Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-05507/USCOURTS-cand-4_06-cv-05507-0/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

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

1-800-BAR NONE, A FINANCIAL

CORPORATION, INC., a California

corporation; JAMES CROUSE,

individually and as designated

representative of the former Bar

None, Inc. shareholders,

Plaintiffs,

v.

BRANDOW'S FAIRWAY CHRYSLER JEEP,

INC., a Pennsylvania corporation;

BRANDOW CHRYSLER JEEP COMPANY, a

Pennsylvania corporation; BRANDOW

CHEVROLET, INC., a New Jersey

corporation; MARGARET M. STUSKI, an

individual; and DOES 1 through 100,

inclusive,

Defendants. /

BRANDOW'S FAIRWAY CHRYSLER JEEP,

INC., a Pennsylvania corporation;

BRANDOW CHRYSLER JEEP COMPANY, a

Pennsylvania corporation; BRANDOW

CHEVROLET, INC., a New Jersey

corporation,

Cross-Claimants,

v.

1-800-BAR NONE, A FINANCIAL

CORPORATION, INC., a California

corporation; JAMES CROUSE, an

individual,

Cross-Defendants. /

No. C 06-5507 CW

ORDER GRANTING

PLAINTIFFS'

MOTION FOR

SUMMARY JUDGMENT

Case 4:06-cv-05507-CW Document 78 Filed 01/04/07 Page 1 of 21
United States District Court

For the Northern District of California

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Plaintiffs and Cross-Defendants 1-800 Bar None, A Financial

Corporation, Inc. (Bar None) and Jim Crouse (collectively,

Plaintiffs) move for summary judgment on their cause of action for

declaratory relief; in addition, Plaintiffs move for summary

judgment on the counter-claims against them. Defendants and CrossClaimants Brandow's Fairway Chrysler Jeep, Inc., Brandow Chrysler

Jeep Company, Brandow Chevrolet (collectively, Brandow) and

Defendant Margaret Stuski (collectively, Defendants) oppose the

motion. The matter was heard on December 1, 2006. Having

considered the parties' papers, the evidence cited therein and oral

argument, the Court grants Plaintiffs' motion.

BACKGROUND

Bar None is a provider of sales leads to retail automobile

dealerships. It obtains leads for its dealership customers by

designing and implementing national advertising campaigns and

direct mail solicitation programs. These advertisements and

solicitations include a toll-free number that a consumer,

interested in purchasing a vehicle, can call. Bar None screens

consumers who call the toll-free number for eligibility to purchase

a vehicle and then directs them to an automobile dealership, where

the dealership will negotiate with the consumer for the sale of a

car. Mr. Crouse is the former president and Chief Executive

Officer of Bar None. 

Brandow was a Bar None customer. Brandow's former Chief

Financial Officer, David Wexler, selected Bar None to generate

leads for the Brandow dealerships. Between 1999 and 2004, Brandow

contracted with Bar None to provide lead generation services. 

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Bar None states that it required all of its customers,

including Brandow, to pre-pay for direct mail advertising. 

According to Bar None, Brandow would typically order a weekly level

of direct mail advertising over the phone; Bar None would generate

a purchase order confirming the phone order and would forward the

order to Brandow. Although Brandow was supposed to sign and return

the purchase order, Bar None states that Brandow often just sent in

payment of the amount reflected on the purchase order. After Bar

None received funds from Brandow, Bar None generated the direct

mailing materials and mailed them using the United States Postal

Service. Brandow states that its initial practice was to have the

accounting department pay Bar None for its services by mailing a

check, not by wire transfer. In 2003, however, Mr. Wexler began

initiating wire transfers to Bar None; only Mr. Wexler was listed

with Brandow's bank as having authority to initiate wire transfers.

In the fall of 2004, Bar None accused Brandow of falling

behind on paying its bills. According to Bar None, Brandow

responded that it was struggling financially. Bar None offered to

provide Brandow with a month of free services, if Brandow would pay

its past due balance. Brandow accepted the free services, but it

did not pay its past due balance. Bar None terminated its business

relationship with Brandow, alleging that Brandow owed Bar None

approximately $150,000 for past advertising services.

During approximately the same time, Brandow fired Mr. Wexler

and hired Ms. Stuski as the Vice President and General Counsel of

Brandow Auto Group, which includes the three Brandow dealerships

involved in this case. One of her responsibilities was to perform

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a forensic investigation of Mr. Wexler's malfeasance. 

Months later, after Bar None attempted to collect on the past

due balance, Ms. Stuski reviewed the Bar None file to determine

what, if anything, was owed. She discovered the wire transfers

and, in light of Brandow's payment practices of mailing checks for

services rendered, deemed the wire transfers suspicious. 

On April 27, 2005, she sent a letter to Bar None, stating that

she had discovered "vast irregularities" in Bar None's services and

the amounts that Brandow had paid to Bar None. The letter stated,

in part:

It is the position of Brandow at this time, that Brandow

does not owe Bar None any money. Further, at this time,

please be advised that according to our calculations, there

has been payment for services to Bar None for which we shall

seek a refund unless they are substantiated and that the

preliminary amount is $1,023,575.00 dollars.

In light of the impending sale of Bar None, this amount

of money is considered in dispute.

Dec. of Staub, Ex. 1. The letter was sent on the day a sale of Bar

None was to close. Bar None contends that the baseless allegations

in the letter caused a delay in the sale of Bar None, resulting in

damages to Bar None shareholders in excess of $500,000. 

Ms. Stuski requested all the documents relating to the

relationship between Bar None and Brandow. Bar None responded

that, given the length of the relationship and corresponding amount

of documents at issue, the request was unreasonable. It requested

that Ms. Stuski provide it with more information concerning the

irregularities she claimed in her letter so that it could

investigate the merit of her allegations; she refused.

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In September, 2005, Plaintiffs filed the present action

against Defendants in Alameda County Superior Court. Plaintiffs'

first amended complaint alleges breach of written contract,

intentional interference with contractual relationships,

interference with prospective economic relations, fraud, defamation

and slander per se. The complaint also includes a cause of action

for declaratory judgment, seeking a judicial declaration that

Brandow's $1,023,575 claim is invalid. 

Defendants answered the complaint and, six months later,

Brandow filed a cross-complaint, alleging concealment, grand theft,

money had and received, unfair business practices, breach of

contract and conspiracy. In addition, Brandow seeks an accounting. 

These causes of action are based on Brandow's allegations that it

paid Bar None over a million dollar for services not rendered and

that Plaintiffs and Mr. Wexler conspired to steal over a million

dollars. 

After filing this lawsuit, Plaintiffs propounded discovery. 

In their interrogatories, Plaintiffs requested that Brandow

describe all accounting and calculations by which it computed the

$1,023,575 figure cited in the April 27, 2005 letter. First,

Defendants answered, "The checks and wire transfer amounts were

totaled." Muller Dec., Ex. 2. Defendants then amended their

answer to explain: 

The checks and wire transfer amounts were totaled. That is,

Brandow compared the amounts of the checks and wire transfers

sent to Bar None to the invoices it had received. The checks

all had invoices which matched up to them. . . . The wire

transfers did not have any invoices associated with them. . . .

After giving Bar None the benefit of the doubt for certain

amounts, the calculation came to $1,023,575.

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Muller Dec., Ex. 3. Defendants augmented their answer again; in

their Second Amended Response to Plaintiff's First Set of Special

Interrogatories, Defendants added:

Brandow is currently unable to recreate the exact calculation

it performed to arrive at the $1,023,575 figure, as there are

no notes reflecting the calculation, nor which amounts it gave

Bar None the benefit of the doubt for. As noted in Ms.

Stuski's April 27, 2005, letter, the amount is "preliminary." 

Hence, Brandow reserves its rights to update the calculation

in the future.

Muller Dec., Ex. 4. 

Through the discovery process, Defendants identified thirty

wire transfers that they claim Bar None received without having

provided services in return. Plaintiffs contend that each of these

wire transfers from Brandow was in exchange for actual work

performed by Bar None at Brandow's request. Plaintiffs produced to

Defendants a set of purchase orders, invoices and United States

Postal Service receipts, documenting the work Bar None performed in

exchange for the wire transfers at issue. 

In August, 2006, while this case was still pending in state

court, Plaintiffs moved for summary judgment on their claim for

declaratory relief as well as on the causes of action contained in

the cross-complaint. Before the motion was decided, Defendants

removed the case to federal court. Plaintiffs again move for

summary judgment.

LEGAL STANDARD

Summary judgment is properly granted when no genuine and

disputed issues of material fact remain, and when, viewing the

evidence most favorably to the non-moving party, the movant is

clearly entitled to prevail as a matter of law. Fed. R. Civ.

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P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

1987).

The moving party bears the burden of showing that there is no

material factual dispute. Therefore, the court must regard as true

the opposing party's evidence, if supported by affidavits or other

evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815

F.2d at 1289. The court must draw all reasonable inferences in

favor of the party against whom summary judgment is sought. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). 

Material facts which would preclude entry of summary judgment

are those which, under applicable substantive law, may affect the

outcome of the case. The substantive law will identify which facts

are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

Where the moving party does not bear the burden of proof on an

issue at trial, the moving party may discharge its burden of

production by either of two methods. Nissan Fire & Marine Ins.

Co., Ltd., v. Fritz Cos., Inc., 210 F.3d 1099, 1106 (9th Cir.

2000). 

The moving party may produce evidence negating an

essential element of the nonmoving party’s case, or,

after suitable discovery, the moving party may show that

the nonmoving party does not have enough evidence of an

essential element of its claim or defense to carry its

ultimate burden of persuasion at trial. 

Id.

 

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If the moving party discharges its burden by showing an

absence of evidence to support an essential element of a claim or

defense, it is not required to produce evidence showing the absence

of a material fact on such issues, or to support its motion with

evidence negating the non-moving party's claim. Id.; see also

Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); Bhan v.

NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). If the

moving party shows an absence of evidence to support the non-moving

party's case, the burden then shifts to the non-moving party to

produce "specific evidence, through affidavits or admissible

discovery material, to show that the dispute exists." Bhan, 929

F.2d at 1409. 

If the moving party discharges its burden by negating an

essential element of the non-moving party’s claim or defense, it

must produce affirmative evidence of such negation. Nissan, 210

F.3d at 1105. If the moving party produces such evidence, the

burden then shifts to the non-moving party to produce specific

evidence to show that a dispute of material fact exists. Id.

If the moving party does not meet its initial burden of

production by either method, the non-moving party is under no

obligation to offer any evidence in support of its opposition. Id.

This is true even though the non-moving party bears the ultimate

burden of persuasion at trial. Id. at 1107.

Where the moving party bears the burden of proof on an issue

at trial, it must, in order to discharge its burden of showing that

no genuine issue of material fact remains, make a prima facie

showing in support of its position on that issue. UA Local 343 v.

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Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994). That

is, the moving party must present evidence that, if uncontroverted

at trial, would entitle it to prevail on that issue. Id.; see also

Int’l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th

Cir. 1991). Once it has done so, the non-moving party must set

forth specific facts controverting the moving party's prima facie

case. UA Local 343, 48 F.3d at 1471. The non-moving party's

"burden of contradicting [the moving party's] evidence is not

negligible." Id. This standard does not change merely because

resolution of the relevant issue is "highly fact specific." Id.

DISCUSSION

Defendants' $1,023,575 overcharge accusation is the basis for

Plaintiffs' claim for declaratory relief. Plaintiffs contend that

the overcharge accusation is also the basis for each of the seven

causes of action in Brandow's counterclaim. Arguing that the

overcharge accusation is without merit, Plaintiffs seek summary

judgment in their favor on these eight claims. Defendants respond

that Plaintiffs have not met their initial burden and that, even if

they did, triable issues of material fact exist. Defendants

request that, if the Court is inclined to grant Plaintiffs' motion,

the Court permit them to conduct additional discovery to show that

there are triable issues of fact.

I. Declaratory Relief

Plaintiffs seek a declaration that Defendants' overcharge

allegation, or refund demand, is, and was, invalid. They

acknowledge that, to prevail on their declaratory judgment claim,

they must establish that the overcharge allegation was baseless and

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that Bar None provided the services for which it was paid. 

Plaintiffs contend that the undisputed facts establish this without

question.

Plaintiffs point to the purchase orders and invoices, attached

to the declaration of Dan Staub, produced for each wire transfer at

issue. In addition, they have included the declaration of Markham

Healy, Bar None's Direct Mail Manager, who states that he collected

purchase orders and United States Postal Service receipts

pertaining to Brandow. Mr. Healy states that he was in charge of

preparing each of the mailings associated with the wire transfers

and that he ensured that each mailing was completed. He explains:

The Brandow account was a fairly large one for Bar None. I

therefore have a good memory of working on the Brandow

mailings. Having reviewed the extensive paper work associated

with each of the thirty wire transfer transactions, I have no

doubt that each of the mailings associated with each of the

thirty wire transfers identified by Brandow actually took

place. I was responsible for ensuring that each mail drop

took place and I remember obtaining confirmation from Bar

None's direct mail vendor that each mail drop did, in fact,

occur.

Healy Dec., ¶ 5.

Defendants disagree that Plaintiffs have met their initial

burden. They argue that Plaintiffs' motion is based largely on

inadmissible evidence and that the remaining evidence is not

sufficient for Plaintiffs to make a prima facie showing that they

are entitled to declaratory judgment. 

Defendants argue that the Staub and Healey declarations must

be excluded because they fail to attach the documents to which they

refer. Federal Rule of Civil Procedure 56(e) requires that

documents relied upon in an affidavit presented in a summary

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judgment motion or opposition thereto be attached to the affidavit. 

See Fed. R. Civ. P. 56(e) ("Supporting and opposing affidavits

shall be made on personal knowledge, shall set forth such facts as

would be admissible in evidence, and shall show affirmatively that

the affiant is competent to testify to the matters stated therein.

Sworn or certified copies of all papers or parts thereof referred

to in an affidavit shall be attached thereto or served

therewith."). Nonetheless, because the documents that should have

been attached to the Staub and Healey declarations were submitted

with Defendants' opposition, the Court will not exclude the

declarations. 

Defendants also argue that the documents Plaintiffs rely on

are not properly authenticated. The only documents not

authenticated at the time of the hearing, however, were the postal

receipts; all other documents were authenticated and admissible. 

After the hearing, Plaintiffs submitted the postal receipts and a

declaration certifying the authenticity of those receipts;

therefore, the postal receipts are authenticated and admissible. 

And, even without the postal receipts, Plaintiffs still make a

prima facie case based upon the purchases orders, the invoices and

the declaration of Mr. Healy, who states, and would testify, that

he ensured that each of mailings associated with the wire transfers

at issue was complete. 

As noted above, Defendants argue that, even if Plaintiffs meet

their initial burden on their claim for declaratory judgment, there

are triable issues of fact that preclude summary judgment. 

Defendants rely heavily upon the testimony of their expert, Mr.

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Woodward. As Plaintiffs note, however, Mr. Woodward makes no

determination on whether Bar None actually provided the direct mail

services at issue, nor could he. Instead, he criticizes the

quality and level of documentation that Bar None provides its

customers; this does not give rise to a triable issue of fact. He

concludes that, based upon his review, he would not have paid the

invoices, nor would he recommend that his clients pay the invoices;

rather, he would have requested more back up data. This does not

controvert Plaintiffs' prima facie case that they did provide the

services paid for by the wire transfers and are entitled to

declaratory judgment. 

Nor does Defendants' evidence that Mr. Crouse proposed a joint

venture with Brandow and asked to borrow money controvert

Plaintiffs' prima facie case. Even assuming this is true, a jury

could not reasonably infer from this fact that Mr. Crouse, Bar None

and Mr. Wexler were stealing money from Brandow. As Plaintiffs

note, absent evidence of wrongdoing, evidence of a theoretical

motive for engaging in wrongdoing is irrelevant. Similarly,

Defendants' evidence that there was an increase in wire transfers

and their evidence regarding irregularities in payment does not

controvert Plaintiffs' prima facie case, as it provides no basis

for a conclusion of wrongdoing. 

Thus, the Court grants summary judgment in favor of Plaintiffs

on their claim for declaratory judgment. 

II. Concealment

Brandow's cross-complaint alleges that Plaintiffs

intentionally failed to disclose that they had received more than

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one million dollars in excess of the amount allegedly owed Bar None

for services rendered. Plaintiffs contend that this allegation,

and the concealment claim, are not supported by the evidence. 

The parties agree that, to state a claim for concealment,

Brandow must show a false representation, or concealment of a

material fact, made with knowledge of its falsity, with the intent

to deceive or induce the person to whom it is made to act upon it,

and justifiable detrimental reliance on the statement. Stevenson

v. Baum, 65 Cal. App. 4th 159, 164 (1998). Plaintiffs point to the

evidence, discussed above, showing that services to Brandow were

rendered for the amount of the disputed wire transfers. In light

of this evidence, the burden shifts to Brandow to produce specific

evidence to show that a dispute of material fact exists. 

Brandow again relies on the declaration of its expert, Mr.

Woodward. But, as discussed above, Mr. Woodward makes no

determination that Brandow paid for services not rendered. Brandow

also argues that this case is about more than wire transfers;

however, it fails to produce any specific evidence to support that

argument. The Court finds that Brandow offers no evidence to

substantiate its claim that Bar None did not actually perform the

services paid for by the wire transfers or that Plaintiffs

knowingly concealed anything. Ms. Stuski's unsupported hunch does

not create a dispute of material fact.

Because Brandow has failed to produce evidence showing that a

dispute of material fact exists, the Court grants summary judgment

in favor of Plaintiffs on Brandow's claim for concealment.

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III. Breach of Contract

Brandow's cross-complaint alleges that Bar None breached a

series of contracts by receiving, for services not rendered, in

excess of one million dollars through a money laundering scheme

designed by Mr. Wexler and Mr. Crouse to defraud Brandow. 

Plaintiffs argue that, like Brandow's claim for concealment, this

claim fails.

The parties agree that to state a claim for breach of

contract, Brandow must prove the existence of a contract, Brandow's

performance or excuse for non-performance, Bar None's breach and

the resulting damages to Brandow. Reichert v. General Ins. Co. of

Am., 68 Cal. 2d. 822, 830 (1968). Plaintiffs again point to the

evidence demonstrating that, for each of the thirty wire transfers

received by Bar None from Brandow, Bar None provided the requested

direct mail services. In light of this evidence, the burden shifts

to Brandow to produce specific evidence to show that a dispute of

material fact exists. 

Brandow again relies on Mr. Woodward's declaration, arguing

that it calls into question whether the services were actually

provided. As discussed above, that argument is not persuasive. 

Brandow's assertion that it paid for services not rendered, without

any specific evidence, does not create a genuine issue of material

fact.

Therefore, the Court grants summary judgment in favor of

Plaintiffs on Brandow's claim for breach of contract. 

IV. Violation of California Penal Code Section 487 (Grand Theft)

Brandow alleges that Plaintiffs committed a public policy tort

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by receiving the wire transfers without providing anything in

return, in violation of California Penal Code Section 487. 

Plaintiffs contend that this claim is also without support.

Section 487 provides that grand theft is committed when money,

labor or property taken is of a value exceeding four hundred

dollars. Plaintiffs again point to the evidence demonstrating

that, for each of the thirty wire transfers received by Bar None

from Brandow, Bar None provided the requested direct mail services. 

As noted above, in light of this evidence, the burden shifts to

Brandow to produce specific evidence to show that a dispute of

material fact exists. 

 Brandow argues that a triable fact exists as to whether

Plaintiffs illegally took money from it. But it does not provide

specific evidence to support this argument, or its claim. 

Therefore, the Court grants summary judgment in favor of Plaintiffs

on Brandow's claim for violation of California Penal Code

Section 487, assuming that such a violation provides a private

civil cause of action. 

V. Money Had and Received

Brandow claims that Plaintiffs became indebted to it by

collecting money through the wire transfers without actually

performing direct mail services. Plaintiffs contend that Brandow's

claim for money had and received fails.

The parties agree that, to prevail on this claim, Brandow must

prove the existence of the following: (1) a statement of

indebtedness in a certain sum; (2) consideration given; and

(3) non-payment. First Interstate Bank v. State of California, 197

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Cal. App. 3d 627, 635 (1987). Plaintiffs again point to the

evidence demonstrating that, for each of the thirty wire transfers

received by Bar None from Brandow, Bar None provided the requested

direct mail services. In light of this evidence, the burden shifts

to Brandow to produce specific evidence to show that a dispute of

material fact exists. 

Brandow fails to meet its burden and, therefore, the Court

grants summary judgment in favor of Plaintiffs on Brandow's claim

for money had and received.

VI. Unfair Business Practices

Brandow alleges that Plaintiffs violated Section 17200 of the

California Business and Professions Code by accepting payments in

excess of amounts invoiced, failing to credit the payments to

outstanding invoices, failing to return excess payments and

conspiring with Brandow's employees to steal from Brandow. 

Plaintiffs argue that this claim fails; they again point to the

evidence demonstrating that, for each of the thirty wire transfers

received by Bar None from Brandow, Bar None provided the requested

direct mail services. In light of this evidence, the burden shifts

to Brandow to produce specific evidence to show that a dispute of

material fact exists. Although Brandow argues that there are

triable issues of fact regarding whether Plaintiffs participated in

any unlawful, unfair or fraudulent acts, it again fails to provide

specific evidence to support this argument. Therefore, the Court

grants summary judgment in favor of Plaintiffs on Brandow's claim

for unfair business practices.

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VII. Conspiracy

Brandow alleges that Plaintiffs and Mr. Wexler conspired and

agreed among themselves to defraud Brandow, engaged in unfair and

deceptive business practices and violated Penal Code Section 487. 

Plaintiffs argue that this claim also fails and, thus, they are

entitled to summary judgment. 

The parties agree that to prevail upon a claim for conspiracy,

a plaintiff must prove the formation and operation of the

conspiracy, wrongful conduct on the part of the defendant in

furtherance of the conspiracy and damages arising from the wrongful

conduct. Kidron v. Movie Acquisition Corp., 40 Cal. App. 4th 1571,

1581 (1995). Plaintiffs argue that Brandow has not, and cannot,

produce any evidence that either Bar None or Mr. Crouse engaged in

an unlawful scheme to steal money from Brandow. They state that

the most Brandow has produced is evidence that Ms. Stuski thinks

that there was a conspiracy, a thought contradicted by the evidence

showing that Plaintiffs did not engage in illegal activity.

Brandow responds that there is ample evidence to warrant trial

on this claim. It notes that Plaintiffs attempted to engage in

"joint ventures" with Brandow and that Mr. Crouse asked to borrow

money. It notes that, after Brandow refused to loan money or

participate in a joint venture, the wire transfers to Bar None

accelerated. Brandow provides no evidence, however, that Bar None

fraudulently received any wire transfers in connection with work it

did not perform. 

Because Brandow has failed to produce evidence showing that a

dispute of material fact exists concerning whether Plaintiffs

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engaged in wrongful conduct, the Court grants summary judgment in

favor of Plaintiffs on Brandow's claim for conspiracy.

VIII. Accounting

Brandow alleges that an accounting is necessary to show the

amount that it is owed from Bar None. Plaintiffs argue that this

claim, like all of Brandow's other cross-claims, fails. It notes

that a plaintiff is entitled to an accounting if it can demonstrate

wrongdoing. See Union Bank v. Sup. Ct., 31 Cal. App. 4th 573, 593-

94 (1995) ("defendant has proven it engaged in no misconduct and,

as a result, plaintiffs have no right to an accounting"); Caldwell

v. Caldwell, 80 Cal. App. 2d 378, 382-83 (1947) (absence of

misconduct by defendants warranted nonsuit as to plaintiff's

accounting cause of action). Here, Brandow has failed to establish

that a dispute of material fact exists as to any wrongdoing by

Plaintiffs. Therefore, the Court grants summary judgment in

Plaintiffs' favor on this claim. 

IV. Defendants' request for further discovery

Defendants request that, if the Court is inclined to grant

Plaintiffs' motion, the Court continue Plaintiffs' motion for six

months to allow Defendants to conduct additional discovery,

pursuant to Federal Rule of Civil Procedure 56(f). Rule 56(f)

requires the party opposing summary judgment to state by affidavit

that “the party cannot for reasons stated present by affidavit

facts essential to justify the party’s opposition.” Fed. R. Civ.

P. 56(f). “[T]he party seeking a continuance bears the burden to

show what specific facts it hopes to discover that will raise an

issue of material fact. The mere hope that further evidence may

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develop prior to trial is an insufficient basis for a continuance

under Fed. R. Civ. P. 56(f).” Continental Maritime of San

Francisco v. Pacific Coast Metal Trades Dist. Council, Metal Trades

Dep’t, AFL-CIO, 817 F.2d 1391, 1395 (9th Cir. 1987) (internal

citation omitted). To obtain a continuance, the party opposing the

summary judgment motion must make clear not only what information

is sought, but also how that information “would preclude summary

judgment.” Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir. 1998)

(quoting Garrett v. City and County of San Francisco, 818 F.2d

1515, 1518 (9th Cir. 1987)).

Plaintiffs object to Defendants' request for additional time

to conduct discovery. They argue that a party seeking a

continuance of a summary judgment motion, pursuant to Rule 56(f),

must formally move for a continuance. Defendants do not. 

Nonetheless, even assuming that Defendants did, they fail to make

clear what information is sought or how that information would

preclude summary judgment. 

Ms. Stuski states that she has outstanding discovery requests. 

As Plaintiffs note, however, none of these pending requests are

relevant to Plaintiffs' claim for declaratory judgment, the only

claim against Ms. Stuski at issue on this motion for summary

judgment. And Ms. Stuski points to no potential discovery requests

that would pertain to the declaratory judgment claim at issue. 

Brandow states that it needs to take depositions of Mr.

Crouse, Mr. Wexler, and Bar None's most knowledgeable person,

because these individuals will have information concerning the

relationship between the parties, who ordered services, what was

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ordered, whether services were provided, how invoices were

prepared, how documents were kept and Bar None's financial

condition from 2003 to 2004; they will also be able to provide

testimony comparing the Brandow account to other dealer accounts. 

Brandow states that this information will bear on the breach of

contract and fraud claims in the cross-complaint and will provide

additional evidence to show that there are triable issues of fact. 

These broad statements are not sufficient to comply with the

requirements of Rule 56(f). As the Ninth Circuit instructs, "Rule

56(f) requires affidavits setting forth the particular facts

expected from the movant's discovery." Brae Transp., Inc. v.

Coopers & Lybrand, 790 F.2d 1439, 1443 (1986). Brandow sets forth

no particular or specific facts.

Furthermore, as Plaintiffs note, Defendants cannot prove that

they pursued discovery diligently before the motion for summary

judgment. See id. (noting that "the movant cannot complain if it

fails to pursue discovery diligently before summary judgment"). 

Plaintiffs filed the complaint in this case over one year ago and

Defendants have failed to take a single deposition, even after

Plaintiffs first filed their motion for summary judgment in state

court over four months ago. Defendants contend that they could not

take depositions because Plaintiffs stonewalled Defendants'

attempts to obtain relevant documents. This contention, however,

is not supported by the record. 

The Court will not delay ruling on Plaintiffs' motion for

summary judgment. 

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1

The parties submitted numerous objections, not discussed

above, to the other parties' evidence. In addition, Defendants

move to strike evidence Plaintiffs submitted in their reply (Docket

No. 62). To the extent that the Court relied upon evidence to

which there is an objection, the parties' objections are overruled. 

To the extent that the Court did not rely on such evidence, the

parties' objections are overruled as moot. Similarly, to the

extent the Court relied upon evidence Defendants move to strike,

Defendants' motion is DENIED; to the extent the Court did not rely

on such evidence, Defendants' motion is DENIED as moot. The Court

has not relied on any inadmissible evidence in deciding this

motion. 

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CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiffs' Motion

for Summary Judgment (Docket No. 17).1 The Court will enter a

declaratory judgment that Plaintiffs do not owe Brandow $1,023,474,

or any amount, and that Brandow's refund request of $1,023,474 is

without merit and is invalid. Judgment will be entered against

Brandow on all of Brandow's counter-claims. These judgments will 

will enter when the remainder of the case is resolved.

IT IS SO ORDERED.

Dated: 1/4/07 

CLAUDIA WILKEN

United States District Judge

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