Court Opinion

ID: 9377490
Source: CourtListenerOpinion
Date Created: 2023-03-07 22:02:21.520557+00
Date Added: 2024-06-11T17:15:51.860704
License: Public Domain

Filed 3/7/23 Triurol v. Kamen CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO

TRIUROL, INC. et al.,                                                 B314225

     Cross-complainants and                                           (Los Angeles County
Appellants,                                                           Super. Ct. No. SC123657)

         v.

CHARLES KAMEN,

     Cross-defendant and
Respondent.

      APPEAL from an order and judgment of the Superior Court
of Los Angeles County. Mark H. Epstein, Judge. Affirmed.

     Parcells Law Firm and Dayton B. Parcells III for Cross-
complainants and Appellants.

      Kilpatrick Townsend & Stockton and Emil W. Herich for
Cross-defendant and Respondent.
                 ______________________________
       Cross-complainants Triurol, Inc. (Triurol), Floyd A. Katske
(Katske), and Jacob Rajfer (Rajfer) appeal from a judgment
entered in favor of cross-defendant Charles Mcfall Kamen
(Kamen) following his successful motion for summary judgment.
(Code Civ. Proc., § 473c.) They argue that the trial court erred in
dismissing their fraud claims against Kamen because they
presented evidence of justifiable reliance upon Kamen’s alleged
misrepresentations.1
       We affirm.
       FACTUAL AND PROCEDURAL BACKGROUND
The parties and relevant contracts
       According to the second amended cross-complaint (SACC),
Triurol is a corporation that developed “Quercetin based food
supplements,” including Prosta-Q and Cysta-Q. Triurol’s
principals include Katske and Rajfer.
       Farr Laboratories, LLC (Farr) is a corporation with
“valuable expertise and experience in the manufacturing,
marketing, labeling and sales of nutritional food supplements.”
Its principals include Fred Reinstein (Reinstein) and Alcides (Al)
Rodriguez (Rodriguez).
       According to the SACC, Kamen is an attorney and was, at
one time, president of Farr.
       On June 5, 1999, Triurol and Farr entered into an
agreement pursuant to which Triurol granted to Farr an
exclusive license to “manufacture, package, label, market and

1
      Cross-complainants only challenge the trial court’s order on
these two causes of action. They do not raise any argument
regarding the three contract-based claims that were also
adjudicated in Kamen’s favor.

                                 2
sell” Protas-Q, a Quercetin-based food supplement. The
agreement was amended on September 17, 1999, January 14,
2000, and either on March 30 or April 7, 2009.
        On June 30, 2000, Triurol and Farr entered into another
agreement pursuant to which Triurol granted to Farr an
exclusive license to “manufacture, package, label, market and
sell” Cysta-Q, another Quercetin-based food supplement. That
agreement was amended on April 7, 2009.
        In exchange, Farr agreed to provide Triurol with quarterly
royalties. Farr also agreed not to develop, market, or sell any
other Quercetin-based products.
The pleadings
        On January 21, 2015, Triurol brought this action against
Farr for breach of the two amended licensing agreements. Farr
responded by filing a cross-complaint against Triurol, Katske,
and Rajfer, alleging breach of the licensing agreements by Triurol
and fraud in the inducement by Katske and Rajfer. Triurol,
Katske, and Rajfer then filed a cross-complaint against Farr,
Reinstein, Rodriguez, and Kamen.
        The operative pleading is the SACC, which alleges claims
for breach of contract, fraud, and declaratory relief. As is
relevant to the issues in this appeal, the SACC alleges that in
order to induce Triurol to give Farr the exclusive license to its
Quercetin products, cross-defendants made certain
representations. “In reasonable reliance on Cross-Defendants[’]
representations, Cross-Complainant entered into the amended
license agreements and agreed to continue to grant to . . . Farr
. . . an exclusive worldwide license to manufacture, package,
label, market and sell” Triurol’s Quercetin-based food
supplements.

                                3
       Triurol later learned that Kamen, along with Farr,
Reinstein, and Rodriguez, made a host of misrepresentations in
the quarterly accounting reports that were provided to Triurol.
Triurol further alleged that an August 28, 2012, e-mail from
Kamen to Farr’s trademark attorney was proof that Farr had
been developing competing Quercetin products in violation of its
agreements with Triurol.
Kamen’s motion for summary judgment
       Kamen filed a motion for summary judgment. Regarding
the fraud causes of action (second and fourth), Kamen noted that
the SACC does not allege that he made any precontractual
representations. Rather, cross-complainants’ fraud claims
against him stem from alleged misrepresentations in quarterly
royalty reports that Kamen allegedly distributed and in the
August 28, 2012, e-mail sent by Kamen to Farr’s trademark
attorney. And, there was no evidence that cross-complainants
justifiably relied upon either the quarterly royalty reports or the
2012 e-mail.
Cross-complainants’ opposition
       Cross-complainants opposed Kamen’s motion. They argued
that there was a triable issue of fact concerning whether they
relied upon Kamen’s misrepresentations set forth in (1) quarterly
royalty reports, (2) the 2012 e-mail from Kamen to Farr’s
trademark counsel, and (3) a January 2009 e-mail from Kamen to
cross-complainants that (a) addressed a scheduling issue, and
(b) asked for an address to send them a “check and inventorship
correction documents.” Specifically, cross-complainants asserted
that “in reasonable reliance on Kamen’s representations, [they]
continued to grant to [Farr] the exclusive worldwide license to
manufacture, package, label, market and sell the licensed

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products to their detriment, and if they had known Kamen’s
representations were false and what he was concealing and the
resulting damages they were suffering, they would not have done
those things.”
       In support, cross-complainants offered a declaration from
Katske, who attested, in general terms, that he and Triurol relied
upon Kamen’s representations and continued to grant to Farr the
exclusive license to its products.
Trial court order
       On May 18, 2021, the trial court issued a 10-page written
order granting Kamen’s motion for summary judgment.
Regarding the fraud claims, the trial court found that “cross-
complainants [could not] demonstrate they detrimentally relied
on any alleged fraud by Kamen.” After all, at the heart of cross-
complainants’ claims was the theory that cross-complainants only
entered into their contracts with Farr based upon
representations made before those agreements were executed.
Since Kamen’s alleged fraud postdated the formation of the
contracts, cross-complainants could not demonstrate that they
justifiably relied upon any alleged misrepresentation made by
Kamen.
       In so ruling, the trial court rejected cross-complainants’
contention that they justifiably relied upon Kamen’s alleged
fraud by “‘continu[ing]’ to give Farr a license after already having
entered into agreements for the same.” “At first glance, this
seems like enough to defeat the motion as to these causes of
action. But . . . except for one e-mail in January 2009 all of
[Kamen’s] supposed misrepresentations made to cross-
complainants are alleged to have occurred after the agreements
and their last amendments were executed. . . . Cross-

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complainants could not have ‘continued’ to allow Farr to use the
license if they had already signed the most recent agreement
allowing the licensing to continue. If the licensing agreement
[had] been signed after the misrepresentations, the outcome
might be different. But that is not what the evidence shows. And
the single January 2009 e-mail is of no help. All Kamen does in
that communication is to make some statements about calendar
availability and then ask Katske and other Triurol members
where royalty checks should be sent. [Citation.] There is no
indication how this statement caused cross-complainants to
change their position on the licensing agreement (let alone the
bigger issue of whether this is a fraudulent misrepresentation).
      “At best, the Court could read cross-complainants’
argument as stating they could have sued cross-defendants
sooner but did not. Even that is a stretch, though, and there is
no evidence to support this theory. Katske does not attest cross-
complainants would have initiated this action sooner had they
known about the misrepresentations. [Citation.] Further, ‘not
suing’ is not the injury-producing conduct allegedly caused by
cross-complainants’ reliance. [Citation.] Cross-complainants do
not claim any damage from not suing earlier.”
      “Additionally, this is not the alleged basis for reliance in
the [SACC]. [Citation.] Consequently, cross-complainants have
not demonstrated any triable issue of material fact as to
detrimental reliance on any statement by Kamen.”
Judgment and appeal
      Judgment was entered, and this timely appeal ensued.

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                          DISCUSSION
I. Standard of review
       “Summary judgment is subject to de novo review. To
analyze the issues, ‘we follow the traditional three-step analysis.
“We first identify the issues framed by the pleadings, since it is
these allegations to which the motion must respond. Secondly,
we determine whether the moving party has established facts
which negate the opponents’ claim and justify a judgment in the
movant’s favor. Finally, if the summary judgment motion prima
facie justifies a judgment, we determine whether the opposition
demonstrates the existence of a triable, material factual issue.
[Citation.]” [Citation.]’ [Citation.]” (Kaney v. Custance (2022)
74 Cal.App.5th 201, 213.)
       “In ‘reviewing the trial court’s decision to grant summary
judgment, we liberally construe the evidence in support of the
party opposing summary judgment and resolve all doubts about
the evidence in that party’s favor. [Citation.]’ [Citation.] ‘[W]e
must draw from the evidence all reasonable inferences in the
light most favorable to the party opposing summary judgment.
[Citation.]’ [Citation.]” (Kaney v. Custance, supra,
74 Cal.App.5th at p. 213.)

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II. The trial court properly dismissed cross-complainants’ fraud
claims against Kamen
        A. Relevant law
        The prima facie elements of a cause of action for fraud are
(1) a misrepresentation (false representation, concealment, or
nondisclosure), (2) knowledge of falsity, (3) intent to defraud, i.e.,
to induce reliance, (4) justifiable reliance, and (5) resulting
damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
        To establish justifiable reliance, cross-complainants must
show that: (1) “the matter was material in the sense that a
reasonable person would find it important in determining how he
. . . would act” and (2) “it was reasonable for the [cross-
complainants] to have relied on the misrepresentation.”
(Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178,
1194.) Typically, “the question of whether reliance is justifiable
is one of fact. [Citations.]” (Ibid.) Nonetheless, a court can
decide the issue as a matter of law “‘if reasonable minds can come
to only one conclusion based on the facts.’ [Citations.]” (Ibid.) In
circumstances where the absence of justifiable reliance is one of
law, the issue can be decided on summary judgment. (Id. at
pp. 1194–1195.)
        B. Analysis
        The SACC alleges that cross-complainants relied upon
cross-defendants’ misrepresentations by entering into the
amended license agreements and continuing to grant to Farr its
exclusive worldwide licenses. But as the trial court correctly
found, Kamen met his initial burden of showing that cross-
complainants cannot establish justifiable reliance upon any he
made: Except for the January 2009 e-mail, all Kamen’s alleged
misrepresentations (in the royalty reports and in the 2012 e-

                                  8
mail)2 occurred after the agreements and amendments thereto
were executed by cross-complainants. And, nothing in the
January 2009 e-mail either contains a misrepresentation or
caused cross-complainants to change their position on a licensing
agreement.
       Urging reversal, cross-complainants assert that they did
present evidence of justifiable reliance, namely “if Kamen had
disclosed and not concealed the true sales of all products and in
particular the competing products containing Quercetin, [cross-
complainants] would have terminated the agreement, taken back
the rights to the licensed products, sold the products themselves
for a greater gain than that received under the licensing
agreement, and insisted that Farr not sell any competing
products containing Quercetin which were diminishing the sales
of the licensed products years earlier.” According to cross-
complainants, pursuant to Small v. Fritz Companies, Inc. (2003)
30 Cal.4th 167, 175 (Small), their forbearance from terminating
the agreements amounts to actionable reliance.
       There are multiple problems with this argument. First, it
was not raised below. Thus, it is forfeited on appeal. (In re C.M.
(2017) 15 Cal.App.5th 376, 385 [“A party may not assert theories
on appeal which were not raised in the trial court”].) Second, this
is not what cross-complainants allege in the SACC. Because this
theory is outside the scope of the SACC, it cannot defeat
summary judgment. (Hutton v. Fidelity National Title Co. (2013)
213 Cal.App.4th 486, 493.) Third, there is no evidence to support

2
      Separately we note that the 2012 e-mail could not support
cross-complainants’ fraud claim because it was not sent to them;
it was sent to Farr’s trademark counsel.

                                 9
this belated contention. All Katske states in his declaration is
that he and Triurol “continued to grant to Farr . . . the exclusive
worldwide license” to “the licensed products to our detriment.”
There is no evidence that Triurol would have terminated one or
both of the amended licensing agreements.
       To the extent the trial court determined that cross-
complainants seem to be arguing that they would have sued
cross-defendants sooner, we agree. Cross-complainants offer no
legal authority in support of their contention that a delay in
bringing a lawsuit is the type of forbearance that amounts to
justifiable reliance to support a fraud claim. (Benach v. County of
Los Angeles (2007) 149 Cal.App.4th 836, 852.)
       Cross-complainants’ reliance upon Small is misplaced. In
Small, our Supreme Court addressed “the [limited] issue [of]
whether California should recognize a cause of action by persons
wrongfully induced to hold stock instead of selling it.” (Small,
supra, 30 Cal.4th at p. 171.) It went on to recognize that that
“forbearance from selling stock is sufficient reliance to support a
cause of action” for fraud. (Id. at p. 175.) Nothing in Small
suggests that its holding should be expanded to include a delayed
decision to bring a lawsuit. (See Molko v. Holy Spirit Assn.
(1988) 46 Cal.3d 1092, 1108 [“Justifiable reliance exists when the
misrepresentation or nondisclosure was an immediate cause of
the plaintiff’s conduct which alters his legal relations, and when
without such misrepresentation or nondisclosure he would not, in
all reasonable probability, have entered into the contract or other
transaction”], superseded by statute on other grounds as stated
in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.)

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                        DISPOSITION
      The order and judgment are affirmed. Kamen is entitled to
costs on appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                               _____________________, Acting P. J.
                               ASHMANN-GERST

We concur:

________________________, J.
CHAVEZ

________________________, J.
HOFFSTADT

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