Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-01524/USCOURTS-cand-5_05-cv-01524-11/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

 This disposition is not designated for publication and may not be cited.

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

**E-Filed 9/12/06**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SYNAPSIS, LLC,

 Plaintiff,

 v.

EVERGREEN DATA SYSTEMS, INC., et al.,

 Defendants.

Case Number C 05-01524 JF

ORDER1 GRANTING DEFENDANT’S

MOTION FOR SUMMARY

JUDGMENT

[re. Docket No. 137]

Defendant Ireland San Filippo LLP (“ISF”), moves for summary judgment as to Plaintiff

Synapsis, LLC’s (“Synapsis”) sole claim against it. Synapsis opposes the motion. The Court

heard oral argument on September 8, 2006. For the reasons set forth below, the motion will be

granted. 

I. BACKGROUND

On January 10, 2005, Synapsis filed the original complaint in the instant action against

Defendants Evergreen Data Systems, Inc. (“Evergreen”), Bruce R. McAllister (“McAllister”),

Steven J. DeMartini (“DeMartini”), ISF, and Does 1 through 10. On July 13, 2005, this Court

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 1 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

issued an order granting the motion of Defendants Evergreen, McAllister, and DeMartini to

dismiss Synapsis’s first five claims with leave to amend (“July 13th order”). The dismissed

claims alleged: (1) violation of the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), (2) breach of contract, (3) intentional interference with prospective economic

advantage, (4) negligent interference with prospective economic advantage, and (5) fraud. 

On August 10, 2005, Synapsis filed a First Amended Complaint, alleging: (1) violations

of RICO, (2) breach of contract, (3) intentional interference with prospective economic

advantage, (4) negligent interference with prospective economic advantage, (5) fraud, and (6)

trade libel and slander. Defendants Evergreen, McAllister, and DeMartini moved to dismiss the

first, third, fourth, and fifth claims, pursuant to Federal Rule of Civil Procedure 12(b)(6). 

Defendant ISF moved to dismiss the second claim, the only claim alleged against it, pursuant to

Federal Rule of Civil Procedure 12(b)(6). On January 9, 2006, this Court issued an order

granting ISF’s motion to dismiss with leave to amend (“January 9th Order”). This order also

denied in part and granted in part, without leave to amend, the motion to dismiss of Defendants

Evergreen, McAllister, and DeMartini. 

On January 30, 2006, Defendants Evergreen, McAllister, and DeMartini filed an answer

and counterclaim against Synapsis and William Akel (“Akel”), the President of Synapsis. On

March 8, 2006, Synapsis filed a Second Amended Complaint (“SAC”) alleging (1) breach of

contract, (2) fraud, (3) trade libel and slander, and (4) conversion. On March 28, 2006,

Defendants Evergreen, McAllister, and DeMartini filed an answer to the Second Amended

Complaint. ISF filed its answer to the Second Amended Complaint on April 7, 2006. On May

18, 2006, ISF filed a motion for summary judgment or, in the alternative, for summary

adjudication of issues (“First MSJ”). This motion addressed the breach of contract claim, the

sole claim asserted against ISF in the Second Amended Complaint. This Court scheduled the

motion hearing for June 28, 2006. On May 30, 2006, Synapsis filed opposition to the motion for

summary judgment (“First Opposition”), and on June 6, 2006, ISF filed a reply (“First Reply”). 

On June 20, 2006, pursuant to Federal Rule of Civil Procedure 56(f), this Court continued the

hearing on ISF’s motion for summary judgment to allow further discovery by Synapsis and

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 2 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 Both parties have complained of perceived advantages gained by the other party in

briefing this motion. See Second Opposition 1 (“ISF will have the chance to file a ‘sur-reply’

after receiving this opposition. Fairness should dictate a different result.”); Second Reply 2, n.3

(alleging that Synapsis “unquestionably has violated Local Rule 7-3 by submitting 32 pages of

opposition briefs”). The Court set the briefing schedule in consultation with the parties and

perceives no prejudice suffered by either party.

Both parties have requested judicial notice of various documents. On August 4, 2006,

ISF requested judicial notice of the Second Amended Complaint and the July 13, 2005 order. 

The Court grants this request. On August 17, 2006, Synapsis filed a declaration by Jeffrey F. Sax

requesting judicial notice of Synapsis’ opposition, filed on May 30, 2006, to ISF’s first motion

for summary judgment and of the Declaration of Akel in support of this opposition. The Court

will grant this request.

3

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

scheduled the motion hearing for September 8, 2006. ISF filed an amended motion for summary

judgment or, in the alternative, for summary adjudication of issues on August 4, 2006 (“Second

MSJ”). Synapsis filed opposition to the second motion on August 18, 2006 (“Second

Opposition”). ISF replied to this opposition on August 25, 2006 (“Second Reply”).2

Synapsis is an electronic forms and laser printing company. On September 21, 1992,

Synapsis’s predecessor, Synapsis Corporation Ltd., entered into a “Sales Agent Agreement” with

Evergreen, a business forms distributor. SAC ¶ 11 and Ex. 1. The Sales Agent Agreement

appointed Evergreen as Synapsis’s “non-exclusive selling representative in the Area and

exclusive selling representative for parties listed on Schedule B to actively promote and solicit

orders for the Manufacturer Products or any components thereof for the term of this Agreement.”

SAC Ex. 1. It is signed by Timothy Short (“Short”), the then-President of Evergreen, and Akel. 

SAC Ex. 1. Synapsis alleges that it “took full control of the duties and responsibilities of” the

Sales Agent Agreement on or about June 26, 1996, as confirmed by a letter dated April 11, 1996. 

SAC ¶ 11 and Ex. 2. This letter, addressed to Akel from Short, reaffirms that “Evergreen

recognizes the intellectual property value of the subject products and written materials and agrees

to use them solely within the limitations of the existing marketing agreements between Synapsis

and Evergreen.” SAC Ex. 2. 

In 1998, “the ownership of EVERGREEN changed hands to MCALLISTER and

DEMARTINI.” SAC ¶ 16. Through early 1999, Synapsis and Evergreen “enjoyed a good,

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 3 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

working relationship.” Id. On May 10, 2000, Synapsis, McAllister, and Bruce Evans, an

“Evergreen manager,” entered into a “Mutual Non-Disclosure Agreement,” which imposed

certain restrictions on the recipients of “Confidential Information,” as defined by the agreement,

including that the “[r]ecipient shall not use the Confidential Information for its own use or for

any purpose except to evaluate whether it desires to enter into a business transaction with the

Disclosing Party, or as necessary to carry out the terms of such business transaction.” SAC ¶ 38

and Ex. 3.

Synapsis alleges that, in late 2002, its “level of business was reduced by more than 60%.”

SAC ¶ 19. McAllister and DeMartini are alleged to have stated that the causes of this reduction

in business were the “bad times in the economy, ‘dot-com’ firms going out of business and the

reluctance of businesses to spend monies on electronic forms.” Id. However, Synapsis became

suspicious that “something was amiss” when it received a phone call in late October 2002 on the

telephone line dedicated to Synapsis-Evergreen business from a customer for whom Synapsis had

not created an order. SAC ¶ 20. Synapsis alleges that McAllister, DeMartini, and Evergreen in

fact had “entered into other business relationships” in violation of the Sales Agent Agreement

and were “secretly diverting business from [Synapsis] through an in house technical service

center.” SAC ¶ 19. Synapsis alleges that it gave “valuable and proprietary trade secret

information” to Evergreen in reliance on representations by McAllister and DeMartini that the

information would be used to further the business relationship between Evergreen and Synapsis,

but that instead McAllister and DeMartini “used this information to cease doing business with

SYNAPSIS while stringing SYNAPSIS along falsely telling SYNAPSIS that business was

slow.” SAC ¶¶ 28, 30. Synapsis alleges that “EVERGREEN’s business was expanding and that

EVERGREEN had begun a new relationship with a competitor of SYNAPSIS, using

SYNAPSIS’ trade secrets and valuable knowledge and training.” SAC ¶ 35. Synapsis alleges

that “between one to six million dollars that should have belonged to SYNAPSIS per the terms

of the [Sales Agent Agreement] were wrongfully diverted.” SAC ¶ 21.

II. LEGAL STANDARD

A motion for summary judgment should be granted if there is no genuine issue of

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 4 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears

the initial burden of informing the Court of the basis for the motion and identifying the portions

of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that

demonstrate 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 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. A genuine issue for trial exists if the non-moving party 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. Anderson, 477 U.S. 242, 248-49;

Barlow v. Ground, 943 F.2d 1132, 1134-36 (9th Cir. 1991). 

“When the nonmoving party has the burden of proof at trial, the moving party need only

point out ‘that there is an absence of evidence to support the nonmoving party’s case.’” 

Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (quoting Celotex, 477 U.S. at 325). 

Once the moving party meets this burden, the nonmoving party may not rest upon mere

allegations or denials, but must present evidence sufficient to demonstrate that there is a genuine

issue for trial. Id. 

III. DISCUSSION

ISF moves for summary judgment on the basis that it was not a party to the contracts, that

it cannot be held liable under an alter ego theory of liability, and that Evergreen, DeMartini, or

McAllister never had actual or ostensible authority to bind ISF with respect to the contracts. As

discussed below, ISF meets its initial burden of informing the Court of the basis for the motion

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

or affidavits that demonstrate the absence of a triable issue of material fact. The burden thus

shifts to Synapsis to present specific facts showing that there are genuine issues for trial.

Synapsis fails to meet this burden.

a. ISF is Not A Party to the Contracts

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 5 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

Synapsis does not allege that ISF was an original signatory party to the contracts at issue

in this case. See First Opposition 11. The absence of this allegation does not preclude Synapsis’

claims of ISF’s liability on the basis that ISF was the alter ego of Evergreen or that ISF was the

actual or ostensible principal of Evergreen. These claims are discussed below.

b. Alter Ego

In its January 9th Order, this Court explained that an alter ego claim must allege: (1)

“such unity of interest and ownership between the corporation and its equitable owner that the

separate personalities of the corporation and the shareholder do not in reality exist” and (2) “an

inequitable result if the acts in question are treated as those of the corporation alone.” Sonora

Diamond Corp. v. Superior Court, 99 Cal. Rptr. 2d 824, 836 (Ct. App. 2000). The January 9th

Order concluded that Synapsis had not alleged any facts with respect to the second element, i.e.,

that it would suffer an inequitable result if the Court evaluated only the liability of Evergreen and

McAllister. January 9th Order 9. ISF points out that Synapsis still has not provided any

evidence with respect to this second element. Memorandum in Support of Second MSJ 15. 

Indeed, the Court finds no reference to this second element in Synapsis’ papers for this motion

and no evidence in the record that would allow a reasonable jury to find that an inequitable result

would occur if the acts at issue in this case were treated as those of Evergreen alone. 

Accordingly, potential alter-ego liability cannot be a basis for denying ISF’s motion for summary

judgment. 

c. Actual Authority

ISF presents evidence that it never had an ownership interest in Evergreen in the form of

a declaration by Robert A. Lee (“Lee”), the managing partner of ISF. Lee states that “ISF has

never had an ownership interest, directly or indirectly, in Evergreen.” Lee Declaration in Support

of Second MSJ ¶ 11. Lee also states that “ISF has never been the principal of Evergreen,” and

that “Evergreen has never been an authorized agent for ISF.” Id. at ¶¶ 12-13. ISF has shown that

Synapsis has failed to present evidence of ISF’s alleged ownership interest in Evergreen.

Memorandum in Support of Second MSJ 7. This satisfies ISF’s initial burden to inform the

court of the basis of the motion and shifts the burden to Synapsis to present evidence sufficient to

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 6 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

 The Court need not resolve ISF’s allegation that the Akel Declaration in Support of

First Opposition is a “sham declaration,” Second Reply, 1 n.1, since it finds for ISF even when it

considers the contents of the declaration.

7

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

demonstrate that there is a genuine issue for trial. 

Synapsis asserts that in 1998, “ISF purchased Evergreen and used its partners, McAllister

and DeMartini, to manage the company.” First Opposition 11. Synapsis offers the following as

evidence of ISF’s ownership of Evergreen: the use of ISF facilities and email by McAllister and

DeMartini, Second Opposition 5; the presence of Evergreen documents on ISF computers, Id. at

5-6, and Akel’s declaration asserting that McAllister and DeMartini repeatedly stated or implied

that ISF owned Evergreen, Akel Declaration in Support of First Opposition ¶¶ 3, 8, 10, 13, 16-

17, 21, 27, 30.3 The Court finds that this evidence is insufficient to allow a rational jury to

decide that ISF actually owned Evergreen. Even in the context of arguments based upon estoppel

and waiver, Synapsis fails to demonstrate that there is a genuine issue for trial.

(i) Estoppel: Synapsis argues that equitable estoppel bars ISF’s defense that it

was not the actual owner or principal of Evergreen. First Opposition 18. Under California law,

“[w]henever a party has, by his own statement or conduct, intentionally and deliberately led

another to believe a particular thing true and to act upon such belief, he is not, in any litigation

arising out of such statement or conduct, permitted to contradict it.” Cal. Evid. Code §623. 

Synapsis provides the declaration of Akel, in which Akel reports numerous occasions on

which McAllister and DeMartini allegedly stated or implied that ISF owned Evergreen. Akel

Declaration in Support of First Opposition ¶¶ 3, 8, 10, 13, 16-17, 21, 27, 30. The Court assumes

the truth of Akel’s assertions for the purposes of this motion. Synapsis asserted at oral argument

that these repeated statements by McAllister and DeMartini that ISF owned Evergreen must be

treated as statements by ISF for the purposes of this litigation. Synapsis based its argument on

the fact that McAllister and DeMartini were partners of ISF at the time that they made the alleged

statements. Although Synapsis made this assertion in response to the Court’s inquiry as to

ostensible authority, the Court understands Synapsis’ position to be that ISF may not now

contradict the statements allegedly made by its partners McAllister and DeMartini that ISF

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 7 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

 Estoppel may arise from silence where there is a duty to speak. Nicolopulous v.

Superior Court, 130 Cal. Rptr. 2d 626, 631 (Cal. Ct. App. 2003). The Court finds no silence in

the face of a duty to speak in the present case, however. Synapsis has offered evidence stating

that Akel met with ISF on June 10, 2003, to “find out what was really going on.” Akel

Declaration in Support of First Opposition Synapsis ¶ 28. ISF denied ownership of Evergreen at

8

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

owned Evergreen. 

The threshold issue for the Court’s determination is whether ISF should be held

responsible for the statements that McAllister and DeMartini made to Akel. The Uniform

Partnership Act of 1994, codified at Cal. Corp. Code §§ 16100-962, governs Limited Liability

Partnerships such as ISF. Cal. Corp. Code § 16101(9). The Code provides that “[a] partnership

is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful

act or omission or other actionable conduct, of a partner acting in the ordinary course of business

of the partnership or within the authority of the partnership.” Cal. Corp. Code § 16305. Synapsis

has provided no evidence tending to prove that McAllister and DeMartini made their statements

to Akel regarding ISF’s alleged ownership of Evergreen either in the ordinary course of business

of ISF or within the authority of ISF. Synapsis has provided no evidence tending to show that it

was ISF’s ordinary course of business to provide assurances that it would stand behind

companies in which it had no ownership interest. The evidence provided by Synapsis instead

shows that McAllister and DeMartini dealt with Akel while undertaking the business of

Evergreen, not ISF. McAllister and DeMartini may have been partners of ISF, but their dealings

with Akel advanced solely Evergreen’s interests. Thus, even assuming McAllister and

DeMartini told Akel that ISF owned Evergreen, there is no evidence that McAllister and

DeMartini made these statements in the ordinary course of ISF business or to further the interests

of ISF. The Court concludes the statements do not estop ISF from denying ownership of

Evergreen.

Moreover, Synapsis provides no evidence that Lee or anyone else at ISF “intentionally

and deliberately” led Synapsis to believe that it was the actual owner or principal of Evergreen. 

The Court therefore concludes that ISF is not estopped from raising the defense that it was not

the actual owner or principal of Evergreen.4

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 8 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

this meeting. Id. at ¶ 29. The Court finds that ISF had no duty to speak prior to Akel asking it

what “was really going on” on June 10, 2003. 

9

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

(ii) Waiver: Synapsis also argues that ISF has waived its right to argue that it was

not Evergreen’s principal. First Opposition 19. “To constitute waiver, it is essential that there be

an existing right, benefit, or advantage, a knowledge, actual or constructive, of its existence, and

an actual intention to relinquish it or conduct so inconsistent with the intent to enforce the right

in question as to induce a reasonable belief that it has been relinquished.” Burton v. Leyser, 196

Cal. App. 3d 451, 460 (1987). There is no evidence in the record that ISF intentionally

relinquished its right to argue that it was not Evergreen’s principal or that its conduct was so

inconsistent with the intent to enforce the right as to induce a reasonable belief that it had been

relinquished. Instead, ISF repeatedly has stated that it has no ownership interest in Evergreen

since Akel’s meeting with ISF on June 10, 2003. Akel Declaration in Support of First

Opposition ¶¶ 28-29 (“I decided that ISF should be contacted to find out from its managing

partner what was really going on. I met with Robert Lee at ISF”s offices on June 10, 2003. . . . 

At that meeting, Mr. Stein [the ISF attorney] denied that ISF ever owned Evergreen . . . .”). ISF

has filed no papers in this Court inconsistent with such a position. The Court therefore concludes

that ISF has not waived its right to argue that it was not Evergreen’s principal.

In the absence of evidence of ISF’s ownership of Evergreen and of any bar to ISF raising

a defense of its lack of ownership, a claim that ISF actually owned Evergreen cannot be a basis

for denying ISF’s motion for summary judgment.

d. Ostensible Authority

Cal. Civ. Code § 2334 provides that “[a] principal is bound by acts of his agent, under a

merely ostensible authority, to those persons only who have in good faith, and without want of

ordinary care, incurred a liability or parted with value, upon the faith thereof.” In order to

recover under a theory of ostensible authority, Synapsis must show representation by the

principal (here, ISF), justifiable reliance on the representation, and a change in position or injury

resulting from such reliance. Meyer v. Glenmoor Homes, Inc., 54 Cal. Rptr. 786, 800 (Ct. App.

1966). A finding of ostensible authority binds the principal to the acts of the agent, such as the

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 9 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

 Cal. Civ. Code § 2794 relates to guaranty contracts entered into for consideration,

which was not present in the instant case.

10

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

execution of an instrument or the entrance into a contract. See e.g. Meyer v. Glenmoor Homes,

54 Cal. Rptr. 786 (Ct. App. 1966). Synapsis alleges that McAllister and DeMartini repeatedly

stated that ISF owned Evergreen but does not allege that McAllister and DeMartini undertook

any actions which would bind ISF. Synapsis does not allege, for example, that McAllister and

DeMartini purported to contract on behalf of ISF or otherwise to undertake an actionable

obligation. Synapsis does not provide evidence that McAllister and DeMartini signed the Mutual

Non-Disclosure Agreement in ISF’s name or otherwise purported to bind ISF to the Mutual NonDisclosure Agreement. See e.g. Akel Declaration in Support of First Opposition ¶ 18 (“Although

not expressly stated in the NDA, McAllister and Evans both signed in their individual capacities

on behalf of Evergreen, since it was Evergreen that was the vehicle through which Synapsis

products would be marketed and sold.”). The bald assertion that ISF was McAllister’s principal

for the purposes of the agreement, SAC ¶ 59, does not defeat ISF’s motion for summary

judgment. Synapsis may not rest upon mere allegations or denials, but must present evidence

sufficient to demonstrate that there is a genuine issue for trial. Fed. R. Civ. Pro. 56(e)

The only suggestion of such an undertaking that the Court sees in Synapsis’ papers is the

implication that McAllister and DeMartini entered into an oral contract on behalf of ISF under

which ISF would serve as a guarantor of the contract between Synapsis and Evergreen or

otherwise ensure its success. See e.g. First Opposition, 8 (referring to alleged representations by

DeMartini and McCallister that “there were plans ahead to rectify the business situation by

[ISF]”). However, such oral contract would not bind ISF even if it were properly alleged and

supported by admissible evidence. First, the Statute of Frauds requires that guaranty contracts be

in writing. Cal. Civ. Code § 1624(a)(2) (requiring that “special promise[s] to answer for the

debt, default, or miscarriage of another, except in the cases provided for in Section 27945” be in

writing). Second, partners generally have no authority to bind their partnership upon a contract

of guaranty. See e.g. Tsakos Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd., 12

Cal. App. 4th 74, 93 (1993) (discussing and following cases holding that partners may not enter

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 10 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

 The Court notes again, as above, that it understands the argument that ISF may not deny

ownership of Evergreen because of the statements by McAllister and DeMartini to Akel asserting

ISF’s ownership of Evergreen to be based on the principles of equitable estoppel rather than

ostensible authority.

11

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

contracts of guaranty without a special grant of authority from the partnership). 

Since it concludes that Synapsis has provided no evidence of any actionable undertaking

by McAllister or DeMartini on behalf of ISF, the Court need not inquire whether McAllister and

DeMartini had ostensible authority for such an undertaking on ISF’s behalf.6 The Court also

need not decide whether, as Synapsis alleges, discrepancies exist between Lee’s deposition

testimony and declaration. Second Opposition 3-6; see also Second Reply 12-14 (ISF arguing

the contrary). The present motion requires Synapsis to show, after ISF has met its initial burden,

that there is a triable issue of fact as to ISF’s status as the ostensible or actual principal of

Evergreen, or as the alter-ego of Evergreen. The purported discrepancies between the deposition

testimony and declaration are all general in nature and their resolution would not alter the Court’s

conclusion that ISF is not the ostensible or actual principal of Evergreen, or the alter-ego of

Evergreen.

IV. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that ISF’s motion for

summary judgment is GRANTED. 

DATED: September 12, 2006

 

JEREMY FOGEL

United States District Judge

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 11 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

Case No. C 05-01524 JF (RS)

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC1)

This Order has been served upon the following persons:

Daniel C. DeCarlo decarlo@lbbslaw.com; kkim@lbbslaw.com;

pink@lbbslaw.com; creyes@lbbslaw.com

Manuel Albert Martinez Mmartinez@steinlubin.com, msaephan@steinlubin.com

Jonathan S. Pink pink@lbbslaw.com; creyes@lbbslaw.com

Michael Navid Radparvar radparvar@lbbslaw.com

Jeffrey F. Sax jsax@sswesq.com

William Shibly Akel wmakel@counterstrike.com 

H. Joseph Nourmand

H. Joseph Nourmand Law Offices

660 S. Figueroa Street

24th Floor

Los Angeles, CA 90017

Case 5:05-cv-01524-JF Document 164 Filed 09/12/06 Page 12 of 12