30-day notice provision, and Plaintiff has identified no evidence that Hines’ breach of the 

termination notice provision caused any damages. Plaintiff identified evidence that the mass 

departure of employees between in late 2013 caused C.C.H.I. difficulties, but there is no evidence 

that Hines’ failure to give C.C.H.I. 30-days’ notice caused those difficulties, or that the difficulties 

would have been alleviated had he given the notice requested under the contract. 

The Court grants summary judgment to Hines on the breach of contract claim.

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F. Fraud in the Inducement (Hines)

The elements of fraud are (a) a misrepresentation (false representation, concealment, or 

nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable 

reliance; and (e) resulting damage. Lazar v. Super. Ct., 12 Cal. 4th 631, 638 (1996). Fraud in the 

inducement is a subset of fraud. It “occurs when the promisor knows what he is signing but his 

consent is induced by fraud.” Rosenthal v. Great W. Fin. Secs. Corp., 14 Cal. 4th 394, 415 (1996) 

(citation and internal quotation marks omitted). “A promise of future conduct is actionable as 

fraud only if made without a present intent to perform. . . . A declaration of intention, although in 

the nature of a promise, made in good faith, without intention to deceive, and in the honest 

expectation that it will be fulfilled, even though it is not carried out, does not constitute a fraud.” 

Magpali v. Farmers Grp., Inc., 48 Cal. App. 4th 471, 481 (1996). 

Plaintiff asserts a fraudulent inducement claim against Hines on the ground that before 

accepting the 2003 Agreement, Hines promised he would provide C.C.H.I. with Consulting 

Services and assist in growing C.C.H.I.’s business, which Plaintiff alleges Hines violated in 2006. 

Lucier Decl., Ex. 6 (Pl.’s Resps. to Form Interrogs. at 50.2 (identifying earliest breach of 

consulting agreement as 2006)). Hines argues Plaintiff cannot produce evidence to support this 

claim because Hines worked on the contract for ten years, establishing he not only had the intent 

to perform on the contract when he entered into it, but fully performed on it. Hines Mot. at 19.

Plaintiff fails to offer any evidence Hines did not intend to perform his obligations under 

the Consulting Agreement when he entered into it, or that he did not perform those obligations for 

several years thereafter. As such, there is no genuine issue of material fact whether Hines 

intended not to fulfill the expectations of the Agreement when he signed it. The Court accordingly 

grants summary judgment to Hines on the fraud in the inducement claim.

G. Civil Conspiracy (Hines, Canadas, InterRemedy, McGuire, Willoughby)

“The elements of a civil conspiracy are: (1) formation and operation of the conspiracy and 

(2) damage resulting to plaintiff (3) from an act done in furtherance of the common design.” I-CA 

Enters., Inc. v. Palram Americas, Inc., 235 Cal. App. 4th 257, 272 n.2 (2015) (quotation omitted). 

“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, 

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although not actually committing a tort themselves, share with the immediate tortfeasors a 

common plan or design in its perpetration.” Id. at 271-72.

Plaintiff argues evidence of a conspiracy between these Defendants exists because “[t]o 

accomplish the theft of C.C.H.I.’s book of business, required a joint effort.” Pl.’s Hines Opp’n at 

24; Pl.’s IR Opp’n at 21-22. He bases this argument on the following: (1) 80% of C.C.H.I.’s 

employees left to join InterRemedy; (2) InterRemedy simply took C.C.H.I.’s business model and 

hired C.C.H.I. employees; and (3) Hines and Canadas conspired to manipulate Canadas’ salary. 

Id. (both) (citing Fields Decl. ¶ 19 (both)). As an initial matter, Paragraph 19 of Plaintiff’s 

Declaration makes no mention of C.C.H.I.’s business model or the alleged salary manipulation, 

and therefore does not constitute evidence supporting Plaintiff’s argument. Second, Plaintiff has 

identified no evidence in connection with these Motions that InterRemedy “simply took C.C.H.I.’s 

business model.” Third, Plaintiff has identified no competent evidence that Hines and Canadas 

conspired to manipulate Canadas’ salary. Canadas provided evidence that she renegotiated her 

initial salary agreement, that Nealy questioned her about her compensation in January 2013, and 

that she explained to him that she had been paid pursuant to renegotiated terms for years but did 

not have written documentation of the new arrangement. See Canadas Decl. ¶ 12 & Ex. E. The 

only evidence Plaintiff identifies to support this theory of manipulation is the fact C.C.H.I. 

presented a claim to its insurers to recover money lost as a result of the manipulation, that the 

insurer investigated the claim and deposed Plaintiff and Nealy, and that “the claim was paid.” But 

it is evident the insurers did not base the payment on the alleged salary manipulation. See

Valeriano Decl., Ex. B (explicitly not agreeing to pay this claim). 

The Court accordingly denies summary judgment on the conspiracy claim to the extent it is 

based on the timing and number of employee resignations, and grants summary judgment on this 

claim to the extent it is based on any other ground.

H. Accounting (Hines, Canadas, InterRemedy, McGuire, Willoughby, RISK)

“To state a claim for an accounting, a plaintiff must allege a relationship that requires an 

accounting and a balance due from the defendant to the plaintiff that can only be ascertained by an 

accounting.” Arostegui v. Bank of Am., 2014 WL 1230762, at *7 (N.D. Cal. Mar. 21, 2014)

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(citing Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (2009)). “The right to an accounting is 

derivative of other claims.” Id. (citing Janis v. Cal. State Lottery Com., 68 Cal. App. 4th 824, 

833-34 (1998)). “An accounting ‘may be sought where the accounts are so complicated that an 

ordinary legal action demanding a fixed sum is impracticable.’” Id. (citing Civic W. Corp. v. Zila 

Indus., Inc., 66 Cal. App. 3d 1, 14 (1977)). Should Plaintiff prevail on claims at trial, and should 

the Court find that any balance due to him on those claims can only be ascertained by an 

accounting, Plaintiff may be entitled to an accounting. Defendants’ Motion for Summary 

Judgment on the accounting claim accordingly is denied.

DISCUSSION - PLAINTIFF’S MOTIONS

Plaintiff moves for judgment on the pleadings as to Defendant RISK. See Pl.’s Mot. at 3. 

RISK is named in only two causes of action: Negligence and Accounting. See id.; see also

Compl. RISK answered the Complaint by asserting 28 affirmative defenses. See Kenneally Mot. 

Decl., Ex. C, Dkt. No. 59-2. After RISK answered the Complaint, its attorneys discovered that 

RISK was a suspended corporation. Lucier Decl. in Support of Mot. to Withdraw ¶ 7, Dkt. No. 

29-1. Counsel for RISK accordingly withdrew from the representation. Order Granting Mot. to 

Withdraw, Dkt. No. 30. As a suspended California corporation, RISK lacks the capacity to defend 

itself in this action. See Ferras v. Husqvarna Constr. Prods. N. Am., Inc., 2016 WL 3547926, at 

*3 (N.D. Cal. June 30, 2016) (Cal. Revenue and Tax Code § 23301 authorizes forfeiture of 

taxpayer’s corporate powers, rights, and privileges when corporation is delinquent in paying 

taxes); Cal. Corp. Code § 2205(c) (upon suspension, “the corporate powers, rights, and privileges 

of the corporation are suspended”); Fed. R. Civ. P. 17(b) (“capacity of a corporation to sue or be 

sued shall be determined by the law under which it was organized”).

A. Motion for Judgment on the Pleadings

“After the pleadings are closed—but early enough not to delay trial—a party may move for

judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the pleadings is properly 

granted when [, accepting all factual allegations in the complaint as true,] there is no issue of 

material fact in dispute, and the moving party is entitled to judgment as a matter of law. . . . 

Analysis under Rule 12(c) is substantially identical to analysis under Rule 12(b)(6) because, under 

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both rules, a court must determine whether the facts alleged in the complaint, taken as true, entitle 

the plaintiff to a legal remedy.” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) 

(internal quotation marks and citations omitted).

The Court accordingly reviews the Complaint to evaluate whether its “factual allegations, 

together with all reasonable inferences, state a plausible claim for relief” against RISK. Cafasso, 

U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 & n.4 (9th Cir. 2011) (noting 

pleading standard articulated in Iqbal, 556 U.S. at 677 applies to Rule 12(c) motions). Plaintiff 

asserts very few specific allegations against RISK. He alleges Hines conducted business through 

RISK and is an officer, director, or member of RISK. Compl. ¶ 5. He further alleges, on 

information and belief, that RISK is an active entity authorized to do business in California. Id. ¶ 

6. He alleges he authorized Hines and Nealy to form RISK in 2003 to “deal with some of 

C.C.H.I.’s business,” that in 2007 RISK converted from a limited liability company to a 

corporation, that Hines and Nealy were officers of RISK, that RISK took some of C.C.H.I.’s 

business, but that most of the business flowed back to C.C.H.I. after 2005. Id. ¶ 17. He further 

contends Hines and Canadas diverted money owed C.C.H.I. to RISK. Id. ¶ 21. Plaintiff offers no 

additional allegations regarding RISK when stating his negligence claim, but instead formulaically 

recites the element of this claim. See id. ¶¶ 37-41. 

To state a claim for negligence, Plaintiff must plead facts showing RISK owed him a duty, 

breached that duty, and that the breach caused Plaintiff damages. See Green, 2016 WL 5339800, 

at *2 (applying California law). The Complaint does not plead facts that are on their face 

sufficient to show RISK owed him a duty or breached that duty. Plaintiff does not identify in his 

Motion a legal basis for finding, based on the facts in the Complaint, that RISK owed him a duty 

or breached that duty. The Complaint therefore does not state a plausible claim for negligence. 

Similarly, Plaintiff’s claim for an accounting is derivative of his negligence claim against RISK, 

and accordingly, the Court also finds Plaintiff does not state a plausible claim for accounting 

against RISK. 

Plaintiff’s motion for judgment on the pleadings as to RISK is denied.

//

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B. Motion for Summary Judgment

Plaintiff’s motion for summary judgment cites the Rule 56 standard but does not provide 

additional details or evidence regarding his theory for RISK’s liability. See Pl.’s Mot. at 4-6 

(reciting allegations of Complaint in narrative form). As the Court already found, the facts 

Plaintiff alleges in the Complaint or in his Motion, even accepted as true, do not establish RISK 

owed a duty to Plaintiff or breached that duty. Plaintiff offers no argument why Hines’ 

wrongdoings, if any, should be imputed to RISK. Once again, Plaintiff’s claim for an accounting 

is derivative of his negligence claim. Accordingly, the Court denies Plaintiff’s motion for 

summary judgment against RISK, without prejudice.

CONCLUSION

Based on the analysis above, the Court hereby ORDERS as follows:

(1) The Court finds Hines and the InterRemedy Defendants have met their burden of 

showing Plaintiff cannot produce admissible evidence to support the following facts:

(a) Defendants capitalized InterRemedy with funds diverted from RISK and/or 

C.C.H.I.;

(b) Defendants stole or deleted data from C.C.H.I.’s Salesforce cloud;

(c) While Defendants were employed by C.C.H.I., they solicited C.C.H.I. 

clients;

(d) After leaving C.C.H.I., they used trade secrets to compete with C.C.H.I.; 

and,

(e) Hines and Canadas “manipulated” Canadas’ compensation without the 

approval of Fields and/or C.C.H.I.

Defendants may file appropriate motions in limine to cabin Plaintiff’s introduction of evidence 

based on this ruling before trial.

(2) The Court DENIES summary judgment to Defendants Hines, Canadas and 

InterRemedy on Plaintiff’s claims for negligent interference with prospective business advantage, 

intentional interference with prospective business advantage, and unfair competition law to the 

extent the claims are based on the timing and number of departures of C.C.H.I. employees. The 

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Court GRANTS summary judgment to Defendants Hines, Canadas and InterRemedy on 

Plaintiff’s claims for negligent interference with prospective business advantage, intentional 

interference with prospective business advantage, and unfair competition law to the extent they are 

based on any other ground asserted in the Complaint. 

(3) The Court GRANTS summary judgment to Defendants Canadas and McGuire on 

Plaintiff’s claim for breach of fiduciary duty. The Court DENIES summary judgment to 

Defendant Hines on Plaintiff’s claim for breach of fiduciary duty to the extent the claim is based 

on the timing and number of departures of C.C.H.I. employees and the misappropriation of Swiss 

Re funds. The Court GRANTS summary judgment to Defendant Hines on Plaintiff’s claim for

breach of fiduciary duty to the extent it is based on any other ground asserted in the Complaint.

(4) The Court DENIES summary judgment to Defendants Canadas and McGuire on 

Plaintiff’s claim for negligence to the extent the claim is based on the timing and number of 

departures of C.C.H.I. employees. The Court DENIES summary judgment to Defendant Hines on 

Plaintiff’s claim for negligence to the extent the claim is based on the timing and number of 

departures of C.C.H.I. employees and the misappropriation of Swiss Re funds. The Court

GRANTS summary judgment to Defendants Canadas, McGuire, and Hines on Plaintiff’s claim 

for negligence on any other ground asserted in the Complaint.

(5) The Court GRANTS summary judgment to Defendants Hines, Canadas, and 

InterRemedy on Plaintiff’s conversion claim.

(6) The Court GRANTS summary judgment to Defendant Hines on Plaintiff’s claim 

for breach of written contract.

(7) The Court GRANTS summary judgment to Defendant Hines on Plaintiff’s claim 

for fraud in the inducement.

(8) The Court DENIES summary judgment to Defendants Hines, Canadas, 

Willoughby and InterRemedy on Plaintiff’s conspiracy claim, to the extent the claim is based on 

the timing and number of departures of C.C.H.I. employees. The Court GRANTS summary 

judgment to Defendants Hines, Canadas, Willoughby and InterRemedy on Plaintiff’s conspiracy 

claim on any other ground asserted in the Complaint. 

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(9) The Court DENIES summary judgment to all Defendants on the accounting claim.

(10) The Court GRANTS summary judgment to all Defendants on Plaintiff’s claim for 

breach of the implied covenant of good faith and fair dealing.

(11) The Court DENIES Plaintiff’s Motion for Judgment on the Pleadings against 

Defendant RISK.

(12) The Court DENIES Plaintiff’s Motion for Summary Judgment against Defendant 

RISK. Defendant RISK has not appeared and cannot defend itself in this action. Accordingly, 

RISK will not be prejudiced if the Court affords Plaintiff the opportunity to renew his motion for 

summary judgment. If Plaintiff renews his motion for summary judgment, he must both address 

the deficiencies noted herein and also confirm that seeking to dispose of the action against RISK 

by summary judgment is procedurally proper. Plaintiff may file a renewed motion for summary 

judgment no later than December 15, 2016.

(13) The Court ORDERS all parties to attend a settlement conference with the 

Honorable Laurel Beeler, to take place no later than 100 days from the date of this Order.

(14) The parties shall meet and confer and file a joint case management conference 

statement no later than January 12, 2017.

(15) The Court ADMONISHES Plaintiff it will strike any further pleadings where he 

compares this business dispute to gang rape (Pl.’s IR Opp’n at 17), or discusses slavery (Pl.’s 

Hines Opp’n at 18; Pl.’s IR Opp’n at 13).

IT IS SO ORDERED.

Dated: November 22, 2016

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

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