Court Opinion

ID: 6112495
Source: CourtListenerOpinion
Date Created: 2022-01-25 20:03:17.380111+00
Date Added: 2024-06-11T08:54:24.571478
License: Public Domain

Filed 1/25/22 Rosenzweig v. Vallurupalli CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

RUSS ROSENZWEIG,                                               2d Civ. No. B311935
                                                             (Super. Ct. No. 56-2020-
     Plaintiff and Appellant,                                00540108-CU-BT-VTA)
                                                                (Ventura County)
v.

HARI K. VALLURUPALLI,

     Defendant and Respondent.

      The trial court sustained without leave to amend
defendant’s demurrer to plaintiff’s third amended complaint
alleging intentional interference with prospective economic
advantage and negligence. We affirm the ensuing judgment.
                              FACTS
      The facts are taken from the third amended complaint.
      Daniel Diermeier is described as “a renowned crisis and
reputation management consultant.” He is a principal in Silicon
Valley Innovation Institute, LLC (SVII). Plaintiff Russ
Rosenzweig was the chief executive officer (CEO) of SVII.
Rosenzweig has an interest in Launch Education, LLC, which in
turn has an interest in SVII.
       Diermeier as an individual entered into a service
agreement with Hari Vallurupalli as an individual and as
manager of 63 Partners, LLC, and Paul Del Gallo as sole member
of Three Companies, LLC. The agreement contained
confidentiality and noncompetition clauses. The agreement also
contained a provision giving the managers of 63 Partners and
Three Companies the right to notify any present or prospective
employer or client of Diermeier of their rights and obligations in
their agreement with Diermeier. It also gave the managers the
right to give notices to any present or prospective employer or
client should Diermeier breach his obligations under the
agreement.
       In February 2018, Del Gallo sent a notice by e-mail to 15 of
Diermeier’s business associates, including his partners in SVII.
It stated, “[This notice is] sent to inform [you] ‘of certain
conditions that may be of relevance to you or your firm. In
preservation of our position in law and in equity, you are notified
of some of the tenets of Dr. Diermeier’s contract.’ ” The notice
also stated the sender’s right to injunctive relief for Diermeier’s
violation of his covenant not to compete or his confidentiality
obligation.
       The notice was sent from the account of a company Del
Gallo owns called First Sight. Vallurupalli conspired with Del
Gallo to send the notices.
       After Del Gallo sent the notices, SVII’s partners stopped
their collaboration with Diermeier. They lost all confidence in
Diermeier and feared becoming involved in ligation. SVII ceased

                                2.
operations. Rosenzweig’s interest in and position at SVII became
worthless.
                              Procedure
       In Rosenzweig’s original and first amended complaints, he
alleged that Vallurupalli published the e-mail notices. By the
time of his third amended complaint, Rosenzweig realized that
the e-mails showed Del Gallo published the e-mail notices. To
make up for the apparently minor problem that the e-mails
showed someone other than the defendant Vallurupalli
committed the alleged wrongful acts, the third amended
complaint alleged that Vallurupalli conspired with Del Gallo to
send the notices.
       The trial court sustained Vallurupalli’s demurrer to
Rosenzweig’s third amended complaint without leave to amend.
The trial court concluded that the facts pleaded fail to show a
proximate cause between the alleged wrongful acts and harm to
Rosenzweig.
                            DISCUSSION
                                   I
                         Standard of Review
       The function of a demurrer is to test whether, as a matter
of law, the facts alleged in the complaint state a cause of action
under any legal theory. (Intengan v. BAC Home Loans Servicing
LP (2013) 214 Cal.App.4th 1047, 1052.) We assume the truth of
all facts properly pleaded, as well as facts of which the trial court
properly took judicial notice. (Ibid.) But we do not assume the
truth of contentions, deductions, or conclusions of law. (Ibid.)
Our review of the trial court’s decision is de novo. (Ibid.)
       We review the trial court’s decision to allow an amendment
to the complaint for an abuse of discretion. (Fontenot v. Wells

                                 3.
Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 274.) Where there
is no reasonable possibility that plaintiff can cure the defect with
an amendment, sustaining a demurrer without leave to amend is
not an abuse of discretion. (Id. at p. 274.)
                                   II
                            Proximate Cause
       Rosenzweig contends the trial court erred in concluding the
third amended complaint showed a lack of proximate cause.
       The third amended complaint alleges two causes of action:
intentional interference with prospective economic advantage
and negligence.
       Intentional interference with prospective economic
advantage requires: (1) an economic relationship between
plaintiff and some third party, with the probability of future
economic benefit to the plaintiff; (2) the defendant’s knowledge of
the relationship; (3) the defendant’s intentional acts designed to
disrupt the relationship; (4) actual disruption of the relationship;
and (5) economic harm to the plaintiff proximately caused by the
acts of the defendant. (Marsh v. Anesthesia Services Medical
Group, Inc. (2011) 200 Cal.App.4th 480, 504.)
       Negligence requires the existence of a duty to the plaintiff,
breach of that duty, and proximate cause resulting in injury.
(McIntyre v. The Colonies-Pacific, LLC (2014) 228 Cal.App.4th
664, 671.)
       Proximate cause has two aspects. The first aspect is cause
in fact, that is, “but-for” causation. (State Dept. of State Hospitals
v. Superior Court (2015) 61 Cal.4th 339, 352.) The second aspect
focuses on public policy considerations. (Id. at p. 353.) Because
the factual cause of an event may be traced back to the dawn of

                                  4.
humanity, the law has as a matter of public policy imposed
limitations on liability in addition to cause in fact. (Ibid.)
       In Korea Supply Co. v. Lockheed Martin Corp. (2003) 29
Cal.4th 1134, a company was seeking to sell equipment to the
Republic of South Korea. The defendant committed a wrong
against the company that caused it to lose the contract. The
agent of the company that lost the contract sued the defendant
for loss of prospective economic damages. The agent claimed that
when the company it represented lost the contract, it lost the
commission. The court held that the agent satisfied the
proximate cause element. But the court cautioned, “In other
cases, however, this proximate cause requirement will prevent a
plaintiff from recovering for harm that is more remotely
connected to a defendant’s wrongful conduct.” (Id. at p. 1166.)
       Rosenzweig relies on Korea Supply for the proposition that
the harm caused to the plaintiff can be indirect. But Korea
Supply also cautions that the proximate cause element will not
be satisfied if the harm is more remotely connected to the
defendant’s wrongful conduct. (Korea Supply Co. v. Lockheed
Martin Corp., supra, 29 Cal.4th at p. 1166.)
       In Korea Supply, the harm directly caused to the company
indirectly harmed its agent. The direct and indirect harm were
only one step apart. The question here is how indirect was the
harm allegedly caused to Rosenzweig?
       Rosenzweig alleges that he was indirectly harmed when the
direct harm to Diermeier caused SVII to collapse. But
Rosenzweig appears deliberately vague on his exact relationship
to SVII, other than as a former employee. At one point, he
alleges that he was “part owner” of SVII, without specifying what
his ownership interest was. At another point, he alleged that he

                               5.
had a “valid business relationship with SVII,” without specifying
the business relationship. The most concrete allegation of his
interest in SVII is that he is “a part owner of Launch Education
LLC, which maintains an ownership interest in SVII.”
       In other words, Rosenzweig has no interest in SVII.
Instead, he has an interest in a limited liability company that has
an interest in SVII. A limited liability company is an entity
distinct from its members. (Corp. Code, § 17701.04, subd. (a).)
Rosenzweig cannot raise and lower the corporate veil as it
pleases him. (See Communist Party v. 522 Valencia, Inc. (1995)
35 Cal.App.4th 980, 993-994 [a party who uses the corporate form
for his benefit may not disregard the corporate form].)
       Thus, the chain of causation is as follows: Vallurupalli
directly harmed Diermeier, which indirectly harmed SVII, which
indirectly harmed Launch Education, LLC, which indirectly
harmed Rosenzweig. That is far removed from proximate cause.
       Rosenzweig’s only direct connection to SVII alleged in the
complaint is as a former employee. He cites no authority giving a
former employee a cause of action against a party who harms his
employer.
       Rosenzweig has failed to state a cause of action for
intentional interference with prospective economic advantage or
negligence. Both causes of action require proximate cause and
Rosenzweig failed to allege one. The trial court properly
sustained Vallurupalli’s demurrer to the third amended
complaint.
                                  III
                          Leave to Amend
       Rosenzweig contends the trial court abused its discretion in
denying him leave to amend his complaint.

                                6.
      But Rosenzweig offers no legal theory or facts he wishes to
add that would state a cause of action. Rosenzweig could not
state a cause of action in four complaints. There is no reasonable
probability he could do any better with a fifth try. The trial court
did not abuse its discretion.
                           DISPOSITION
      The judgment is affirmed. Costs are awarded to
respondent.
      NOT TO BE PUBLISHED.

                                      GILBERT, P. J.
We concur:

             PERREN, J.

             TANGEMAN, J.

                                 7.
                  Benjamin F. Coats, Judge

              Superior Court County of Ventura

               ______________________________

     Clark Hill, Richard H. Nakamura, Jr., Bradford G. Hughes
and Giel Stein for Plaintiff and Appellant.
     Myers, Widders, Gibson, Jones & Feingold and Jill L.
Friedman for Defendant and Respondent.

                              8.