Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-00441/USCOURTS-casd-3_14-cv-00441-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THE ECLIPSE GROUP LLP, a

California limited liability partnership,

Plaintiff,

CASE NO. 14cv0441-GPC-WVG

ORDER:

(1) DENYING PLAINTIFF’S

MOTION FOR SUMMARY

JUDGMENT;

[Dkt. No. 17.]

(2) VACATING HEARING DATE

v.

FORTUNE MFG. CO., LTD., a

Taiwan company,

Defendant.

Before the Court is Plaintiff The Eclipse Group LLC’s (“Plaintiff”) motion for

summary judgment against Defendant Fortune Mfg. Co., Ltd. (“Defendant”). (Dkt.

No. 17.) The parties have fully briefed the motion. (Dkt. Nos. 20-23.) Pursuant to

Civil Local Rule 7.1(d)(1), the Court finds the matter suitable for adjudication on the

papers, without oral argument. For the following reasons, the Court DENIES

Plaintiff’s motion for summary judgment.

FACTUAL BACKGROUND

This action arises from Defendant’s alleged failure to pay Plaintiff for legal

services. (Dkt. No. 1 ¶¶ 5-11.) Defendant is a Taiwan based company that produces

bronze and brass valves for use in industries such as oil, chemical, gas, machinery,

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construction, and water. (Dkt. No. 20-4 at 3-4.)1 Around June 2010, Defendant

contacted Plaintiff regarding filing a claim against Zurn Industries, LLC (“Zurn”).

(Dkt. No. 1 ¶ 5; Dkt. No. 20-1 ¶ 6.) 

Around October 26, 2010, Plaintiff and Defendant signed an engagement letter

under which Plaintiff would represent Defendant “in connection with preparing and

filing a claim against Zurn/Wilkins.” (Dkt. No. 17-4 at 2; Dkt. No. 20-1 ¶ 6.) The

engagement letter set forth Plaintiff’s blended hourly rate and partial contingency

arrangement, and stated that Plaintiff was entitled to payment for expended costs. (Dkt.

No. 17-4 at 2.) The engagement letter also provided that if payment was not received

within sixty days after the issuance of an invoice, the outstanding amount “may” be

subject to finance charges of 8% per annum. (Id. at 3.) In addition, the engagement

letterstated that if Defendant had any dispute with any invoiced amounts, it “shall raise

such dispute within thirty (30) days of the invoice date” or it would be “liable for the

full amount invoiced.” (Id.) 

On January 18, 2011, Plaintiff filed an action on behalf of Defendant against

Zurn in United States District Court forthe Central District of California: Fortune Mfg.

Co., Ltd. v. Zurn Industries, LLC, Case No. 11-cv-0530-PA-JEM. (Dkt. No. 20-1 ¶ 8;

Dkt. No. 20-3 at 2.) On November 14, 2011, the district court granted Zurn’s motion

forsummary judgment because, among other things, it found thatsome of Defendant’s

claims were barred by the applicable statutes of limitation. (Dkt. No. 20-6.) Shortly

thereafter, Defendant settled with Zurn. (Dkt. No. 20-1 ¶ 9.) 

Between October 2011 and February 2012, Plaintiffsent Defendant invoicesfor

its services. (Dkt. No. 17-3 ¶ 3; Dkt. No. 17-5.) Around April 10, 2012, Defendant

sent Plaintiff an email stating that it was “extremely disappointed and dissatisfied” with

Plaintiff’s legal services, and therefore it “does not find it reasonable to make more

payments for the dilettante services provided.” (Dkt. No. 21-2 ¶ 2; Dkt. No. 21-3 at 2-

1Page number citations such as this one are to the page numbers reflected on the

Court’s CM/ECF system and not to page numbers assigned by the parties.

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3; see also Dkt. No. 20-1 ¶ 9.) On September 3, 2013, Plaintiff sent Defendant a letter

stating that Defendant owed it $136,383.75 in fees and $38,247.86 in costs. (Dkt. No.

17-7 at 2.) The letter further stated that “[w]e understand that you were unhappy with

the outcome of the case and therefore disputed the balance” but “we cannot forgive the

amount due.” (Id.)

Defendant declares that it has paid Plaintiff approximately $104,396.49 for its

services, pursuant to the engagement letter, but disputes that any further payments are

due. (Dkt. No. 20-1 ¶ 9.) Plaintiff declares that Defendant owes it $136,383.75 in fees

and $38,247.86 in costs, plus 8% per annum. (Dkt. No. 17-3 ¶¶ 3, 7.) 

PROCEDURAL HISTORY

On February 26, 2014, Plaintiff filed this action against Defendant. (Dkt. No. 1.)

Plaintiff alleges four claims: (1) breach of written agreement; (2) open book account;

(3) account stated; and (4) quantum meruit. (Id. ¶¶ 12-30.)

On December 8, 2014, theCourt granted Defendant’s motion to set aside default

judgment. (Dkt. No. 13.) Defendant filed its answer on December 11, 2014. (Dkt. No.

15.) In its answer, Defendant asserted as defenses that it “is entitled to offset any

recovery by the amount necessary to correct defects caused by [Plaintiff’s] deficient

and/or negligent legal representation” and that it was “discharged from performing the

contract because [Plaintiff] . . . materially breached the contract by failing to provide

reasonably competent representation in multiple instances . . . .” (Id. at 5.)

On December 22, 2014, Plaintiff filed the instant motion for summary judgment.

(Dkt. No. 17.) Defendant filed its opposition on January 30, 2015. (Dkt. No. 20.)

Plaintiff replied on February 13, 2015.

2

 (Dkt. No. 21.)

2On February 20, 2015, Defendant filed evidentiary objections to a declaration

submitted by Plaintiff in support of its reply and a request to strike the portions of the

reply that rely upon the declaration. (Dkt. No. 22.) On February 23, 2015, Plaintiff

filed an ex parte application for leave to respond to Defendant’s objection and request

to strike. (Dkt. No. 23.) The Court grants Plaintiff’s ex parte application. (Id.) To the

extent that the Court relied upon evidence to which Defendant objected, the objections

are overruled. To the extent the Court did not rely on evidence to which the Defendant

objected, the objections are overruled as moot.

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LEGAL STANDARD

Federal Rule of Civil Procedure 56 empowers the Court to enter summary

judgment on factually unsupported claims or defenses, and thereby “secure the just,

speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 477

U.S. 317, 325, 327 (1986). Summary judgment is appropriate if the “pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any,show that there is no genuine issue asto any material fact and that the

moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact

is material when it affects the outcome of the case. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986).

The moving party bears the initial burden of demonstrating the absence of any

genuine issues of material fact. Celotex Corp., 477 U.S. at 323. The moving party can

satisfy this burden by demonstrating that the nonmoving party failed to make a

showing sufficient to establish an element of his or her claim on which that party will

bear the burden of proof at trial. Id. at 322-23. If the moving party fails to bear the

initial burden, summary judgment must be denied and the court need not consider the

nonmoving party’s evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60

(1970).

Once the moving party has satisfied this burden, the nonmoving party cannot rest

on the mere allegations or denials of his pleading, but must “go beyond the pleadings

and by her own affidavits, or by the ‘depositions, answers to interrogatories, and

admissions on file’ designate ‘specific facts showing that there is a genuine issue for

trial.’” Celotex, 477 U.S. at 324. If the non-moving party fails to make a sufficient

showing of an element of its case, the moving party is entitled to judgment as a matter

of law. Id. at 325. “Where the record taken as a whole could not lead a rational trier

of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’”

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

making this determination, the court must “view[ ] the evidence in the light most

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favorable to the nonmoving party.” Fontana v. Haskin, 262 F.3d 871, 876 (9th Cir.

2001). The Court does not engage in credibility determinations, weighing of evidence,

or drawing of legitimate inferences from the facts; these functions are for the trier of

fact. Anderson, 477 U.S. at 255. 

DISCUSSION

Plaintiff moves for summary on each of its four claims: (1) breach of written

agreement; (2) open book account; (3) account stated; and (4) quantum meruit.

3

(Dkt.

No. 17.)

A. Breach of Written Agreement

Under California law, “the elements of a cause of action for breach of contract

are (1) the existence of the contract, (2) plaintiff’s performance or excuse for

nonperformance,(3) defendant’s breach, and (4)the resulting damagesto the plaintiff.”

Oasis West Realty, LLC v. Goldman, 250 P.3d 1115, 1121 (Cal. 2011). “When a

party’s failure to perform a contractual obligation constitutes a material breach of the

contract, the other party may be discharged from its duty to perform under the

contract.” Brown v. Grimes, 120 Cal. Rptr. 3d 893, 902 (Ct. App. 2011). “Normally

the question of whether a breach of an obligation is a material breach, so as to excuse

performance by the other party, is a question of fact.” Id. at 903.

Here, Plaintiff argues that Defendant breached the engagement letter agreement

by not paying Plaintiff for the legal services it performed in connection with the Zurn

action. (Dkt. No. 17-1 at 4.) Defendant counters that Plaintiff breached the agreement

because it failed to exercise the requisite skill and care in representing Defendantsince

Plaintiff filed claims that “were either time barred as a matter of law well before the

complaint was filed, or claims that became time barred because of Plaintiff’s failure to

3The Court reiterates that it is Plaintiff’s burden to show that it is entitled to

summary judgment, yet Plaintiff’s motion fails to cite a single case or statute

supporting any of its generally cursory arguments. (Dkt. No. 17.) Cf. Entm’t Research

Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1217 (9th Cir.1997) (“Judges

are not like pigs, hunting for truffles buried in briefs.” (citation and internal quotation

marks omitted)). 

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file the complaint until January 18, 2011.” (Dkt. No. 20 at 14.)

Plaintiff responds that it did not commit legal malpractice because the statute of

limitations had expired before it met with Defendant, and that it informed Defendant

of the potential statute of limitation issues. (Dkt. No. 21 at 2-3; Dkt. No. 21-1 ¶¶ 3-5.)

However, Defendant declares that Plaintiff never advised it of the possible statute of

limitations problems, and would not have pursued those claims, and incurred the

associated legal fees and expenses, if had been so advised. (Dkt. No. 20-1 ¶ 10.) As

Plaintiff acknowledges, the Court must view the evidence in the light most favorable

to Defendant as the non-moving party, and assume that Plaintiff did not advise

Defendant of the potential statute of limitations issues. (Dkt. No. 21 at 2.)

Plaintiff also respondsthat its actions do not constitute legal malpractice because

its filing of claims ultimately found to be time-barred did not cause Defendant to lose

any meritorious claim. (Dkt. No. 21 at 3) (citing Gutierrez v. Mofid, 705 P.2d 886, 891

(Cal. 1985) (“It is well settled that an attorney is liable for malpractice when his

negligent investigation, advice, or conduct of the client’s affairs results in loss of the

client’s meritorious claim.”)). However, loss of a meritorious claim is not a required

element for legal malpractice. See Kasem v. Dion-Kindem, 179 Cal. Rptr. 3d 711, 715

(Ct. App. 2014) (“To state a cause of action for legal malpractice, a plaintiff must plead

the duty of the attorney to use such skill, prudence, and diligence as members of his or

her profession commonly possess and exercise; breach of that duty; a proximate causal

connection between the breach and the resulting injury; and actual loss or damage

resulting from the attorney’s negligence.” (emphasis added)); see alsoNeel v. Magana,

Olney, Levy, Cathcart & Gelfand, 491 P.2d 421, 423 (Cal. 1971) (“Since in the usual

case, the attorney undertakes to perform his duties pursuant to a contract with the

client, the attorney’s failure to exercise the requisite skill and care is also a breach of

an express or implied term of that contract. Thus legal malpractice generally

constitutes both a tort and a breach of contract.”).

In addition, Plaintiff responds that Defendant has not provided expert testimony

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to support that Plaintiff committed legal malpractice. (Dkt. No. 21 at 3, 5-6.) See

Stanley v. Richmond, 41 Cal. Rptr. 2d 768, 781 (Ct. App. 1995) (“Where a malpractice

action is brought against an attorney holding [herself] out as a legal specialist and the

claim against the attorney relates to [her] expertise, then only a person knowledgeable

in the specialty can define the applicable duty of care and render an opinion on whether

it was met.” (citation and internal quotation marks omitted, alterations in original)).

However, expert testimony is not required “if the attorney’s negligence is readily

apparent from the facts of the case.” Stanley, 41 Cal. Rptr. 2d at 781 (citation and

internal quotation marks omitted.) Moreover, Defendant contendsthat this case isstill

in early discovery and it is awaiting the production of requested documents, and

Defendant asks that the Court deny summary judgment under Federal Rule of Civil

Procedure 56(d) to permit it to gather the necessary information for any required expert

analysis and opinion. (Dkt. No. 20 at 14 n.3; Dkt. No. 20-2 ¶¶ 5-6.) Plaintiff responds

that Defendant has not shown what additional information is sought and how it would

preclude summary judgment, and that Plaintiff has already produced the documents

requested.

4

(Dkt. No. 21 at 6-7; Dkt. No. 21-4 ¶¶ 2-3.) The Court concludes that to the

extent expert testimony is necessary, summary judgment is premature because

Defendant has sufficiently shown that it needs additional discovery. See Fed. R. Civ.

P. 56(d); VISA Int’l Serv. Ass’n v. Bankcard Holders of Am., 784 F.2d 1472, 1475 (9th

Cir. 1986) (stating that denial under former Rule 56(f) is disfavored when a party

specifically identifies relevant information and pointsto “some basis” for its existence).

Finally, Plaintiff argues that Defendant cannot challenge its invoices because

Defendant did not object until April 2012, which was over thirty days after the January

26, 2012 invoice that included the work on the summary judgment opposition, and five

months after the district court granted summary judgment in the Zurn action. (Dkt. No.

21 at 3-4; see also Dkt. No. 17-5 at 16-28.) The engagement letter provides that if

4The parties dispute whether Plaintiff isrequired to produce to Defendant emails

and bills previously sent to Defendant. (Dkt. No. 22 at 2 n.1; Dkt. No. 23-2 at 2.)

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Defendant had any dispute with any invoiced amounts, it “shall raise such dispute

within thirty (30) days of the invoice date” or it would be “liable for the full amount

invoiced.” (Dkt. No. 17-4 at 2.) However, if Plaintiff materially breached the

agreement, Defendant may have been discharged fromits duty to complywith thisterm

of the agreement. See Brown, 120 Cal. Rptr. 3d at 902. 

In sum, based on the current record, Plaintiff has failed to demonstrate the

absence of any genuine dispute of material fact as to whether Plaintiff’s legal

representation constituted a material breach of the engagement letter excusing

Defendant from making payments, and therefore has failed to meet its burden to show

that it is entitled to summary judgment on its breach of contract claim. See Greenberg

Traurig, LLP v. Gale Corp., No. 07-cv-01572-MCE-DAD, 2009 WL 2422815, at *3

(E.D. Cal. Aug. 4, 2009) (denying summary judgment in law firm’s breach of contract

action to recover unpaid legal fees from its former client because there existed a

genuine dispute of material fact regarding whether law firm’s failure to provide

competent legal representation constituted a material breach of the contract which

excused the client from making payments under the contract). 

As such, the Court DENIES Plaintiff’s motion for summary judgment on its

breach of contract claim.

B. Open Book Account

An open book account is “a detailed statement which constitutes the principal

record of one or more transactions between a debtor and a creditor arising out of a

contract or some fiduciary relation, and shows the debits and credits in connection

therewith, and against whom and in favor of whom entries are made, is entered in the

regular course of business as conducted by such creditor or fiduciary, and is kept in a

reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet

or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or

cards of a permanent character, or is kept in any other reasonably permanent form and

manner.” Cal. Code Civ. Proc. § 337a; see also Cusano v. Klein, 264 F.3d 936, 942

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n.2 (9th Cir. 2001). “To prevail on an open book account claim, a plaintiff must show

that: ‘(1) Plaintiff and Defendant had financial transactions; (2) that Plaintiff kept an

account of the debits and credits involved in the transactions; (3) that Defendant owes

money on the account; and (4) the amount of money that Defendant owes Plaintiff.’”

In re Beshmada, LLC, No. 13-cv-8342-GAF, 2014 WL 4060262, at *7 (C.D. Cal.

2014) (citation omitted). Under California law, money due under an express contract

cannot be recovered in an action claiming an open book account unless there is a

contrary agreement by the parties. Martini E Ricci Iamino S.P.A. – Consortile Societa

Agricola v. W. Fresh Mktg. Servs., Inc., No. 13-cv-0097-AWI-BAM, 2014 WL

4661149, at * 11 (E.D. Cal. Sept. 18, 2014). “[C]ourtsrequire that the parties expressly

intend to be bound because accruing debts under an express contract are not normally

considered the subject of an open book account.” Id. (citation and internal quotation

marks omitted). “The mere incidental keeping of accounts does not alone create a book

account.” Id. (citation and internal quotation marks omitted).

Plaintiff’s entire argument in support of its open book account claim is:

“[Plaintiff] statements to [Defendant] constitute an open book account, and

[Defendant’s] refusal to pay is grounds for entry ofsummary judgment.” (Dkt. No. 17-

1 at 4.) Defendant counters that Plaintiff has made no effort to carry its burden of

proof, and that the claimfails because it is based on the parties’ original express written

agreement and the parties never agreed to be bound by a book account. (Dkt. No. 20

at 11-12.)

The Court agrees with Defendant that Plaintiff has failed to meet its burden to

demonstrate the absence of any genuine dispute of material fact regarding its open

book account claim. The claim is based on the parties’ express original agreement, and

Plaintiff has not shown that the parties agreed to be bound by a book account. Assuch,

the Court DENIES Plaintiff’s motion for summary judgment on its open book account

claim.

///

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C. Account Stated

An “account stated” is “an agreement, based on prior transactions between the

parties, that all items of the account are true and that the balance struck is due and

owing from one party to the other.”5

S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1091

(9th Cir. 1989). “The elements of an account stated are: ‘(1) previous transactions

between the parties establishing the relationship of debtor and creditor; (2) an

agreement between the parties, express or implied, on the amount due from the debtor

to the creditor; (3) a promise by the debtor, express or implied, to pay the amount

due.’” Martini E Ricci Iamino S.P.A. – Consortile Societa Agricola, 2014 WL

4661149, at * 9 (quoting Zinn v. Fred R. Bright Co., 76 Cal. Rptr. 663, 665-66 (Ct.

App. 1969)). “Both parties must assent to the new amount owed in order to create an

accountstated.” Id. “[A] debt which is not predicated on a new contract, but isinstead

based on a preexisting express contract, cannot be the basis of an account stated.” Id.

(citation and internal quotation marks omitted). 

Plaintiff’s entire argument in support of its account stated claim is: “[Plaintiff]

statementsto [Defendant] constitute an accountstated and [Defendant’s] refusal to pay

is grounds for entry of summary judgment.” (Dkt. No. 17-1 at 4.) Defendant counters

that Plaintiff has made no effort to carry its burden of proof, and that the claim fails

because it is based on the parties’ original express written agreement and the parties

never reached a new agreement on the balance. (Dkt. No. 20 at 9-11.)

The Court agrees with Defendant that Plaintiff has failed to meet its burden to

demonstrate the absence of any genuine dispute of material fact regarding its account

stated claim. The claim is based on the parties’ original express written agreement and

the evidence shows that Defendant disputed the amount due. As such, the Court

DENIES Plaintiff’s motion for summary judgment on its account stated claim.

5An “open book account” differs from an “account stated” in that the parties to

an open book account have not agreed on a final balance. H & C Global Supplies SA

DECVv.Pandol Assocs. Mktg., Inc., No. 13-CV-0827-AWI -SKO, 2013 WL 5954812,

at *2 (E.D. Cal. Nov. 6, 2013)

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D. Quantum Meruit

“Quantum meruit (or quasi-contract) is an equitable remedy implied by the law

under which a plaintiff who has rendered services benefitting the defendant may

recover the reasonable value of those services when necessary to prevent unjust

enrichment of the defendant.” In re De Laurentiis Ent. Grp. Inc., 963 F.2d 1269, 1272

(9th Cir. 1992) (citation omitted). “Quantum meruit is not the same as a contract

implied in fact. Quantum meruit is based not on the intention of the parties, but rather

on the provision and receipt of benefits and the injustice that would result to the party

providing those benefits absent compensation.” Id. The elements of a claim based on

quantum meruit are: “(1) that the plaintiff performed certain servicesfor the defendant,

(2) their reasonable value, (3) that they were rendered at defendant’s request, and

(4) that they are unpaid.” Cedars Sinai Med. Ctr. v. Mid-West Nat’l Life Ins. Co., 118

F. Supp. 2d 1002, 1013 (citing Haggerty v. Warner, 252 P.2d 373, 377 (Cal. Ct. App.

1953)).

Plaintiff argues that it is entitled to summary judgment on its quantum meruit

claim because there is no dispute that it provided legal services to Defendant and

Defendant hasfailed to pay. (Dkt. No. 17-1 at 4-5.) Defendant countersthat Plaintiff’s

quantum meruit claim fails because Plaintiff seeks equitable relief for services already

subject to a written contract. (Dkt. No. 20 at 13.) (citing Hedging Concepts, Inc. v.

First Alliance Mortg. Co., 49 Cal. Rptr. 2d 191, 197-98 (Ct. App. 1996) (“[I]t is well

settled that there is no equitable basis for an implied-in-law promise to pay reasonable

value when the parties have an actual agreement covering compensation.”)). 

Alternatively, Defendant contends that Plaintiff is not entitled to summary judgment

because Defendant has challenged the value of Plaintiff’s services in the underlying

Zurn action. (Dkt. No. 20 at 13.) 

The Court concludes that Plaintiff has failed to meet its burden to demonstrate

the absence of any genuine dispute of material fact regarding the reasonable value of

its services, and therefore has failed to meet its burden to show that it is entitled to

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summary judgment on its quantum meruit claim. As such, the Court DENIES

Plaintiff’s motion for summary judgment on its quantum meruit claim.

CONCLUSION AND ORDER

For the foregoing reasons, IT IS HEREBY ORDERED:

(1) the Court DENIES Plaintiff The Eclipse Group LLC’s motion for

summary judgment (Dkt. No. 17);

(2) the Court GRANTS Plaintiff’s ex parte application for leave to respond

to Defendant Fortune’s objection to Plaintiff’s declaration and its request

to strike Plaintiff’s reply (Dkt. No. 23);

(3) theCourt hereby VACATES the hearing date set for this matter on March

6, 2015 at 1:30 p.m. 

IT IS SO ORDERED.

DATED: March 4, 2015

HON. GONZALO P. CURIEL

United States District Judge

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