Jass v. Cherryroad Techs. Inc.
| Decision Date | 17 November 2021 |
| Docket Number | Case No. 19-cv-00609-DKW-RT, Case No. 20-cv-00066-DKW-RT |
| Parties | Haralds JASS, Plaintiff, v. CHERRYROAD TECHNOLOGIES INC., et al., Defendants. Ho Yin Jason Wong, Plaintiff, v. CherryRoad Technologies, Inc., et al., Defendants. |
| Court | U.S. District Court — District of Hawaii |
Roman F. Amaguin, Law Office of Roman Amaguin, Honolulu, HI, for Plaintiff.
Richard P. Sybert, Gordon and Rees LLP, San Diego, CA, Yuo-Fong Amato, Pro Hac Vice, Gordon Rees Scully Mansukhani, Philadelphia, PA, Eve Bacanskas, Pro Hac Vice, Gordon Rees Scully Mansukhani, LLP, Denver, CO, Mia Dianne Obciana, Gordon Rees Scully Mansukhani LLP, Honolulu, HI, for Defendants.
ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT, (2) DENYING PLAINTIFF HARALDS JASS’ MOTION FOR SUMMARY JUDGMENT ON COUNTS I AND VII, (3) GRANTING IN PART AND DENYING IN PART JASS’ MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT ON ALL COUNTERCLAIMS, AND (4) GRANTING IN PART AND DENYING IN PART PLAINTIFF HO YIN JASON WONG'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT ON ALL COUNTERCLAIMS
Pending before the Court are four motions for summary judgment filed by the parties, three by Plaintiffs Haralds Jass (Jass) and Ho Yin Jason Wong (Wong, and, together with Jass, Plaintiffs) and one by Defendants CherryRoad Technologies Inc. (CR), Jeremy Gulban (Gulban), and Nicholas Visco (Visco, and, collectively with CR and Gulban, Defendants), seeking relief with respect to the claims and counterclaims raised in this action.
Having reviewed the many briefs and voluminous evidence filed in connection with the four motions, the Court finds that, while summary judgment is warranted on a few of the claims and counterclaims, most of the evidence at this juncture is either disputed or lacking, precluding judgment for any party. Therefore, for the reasons set forth below, Defendants’ motion for summary judgment and Plaintiffs’ motions with respect to the counterclaims are GRANTED IN PART and DENIED IN PART, while Jass’ motion for summary judgment on Claims 1 and 7 of his Second Amended Complaint is DENIED.
Pursuant to Federal Rule of Civil Procedure 56(a), a party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party is entitled to judgment as a matter of law when the non-moving party fails to make a sufficient showing on an essential element of a claim in the case on which the non-moving party has the burden of proof. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In contrast, when the moving party bears the burden of proof, "it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted...." Houghton v. South , 965 F.2d 1532, 1536 (9th Cir. 1992). This means that the movant "must establish beyond controversy every essential element" of its claims. See S. Cal. Gas Co. v. City of Santa Ana , 336 F.3d 885, 888 (9th Cir. 2003) (quotation omitted). In assessing a motion for summary judgment, all facts are construed in the light most favorable to the non-moving party. Genzler v. Longanbach , 410 F.3d 630, 636 (9th Cir. 2005).
The facts set forth below are those that are undisputed (and/or not properly disputed), material, and established by the factual statements and evidence submitted by the parties in support of, and in opposition to, the four motions for summary judgment.1
Since at least early 2009, Jass owned and operated Superb Management Corporation (SMC), Superb Development & Service Corporation (SDSC), Superb Internet Corporation (SIC), and HopOne Internet Corporation (HopOne). Defendants’ Concise Statement in Support of Motion for Summary Judgment at ¶ 1, Dkt. No. 92-2.2 Wong was Jass’ second-in-command. Id. In part because Jass’ companies experienced declining revenues, he began looking for potential buyers. Id. at ¶ 2. Around June 2018, Jass started negotiating a potential acquisition of his companies with CR. Id. During these negotiations, Jass informed CR that his spouse, Wong, would need to remain employed with SMC as part of any deal. Id. at ¶ 3.
In 2006, CR was incorporated in Florida. 9/8/21 Decl. of Jeremy Gulban at ¶ 4, Dkt. No. 102-4. Prior to January 2021, CR was owned by the Michael J. Gulban and Ann Marie Gulban Family Trust, the Michael Gulban Revocable Trust, and the Ann Marie Gulban Revocable Trust. Id. at ¶ 6. Many of CR's directors and officers have been located in New Jersey, Florida, and other states, but not in Hawai‘i. Id. at ¶ 7. At some point, CR's board of directors consisted of Michael Gulban, Ann Marie Gulban, Amy Ramsburg, Thomas Ferrando, and Robert Guyett. Id. at ¶ 8; 2/14/20 Annual Report to the State of Florida at 1-2, Dkt. No. 106-9. CR's officers included Gulban, Amy Ramsburg, Lisa Cornachia, and Stephen Lange. 9/8/21 Gulban Decl. at ¶ 9.3
On and around May 1, 2019, various acquisition-related agreements were signed by the parties. In no particular order, first, CR and Superb Internet Technologies Inc. (SIT) entered into a Share and Asset Purchase Agreement (SAPA) with Jass and SIC, whereby CR bought HopOne, SIT bought substantially all of SIC's assets, CR became the minority owner of SMC, and Jass would receive payments based on the revenue of the acquired companies. Dkt. No. 92-2 at ¶ 4.
CR and Jass also entered into a Shareholders Agreement, whereby Jass would control one board seat of SMC, while CR would control two. Id. at ¶ 6. Jass appointed himself to his board seat, and CR appointed Gulban and Visco. Id. Under the Shareholders Agreement, CR could unilaterally remove and designate a replacement for either of the two directors it had appointed to the board. Shareholders Agreement at ¶ 1(b), Dkt. No. 93-5. Pursuant to the Shareholders Agreement, Jass could not, on behalf of SMC, adopt a budget or business plan, incur indebtedness greater than $1,000 in a single transaction, make loans, or advance funds without the approval of SMC's board or, if a shareholder vote was required, CR. Id. at ¶ 2(a).
After May 1, 2019, Jass held approximately 92% of the stock shares of SMC, and CR owned approximately 8% of the same. Plaintiffs’ Joint Concise Statement of Facts in Opposition to Defendants’ Motion for Summary Judgment at ¶ 3, Dkt. No. 107.
Jass and Wong also each entered into an employment agreement (EA) with SMC. Dkt. Nos. 94-3, 94-9. Pursuant to Jass’ EA, he was hired, on a full-time basis, as President of SMC for a period of three years unless terminated earlier pursuant to the EA. Dkt. No. 94-3 at ¶¶ 1-2. Jass’ EA also made him eligible for a bonus. Any bonus, though, had to be approved by a two-thirds vote of SMC's board of directors and was based upon CR's 2019 bonus plan. Id. at ¶ 4(a). Further, Jass’ vacation time was subject to the approval of SMC's board. Id. at ¶ 5. At some point after June 11, 2019, Jass learned that Charles Deskins (Deskins), an employee of CR, would supervise his work. 9/8/21 Decl. of Haralds Jass at ¶21, Dkt. No. 107-1.
Wong's EA, by contrast, specified that he was hired, on a part-time basis, as Director of Governance & Information Systems for a period of three years unless terminated earlier pursuant to the EA. Dkt. No. 94-9 at ¶¶ 1-2. Wong's base salary was $4,600 per month. Id. at ¶ 4. Wong was responsible for human resources (HR) functions and government relations, among other duties. 8/10/21 Decl. of Ho Yin Jason Wong at ¶ 3, Dkt. No. 94-8. As of July 22, 2019, Gulban expected Wong to report to Deskins. 7/22/19 Email from Gulban to Jass, Dkt. No. 93-10.
In their respective EAs, Jass and Wong could be terminated for "Cause" as defined therein. Dkt. No. 94-3 at ¶ 10(b); Dkt. No. 94-9 at ¶ 10(b). The EAs described five categories of conduct representing "Cause," but, "[i]n all cases, for Cause to exist, [SMC] must give Employee written notice specifying in reasonable detail the act(s) or omission(s) that [SMC] believes constitute Cause and, in the case of items (A), (D), and (E) in this Section [10](e)(i), a reasonable opportunity for Employee to correct such act(s) or omission(s)." Dkt. No. 94-3 at 10(e)(i); Dkt. No. 94-9 at 10(e)(i).4 An Employee Handbook authored by Wong applied to SMC during the time of Jass and Wong's employment there. 7/20/21 Depo. of Haralds Jass at 113:9-17, Dkt. No. 92-20; 7/21/21 Depo. of Ho Yin Jason Wong at 174:25-175:10, Dkt. No. 97-1.
Pursuant to Non-Disclosure Agreements attached to their EAs, upon termination, Jass and Wong were required to "delete or erase all intangible Confidential Information of [SMC] in [their] possession." Exh. B to Dkt. No. 94-3 at ¶ 4, Dkt. No. 94-3 at 9-10; Exh. B to Dkt. No. 94-9 at ¶ 4, Dkt. No. 94-9 at 8-9.
Next, CR, SMC, and SDSC entered into an Intercompany Services Agreement (ISA), whereby CR engaged SMC and SDSC to provide management, administrative, and software-related services to CR, while CR agreed to pay certain invoices and payroll expenses incurred by SMC and SDSC. Dkt. No. 106-10 at ¶¶ 1-2. In addition, SIC and SIT entered into a Transition Services Agreement, whereby SIC would perform certain payment collecting and processing services for SIT. Dkt. No. 92-2 at ¶ 5.
On May 5, 2019, Jass suggested to Gulban that Wong be considered for a full-time role. 5/5/19 Email from Jass to Gulban, Dkt. No. 92-33 at 1-2. Jass also informed Gulban that he and Wong would be travelling to New Jersey in June 2019 to visit CR. Id. at 1. On June 11-12, 2019, Jass and Wong visited CR's headquarters. Dkt. No. 92-2 at ¶ 10. At a dinner during this visit, CR employees told Wong they were interested in getting to know him better and asked about his hobbies, interests, and educational background. Wong Depo. at 291:8-17. During this time period, Jass and Wong began...
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