Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_08-cv-03974/USCOURTS-cand-4_08-cv-03974-14/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1332 Diversity-Stockholders Suits

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UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

GEOFFREY BAKER and ELIZABETH 

MULLEN, 

 Plaintiffs, 

 vs. 

ARKANSAS BLUE CROSS AND BLUE 

SHIELD, BLUE CROSS AND BLUE SHIELD 

OF FLORIDA, INC., BLUE CROSS AND 

BLUE SHIELD OF MASSACHUSETTS, INC.,

BLUE CROSS AND BLUE SHIELD OF 

NORTH CAROLINA, HEALTHCARE 

SERVICES CORPORATION, B.P. 

INFORMATICS LLC, MICHAEL BROWN, 

PETER GOLDBACH, MICHAEL NEWMAN, 

BRETT PAINCHAUD, LAURA TUMPERI, 

and CHRISTOPHER WOODFIN, 

 Defendants. 

______________________________________

B.P. INFORMATICS LLC, 

 Counterclaimant, 

 vs. 

GEOFFREY BAKER and ELIZABETH 

MULLEN, 

 Counterdefendants. 

Case No: CV 08-3974 SBA

ORDER GRANTING PLAINTIFFS’ 

MOTION FOR SUMMARY 

JUDGMENT ON DEFENDANT’S 

COUNTERCLAIM

Docket 189 

Plaintiffs Geoffrey Baker and Elizabeth Mullen (collectively “Plaintiffs”) filed the 

instant diversity jurisdiction action against B.P. Informatics LLC (“BPI”) and other defendants 

in this Court on August 20, 2008. All of Plaintiffs’ claims have been dismissed, and the only 

claim remaining in this action is BPI’s counterclaim for breach of contract. The parties are 

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presently before the Court on Plaintiffs’ Motion for Summary Judgment. (Docket 189.) 

Having read and considered the papers filed in connection with this matter and being fully 

informed, the Court hereby GRANTS the motion for the reasons set forth below. The Court, in 

its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 

78(b). 

I. BACKGROUND

The parties are familiar with the facts and procedural history of this case, which only 

will be summarized briefly herein. Med-Vantage, Inc. (“Med-Vantage”) is a software 

company founded by Plaintiff Baker in 2001. On August 22, 2007, Plaintiffs and others 

entered into a Stockholder Agreement, pursuant to which BPI acquired a 52% interest in MedVantage, leaving Baker with a 31% equity interest. Thereafter, BPI and various related entities 

assumed control of the Med-Vantage board and allegedly began operating the company for 

their benefit, to the detriment of minority shareholders, including Plaintiffs. 

On August 20, 2008, Plaintiffs filed suit in this Court against various defendants, 

including BPI, for breach of fiduciary duty, minority shareholder oppression, violation of 

California’s Unfair Competition Law and breach of contract. Plaintiffs filed a First Amended 

Complaint on March 17, 2009, alleging the same causes of action. In their breach of contract 

claim, Plaintiffs averred that BPI breached the Stockholder Agreement by failing to vote their 

shares at the December 8, 2008, stockholder’s meeting in favor of the two nominees that Baker 

had proposed for the board. 

In response to the amended complaint, Defendants filed a motion to dismiss under 

Federal Rule of Civil Procedure 12(b)(6). On July 31, 2009, the Court granted Defendants’ 

motion in part and dismissed all claims except Plaintiffs’ fourth cause of action for breach of 

contract. On August 14, 2009, BPI filed an answer to the amended complaint, along with a 

counterclaim for breach of contract. The counterclaim, which is the flipside of Plaintiffs’ 

contract claim, alleges that “[a]t the Med-Vantage Meeting held on December 8, 2008, Baker 

and Mullen did not vote for any of the directors that BPI had nominated,” ostensibly in 

violation of Section 2.2 of the Stockholder’s Agreement. (Counterclaim ¶¶ 11-12.) 

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On June 1, 2010, the Court granted Plaintiffs’ motion to voluntarily dismiss their breach 

of contract claim. Plaintiffs now move for summary judgment on BPI’s counterclaim on the 

ground that it cannot show that it suffered any damages from the alleged breach of the 

Stockholder’s Agreement. Plaintiffs contend that because BPI held the majority of shares, its 

nominees were elected to the board, notwithstanding the fact that Plaintiffs voted for Baker’s 

nominees. (Baker Decl. ¶¶ 3-4.) Nonetheless, BPI alleges that it has been injured “in that it 

has been forced to defend a meritless suit, which is barred by [Plainitffs’] own conduct, 

including without limitation that Baker and Mullen come to this action with unclean hands.” 

(Counterclaim ¶ 14.) 

II. LEGAL STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure authorizes summary judgment if 

there is no genuine issue as to any material fact and the moving party is entitled to judgment as 

a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The 

moving party bears the initial burden of demonstrating the basis for the motion and identifying 

the portions of the pleadings, depositions, answers to interrogatories, affidavits, and admissions 

on file that establish the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 

477 U.S. 317, 323 (1986). If the moving party meets this initial burden, the burden then shifts 

to the non-moving party to present specific facts showing that there is a genuine issue for trial. 

Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324; Matsushita Elec. Indus. Co. v. Zenith Radio 

Corp., 475 U.S. 574, 586-87 (1986). 

An issue of fact is “material” if, under the substantive law of the case, resolution of the 

factual dispute might affect the outcome of the claim. Anderson, 477 U.S. at 248. Factual 

disputes are genuine if they “properly can be resolved in favor of either party.” Id. at 250. 

Accordingly, a genuine issue for trial exists if the non-movant presents evidence from which a 

reasonable jury, viewing the evidence in the light most favorable to that party, could resolve 

the material issue in his or her favor. Id. “If the evidence is merely colorable, or is not 

significantly probative, summary judgment may be granted.” Id. at 249-50 (internal citations 

omitted). Only admissible evidence may be considered in ruling on a motion for motion for 

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summary judgment. Fed.R.Civ.P. 56(e); Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 

2002). 

III. DISCUSSION

A. BREACH OF CONTRACT

Delaware law governs the Stockholder Agreement. (Moreno Decl. Ex. A § 12.7.) 

Under Delaware law, the elements of a breach of contract under Delaware law are: (1) a 

contractual obligation; (2) a breach of that obligation by the defendant; and (3) resulting 

damage to the plaintiff. H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 140 (Del. Ch. 

2003). To be recoverable, the damages sought in a breach of contract claim must be the natural 

and probable consequence of the conduct constituting the breach. See Paul v. Deloitte & 

Touche, LLP 974 A.2d 140, 147 (Del. 2009). In other words, the claimed damages must be 

proximately caused by breaching party’s alleged actions. F.E. Myers Co. v. Pipe Maint. Servs., 

Inc., 599 F. Supp. 697, 703 (D. Del. 1984). The failure to establish damages resulting from an 

alleged breach is fatal to claim for breach of contract. See Paul, 974 A.2d at 147 (affirming 

grant of summary judgment where plaintiff suffered no damages resulting delayed payment of 

severance, notwithstanding that such delay contravened terms of agreement). 

Plaintiffs contend that BPI cannot show that it suffered any damages resulting from 

their failure to vote their shares for BPI’s nominees. Specifically, Plaintiffs point out that their 

votes were superfluous because BPI’s nominees were elected to the Med-Vantage board, 

notwithstanding Plaintiffs’ decision to vote for Baker’s nominees. As noted, BPI does not 

dispute this, but instead, argues that it has been injured by having incurred legal fees defending 

against Plaintiffs’ lawsuit. (Def.’s Opp’n at 7; Counterclaim ¶ 13.) However, BPI’s legal fees 

resulted from Plaintiffs’ decision to file this lawsuit, not because of the Plaintiffs’ decision to 

vote for Baker’s nominees. Tellingly, BPI offers no evidence or cogent explanation as to how 

Plaintiffs’ voting decision caused BPI to defend this case and concordantly incur legal fees. 

Thus, the Court concludes that BPI’s legal fees do not constitute damages caused by Plaintiffs’ 

alleged breach of the Stockholder Agreement. See Taxpayers for the Animas-La Plata 

Referendum v. Animas-La Plata Water Conservancy Dist., 739 F.2d 1472, 1480 (10th Cir. 

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1984) (“[legal] expenses are generally not considered ‘damages’ because they are not the 

legitimate consequence of the tort or breach of contract sued upon”). 

B. DECLARATORY RELIEF

Alternatively, BPI argues that no showing of damages is required for declaratory relief. 

Def.’s Opp’n at 4.1

 This contention also lack merit. “[T]hose who seek to invoke the 

jurisdiction of the federal courts must satisfy the threshold requirement imposed by Article III 

of the Constitution by alleging an actual case or controversy.” City of Los Angeles v. Lyons, 

461 U.S. 95, 101 (1983) (citations omitted); Jones v. City of Los Angeles, 444 F.3d 1118, 1126 

(9th Cir. 2006). A plaintiff seeking declaratory relief cannot rely on past injury to satisfy the 

injury requirement for federal jurisdiction. O’Shea v. Littleton, 414 U.S. 488, 495-96 (1974). 

Rather, a plaintiff must show a significant possibility of future harm. Coral Constr. Co. v. King 

County, 941 F.2d 910, 929 (9th Cir. 1991). Absent such a showing, a plaintiff has no standing 

to seek declaratory relief. Hodgers-Durgin v. De La Vina, 199 F.3d 1037, 1044 (9th Cir. 

1999). 

As set forth above, there is no evidence BPI has suffered any harm resulting from 

Plaintiffs’ decision not to vote for BPI’s board nominees at the stockholder meeting. Nor is 

there any evidence to show that there is any possibility of future injury. To the contrary, BPI’s 

counterclaim is based on a past event; namely, Plaintiffs’ refusal to vote for BPI’s board 

nominees at the December 8, 2008 stockholder meeting. As such, BPI’s injury, if any, 

occurred in the past, and there no showing of any possible future harm. Given these 

circumstances, BPI has no standing to seek declaratory relief. See Mayfield v. United States, 

599 F.3d 964, 969 (9th Cir. 2010) (“a plaintiff who has standing to seek damages for a past 

injury, or injunctive relief for an ongoing injury, does not necessarily have standing to seek 

prospective relief such as a declaratory judgment.”); San Diego Police Officers’ Ass’n v. San 

 1 The Declaratory Judgment Act permits federal courts to “declare the rights and other 

legal relations” or parties to “a case of actual controversy.” 28 U.S.C. § 2201. BPI’s 

counterclaim is for breach of contract, not declaratory relief. Only in its prayer for relief does 

BPI briefly mention that it seeks a “judgment against Plaintiffs declaring Baker and Mullen 

have violated the Stockholders’ Agreement.” (Counterclaim at 15.) 

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Diego City Employees’ Retirement Sys., 568 F.3d 725, 736 (9th Cir. 2009) (“with no live case 

or controversy before us, there is no call for such declaratory relief”). 

C. RULE 56(F) 

Finally, BPI argues that it is premature to resolve its counterclaim on the ground that 

little discovery has taken place. Def.’s Opp’n at 11. “A Rule 56(f) motion must show how 

additional discovery would preclude summary judgment and why a party cannot immediately 

provide ‘specific facts’ demonstrating a genuine issue of material fact.” Mackey v. Pioneer 

Nat. Bank, 867 F.2d 520, 524 (9th Cir.1989) (internal citations omitted). The party seeking a 

continuance of discovery must show “(1) that [he has] set forth in affidavit form the specific 

facts that [he] hope[s] to elicit from further discovery, (2) that the facts sought exist, and 

(3) that these sought-after facts are ‘essential’ to resist the summary judgment motion.” 

California v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998). 

As an initial matter, BPI’s assertion that it has had insufficient time to conduct 

discovery is specious. The stockholder’s meeting at which Plaintiffs cast the votes at issue 

occurred on December 8, 2008. BPI has thus had ample opportunity to assemble the evidence 

in support of their claim that Plaintiffs’ voting decision caused it harm. This is especially true 

given that evidence of how BPI allegedly was harmed should be within BPI’s knowledge and 

control. See Schwarzer, Tashima & Wagstaffe, Calif. Practice Guide: Fed. Civ. P. Before 

Trial, ¶ 14.116 (TRG 2010) (“if the evidence is already within his or her control, a request for 

discovery may be denied.”). BPI’s lack of diligence in conducting discovery, standing alone, 

militates against granting its requested continuance. See Chance v. Pac-Tel Teletrac Inc., 242 

F.3d 1151, 1161 n.6 (9th Cir. 2001) (“the district court does not abuse its discretion by denying 

further discovery if the movant has failed diligently to pursue discovery in the past.”) (internal 

quotations and citation omitted). 

Even if BPI were diligent, it has failed to persuade the Court that any additional 

discovery would preclude summary judgment. In the accompany declaration of its counsel, 

BPI claims that it should be allowed additional discovery to explore the purpose of the voting 

provision of the Stockholder’s Agreement, the harm to board allegedly resulting from 

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Plaintiffs’ votes, statements made by Plaintiffs regarding BPI’s board nominees and Plaintiffs’ 

awareness of the “wrongfulness” of their actions. (Moreno Decl. ¶¶ 7-8.) It is unclear what 

bearing any of these vaguely-described topic matters have on BPI’s ability to establish contract 

damages or otherwise preclude summary judgment. To the contrary, it is evident that such 

purported facts have no bearing on the issue of contract damages based on Plaintiffs’ alleged 

conduct. BPI’s Rule 56(f) request is denied. 

IV. CONCLUSION

For the reasons stated above, 

IT IS HEREBY ORDERED THAT Plaintiffs’ Motion for Summary Judgment is 

GRANTED. Judgment on BPI’s counterclaim shall be entered in favor of Plaintiff. The Clerk 

shall close the file and terminate any pending matters. 

IT IS SO ORDERED. 

Dated: June 21, 2010 ___________________________________ 

SAUNDRA BROWN ARMSTRONG 

United States District Judge 

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