Semiconductor Components Industries, L.L.C. v. I2A Technologies, Inc. et al

Filing 41

ORDER by Judge Thelton E. Henderson granting in part and denying in part 36 Plaintiff's Motion for Judgment on the Pleadings. (tehlc3, COURT STAFF) (Filed on 7/30/2010)

Semiconductor Components Industries, L.L.C. v. I2A Technologies, Inc. et al

Doc. 41

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

SEMICONDUCTOR COMPONENTS INDUSTRIES, L.L.C., Plaintiff, v. I2A TECHNOLOGIES, INC., and VICTOR BATINOVICH, Defendants.

NO. C10-0603 TEH ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS

United States District Court

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For the Northern District of California

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This matter comes before the Court on Plaintiff's motion for judgment on the

13 pleadings. After carefully considering the parties' written arguments, the Court finds oral 14 argument to be unnecessary and now VACATES the motion hearing scheduled for August 9, 15 2010. For the reasons discussed below, the Court GRANTS the motion as to liability but 16 DENIES the motion as to damages, which must be determined by further proceedings. 17 18 BACKGROUND 19 Plaintiff Semiconductor Components Industries, L.L.C., which does business as ON

20 Semiconductor,1 filed this action against Defendant I2A Technologies, Inc., and I2A's 21 president and chief executive officer, Victor Batinovich. The complaint alleges three causes 22 of action: conversion, intentional interference with contractual relationships, and unjust 23 enrichment. ON Semiconductor now moves for judgment on the pleadings on the conversion 24 and unjust enrichment claims and requests dismissal of the remaining claim as moot. 25 ON Semiconductor alleges that it owed I2A less than $25,000 but mistakenly sent a

26 wire transfer of $613,649.46 to I2A's bank account on December 18, 2009, instead of to 27 The complaint refers to Plaintiff as "Semiconductor Components," but the motion papers use "ON Semiconductor." The Court uses ON Semiconductor to refer to Plaintiff 28 except when quoting the complaint.
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1 another vendor to whom the larger amount was owed. Compl. ¶ 10. In its answer, I2A 2 admits that ON Semiconductor "sent a wire transfer to I2A in an amount of approximately 3 $600,000," and that "the amount sent substantially exceeded the amount owed by Plaintiff to 4 I2A." Answer ¶ 10. "Defendants lack sufficient knowledge or information to form a belief 5 as to whether the person who made the transfer acted because of mistake or that a transfer of 6 that size was due from [ON Semiconductor] to a third party." Id. 7 ON Semiconductor contacted I2A via electronic mail on January 6 and January 13,

8 2010, to explain the mistake and request a return of a portion of the wired funds. Compl. 9 ¶ 11; Answer ¶ 11. The parties dispute whether I2A responded to those e-mails. Compare 10 Compl. ¶ 11 ("I2A did not respond.) with Answer ¶ 11 ("I2A emailed Plaintiff regarding the

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11 situation on at least January 30, 2010 and February 15, 2010.").
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ON Semiconductor subsequently sent a letter to Batinovich on January 29, 2010,

13 stating that the wire transfer was erroneously sent to I2A, requesting that I2A return the 14 funds to ON Semiconductor, and providing I2A with instructions on how to send a return 15 wire transfer. Compl. ¶ 12; Answer ¶ 12. In response, Batinovich sent an e-mail to ON 16 Semiconductor noting "that he was not previously aware of the issue because he was out of 17 the country and I2A's accounting and finance service is outsourced." Answer ¶ 13. He also 18 "agreed that I2A did not `have [a] right to something that is not rightfully ours' and that I2A 19 `will do what is right.'" Id. Batinovich's e-mail "did not discuss what portion of the wire 20 transfer was in excess of the amount owed" and "concluded by noting `I will do my best 21 remotely, however and in any case when I return back to US.'" Id. Batinovich further 22 informed ON Semiconductor "that while he was out of the country only a portion of the 23 overpayment could be sent each month, and that the amount owed (whatever that might be) 24 would be returned `+ interest.'" Id. ¶ 15. 25 The complaint alleges the following as to ON Semiconductor's conversion claim: that

26 ON Semiconductor "owns the property wrongfully transferred to I2A and Mr. Batinovich 27 that is at issue in this complaint"; that Defendants "wrongfully acquired" ON 28 Semiconductor's property and "intentionally refused to return" such property after ON 2

1 Semiconductor demanded its return; and that ON Semiconductor "suffered damage, and will 2 continue to suffer great and irreparable harm and damage" as a result of these alleged acts. 3 Compl. ¶¶ 17-19. Defendants "admit that a portion of the funds transferred by Plaintiff to 4 I2A were in excess of the amount owed by Plaintiff to I2A and that Plaintiff has certain legal 5 rights relating to that excess," but they "deny that Plaintiff is entitled to reversal of the action 6 that it itself took on the terms at the time of its choosing, without regard to I2A's needs and 7 abilities." Answer ¶ 17. In addition: 8 9 10 Defendants deny that Mr. Batinovich acquired (wrongfully or not) any property of Plaintiff's. Defendants deny that I2A "wrongfully acquired" any such property, as it had no involvement in Plaintiff's unilateral action sending the money. Defendants deny that either I2A or Mr. Batinovich "intentionally refused to return [Plaintiff's] property," in light of limitations imposed on I2A's finances by Mr. Batinovich's absence from the country.

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For the Northern District of California

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13 Id. ¶ 18. Although "Defendants admit that Plaintiff has suffered damage," they contend that 14 such "damage was proximately caused by Plaintiff's own conduct in wiring money it now 15 wishes it had not." Id. ¶ 19. 16 In answering ON Semiconductor's claim for unjust enrichment, Defendants stated that

17 "[t]he funds that Plaintiff sent to I2A in excess of the amount that it owed I2A are being 18 returned with interest to Plaintiff, and Defendants therefore deny that I2A has been or will be 19 unjustly enriched by Plaintiff's wire transfer and its aftermath." Id. ¶ 26. Defendants further 20 "deny that I2A benefited [sic] from the wire transfer," id. ¶ 27, and "that Plaintiff suffered or 21 will suffer harm," id. ¶ 28. 22 23 LEGAL STANDARD 24 Granting a motion for judgment on the pleadings under Federal Rule of Civil

25 Procedure 12(c) is proper when "the moving party clearly establishes on the face of the 26 pleadings that no material issue of fact remains to be resolved and that it is entitled to 27 judgment as a matter of law." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 28 1542, 1550 (9th Cir. 1989). In analyzing a Rule 12(c) motion, "[a]ll allegations of fact by the 3

1 party opposing the motion are accepted as true, and are construed in the light most favorable 2 to that party. As a result, a plaintiff is not entitled to judgment on the pleadings when the 3 answer raises issues of fact that, if proved, would defeat recovery." Gen. Conference Corp. 4 of Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church, 887 F.2d 228, 5 230 (9th Cir. 1989) (citations omitted). Courts may also "consider facts that `are contained 6 in materials of which the court may take judicial notice.'" Heliotrope Gen., Inc. v. Ford 7 Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999) (quoting Barron v. Reich, 13 F.3d 1370, 8 1377 (9th Cir.1994)). 9 10 DISCUSSION

United States District Court

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For the Northern District of California

Conversion The parties agree that: Under California law, conversion is the wrongful exercise of dominion over another's personal property in denial of or inconsistent with his rights in the property. The elements of conversion are (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by wrongful act inconsistent with the property rights of the plaintiff; and (3) damages. In California, conversion is a strict liability tort: Questions of good faith, lack of knowledge, and motive are ordinarily immaterial.

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18 In re Emery, 317 F.3d 1064, 1069 (9th Cir. 2003) (citations omitted). "Possession of the 19 property coupled with refusal to return it is sufficient to support a defendant's liability for 20 conversion." Express Media Group, LLC v. Express Corp., No. C 06-3504 WHA, 2007 WL 21 1394163, at *4 (N.D. Cal. May 10, 2007) (citing Schroeder v. Auto Driveaway Co., 11 22 Cal.3d 908, 918 (1974)). 23 Like the defendants in a case decided last year in the Eastern District of California,

24 Defendants here mistakenly construe when the conversion occurred. Conversion did not 25 occur when ON Semiconductor transferred money it did not owe to I2A, thus rendering 26 irrelevant Defendants' arguments that they did nothing to induce ON Semiconductor to 27 transfer over $600,000 to I2A's account. Instead, "[t]he appropriate way of framing the tort 28 in this case is that the conversion occurred when Plaintiff approached . . . Defendants that 4

1 had control over the money deposited in the accounts, asked for the money to be returned, 2 and was refused." Mahajan v. Kumar, Case No. CV F 06-1728 AWI SMS, 2009 WL 3 3055225, at *5 (E.D. Cal. Sept. 21, 2009). 4 Defendants make technical arguments as to why their answer cannot be construed to

5 admit the necessary elements for conversion, but the undisputed factual allegations in the 6 pleadings establish Defendants' liability for conversion even when such allegations are 7 construed in a light most favorable to Defendants. Defendants admit in their answer that ON 8 Semiconductor transferred funds to I2A in excess of what ON Semiconductor owed I2A, and 9 that ON Semiconductor had legal rights as to the excess funds. Defendants further admit that 10 ON Semiconductor requested return of those funds, and that this request was denied.

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11 Although Defendants admit that ON Semiconductor has suffered damages but deny that their
For the Northern District of California

12 actions caused such damages, "[b]ecause the money has never been returned, the tort of 13 conversion is ongoing and Plaintiff has suffered damage." Mahajan, 2009 WL 3055225, at 14 *5. There simply is no issue of fact raised in the answer that, if true, would defeat ON 15 Semiconductor's recovery for conversion or establish that Defendants are entitled to return 16 the excess funds to ON Semiconductor on Defendants' own schedule. Accordingly, ON 17 Semiconductor is entitled to judgment on the pleadings as to liability on its conversion claim. 18 19 II. 20 Unjust Enrichment As with the conversion claim, the parties agree on the elements of a claim for unjust

21 enrichment: "receipt of a benefit and the unjust retention of the benefit at the expense of 22 another." Peterson v. Cellco P'ship, 164 Cal. App. 4th 1583, 1593 (2008) (citation and 23 internal alteration omitted). The parties further agree that there is no cause of action unless 24 "the benefits were conferred by mistake, fraud, coercion, or request; otherwise, though there 25 is enrichment, it is not unjust." Nibbi Bros., Inc. v. Home Fed. Sav. & Loan Ass'n, 205 Cal. 26 App. 3d 1415, 1422 (1988) (citation omitted). 27 In this case, Defendants argue that the pleadings fail to establish that the benefits were

28 conferred by mistake, and that their answer also denies that any enrichment was unjust. 5

1 However, although Defendants do not admit that ON Semiconductor transferred the excess 2 funds by mistake, they do not raise any issue of fact that would lead to any other conclusion; 3 they simply state that they "lack sufficient knowledge or information to form a belief as to 4 whether the person who made the transfer acted because of mistake. . . ." Answer ¶ 10. 5 Defendants do not dispute that ON Semiconductor transferred "substantially" more money to 6 I2A than was owed. Id. Similarly, although they "deny that I2A has been or will be unjustly 7 enriched by Plaintiff's wire transfer and its aftermath," id. ¶ 26, this is not a factual dispute 8 sufficient to defeat liability. Indeed, in the same paragraph, Defendants make clear that the 9 reason they do not believe they have been unjustly enriched is that "[t]he funds that Plaintiff 10 sent to I2A in excess of the amount that it owed I2A are being returned with interest to

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11 Plaintiff." Id. Defendants do not, however, cite any authority for the proposition that a party
For the Northern District of California

12 who receives funds by mistake from another party may decide when and on what terms to 13 return those funds. Nor can it be disputed that Defendants are retaining the benefit of using 14 the funds in question at the expense of ON Semiconductor. Consequently, the Court 15 GRANTS ON Semiconductor's motion for judgment on the pleadings as to liability on its 16 claim for unjust enrichment. 17 18 III. 19 Damages Although the Court finds judgment on the pleadings to be appropriate as to liability on

20 the above two claims, the Court agrees with Defendants that a final judgment cannot be 21 entered at this time because the pleadings fail to establish the specific amount that 22 Defendants must return to ON Semiconductor. First, the pleadings allege only that ON 23 Semiconductor owed "under $25,000" to I2A, Compl. ¶ 10; how much under remains a 24 question. Similarly, although the complaint alleges that ON Semiconductor transferred 25 "$613,649.46 to I2A's bank account," id., Defendants admit only that "Plaintiff sent a wire 26 transfer to I2A in an amount of approximately $600,000," Answer ¶ 10. Moreover, ON 27 Semiconductor admits in its moving papers that Defendants have already transferred back 28 $180,000 between February and June 2010. Mot. at 1 n.1. These amounts appear nowhere 6

1 in the pleadings. Accordingly, while the Court finds it proper to enter judgment on the 2 pleadings as to liability, further proceedings must determine the amount of damages to be 3 awarded. 4 5 IV. 6 Whether Judgment Should Be Entered Against Defendant Batinovich Finally, Defendants argue that judgment cannot be entered against Defendant

7 Batinovich because "there is not even an allegation ­ let alone an admission ­ that any of the 8 funds at issue were ever received by Batinovich." Opp'n at 1 n.1. Indeed, while the 9 complaint alleges that both "I2A and Mr. Batinovich wrongfully acquired Semiconductor 10 Components' property," Compl. ¶ 18, Defendants' answer explicitly denies "that

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11 Mr. Batinovich acquired (wrongfully or not) any property of Plaintiff's," Answer ¶ 18.
For the Northern District of California

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This disputed fact does not, however, save Batinovich from having judgment entered

13 against him. Under California law, a corporate officer can be held personally liable for the 14 corporation's misconduct if he or she "authorizes, directs, or in some meaningful sense 15 actively participates in the wrongful conduct." Frances T. v. Village Green Owners Ass'n, 16 42 Cal.3d 490, 504 (1986) (internal quotation and citation omitted). As is clear from 17 Defendants' answer, Batinovich exerts control over the funds in I2A's accounts and has 18 actively participated in the withholding of the return of all of the disputed funds to ON 19 Semiconductor. For example, the answer admits that Batinovich told ON Semiconductor that 20 he "will do what is right" and "the amount owed (whatever that might be) would be returned 21 `+ interest.'" Answer ¶¶ 13, 15. Defendants further state in the answer that Batinovich's 22 absence from the country places limitations on I2A's finances. Id. ¶¶ 15, 18. The Court is 23 therefore satisfied by the undisputed pleadings that judgment against Batinovich is 24 warranted. 25 26 CONCLUSION 27 For the reasons discussed above, ON Semiconductor's motion for judgment on the

28 pleadings is GRANTED IN PART and DENIED IN PART. Judgment shall be entered as to 7

1 liability on the conversion and unjust enrichment claims against both Defendants I2A and 2 Batinovich, with the amount of damages to be determined by further proceedings ­ 3 including, if necessary, the scheduled January 2011 trial. No judgment shall be entered until 4 after the amount of damages has been determined. If the parties believe that a further case 5 management conference would be helpful to determine how to resolve the amount of 6 damages, they shall contact the Court's courtroom deputy to request a case management 7 conference date. 8 Pursuant to ON Semiconductor's request, the claim for intentional interference with

9 contractual relationships shall be dismissed. 10

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11 IT IS SO ORDERED.
For the Northern District of California

12 13 Dated: 07/30/10 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 THELTON E. HENDERSON, JUDGE UNITED STATES DISTRICT COURT