Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-00272/USCOURTS-cand-3_18-cv-00272-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHRISTOPHER CARDINAL, et al.,

Plaintiffs,

v.

JOHN LUPO, et al.,

Defendants.

Case No. 18-cv-00272-JCS 

ORDER REGARDING MOTION FOR 

SANCTIONS AND MOTIONS FOR 

SUMMARY JUDGMENT

Re: Dkt. Nos. 81, 84, 89, 91, 96, 116

I. INTRODUCTION

This case concerns Defendant John Lupo’s sale of a residential kitchen remodeling 

company, Kitchen Experts of California, Inc. (“Kitchen Experts”), to Plaintiff Christopher 

Cardinal. Kitchen Experts and a second company that Cardinal later purchased, American 

Appliance Outlet, LLC (“AAO”), are also plaintiffs. Lupo’s wife Andreana Michael, his 

employees Moheba D’Anna and Bryce Phelton, and his new companies Kitchen Fantastic, Inc. 

and Appliance Fantastic, Inc. are also defendants. Defendants now move for summary judgment 

and Plaintiffs move for discovery sanctions. The Court held a hearing on September 6, 2019. For 

the reasons discussed below, the motions are GRANTED in part and DENIED in part.

1

II. BACKGROUND2

In March of 2017, Lupo contacted Cardinal with an offer to sell Kitchen Experts—a 

kitchen remodeling business—to him for $1 million, purportedly because Lupo was moving out of 

state. Cardinal contends that he agreed to the deal based on Lupo’s representations about the 

 

1 The parties have consented to the jurisdiction of the undersigned magistrate judge for all 

purposes pursuant to 28 U.S.C. § 636(c).

2 For the purpose of Defendants’ motions for summary judgment, where the Court must draw all 

reasonable inferences in favor of Plaintiffs, this background section presents the facts generally 

from Plaintiffs’ point of view. Nothing in this section should be construed as resolving any issue 

of fact that might be disputed.

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company, and based on an opportunity conduct due diligence, which Lupo hindered by limiting 

Cardinal’s access to documents, ostensibly to avoid employees leaving the company if they 

learned a sale was likely. Due diligence was limited to Cardinal’s review of certain binders that 

Lupo provided. The agreed upon price subsequently increased to $1.5 million, and the stock 

purchase agreement that the parties signed in May of 2017 called for a price of $2 million. 

Cardinal claims that, following closing of the deal, he learned that many of Lupo’s representations 

were false, and that Kitchen Experts had significant undisclosed debts, paid many of its employees 

outside of formal payroll to avoid pay deductions, and lacked basic financial records, among other 

issues that were not disclosed before the sale. Later in 2017, rather than move out of state and 

enter a different line of work, Lupo founded a new kitchen remodeling service, Kitchen Fantastic, 

which competed with Kitchen Experts. Certain Kitchen Experts employees, including Defendant 

Phelton and foreman Luis Daza, ended up leaving Kitchen Experts to work fort Kitchen Fantastic.

In September of 2017, Cardinal purchased another business, Plaintiff AAO, from nonparties Tristan Odell and Mariam Helmandy. Cardinal states that Defendant D’Anna, an AAO 

employee, encouraged him to falsify documents in an effort to maintain a relationship with Riggs 

Distributing, Inc., an important supplier. AAO fired D’Anna on October 16, 2017. D’Anna 

continued to use a Yahoo email account that had at times been used as AAO’s general office email 

address for several days after she was fired, until AAO changed the password and security 

settings. The parties dispute whether AAO or D’Anna owned that email address. At some point 

after she was fired by AAO, D’Anna began working for Defendant Appliance Fantastic, another 

new company founded by Lupo that competed with AAO.

Cardinal eventually consolidated both Kitchen Experts and AAO under a holding company 

called Good Development, and soon thereafter transferred all of his stock in Good Development to 

his business partner James Franchini, in exchange for Franchini assuming the companies’ debts to 

Cardinal of more than $2 million.

Plaintiffs’ complaint includes the following claims: (1) fraudulent misrepresentation, 

asserted by Cardinal against Lupo, Compl. ¶¶ 50–57; (2) negligent misrepresentation, between the 

same parties, id. ¶¶ 58–59; (3) aiding and abetting fraud, asserted by Cardinal against Michael, id.

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¶¶ 60–64; (4) breach of contract, asserted by Kitchen Experts against Lupo, id. ¶¶ 65–69; (5) 

breach of contract, asserted by Cardinal against Lupo, id. ¶¶ 70–73; (6) breach of the duty of good 

faith and fair dealing, asserted by Kitchen Experts against Lupo, id. ¶¶ 74–77; (7) “Trade 

Libel/Commercial Disparagement,” asserted by Kitchen Experts and AAO against Lupo, Kitchen 

Fantastic, and D’Anna, id. ¶¶ 78–85; (8) intentional interference with contractual relations, 

asserted by Kitchen Experts against Lupo and D’Anna, id. ¶¶ 86–97; (9) intentional interference 

with prospective economic relations, asserted by Kitchen Experts against Lupo, id. ¶¶ 92–97; 

(10) breach of the duty of loyalty, asserted by Kitchen Experts against Phelton, id. ¶¶ 98–102; 

(11) inducing a breach of the duty of loyalty, asserted by Kitchen Experts against Lupo and 

Kitchen Fantastic, id. ¶¶ 103–06; (12) conversion, asserted by Kitchen Experts against Lupo and 

Kitchen Fantastic, id. ¶¶ 107–12; (13) violation of the Computer Fraud and Abuse Act (“CFAA”),

18 U.S.C. § 1030(a)(2)(C), asserted by Kitchen Experts against Lupo and Kitchen Fantastic, id.

¶¶ 113–19; (14) violation of the Stored Communications Act (“SCA”), 18 U.S.C. § 2701, asserted 

by AAO against Lupo, Appliance Fantastic, and D’Anna, Compl. ¶¶ 120–26; and (15) unlawful, 

unfair, and fraudulent competition in violation of California’s unfair competition law (the “UCL”), 

Cal. Bus. & Prof. Code § 17200, asserted by Kitchen Experts and AAO against Kitchen Fantastic 

and Appliance Fantastic, Compl. ¶¶ 127–29.

III. SUBJECT MATTER JURISDICTION

Although the parties have not raised any question of the Court’s subject matter jurisdiction, 

the Court is required to consider that issue sua sponte and dismiss any claims that fall outside its 

jurisdiction. The CFAA and SCA claims arise under federal law, and thus fall within federal 

question jurisdiction under 28 U.S.C. § 1331. The only potential basis for jurisdiction over the 

other thirteen claims, all of which arise under California state law, is supplemental jurisdiction 

pursuant to 28 U.S.C. § 1367. That statute authorizes district courts to hear “claims that are so 

related to claims in the action within [the Court’s] original jurisdiction that they form part of the 

same case or controversy under Article III of the United States Constitution.” 28 U.S.C. 

§ 1367(a). In determining whether claims are sufficiently related to meet that test, courts look to 

whether they share a “‘common nucleus of operative fact.’” See Mendoza v. Zirkle Fruit Co., 301 

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F.3d 1163, 1173–74 (9th Cir. 2002) (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 

725 (1966)). The inclusion of additional plaintiffs in such claims—here, Cardinal, who does not 

assert either the SCA claim or the CFAA claim—does necessarily preclude supplemental 

jurisdiction. See generally Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005)

(holding that, where at least one plaintiff in a class action meets the amount-in-controversy 

requirement of 28 U.S.C. § 1332, a court may exercise supplemental jurisdiction over the claims 

of class members who do not meet that requirement). 

Although not all of the claims here rest on the same specific facts, all arise from the same 

course of dealing between Lupo and Cardinal during the sale of Kitchen Experts and their 

subsequent competition. The Court concludes that the claims are part of the same constitutional 

case and that Plaintiffs’ state law claims fall within the Court’s supplemental jurisdiction.

IV. MOTION FOR SANCTIONS

A. Legal Standard

“Federal courts have the authority to sanction litigants for discovery abuses both under the 

Federal Rules of Civil Procedure and pursuant to the court's inherent power to prevent abuse of the 

judicial process.” Network Appliance, Inc. v. Bluearc Corp., No. C 03-5665 MHP, 2005 WL 

1513099, at *2 (N.D. Cal. June 27, 2005) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 

(1991); In re Yagman, 796 F.2d 1165, 1187 (9th Cir. 1986)). Rule 16(f) of the Federal Rules of 

Civil Procedure allows a court to order sanctions where a party or its attorney fails to obey a 

pretrial order. Rule 37(b)(2)(A) specifically addresses sanctions that may be imposed on a party 

that has failed to comply with a discovery order, including striking pleadings in whole or in part, 

dismissal, entry of default judgment, contempt of court, and, as Plaintiffs seek here, an order 

“directing that the matters embraced in the order or other designated facts be taken as established 

for purposes of the action, as the prevailing party claims.” See Fed. R. Civ. P. 37(b)(2)(A)(i). 

A district court has inherent authority to impose sanctions for spoliation of evidence. Leon 

v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006); Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th 

Cir. 1993). The majority of courts use a three-part test to determine whether spoliation occurred, 

consisting of the following elements: “‘(1) that the party having control over the evidence had an 

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obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a 

“culpable state of mind;” and (3) that the evidence was “relevant” to the party’s claim or defense 

such that a reasonable trier of fact could find that it would support that claim or defense.’” Apple 

Inc. v. Samsung Elecs. Co., 881 F. Supp. 2d 1132, 1138 (N.D. Cal. 2012) (quoting Zubulake v. 

UBS Warburg LLC, 220 F.R.D. 212, 215 (S.D.N.Y. 2003)) (footnotes omitted). If spoliation is 

found, courts often consider three factors to determine whether and what type of sanctions to 

issue: “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of 

prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid 

substantial unfairness to the opposing party.” Nursing Home Pension Fund v. Oracle Corp., 254 

F.R.D. 559, 563 (N.D. Cal. 2008) (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 

(3d Cir. 1994)).

In this Court, “[a]ny motion for sanctions, regardless of the sources of authority invoked, 

. . . must be made as soon as practicable after the filing party learns of the circumstances that it 

alleges make the motion appropriate.” Civ. L.R. 7-8.

B. The Court’s Previous Orders

Although Plaintiffs’ briefs regarding sanctions include references to Defendants’ purported 

violation of other “discovery obligations,” the focus of the motion is whether Defendants 

complied with two previous court orders. See, e.g., Sanctions Mot. (dkt. 116) at 9–10 (“Here, 

Defendants violated the Court’s orders found at Docket Nos. 66 and 69. . . . Accordingly, 

Plaintiffs are entitled to sanctions under Rules 37 and 16.”); id. at 12 (identifying “Defendants’ 

refusal to comply with the Court’s order” as the basis for sanctions under the Court’s inherent 

authority). With the exception of a brief discussion of the Court’s inherent authority to sanction 

spoliation of evidence, see id. at 13–14, Plaintiffs do not discuss in any detail other obligations 

that Defendants violated, and do not address authority or legal standards for sanctions related to 

such obligations. The Court therefore also focuses on those previous orders, as well as spoliation, 

in considering Plaintiffs’ motion.

In the weeks leading up to January 18, 2019, counsel for the parties had a series of 

conferences with one another and with the Court regarding discovery disputes, during which 

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defense counsel was at times unable to obtain compliance from his clients and the Court at times 

admonished defense counsel for failure to comply with Court orders and discovery obligations. 

On January 18, 2019, the parties submitted a stipulation prepared during a conference that the 

Court required them to hold in person at the courthouse in an effort to resolve their discovery 

disputes. The Court adopted that stipulation as an order (the “January 2019 order”) on January 22, 

2019, and filed that order on January 23, 2019. See Jan. 2019 Order (dkt. 66). As is relevant to 

the current dispute, the January 2019 order required Defendants to take the following actions no 

later than January 23, 2019 (with respect to Lupo’s obligations) and January 25, 2019 (with 

respect to the other Defendants’ obligations):

Defendant John Lupo to confirm completion of search for documents 

and records related to Plaintiff Kitchen Experts of California, Inc.’s 

corporate books and records, including without limitation tax returns 

and files provided by RKO Tax & Investments, Inc.

Defendant John Lupo to provide update to Plaintiffs regarding his 

efforts and ability to access his Comcast email account and the Bank 

of America account.

Defendant John Lupo to provide update to Plaintiffs regarding the 

status of prior mobile devices and tablets, including dates each device 

was last used by him and/or transferred to a third party.

Defendant Bryce Phelton to provide update to Plaintiffs regarding the 

status and location of all prior mobile devices, tablets, and computers, 

including dates each device was last used by him and/or transferred 

to a third party.

Defendants Kitchen Fantastic, Inc. and Legacy Appliance (fka 

Appliance Fantastic, Inc.) to confirm the existence, identity and 

amount of certain corporate books and records, which the parties 

understand to mean any balance statements, profit and loss 

statements, gross sales and receipts, employment agreements, 

subcontractor agreements, payroll records, payments to any 

employees outside of payroll, lease agreements, vendor contracts, 

utility statements, bank statements, and tax returns to facilitate a 

further meet and confer between lead trial counsel to identify with 

particularity which, if any, documents to be included in a further 

production of documents to be made no later than January 31, 2019.

Defendant Andreana Michael to serve verified amended responses to 

Plaintiff Christopher Cardinal’s Request for Production, Set One, 

including a statement compliant with Civil Standing Order for 

Magistrate Judge Joseph C. Spero, ¶¶ 10, 11.

Defendant Moheba D’Anna to serve verified amended responses to 

Plaintiff Christopher Cardinal’s Request for Production, Set One, 

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including a statement compliant with Civil Standing Order for 

Magistrate Judge Joseph C. Spero, ¶¶ 10, 11.

Id. The order also required counsel for both parties to meet and confer on January 28, 2019 

regarding a supplemental document production, and required Defendants to complete that 

document production no later than January 31, 2019. Id.

The parties appeared for a case management conference on February 7, 2019, at which 

time the Court ordered, in relevant part, as follows:

1. With respect to all documents sent to Defendant Lupo or to any of 

his companies by accountant Robert Olson, Defendants shall turn 

those documents over to defense counsel who shall review them and 

produce responsive document [sic] on or before 2/15/19.

2. With respect to document relating to Kitchen Fantastic and to 

Appliance Fantastic, on or before 2/15/19 defendants shall produce 

all of the following documents for the period from the sale transaction 

at issue in this case to present:

a. All records relating to any and all compensation paid to any 

employee, officer or independent contractor;

b. All marketing and advertising documents and documents 

relating to marketing and advertising expenses;

c. All leases;

d. All monthly banking records;

e. All documents reflecting gross receipts;

f. All documents relating to any loans.

3. After production of the documents above, Plaintiff shall take the 

deposition of Mr. Lupo. If further documentation is produced after the 

deposition, the court will consider ordering the [sic] Mr. Lupo’s 

deposition be reconvened.

4. On or before 2/15/19, the parties shall meet and confer and resolve 

all issues regarding any forensic examination of cell phones, tablets 

and computers, and any documents requested from plaintiff from 

defendants [sic]. Any remining issues will be addressed at the next 

CMC [i.e., case management conference].

Feb. 7, 2019 Civil Minute Order (“Feb. 2019 Order,” dkt. 69). At the next case management 

conference on February 15, 2019, the parties acknowledged that discussions regarding electronic 

discovery were continuing but expressed no concerns about their ability to resolve the remaining 

issues, except that they might need to extend the deadline to complete depositions. See dkt. 72

(minutes, reflecting no discovery issues).

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C. Sanctions Requested

1. Order Excluding Diligence Materials

The first sanction that Plaintiffs request is an order excluding Defendants from introducing 

any evidence of the documents that Lupo made available for Cardinal to review in binders during 

a meeting at Lupo’s attorney’s office as part of Cardinal’s due diligence investigation before 

purchasing Kitchen Experts. Sanctions Mot. at 15–16. Cardinal was not permitted to keep copies 

of those documents, and they were not produced in discovery. According to Lupo’s June 26, 2019 

deposition testimony, Lupo did not take them with him after the meeting and never saw them 

again. Crawford Decl. re Sanctions (dkt. 116-1) Ex. 11 (Lupo Dep.) at 255:18–25, 257:3–9. 

Plaintiffs argue that such documents are crucial to rebut Defendants’ contention that Cardinal 

should have been aware of any payroll or accounting irregularities at Kitchen Experts as a result of 

the due diligence process, and specifically as a result of Bank of the West and American Express 

account statements included in the diligence materials. Plaintiffs reasonably contend that bank 

records procured later are not a substitute for the actual collection of documents provided for 

Cardinal’s diligence review, because such records do not necessarily reflect what was available for 

Cardinal to review before closing the deal.

Plaintiffs’ motion cites no authority requiring Lupo to have preserved or produced in 

litigation the binders made available during Cardinal’s due diligence review. Sanctions Mot. at 

15–16. Plaintiffs’ reply brief suggests that Lupo’s failure to produce those documents either 

constitutes or evinces a violation of the January 2019 order that Lupo “confirm completion of 

search for documents and records related to Plaintiff Kitchen Experts of California, Inc.’s 

corporate books and records.” Jan. 2019 Order at 1; see Reply re Sanctions (dkt. 119) at 8. 

The only evidence regarding the fate of the diligence binders is: (1) Cardinal’s declaration 

that he was not permitted to keep them; and (2) Lupo’s testimony that he did not take them with 

him and does not know what happened to them. There is no evidence that the binders currently 

exist or that they existed at the time this lawsuit was filed. Other than a letter that defense counsel 

sent to Plaintiffs’ counsel confirming that the search required by the January order had been 

completed—which, as Plaintiffs correctly note, is inadmissible hearsay for the truth of the matter 

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asserted—there is no evidence regarding what, if any, search Lupo conducted for Kitchen Expert’s 

corporate records. Nor is there any indication that Plaintiffs specifically requested these binders, 

as opposed to more general requests for production of, for example, “[a]ll documents and 

communications regarding or relating to . . . the sale of Kitchen Experts.” See Crawford Reply 

Decl. re Sanctions (dkt. 119-1) Ex. 32 (Request No. 6). 

Plaintiffs have not shown that Defendants violated a court order with respect to this issue. 

The January 2019 order narrowly required Lupo to certify that he completed a search for 

documents. Lupo provided a letter to that effect, and despite Plaintiffs having subsequently taken 

Lupo’s deposition, Plaintiffs identify no evidence that the search was inadequate. The Court did 

not order Lupo to produce the particular documents at issue. Plaintiffs therefore have not 

demonstrated that they are entitled to sanctions for violation of a court order under Rules 16 or 37. 

Plaintiffs also have not met the test for spoliation sanctions. The first element of that test 

is that the party to be sanctioned must have had a legal duty to preserve the documents at issue. 

See Apple, 881 F. Supp. 2d at 1138. Plaintiffs have not argued or shown that Lupo had any duty 

to preserve the diligence binders at the time of the sale. In the absence of such a showing, or any 

evidence that the documents survived beyond that point and were destroyed during the pendency 

of this case, Plaintiffs cannot establish spoliation. The request for an order precluding evidence of 

the diligence materials is DENIED, and witnesses for any party may testify regarding their 

recollections of what documents were included in the binders made available for Cardinal’s 

review.

2. Jury Instruction that Lupo Solicited Daza

Plaintiffs seek an instruction that Lupo solicited foreman Luis Daza to work for Kitchen 

Fantastic while Daza was still employed by Kitchen Experts, in violation of a non-solicitation 

provision of the purchase agreement. Sanctions Mot. at 16–18. According to Plaintiffs, this 

sanction is warranted because Defendants have not produced all communications with Daza or 

records of payments to Daza and refused to provide their electronic devices for forensic review. 

Id.

Lupo testified at his deposition that Daza worked for him and for Kitchen Fantastic, with 

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Lupo initially paying Daza personally (for work on “[k]itchens”) before “he came to work for the 

company.” Crawford Decl. re Sanctions Ex. 11 (Lupo Dep.) at 313:10–11, 327:23–328:13. Lupo 

suggested that, by the time of his deposition, he had come to know that Daza was still employed 

by Kitchen Experts when he began working for Lupo and Kitchen Fantastic, but testified that his 

understanding differed at the time of the events in question, because Daza told Lupo that he had 

quit his job with Kitchen Experts. Id. at 313:15–314:22. In an October 16, 2017 text message, 

Daza informed Lupo that he had given his two weeks’ notice resigning from Kitchen Experts, and 

that “Friday”—presumably October 13, 2017—was his last day. Id. at 324:9–17; Pohls Decl. re 

Sanctions (dkt. 118-3) Ex. 16. Lupo testified that Daza had told him the same thing verbally 

before then. Crawford Decl. re Sanctions Ex. 11 (Lupo Dep.) at 324:9–24. There is some 

indication that Lupo and Phelton had reached out to Daza regarding Kitchen Fantastic in 

September of 2017, before Daza sent Lupo the text message regarding his resignation. Id. (Lupo 

Dep.) at 318:12–320:6.

The Court has serious concerns about Lupo’s compliance with his discovery obligations 

regarding financial records. The absence of records of payment to Daza and others for work 

performed less than six months before Plaintiffs filed this action is unusual, and Lupo’s vague and 

evasive answers at his deposition regarding his efforts to locate and produce such records do not 

inspire confidence. See id. (Lupo Dep.) at 305:2–12.3 Nevertheless, Plaintiffs have identified no 

evidence that any records of payment to workers that the Court ordered produced in fact existed at 

the time of the Court’s orders. Absent such evidence, Plaintiffs have not shown that Defendants 

violated the orders in that respect. Nor have Plaintiffs identified evidence that such records 

 

3 The relevant portion of the transcript reads as follows:

Q: Got it. And you’re paying [individuals performing work for 

Kitchen Fantastic] from a personal account under your name? 

A: Yes.

Q: Okay. And do you recall whether you looked for copies of those 

personal checks before today? 

A: I might have.

Q: Okay. And do you recall whether they have been produced in this 

action?

A: I don’t know.

Crawford Decl. re Sanctions Ex. 11 (Lupo Dep.) at 305:2–12.

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existed at a time when Defendants had a duty to preserve them, as would be required for sanctions 

based on spoliation. The Court therefore declines to impose a jury instruction as a sanction for 

Defendants’ failure to produce payment records. Plaintiffs may, however, question Lupo and 

others about the lack of such records at trial, and the jury may draw inferences from their absence 

as it sees fit.

The Court also has concerns regarding the scope of Defendants’ production of text 

messages and other communications. Defendants’ produced electronic communications solely in 

the form of screenshot images, without any associated metadata, and in some cases without 

indication of the date and time that messages were sent or received. See Crawford Decl. re 

Sanctions ¶ 24. Lupo—who filed his answer (dkt. 14) to Plaintiffs’ complaint on February 9, 

2018, while represented by counsel—has been unable to locate emails in his personal Comcast 

account predating March 14, 2018, ostensibly as a result of the account having been “hacked” by 

an unknown person. Lupo Decl. re Sanctions (dkt. 118-2) ¶ 5; Opp’n to Sanctions Mot. (dkt. 118)

at 2 n.1; Crawford Decl. re Sanctions Ex. 13 (Jan. 23, 2019 letter from defense counsel). Certain 

messages sent between defendants were only located by one of the parties to the message, and 

were not included in the other party’s production. See, e.g., Sanctions Mot. at 19; Crawford Decl. 

re Sanctions Ex. 5 (D’Anna Dep.) at 281:25–282:12; Crawford Decl. re D’Anna & Appliance 

MSJs (dkt. 104) ¶ 9 (collectively indicating that D’Anna produced only one page of text messages 

between her and Lupo, which Lupo produced seventy-two pages of messages between D’Anna 

and Lupo, an assertion not disputed in Defendants’ opposition to the motion for sanctions). Under 

these circumstances, Plaintiffs’ concerns about Defendants’ production of electronic 

communications are reasonable.4

 

4 Plaintiffs might also have had reason to doubt whether Defendants complied with their discovery 

obligations as a result of not receiving verifications signed by Michael and D’Anna of their 

discovery responses, which the Court’s January 2019 order had required, even after Plaintiffs’ 

attorney flagged that issue. See Crawford Decl. re Sanctions ¶¶ 15–16, 19 & Exs. 16–17, 20. 

Defense counsel has now produced verifications apparently signed by Michael and D’Anna at the 

time the responses were served, sent to defense counsel within the weeks following service of the 

responses, but never provided to Plaintiffs’ counsel, although defense counsel states that he 

“assured” Plaintiffs’ counsel by telephone that the verifications had been signed. Pohls Decl. re 

Sanctions ¶¶ 2–4 & Ex. 1. While Plaintiffs’ counsel does not now dispute that the verifications 

were signed as defense counsel states, defense counsel’s inexplicable failure to comply with the 

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That being said, the Court is not persuaded that a jury instruction is an appropriate 

sanction. There is no evidence that Defendants in fact withheld any communications regarding 

Daza’s employment, or that they failed to preserve any such communications at a time when they 

had a duty to do so. Plaintiffs have a strong argument that Defendants failed to comply with the 

Court’s February 2019 order that the parties “meet and confer and resolve all issues regarding the 

forensic examination of cell phones, tablets and computers, and any documents requested from 

plaintiff from defendants [sic].” See Feb. 2019 Order ¶ 4. After the parties had begun to negotiate 

regarding this issue, Plaintiffs’ counsel sent defense counsel a proposal for forensic examination 

on March 5, 2019, but Defendants never responded to that proposal and never made their devices 

available for review. Crawford Decl. ¶ 22. But Plaintiffs waited to raise the issue of that 

noncompliance until the present motion filed August 9, 2019—more than five months after the 

proposal to which Defendants failed to respond, two months after the repeatedly extended deadline 

to complete non-expert depositions, and days after briefing concluded on Defendants’ motions for 

summary judgment. This despite the Court’s February 7, 2019 order that any issues the parties 

could not resolve regarding forensic examination should be raised at the subsequence case 

management conference on February 15, 2019. Plaintiffs offer no explanation for this delay. 

This Court’s local rules require that any motion for sanctions “must be made as soon as 

practicable after the filing party learns of the circumstances that it alleges make the motion 

appropriate.” Civ. L.R. 7-8(c). The circumstances here illustrate one reason for that rule. If 

Plaintiffs had raised the breakdown in communication regarding forensic examination earlier, the 

Court would likely have ordered Defendants to respond to Plaintiffs’ proposal, or ordered 

Defendants to submit to a reasonable examination of their devices, likely combined with an order 

that Defendants pay Plaintiffs’ attorneys’ fees for the arduous process. The same is true of 

Defendants’ failure to produce electronic communications in a form that preserved relevant 

metadata. Instead, the parties represented to the Court at the February 15, 2019 case management 

conference that they were on a path towards resolving any remaining issues with electronic 

 

basic requirement of providing verified responses at the time the responses were served appears to 

have contributed to the degree of mistrust now pervading the case.

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discovery. No party raised any such issue in the months since then until the briefing on the 

present motions. At this point, an order requiring forensic examination of devices would be

tantamount to reopening discovery after the briefing on summary judgment has closed and with 

little time remaining before trial. The Court declines to do so.

Because Plaintiffs have not shown a likelihood that communications wrongfully withheld 

from production (to the extent any communications have been) would support the factual assertion 

of their proposed jury instruction, and because Plaintiffs’ own delay in raising the issue has 

precluded the possibility of lesser, more appropriate sanctions, the motion for a jury instruction 

regarding Lupo’s solicitation of Daza to work for Kitchen Fantastic while he was employed by 

Kitchen Experts is DENIED. If Plaintiffs wish to question Defendants at trial about gaps in their 

production of documents, they may do so.

3. Jury Instruction Regarding Brach of Duties to Kitchen Experts

Plaintiffs seek a jury instruction related to their claims for breach of duties owed to 

Kitchen Experts, although the precise instruction they seek varies depending where one looks in 

their motion. The lists included in Plaintiffs’ notice of motion and in their proposed order, as well 

as a heading in their memorandum of points and authorities, refer to a “[j]ury instruction that 

Phelton and Daza breached their fiduciary duties to Kitchen Experts.” See, e.g., Sanctions Mot. at 

18. The body of their argument, however, “request[s] that the jury be instructed that Lupo and 

Kitchen Experts induced Daza and Phelton to breach their duties of loyalty to Kitchen Experts.” 

Id. at 19. The latter instruction is more consistent with Plaintiffs’ characterization of their claims 

in their complaint and particularly in their opposition to Phelton’s motion for summary judgment, 

where Plaintiffs emphasize that the claim is based on an employee’s duty of loyalty rather than on 

a fiduciary duty. See, e.g., Opp’n to Phelton MSJ (dkt. 86) at 7; Compl. ¶¶ 98–106.

Defendants represented to Plaintiffs that Phelton replaced his mobile phone in September 

or October of 2017 without retaining the previous phone, and replaced it again in September or 

October of 2018, again without retaining the previous phone. Crawford Decl. re Sanctions Ex. 13. 

Phelton states in his declaration that each time he replaced his phone, he understood that all of the 

data on the old phone was transferred to the new phone. Phelton Decl. re Sanctions (dkt. 118-1)

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¶¶ 2, 5. In March of 2018, however, Phelton visited an Apple Store to complain about problems 

with his phone’s navigation functions, and an Apple employee instructed him that it would be 

necessary to reset the phone to its factory settings. Id. ¶ 3(1).5 Phelton states that he “took those 

steps the Apple representative identified for [him] to back-up all of the electronically stored 

information on [his] cell phone” before resetting the phone, but nevertheless discovered after the 

phone had been reset “that some of that electronically stored information—in particular, [his] 

phone call records and text messages—had not been backed-up and were no longer on [his] cell 

phone.” Id. ¶ 3(2). Phelton was served with the complaint in this action in January of 2018 (by 

substitute service on a person in charge at his place of business followed by mailing), first 

obtained counsel on April 19, 2018, and answered Plaintiffs’ complaint on April 20, 2018. See 

dkts. 25, 32; Phelton Decl. re Sanctions ¶ 4. 

Plaintiffs have offered no argument or evidence showing that Phelton had a duty to 

preserve communications when he replaced his phone in 2017. The Court declines to impose any 

sanctions for that conduct.

Phelton’s conduct in resetting his phone in March of 2018, which in fact resulted in a loss 

of data, is a closer call. Phelton had at that time been served with Plaintiffs’ complaint and does 

not claim to have been unaware of this action. Phelton therefore should have taken reasonable 

steps to preserve electronically stored information. See Fed. R. Civ. P. 37(e) (discussing the duty 

to “take reasonable steps to preserve” electronically stored information “in the anticipation or 

conduct of litigation”). On the other hand, Phelton was not represented by counsel at the time, and 

claims to have followed instructions from an Apple representative to back up his data before 

resetting the phone, even though those instructions proved ineffective. See Phelton Decl. re 

Sanctions ¶¶ 3(2), 4. With no evidence to contradict Phelton’s explanation of what happened, the 

Court cannot say that his conduct—which, according to his declaration, he believed would be 

sufficient to preserve his data—was unreasonable for an unrepresented litigant.

Phelton’s replacement of his phone in the fall of 2018 also raises concerns. Phelton had 

 

5 Phelton’s declaration includes two paragraphs bearing the number 3, which are designated in this 

order as 3(1) and 3(2).

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been represented by counsel for several months by that time, and should have taken more rigorous 

steps to preserve his data than simply transferring it to a new phone and discarding the old one. 

Nevertheless, Plaintiffs have not shown prejudice as a result of the 2018 phone replacement. 

There is no indication that data was in fact lost in the process; Plaintiffs do not dispute that 

Phelton has access to communications dating back to March of 2018. While Phelton’s conduct 

discarding a phone that he used might have affected the ability for a forensic examination to show 

past deletion or manipulation of data, no such examination occurred, due in part to Plaintiffs’ own 

lack of diligence in pursuing the issue, as discussed above in the context of the previous jury 

instruction sought in Plaintiffs’ motion. The hypothetical effect that Phelton’s phone replacement 

might have had on a forensic examination that never occurred is not cognizable prejudice. The 

motion for this jury instruction is DENIED. Plaintiffs may question Phelton about the loss of his 

data at trial if they so choose.

4. Jury Instructions that D’Anna Was Appliance Fantastic’s Agent

Plaintiffs seek a jury instruction that D’Anna was acting as Appliance Fantastic’s agent 

when she made purportedly defamatory statements to AAO’s customers and vendors. Sanctions

Mot. at 19–21. In light of the Court’s holding below that Defendants are entitled to summary 

judgment on Plaintiffs’ trade libel claims for reasons unrelated to agency, the jury instruction 

specifically requested is moot. 

Plaintiffs also request an instruction that D’Anna was acting as Appliance Fantastic’s agent 

when she accessed an email account that Plaintiffs contend was owned by AAO, purportedly in 

violation of the Stored Communications Act. Id. at 21–22. Plaintiffs arguments for that 

instruction consist solely of identifying “significant direct and circumstantial evidence that 

D’Anna was acting pursuant to an agreement with Lupo for the benefit of Appliance Fantastic.” 

Id. at 22. The existence of evidence is not grounds for imposing a jury instruction as a discovery 

sanction. Nevertheless, because Plaintiffs’ arguments in favor of the former proposed instruction 

regarding the trade libel claim, which is moot, could also be applied to the proposed instruction 

regarding the Stored Communication Act claim, which is not, the Court addresses those 

arguments.

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Plaintiffs seek this sanction based on D’Anna’s failure to produce complete records of her 

communications—particularly with Lupo and with Riggs Distributing representative Bob 

Hostetler—as well as payment records that “tend to show when D’Anna became an agent of 

Appliance Fantastic.” Sanctions Mot. at 20–21.6 Although the gaps in D’Anna’s records raise 

concerns, Plaintiffs have not shown that the documents at issue existed at any time that D’Anna 

had a duty to preserve them. Plaintiffs also have not offered any explanation for bringing the 

present motion months after discovery closed, rather than “as soon as practicable” as required by 

Local Rule 7-8, which would have preserved the option of imposing lesser sanctions to explore 

whether any such documents still exist or could be recovered. The motion for these instructions is 

DENIED.

5. Jury Instruction Regarding Unfair Competition

Plaintiffs seek a jury instruction that Kitchen Fantastic and Appliance Fantastic engaged in 

unfair competition as a sanction for Defendants’ failure to produce records of “off-payroll” 

payments that several witnesses testified occurred. Sanctions Mot. at 23–24. As Defendants 

correctly note, California’s Unfair Competition Law generally provides only for equitable relief, 

and claims under that statute are generally tried to the court rather than to a jury. See, e.g., People 

v. Bhakta, 162 Cal. App. 4th 973, 979 (2008) (citing Hodge v. Superior Court, 145 Cal. App. 4th 

278, 284 (2006)).7 Plaintiffs do not address this issue in their reply. 

The Court construes the motion as asking the Court to accept as proven that Defendants 

paid workers off payroll to avoid otherwise mandatory deductions from the employees’ 

paychecks. There is no real dispute that such payments occurred, including well into 2018, and 

 

6 Plaintiffs also argue that D’Anna “refused to identify customers and suppliers with whom she 

interacted.” Sanctions Mot. at 21. Plaintiffs have not identified any court order requiring D’Anna 

to identify customers, or any other authority that would justify imposing sanctions for such a 

refusal. Plaintiffs cite the January 2019 order, id. (citing dkt. 66), but that order did not on its face 

require D’Anna to produce documents identifying customers or suppliers.

7 A recent California appellate decision held that there can be a limited right to a jury trial on 

issues of liability in a “government enforcement action seeking statutory penalties” under the 

UCL. See generally Nat’l Biweekly Admin., Inc. v. Superior Court, 24 Cal. App. 5th 438 (2018). 

The California Supreme Court granted review of that decision and has not yet issued its own 

decision. See Nat’l Biweekly Admin., Inc. v. Superior Court, 426 P.3d 302 (Cal. 2018) (granting 

review). This potential exception to the general rule is not relevant here—the present case is not a 

government enforcement action seeking statutory penalties.

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that not all of the checks are accounted for in Defendants’ document production. See, e.g., 

Crawford Dec. re Sanctions Ex. 2 (Ohelo Dep.) at 131:23–132:23 (testimony that Ashton Ohelo

received payments from Lupo from when he started working for Kitchen Fantastic in late 2017 or 

early 2018 until he was added to formal payroll in August of 2018); id. Ex. 4 (Phelton Dep.) at 

226:11–231:24 (describing checks received outside of the payroll system, including in late 2018); 

see also id. Ex. 6 (D’Anna Dep.) at 304:6–309:12 (somewhat equivocal and contradictory 

testimony as to whether D’Anna received payment in 2018 other than formal payroll and 

commissions paid directly by vendors). Moreover, because at least some payments that are 

unaccounted for in Defendants’ document production continued into 2018 after this action was 

filed and Defendants were represented by counsel, there is no question that Defendants were 

subject to a duty to preserve those records. Defendants either failed to do so or failed to produce 

them as required by the February 2019 order.

The fact remains that Plaintiffs failed to bring this motion until well after discovery closed, 

violating Local Rule 7-8 and depriving the Court of the potential to order other forms of effective 

relief. Because the record appears to be clear that such payments occurred,8the need for an 

evidentiary sanction accepting that fact as proven might well be moot. For the moment, the Court 

DENIES Plaintiffs’ motion for this sanction, without prejudice to Plaintiffs renewing the motion 

after trial if necessary.9

6. Attorneys’ Fees

Plaintiffs seek their attorneys’ fees for bringing the present motion pursuant to Rule 

37(b)(2)(C), which provides that where a party has violated a court order, “the court must order 

the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, 

including attorney’s fees, caused by the failure, unless the failure was substantially justified or 

other circumstances make an award of expenses unjust.” See Fed. R. Civ. P. 37(b)(2)(C). 

 

8 Plaintiffs have not moved for partial summary judgment on this or any other issue.

9 Plaintiffs also argue that Defendants failed to produce Kitchen Fantastic’s tax returns for 2017. 

Sanctions Mot. at 24. Defendants objected to producing the tax returns, and Plaintiffs have not 

identified any order requiring them to do so. The Court declines to impose sanctions for failure to 

produce the tax returns.

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Although the Court declines to grant much of Plaintiffs’ motion, the Court concludes that 

Defendants failed to comply with, at least, the February 2019 order to “meet and confer and 

resolve all issues regarding any forensic examination of cell phones, tablets and computers, and 

any documents requested from plaintiff from defendants [sic].” February 2019 Order. Defendants 

argue that they complied by initially meeting and conferring regarding a potential procedure for 

forensic examination. Opp’n to Sanctions Mot. at 4–5. The Court’s order called for the parties to 

negotiate the issue to a resolution, which they did not do. While failure to reach a resolution could 

be excused if the parties reached an impasse after negotiating in good faith, the record does not 

reflect that. Plaintiffs offer undisputed evidence that, at Defendants’ request, Plaintiffs provided a 

proposal for a review process, but Defendants never responded. Crawford Decl. re Sanctions ¶ 22. 

Responsibility for the breakdown in the meet-and-confer process required by the Court’s order 

therefore lies with Defendants. The motion is GRANTED as to fees incurred as a result of that 

violation.

Plaintiffs seek their attorneys’ fees for preparing the present motion, most of which is not 

attributable to Defendants’ failure to continue negotiations regarding forensic review. Instead, the 

Court awards Plaintiffs their attorneys’ fees for the preparing the proposal to which Defendants 

failed to respond, and for any subsequent work related to Defendants’ failure to continue 

negotiations, including preparing the portions of the present motion addressing that issue. 

Plaintiffs are ORDERED to provide a calculation of such fees to Defendants within one week of 

this order. Defendants shall respond within three business days. If Defendants object to the 

calculation of fees, the parties shall meet and confer and attempt to reach an agreement. Within 

three weeks of this order, the parties shall file either a stipulation as to the amount of fees awarded, 

or separate statements not exceeding three pages addressing any areas of disagreement as to the 

calculation of fees. The Court will not reconsider the categories of work for which fees are 

awarded.10

 

10 Although, as noted above, Plaintiffs failed to comply with the timeliness requirement of Local 

Rule 7-8, Plaintiffs would have been entitled to the same attorneys’ fees regardless of when they 

had brought the motion, and there is no prejudice to Defendants in imposing this sanction later 

rather than earlier in the case.

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V. MOTIONS FOR SUMMARY JUDGMENT

A. Legal Standard

Summary judgment on a claim or defense is appropriate “if the movant shows that there is 

no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 

law.” Fed. R. Civ. P. 56(a). In order to prevail, a party moving for summary judgment must show 

the absence of a genuine issue of material fact with respect to an essential element of the nonmoving party’s claim, or to a defense on which the non-moving party will bear the burden of 

persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

Once the movant has made this showing, the burden then shifts to the party opposing 

summary judgment to designate “‘specific facts showing there is a genuine issue for trial.’” Id. 

(citation omitted); see also Fed. R. Civ. P. 56(c)(1) (“A party asserting that a fact . . . is genuinely 

disputed must support the assertion by . . . citing to particular parts of materials in the record 

. . . .”). “[T]he inquiry involved in a ruling on a motion for summary judgment . . . implicates the 

substantive evidentiary standard of proof that would apply at the trial on the merits.” Anderson v. 

Liberty Lobby Inc., 477 U.S. 242, 252 (1986). The non-moving party has the burden of 

identifying, with reasonable particularity, the evidence that precludes summary judgment. Keenan 

v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). Thus, it is not the task of the court to scour the 

record in search of a genuine issue of triable fact. Id.; see Carmen v. S.F. Unified Sch. Dist., 237 

F.3d 1026, 1031 (9th Cir. 2001); Fed. R. Civ. P. 56(c)(3). 

A party need not present evidence to support or oppose a motion for summary judgment in 

a form that would be admissible at trial, but the contents of the parties’ evidence must be amenable 

to presentation in an admissible form. See Fraser v. Goodale, 342 F.3d 1032, 1036−37 (9th Cir. 

2003). Neither conclusory, speculative testimony in affidavits nor arguments in moving papers 

are sufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ’g Co., 

Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). On summary judgment, the court draws all 

reasonable factual inferences in favor of the non-movant, Scott v. Harris, 550 U.S. 372, 378 

(2007), but where a rational trier of fact could not find for the non-moving party based on the 

record as a whole, there is no “genuine issue for trial” and summary judgment is appropriate. 

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Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986).

B. Bryce Phelton’s Motion

Phelton moves for summary judgment on the only claim against him, that he breached a 

duty of loyalty to Kitchen Experts. See generally Phelton MSJ (dkt. 81); Compl. ¶¶ 98–102. The 

only argument presented in Phelton’s motion is that California law recognizes no tort for breach of 

duty of loyalty separate from breach of fiduciary duty, and Plaintiffs have not shown that Phelton 

owed a fiduciary duty to Kitchen Experts. Phelton MSJ at 3–4 (relying on Mattel, Inc. v. MGA 

Entm’t, Inc., No. CV 04-9049 DOC (RNBx), 2011 WL 8427611 (C.D. Cal. Mar. 28, 2011)). 

Phelton is correct that the district court in Mattel declined to recognize a cause of action for 

breach of duty of loyalty by an employee absent any fiduciary duty. See Mattel, 2011 WL 

8427611, at *2–3 (“Mattel’s request that the Court adopt a broad and vague extra-contractual 

common law duty that binds all employees in all aspects of their employment, is denied.”). As 

Plaintiffs note in their opposition brief, however, the Mattel case represents a minority view that 

has been explicitly rejected in subsequent district court decisions. Opp’n to Phelton MSJ; see, 

e.g., Becquer v. Mirantis, Inc., No. CV 18-1072(DSD/HB), 2018 WL 4654748, at *3 (D. Minn. 

Sept. 27, 2018) (considering arguments regarding California law); E.D.C. Techs., Inc. v. Seidel, 

216 F. Supp. 3d 1012, 1016 (N.D. Cal. 2016); Integral Dev. Corp. v. Tolat, No. C 12-06575 JSW, 

2013 WL 5781581, at *3 (N.D. Cal. Oct. 25, 2013); Zayo Grp. LLC v. Hisa, No. SACV 

13-752-JST (JPRx), 2013 WL 12201401, at *7 (C.D. Cal. Sept. 17, 2013). In a decision predating 

Mattel, Judge Illston held that “the California Supreme Court would likely follow the Restatement 

[of Agency] to recognize that [even] a lower-level employee, such as a sales clerk or a laborer, 

owes a duty of loyalty to his employer” capable of supporting a claim for breach of that duty. 

Otsuka v. Polo Ralph Lauren Corp., No. C 07-02780 SI, 2007 WL 3342721, at *2–3 (N.D. Cal. 

Nov. 9, 2007) (citing Eckard Brandes, Inc. v. Riley, 338 F.3d 1082, 1085–86 (9th Cir. 2003)

(reaching the same conclusion with respect to Hawaii law); Stokes v. Dole Nut Co., 41 Cal. App. 

4th 285, 295 (1995) (recognizing a duty of loyalty in a case involving managerial employees, 

without indicating that the duty was limited managers); Fowler v. Varian Assocs., Inc., 196 Cal. 

App. 3d 34, 41 (1987) (same)). Phelton does not address those authorities in a reply brief, instead 

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filing a “statement in lieu of reply” asserting, incorrectly, that Plaintiffs did not file an opposition 

brief. See dkt. 93; cf. Opp’n to Phelton MSJ.

Otsuka’s interpretation of Eckard, Stokes, Fowler, and the Restatement is more persuasive 

than Mattel’s reliance on the general policy against imposing common law tort duties on an 

employment relationship. This Court therefore follows the majority view that California law 

recognizes a claim for breach of an employee’s duty of loyalty while still employed. As Phelton 

presents no other arguments in his motion, the motion is DENIED.

C. Moheba D’Anna’s Motion

D’Anna moves for summary judgment on the three claims asserted against her, for trade 

libel, interference with contractual relations, and violation of the Stored Communication Act. For 

the reasons discussed below, D’Anna’s motions is GRANTED with respect to trade libel and 

interference with contractual relations, but DENIED as to the Stored Communications Act.

1. Trade Libel Claim

California courts have explained the doctrine of trade libel as follows:

“Trade libel is the publication of matter disparaging the quality of 

another’s property, which the publisher should recognize is likely to 

cause pecuniary loss to the owner. [Citation.] The tort encompasses 

‘all false statements concerning the quality of services or product of 

a business which are intended to cause that business financial harm 

and in fact do so.’ [Citation.] [¶] To constitute trade libel, a statement 

must be false.”

City of Costa Mesa v. D’Alessio Invs., LLC, 214 Cal. App. 4th 358, 376 (2013) (quoting 

ComputerXpress, Inc. v. Jackson 93 Cal. App. 4th 993, 1010 (2001)) (alteration in original).

Plaintiffs base this claim on two emails that D’Anna sent after she was fired. First, 

D’Anna sent the following email to two individuals at Riggs Distributing on October 17, 2017:

Good morning.

With some dramatic changes at American Appliance, I would like to 

inform Riggs and my friends at Riggs, Bob and Nikki, that I am no 

longer part of American Appliance team. It was a great journey for 

me and I came across so many beautiful people that I can look up to 

and respect. It was a great pleasure working with every single one, 

(Lee, JJ and Elizabeth) and want to thank you for giving me the 

opportunity to be part of the Subzero, Wolf and Asko family, thank 

You Grant and Bob Riggs for the trust.

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With the substantial changes and unethical process at American 

Appliance, morally I can not continue working with the new team. I 

once believed in this company and the people but time has came 

where I have to walk away from the company I built.

Again, thank you for your support and encouragement over the past 

years. I hope our paths will cross again in future endeavors.

Moheba D’Anna

Franchini Decl. re D’Anna & Appliance MSJs (dkt. 103) Ex. L. Riggs had terminated its 

relationship as a supplier of AAO by that time, and the parties dispute whether there was any 

discussion or possibility of the relationship resuming.

Second, D’Anna sent the following email to an individual named Shantel on October 18, 

2017:

Hello Shantel,

I’m no longer with American Appliance. Here is a company that I 

trust and can help you out. call Rose and tell them D’Anna sent you 

and she will definitely help you out. She can be reached at 209-624-

3305.

D’Anna

Franchini Decl. re D’Anna & Appliance MSJs Ex. H. In her declaration, D’Anna describes 

Shantel as a sales representative of Bay Area News Group, which AAO used as an advertising 

outlet. D’Anna Decl. re D’Anna MSJ (dkt. 89-1) ¶ 4. The previous email in D’Anna’s exchange 

with Shantel, however, includes references to particular kitchen products only available as a 

special order, and is at least amenable to an interpretation that Shantel was interested in purchasing 

those products from AAO. Franchini Decl. re D’Anna & Appliance MSJs Ex. H.

D’Anna argues that she cannot be held liable for her statements that a different company 

was “a company that [she] trust[s]” and that AAO was “unethical” because those are statements of 

opinion, relying on a California appellate court’s decision in Hofmann Co. v. E. I. Du Pont De 

Nemours & Co., 202 Cal. App. 3d 390, 403 (1988). See D’Anna & Appliance Reply (dkt. 109) at 

2 (citing Hofmann). The strict rule against imposing liability for statements of opinion as 

discussed in that case has since been abrogated. See Kahn v. Bower, 232 Cal. App. 3d 1599, 

1606–07 (1991) (recognizing that Hofman has been abrogated by Milkovich v. Lorain Journal Co., 

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497 U.S 1 (1990)). Instead, the question is whether D’Anna’s statements could be construed as 

“‘implying a provably false factual assertion.’” Id. at 1607 (quoting Moyer v. Amador Valley Joint 

Union High Sch. Dist., 225 Cal. App. 3d 720, 724 (1990)). Statements of opinion are still not 

generally actionable, but “where an expression of opinion implies a false assertion of fact, the 

opinion can constitute actionable defamation.” Summit Bank v. Rogers, 206 Cal. App. 4th 669, 

696 (2012); see also Wong v. Jing, 189 Cal. App. 4th 1354, 1370 (2010). Whether the statement 

could be construed as implying an assertion of fact is a question of law for the Court. Summit 

Bank, 206 Cal. App. 4th at 696. 

D’Anna’s statement that a competitor of AAO was “a company that [she] trust[s]” does not 

support a claim for trade libel, both because it is a statement of opinion that does not clearly imply 

any disprovable fact, and because there is no evidence that it is false. Whether the statement could 

be taken as implying a lack of trust in the new management of AAO is of no consequence—

D’Anna was free to place her trust in whichever companies she saw fit, and at least absent any 

non-disparagement contract, she was free to express her opinions as to which companies she 

trusted.

The question of whether D’Anna’s email to Riggs either includes or implies a false 

statement of fact is a closer call. At the very least, the email likely implies that D’Anna left AAO 

voluntarily based on a difference of opinion, which is not true—there is no dispute that D’Anna 

was fired. See D’Anna Decl. re D’Anna MSJ ¶ 3. Describing a party as “unethical” can also 

support a claim in at least some circumstances. See Mamou v. Trendwest Resorts, Inc., 165 Cal. 

App. 4th 686, 728 (2008) (“Even the statements on which Trendwest focuses for this argument—

that Mamou lacked integrity, that he was unethical—could be found to convey an actual 

imputation of fact if they implied the speaker's possession of undisclosed supporting facts.”). 

The larger issue with D’Anna’s email to Riggs personnel is that Plaintiffs have not offered 

evidence of any harm that resulted from it. To support a claim for trade libel, a false statement not 

only must be “intended to cause [a] business financial harm,” but also must “in fact do so.” Costa 

Mesa, 214 Cal. App. 4th at 376. Riggs terminated its dealer agreement with AAO before AAO 

fired D’Anna and before she sent the email at issue. See Pohl’s Decl. re D’Anna MSJ Ex. 2 (letter 

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from Riggs dated October 3, 2017). As Plaintiffs concede in their opposition brief, their “burden” 

is to show that “D’Anna’s publication played a material part in AAO’s loss of a prospective dealer 

agreement with Riggs,” or in other words, a material part in AAO’s failure to secure a new 

agreement after Riggs terminated the agreement that had been in place when Cardinal bought the 

business. Opp’n to D’Anna MSJ (dkt. 101) at 5. The evidence they offer shows at most that 

Cardinal was attempting to secure a new agreement. See Cardinal Decl. re D’Anna & Appliance 

MSJs (dkt. 105) ¶ 9 (“As of the time AAO terminated Ms. D’Anna’s employment . . . AAO and 

Riggs were in good-faith discussions regarding the renewal of the Dealer Agreement.”); Crawford 

Decl. re D’Anna & Appliance MSJs Ex. Q (text message conversation dated October 10, 2017 

including messages from Cardinal stating, “As of when that letter came in, we can’t place any new 

orders from Riggs. We’re working on getting a new account set up with them, but until that’s 

confirmed, we can’t place any new orders - we can only work with old orders that were placed on 

or [message cuts off at end of page]”).11 

There is no evidence that such discussions had any chance of success. To the contrary, 

Riggs representative Robert Hostetler testified at his deposition that he “felt both [Cardinal] and 

Moheba [D’Anna] were not being forthcoming” in a meeting with them before Cardinal 

completed his purchase of AAO. Pohl’s Reply Decl. re D’Anna MSJ Ex. A (Hostetler Dep.) at 

93:5–10 (emphasis added); see also id. at 94:9–11 (“[B]ut I could tell just from the meeting that --

that neither one of ’em were being forthcoming.”). Hostetler testified that he attempted to steer 

the conversation to business, including the fact that the Riggs dealer agreement was not 

transferable and would not remain with AAO if Cardinal bought the company, while “Mr. 

Cardinal talked about dog showers.” Id. at 92:25–94:4. According to Hostetler, D’Anna’s email 

did not affect his impression of the new ownership of AAO “[b]ecause [Hostetler] had already had 

 

11 Cardinal notes in his declaration that even after the termination of the dealer agreement, AAO 

was able to purchase goods from Riggs on a cash-in-advance basis, but was unable to do so “after 

November 2017.” Cardinal Decl. re D’Anna & Appliance MSJs ¶¶ 9–10. To the extent 

Cardinal’s declaration could be construed as implying that D’Anna’s email prompted Riggs to 

revoke AAO’s ability to buy goods cash-in-advance, the record does not support such a chain of 

causation. Riggs’s October 3, 2017 termination letter expressly stated that AAO would retain the 

right to purchase goods cash-in-advance only until November 3, 2017. Pohl’s Decl. re D’Anna 

MSJ Ex. 2.

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that meeting with Mr. Cardinal.” Id. at 112:7–13. Hostetler summarized the meeting as follows: 

“It was one of the worst meetings I’ve ever been in, actually, in 30 years. It was terrible.” Id. at 

93:8–10. Riggs later terminated the dealer agreement upon learning that Cardinal had bought 

AAO.

Hostetler testified that Riggs was not in discussions with AAO about renewing the 

agreement when D’Anna sent the email at issue. Id. at 112:18–20. After Riggs terminated the 

dealer agreement upon learning that Cardinal purchased AAO, Hostetler eventually had a meeting 

with Cardinal’s business partner James Franchini (after Franchini visited the Riggs office on three 

consecutive days seeking such a meeting), which Hostetler also characterized as “terrible,” with 

Franchini becoming “aggressive” and “belligerent” and “saying some really derogatory things” 

about D’Anna, including “accus[ing] her of being a terrorist.” Id. at 113:2–114:18, 145:16–

146:24, 148:17–22. Hostetler became uncomfortable and asked Franchini to leave the building, 

which Franchini initially refused to do. Id. at 114:19–21.

Even taking into account Hostetler’s testimony that “the conversation [he] had with Jim 

[Franchini] wasn’t that we weren’t ever going to sell him goods or open him up as a dealer,” id. at 

145:9–11, there is no evidence in the record from which a reasonable jury could conclude that 

D’Anna’s email was a substantial factor in Plaintiffs’ failure to renew AAO’s dealer agreement 

with Riggs. Because neither D’Anna’s email to Shantel nor her email to Riggs supports a claim 

for trade libel, D’Anna’s motion for summary judgment on this claim is GRANTED.

2. Interference with Contractual Relations

The eighth claim of Plaintiffs’ complaint, asserted by Kitchen Experts for interference with 

contractual relations, includes D’Anna as well as Lupo in a heading, but includes allegations only 

regarding Lupo’s conduct, with no other mention of D’Anna. Compl. ¶¶ 86–91. D’Anna notes 

that lack of allegations and asserts that she had no relationship whatsoever with Kitchen Experts. 

D’Anna MSJ (dkt. 89) at 5–6. In their opposition brief, “Plaintiffs do not contest D’Anna’s 

motion with respect to [this] cause of action,” conceding that the complaint lacks allegations that 

she interfered with any Kitchen Experts contract, and stating that “D’Anna [sic, presumably 

intended as ‘Kitchen Experts’ or ‘Plaintiffs’] applies for approval of this Court to dismiss this 

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Cause of Action against D’Anna.” Opp’n to D’Anna MSJ at 14 (capitalization altered in the first 

quotation). D’Anna’s motion is GRANTED as to this claim.

3. Stored Communications Act Claim

AAO’s claim under the Stored Communications Act asserts that D’Anna violated 18 

U.S.C. §§ 2701, which, in conjunction with 18 U.S.C. § 2707, “provides a cause of action against 

anyone who ‘intentionally accesses without authorization a facility through which an electronic 

communication service is provided . . . and thereby obtains, alters, or prevents authorized access to 

a wire or electronic communication while it is in electronic storage.’” Theofel v. Farey-Jones, 359

F.3d 1066, 1072 (9th Cir. 2004) (quoting 18 U.S.C. § 2701(a)). There is no dispute that D’Anna 

continued to access and use the “aao_outlet@yahoo.com” email address for some time after she 

was fired. The parties dispute whether the email address belonged to AAO, in which case 

D’Anna’s use of it was without authorization, or belonged to D’Anna personally, in which case 

her continued use was legitimate (and AAO’s subsequent steps to block D’Anna’s access to the 

account and use the account itself would not be legitimate, although no party has asserted a claim 

based on that conduct). See D’Anna MSJ at 6; Appliance MSJ (dkt. 91) at 4–6.

After AAO fired D’Anna on October 16, 2017, see Franchini Decl. re D’Anna & 

Appliance MSJs ¶ 10, she continued to access the email account “aao_outlet@yahoo.com” and 

replied to several emails that AAO customers sent to that account. Some of those replies simply 

informed the customers that D’Anna was no longer employed by AAO and directed them to other 

AAO personnel. See D’Anna Decl. re D’Anna MSJ Ex. 1. In one instance, however D’Anna told 

a customer who inquired about an order to contact “Rose from AAO” and provided a telephone 

number, without informing the customer that Rose worked for a competing company that also 

used the initials AAO—Adell Appliance Outlet, not American Appliance Outlet. Franchini Decl.

re D’Anna & Appliance MSJs ¶ 14 & Ex. F. As discussed above in the context of trade libel, 

D’Anna also emailed an individual named Shantel to state that Rose was with “a company that 

[D’Anna] trust[s]” and “can help [Shantel] out.” Id. Ex. H. These examples are intended only to 

illustrate D’Anna use of the account in a manner to which AAO might reasonably object; because 

the parties’ dispute centers on ownership of the account, this order need not recount the full scope 

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of D’Anna’s use of the account after she was fired. On October 20, 2017, an AAO representative 

contact D’Anna by text message and requested the password for the account, but D’Anna refused 

to provide it, stating that it was her personal account and AAO had no right to access it. D’Anna 

Decl. re Appliance MSJ (dkt. 91-1) ¶ 6 & Ex. 3. On October 23, 2017, AAO changed the 

password, security settings, and associated contact information for the account, denying D’Anna 

further access. See id. ¶¶ 7–9; Pohls Decl. re Appliance MSJ (dkt. 91-9) Ex. 1 (Responses to 

Requests for Admission 15–20).

D’Anna states in her declaration that she created the email account at issue in 2011, when 

AAO did not yet exist and D’Anna worked at Adell’s Appliance Outlet—a different company run 

by members of her family that shared the same acronym as AAO—and that although she used the 

account in part for business purposes, she also used it for personal communications and Adell’s 

Appliance Outlet had no ownership interest in the account. D’Anna Decl. re Appliance MSJ ¶ 2. 

D’Anna states that she continued to use the account for both business and personal 

communications when she was employed by AAO from 2013 through October of 2017, but she 

never transferred any ownership interest in the account to AAO. Id. ¶ 4. D’Anna’s position that 

she owned the account is supported by AAO’s admissions that the account was created in 2011,

that AAO was not formed as a limited liability company until 2013, and that D’Anna used the 

account in part for personal communication. Pohls Decl. re Appliance MSJ Ex. 1 (Responses to 

Requests for Admission 2, 4–6).

There is also evidence tending to suggest that the account was in at least de facto use as 

AAO’s general office email account. In the emails attached to D’Anna’s declaration, the name of 

the account is displayed as “American Appliance.” D’Anna Decl. re Appliance MSJ Ex. 2. 

Franchini states in a declaration that other employees besides D’Anna had access to the account 

and AAO had its password, and that he understood the account to be AAO’s “primary email 

address” at the time Cardinal purchased the company. Franchini Decl. re D’Anna & Appliance 

MSJs ¶¶ 8–9. Franchini also attaches two business directories and an advertisement in a magazine 

from 2014 or 2015 listing the Yahoo address as AAO’s contact information. Id. ¶ 13 & Exs. C–

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E.12 Perhaps most significantly, D’Anna and Cardinal had a conversation via text message that, at 

the very least, could reasonably be interpreted as D’Anna stating that the account at issue was 

AAO’s office email address rather than her own personal email address:

[Cardinal:] Those are three sections. If you share your email I can 

send you the PDF if that’s easier.

[D’Anna:] aao_outlet@yahoo.com

[Cardinal:] For future reference, is that just you or is that shared with 

everyone there?

[D’Anna:] That’s the office email

[D’Anna:] Danna@aaoaapliance.com [sic]

Cardinal Decl. re D’Anna & Appliance MSJs ¶ 4 & Ex. V. D’Anna offers a strained interpretation 

of that conversation as stating that the “aao_outlet” email address was D’Anna’s personal address 

while the latter email address beginning with “Danna” was “shared with everyone there.” D’Anna 

& Appliance Reply at 6–7; see also Crawford Decl. re D’Anna & Appliance MSJs Ex. O (D’Anna 

Dep.) at 166:6–22 (muddled testimony that could be interpreted as stating the same position).

13

 

On D’Anna’s motion for summary judgment, the Court need not address whether her 

interpretation of the conversation might be plausible—it is enough that a reasonable jury could

view the conversation as indicating that the account at issue was “the office email” that was 

“shared with everyone there.” 

Weighing that conflicting evidence, a jury could reasonably decide either that the email 

address belonged to D’Anna personally or that it was AAO’s general office email address. While 

Defendants are correct that Plaintiffs have not offered direct evidence that D’Anna transferred 

ownership of the account to AAO—and neither party has addressed any legal standard for how 

 

12 It is not obvious whether the business directories included this email address before AAO fired 

D’Anna and barred her access to the account. Regardless, the 2014 or 2015 advertisement 

provides at least some evidence that AAO used the account as its general email address before 

those events.

13 Defendants’ reply brief states that D’Anna gave clearer testimony to the same effect on redirect 

examination, which would be submitted under seal. D’Anna & Appliance Reply at 8 n.7. The 

only exhibits submitted with the reply, under seal or otherwise, were excerpts of the depositions of 

Robert Hostetler and Grant Riggs. See Pohls Reply Decl. re D’Anna & Appliance MSJs (dkt. 

109-1); Sealing Mot. re Reply re D’Anna & Appliance MSJs (dkt. 110).

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such a transfer of ownership would be effected—a jury might infer from the evidence of AAO’s 

general use of the address and D’Anna’s characterization of it as a shared office email address (if 

the jury interpreted her text messages with Cardinal in Plaintiffs’ favor) that such a transfer at 

some point occurred, and decline to credit D’Anna’s testimony to the contrary. D’Anna’s motion 

for summary judgment on this claim is DENIED.

D. Appliance Fantastic Motion

Appliance Fantastic moves for summary judgment on both of the claims against it, for 

violation of the Stored Communications Act and the UCL. See generally Appliance MSJ. 

1. Stored Communications Act

AAO’s Stored Communications Act claim asserts that Appliance Fantastic is liable 

because D’Anna acted as its agent at the time she accessed the “aao_outlet@yahoo.com” email 

account. Compl. ¶¶ 120–26. Appliance Fantastic’s first argument with respect to this claim is that 

no violation occurred because D’Anna owned the account in question. Appliance MSJ at 4–6. 

For the reasons discussed above in the context of D’Anna’s motion, Appliance Fantastic is not 

entitled to summary judgment on that basis.

Appliance Fantastic also argues that there is no evidence that D’Anna was acting as its 

agent at the time she accessed the account. Id. at 7. Appliance Fantastic relies on D’Anna’s 

declaration that she was not employed by Appliance Fantastic at that time or any time before 

November 5, 2017, that she exchanged only brief text messages with Lupo asking him to call her 

on October 20, 2017 (i.e., before AAO changed the password to the account) because she intended 

to inform him that she had been fired and was looking for a new job, and that the two did not have 

a conversation until October 24, 2017 (i.e., after AAO change the password and D’Anna ceased to 

have access to the account). D’Anna Decl. re Appliance MSJ ¶¶ 10–11 & Exs. 5–6. 14

The evidence on which Plaintiffs rely for their position that D’Anna began acting as 

Appliance Fantastic’s agent before she accessed the account is less direct. D’Anna testified that 

 

14 Plaintiffs object to the screenshots of text messages attached to D’Anna’s declaration on the 

grounds that they were produced by Lupo but not authenticated by him. That objection is 

overruled. D’Anna was a party to the conversation and may testify to its authenticity, regardless 

of whether it was produced from her records.

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Lupo reached out to her to see if she was interested in helping with his new company at some 

point between October 16, 2017 and October 20, 2017, while she still had access to the Yahoo 

account. See Crawford Decl. Ex. O (D’Anna Dep.) at 252:24–253:19.15 D’Anna also testified, 

however, that she did not respond to that outreach until her brief text message to Lupo on October 

20, 2017 asking to talk, and did not think that she spoke to him that day, although she was not 

sure. Id. at 253:6–24. D’Anna does not indicate in her deposition testimony that she accepted 

Lupo’s expression of interest in hiring her before AAO changed the password to the Yahoo 

account.

There is also evidence that could be interpreted as D’Anna beginning outreach to a

Thermador distributor on Lupo’s behalf before the November 5, 2017 date that she states is the 

earliest she might have begun working for Lupo. First, on October 17, 2017—the day after she 

was fired—D’Anna sent an email to Rich Federico, a sales manager of BSH Home Appliance, 

reading as follows:

Hello Rick,

Pleasure meeting with you. Let me know what day works best for

you to meet and go over the Bosch/Thermador/ Gaggenau live

showroom. Have a great evening.

Thank You

D’Anna

Franchini Decl. re D’Anna & Appliance MSJs Ex. J. Federico responded about an hour later that 

it was “[g]reat speaking with you this evening” and asked D’Anna to remind him where she was 

located. Id. D’Anna responded, again using the “aao_outlet” Yahoo account:

American Appliance Pleasanton and AAO Appliance in Manteca. 

Sold both locations. Now new location will be in Livermore. David 

Nicholas is our sales representative and our will calls of as last time 

was over 1 million with a Purcell Murray. David Nichols will have a 

better ballpark with our numbers. Any question feel free to contact 

me.

Id. D’Anna, Federico, and another BSH sales representative arranged a meeting for the following 

 

15 Plaintiffs assert in their opposition brief that Lupo first “solicited D’Anna’s personal assistance 

for Appliance Fantastic’s business no later than August 23, 2017—within a week of incorporating 

Appliance Fantastic,” but cite no evidence for that assertion. See Opp’n to Appliance MSJ at 6.

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day, but Federico had to cancel the meeting and stated in an October 19, 2017 email that the other 

representative would follow up with D’Anna to reschedule. Id. 

It is not clear from the email exchange above on whose behalf D’Anna was meeting with 

the BSH representatives—for example, the parties’ briefs do not address who “David Nicholas” or 

“David Nichols” is and whether he had any relationship with AAO, Appliance Fantastic, or any 

other company. See id. About two weeks later on November 1, 2017, however, D’Anna and 

Lupo exchanged the following text messages:

[Lupo:] How did your meeting with thermador go? Is there a chance 

for us?

[D’Anna:] It went great. Ty [presumably, “thank you”] I’ll call you 

tomorrow

[It is not clear whether a portion of the conversation is omitted here 

between pages.]

[Lupo:] Ok

So does that mean

No chance for us?

[D’Anna:] Maybe tomorrow or Friday if I can see the showroom to 

see where things r at

[Lupo:] Ok

Yay sounds like there is a chance then

[D’Anna:] Let’s meet n get to know how u conduct business and go 

from there

D’Anna Decl. re Appliance MSJ Ex. 7. D’Anna and Lupo arranged for a meeting the following 

day, and after that meeting Lupo sent D’Anna a text message stating in part, “I can’t remember 

being this excited[.] Your [sic] awesome !!!!!” Id. D’Anna responded:

Pls send me your email. I have the steals n deals from Thermador. Let 

me know if ur interested. All new product but discounted

Id. After a conversation about a particular appliance, on November 4th and 5th, Lupo and D’Anna 

discussed D’Anna’s efforts to obtain permission to “go forward”—apparently referring to working 

with Lupo—from members of her family who were also in the appliance business. Id. The 

portion of the conversation included in the record concludes with the following message from 

D’Anna:

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Let’s sit down n see exactly what my role be. What your expectations 

are and what #’s we r looking at for the first year

Id.

At her deposition, D’Anna testified that her meeting with a Thermador distributor

referenced in Lupo’s November 1, 2017 text message related to her “potentially going to be 

opening up a place of [her] own,” and was with Rick Federico, the BSH representative whom she 

emailed from the “aao_outlet@yahoo.com” account in mid-October. Crawford Decl. re D’Anna 

& Appliance MSJs Ex. O (D’Anna Dep.) at 254:23–255:5, 255:21–23. D’Anna had no 

explanation for why Lupo referred to “a chance for us” if he was referring to a meeting she took 

for her own purposes. Id. at 255:6–18 (emphasis added). The conversation could be interpreted as 

suggesting that D’Anna held the meeting on November 1, 2017 (or perhaps shortly before then) on 

Lupo and Appliance Fantastic’s behalf, even though subsequent messages indicate that she had 

not finalized a role with them by November 5, 2017. Combined with D’Anna’s unexplained 

failure to produce all of her text messages with Lupo despite producing messages with other 

people from the same time period, a jury that found Lupo and D’Anna’s testimony not credible 

could perhaps infer that—contrary to D’Anna’s declaration—D’Anna had agreed to meet with 

Federico on Lupo and Appliance Fantastic’s behalf when she emailed Federico in October of 2017

from the Yahoo account that Appliance Fantastic claims to own. The Court therefore declines to 

grant summary judgment on the Stored Communication Act claim against Appliance Fantastic.

2. Unfair Competition Claim

Appliance Fantastic seeks summary judgment on AAO’s unfair competition claim based 

on the doctrine of unclean hands, arguing that “admissions that AAO made in response to Ms. 

D’Anna’s discovery . . . conclusively establish that AAO engaged in precisely the same conduct 

upon which it purports to base its claims against Appliance Fantastic.” Appliance MSJ at 8. That 

portion of Appliance Fantastic’s motion cites no particular admissions, but appears to refer to 

admissions cited earlier in the motion that AAO accessed the Yahoo email account without asking 

for D’Anna’s permission and changed the password for the account without authority from 

D’Anna. See id. at 6 (citing Pohls Decl. re Appliance MSJ Ex. 1). Such conduct would only be 

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wrongful if D’Anna was the rightful owner of the account and AAO was not—an issue that, as 

discussed above in the context of the Stored Communication Act, is in dispute and could be 

resolved in either party’s favor. 

Moreover, as Plaintiffs note in their opposition brief, California courts “have long held that 

the equitable defense of unclean hands is not a defense to an unfair trade or business practices 

claim based on violation of a statute.” Ticconi v. Blue Shield of Cal. Life & Health Ins. Co., 160 

Cal. App. 4th 528, 543 (2008); see Opp’n to Appliance MSJ (dkt. 102) at 9. Equitable defenses 

like unclean hands “may be considered when the trial court exercises its discretion to fashion a 

remedy under Business and Professions Code section 17203 [but] may not be used to defeat the 

cause of action under the UCL.” Ticconi, 160 Cal. App. 4th at 544 (citing Cortez v. Purolator Air 

Filtration Prods. Co., 23 Cal. 4th 163, 179 (2000)) (some emphasis omitted). Defendants do not 

address that issue in their reply, instead arguing for the first time that summary judgment is 

appropriate because the UCL claim is derivative of Plaintiffs’ other claims and “the same evidence 

which establishes that plaintiffs’ other claims in this case lack merit therefore requires that 

Appliance Fantastic also prevail on the [UCL] claim.” D’Anna & Appliance Reply at 10. 

Because, as discussed above, AAO may proceed on its Stored Communications Act claim, it may 

also proceed on its UCL claim. Appliance Fantastic’s motion for summary judgment is DENIED.

E. Lupo and Kitchen Fantastic’s Motion

Lupo and Kitchen Fantastic move for summary judgment on Plaintiffs’ claims against 

them. See Lupo & Kitchen MSJ (dkt. 96); Kitchen Fantastic Joinder (dkt. 99). With respect to 

Lupo, those claims are for fraudulent misrepresentation, negligent misrepresentation, breach of 

contract, breach of the duty of good faith and fair dealing, trade libel, intentional interference with 

contractual relations, intentional interference with prospective economic relations, inducing a 

breach of the duty of loyalty, conversion, violation of the Computer Fraud and Abuse Act, and 

violation of the Stored Communications Act. With respect to Kitchen Fantastic, those claims are 

trade libel, inducing a breach of the duty of loyalty, conversion, violation of the Computer Fraud 

and Abuse Act, and violation of the Unfair Competition Law.

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1. Claims for Fraudulent and Negligent Misrepresentation

Defendants contend that Lupo cannot be liable for fraudulent or negligent 

misrepresentation related to the stock purchase agreement (“SPA”) because Cardinal cannot prove 

reliance. Lupo & Kitchen MSJ at 7–8. Section 3.17 of the SPA, which Cardinal initialed, 

describes Cardinal’s duty to conduct an investigation to his satisfaction:

3.17 Due Diligence. The Buyer has or will have inspected and 

performed the requisite due diligence, to the extent the Buyer deems 

necessary, in its sole and absolute discretion, with respect to every 

element and facet of the Corporation and the Business prior to the 

Closing. THE BUYER WOULD NOT AND WILL NOT CLOSE 

THE TRANSACTION CONTEMPLATED BY THIS 

AGREEMENT UNLESS THE BUYER IS SATISFIED WITH 

SAID INSPECTION AND DUE DILIGENCE.

SPA § 3.17.

16

 Lupo relies on the rule that “a plaintiff ‘cannot claim reliance if he makes an 

independent investigation, which, performed with reasonable diligence, should disclose the true 

facts.’” Lupo & Kitchen MSJ at 7 (quoting Carroll v. Dungey, 223 Cal. App. 2d 247, 254, 

(1963)). 

A more complete statement of the relationship between reliance and diligent investigation 

is found in a 1987 California appellate decision quoting a treatise: “‘If the plaintiff having access 

to the necessary information actually makes an independent investigation which the defendant 

does not hinder, he will be charged with knowledge of the facts which reasonable diligence would 

have disclosed, and he cannot claim reliance upon the representations.’” Orient Handel v. U.S.

Fid. & Guar. Co., 192 Cal. App. 3d 684, 694 (1987) (citation omitted; emphasis added); see also 

ING Bank, FSB v. Ahn, 758 F. Supp. 2d 936, 944 (N.D. Cal. 2010). There are questions of fact as 

to whether Cardinal had access to all necessary information to discover Lupo’s purported 

misrepresentations, and as to whether Lupo hindered Cardinal’s ability to conduct an 

investigation. See, e.g., Cardinal Decl. re Lupo & Kitchen MSJ (dkt. 112-1) ¶ 10 (“Mr. Lupo 

explained that all the documents we requested existed [when in fact they did not] and were at the 

Kitchen Experts office, but that he couldn’t get them from Anne Barlow without causing a 

 

16 The SPA is included in the record as Exhibit A to Plaintiffs’ Complaint. No party disputes its 

authenticity.

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widespread panic within the company that would cause major damage by leading to an exodus of 

employees.”).

Defendants also argue in their reply that Cardinal cannot have relied on Lupo’s 

representations outside of the SPA because the SPA itself provided that Lupo did “not make any 

other express or implied representation or warranty on behalf of the corporation related to the 

subject matter of this agreement” other than those specifically stated in the SPA. SPA § 3.10 

(capitalization and emphasis omitted); Lupo & Kitchen Reply (dkt. 113) at 5–7. For one thing, 

Lupo does not address the portion of that provision describing the representations at issue as “on 

behalf of the company,” which could be interpreted as stating only that representations that Lupo 

made outside of the written SPA were made on his own behalf, not as a representative of Kitchen 

Experts. Because Defendants did not raise that provision until their reply, Plaintiffs had no 

occasion to address its meaning in their opposition brief.

Even aside from that, there is evidence from which a jury could conclude that certain 

representations within the SPA itself were false. E.g., compare SPA § 3.13 (“The Corporation . . . 

has allowed Buyer to review true, correct and complete copies of all of the Corporation’s bank 

statements [over multiple years.]”) with Cardinal Decl. re Lupo & Kitchen MSJ ¶ 26 (“[T]here 

was a secret company account at Bank of America that Mr. Lupo never told use about, and later 

withdrew money from long after the sale.”); compare SPA § 3.15 (“Employee Classfication. The 

Corporation . . . has been in compliance in all material respects with all applicable state and 

federal laws and regulations regarding employment and employment practices . . . .”) with 

Cardinal Decl. re Lupo & Kitchen MSJ ¶ 25 (“Second, [Kitchen Experts], under Mr. Lupo’s 

ownership, had been committing massive payroll fraud for years.”). Based on Cardinal’s 

declaration that he had those provisions added to assuage his concerns about the limited 

documentation available to him, a jury could reasonably conclude that he relied on their veracity. 

Cardinal Decl. re Lupo & Kitchen MSJ ¶ 14.

Defendants briefly argue that Cardinal also cannot prevail on his misrepresentation claims 

because Cardinal and Kitchen Experts expressly agreed to indemnify Lupo and hold him harmless 

of conduct related to his association with the company. Lupo & Kitchen MSJ at 8 (citing SPA 

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§ 7.2). As Plaintiffs correctly note, a party cannot rely on a provision of a contract that was 

procured by fraud. Opp’n to Lupo & Kitchen MSJ (dkt. 112) at 5; Filet Menu, Inc. v. C.C.L. & 

G., Inc., 79 Cal. App. 4th 852, 861 (2000) (“[A] contract induced by fraud renders the entire 

agreement voidable, permitting the aggrieved party to defend a suit on the contract by objecting to 

its enforcement because procured or induced by fraud.”). There is evidence from which a jury 

could conclude that the SPA was procured by fraud. Defendants’ motion for summary judgment 

on Plaintiffs’ misrepresentation claims is DENIED.

2. Claims for Breach of Contract and the Duty of Good Faith

a. Anti-Assignment Clause

Defendants argue that they cannot be liable for breach of contract to Kitchen Experts 

because, after Cardinal purchased the business, he merged it into a new company, “KEC 

Acquisition Corporation,” that later took on essentially the same name as the previous company—

“Kitchen Experts of California, Inc.,” as compared to the previous “Kitchen Experts of California, 

Incorporated.” Lupo & Kitchen MSJ at 1–2 (citing Pohls Decl. re Lupo & Kitchen MSJ (dkt. 98) 

Exs. 1–3). According to Defendants, any transfer of the original Kitchen Experts’ rights under the 

contract to the new corporation as a result of the merger would violate the anti-assignment clause 

of the SPA, which reads as follows:

10.7 Assignment. This Agreement shall be binding upon and inure to 

the benefit of the parties and their respective successors and assigns; 

provided that no assignment by the Buyer of any rights or obligations 

may be made without the written consent of the Selling Shareholder 

except to name a nominee for the purchase hereunder provided said 

nominee assumes all of the obligations hereunder pursuant to Exhibit 

13 hereof. The Seller may in its sole discretion assign any of its rights 

and obligations under Section 4.7 of this Agreement to one or more 

of its Affiliates upon written notice to the Buyer. No assignment by 

any party pursuant to this Section 10.7 shall relieve the assigning 

party of its obligations hereunder.

SPA § 10.7.

Plaintiffs contend that California courts have not held assignments as a matter of law based 

on changes in corporate form to violate contractual anti-assignment provisions. Opp’n to Lupo &

Kitchen MSJ at 7–12. The California Supreme Court has recognized that principle in at least 

some circumstances since 1947. Trubowitch v. Riverbank Canning Co., 30 Cal. 2d 335, 345–46 

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(1947) (“No interest of the seller would be served by preventing the rights under this contract for 

the sale of standard goods from passing to a copartnership continuing the business of the 

corporation formed by its sole stockholders, who were entitled to the assets of the corporation 

upon its dissolution. . . . To require an action to be brought under such circumstances by the 

dissolved corporation rather than by the copartnership formed by its shareholders, which owns all 

the assets of the corporation and carries on its business, is to require compliance with a shallow 

formality that serves no substantial interest of the seller.”). Trubowich acknowledged “that a 

provision against assignment in a contract or lease does not preclude a transfer of the rights 

thereunder by operation of law . . . and that if an assignment results merely from a change in the 

legal form of ownership of a business, its validity depends upon whether it affects the interests of 

the parties protected by the nonassignability of the contract.” Id.

Under section 1107 of the California Corporations Code, the surviving corporation after a 

merger “shall succeed, without other transfer, to all the rights and property of each of the 

disappearing corporations and shall be subject to all the debts and liabilities of each in the same 

manner as if the surviving corporation had itself incurred them.” Cal. Corp. Code § 1107(a). The 

statute tends to suggest that the transfer of rights occurs “by operation of law,” and thus does not 

violate the anti-assignment clause. See Trubowitch, 30 Cal. 2d at 345. Alternatively, if the merger 

is considered “a change in the legal form of ownership of a business,” the question would be 

whether it “whether it affects the interests of the parties protected by the nonassignability of the 

contract.” Id. at 346; see also SQL Sols., Inc. v. Oracle Corp., No. C-91-1079 MHP, 1991 WL 

626458, at *4 (N.D. Cal. Dec. 18, 1991). 

Defendants have offered no argument or evidence of any adverse effect on them as a result 

of the merger, which Cardinal states that he undertook to cure certain defects in corporate 

governance that occurred while Lupo owned the business. See Cardinal Decl. re Lupo & Kitchen 

MSJ ¶ 33. Under similar circumstances, Judge Alsup denied a motion for summary judgment 

based on anti-assignment provision where the moving party did “not provide any analysis of facts 

or law regarding whether the ‘acquisition’ . . . affected the interests protected by the 

nonassignability provision, or even what those interests might be.” Openwave Sys. Inc. v. Myriad 

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France S.A.S., No. C 10-02805 WHA, 2011 WL 1832999, at *5 (N.D. Cal. May 13, 2011).

Defendants also note Cardinal’s transfer of his stock in Kitchen Experts to a new holding 

corporation known as Good Development, and his later transfer of his stock in Good Development 

to Franchini. The Ninth Circuit has held that where a corporation is a party to an anti-assignment 

provision, a transfer of the corporation’s stock to a new owner—as opposed to a transfer of the 

corporation’s rights to a different entity—does not violate the provision. U.S. Cellular Inv. Co. v. 

GTE Mobilnet, Inc., 281 F.3d 929, 935 (9th Cir. 2002).

Rather than addressing any of the authority discussed above and in Plaintiffs’ opposition 

brief, Defendants’ reply argues for the first time that Plaintiffs violated a separate section of the 

SPA, which required Cardinal to provide Lupo with three days’ notice prior to the merger 

contemplated at the time of the sale, because Cardinal did not in fact provide any such notice. 

Lupo & Kitchen Reply at 2–3 (citing SPA § 2.2; Lupo Decl. re Lupo & Kitchen MSJ (dkt. 97) ¶ 2 

(stating that Lupo was unaware of the change in corporate form until his deposition in June of 

2019)). That provision appears in a section of the SPA addressing Lupo’s security interest in 

Kitchen Experts from the time of the sale until full payment of the purchase price. SPA § 2.2. 

There is no indication that the parties intended it to have any relation to the anti-assignment

provision, which occurs fourteen pages later in a separate section of the SPA. Defendants have 

also identified no evidence of prejudice as a result of that purported breach. Whatever remedy 

Lupo may have for the purported breach of section 2.2, if any, it is not to negate the transfer of 

rights under the SPA by operation of law to the surviving post-merger corporation under section 

1107 of the Corporations Code.

Defendants have not shown that any change in corporate form or ownership violated the 

SPA’s anti-assignement provision under California law. Their motion for summary judgment on 

that basis is DENIED.

b. Cardinal’s Transfer of Stock 

Defendants also argue that Cardinal cannot show damages because he transferred his 

ownership interest within months after purchasing the corporation, and thus could only recover for 

damages that occurred between May 25, 2017 and June 15, 2017. Lupo & Kitchen MSJ at 5–7. 

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Defendants base that date on when Cardinal transferred his shares in Kitchen Experts to the 

corporation that he created and also owned for the purpose of effecting a merger and curing 

purported defects in past corporate governance. Cardinal did not transfer his ultimate ownership 

of Kitchen Experts (using that term to refer to both the pre- and post-merger versions of the 

company) until 2019, when he gave 49% of the new holding company Good Development to 

Franchini on or immediately after March 8, 2019, and days later sold his remaining 51% of the 

holding company to Franchini “in return for assumption of the company’s debts to [Cardinal], 

which at the time was roughly $2.14 million (most of which was from KE).” Cardinal Decl. re 

Lupo & Kitchen MSJ ¶¶ 43–44. 

Cardinal’s declaration and the SPA indicate that Cardinal paid $2 million to purchase 

Kitchen Experts from Lupo, SPA § 2.1, subsequently loaned an amount to Kitchen Experts 

sufficient to constitute “most of” Good Development’s $2.14 million debt (for a total investment 

in Kitchen Experts likely somewhere between $3 million and $4 million), and then sold his 

ownership interest in Good Development (which also included other businesses besides Kitchen 

Experts) in exchange for Franchini’s assumption of the company’s $2.1 million debt. Cardinal 

Decl. re Lupo & Kitchen MSJ ¶ 44. If a jury agreed with Plaintiffs’ positions regarding Lupo and 

Kitchen Fantastic’s purported misconduct, the jury might reasonably attribute some portion of the 

significant difference in value reflected by those purchase, investment, and sale amounts to such 

misconduct, either at the time of sale resulting from Lupo’s purported misrepresentations inducing 

Cardinal to pay a higher price than he otherwise would have, or subsequent to the sale resulting 

from other conduct. Defendants are not entitled to summary judgment based on a failure by 

Cardinal to show damages.

To the extent that Defendants motion could be read as suggesting that Cardinal cannot 

show a breach of contract because Lupo’s relevant obligations under the SPA were limited to 

indemnifying Cardinal for misrepresentations stated in the SPA, see Lupo & Kitchen MSJ at 5–6, 

there is evidence—as discussed above in the context of the misrepresentation claims—from which 

a jury could reasonably determine that certain representations in the SPA were false, and that such 

representations affected the value of the company.

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Defendants’ motion for summary judgment is DENIED with respect to Plaintiffs’ claims 

for breach of contract, as well as for breach of the duty of good faith and fair dealing, for which 

Defendants rely on the same arguments. See Lupo & Kitchen MSJ at 4, 6–7.

3. Claim for Trade Libel

Defendants argue that Lupo is entitled to summary judgment on Plaintiffs’ claims for trade 

libel because Kitchen Experts’ responses to interrogatories failed to identify any evidence of false 

statements by Lupo or of any “prospective user of [Kitchen Expert’s] business . . . who was 

induced to avoid [Kitchen Experts] because of a false statement attributed to Mr. Lupo.” Lupo & 

Kitchen MSJ at 8 (citing Pohls Decl. re Lupo & Kitchen MSJ Exs. 7–8). Plaintiffs contend that 

summary judgment is not appropriate because they identified certain purportedly false statements

in their interrogatory responses, and because Lupo has “refuse[d] to turn over information 

regarding his communications with prospective [Kitchen Experts] customers.” Opp’n to Lupo & 

Kitchen MSJ at 22–23. 

Plaintiffs also object to Defendants’ reliance on Plaintiffs’ interrogatory responses as 

hearsay. Id. at 22 n.9. But Defendants’ use of Plaintiffs’ responses “falls under the hearsay 

exception for statements of an opposing party.” Held v. Northshore Sch. Dist., No. C13-1548 

MJP, 2014 WL 6451297, at *5 (W.D. Wash. Nov. 17, 2014) (citing Fed. R. Evid. 802(d)(2)). A 

party’s own interrogatory responses, on the other hand, are hearsay—Plaintiffs cannot rely on their 

interrogatory responses as a substitute for evidence of false statements that Lupo made to any of 

Kitchen Experts’ actual or potential customers, or anyone else with whom it might have had a 

business relationship, such as customers or suppliers. AT & T Corp. v. Dataway Inc., 577 F. Supp. 

2d 1099, 1109 (N.D. Cal. 2008).

The Court is also not inclined to deny summary judgment based on Lupo’s purported 

failure to produce communications with potential Kitchen Experts customers. Celotex, on which 

Plaintiffs rely, acknowledged Rule 56(f) of the Federal Rules of Civil Procedure, which “which 

allows a summary judgment motion to be denied, or the hearing on the motion to be continued, if 

the nonmoving party has not had an opportunity to make full discovery.” 477 U.S. at 326. 

Plaintiffs had such an opportunity here. Discovery closed before Lupo and Kitchen Experts filed 

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their motion for summary judgment, Plaintiffs filed their opposition brief more than a month after 

Lupo’s long-delayed deposition, and Plaintiffs did not file a motion to compel Lupo to produce 

evidence of communications with potential customers. Even Plaintiffs’ belated motion for 

sanctions does not cite any failure of Lupo to produce such evidence as grounds for relief. 

Plaintiffs had their opportunity. Defendants’ motion for summary judgment is GRANTED as to 

the claim against Lupo for trade libel. 

Although Defendants’ briefs omitted any argument that Plaintiffs lack evidence of false 

statements or harm caused by Kitchen Fantastic, the Court raised that issue at the hearing and 

Plaintiffs did not indicate that they had any such evidence. Summary judgment is therefore also 

GRANTED with respect to the trade libel claim against Kitchen Fantastic.

4. Claims for Intentional Interference with Contractual Relations and 

Economic Relations

Defendants argue that Lupo is entitled to summary judgment on Plaintiffs’ claims for 

interference with contractual relations and prospective economic relations because, in the context 

of employment and in the absence of a contract, such a claim is barred under section 16600 of the 

California Business and Professions Code as a restraint of trade. Lupo & Kitchen MSJ at 4–5 

(also citing Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 255 (1968)); see also Notice of Lupo & 

Kitchen MSJ at 3 ¶ 8. According to Defendants, Lupo was not subject to any contract that would 

disrupt the operation of that rule because the anti-assignment provision bars the current version of 

Kitchen Experts from invoking its predecessor’s rights. As discussed above, the Court rejects the 

underlying argument regarding the anti-assignment provision, and holds that the new Kitchen 

Experts is entitled to assert the rights of the company that Lupo sold. The motion is therefore 

DENIED as to this claim. The Court need not reach Plaintiffs’ alternative argument that Lupo’s 

particular familiarity with Kitchen Experts’s business is sufficient to support the claim even 

without a contract.

5. Claim for Inducing a Breach of the Duty of Loyalty

Defendants argue that Lupo and Kitchen Fantastic are entitled to summary judgment on 

Plaintiffs claim for inducing a breach of Daza and Phelton’s duty of loyalty to Kitchen Experts 

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because Plaintiffs have not shown any fiduciary duty. Lupo & Kitchen MSJ at 9; see also Lupo & 

Kitchen Reply at 8 (“Neither Mr. Lupo nor Kitchen Fantastic, Inc. Can Be Liable for Inducing 

Conduct that Was Not Tortious”). For the reasons discussed above in the context of Phelton’s 

motion, the Court holds that California law recognizes a tort claim for any employee’s breach of 

the duty of loyalty to an employer, distinct from a claim for breach of fiduciary duty. Defendants’ 

motion is therefore DENIED as to this claim.

6. Claims for Conversion and Violation of the Computer Fraud and 

Abuse Act

Defendants assert in their notice of motion that they are entitled to summary judgment on 

Kitchen Expert’s claims for conversion and violation of the Computer Fraud and Abuse Act 

“because the Kitchen Experts of the Stock Purchase Agreement is no longer in existence and John 

Lupo and Kitchen fantastic [sic] have no contractual relationship with the existing entity.” Notice 

of Lupo & Kitchen MSJ at 3 ¶¶ 10–11. Defendants do not address those claims again in either 

their motion or their reply brief, except for a footnote in the motion reading as follows:

To the extent they are dependent on a contractual relationship that did 

not exist, the ninth claim for relief (for intentional interference with 

prospective economic relations), twelfth claim for relief (for 

conversion) and thirteenth claim for relief (for computer fraud) all 

also must fail. 

Lupo & Kitchen MSJ at 4 n.3. Defendants have not explained why a contractual relationship 

would be necessary to the tort of conversion or to a statutory claim for unauthorized access under 

the Computer Fraud and Abuse Act. See, e.g., LVRC Holdings LCC v. Brekka, 581 F.3d 1127, 

1132 (9th Cir. 2009) (discussing the elements of a claim under the Computer Fraud and Abuse 

Act); Welco Elecs., Inc. v. Mora, 223 Cal. App. 4th 202 (2014) (discussing the elements of a claim 

for conversion under California law). Defendants thus have not met their initial burden to show 

the absence of genuine dispute as to any element of those claims, and their motion is DENIED 

with respect to those claims.17

 

17 To the extent Defendants intended, without explanation, that this argument rely on the antiassignment argument discussed above in the context of Plaintiffs’ breach of contract claims, it 

fails because Defendants have not shown that the changes in corporate form or stock ownership 

violated that provision of the contract. Such an argument would also fail because any rights that 

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7. Claim for Violation of the Stored Communications Act

Defendants’ notice of motion briefly asserts that Lupo is entitled to judgment on Plaintiffs’ 

claim for relief under the Stored Communications Act because Lupo did not access AAO’s stored 

communications. Notice of Lupo & Kitchen Fantastic MSJ at 3 ¶ 12. Neither party’s briefs 

address that claim in any way. The Stored Communications Act claim asserted in the complaint 

does not allege that Lupo himself accessed AAO’s communications, but rather than D’Anna acted 

as Lupo’s agent when she accessed the “aao_outlet@yahoo.com” account after she was fired. 

Compl. ¶ 122. For the reasons discussed above in the context of Appliance Fantastic’s motion, 

Lupo is not entitled to summary judgment on that claim.

8. Claim for Violation of the Unfair Competition Law

Defendants argue in their motion only that Kitchen Fantastic is entitled to judgment on 

Plaintiffs’ UCL claim because it is derivative of Plaintiffs’ other claims, on which Defendants also 

contend they are entitled to judgment. Lupo & Kitchen MSJ at 9–10. As discussed above, the 

Court declines to grant judgment on any of the other claims against Kitchen Fantastic—for trade 

libel, inducing a breach of the duty of loyalty, and violation of the Computer Fraud and Abuse 

Act. The Court therefore also DENIES Defendants’ motion with respect to the UCL claim.18 

F. Andrea Michael’s Motion

Lupo’s wife Andrea Michael moves for summary judgment on the only claim against her, 

for aiding and abetting Lupo’s purported fraud. Liability for aiding and abetting applies where a 

“person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance 

or encouragement to the other to so act or (b) gives substantial assistance to the other in 

accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a 

 

Kitchen Expert had to sue for conversion or violation of the Computer Fraud and Abuse Act were 

not rights under the contract, and thus did not fall within the scope of the anti-assignment 

provision to begin with.

18 In a footnote, Lupo also briefly contends that he is entitled to summary judgment on a 

counterclaim for breach of contract. Lupo & Kitchen MSJ at 5 n.5. That request is DENIED. See 

United States v. Strong, 489 F.3d 1055, 1060 n.4 (9th Cir. 2007) (“The summary mention of an

issue in a footnote, without reasoning in support of the appellant’s argument, is insufficient to 

raise the issue on appeal.” (quoting Hilao v. Estate of Marcos, 103 F.3d 767, 889 n.4 (9th Cir. 

1996)).

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breach of duty to the third person.” Berger v. Varum, 35 Cal. App. 5th 1013, 1025 (2019) 

(citation and internal quotation marks omitted).

Michael states in her declaration that she did not participate in negotiations regarding the 

SPA or Lupo’s efforts to sell Kitchen Experts, that she had no role related to Kitchen Experts’s 

books and records, that she made no representations regarding the sale, and that she met Cardinal 

for the first time when she signed a spousal consent form at the closing of the transaction. See 

generally Michael Decl. (dkt. 85). There is evidence from which a jury might conclude otherwise. 

Mail for Kitchen Express was delivered to her home. Crawford Decl. re Phelton & Michael MSJs

(dkt. 87) Ex. B at 22:14–16. Michael sometimes signed checks on behalf of Kitchen Express. Id

at 20:16–22:6. Michael made numerous personal purchases using Kitchen Express checks, 

sometimes based on consultations with her husband Lupo. E.g., id. at 41:7–42:15. Michael 

frequently called Kitchen Experts operations manager Anne Barlow with questions regarding 

“certain payments, finances, and expenses,” and gave Barlow the impression “that she was 

familiar with the financial condition and affairs of Kitchen Experts.” Barlow Decl. re Michael 

MSJ (dkt. 88-1) ¶ 4.

During the process of finalizing the sale, Thomas Del Beccaro—an attorney whom 

Cardinal had initially believed represented Lupo—stated that he represented Michael and was 

serving as her representative, that Michael did not approve of the $1 million sale price to which 

Lupo and Cardinal had previously agreed, and that her approval was necessary for the sale to go 

forward. Cardinal Decl. re Michael MSJ (dkt. 88-5) ¶¶ 2–3.19 Michael later expressed opinions 

on the sale of the company that had been central to her and her husband’s lives. Id. ¶¶ 4, 7. 

If a jury declined to credit Michael’s testimony regarding her lack of knowledge 

involvement, it might conclude from the evidence of her involvement with Kitchen Experts and 

the sale that she knew of at least some of Lupo’s purported misrepresentations, and that she 

knowingly helped Lupo defraud Cardinal by insisting on a higher sale price.20 Michael’s motion 

 

19 Defendants object to Cardinal’s recounting of Del Beccaro’s statements as hearsay. Statements 

by an agent of a party opponent are not hearsay. Fed. R. Evid. 801(d)(2)(D).

20 The Court also notes that Michael did not search for text messages in response to Plaintiffs’ 

requests for production of communications, and thus may not have produced all communications 

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United States District Court

Northern District of California

for summary judgment is therefore DENIED.

The Court does not reach Plaintiffs’ argument that Michael’s signing of the spousal 

consent form representing that she had read the SPA was itself fraudulent in light of her testimony 

that she did not read the SPA.

VI. CONCLUSION

For the reasons discussed above, the motions are GRANTED in part and DENIED in part. 

The motion for sanctions is DENIED except as to limited attorneys’ fees, and the parties shall 

follow the procedure set forth above to determine the amount of fees. Defendants’ motions for 

summary judgment are GRANTED with respect to: (1) all of Plaintiffs’ claims for trade libel; and

(2) the claim against D’Anna for interference with contractual relations. The motions for 

summary judgment are otherwise DENIED.

IT IS SO ORDERED.

Dated: September 17, 2019

______________________________________

JOSEPH C. SPERO

Chief Magistrate Judge

 

responsive to Plaintiffs’ document requests. Id. at 147:17–148:8.

Case 3:18-cv-00272-JCS Document 134 Filed 09/17/19 Page 45 of 45