Toce et al v. Rentch et al, No. 3:2017cv00603 - Document 94 (S.D. Cal. 2018)

Court Description: ORDER Granting in Part and Denying in Part 62 Defendants Cameron Rentch and Wise Law Group's Motion for Summary Judgment; Denying as Moot 63 Defendants Cameron Rentch and Wise Law Group's Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Thomson Reuters' Cross-Complaint; Granting in Part and Denying in Part 64 Defendant/Cross-Complainant Thomson Reuters' Motion for Summary Judgment. Signed by Judge Anthony J. Battaglia on 11/15/2018. (acc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 ANDRE F. TOCE, an individual, THE TOCE FIRM, APLC, et al., ORDER: Plaintiffs, 13 14 Case No.: 17-cv-0603-AJB-BLM v. (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS CAMERON RENTCH AND WISE LAW GROUP’S MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFFS; 15 16 17 18 19 20 21 22 23 CAMERON RENTCH, WISE LAW GROUP, LLC, et al., Defendants. (2) DENYING DEFENDANTS CAMERON RENTCH AND WISE LAW GROUP’S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF THOMSON REUTER’S CROSS-COMPLAINT; THOMSON REUTERS (LEGAL) INC, Cross-Complainant, v. CAMERON RENTCH and WISE LAW GROUP, LLC, Cross-Defendants. (3) GRANTING IN PART AND DENYING IN PART DEFENDANT/CROSSCOMPLAINANT THOMSON REUTER’S MOTION FOR SUMMARY JUDGMENT 24 25 26 27 28 1 17-cv-0603-AJB-BLM 1 2 Pending before the Court are three motions for summary judgment. (Doc. Nos. 62, 3 63, 64.) As will be explained in greater detail below, the Court GRANTS in part and 4 DENIES in part Defendants Cameron Rentch and Wise Law Group’s motion for summary 5 judgment against Plaintiffs, (Doc. No. 62), DENIES Defendants Cameron Rentch and 6 Wise Law Group’s motion for summary judgment, or in the alternative, summary 7 adjudication of Thomson Reuter’s cross-complaint, (Doc. No. 63), and GRANTS in part 8 and DENIES in part Defendant/Cross-Complainant Thomson Reuter’s motion for 9 summary judgment, (Doc. No. 64). BACKGROUND 10 Wise Law Group (“WLG”), a California corporation, specialized in online lead 11 12 generation and legal marketing. (Doc. No. 62-1 at 7.) Plaintiffs Andre Toce and Gil 13 Dozier are Louisiana lawyers and owners of their respective law practices. (Id.) WLG 14 created and managed online and television campaigns to attract individuals to participate 15 in mass medical tort litigation regarding Trans-Vaginal Mesh (“TVM”) complications. 16 (Id.) 17 WLG and Toce engaged in two separate campaigns. (Id. at 11.) The first campaign 18 is not at issue in the present litigation. The second campaign was between WLG and Toce 19 and Dozier. (Id.) This second campaign is the subject of this instant litigation. This 20 campaign was to generate leads for Toce and Dozier regarding patients who had received 21 a TVM implant and had suffered complications; patients who had undergone a revision 22 surgery; and patients who had a pelvic organ prolapse insert and had not undergone a 23 revision surgery. (Id.) 24 The parties dispute the exact terms of the Campaign Agreement between WLG and 25 Plaintiffs, however, Plaintiffs contend that WLG promised to provide unlimited leads 26 until Plaintiffs had retained one hundred cases. (Doc. No. 72 at 11.) During 2014, Toce 27 sent several emails regarding his dissatisfaction with the leads that were being generated. 28 (Doc. No. 62-1 at 13.) Plaintiff Toce in one such email explained that he believed his 2 17-cv-0603-AJB-BLM 1 payment of $50,000 was in actuality a purchase for one hundred retained cases. (Id.; Doc. 2 No.72 at 10.) However, Defendants’ invoice provides that WLG was obligated only to 3 provide sixty-two leads at a price of $800 per lead. (Doc. No. 72 at 11.) 4 WLG and Cameron Rentch later entered into an Asset Purchase Agreement 5 (“APA”) with Thomson Reuters. (Doc. No. 62-1 at 14.) WLG and Rentch and Thomson 6 Reuters dispute whether Thomson Reuters purchased the Campaign Agreement. 7 In Plaintiffs’ complaint, they allege (1) fraudulent concealment; (2) breach of 8 implied duty to perform with reasonable care; (3) breach of covenant of good faith and 9 fair dealing; (4) breach of contract; (5) breach of contract; (6) quantum meruit. (See 10 generally Doc. No. 1.) Thomson Reuters filed a cross-complaint against Rentch and 11 WLG for breach of contract and declaratory relief. (See generally Doc. No. 15.) 12 LEGAL STANDARD 13 Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the 14 moving party demonstrates the absence of a genuine issue of material fact and entitlement 15 to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact 16 is material when, under the governing substantive law, it could affect the outcome of the 17 case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if a 18 reasonable jury could return a verdict for the nonmoving party. Id. 19 A party seeking summary judgment bears the initial burden of establishing the 20 absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The moving 21 party can satisfy this burden in two ways: (1) by presenting evidence that negates an 22 essential element of the nonmoving party’s case; or (2) by demonstrating the nonmoving 23 party failed to establish an essential element of the nonmoving party’s case on which the 24 nonmoving party bears the burden of proving at trial. Id. at 322–23. “Disputes over 25 irrelevant or unnecessary facts will not preclude a grant of summary judgment.” T.W. Elec. 26 Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). 27 Once the moving party establishes the absence of a genuine issue of material fact, 28 the burden shifts to the nonmoving party to set forth facts showing a genuine issue of a 3 17-cv-0603-AJB-BLM 1 disputed fact remains. Celotex Corp., 477 U.S. at 330. When ruling on a summary 2 judgment motion, a court must view all inferences drawn from the underlying facts in the 3 light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. Ltd. v. Zenith 4 Radio Corp., 475 U.S. 574, 587 (1986). 5 6 DISCUSSION A. Request for Judicial Notice 7 Federal Rule of Evidence 201 states that a “court may judicially notice a fact that is 8 not subject to reasonable dispute because it: (1) is generally known within the trial court’s 9 territorial jurisdiction; or (2) can be accurately and readily determined from sources 10 whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). 11 Plaintiffs request that judicial notice be taken of the amended California Rules of 12 Professional Conduct, Rule 7.2 “Advertising” effective November 1, 2018 including the 13 Executive Summary, Standards Table, and Redline Comparison to Model Rule 7.2. (Doc. 14 No. 91.) These items are matters of public record. Accordingly, the Court GRANTS 15 Plaintiffs’ request for judicial notice. 16 B. Cameron Rentch and Wise Law Group’s Motion for Summary Judgment 17 against Plaintiffs 18 Rentch and WLG bring their summary judgment motion on Plaintiffs’ causes of 19 actions against them for fraudulent concealment, breach of express contract, implied 20 covenants and the seeking of quantum meruit damages. (See generally Doc. No. 62.) 21 Plaintiffs oppose the motion. (Doc. No. 72.) 22 a. 23 Rentch and WLG contend that Plaintiffs’ breach of contract claim is barred by the 24 statute of limitations and the illegality of contracting for the sale of cases. (Doc. No. 62-1 25 at 18.) 26 /// 27 /// 28 /// Breach of Contract 4 17-cv-0603-AJB-BLM 1 i. Illegality 2 Defendants contend that Plaintiffs’ assertion of the material terms of the Campaign 3 Agreement render the contract illegal. (Doc. No. 62-1 at 19.) “Where a contract has but a 4 single object, and such object is unlawful, whether in whole or in part, or wholly impossible 5 of performance, or so vaguely expressed as to be wholly unascertainable, the entire contract 6 is void.” Cal. Civ. Code § 1598. Per Louisiana Rules of Professional Conduct Section 7 7.2(c)(13), an attorney may not provide anything of value to a person for recommending 8 the lawyer’s services with limited exceptions. Likewise, California Rules of Professional 9 Conduct Section 1-320(c)1 states, “A member shall not compensate, give, or promise 10 anything of value to any person or entity for the purpose of recommending or securing 11 employment of the member or the member's law firm by a client, or as a reward for having 12 made a recommendation resulting in employment of the member or the member's law firm 13 by a client.” 14 Defendants contend that Plaintiffs assert that the Campaign Agreement was for the 15 sale of cases rather than leads. (Doc. No. 62-1 at 19.) Thus, this is illegal and would render 16 the Campaign Agreement unenforceable. (Id.) Plaintiffs assert that the Campaign 17 Agreement is legal and enforceable since the terms are such that Defendants would provide 18 unlimited leads until the respective law firms reached a desired number of cases that they 19 were able to create from those leads. (Doc. No. 72 at 21.) Plaintiffs provide no support for 20 their assertion that agreeing to provide unlimited leads until the law firms reached a desired 21 22 23 24 25 26 27 28 1 The Court recognizes that the amended California Rules of Professional Conduct, Rule 7.2 “Advertising” became effective November 1, 2018. Rule 7.2 states in relevant part, “A lawyer shall not compensate, promise or give anything of value to a person for the purpose of recommending or securing the services of the lawyer or the lawyer’s law firm, except that a lawyer may: … (2) pay the usual charges of a legal services plan or a qualified lawyer referral service. A qualified lawyer referral service is a lawyer referral service established, sponsored and operated in accordance with the State Bar of California’s Minimum Standards for a Lawyer Referral Service in California.” However, this change in the rule does not affect the Court’s analysis. Here, the issue is not whether paying a referral service is illegal, but rather whether paying for unlimited number of leads to reach a desired number of cases is illegal. The Court will refer to Section 1-320(c) for purposes of this Order since Rule 7.2 was not yet in effect during the occurrence of the events in this litigation. 5 17-cv-0603-AJB-BLM 1 number of cases is somehow different than a contract to sell cases. The Court is 2 unconvinced that Plaintiffs’ interpretation is different than an agreement to sell cases. Thus, 3 the Court finds that Plaintiffs’ interpretation of the Campaign Agreement is illegal. See La. 4 Rules of Prof. Conduct R. 7.2(c)(13); Cal. Rules of Prof. Conduct R. 1-320(c). 5 Accordingly, the Court will not enforce the terms of an illegal contract. See McMullen v. 6 Hoffman, 174 U.S. 639, 654 (1899); see also Lee On v. Long, 37 Cal. 2d 499, 502 (Cal. 7 1951) (“No principle of law is better settled than that a party to an illegal contract cannot 8 come into a court of law and ask to have his illegal objects carried out [.]”). Thus, the Court 9 GRANTS Rentch and WLG’s motion for summary judgment on the basis that Plaintiffs’ 10 interpretation of the Campaign Agreement is for an illegal purpose. 11 ii. Statute of Limitations 12 Defendants Rentch and WLG assert that the Campaign Agreement is barred by the 13 two-year statute of limitations for an oral contract. (Doc. No. 62-1 at 18.) The Court has 14 determined that the Campaign Agreement as Plaintiffs have pled is for an illegal purpose. 15 Accordingly, the Court DENIES Defendants’ motion on the basis of statute of limitations 16 as moot. 17 b. 18 Defendants argue that Plaintiffs have not satisfied the elements of fraudulent 19 concealment. (Doc. No. 62-1 at 20.) Defendants contend that the elements of fraudulent 20 concealment are: “(1) a misrepresentation as to a material fact; (2) knowledge of falsity; 21 (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage.” (Id. (citing 22 Gonsavles v. Hodgson, 38 Cal. 2d 91, 100–101 (Cal. 1951)).) However, Plaintiffs assert 23 that the correct elements of fraudulent concealment are: “(1) the defendant must have 24 concealed or suppressed a material fact, (2) the defendant must have been under a duty to 25 disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or 26 suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been 27 unaware of the fact and would not have acted as he did if he had known of the concealed 28 or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the Fraudulent Concealment 6 17-cv-0603-AJB-BLM 1 plaintiff must have sustained damage.” (Doc. No. 72 at 24 (citing Smith v. Ford Motor Co., 2 749 F. Supp. 980 (N.D. Cal. 2010)).) The Court agrees with Plaintiff regarding the elements 3 of fraudulent concealment. See Tapia v. Davol, Inc., 116 F. Supp. 3d 1149, 1163 (S.D. Cal. 4 2015); Bell v. Fed. Home Loan Mortg. Corp., No. 11-cv-2514, 2012 WL 1581075, at * 4 5 (S.D. Cal. May 4, 2012). 6 First, Defendants contend that the failure to disclose Rentch’s negotiations with 7 Thomson Reuters and Kerry Steigerwalt’s involvement with Ford & Associates were not 8 material facts to the Campaign Agreement. (Doc. No. 62-1 at 20–21.) However, Plaintiffs 9 assert that these misrepresentations were material facts since Toce would not have been 10 involved in a transaction with a lawyer who was suspended. (Doc. No. 72 at 24.) Further, 11 Plaintiffs contend that Toce may or may not have entered into the Campaign Agreement 12 had Toce known Rentch was in negotiations with Thomson Reuters. (Id.) Therefore, these 13 facts may be suppressed material facts. However, the Court does not need to decide this 14 issue, as explained further below, since Defendants did not tell half-truths calculated to 15 deceive. 16 Second, Defendants assert that “statements about the future are considered to be 17 opinions or predications, not statements of fact, and are not actionable.” (Doc. No. 62-1 at 18 21 (citing Cohen v. S & S Const. Co., 151 Cal. App. 3d 941, 946 (Cal. Ct. App. 1983)).) 19 However, there are three exceptions to this general principal: “(1) where a party holds 20 himself out to be specially qualified and the other party is so situated that he may 21 reasonably rely upon the former’s superior knowledge; (2) where the opinion is by a 22 fiduciary or other trusted person; (3) where a party states his opinion as an existing fact or 23 as implying facts which justify a belief in the truth of the opinion.” (Doc. No. 72 at 25 24 (citing Borba v. Thomas, 70 Cal. App. 3d 144, 152 (Cal. Ct. App. 1997); In re Jogert, Inc., 25 950 F. 2d 1498, 1507 (9th Cir. 1991); Mueller v. San Diego Ent. Partners, LLC, 260 F. 26 Supp. 3d 1283, 1296 (S.D. Cal. 2017)).) 27 Defendants Rentch and WLG contend that they did not owe a duty to Plaintiffs to 28 disclose speculation of a future event. (Doc. No. 62-1 at 21.) However, Plaintiffs assert that 7 17-cv-0603-AJB-BLM 1 Defendants did in fact owe a duty to Plaintiffs. (Doc. No. 72 at 25.) Rentch held himself 2 out to Plaintiffs as having “special knowledge in marketing for leads which Plaintiffs relied 3 upon, and he stated his opinion guaranteeing leads into the future.” (Id.) When the party 4 with special knowledge “does speak he must speak the whole truth to the end that he does 5 not conceal any facts which materially qualify those stated. One who is asked for or 6 volunteers information must be truthful, and the telling of a half-truth calculated to deceive 7 is fraud” Cicone v. URS Corp., 183 Cal. App. 3d 194, 201 (Cal. Ct. App. 1986). Here, 8 Plaintiffs have not established that Defendant Rentch told “a half-truth calculated to 9 deceive.” While Rentch did not disclose the negotiations with Thomson Reuters, the Court 10 is unconvinced that this lack of disclosure was calculated to deceive. Plaintiffs have 11 provided no evidence that Rentch’s “half-truths” regarding Rentch’s negotiations with 12 Thomson Reuters and Kerry Steigerwalt’s involvement were calculated to deceive them. 13 14 15 Accordingly, the Court GRANTS Defendants’ motion for summary judgment for fraudulent concealment. c. 16 Breach of Implied Duty to Perform with Reasonable Care, Breach of Implied Covenant of Good Faith and Fair Dealing 17 In order to state a cause of action for Plaintiffs’ breach of implied duty to perform 18 with reasonable care and breach of implied covenant of good faith and fair dealing, Plaintiff 19 must establish and show that a breach of contract occurred. Here, as explained above, the 20 terms of the Campaign Agreement are illegal. Therefore, the Campaign Agreement is void 21 and a breach cannot be established. Accordingly, the Court GRANTS Defendants’ motion 22 for summary judgment on these causes of action. 23 d. 24 “To recover in quantum meruit, a party need not prove the existence of a contract 25 [.]” Huskinson & Brown v. Wolf, 32 Cal. 4th 453, 458 (Cal. 2004) (citations omitted). 26 However, under contract-based claims, including quantum meruit, a party may not recover 27 for that which cannot be recovered on a contract. See Yoo v. Robi, 126 Cal. App. 4th 1089, 28 1104 n. 30 (Cal. Ct. App. 2005); Pacific Custom Pools, Inc. v. Turner Construction Co., Quantum Meruit 8 17-cv-0603-AJB-BLM 1 79 Cal. App. 4th 1254, 1266 (Cal. Ct. App. 2000). Here, the Court will not enforce a 2 contract for an illegal purpose or provide recovery on the basis of an illegal contract. 3 Accordingly, the Court GRANTS Defendants’ motion for summary judgment on this 4 basis. 5 C. Cameron Rentch and Wise Law Group’s Motion for Summary Judgment of 6 Thomson Reuters’ Cross-Complaint 7 Rentch and WLG bring their summary judgment motion of Thomson Reuters’ cross- 8 complaint. (Doc. No. 63.) Plaintiffs respond to Rentch and WLG’s motion for summary 9 judgment of Thomson Reuters’ cross-complaint. (Doc. No. 68) Thomson Reuters opposes 10 the motion. (Doc. No. 67.) 11 Rentch and WLG contend that California law applies to interpretation of all the 12 contracts at issue in this present litigation. (Doc. No. 67 at 10.) Further, Rentch and WLG 13 contend that the Campaign Agreement was disclosed to Thomson Reuters. (Doc. No. 63-1 14 at 10.) Since the Court has granted Rentch and WLG’s motion for summary judgment 15 regarding the illegality of the Campaign Agreement, their motion for summary judgment 16 of Thomson Reuter’s cross-complaint is now moot. Accordingly, the Court DENIES the 17 motion for summary judgment as moot. 18 D. Thomson Reuters’ Motion for Summary Judgment 19 Thomson Reuters brings its summary judgment motion. (Doc. No. 64.) Defendants 20 Rentch and WLG responded to and partially joined Thomson Reuters’ motion for summary 21 judgment. (Doc. No. 66.) Plaintiffs oppose the motion. (Doc. No. 74.) 22 a. 23 Breach of Contract i. Illegality 24 As the Court has explained above, supra Section A.a.i., the Court granted Rentch 25 and WLG’s motion for summary judgment regarding illegality of the Campaign 26 Agreement. Accordingly, the Court GRANTS summary judgment on the basis of 27 illegality. 28 /// 9 17-cv-0603-AJB-BLM 1 ii. Party to the Agreement 2 First, Thomson Reuters asserts that Delaware law applies to the contracts at issue in 3 this litigation. Second, Thomson Reuters asserts that it is not a party to the Campaign 4 Agreement as a successor in interest because the Campaign Agreement was not purchased 5 in the APA. As explained above, these issues are now moot as the Campaign Agreement, 6 as interpreted by the Plaintiffs, is for an illegal purpose and is void. 7 Third, Thomson Reuters asserts that it was not engaged in any fraudulent transfer. 8 (Doc. No. 64-1 at 20.) However, Plaintiffs do not assert that Thomson Reuters was engaged 9 in fraudulent transfer and did not bring a cause of action for fraudulent transfer in its 10 complaint against Thomson Reuters. (Doc. No. 1 at 6.) Accordingly, the Court DENIES 11 summary judgment on this basis as moot. 12 b. 13 Thomson Reuters, Rentch, and WLG contend that Plaintiffs may not recover lost 14 profits because the damages here are entirely speculative. (Doc. No. 64-1 at 22; Doc. No. 15 66 at 8.) As explained above, this issue is now moot because the Court will not enforce a 16 contract for an illegal purpose. Accordingly, the Court DENIES summary judgment on 17 this basis as moot. Lost Profits 18 c. 19 As explained above, supra Sections B.c. and B.d., the Court will not enforce an 20 illegal contract. Accordingly, the Court GRANTS Defendants’ motion for summary 21 judgment on these causes of action. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// Implied Covenant and Quantum Meruit Claims 10 17-cv-0603-AJB-BLM 1 CONCLUSION 2 Based on the foregoing, the Court GRANTS in part and DENIES in part Defendants 3 Cameron Rentch and Wise Law Group’s motion for summary judgment against Plaintiffs, 4 (Doc. No. 62), DENIES as moot Defendants Cameron Rentch and Wise Law Group’s 5 motion for summary judgment, or in the alternative, summary adjudication of Thomson 6 Reuters’ cross-complaint, (Doc. No. 63), and GRANTS in part and DENIES in part 7 Defendant/Cross-Complainant Thomson Reuters’ motion for summary judgment, (Doc. 8 No. 64). Thomson Reuters’ cross-complaint, (Doc. No. 15), for indemnification is now 9 moot. The Clerk of Court is DIRECTED to CLOSE this case. 10 11 12 IT IS SO ORDERED. Dated: November 15, 2018 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 17-cv-0603-AJB-BLM

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