Results ByIQ, LLC v. Fanning et al

Filing 82

ORDER by Judge Samuel Conti denying 60 Motion for Summary Judgment; denying 78 Motion to Continue (sclc1, COURT STAFF) (Filed on 5/7/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

United States District Court

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RESULTS BYIQ LLC,

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Plaintiff,

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v.

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NETCAPITAL.COM LLC, NETWIRE INC.,
NETMOVIES INC., and DOES 1-20,
inclusive,
Defendants.

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Case No. C 11-0550-SC
ORDER DENYING DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
AND MOTION TO CONTINUE
TRIAL

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I.

INTRODUCTION
Plaintiff Results ByIQ LLC ("Results ByIQ") brings this action

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against Defendants NetCapital.com LLC, Netwire Inc., and Netmovies

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Inc. (collectively "Defendants") for breach of contract and fraud

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in the inducement, among other things.

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The crux of Results ByIQ's Amended Complaint is that Results ByIQ

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performed work for Defendants pursuant to a written agreement and

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was never compensated for that work.

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summary judgment on the grounds that (1) Results ByIQ lacks

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standing to bring this action and (2) Results ByIQ's claims are

ECF No. 4 ("Am. Compl.").

Defendants now move for

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time-barred.

ECF No. 61 ("MSJ").

The Motion is fully briefed, ECF

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Nos. 72 ("Opp'n"), 76 ("Reply"), and appropriate for determination

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without oral argument per Civil Local Rule 7-1(b).

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Court is Defendants' motion to continue the trial in this matter

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from June 10, 2013 to sometime in July 2013.

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Continue ("MTC")).

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are DENIED.

Also before the

ECF No. 78 (Motion to

For the reasons set forth below, both motions

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II.

Plaintiff Results ByIQ alleges that non-party ByIQ LLC

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United States District Court

For the Northern District of California

BACKGROUND

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("ByIQ") entered into a Consulting Agreement with Defendants

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NetCapital.com LLC, Netwire Inc., and NetMovies Inc. in or around

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October 25, 2006.

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agreement on behalf of ByIQ, and John Fanning signed on behalf of

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NetCapital.com.

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ByIQ allegedly performed work pursuant to the Consulting Agreement.

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Id. ¶¶ 21-24.

Am. Compl. ¶ 19.1

Id. Ex. B.

Paul Charlton signed the

Between October 2006 and early 2008,

On November 30, 2006, ByIQ submitted an invoice to

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"NetCapital, LLC" for $10,500, which was due on that same date.

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Id. Ex. D.

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chief operating officer allegedly acknowledged and affirmed

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Defendants' outstanding debt for services provided by ByIQ and

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requested that ByIQ perform additional services.

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In December 2010, Mr. Charlton emailed Mr. Fanning to request that

In November 2007 and December 2008, Mr. Fanning and his

Id. ¶¶ 22, 28.

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Though this is a motion for summary judgment, the parties briefed
it as if it were a motion for judgment on the pleadings. For
example, Defendants' statement of facts, ECF No. 62, primarily
references Results ByIQ's original complaint and the documents
attached thereto.

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Defendants pay their outstanding bills.

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responded: "This is a netmovies bill.

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be handled."

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emailed Mr. Fanning to demand payment.

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alleges that Mr. Fanning did not respond.

Id. Ex. I.

Id. Ex. H.

Mr. Fanning

I am not sure how this would

In January 2011, Mr. Charlton again
Id. Ex. K.

Results ByIQ

Id. ¶¶ 35-36.

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In a declaration filed with the Court, Mr. Charlton claims

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that he and several other members of ByIQ elected to cash out their

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interests in ByIQ and wind down the business in 2009 or 2010.

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No. 74 ("Charlton Decl.") ¶ 5.

ECF

Mr. Charlton also claims that he

United States District Court

For the Northern District of California

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formed Plaintiff Results ByIQ in or around 2010 and that Results

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ByIQ became the successor-in-interest to ByIQ and the assignee of

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ByIQ's claims and causes of action.

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purportedly memorialized in a written agreement, but Mr. Charlton

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has yet to locate a copy of that agreement.

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Id. ¶ 6.

This transaction was

Charlton Decl. ¶ 6.

Results ByIQ filed this action on February 7, 2011 and amended

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its Complaint three days later.

The Amended Complaint asserts

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causes of action for (1) violation of the Racketeer and Corrupt

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Organizations Act, 18 U.S.C. § 1964; (2) fraud in the inducement;

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(3) fraudulent conveyance; (4) breach of contract; (5) account

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stated; and (6) open book account.

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III. LEGAL STANDARD

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Entry of summary judgment is proper "if the movant shows that

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there is no genuine dispute as to any material fact and the movant

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is entitled to judgment as a matter of law."

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56(a).

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require a directed verdict for the moving party.

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Liberty Lobby, Inc., 477 U.S. 242, 251 (1986).

Fed. R. Civ. P.

Summary judgment should be granted if the evidence would

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Anderson v.
Thus, "Rule 56[]

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mandates the entry of summary judgment . . . against a party who

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fails to make a showing sufficient to establish the existence of an

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element essential to that party's case, and on which that party

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will bear the burden of proof at trial."

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477 U.S. 317, 322 (1986).

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believed, and all justifiable inferences are to be drawn in his

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favor."

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of a scintilla of evidence in support of the plaintiff's position

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will be insufficient; there must be evidence on which the jury

United States District Court

For the Northern District of California

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Celotex Corp. v. Catrett,

"The evidence of the nonmovant is to be

Anderson, 477 U.S. at 255.

However, "[t]he mere existence

could reasonably find for the plaintiff."

Id. at 252.

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IV.

DISCUSSION
Defendants move to dismiss on standing and statute of

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limitations grounds.2

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below.

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continue the trial.

The Court addresses each of these arguments

Additionally, the Court addresses Defendants' motion to

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A.

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Defendants argue that Results ByIQ lacks standing because it

Standing

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is not the real party in interest to this suit.

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Specifically, Defendants contend that all of Results ByIQ's claims

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are predicated on injuries to ByIQ.

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that it has standing as successor-in-interest to ByIQ and assignee

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of ByIQ's claims and causes of action.

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has filed a declaration with the Court asserting that Results ByIQ

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Id.

MSJ at 2-3.

Results ByIQ responds

Opp'n at 4.

Mr. Charlton

Defendants also move to dismiss Results ByIQ's wire fraud claim
on the ground that 18 U.S.C. § 1343 does not grant a private right
of action. The fundamental flaw in this argument is that Results
ByIQ is no longer asserting a claim for wire fraud. The claim was
asserted in Results ByIQ's original complaint, but abandoned when
the complaint was amended. Compare ECF No. 1 ("Compl.") with Am.
Compl.
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is ByIQ's successor-in-interest, but Results ByIQ has yet to

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produce the legal document memorializing this arrangement.

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Defendants assert that Results ByIQ's inability to produce this

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document warrants summary judgment since it amounts to a complete

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failure of proof concerning an essential element of Results ByIQ's

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case.

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Reply at 4.
In the absence of a legal document memorializing the

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assignment of ByIQ's rights, the Court is left with Mr. Fanning's

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representations concerning the existence and terms of the

United States District Court

For the Northern District of California

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assignment.

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without making a credibility determination, which would be

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inappropriate at this state of the litigation.

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provides that the Court may deny a motion for judgment if a

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nonmovant shows, "for specified reasons, that it cannot present

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facts essential to justify its opposition."

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of Results ByIQ's counsel indicates that Defendants first raised

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the issue of Results ByIQ's standing in the instant motion and that

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no discovery has been taken on this matter.

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("Battista Decl.") ¶¶ 4-5.

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The Court cannot dismiss Mr. Fanning's declaration

Further, Rule 56(d)

Here, the declaration

See ECF No. 73

Accordingly, the Court declines to grant summary judgment on
standing grounds.

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B.

Statute of Limitations

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Under California law, the statute of limitations for an

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action upon any contract and an action for relief on the ground of

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fraud are four years and three years, respectively.

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Proc. Code § 337, 338(d).

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contract claims are time-barred because Results ByIQ's first

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invoice was due on November 30, 2006 and this action was not filed

Cal. Civ.

Defendants argue that Results ByIQ's

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until February 7, 2011.

MSJ at 4.

Defendants also contend that

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Results ByIQ's claim for fraud in the inducement is time-barred

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because it accrued on October 25, 2006, the date on which ByIQ and

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Defendants entered into the Consulting Agreement.3

Id. at 4-5.

With respect to the contract claims, Results ByIQ responds

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that triable issues of fact exist as to when the November 30, 2006

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invoice was received by Defendants and when payment was expected.

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Opp'n at 5.

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U.S. Mail on November 30, 2006, meaning that Defendants would have

Results ByIQ points out that the invoice was sent by

United States District Court

For the Northern District of California

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received it sometime after the November 30, 2006 due date.

Id.

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(citing Battista Decl. Ex. 2 at 15-16).

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argues that no reasonable business person expects that an invoice

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will be paid the instant that it is received.

Results ByIQ further

Id.

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Under California Code of Civil Procedure section 337, the

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statute of limitations for an action to recover on an "account

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stated" based on an account of more than one item does not begin to

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run until the date of the last item.

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limitations for a "book account" begins as of the last entry of the

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book account.4

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971-72 (Cal. Ct. App. 1991).

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indefinitely for the purposes of calculating the statute of

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limitations.

Likewise, the statute of

R.N.C. Inc. v. Tsegeletos, 231 Cal. App. 3d 967,

Id. at 972.

A book account does not remain open

"[T]he 'open' or 'closed' nature of a

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Although Defendants suggest that all of Results ByIQ's fraud
claims are time-barred, they do not directly address Results ByIQ's
claim for fraudulent conveyance. Accordingly, the Court declines
to find that the fraudulent conveyance claim is time-barred.
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A book account is defined as "a detailed statement which
constitutes the principal record of one or more transactions
between a debtor and a creditor arising out of a contract or some
fiduciary relation . . . [that] is kept in a reasonably permanent
form and manner." Cal. Code Civ. Proc. § 337a.
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book account turns not on the account balance per se, but on the

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parties' expectations of possible future transactions between them

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[on that account]."

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3d 771, 778 (Cal. Ct. App. 1988).

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the parties intend that the individual items of the account shall

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not be considered independently, but as a connected series of

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transactions, . . . and where . . . there is but one single and

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indivisible liability."

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Accounting, § 4 at 373-74).

Id. (quoting Gross v. Recabaren, 206 Cal. App.
"An open account results where

Id. (quoting 1 Am. Jur. 2d Accounts and

United States District Court

For the Northern District of California

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In this case, the Court cannot find that Results ByIQ's

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contract claims are time-barred based on the evidence before it.

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As an initial matter, Defendants have failed to address whether

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their account with ByIQ remained open or closed after November 30,

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2006, and thus have failed to carry their burden.

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facts before the Court suggest that the account remained open well

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after November 30, 2006.

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Complaint, which Defendants do not appear to dispute, ByIQ

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continued to render services under the Consulting Agreement through

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sometime in early 2008.

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December 2008, Defendants and ByIQ had conversations about ByIQ

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performing additional work for Defendants.

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Further, the

According to facts alleged in the

Am. Compl. ¶¶ 21-24.

Further, as late as

See id. ¶ 29.

As to the fraud in the inducement claim, Results ByIQ argues

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that it did not discover the fraud until at least December 2010.

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Results ByIQ points out that it has alleged that Defendants

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acknowledged their debt in November 2007 and December 2008 and

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requested additional service be performed under the Consulting

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Agreement.

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indication that Defendants had no intention of paying their bills

Opp'n at 7.

Results ByIQ further argues that the first

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came on December 7, 2010, when Mr. Fanning responded to Mr.

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Charlton's demand for payment by saying: "This is a netmovies bill.

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I am not sure how this would be handled."

Id.

Under California law, the discovery rule "postpones accrual of

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a cause of action until the plaintiff discovers, or has reason to

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discover, the cause of action, until, that is, he at least

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suspects, or has reason to suspect, a factual basis for its

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elements."

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1999).

Norgart v. Upjohn Co., 21 Cal. 4th 383, 389 (Cal.

A plaintiff has reason to discover when he has "notice or

United States District Court

For the Northern District of California

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information of circumstances to put a reasonable person on

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inquiry."

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argue that, based on the facts alleged in the Amended Complaint,

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Results ByIQ should have discovered the alleged fraud by December

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2007.

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appear to be relying on Results ByIQ's allegation that it had

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provided $41,550 in services by December 2007.

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Id. at 398 (internal quotations omitted).

Reply at 9.

Defendants

It is not altogether clear why, but Defendants

The Court finds that the undisputed evidence does not support

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summary judgment on Results ByIQ's fraud in the inducement claim.

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In fact, there is little evidence before the Court other than

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Results ByIQ's own pleading.

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repeatedly demanded payment from Defendants from November 2006

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through January 2011 and that, during this period, Defendants never

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denied their payment obligations or otherwise indicated that they

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would refuse to pay.

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these facts.

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person would have discovered that Defendants had no intention of

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fulfilling their alleged obligations is matter of fact best left to

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the jury.

That pleading suggests that ByIQ

Defendants do not appear to dispute any of

In this case, determining exactly when a reasonable

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For these reasons, and the reasons set forth in Section IV.B,

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Defendants' motion for summary judgment is DENIED.

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C.

Motion to Continue the Trial

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The trial in this matter is currently set for June 10, 2013.

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On May 1, 2013, Defendants moved to continue the trial to sometime

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in July.

Results ByIQ has opposed the motion.

ECF No. 80.

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Defendants argue that a continuance is warranted because

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justice requires that they be given an opportunity to conduct

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discovery on the assignment agreement discussed in Section IV.A,
MTC at 5-6.

However, it is unclear why Defendants have

United States District Court

For the Northern District of California

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supra.

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waited until now to conduct discovery on this purportedly central

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issue.

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to be deposed by Results ByIQ until June because his home city of

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Boston is on "lockdown."

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recent tragedy in Boston, the Court takes judicial notice of the

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fact that Boston has not been on lockdown for some time.

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event, Results ByIQ has indicated that it is prepared to move

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forward with the trial as scheduled.

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that their new counsel, Maria Crimi Speth, is unavailable due to

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scheduling conflicts.

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Speth is not counsel of record in this action, is not admitted to

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practice law in California, and has yet to file an application for

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pro hac vice admission.

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Defendants' current counsel is unavailable for trial or intends to

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withdraw as counsel of record.5

Defendants also argue that Mr. Fanning will be unavailable

Id. at 3-4.

MTC at 3.

While sensitive to the

In any

Finally, Defendants contend

As Results ByIQ points out, Ms.

Further, there is no indication that

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Defendants also contend that there should be more time between
the hearing on their motion for summary judgment and the due date
for the parties' pre-trial briefs. This argument is also
unpersuasive. Defendants have been aware of the trial date (and
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In sum, the motion to continue the trial is DENIED.

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This case

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has been pending before the Court since February 7, 2011, and the

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current trial date has been set since August 31, 2012.

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The Court is not inclined to grant a continuance at this late date.

ECF No. 53.

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V.

CONCLUSION

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For the foregoing reasons, Defendants NetCapital.Com LLC,

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Netwire Inc., and Netmovies Inc.'s motion for summary judgment is

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DENIED.

Defendants' motion to continue the trial is also DENIED.

United States District Court

For the Northern District of California

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IT IS SO ORDERED.

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Dated:

May 7, 2013
UNITED STATES DISTRICT JUDGE

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the possibility of required pre-trial filings) for several months
and, in spite of this, chose to file their motion for summary
judgment after the last day for motions to be filed in this matter.
See ECF No. 64.
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