Accuchex v. Paychex

Accuchex v. Paychex



Filed 8/9/06 Accuchex v. Paychex CA2/5


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS






California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.



IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FIVE









ACCUCHEX CORPORATION,


Plaintiff and Appellant,


v.


PAYCHEX, INC. et al.,


Defendants and Respondents.


B183920


(Los Angeles County Super. Ct.


No. BC294710)


APPEAL from a judgment of the Superior Court of Los Angeles County. Gregory W. Alarcon and Robert H. O’Brien, Judges. Affirmed in part and reversed in part.


Weston, Benshoof, Rochefort, Rubalcava & MacCuish, LLP, Jonathan M. Gordon; Craig and Macauley PC, Stephen Wald and Richard A. Sugarman for Plaintiff and Appellant.


Irell & Manella LLP, Gregory R. Smith, Morgan Chu, Alexander F. Wiles, Michael H. Strub, Jr., and Sandy S. Chung for Defendants and Respondents.



Plaintiff and appellant Accuchex Corporation appeals from a judgment following the granting of a motion for summary adjudication and a court trial in favor of defendants and respondents Paychex, Inc., B. Thomas Golisano, and Walter Turek (collectively the Paychex defendants).[1] Accuchex contends: (1) triable issues of fact exist as to whether the Paychex defendants were privileged to interfere with the licensing agreement between Accuchex and Rapid Payroll, Inc. (RPI); (2) triable issues of fact exist as to the cause of action for interference with prospective economic advantage; and (3) the trial court’s finding that the Paychex defendants’ conduct did not violate the Unfair Competition Law (the UCL) (Bus. & Prof. Code, § 17200 et seq.) does not preclude a jury trial on Accuchex’s cause of action for fraud. We reverse the judgment as to the cause of action for intentional interference with contract, and otherwise, we affirm the judgment in favor of the Paychex defendants.


FACTS AND PROCEDURAL BACKGROUND


The Licensing Agreement


In the early 1990’s, Olsen Computer Systems developed a software program that automated payroll processing. Olsen licensed its software to payroll processing companies. Under the licensing agreements, Olsen was required to maintain the software program as long as the licensees paid annual licensing fees. Accuchex provides payroll processing services to its customers. In 1994, Accuchex entered into a licensing agreement with Olsen.


Paychex is a large payroll provider. Golisano is the founder, President, and Chief Executive Officer of Paychex. In 1995, Golisano proposed that Paychex acquire Olsen. In 1996, Paychex purchased all of Olsen’s stock and ultimately changed the name of the company to RPI. In 1998, Paychex promised to provide licensees who signed an addendum with a product that would work on Microsoft’s “Windows” operating system. The 16-bit Windows product provided to licensees had several glitches.


Paychex developed another version of the payroll software referred to as the 32-bit version, but did not distribute this version to licensees. Turek was the Senior Vice‑President of Sales of Paychex. Paychex asked Turek to serve as a member of the board of directors and the sole officer of RPI. With Golisano’s approval, Turek sent a letter to RPI’s licensees in August 2001, stating that after a one year period, the software would no longer be supported. Turek explained, “The decision to discontinue licensing of the software was based primarily on the costs associated with continuing support and maintenance, and developing necessary enhancements to the Software. In short, it is no longer economically feasible for RPI to continue licensing the Software.” Another licensee filed an action in federal court against RPI and Paychex seeking an injunction to prevent termination of the licenses. On June 7, 2002, Turek sent a letter to the licensees rescinding the August 2001 termination letter.


The Instant Action and the Motion for Summary Adjudication


On April 28, 2003, Accuchex filed a complaint against RPI and the Paychex defendants. On August 6, 2003, Accuchex filed an amended complaint alleging causes of action for: breach of contract and declaratory relief against RPI alone; specific enforcement of a right to computer code against RPI and Paychex; violation of the UCL against RPI, Paychex, and Turek; interference with contract against the Paychex defendants; and interference with prospective economic advantage and fraud against RPI and the Paychex defendants. On September 10, 2003, RPI and Paychex filed a cross-complaint against Accuchex for declaratory relief, including a declaration that any damages were limited by the licensing agreement to the amount of the licensing fees Accuchex had paid, and that RPI has no obligation to provide upgrades or enhancements to the 16-bit Windows software.


RPI and the Paychex defendants filed a motion for summary adjudication of the tortious inference causes of action on the grounds that a parent corporation is privileged to interfere with the contracts of wholly-owned subsidiaries in the legitimate pursuit of its own business interests and none of the Paychex defendants engaged in conduct that was wrongful by some measure other than the fact of interference itself. They submitted Golisano’s declaration in support of the motion. Golisano declared that in 2001, he concluded it was no longer in Paychex’s longterm interest to remain in the licensing business because: (1) the base of licensees was declining, and as a result, revenue was declining, which in turn increased the cost per licensee to maintain the software; (2) Paychex and the licensees no longer shared the same software platform, which further narrowed the base over which costs were spread; and (3) Paychex was developing a separate software platform that did not fit with RPI’s licensing business. Therefore, Golisano directed Turek to send the letter to the licensees in August 2001 stating that RPI would be phasing out support of the software and expected them to find different payroll software within one year.


Accuchex opposed the motion for summary adjudication on the following grounds. The Paychex defendants were not protecting the investment interest of the parent corporation when they interfered with Accuchex’s licensing agreement. The licensing business, which constituted RPI’s sole business, was profitable. The Paychex defendants were aware that the termination of the licenses would debilitate the licensees and they acted with the intent to injure the licensees, Golisano was not a manager or agent of RPI, and the conduct constituted a violation of the UCL.


In support of the opposition, Accuchex submitted Golisano’s testimony to the effect that one of the reasons Paychex acquired Olsen was “to leverage acquisitions of the licensees’ customers.” At the January 11, 1996 meeting of the Paychex board of directors, Golisano reported that as a result of the increasing number of licensees of Olsen’s software, the company “may take on a life of its own.” Although Paychex sent information to licensees in November 1996 assuring that Paychex intended to “aggressively market” new licenses, the Paychex defendants never attempted to sell any new licenses after purchasing Olsen. Golisano was aware that as a result of the decision not to sell any new licenses, licensing revenue was projected to decline 10 percent per year beginning in 2000. After the August 2001 termination letter was sent to the licensees, Golisano invited a client of a licensee, who was also a social acquaintance of his, to dinner at his house and informed the client that the licensee would be changing software programs because Paychex would no longer be licensing its software.


Accuchex also submitted Turek’s deposition testimony stating that Golisano selected him to act as President of RPI and he is also a member of the board of directors. However, Turek does not know the identities of any other board of director members, the board has never had a meeting, and there are no other officers of the company. Turek “believes” RPI has an office in Orange County, but he does not know whether RPI has any employees. Turek is unaware of which aspects of the business are allocated to Paychex and which are allocated to RPI. At the meeting in which Turek and Golisano decided to send the licensees a letter terminating the licenses, Turek did not review any financial records and had no recollection of the cost to support the licensees consistent with the licensing agreements. RPI was receiving annual licensing fees of approximately $2 million. Turek believed it was going to cost more than $2 million to support the licnesees, but did not know how much more it would cost. He is not aware of whether any financial analysis had been performed and presented to Golisano. Turek felt it was not his responsibility “to question whatever financial review is done to come to the decision that was made.” Moreover, Turek was not aware of whether RPI had lost any money as a result of a federal court injunction requiring the company to support the licenses during ongoing litigation in another matter. Turek reviews RPI’s quarterly and annual reports, but does not recall any disclosure to the shareholders of a materially adverse change to the company’s finances based on the injunction ordering RPI to support the licenses.


Accuchex submitted deposition testimony of Paychex’s attorney, who stated that that no document existed that analyzed or evaluated the income, expenses, or financial condition of RPI in connection with the decision to send the termination letter. Accuchex submitted a document prepared by Paychex employee John Lucania in March 2001in which he stated that all Paychex clients using the 16-bit version would be converted to the 32-bit version by October 2001. Lucania noted that if Paychex continued the licensing arrangement, it would have to maintain the 16-bit version solely for the licensees’ use. In deposition, Lucania recalled having estimated it would cost approximately $1 million annually to maintain the 16-bit client product solely for the licensees. Accuchex also submitted evidence to show that after the August 2001 termination letter was sent to the licensees, Paychex sales employees contacted the licensees’ clients, informed them that the licensees would soon have to transition to new software, and solicited their business for Paychex, which would not require the clients to change payroll systems.


Judge Gregory W. Alarcon granted the motion for summary adjudication. Judge Alarcon noted that a cause of action for intentional interference with contract does not exist between the contracting parties. The court found that Golisano and Turek advised RPI to breach the contracts in their role as agents of RPI for the benefit of RPI. The court also found that Paychex was also privileged to advise RPI to breach the contracts, because it was more beneficial than performance under the contract. The court stated that Paychex was not a separate legal entity from RPI and not a stranger to the contract. The trial court also granted the motion for summary adjudication of the cause of action for tortious interference with prospective economic advantage, because Accuchex had not shown any intentional act by the Paychex defendants that was wrongful beyond the fact of interference itself.


Trial of Equitable Causes of Action


Judge Robert H. O’Brien bifurcated the issues remaining for trial and ordered the equitable issues of declaratory relief, unfair competition, and specific performance to be tried first to the court. After Accuchex rested its case, RPI, Paychex, and Turek moved under Code of Civil Procedure section 631.8 for judgment on the cause of action for violation of the UCL. The trial court granted the motion.


The trial court later issued a statement of decision finding that Accuchex had elected a specific performance remedy and was entitled to specific performance of the licensing agreement. The trial court entered an injunction requiring RPI to continue to license the software that had been delivered to Accuchex and, unless and until RPI dissolved and went out of business, to provide maintenance and support for the software. The trial court found Accuchex was also entitled to incidental damages of $62,607.90. The trial court also found that in the event that RPI dissolved, Accuchex would be entitled to the source code for the software as provided in the original license agreement.


The trial court noted that Accuchex’s cause of action for violation of the UCL had been based on the following allegations: RPI and the Paychex defendants acquired Olsen with the undisclosed intent to deny support to the licensees, terminate the licensing agreements, and put the licensees out of business; RPI and the Paychex defendants defrauded the licensees by falsely representing they intended to “aggressively market” the software to new licensees in order to encourage Accuchex and others to continue to rely on the software, when instead the RPI and the Paychex defendants intended to make it more difficult for Accuchex to compete; and RPI and the Paychex defendants made misrepresentations about their undisclosed intentions to terminate the licenses, intentionally withheld support and maintenance for the software, coerced Accuchex to sign the Windows Addendum, appropriated Accuchex’s clients and ultimately intentionally terminated Accuchex’s licensing agreement.


In connection with the cause of action for violation of the UCL, the trial court made the following findings. Paychex acquired Olsen for business and competitive reasons, and not unfair, unlawful or fraudulent reasons. Accuchex was not coerced into signing the Windows Addendum, nor was it misled to believe that it would receive a Windows NT-compatible software for free and without signing any further agreement. RPI and the Paychex defendants provided maintenance and support. Although RPI was not entitled to terminate Accuchex’s licensing agreement, Accuchex failed to prove that the decision to terminate the licensing agreement was fraudulent, in bad faith or part of a larger scheme to harm Accuchex’s business. Accuchex failed to prove a conspiracy to terminate contracts, economic extortion, a decision to deny support and maintenance to users, any intentional or reckless false representation with the intent to defraud Accuchex, any intentional concealment or suppression of facts with the intent to defraud, any promise with the intent to defraud Accuchex, or any evidence of intentional control of the allocation of support or decrease in the level, quantity, or quality of support to Accuchex. Accuchex failed to show by a preponderance of the evidence “unlawful” or “unfair” conduct under the UCL. Further, Accuchex failed to show by a preponderance of the evidence that any defendant intentionally made a misrepresentation with the intent to defraud, or intentionally concealed facts with the intent to defraud, or made any promise with the specific intent not to perform.


The trial court entered judgment in favor of Accuchex and against RPI as to portions of the cause of action for declaratory relief, injunctive relief and specific performance. The trial court found in favor of RPI and the Paychex defendants on all remaining causes of action in the complaint and cross-complaint. Accuchex filed a timely notice of appeal.


DISCUSSION


Summary Adjudication Issues


A. Standard of Review


Summary adjudication motions are restricted to an entire cause of action, an affirmative defense, a claim for punitive damages, or an issue of duty. (Code Civ. Proc., § 437c, subd. (f)(1); Hood v. Superior Court (1995) 33 Cal.App.4th 319, 323.) “A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.” (Code Civ. Proc., § 437c, subd. (f)(2).)


“A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] We review the trial court’s decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.] In the trial court, once a moving defendant has ‘shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established,’ the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff ‘may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .’ [Citations.]” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.)


A defendant or cross-defendant meets his or her burden upon a motion for summary judgment or summary adjudication if that party has proved “one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) The defendant need not conclusively negate an element of the plaintiff’s cause of action, but must only show that one or more of its elements cannot be established. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853.) The burden of proof at trial is relevant to the burden of production borne by the defendant moving for summary judgment. “[I]f a defendant moves for summary judgment against [a plaintiff who would bear the burden of proof by a preponderance of evidence at trial], he must present evidence that would require a reasonable trier of fact not to find any underlying material fact more likely than not.” (Id. at p. 851.)


B. Privilege to Interfere with Contract


Accuchex contends triable issues of fact exist as to whether the Paychex defendants were privileged to interfere with the contract between Accuchex and RPI. We agree.


“To recover in tort for intentional interference with the performance of a contract, a plaintiff must prove: (1) a valid contract between plaintiff and another party; (2) defendant’s knowledge of the contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514, fn. 5.)


“ ‘One who has a financial interest in the business of another is privileged purposely to cause him not to enter into or continue a relation with a third person in that business if the actor [¶] (a) does not employ improper means, and [¶] (b) acts to protect his interest from being prejudiced by the relation.’ (Rest., Torts, § 769.) The financial interest privileged under this provision is an interest in the nature of an investment, i.e., interest of a part owner, partner, stockholder and the like.” (Sade Shoe Co. v. Oschin & Snyder (1984) 162 Cal.App.3d 1174, 1181.) Interference by a parent corporation with the contractual relations between a subsidiary and a third party comes within section 769 and is not privileged as a matter of law. (Culcal Stylco, Inc. v. Vornado, Inc. (1972) 26 Cal.App.3d 879, 882-883.)


Justification for inducing breach of contract by lawful means is an affirmative defense. (Culcal Stylco, Inc. v. Vornado, Inc., supra 26 Cal.App.3d at p. 881.) “It is essentially a state-of-mind privilege and therefore its existence cannot normally be satisfactorily determined on the basis of pleadings alone. [Citation.] The resolution of the issue turns on the defendants’ predominant purpose in inducing the breach of the contract.” (Id. at p. 883.)


In this case, the Paychex defendants moved for summary adjudication of their affirmative defense that they were privileged to interfere with the licensing agreement in order to protect Paychex’s interest in RPI. The Paychex defendants submitted evidence that they directed RPI to terminate the licensing agreement because of increasing costs associated with supporting the licenses. This evidence was sufficient to shift the burden to Accuchex to show the existence of a triable issue of fact.


In opposition to the motion, Accuchex submitted evidence from which a trier of fact could conclude the claim that the licenses were terminated due to increasing costs was a pretext and the Paychex defendants did not interfere with the licensing agreement in order to protect Paychex’s interest in RPI. Accuchex argues Paychex’s interest in RPI was not prejudiced by the contract between RPI and Accuchex, because RPI’s annual revenue from licensing fees was approximately $2 million, while the estimated annual cost of supporting the 16-bit version of the software for the licensees was $1 million. Accuchex submitted evidence from which a trier of fact could find the Paychex defendants claim that they interfered with the contract based on cost considerations is not credible, because no written financial analysis exists and Turek has no financial information to support the statements he made in his August 2001 termination letter. Moreover, Turek admits that he is not aware of any losses that have been suffered by RPI as a result of having been ordered to continue to support the licenses by the federal court in a different action. Golisano suggested in deposition that Paychex acquired Olsen in part to leverage acquisitions of the licensees’ customers. After the August 2001 termination letter was sent to the licensees, Paychex sales employees used the fact that the licensees had to change to new software to solicit the licensees’ customers. Triable issues of fact exist as to the Paychex defendants’ state-of-mind and whether their predominant purpose in inducing the breach of the licensing agreement was to protect Paychex’ interest in RPI.[2]


C. Intentional Interference with Prospective Advantage


Accuchex contends triable issues of fact also exist as to the cause of action for intentional interference with prospective advantage. We disagree.


The elements of the tort of intentional interference with prospective economic advantage are: (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant’s acts. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.) “[A] plaintiff seeking to recover damages for interference with prospective economic advantage must plead and prove as part of its case-in-chief that the defendant’s conduct was ‘wrongful by some legal measure other than the fact of interference itself.’” (Ibid.)


Accuchex argued in the trial court and on appeal that the Paychex defendants’ actions in directing RPI to breach the licensing agreement were wrongful apart from the fact of the interference, because they constituted a violation of the UCL. However, the Paychex defendants’ actions in directing RPI to breach the agreement were submitted to the trial court for a determination as to whether the conduct violated the UCL. The trial court found that Accuchex failed to prove any violation of the UCL. Therefore, Accuchex cannot establish this element of the tort.


Fraud


At trial, Accuchex attempted to prove that the Paychex defendants made misrepresentations in violation of the UCL, but the trial court found no misrepresentations had been made. On appeal, Accuchex does not dispute that the same alleged misrepresentations form the basis of Accuchex’ cause of action for fraud. However, Accuchex contends it is entitled to a jury trial on the cause of action for fraud by law, the trial court decided the UCL claim on a different basis than whether misrepresentations had been made, and Accuchex was entitled to offer additional evidence to prove the misrepresentations. Accuchex is incorrect.


“It is beyond question that the trial court had the authority to order a trial of the equitable claims before a trial of the remaining legal claim. (See Raedeke [v. Gibraltar Sav. & Loan Assn. (1974)] 10 Cal.3d 665, 671.) Indeed, this is the preferred procedure where the case includes both equitable and legal claims. [Citation.]” (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1241-1242.) “Where plaintiff’s claims consist of a ‘mixed bag’ of equitable and legal claims, the equitable claims are properly tried first by the court. A principal rationale for this approach has been explained as follows: ‘“When an action involves both legal and equitable issues, the equitable issues, ordinarily, are tried first, for this may obviate the necessity for a subsequent trial of the legal issues.” [Citation.]’ [Citations.]” (Id. at p. 1238.)


In this case, the trial court properly tried the equitable issues first and the ruling on the UCL cause of action obviated the necessity for a trial of the fraud cause of action. Accuchex was not entitled to a jury trial on its cause of action for fraud under these circumstances.


Accuchex asserts that the trial court granted the motion under Code of Civil Procedure section 631.8 on the basis that the alleged wrongful conduct did not affect the public generally. However, the trial court clearly understood that a determination as to whether a false statement had been made was part of the ruling required in connection with Accuchex’s UCL claim. Although there was discussion among the trial court and the parties as to other aspects of the UCL cause of action, the trial court did not state a basis for its ruling during the hearing. The trial court clearly stated its finding in the statement of decision that no misrepresentations had been made. A trial court’s written statement of decision cannot be impeached by oral expressions of the trial court to the contrary. (Raville v. Singh (1994) 25 Cal.App.4th 1127, 1132; Chapple v. Big Bear Super Market No. 3 (1980) 108 Cal.App.3d 867, 875.) The statement of decision is controlling.


Accuchex contends it was entitled to supplement the record with additional evidence, but did not make a request to do so because the trial court dismissed the UCL claim for reasons unrelated to the fraud cause of action. This is simply an incorrect statement of the discussion during the hearing and the trial court’s oral ruling, as stated above. Moreover, we note that evidentiary rulings the trial court made subsequent to granting the Paychex defendants’ motion under Code of Civil Procedure section 631.8 are irrelevant.[3]


DISPOSITION


The portion of the judgment dismissing the cause of action for interference with contract and the order granting summary adjudication of the cause of action for interference with contract in favor of Paychex, Golisano, and Turek are reversed. The trial court is directed to enter a new and different order denying the motion for summary adjudication as to the cause of action for interference with contract. In all other respects, the judgment as to Paychex, Golisano, and Turek is affirmed. Accuchex Corporation is awarded its costs on appeal.


KRIEGLER, J.


I concur:


TURNER, P. J.


MOSK, J., Concurring


I concur.


A violation of Business and Professions Code section 17200 et seq. (UCL) has proof requirements different than those for common law fraud. When, as here, the UCL claim is based on fraudulent conduct, “the claim is said to be ‘grounded in fraud’ or to ‘sound in fraud.’” (Vess v. Ciba-Geigy Corp. USA (9th Cir. 2003) 317 F.3d 1097, 1103.)


Accuchex Corporation (Accuchex) suggests that the granting of the Code of Civil Procedure section 631.8 motion to its UCL claims should not foreclose it from having a jury trial on its fraud case at which it would be able to introduce evidence of actual fraud. At the hearing on the Code of Civil Procedure section 631.8 motion the following colloquy took place. “Court: Are you [defendants] arguing that the court’s determination on the fraud assertion in the 17200 framework would somehow have a determinative effect on the separate fraud cause of action? [¶] Mr. Wiles: Yes, I am. [¶] Court: But the criteria are different.” The trial court granted the motion. Not until after the end of the court trial did the trial court specifically set forth its finding that in connection with the UCL action there were no misrepresentations and that this precluded the fraud action.


Accuchex says it was somehow misled into not putting in more evidence. But Accuchex had no right to put in more evidence on the UCL claim once the Code of Civil Procedure section 631.8 motion was granted. It could have sought to introduce evidence after the motion was made.


It appears that Accuchex put in all the evidence it had of fraud in connection with the court trial on the UCL claim. It is possible it did not, but Accuchex has not indicated either before the trial court or on appeal what claims of fraud or evidence had not been introduced at the court trial that Accuchex would have introduced at a trial on the fraud count. The several documents that had been excluded, to which Accuchex refers, give no such indication. They were introduced at the court hearing, and all that can be discerned is that objections to them were sustained. There is no indication of why.


Defendants made it clear that they intended to use findings in connection with the UCL action to bar a jury trial on the fraud claim. Under these circumstances, Accuchex should have taken steps to make clear what, if any, allegations concerning the fraud claim were not foreclosed by an adverse UCL ruling and what additional evidence Accuchex could have submitted in connection with a fraud claim.


MOSK, J.


Publication courtesy of San Diego free legal advice.


Analysis and review provided by Santee Real Estate Attorney.


[1] Accuchex also appealed from a portion of the judgment concerning defendant and cross-complainant Rapid Payroll, Inc. (RPI). However, while the instant appeal was pending, RPI filed for bankruptcy and an automatic stay is in effect. Despite the stay, RPI contends this court may consider whether the trial court properly found in favor of RPI and Paychex on their cross-complaint and enforced a limitation of liability provided for in the licensing agreement with Accuchex. However, we conclude this issue is better addressed in connection with the issues presented by Accuchex’s appeal as to RPI. Therefore, we do not address any issues related to RPI.


[2] On appeal, the Paychex defendants do not contend that any of the findings contained in the statement of decision resolve the privilege issue. We note that the defendants have the burden to prove their affirmative defense.


[3] It is unclear whether Accuchex contends that it should be allowed to pursue the fraud claim against Golisano because he was not a party to the UCL claim. This contention is incorrect. Estoppel may apply against Accuchex as the plaintiff in both the UCL and fraud claims by a party who was not named in one of the causes of action. (See Bernhard v. Bank of America (1942) 19 Cal.2d 807, 812; Furia v. Helm (2003) 111 Cal.App.4th 945, 959, fn. 11.)



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