Court Opinion

ID: 9378295
Source: CourtListenerOpinion
Date Created: 2023-03-09 21:03:13.856581+00
Date Added: 2024-06-11T17:17:19.957804
License: Public Domain

Filed 3/9/23 Feldman v. Yapstone CA2/3

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 California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION THREE

 TODD FELDMAN,                                                   B316156

        Plaintiff and Appellant,                                 Los Angeles County
                                                                 Super. Ct. No.
        v.                                                       19STCV14523
 YAPSTONE, INC.,

        Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Rupert A. Byrdsong, Judge. Reversed and
remanded.
     Miller Barondess and James Goldman for Plaintiff and
Appellant.
     Kabat Chapman & Ozmer, Theresa A. Kristovich and Paul
A. Grammatico for Defendant and Respondent.
           _______________________________________
                          INTRODUCTION

       In 2000, Todd Feldman purchased shares of Yapstone,
Inc.’s (Yapstone) stock.1 In 2019, he sued Yapstone for
declaratory relief and breach of contract, asserting Yapstone
violated his anti-dilution rights as a holder of the company’s
stock by failing to give him the opportunity to obtain additional
shares of stock when, between 2003 and 2015, it issued several
million shares to various investors and employees at reduced or
no cost. The court granted Yapstone’s motion for summary
judgment, finding Feldman’s claims are time-barred. Because
there is a triable issue of fact as to whether the delayed discovery
rule tolled the statute of limitations for at least one of the alleged
breaches underlying Feldman’s breach of contract claim, we
reverse the judgment.

          FACTS AND PROCEDURAL BACKGROUND

1.      Feldman Invests in Yapstone
       Yapstone is an online payment company incorporated in
Delaware and headquartered in Walnut Creek, California.
Thomas J. Villante is Yapstone’s chairman and chief executive
officer. Villante and Feldman were childhood friends.
       In March 2000, Yapstone filed a certificate of designation
authorizing the company to issue 250,000 shares of “Series A
Preferred Stock” (March 2000 Certificate of Designation). That
certificate sets forth the rights of Series A Preferred stockholders,
including the right to convert such stock into Yapstone’s Class A
Common Stock. Series A Preferred stockholders were also given

1   The company is currently known as Yapstone Holdings, Inc.

                                   2
limited anti-dilution protections, such as the right to convert
Series A Preferred Stock into Class A Common Stock at a
discounted rate should the company issue Class A Common
Stock, or any security convertible into that class of stock, below
the stock’s conversion price, which at the time was $10 per share.
The March 2000 Certificate of Designation states that the rights
of Series A Preferred stockholders can be amended with two-
thirds of those stockholders’ approval.
      In April 2000, after consulting with Villante, Feldman
purchased 2,500 shares of Yapstone’s Series A Preferred Stock.
At the time, Feldman’s shares accounted for about one percent of
all Yapstone’s Series A Preferred Stock and about a quarter of
one percent of all Yapstone’s stock.2
      Shortly after Feldman purchased his shares of Series A
Preferred Stock, Yapstone sent him a copy of his subscription
agreement. That agreement includes a provision entitled
“Limited Voting Stock; Dilution,” which provides: “Investor
understands that (1) the Shares [of Series A Preferred Stock] are
only entitled to one vote per Share whereas [Yapstone] has issued
a significant number of shares of Class B Common Stock entitled
to ten votes per share; (2) [Yapstone] is not agreeing to maintain
the percentage ownership provided by Investor’s purchase of the
Shares; (3) [Yapstone] is currently selling and probably will in
the future sell more equity and other securities to raise capital
and issue such securities for purposes of providing compensation
and reimbursement to [Yapstone’s] officers and others; and (4)

2In May 2011, Villante gifted Feldman 1,000 shares of Class A
Common Stock.

                                 3
any such issuance of equity securities will reduce Investor’s
percentage in [Yapstone] accordingly.”
2.    Yapstone Acquires RentPayment.com’s Assets
       In September 2002, Yapstone agreed to purchase the assets
of a competitor online payment company, RentPayment.com
(RentPayment). As part of the deal, RentPayment would receive
a 25 percent equity interest in Yapstone. Specifically, Yapstone
would issue to RentPayment: (1) 135,431 shares of Yapstone’s
Class A Common Stock at $0.001 value per share; (2) 420,125
shares of Yapstone’s Class B Common Stock at $0.001 value per
share; and (3) 134,250 shares of Yapstone’s Series A Preferred
Stock at no par value per share. As part of the acquisition,
RentPayment’s president and chief executive officer, Matthew
Golis, would become Yapstone’s president and chief operating
officer, and Golis would “be able to direct the voting and
disposition of all [Yapstone’s] shares owned by RentPayment.”
       To facilitate the purchase agreement, Yapstone’s creditors,
including Villante, agreed to restructure Yapstone’s debt.
Specifically, Yapstone would issue to Villante 187,950 shares of
Series A Preferred Stock and 777,778 shares of Class B Common
Stock in consideration of nearly $500,000 of debt that Yapstone
owed Villante for unpaid compensation and various advances he
made to the company. Additionally, Yapstone agreed to assume
$175,000 of debt that RentPayment owed Golis for unpaid
compensation.
       The same month it agreed to purchase RentPayment’s
assets, Yapstone sent its stockholders, including Feldman, a
document detailing the purchase agreement (Information Sheet).
The Information Sheet included the following disclosure: “Upon
completion of the Acquisition, [Yapstone’s] directors and

                                 4
executive officers and persons or entities affiliated with them will
beneficially own in the aggregate approximately 48% of
[Yapstone’s] outstanding Class A Common Stock, approximately
100% of [the company’s] outstanding Class B Common Stock and
approximately 66% of [the company’s] outstanding Series A
Preferred Stock. If these shareholders vote together as a group,
they will be able to control [the company’s] business and affairs,
including the election of individuals to [the company’s] board of
directors, and to otherwise affect the outcome of certain actions
that require shareholder approval, including the adoption of
amendments to [the company’s] Certificate of Incorporation and
certain mergers, sales of assets and other business acquisitions or
dispositions.”
       In early February 2003, Yapstone sent the company’s
stockholders, including Feldman, a letter addressing what steps
the company needed to take to finalize its purchase of
RentPayment’s assets (RentPayment Purchase Letter). The letter
stated that to complete the purchase, Yapstone needed to issue
Class A Common Stock and Series A Preferred Stock “for an
amount equal to less than $10.00 per share,” which would trigger
the Series A Preferred stockholders’ anti-dilution rights.
Yapstone asked its stockholders for assurance that “the issuance
of [the] Company’s Class A Common Stock and Preferred Stock in
connection with the [purchase agreement] will not trigger the
Anti-Dilution Right.” To that end, Yapstone sought approval from
two-thirds of the Series A Preferred stockholders to amend the
March 2000 Certificate of Designation to exempt any shares
issued as part of the RentPayment purchase agreement from the
anti-dilution rights of Series A Preferred stockholders. Yapstone
assured its stockholders that “the waiver of the Anti-Dilution

                                 5
Right to be effected by the enclosed Certificate of Amendment is a
waiver only with respect to the issuances of Class A Common
Stock and Preferred Stock made in connection with the
[RentPayment purchase agreement]. The Anti-Dilution Right will
continue in effect for all subsequent dilutive issuances of the
Company’s securities.”
       Feldman, along with numerous other Series A Preferred
stockholders, executed written consents waiving their anti-
dilution rights as they applied to Yapstone’s purchase agreement
with RentPayment (Purchase Agreement Waiver). In 2003, after
finalizing its purchase of RentPayment’s assets, Yapstone filed
with the Delaware Secretary of State an amended certificate of
designation (2003 Amended Certificate of Designation), adding
the shares issued to RentPayment as part of the purchase
agreement to Yapstone’s definition of “Excluded Stock”—i.e.,
stock not subject to Series A Preferred stockholders’ anti-dilution
rights.
3.    Feldman Investigates Yapstone’s Stock
      In 2017, after experiencing health problems, Feldman
began planning his estate. Feldman contacted Villante for
information about the value of Yapstone’s stock and how to
transfer the stock Feldman owned to a family trust. According to
Feldman, Villante and Yapstone were reluctant to provide him
information about his stock and the company’s finances.
Yapstone eventually provided Feldman and his lawyers
information about at least 12 transactions that occurred between
2003—when the company acquired RentPayment’s assets—and
2015, during which Yapstone issued several million shares of
Class A Common Stock and other types of stock to various
investors and employees. According to Feldman, several of those

                                6
transactions, especially those occurring between 2003 and 2011,
involved the issuance of Yapstone stock at reduced or no cost.
       When Feldman questioned whether any of the 12
transactions triggered his anti-dilution rights as a Series A
Preferred stockholder, Yapstone initially denied he had any anti-
dilution rights. Later, the company claimed that none of the
company’s issuances of stock triggered Feldman’s anti-dilution
rights.
4.    Feldman’s Lawsuit
       In April 2019, Feldman sued Yapstone for declaratory relief
and breach of contract. The gravamen of Feldman’s claims is that
Yapstone deprived him of opportunities to exercise his anti-
dilution rights as a holder of the company’s Series A Preferred
Stock when the company issued millions of shares of its stock to
various investors and employees at less than fair value.
       Feldman alleged that after he purchased 2,500 shares of
Yapstone’s Series A Preferred Stock, the company issued nearly
4 million additional shares of Class A Common Stock, “some of
[which] was issued on a pro-rata basis to Class A Common
Stockholders.” Specifically, on 12 occasions between September
2003 and September 2015, Yapstone authorized the issuance of
additional shares of Class A Common Stock, but the company
never gave Feldman the opportunity to purchase additional
shares of such stock, “despite the rights granted to him as a
Series A Preferred Stockholder.” For instance, on March 31, 2005,
Yapstone authorized the issuance of more than 1 million shares
of Class A Common Stock without offering Feldman the
opportunity “to participate in any offering of additional shares.”
       According to Feldman, many of the shares issued in the
transactions occurring between 2002 and 2011 “were obtained by

                                7
founders and family members and close associates of founders
who received them in exchange for far less than fair value, if
anything.” Those stockholders then used their shares “to
purportedly, but invalidly and without proper corporate action,
remove Feldman’s rights as a Series A Preferred Stockholder to
acquire additional shares of Class A Common Stock” and to
“expand the list of exceptions as to when [Feldman’s] anti-
dilution rights … would apply, so as to enable them to proceed
with the transactions identified and dilute Feldman.”
       Feldman also alleged that Yapstone’s 2003 acquisition of
RentPayment’s assets was fraudulent. According to Feldman, the
consideration Yapstone received for the shares that the company
issued to Villante, Golis, and their “cronies” during that
transaction was “substantially less” than the value of the issued
shares. In Feldman’s view, Villante used the acquisition of
RentPayment “to fraudulently increase his and his trusted
associates’ share of Yapstone,” such that they owned “more than
66% of the outstanding shares of Series A Preferred Stock,” which
“allowed them together to approve any amendment to the
Certificate of Incorporation and any issuance of additional
securities ranking prior to or on parity with Series A Preferred
Stock.”
       In April 2021, Yapstone moved for summary judgment.3
Yapstone argued Feldman’s claims lack merit and, in any event,
are barred by the four-year statute of limitations applicable to
breach of contract claims. To the extent Feldman’s claims arise
out of Yapstone’s 2003 acquisition of RentPayment’s assets,

3Yapstone filed its first motion for summary judgment in March 2020,
but it later withdrew that motion.

                                 8
Yapstone argued they are time-barred because that transaction
occurred more than a decade before Feldman sued Yapstone.
According to Yapstone, the delayed discovery rule didn’t toll the
statute of limitations for Feldman’s claims. As for any of the
Class A Common Stock offerings that occurred less than four
years before Feldman sued Yapstone, Feldman did not allege how
any of those transactions triggered his anti-dilution rights.
       In support of its summary judgment motion, Yapstone
submitted a declaration executed by David Durant, the
company’s secretary. Durant has worked for Yapstone since June
2015. He is the company’s custodian of records.
       Durant testified that none of Yapstone’s stock offerings
identified in Feldman’s complaint involved the issuance of Class
A Common Stock, or securities convertible into Class A Common
Stock, that would have triggered Feldman’s anti-dilution rights.
As for Yapstone’s issuances of Class A Common Stock between
2013 and 2015, Durant testified that each transaction was a
board-approved grant of stocks to employees as part of the
employees’ equity plans, which fall within the company’s pool of
“Excluded Stock.” According to Feldman, all the other
transactions identified in Feldman’s complaint involved issuances
of classes of stock that did not trigger Series A Preferred
stockholders’ anti-dilution rights.
       Yapstone also submitted Feldman’s responses to requests
for admissions and special interrogatories; excerpts from
Feldman’s deposition; and a request for judicial notice of several
of Yapstone’s corporate documents. In his responses to Yapstone’s
request for admissions, Feldman admitted he received the
Information Sheet and the RentPayment Purchase Letter
addressing the purchase agreement between Yapstone and

                                9
RentPayment. During his deposition, Feldman admitted he
signed the Purchase Agreement Waiver, agreeing to waive his
anti-dilution rights as they applied to Yapstone’s acquisition of
RentPayment’s assets. And, in his response to Yapstone’s special
interrogatories, Feldman admitted he was not aware of “any
conversion event” that may have triggered his anti-dilution rights
as a Series A Preferred stockholder.
       Feldman opposed the summary judgment motion. He
argued his declaratory relief claim isn’t time-barred because
Yapstone didn’t assert he lacked anti-dilution rights until after
he contacted the company in 2017, less than four years before he
filed his lawsuit. As for his breach of contract claim, Feldman
argued it is not time-barred because the delayed discovery rule
applies to all of Yapstone’s dilutive transactions that occurred
more than four years before he sued the company. In any event,
summary judgment would not be appropriate, Feldman asserted,
because two of the company’s dilutive transactions occurred in
May and September 2015, less than four years before Feldman
filed his complaint. Feldman also argued Yapstone failed to
establish there are no triable issues of material fact concerning
his breach of contract claim.
       Feldman objected to parts of Durant’s declaration and
Yapstone’s request for judicial notice.
       Following a hearing in February 2021, the court granted
Yapstone’s summary judgment motion. The court explained its
ruling as follows: “I agree with [Yapstone’s] analysis regarding
that the statute of limitations has expired, that everything was
pretty transparent with regard to what was happening with the
stocks. And, therefore, if there was going to be any type of issue
in claim it should have been brought a lot sooner than when this

                               10
case was filed. [¶] I did not see any hard evidence that [Feldman]
produced in responding to [Yapstone’s] statement of undisputed
facts. In fact[,] he basically agreed with everything almost, but
even the ones that claimed there was a dispute there was no
evidence submitted just argument. [¶] As relation to the claim for
promissory estoppel that is not in this lawsuit, and you can’t
start adding claims and theories outside of the pleadings to
defeat the motion that is on calendar for the lawsuit that is being
addressed.”
       In September 2021, the court entered judgment in
Yapstone’s favor. Feldman appeals.
                          DISCUSSION

1.    Principles of Summary Judgment and Standard of
      Review
       A court may grant summary judgment where no triable
issues of material facts exist as to all the plaintiff’s causes of
action and the moving party is entitled to judgment as a matter
of law. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476
(Merrill).) If the defendant fails to negate all the plaintiff’s
claims, summary judgment should be denied. (Robertson v. Wentz
(1986) 187 Cal.App.3d 1281, 1287 (Robertson).)
       A defendant moving for summary judgment must show
that one or more elements of the plaintiff’s claims cannot be
established or that there exists a complete defense to the claims.
(Code Civ. Proc., § 437c, subd. (p)(2).) To meet this burden, the
defendant must support its motion with “evidence including
‘affidavits, declarations, admissions, answers to interrogatories,
depositions, and matters of which judicial notice’ must or may ‘be
taken.’ ” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,

                                11
855 (Aguilar), quoting Code Civ. Proc., § 437c, subd. (b).) “The
defendant may also present evidence that the plaintiff does not
possess, and cannot reasonably obtain, needed evidence—as
through admissions by the plaintiff following extensive discovery
to the effect that the plaintiff has discovered nothing.” (Aguilar,
at p. 855.) The defendant may not, however, “simply point out
that the plaintiff does not possess, and cannot reasonably obtain,
needed evidence.” (Id. at p. 854, fn. omitted.) If the defendant
does not present sufficient evidence to meet its initial burden, the
burden of production never shifts to the plaintiff. (Id. at p. 850.)
Instead, the court must deny summary judgment. (Ibid.)
       If the defendant meets its initial burden, the burden shifts
to the plaintiff to present evidence establishing a triable issue of
material fact. (Merrill, supra, 26 Cal.4th at p. 476.) A triable
issue of fact exists if the evidence would allow a reasonable trier
of fact to find in favor of the party opposing summary judgment.
(Aguilar, supra, 25 Cal.4th at p. 850.) If the plaintiff meets his
burden, the court should deny summary judgment. (Gaggero v.
Yura (2003) 108 Cal.App.4th 884, 889.)
       We independently review a ruling on a motion for summary
judgment. (Aguilar, supra, 25 Cal.4th at p. 860.) We liberally
construe the evidence in favor of the opposing party and resolve
all doubts about the evidence in that party’s favor. (Wiener v.
Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.)
We consider all evidence the parties submit in connection with
the motion, except that which the court properly excluded.
(Merrill, supra, 26 Cal.4th at p. 476.)

                                12
2.    A triable issue exists as to whether the delayed
      discovery rule tolls the statute of limitations for
      Feldman’s breach of contract claim.
       The court granted Yapstone’s summary judgment motion
on statute of limitations grounds, finding all of Feldman’s claims
are time-barred. As we explain, the court erred in granting
summary judgment because there is a triable issue as to whether
the delayed discovery rule tolled the statute of limitations for at
least one of the transactions underlying Feldman’s breach of
contract claim.
       The statute of limitations for breach of contract is four
years. (Code Civ. Proc., § 337, subd. (a).) Generally, the
limitations period begins to run “upon the occurrence of the last
element to the cause of action.” (Neel v. Magana, Olney, Levy,
Cathcart & Gelfand (1971) 6 Cal.3d 176, 187.)
       Feldman filed his complaint on April 26, 2019. It is
undisputed that, on its face, Feldman’s breach of contract claim is
time-barred as to Yapstone’s alleged dilutive transactions
occurring between March 2003 and February 2015, since those
transactions were completed more than four years before
Feldman filed his complaint.
       Under the delayed discovery rule, however, the accrual of a
breach of contract cause of action may be tolled until the plaintiff
discovers, or has reason to discover, the cause of action. (Fox v.
Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807 (Fox); see
Gryczman v. 4550 Pico Partners, Ltd. (2003) 107 Cal.App.4th 1, 5
(Gryczman) [delayed discovery rule applies to breach of contract
causes of action where the harm is difficult to detect, and the
defendant is in a superior position to comprehend the breach and
the harm].) “A plaintiff has reason to discover a cause of action

                                13
when he or she ‘has reason at least to suspect a factual basis for
its elements.’ ” (Fox, at p. 807.) Put another way, the delayed
“discovery rule only delays accrual until the plaintiff has, or
should have, inquiry notice of the cause of action.” (Ibid.)
        To rely on the delayed discovery rule, a plaintiff must show
“ ‘(1) the time and manner of discovery and (2) the inability to
have made earlier discovery despite reasonable diligence.’ ” (Fox,
supra, 35 Cal.4th at p. 808.) Whether the delayed discovery rule
applies is generally a question of fact. (Gryczman, supra, 107
Cal.App.4th at pp. 6–7; E-Fab, Inc. v. Accountants, Inc. Services
(2007) 153 Cal.App.4th 1308, 1320 [“ ‘belated discovery is a
question of fact’ ”].) The issue may be resolved as a matter of law
only if “ ‘reasonable minds can draw only one conclusion from the
evidence.’ ” (E-Fab, at p. 1320.)
        Where the plaintiff opposes summary judgment and it is
undisputed that the plaintiff’s claims are facially time-barred,
“the plaintiff has the burden ‘to show that a triable issue of one or
more material facts exists as to’ ” the application of the delayed
discovery rule. (Gryczman, supra, 107 Cal.App.4th at pp. 6–7.)
Specifically, the plaintiff must present evidence showing a triable
issue exists as to whether he “exercised due diligence in
discovering the breach.” (Id. at p. 7.)
        Feldman alleged Yapstone engaged in a series of dilutive
transactions between 2003 and 2011, including on March 31,
2005,4 during which Yapstone authorized the issuance of millions

4 Durant testified that this transaction was completed in April 2005,
when Yapstone acquired “eRentPayer, Inc.,” a competitor online
payment company. For brevity’s sake we hereafter refer to this
transaction as the “April 2005 Transaction.”

                                  14
of shares of Series A Preferred Stock or Series A Common Stock
at reduced or no cost. Feldman produced the following evidence to
show he did not have reason to timely discover any of those
transactions.
       Feldman states in his declaration that after he received the
RentPayment Purchase Letter and consented to waiving his anti-
dilution rights with respect to Yapstone’s acquisition of
RentPayment’s assets, he believed those rights would apply to all
of Yapstone’s future issuances of Class A Common Stock.
Specifically, Feldman relied on Yapstone’s statement in the
purchase letter that his waiver applied “only” to the company’s
purchase of RentPayment’s assets, and that his anti-dilution
rights would “continue in effect for all subsequent dilutive
issuances of the Company’s securities.” According to Feldman,
after he signed the Purchase Agreement Waiver, he was never
offered any opportunities to acquire additional shares of
Yapstone stock, nor did he have any reason to be aware that
“Yapstone had issued or sold any Series A Preferred Stock or
Class A Common Stock at less than $10 per share”—i.e., at a
value that would trigger his anti-dilution rights as a Series A
Preferred stockholder. Thus, he did not discover any of
Yapstone’s issuances of Series A Preferred Stock and Class A
Common Stock that occurred after he signed the Purchase
Agreement Waiver, including the April 2005 Transaction, until
he began investigating Yapstone’s stocks in 2017 in connection
with his estate plan.
       Feldman’s evidence is sufficient to raise a triable issue as to
whether he had reason to discover the April 2005 Transaction in
a timely manner. That is, Feldman’s evidence shows the time and
manner of his discovery—i.e., after he began investigating

                                 15
Yapstone’s stocks in 2017. (See Fox, supra, 35 Cal.4th at p. 808.)
Additionally, a reasonable trier of fact could find Feldman was
unable to discover, or had no reason to inquire about, the April
2005 Transaction based on Yapstone’s assurances in the
RentPayment Purchase Letter that his anti-dilution rights would
apply to any future dilutive issuances of the company’s securities
and his testimony that Yapstone never notified him about that
transaction.
      Yapstone contends the delayed discovery rule should not
apply in this case because none of the company’s allegedly
dilutive transactions were performed in secret. (See
NBCUniversal Media, LLC v. Superior Court (2014) 225
Cal.App.4th 1222 (NBCUniversal) [the delayed discovery rule
“ ‘may be applied to breaches which can be, and are, committed in
secret and, moreover, where the harm flowing from those
breaches will not be reasonably discoverable by plaintiffs until a
future time’ ”].) According to Yapstone, Feldman was put on
notice of all the company’s allegedly dilutive transactions through
records publicly recorded with the Delaware Secretary of State.
This argument lacks merit.
      The publicly recorded documents Yapstone relied on to
support this argument consist of: (1) a “Certificate of Amendment
of Certificate of Incorporation of Yapstone, Inc.” signed on
September 5, 2002 and recorded on March 28, 2003; (2) a
“Certificate of Amendment of Certificate of Designation of Series
A Preferred Stock of Yapstone, Inc.” signed on September 5, 2002
and recorded on March 28, 2003; and (3) a “Certificate of
Amendment of Certificate of Designation of Series A Preferred
Stock of Yapstone, Inc.” signed on February 5, 2003 and recorded
on May 27, 2003. All these documents pertain to Yapstone’s

                                16
purchase of RentPayment’s assets, as to which Feldman
expressly agreed to waive his anti-dilution rights. These
documents don’t mention any subsequent issuance of Yapstone
stock—including the April 2005 Transaction—and they were all
signed and recorded in 2002 or 2003. Needless to say, these
documents would not have put Feldman on inquiry notice of the
April 2005 Transaction.
       Nor does Durant’s testimony or the exhibits attached to his
declaration establish Feldman should have had reason to
discover the April 2005 Transaction within four years of its
completion. Durant testified that the Class A Common Stock
issued during the April 2005 Transaction was added to the
“Series A definition of ‘Excluded Stock’ ”—i.e., stock not subject to
the anti-dilution rights conferred by Series A Preferred Stock—
following a two-thirds vote of the Series A Preferred stockholders.
According to Durant, “[t]hose definitions of ‘Excluded Stock’ are
reflected” in a document entitled “Amended and Restated
Certificate of Designation of Series A Preferred Stock of
Yapstone, Inc.,” which is attached to his declaration as Exhibit
32. That document was signed by Golis on May 27, 2011 and
recorded with the Delaware Secretary of State on that same date.
Contrary to Durant’s testimony, however, the amended certificate
of designation at Exhibit 32, and specifically the paragraph in
that document defining “Excluded Stock,” does not mention the
April 2005 Transaction. Thus, that document would not have put
Feldman on notice of the April 2005 Transaction. Yapstone points
to no other evidence that shows the details of that transaction
were disclosed to Feldman or otherwise publicly disclosed before
Feldman began investigating Yapstone’s stocks in 2017.

                                 17
       In short, Feldman created a triable issue concerning
whether he exercised reasonable diligence in discovering the
April 2005 Transaction. The court, therefore, shouldn’t have
found Feldman’s breach of contract claim, as it arises out of that
transaction, is time-barred as a matter of law. (Gryczman, supra,
107 Cal.App.4th at p. 7.)
       Finally, we reject Yapstone’s argument that even if
Feldman’s breach of contract claim isn’t time-barred, it met its
initial burden to produce evidence negating all the elements of
that claim. Feldman alleged Yapstone engaged in dilutive
transactions—i.e., issued shares of Class A Common Stock or
Series A Preferred Stock at less than $10 per share—on several
occasions between 2003 and 2011, including during the April
2005 Transaction. According to Feldman, Yapstone violated his
anti-dilution rights because the company never notified him of
the dilutive transactions or otherwise offered him the opportunity
to exercise his anti-dilution rights—i.e., convert his Series A
Preferred Stock into Class A Common Stock at a discounted
conversion price. Thus, as the moving party, Yapstone had the
burden to produce evidence negating all the elements of
Feldman’s breach of contract claim as it related to those
transactions. (Aguilar, supra, 25 Cal.4th at p. 855.)
       As we just explained, Exhibit 32 attached to Durant’s
declaration does not reflect that the shares of Yapstone Class A
Common Stock issued as part of the April 2005 Transaction were
added to the company’s definition of “Excluded Stock” by a two-
thirds vote of Series A Preferred stockholders—i.e., exempted
from Feldman’s anti-dilution rights. Nor does Durant otherwise
claim that the April 2005 transaction did not involve the issuance
of Class A Common Stock, or any security convertible into that

                               18
class of stock, at a value of less than $10 per share. Yapstone
points to no other evidence that would establish the shares issued
during the April 2005 transaction were properly added to the
company’s definition of “Excluded Stock.” Consequently,
Yapstone has not met its burden to show the April 2005
Transaction did not violate Feldman’s anti-dilution rights.
       In sum, because there are triable issues of material fact
concerning at least one of Feldman’s claims, the court should
have denied summary judgment. (Aguilar, supra, 25 Cal.4th at p.
855; Robertson, supra, 187 Cal.App.3d at p. 1287 [moving
defendant must make a factual showing negating all causes of
action before the court may grant summary judgment].)5

5In light of our conclusion, we need not address the other arguments
raised by Feldman.

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                           DISPOSITION

      The judgment is reversed, and the matter is remanded for
further proceedings consistent with the views expressed in this
opinion. Appellant Todd Feldman shall recover his costs on
appeal.

    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                LAVIN, Acting P. J.
WE CONCUR:

       EGERTON, J.

       BENKE, J.*

*Retired Associate Justice of the Court of Appeal, Fourth Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6
of the California Constitution.

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