1.

Veros Software Inc. v. First American

This action is a Breach of Contract/Shareholder Derivative suite with a cross-complaint, a related Federal action, and a possibly related Delaware action.  The trial date is set for 2/2/09.

The Bozorgi Cross-Defendants are allegedly shareholders and controlling officers of Veros SW. They are also allegedly managers of Veros RES, with Darius allegedly serving as its President, and Bijan allegedly serving as its CFO.  The Cross-Complaint alleges that the Bozorgis and Veros SW are alter-egos.  The Amended Cross-Complaint charges the Cross-Defendants with, among other things, multiple breaches of the Operating Agreement, including but not limited to failing to properly allocate the income and losses of Veros RES, failing to timely and fully pay distributions as required by the Operating Agreement, and paying excessive salaries to the Bozorgis. 

The Demurrer of Cross-Defendants Darius and Bijan Bozorgi is overruled in its entirety as procedurally defective. It does not, as required by CRC 3.1320(a), specify whether it applies to the entire Amended Cross-Complaint or only to certain causes of action therein.  Additionally, it fails to cite to applicable (i.e., Delaware) law, and therefore fails to include a proper Memorandum of Points and Authorities as required by CRC 3.1113.  The Bozorgis note that the Joint Venture Agreement states that California law governs that Agreement “and the legal relations between the parties hereto.”) However, the Amended Cross Complaint is based on the alleged violations of the Operating Agreement, not the Joint Venture Agreement, and there is no legal authority to support the contention in the Reply that any ambiguity between the joint venture agreement and operating agreement should be resolved in favor of the joint venture agreement.

Even if the Court were to overlook the procedural defects, the Demurrer would also fail, as it is based on a false premise regarding the Amended Cross-Complaint---that Cross-Complainant FARES LLC lacks standing to maintain a remedial action in its own right against the company managers for diminution of value of its ownership interest in Veros RES.  However, the Amended Cross-Complaint does not, in fact, allege any such diminution in value of FARES LLC’s ownership interest in Veros RES.

Regarding the Motion of Cross-Complainant First American Real Estate Solutions LLC to Disqualify Counsel for Veros RES:  Defendant Polansky represents both Plaintiff/Nominal Defendant/Cross-Defendant Veros RES and also Plaintiff/Cross-Defendant Veros SW.  It appears that there is a potential conflict regarding the  interests of Veros RES and Veros SW.  Cross-Complainant FACL, as an assignee in interest to FARES LLC, holds a 30% minority interest in Veros RES; and that Veros SW holds the remaining 70% majority interest.  Therefore, the interests of Veros RES (Polansky’s client) are split between FACL and Veros SW (Polansky’s other client).  There may be some actions, such as payment of a settlement to Veros SW to FACL in return for FACL dismissing Veros SW from the Cross-Complaint that could benefit Veros RES (by resolving the differences between its two members) but that could be harmful to Veros SW (by costing it the settlement money). In this situation, Polansky would not be able to assist one of his clients without hurting the interests of the other.

However, Rule 3-310(c)(1) allows an attorney to simultaneously represent clients with potentially conflicting interest with the informed written consent of those clients, following written disclosure.  It is not entirely clear from the information provided to the Court exactly what sort of “informed written consent”, if any, Veros SW and Veros RES gave with respect to Mr. Polansky’s joint representation.

In its Oppositions, Veros RES alleges, although not under oath and with no supporting documentation, that Judge Selna made certain findings in this regard.  Depending upon the type of order or finding made by Judge Selna, it could possibly affect the instant motion.

Counsel should be prepared to address these points at the oral argument. As an alternative, Counsel may stipulate to supplemental briefing.  If this agreement is reached, please contact the clerk of the court regarding the briefing schedule.

2.

Zurich Specialities v. Century Surety

Motion for Summary Adjudication:  Plaintiff Zurich Specialties London Ltd seeks Summary Adjudication against Century Surety as to the duty to defend their mutual insured Alarcon Sons, Inc. in ten of the fifty-four underlying actions.

No tentative, but if counsel believe the issues of ripeness and the enforceability of the excess “other insurance” clause are adequately addressed in the written arguments, counsel may waive oral argument after so advising all other counsel and the court clerk.

3.

Greystone Homes v. Assurance Company

• Defendants Travelers Casualty and Surety Co., United States Fidelity and Guaranty, and Fidelity and Guaranty Insurance Underwriters, Inc.’s (collectively referred to as the “Traveler Entities”) Motion to Strike portions of the First Amended Complaint pertaining to punitive damages is granted, with leave to amend.
• Defendant Fireman’s Fund Insurance Company’s Demurrer to the First Amended Complaint is sustained, with leave to amend, as to the First Cause of Action and the Second Cause of Action.
• Defendant Fireman’s Motion to Strike is granted, in its entirety, with leave to amend.

15 days to amend. Fireman’s to give notice.