Filed 7/29/16 Shermoen v. First Allied Securities CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

STEPHEN R. SHERMOEN, SR., 

Individually and as Trustee, etc. et al.,

Plaintiffs and Appellants,

v.

FIRST ALLIED SECURITIES, INC. et al.,

Defendants and Respondents.

 D067612

(Super. Ct. No. 37-2013-00058215- 

CU-SL-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Joel M. 

Pressman, Judge. Affirmed.

Mirch Law Firm, Kevin J. Mirch, Marie C. Mirch and Erin E. Hanson for 

Plaintiffs and Appellants.

Kirby Noonan Lance & Hoge, Michael L. Kirby, Ryan S. Kirby; Kirby & Kirby,

Michael L. Kirby and Ryan S. Kirby for Defendants and Respondents.

After their investments dropped in value, plaintiffs Stephen Shermoen, Sr., and 

Nancy Shermoen sued Advanced Equities, Inc. (AEI), First Allied Securities, Inc. 
2

(FASI), Adam Antoniades (FASI's CEO), and other individuals and entities for 

misrepresentations and omissions, fiduciary breach, and securities law violations.1 FASI 

and Antoniades (herein, defendants) successfully moved for summary judgment on 

plaintiffs' second amended complaint (SAC). 

On appeal, plaintiffs argue defendants failed to meet their burden on summary 

judgment because the evidence they proffered was inadmissible and insufficient. They 

also claim that even if defendants met their burden, plaintiffs offered competent evidence 

demonstrating a triable issue as to each cause of action. 

We affirm the judgment. Defendants met their burden to show, and plaintiffs

failed to rebut, the lack of a triable issue of material fact as to each of the causes of action 

against them. Plaintiffs made their investments through AEI and their AEI broker, Jared 

Slater, not FASI. Defendants proffered uncontroverted evidence they never made 

representations to plaintiffs, through Slater or otherwise, and that at all relevant times, 

AEI and FASI operated as completely independent companies.

FACTUAL AND PROCEDURAL BACKGROUND

A. Plaintiffs' Investment and Lawsuit

Plaintiffs held a brokerage account with AEI, a firm that specialized in 

investments in the "clean tech" sector. AEI funded Silicon Valley start-up companies 

 

1 Plaintiff Stephen Shermoen, Sr. (herein, Shermoen), sued in his individual 

capacity and as trustee of the Shermoen Sr. Revocable Family Trust Dated August 23, 

1999 (Trust). As described below, Shermoen submitted a declaration and deposition 

transcript in response to the summary judgment motion filed by FASI and Antoniades. 

Plaintiff Nancy Shermoen sued in her capacity as trustee of the Trust but did not submit a 

declaration or other evidence.
3

through private placements (nonstock transactions). AEI created investment products to 

fund the start-up companies, including AEI 2010 Clean Tech Ventures II, LLC and AEI 

Wireless II, LLC. AEI was a subsidiary of Advanced Equities Financial Corporation 

(AEFC). AEFC also owned FASI, another brokerage firm.

In 2010, plaintiffs, as trustees of the Trust, invested approximately $56,604 in AEI 

2010 Clean Tech Ventures II, LLC through their AEI broker, Jared Slater. AEI 2010 

Clean Tech Ventures II, LLC purchased convertible preferred shares of Fisker 

Automotive, Inc., Serious Energy Inc., and Bloom Energy Corp., three late-stage start-up 

companies. In 2010, on Slater's advice, Shermoen invested his retirement account

containing $49,876 in AEI Wireless II, LLC. AEI Wireless II, LLC purchased preferred 

shares of Motricity, Inc. In 2011, Plaintiff Shermoen wanted to move his retirement 

account. He was unable to reach anyone at AEI to execute the transaction and later

learned AEI had closed. 

Plaintiffs filed suit in July 2013. Their SAC, filed in February 2014, alleged

common law fraud and statutory claims against AEI, FASI, Bloom Energy Corp., AEI 

Clean Tech Ventures II, LLC, AEI Wireless II, LLC, and three officers and directors of 

AEFC: Dwight Badger, Keith Daubenspeck, and Antoniades.2 As to FASI and 

Antoniades, the SAC asserted intentional and negligent misrepresentations and 

omissions, fraud and deceit, and constructive fraud. It also asserted failure to supervise

 

2 The original complaint also asserted claims against Fisker Automotive, Inc., 

Motricity, Inc., and Serious Energy, Inc. Neither the original complaint nor the SAC 

alleged claims against the corporate parent, AEFC, or against AEI broker, Jared Slater.
4

against Antoniades and fiduciary breach and secondary securities liability (Corp. Code, 

§§ 25504, 25504.1) against FASI.3

In essence, plaintiffs claimed defendants misrepresented or failed to relay the risks 

of the investment offerings to brokers like Slater. For example, plaintiffs claimed they 

were told their Fisker shares would have liquidation preference and antidilution 

protection when in actuality they would lose those rights if they did not participate in 

Fisker's capital calls. They alleged AEFC officer Dwight Badger misstated facts about 

Bloom Energy's finances, which Antoniades and Daubenspeck failed to correct. 

Likewise, they claimed defendants misrepresented that Motricity was a sufficiently safe 

investment for a retirement account. Sales materials allegedly touted the risky private 

placements as "late stage equities" that were 12-36 months from an initial public offering 

and provided "higher near term investment returns" compared to public equity markets, 

with "greater short-term liquidity and lower risk profiles."

Plaintiffs alleged Antoniades made misrepresentations and omissions about AEI 

products to AEI and FASI brokers during training seminars, which were then conveyed to 

 

3 Corporations Code sections 25504 and 25504.1 are part of the Corporate 

Securities Law of 1968, also referred to as California's Blue Sky law (Corp. Code, 

§ 25000 et seq.). The Blue Sky law enumerates several prohibited practices and 

establishes civil liability for persons who misrepresent or omit material facts in 

connection with the purchase or sale of securities. (Corp. Code, § 25501.) "The liability 

created by section 25501 is sometimes referred to as primary or direct because it applies 

to a person who is directly or primarily responsible" for a securities fraud violation. 

(AREI II Cases (2013) 216 Cal.App.4th 1004, 1013.) The Blue Sky law also establishes 

secondary liability for those who assist in the primary violation. (Ibid.; Corp. Code, 

§§ 25504, 25504.1.) The SAC asserted primary and secondary violations by AEI entities 

and secondary violations by FASI. 
5

plaintiffs. They alleged that in 2007, Antoniades held a training seminar where he told 

AEI and FASI brokers that the start-up companies targeted for investment were going 

public, had extensive interest in initial public offerings, and were viable companies 

operating well above their investment value.4 Plaintiffs further alleged Antoniades 

misrepresented to AEI and FASI brokers during sales meetings, presentations, and 

in-person calls that investors like plaintiffs would have the benefit of antidilution 

protection if the companies did not meet their capital calls. Plaintiffs claimed Antoniades 

developed sales materials for AEI and encouraged the aggressive sale of AEI investments 

to investors. 

The SAC alleged these representations about the start-ups were false and their 

investments were nearly worthless. For example, although plaintiffs were allegedly told 

Fisker had "fantastic" prospects, those statements were untrue, and Fisker filed for 

Chapter 11 bankruptcy protection in November 2013. Plaintiffs claimed "Private Equity 

was being sold to 'unqualified investors' by using fraudulent representations and/or 

concealing facts which were necessary for any investor to make a knowing decision 

whether or not to invest in the products and the risk associated with private equity." 

Plaintiffs claimed to be individual investors who could not afford to invest their 

retirement plans in risky securities and stated the investments made were unsuitable and 

contrary to their investment goals. 

 

4 The SAC does not clarify whether Antoniades was referring to a general 

investment philosophy or instead to the particular start-up companies plaintiffs invested 

in through AEI 2010 Clean Tech Ventures II, LLC and AEI Wireless II, LLC.
6

Plaintiffs alleged AEI and FASI failed to conduct adequate due diligence. They 

alleged brokers sold AEI products "without considering basic, but essential securities 

requirements such as suitability, investment objectives, liquidity, etc." Plaintiffs 

contended that as part of the sales process, brokers told investors AEI products had been 

vetted by FASI and were safe investments, even for retirement accounts. 

At the time plaintiffs made their investments in 2010, Antoniades served as CEO 

of FASI. Plaintiffs claimed Antoniades simultaneously served as constructive president 

of AEI and that AEI and FASI disregarded corporate formalities. As an example of AEI 

and FASI's intertwined relationship, plaintiffs alleged that in 2008, Antoniades, as 

President of AEI, terminated FASI's CEO and President, Keith Gregg, after Gregg tried 

to curb unethical sales practices. Plaintiffs alleged AEI and FASI shared office space and 

employees and were used interchangeably to sell AEI's proprietary investment products. 

Plaintiffs alleged they were not advised their investments were worthless. They 

received periodic statements that showed their investments at cost instead of value. As a 

result, they mistakenly believed their investments had retained their original purchase 

value, unaware that the actual value of the investments had plummeted. 
7

B. Defendants' Motion for Summary Judgment

On September 26, 2014, defendants moved for summary judgment or summary 

adjudication. Defendants argued FASI and AEI were completely independent brokerdealers that merely shared a parent. They argued plaintiffs never opened an account with 

FASI or had any form of oral or written communications with FASI or Antoniades, 

through Slater or otherwise. 

In support of their motion, defendants submitted a declaration by Antoniades and 

excerpts of his deposition transcript. Antoniades declared he had never met plaintiffs;

never communicated with plaintiffs; never communicated with or supervised Slater;

never trained Slater or told him what he should say to plaintiffs about their investments; 

never pushed investments in AEI products; and never developed sales materials for AEI 

products. Antoniades declared Slater had never been a registered broker with FASI; 

instead, he was employed with AEI, which had "always been a completely separate 

broker-dealer" under the FINRA and SEC rules and regulations. AEI had its own 

leadership team, capital, policies and procedures, real estate holdings, compliance 

department, chief compliance officer, advertising department, accounting department, 

and bank accounts. It had a separate corporate office in Chicago, Illinois. Antoniades 

declared he had never managed or controlled AEI. Instead, he was hired as president of 

AEFC to be the business leader of FASI. In this capacity, he had no oversight or 

involvement in AEI's creation of investment products. FASI employed its own 

supervisors and compliance officers, had its own policies and procedures, its own capital, 

and its own audit number. 
8

Antoniades's declaration authenticated and attached an excerpt from the transcript 

of his September 10, 2014 deposition in this case. The transcript was not signed by a

certified shorthand reporter. At his deposition, Antoniades testified AEI was a 

"completely separate broker dealer" that "had its own leadership team, its own capital, its 

own policies and brokers, its own real estate, its own everything." AEFC and FASI 

shared corporate offices in San Diego, while AEI had a separate office in Chicago. 

Antoniades had served as president of AEFC since 2007 and was the business leader of 

AEFC's independent brokerage channel, FASI. Antoniades explained at the deposition

that while FASI brokers also sold AEI products to their clients, these sales would be 

subject to internal supervision by FASI's officers and compliance team. Likewise, AEI 

brokers who sold AEI products to AEI clients were supervised internally at AEI. As he 

had in his declaration, Antoniades rejected at deposition that FASI ever did due diligence 

for AEI. 

Defendants filed a request for judicial notice, attaching FINRA records and reports 

for Slater and AEI, a press release, and an AEI organization chart. They filed a separate 

statement of undisputed material facts, citing Antoniades's declaration and deposition 

testimony. 

C. Plaintiffs' Opposition and Defendants' Reply 

Plaintiffs filed their opposition to defendants' motion on November 26, 2014. 

They made evidentiary objections to defendants' request for judicial notice, claiming the 

exhibits were not authenticated, lacked foundation, and were inadmissible hearsay. 
9

Plaintiffs objected to Antoniades's declaration, arguing it was not based on personal 

knowledge, and the deposition transcript, arguing it was not properly authenticated. 

Plaintiffs offered nine exhibits (A through I) in support of their opposition, 

authenticated through three declarations. Marie Mirch, an attorney for plaintiffs who 

previously served as counsel for Keith Gregg in a FINRA arbitration against FASI, filed 

a declaration introducing documents from that proceeding (Exhibits A through F) (the 

Mirch Declaration).5 Shermoen submitted a declaration authenticating documents he 

received from AEI broker Jared Slater (Exhibits G and H).6 Erin Hanson, an attorney for 

 

5 Exhibit A was an AEFC form indicating that AEFC and its "affiliates" shared an 

employee handbook. Exhibit B was a 2008 e-mail from Keith Gregg stating the company 

was undergoing corporate reorganization. Exhibit C was a 2008 memorandum from 

Antoniades, as president of AEFC, to FASI and AEI staff. Antoniades wrote that Gregg 

would become an executive vice-president of Advanced Equities Wealth Management 

(AEWM) and "oversee the sales and marketing of AEWM products and services 

delivered to [AEI], [FASI], and associated affiliates." The memorandum stated that 

Antoniades had assumed the role of president and CEO of FASI and looked forward to 

pursuing "our shared goals of growing our businesses." Exhibit D was a 2008 

memorandum from Antoniades, as president of AEFC, announcing Gregg would be 

placed on administrative leave. The memorandum was printed on AEFC letterhead, 

which listed logos for AEI, FASI, and AEWM at the bottom of the page. Exhibit E was a 

2009 letter from FASI's human resources manager that verified that Gregg was president 

and CEO of FASI in 2007 and worked for AEWM in 2008. Exhibit F was a transcript 

from a separate arbitration involving FASI, FINRA No. 12-03374, in which FASI's chief 

operations officer Diane O'Neal testified that FASI did due diligence on AEI products in 

2007 or 2008. 

6 Exhibit G was an AEFC advertising brochure sent by Slater to plaintiffs that 

mentioned FASI and AEI as part of the "Advanced Equities Family of Companies." 

Exhibit H was a return envelope sent by Slater to plaintiffs for plaintiffs to return AEI's 

privacy policies. The envelope was addressed to "[FASI], attention: AEI Compliance."
10

plaintiffs, filed a declaration identifying an AEFC document she pulled from the Internet 

(Exhibit I).7

Plaintiffs argued the return envelope (Exhibit H) and language referring to AEI 

and FASI as part of "the Advanced Equities Companies" (Exhibits D and G) showed that 

AEI and FASI were actually a single unit. They pointed to AEFC memoranda

concerning employee transitions as evidence employees moved between AEI and FASI 

(Exhibits B, C, and E). They argued the deposition of FASI's chief operating officer 

(Exhibit F) demonstrated that FASI vetted AEI products. Plaintiffs argued that as 

president of AEFC, Antoniades communicated with plaintiffs by approving brochures 

and information sent to investors (Exhibit G), sending memoranda to staff (Exhibit C), 

and exercising managerial control and supervisory authority over AEI brokers. Yet, 

plaintiffs provided no evidence to rebut defendants' proffer that they had no role in 

developing sales materials for AEI products. 

Defendants filed their reply in support of their motion on December 5, 2014. 

Their brief noted that although Shermoen had been deposed on November 13, 2014,

plaintiffs did not offer his testimony in response to the summary judgment motion. 

Defendants argued the deposition confirmed that: Shermoen made all his investments 

through his AEI broker, Slater, and never met with anyone at FASI; Slater never 

represented he was affiliated with FASI; Slater never mentioned Antoniades; plaintiffs

 

7 Exhibit I was AEFC's Spring 2010 Newsletter in which AEFC CEO Dwight 

Badger congratulated staff for milestones reached by Motricity, Fisker Automotive, and 

Bloom; Badger stated these milestones would "serve as the catalyst for growth 

throughout all our business units."
11

never heard of Antoniades until after making the investments; and plaintiffs knew their 

investments were risky. Defendants argued only one of plaintiffs' exhibits (Exhibit G)

was properly authenticated and that even if AEI and FASI shared a parent in 2008, that 

fact was immaterial to investments plaintiffs made with Slater in 2010. Defendants 

reiterated that FASI and AEI had always been completely independent broker-dealers and 

that plaintiffs' claims, if any, were against AEI entities alone. 

D. Trial Court's Ruling and Judgment

The trial court heard argument on defendants' motion in December 2014. The 

court sustained plaintiffs' objections to defendants' request for judicial notice but 

overruled their objections to defendants' evidence. On its own motion, the court 

concluded that with the exception of Exhibit G, authenticated by Shermoen's declaration, 

plaintiffs' documentary evidence lacked authentication and foundation. 

Turning to the merits, the court granted defendants' motion for summary 

judgment, finding they had carried their burden whereas plaintiffs had not. The court 

noted the SAC alleged plaintiffs invested in AEI products through AEI brokers. 

Defendants proffered competent evidence that: plaintiffs were not customers of FASI or 

Antoniades; Slater alone solicited plaintiffs, and he worked exclusively for AEI; FASI 

and Antoniades did not manage or supervise Slater; and FASI and AEI were independent 

broker-dealers. Even if plaintiffs' evidence were admissible, the court found it did not 

rebut defendants' proffer. The court determined that the mere fact AEI and FASI shared a 

parent company in 2008 did not create a causal connection between the parties in 

connection with plaintiffs' investments made years later. 
12

On May 19, 2015, the trial court entered judgment for defendants on plaintiffs'

SAC, dismissing each of the causes of action against FASI and Antoniades with 

prejudice. Plaintiffs appealed.8

DISCUSSION

I. Legal Principles

The purpose of summary judgment is to "cut through the parties' pleadings in 

order to determine whether, despite their allegations, trial is in fact necessary to resolve 

their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) 

Summary judgment is properly granted if the record demonstrates there is no triable issue 

of material fact such that the moving party is entitled to judgment as a matter of law. 

(Code Civ. Proc., § 437c, subd. (c).)9

A defendant moving for summary judgment bears the burden of persuasion to 

show there are no triable issues of material fact. (Aguilar, supra, 25 Cal.4th at p. 850.) 

To meet that burden, a defendant need only show the plaintiff cannot establish an 

 

8 In February 2015, plaintiffs filed a premature notice of appeal from the court's 

December 2014 order granting defendants' motion for summary judgment and directing 

defendants to prepare a judgment of dismissal. An order granting a motion for summary 

judgment is not an appealable order or judgment. (Stolz v. Wong Communications LP

(1994) 25 Cal.App.4th 1811, 1816.) Instead, the appeal must be taken from a judgment 

entered on the basis of the summary judgment order. (Code Civ. Proc., §§ 904.1, subd. 

(a)(1), 437c, subd. (m)(1).) However, in the interests of justice, we construe plaintiffs' 

appeal as having been taken from the entry of judgment, rather than from the order 

granting defendants' motion. (Zavala v. Arce (1997) 58 Cal.App.4th 915, 924, fn. 7; 

Schettler v. County of Santa Clara (1977) 74 Cal.App.3d 990, 995, fn. 1; Levy v. 

Skywalker Sound (2003) 108 Cal.App.4th 753, 761, fn. 7.)

9 Further statutory references are to the Code of Civil Procedure unless otherwise 

specified.
13

essential element of a cause of action. (Id. at pp. 853-854; § 437c, subd. (p)(2).) Once 

the defendant has met that burden, the burden shifts to the plaintiff to show a triable issue 

of one or more material facts exists as to that cause of action. (§ 437c, subd. (p)(2); 

Aguilar, at p. 849.) A plaintiff "shall not rely upon the mere allegations or denials of its 

pleadings to show that a triable issue of material fact exists but, instead, shall set forth the 

specific facts showing that a triable issue of material fact exists as to that cause of action 

. . . ." (§ 437c, subd. (p)(2); Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477

(Merrill).)

In ruling on the motion, the trial court must view the evidence and all inferences 

reasonably drawn therefrom in the light most favorable to the party opposing summary 

judgment. (Aguilar, supra, 25 Cal.4th at p. 843.) A triable issue of material fact exists 

"if, and only if, the evidence would allow a reasonable trier of fact to find the underlying 

fact in favor of the party opposing the motion in accordance with the applicable standard 

of proof." (Id. at p. 850.)

On appeal, we review the trial court's decision to grant summary judgment de 

novo, "considering all of the evidence the parties offered in connection with the motion 

(except that which the trial court properly excluded) and the uncontradicted inferences 

the evidence reasonably supports." (Merrill, supra, 26 Cal.4th at p. 476; see Wachovia 

Bank v. Lifetime Industries, Inc. (2006) 145 Cal.App.4th 1039, 1048.) A trial court's 

stated reasons for granting summary judgment do not bind us; we review the court's 

ruling, not its rationale. (Continental Ins. Co. v. Columbus Line, Inc. (2003) 107 

Cal.App.4th 1190, 1196.) We review the trial court's evidentiary rulings for abuse of 
14

discretion. (Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694 (Carnes); Park v. 

First American Title Co. (2011) 201 Cal.App.4th 1418, 1427 (Park).)

II. Defendants Met Their Burden

Plaintiffs claim defendants did not meet their burden on summary judgment 

because the evidence they proffered was inadmissible and insufficient to show the lack of 

a triable issue. Plaintiffs' contention lacks merit. As the trial court found, defendants

offered competent evidence to establish the lack of a triable issue of material fact as to 

any of the causes of action asserted against them in the SAC.

A. No Error in Admitting Defendants' Evidence

As the party moving for summary judgment, defendants bore the initial burden to 

make a prima facie showing of the nonexistence of a triable issue of material fact. 

(Aguilar, supra, 25 Cal.4th at p. 850.) Plaintiffs argue the trial court erred in admitting 

Antoniades's declaration and excerpted deposition transcript because the declaration was 

not based on personal knowledge and the deposition was not signed by the certified 

shorthand reporter. We find no error.

Declarations offered in support of a summary judgment motion "shall be made by 

a person on personal knowledge, shall set forth admissible evidence, and shall show 

affirmatively that the affiant is competent to testify to the matters stated in the affidavits 

or declarations." (§ 437c, subd. (d).) Plaintiffs cite to Bowden v. Robinson (1977) 67 

Cal.App.3d 705, in which the court determined a declaration that used the phrase "to the 

best of my knowledge" was inadmissible. (Id. at pp. 719-720.) The court explained that 

the phrase, " 'To the best of my knowledge' indicates something less than the 'personal 
15

knowledge' required under . . . section 437c, and implies that the declarant's statement is 

based on something similar to information and belief." (Ibid.) Subsequent cases have 

clarified that the key inquiry is whether the phrase introduces an impermissible element 

of uncertainty to the statements made in the declaration. For example, in Katelaris v. 

County of Orange (2001) 92 Cal.App.4th 1211 (Katelaris), the court explained that the 

phrase "to the best of my knowledge" did not "somehow magically nullif[y] whatever 

statement follows it." (Id. at p. 1216.) Instead, the phrase may introduce an element of 

uncertainty that, under some circumstances, could render the declaration inadmissible 

under section 437c. (Ibid.) Likewise, in Pelayo v. J.J. Lee Management Co., Inc. (2009) 

174 Cal.App.4th 484 (Pelayo), the court concluded that the declarant's use of the phrase 

"to the best of my knowledge" did not suggest the information was not based on personal 

knowledge. (Id. at p. 494.) Instead, the phrase "at most raised an issue about the clarity 

and certitude of [the declarant's] memory, . . . not its admissibility." (Ibid.)

Hence, the key inquiry is whether Antoniades's use of the phrase, "To my 

knowledge" to preface some of the factual assertions in his declaration introduced an 

impermissible level of uncertainty. (Katelaris, supra, 92 Cal.App.4th at p. 1216; Pelayo, 

supra, 174 Cal.App.4th at p. 494.) We conclude it did not. Antoniades declared he had 

personal knowledge of the facts he asserted and signed under penalty of perjury that the 

facts set forth were true and correct. As in Pelayo, the declaration asserted facts that 

were within the scope of Antoniades's personal knowledge, including his 

communications with plaintiffs, his communications with and oversight of Slater, and the 

corporate structure of AEI and FASI, which were both subsidiaries of AEFC. (Pelayo, 
16

supra, at p. 494.) Indeed, statements prefaced with, "To my knowledge" were 

substantively similar to statements that were not so qualified. For example, Antoniades 

declared, "I have never made any false or misleading statements to any of the Plaintiffs in 

this action, nor their broker about their investments, [Slater], because I never 

communicated with any of them about Plaintiffs' investment decisions." Given this 

unqualified statement, other statements that Antoniades did not, to his knowledge, speak 

to plaintiffs or Slater by phone or e-mail, are not impermissibly uncertain. 

As to the deposition transcript, any writing must be authenticated before it may be 

received into evidence. (Evid. Code, § 1401, subd. (a).) Antoniades authenticated the 

transcript excerpt by declaring under penalty of perjury in his declaration that it was a 

true and correct copy of his September 2014 deposition in this case. Contrary to 

plaintiffs' contention, the lack of a signed certification by the shorthand reporter does not 

render the transcript excerpt inadmissible. (See Greenspan v. LADT LLC (2010) 191 

Cal.App.4th 486, 523 ["[D]eposition excerpts were attached to the moving papers and 

were authenticated by the attorneys who took the depositions. That is an acceptable 

means of authentication. [Citation.] The deposition excerpts also included the court 

reporter's signed certification page—an alternative method of authentication."], italics 

added.) 

Plaintiffs' authorities do not suggest otherwise. In Voorheis v. HawthorneMichaels Co. (1957) 151 Cal.App.2d 688, it was error to read a deposition transcript at 

trial because the since-deceased deponent had never read or signed it so as to ensure the 

writing represented "precisely the statements for which the witness stands responsible." 
17

(Id. at pp. 690, 692-693.) In Pavone v. Citicorp Credit Services, Inc. (S.D.Cal. 1997) 60 

F.Supp.2d 1040, a declaration could not authenticate a transcript where it equivocated as 

to whether the transcript accurately reflected statements made at the deposition. (Id. at 

p. 1045.) Here, by contrast, Antoniades unequivocally authenticated the transcript as a 

true and correct copy of his deposition in his declaration. 

For the first time on appeal, plaintiffs argue Antoniades's deposition excerpt did 

not comport with rule 3.1116 of the California Rules of Court, which governs the use of 

deposition testimony as exhibits to motions. While defendants did not highlight relevant 

portions of Antoniades's testimony, as required by the rule (Cal. Rules of Court, rule 

3.1116(c)), plaintiffs waived their objection by failing to raise it below. (Superior 

Dispatch, Inc. v. Insurance Corp. of New York (2010) 181 Cal.App.4th 175, 192-193; 

§ 437c, subd. (b)(5).)

Thus, the trial court did not err in overruling plaintiffs' evidentiary objections to 

Antoniades's declaration or deposition transcript. 

B. Defendants Carried Their Burden on Summary Judgment

As the party moving for summary judgment, defendants bore the burden to show 

there was no triable issue of material fact. (Aguilar, supra, 25 Cal.4th at p. 850.) We 

conclude defendants carried their burden.

The thrust of the SAC is that plaintiffs invested in AEI's products believing the 

underlying start-up companies (Fisker Automotive, Bloom Energy, Serious Energy, 

Motricity) were vetted, sufficiently safe for a retirement account, and protected by

liquidation preference and antidilution provisions when, in actuality, the underlying 
18

securities were risky. The claims against these defendants, FASI and Antoniades, are 

premised on allegations that AEI and FASI were in effect the same company; FASI 

vetted AEI products; and Antoniades supervised and made misrepresentations to AEI 

brokers, including Slater, through trainings and sales materials. As we explain,

defendants proffered competent evidence they made no statements to plaintiffs, through 

Slater or otherwise, and that FASI and AEI were, at all relevant times, completely

independent broker-dealers. This was sufficient to carry their burden to show that 

plaintiffs could not establish at least one element of each of their causes of action against 

FASI and Antoniades.10

 

10 On appeal, defendants cite to documents attached to their request for judicial 

notice, which the trial court denied. Because defendants did not appeal the denial of their 

request for judicial notice or renew their request for judicial notice with us, we do not 

consider these documents on review. (Hensel Phelps Construction Co. v. San Diego 

Unified Port Dist. (2011) 197 Cal.App.4th 1020, 1028, fn. 9.) We likewise reject 

defendants' contention that allegations in plaintiffs' original complaint are judicial 

admissions. While allegations in a prior verified complaint may be considered judicial 

admissions (Knoell v. Petrovich (1999) 76 Cal.App.4th 164, 168-169), as a general rule, 

an amended complaint supersedes the original (Foreman & Clark Corp. v. Fallon (1971) 

3 Cal.3d 875, 884).
19

1. Claims Based on Alleged Misrepresentations or Omissions

Claims of intentional misrepresentations and omissions, fraud and deceit, and 

negligent misrepresentation all require a misrepresentation or omission. (Small v. Fritz 

Companies, Inc. (2003) 30 Cal.4th 167, 173; Ragland v. U.S. Bank National Assn. (2012) 

209 Cal.App.4th 182, 196.) Defendants showed the lack of a triable issue on this 

essential element.

The SAC alleged FASI and Antoniades made material misstatements or omissions 

about the investment vehicles (AEI Clean Tech Ventures II, LLC and AEI Wireless II, 

LLC) and the targeted start-up companies (Fisker Automotive, Bloom Energy, Serious

Energy, Motricity), which were then conveyed to plaintiffs through the marketing and 

training materials sent to AEI and FASI brokers, including Slater. In particular, plaintiffs

alleged brokers told investors AEI products had been vetted by FASI and were safe, even 

for retirement accounts. 

Defendants offered competent evidence showing they made no direct statements to 

plaintiffs or Slater. Antoniades declared he never met plaintiffs, never communicated 

with plaintiffs, never communicated with or supervised Slater, never trained Slater, and 

never told Slater what to say to plaintiffs about their investments. Antoniades declared 

he never conducted seminars to instruct or train brokers to sell AEI products, never 

demanded sales or sales efforts of AEI products, and never had anything to do with the 

development or preparation of marketing materials for AEI products. He stated he never 

made any determination about the suitability of plaintiffs' investments. Antoniades 

likewise declared FASI employees never developed marketing materials for AEI's 
20

products and that he was never aware of any false statements being made through AEI by 

FASI brokers. 

The only specific representation plaintiffs attributed to these defendants was a 

statement Antoniades allegedly made at a 2007 training seminar for AEI and FASI 

brokers. Aside from admissible evidence in Antoniades's declaration that he never 

conducted such training seminars, it is well settled that forward-looking statements do not 

provide a basis for claims of misrepresentations or omissions, fraud and deceit, or 

negligent misrepresentation. (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 

1469-1470 ["The law is well established that actionable misrepresentations must pertain 

to past or existing material facts. [¶] . . . [¶] Any future market forecast must be regarded 

not as fact but as prediction or speculation."].)

Defendants also offered competent evidence that FASI and Antoniades did not 

make any indirect misrepresentations or omissions by virtue of the corporate relationship 

between AEI and FASI. Antoniades declared he was the president of AEFC and CEO of 

FASI at the time plaintiffs made their investments. Slater was a broker for AEI; he had 

never been registered as a broker for FASI. Antoniades never had supervisory authority 

over Slater. He never managed or controlled AEI, the brokerage firm Slater worked for; 

never acted as "constructive" president or CEO of AEI; never had a job description that 

included management of AEI; had no oversight or involvement in AEI's investment 

banking arm, which created the investment vehicles; and never did due diligence for AEI. 

Antoniades's declaration established that AEI had always been a completely 

separate broker-dealer from FASI under FINRA and SEC rules and regulations. AEI had 
21

its own leadership team, employee structure, supervisors, capital, policies and 

procedures, real estate holdings, compliance department, chief compliance officer, 

advertising department, accounting department, and bank accounts. It had a separate 

corporate office in Chicago. FASI had its own supervisors and compliance officers,

infrastructure, policies and procedures, capital, audit number, accounting department, 

accounting procedures, and bank accounts. FASI never did due diligence for AEI, and 

any business dealings between FASI and AEI would have been conducted "at arm's 

length on commercially reasonable terms." Likewise, Antoniades testified at deposition 

that: FASI maintained its separate corporate office in San Diego; he was an officer of

AEFC and FASI; FASI and AEI were completely independent broker-dealers; and FASI 

never did due diligence for AEI.11

The SAC acknowledged FASI was not AEI's corporate parent. Yet, plaintiffs did

not sue the parent, AEFC. Absent any direct or indirect misrepresentations, liability 

against FASI and Antoniades is premised on the theory AEI and FASI failed to adhere to 

corporate formalities such that Antoniades served as the "constructive" president of AEI. 

"Generally, alter ego liability is reserved for the parent-subsidiary relationship. 

However, under the single-enterprise rule, liability can be found between sister 

companies." (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 

 

11 Plaintiffs argue Antoniades's assertion that FASI never did due diligence for AEI 

is contradicted by his deposition testimony. To the contrary, Antoniades's testimony that 

FASI did due diligence on products it distributed, including AEI products sold to FASI 

clients, in no way contradicted assertions in his declaration and deposition that FASI 

never did due diligence for AEI. 
22

Cal.App.3d 1220, 1249 (Las Palmas); Hasso v. Hapke (2014) 227 Cal.App.4th 107, 155

(Hasso).) This theory requires proof that the sister companies, despite their separate 

personalities, formed a single enterprise. (Las Palmas, at pp. 1249-1250; Hasso, at 

p. 155.) In Las Palmas, the court affirmed a judgment entered against sister companies 

under an alter ego theory, where the two companies "formed a single enterprise for the 

purpose of committing a continuing fraud against buyers." (Las Palmas, supra, at 

pp. 1250-1251 [noting that one company had guaranteed the other's loans and that the 

companies shared directors and staff]; see Pan Pacific Sash & Door Co. v. Greendale 

Park, Inc. (1958) 166 Cal.App.2d 652, 658-659 [affirming judgment against sister 

corporations under alter ego theory where "each corporation was but an instrumentality 

or conduit of the other in the prosecution of a single venture"].) 

Here, defendants presented competent evidence that AEI and FASI were 

independent broker-dealers that maintained separate corporate offices, leadership teams, 

policies and procedures, compliance officers, bank accounts, and audit numbers and 

would enter any business dealings at arm's length. Consequently, defendants carried their 

burden to show there is no triable issue as to liability for misrepresentations or omissions 

under an alter ego theory. (Hasso, supra, 227 Cal.App.4th at pp. 156-157 [no alter ego 

liability where there was no unity of interest between separate companies; companies 

maintained separate bank accounts and legal formalities and did not commingle assets].)

Thus, defendants met their burden to show the lack of a triable issue on the 

misrepresentation claims. Defendants' evidence showed they made no statements 

whatsoever to plaintiffs or Slater (including through marketing or training materials), 
23

much less material misrepresentations or omissions regarding the specific investments 

plaintiffs made. Defendants' evidence also established AEI and FASI were completely 

separate companies, such that FASI and its CEO would not be responsible for any 

misrepresentations or omissions by AEI or its brokers.

2. Claims Based on Defendants' Alleged Relationship with Plaintiffs or AEI

Defendants likewise met their burden as to the remaining causes of action. 

Fiduciary breach and constructive fraud require a fiduciary or special relationship. (Wolf 

v. Superior Court (2003) 107 Cal.App.4th 25, 29; City of Hope National Medical Center 

v. Genentech, Inc. (2008) 43 Cal.4th 375, 386 (Genentech); Peterson Development Co. v. 

Torrey Pines Bank (1991) 233 Cal.App.3d 103, 117.) As plaintiffs' broker, Slater had a 

fiduciary relationship with plaintiffs (Brown v. Wells Fargo Bank, N.A. (2008) 168 

Cal.App.4th 938, 961), as did his employer, AEI (id. at p. 961, fn. 13). FASI and 

Antoniades, however, did not. Plaintiffs argue defendants' evidence did not negate a 

fiduciary relationship. To the contrary, evidence showing that AEI and FASI were 

completely separate entities; Slater worked for AEI, not FASI; and Antoniades never had 

supervisory control over AEI brokers does precisely that. (Genentech, supra, at p. 386.) 

Such evidence likewise negates the contention that defendants owed plaintiffs a fiduciary 

duty by virtue of an alter ego theory. (Las Palmas, supra, 235 Cal.App.3d at pp. 1249-

1250; Hasso, supra, 227 Cal.App.4th at pp. 156-157.)

Similarly, a claim for failure to supervise presupposes a duty to use due care. 

(Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 397; Software Design & Application, 
24

Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472, 478.)12 Defendants' evidence 

that Antoniades lacked a supervisory relationship over Slater or managerial control over 

AEI negated that element.

Control person liability under section 25504 of the Corporations Code "requires 

some sort of control person, employee, or agency relationship with the primary [securities

law] violator"—here, AEI. (AREI II Cases, supra, 216 Cal.App.4th at p. 1013.) Control 

is " 'the possession, direct or indirect, of the power to direct or cause the direction of the 

management and policies of a corporation.' " (Hellum v. Breyer (2011) 194 Cal.App.4th 

1300, 1316.) Likewise to find an agency relationship between two distinct companies, 

one company must exercise a degree of control that reflects its "purposeful disregard of 

the [other's] independent corporate existence." (Sonora Diamond Corp. v. Superior 

Court (2000) 83 Cal.App.4th 523, 542.) Defendants' evidence that FASI and AEI at all 

times operated as completely independent sister companies negated the essential element 

of control.

Finally, section 25504.1 of the Corporations Code requires proof that FASI 

"materially assisted in the [underlying] securities law violation" of AEI. (AREI II Cases, 

 

12 Plaintiffs cite an administrative regulation to suggest broker-dealers have a duty to 

supervise their agents. (10 Cal. Code Regs., § 260.218.4, subd. (a) ["Every broker-dealer 

shall exercise diligent supervision over the securities activities of all of its agents."].) 

That regulation does not impose a statutory duty to supervise. (Asplund v. Selected 

Investments in Financial Equities, Inc. (2000) 86 Cal.App.4th 26, 38; see California 

Service Station Assn. etc. v. American Home Assurance Co. (1998) 62 Cal.App.4th 1166, 

1175 ["[T]he courts and the Legislature may create a negligence duty of care, but an 

administrative agency cannot independently impose a duty of care if that authority has 

not been properly delegated to the agency by the Legislature."].) To the extent the SAC 

asserts a claim for failure to supervise, it rests on common law negligence.
25

supra, 216 Cal.App.4th at p. 1014.) "[I]t is not enough that a person provided material 

assistance in a larger scheme to defraud if that person had no role or involvement in the 

part of the scheme that constituted a violation of the securities laws." (Ibid.) Thus, a 

plaintiff must show that a person materially aided in not just the transaction, but in the 

securities violation itself. (Id. at p. 1016.) Defendants' evidence that AEI and FASI were 

completely independent and that plaintiffs bought their securities through AEI alone 

negated any connection between FASI and securities violations by AEI brokers.

In short, as with the misrepresentation claims, defendants carried their burden to 

show that plaintiffs' remaining claims for fiduciary breach, constructive fraud, failure to 

supervise, control person liability (Corp. Code, § 25504), and aiding and abetting liability 

(Corp. Code, § 25504.1) each lacked a triable issue as to an essential element. (Aguilar, 

supra, 25 Cal.4th at p. 850.)

IV. Plaintiffs Failed to Meet Their Burden

Because defendants carried their burden, the burden shifted to plaintiffs to show 

the existence of a triable issue of material fact. (§ 437c, subd. (p)(2); Aguilar, supra, 25 

Cal.4th at p. 850.) We conclude plaintiffs failed to meet their burden.

A. Any Error in Excluding Plaintiffs' Evidence Was Harmless

Plaintiffs argue the trial court erred when it excluded all but one of plaintiffs'

exhibits for lack of authentication and foundation. They contend their evidence was 

authenticated by declarations from their attorneys and Shermoen. We conclude any error 

was harmless.
26

Exhibits A through E consisted of documents produced in a 2008 arbitration 

between Gregg and FASI.13 Plaintiffs did not properly authenticate these documents, as 

they did not submit evidence linking these documents to a discovery production by FASI 

in the 2008 FINRA case.14 Exhibit F purports to be an excerpt from a separate 2012 

arbitration between Martina Hutchinson, FASI, and third-party respondent Michael 

DiPietro. Plaintiffs did not submit evidence laying a proper foundation for Exhibit F; the 

Mirch Declaration merely states the transcript was among the documents received from 

FASI's counsel in the 2008 arbitration.15 Thus, the trial court did not err in excluding 

Exhibits A through F. (Carnes, supra, 126 Cal.App.4th at p. 694; Park, supra, 201 

Cal.App.4th at p. 1427.)

Likewise, the trial court properly excluded Exhibit I, which was a copy of an 

AEFC staff newsletter obtained from the Internet. A declaration of Erin Hanson, 

 

13 See ante, footnotes 5 through 7, for a description of plaintiffs' exhibits.

14 The Mirch Declaration purports to attach "correspondence accompanying 

discovery production from First Allied's counsel in the FINRA matter." However, based 

on the record before us, it does not appear that plaintiffs submitted this correspondence as 

an exhibit before the trial court. 

15 Exhibit F also appears inadmissible under the hearsay rule, as plaintiffs did not 

establish admissibility under the former testimony exception. Plaintiffs did not proffer 

evidence O'Neal was unavailable to testify, either through another deposition or by 

declaration. Plaintiffs also did not show the parties in the 2012 arbitration had the same 

interest and motive to cross-examine O'Neal as defendants would have in this case (Evid. 

Code, §§ 1291, subd. (a)(2), 1292, subd. (a)), or that FASI offered O'Neal's testimony in 

its own behalf at the 2012 arbitration (Evid. Code, § 1291, subd. (a)(1)). (See Gatton v. 

A.P. Green Services, Inc. (1998) 64 Cal.App.4th 688, 693 [no error in excluding 

deposition testimony from another case offered in opposition to summary judgment 

motion]; Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1150 

[same].)
27

plaintiffs' counsel, detailed the steps she used to pull this document from the Internet. 

This was insufficient to lay a proper foundation as to the authenticity of the AEFC 

newsletter. (People v. Goldsmith (2014) 59 Cal.4th 258, 267 ["The foundation requires 

that there be sufficient evidence for a trier of fact to find that the writing is what it 

purports to be, i.e., that it is genuine for the purpose offered."].)

Finally, the trial court excluded Exhibit H, which was a copy of a return envelope 

addressed to "[FASI], attention: AEI Compliance." Shermoen authenticated this 

envelope in his declaration, stating it was a true and correct copy of the return envelope 

he received from Slater along with AEI's privacy policies. The trial court's evidentiary 

ruling excluding Exhibit H was erroneous, as plaintiffs laid a proper foundation as to that 

exhibit. Nevertheless, any error was harmless. (Park, supra, 201 Cal.App.4th at p. 1427 

[applying harmless error standard].) Indeed, as discussed below, even if all of plaintiffs'

exhibits were considered, they would not raise a triable issue as to any of plaintiffs'

claims against these defendants. 

B. Plaintiffs Did Not Meet Their Burden on Summary Judgment

Even if all of their exhibits were admissible, plaintiffs did not meet their burden to 

show a triable issue as to any of the causes of action against these defendants. Plaintiffs 

did not offer any evidence to rebut defendants' proffer that Antoniades never made any 

statements to plaintiffs or Slater, or any statements regarding the suitability of plaintiffs'

investments. They offered no evidence to overcome defendants' evidence that FASI and 

AEI operated as independent broker-dealers and that neither FASI nor Antoniades 

prepared sales materials for AEI products. Plaintiffs argued AEFC marketing materials 
28

and internal memoranda describing AEI and FASI as part of the same family of 

companies indicated that FASI and AEI were a single entity. To the contrary, such 

evidence at most suggested that AEI and FASI were part of the same corporate family, 

not that FASI was an alter ego of AEI or otherwise controlled AEI. 

BBA Aviation PLC v. Superior Court (2010) 190 Cal.App.4th 421 is instructive. 

In BBA Aviation, an individual sued his former employer and the employer's English 

parent company for wrongful termination. He argued his former employer was an agent 

of the parent company, so as to permit the court to exercise jurisdiction. In support, he

pointed to the fact the parent company's "name and logo appeared on [its subsidiary's] 

signage, employee uniforms, badges, business cards, and employment documents." (Id.

at p. 434.) The court rejected the theory that "the mere appearance of a parent's logo on 

its subsidiary's documents constitutes pervasive control over day-to-day operations" and 

concluded such branding was "insufficient to prove the existence of a single entity." 

(Ibid.; see Salkin v. United Services Auto. Assn. (C.D.Cal. 2011) 767 F.Supp.2d 1062, 

1066 ["The presence of USAA's logo on documents and correspondence from USAA 

Life does not demonstrate sufficiently that the two companies are one entity."].) Thus, 

the mere fact AEI and FASI were both mentioned in AEFC internal memoranda and 

marketing materials is insufficient to prove that AEI and FASI formed a single entity.16

 

16 Likewise, AEFC memoranda regarding Gregg's transition from FASI to AEWM in 

2008 (Exhibits B, C, and E) did not overcome defendants' evidence that FASI and AEI 

operated as completely independent broker-dealers, observing all corporate formalities.
29

Plaintiffs also offered no evidence to overcome defendants' showing that FASI and 

Antoniades had no role in vetting AEI's products or supervising AEI brokers. The SAC 

alleged AEI brokers told investors that AEI products were vetted by FASI. At most, 

plaintiffs' Exhibit F suggested that in 2007 or 2008, FASI performed due diligence on 

AEI products. Not only was this consistent with defendants' evidence that FASI could do 

due diligence on AEI products that FASI brokers sold to FASI clients, it did not show a 

triable issue. Even supposing FASI did due diligence for AEI in 2007 or 2008, plaintiffs

offered no causal connection between these acts and their investments in 2010. Indeed, 

even supposing FASI did due diligence for AEI in 2010, there was no causal connection 

to plaintiffs' specific investments.

Rather than offer evidence to overcome defendants' proffer, plaintiffs reiterated 

the factual allegations in the SAC to argue a triable issue existed. For example, in 

response to defendants' evidence that Antoniades never participated in trainings for AEI 

brokers, plaintiffs asserted, without support, that he in fact "spoke at conferences in 

which AEI employees such as Mr. Slater attended." Once the burden shifted to plaintiffs, 

however, they could not "rely upon the mere allegations or denials of its pleadings to 

show that a triable issue of material fact exist[ed]." (§ 437c, subd. (p)(2).) 

In sum, plaintiffs failed to defeat defendants' evidentiary showing that FASI and 

AEI were, at all relevant times, independent broker-dealers; that FASI and its CEO had 

no role in vetting plaintiffs' investments; and that FASI's CEO made no statements to 

plaintiffs or their AEI broker. As defendants argue, plaintiffs' claims lie, if at all, against 
30

AEI entities. The trial court properly granted defendants' motion and entered judgment in 

favor of FASI and Antoniades on plaintiffs' SAC.

DISPOSITION

The judgment is affirmed. Respondents are entitled to their costs on appeal.

HALLER, J.

WE CONCUR:

BENKE, Acting P. J.

NARES, J.