Order Submitted Matter

Cal. Super. - 6th Dist.May 1, 2019

Order Issued on Submitted Matter SUPERIOR COURT, STATE OF CALIFORNIA f5, a - EL, COUNTY OF SANTA CLARA i, DEPARTMENT 20 8 / N0"! G 2021 161 North First Street, San Jose, CA 95113 408.382.2320 ' 408.882.2296 (fax) smanoukian@scscourt.org Cbes‘k 0 the Courtm Izttp;//www.scscourt.0rg Biwm Mzfifiufiow .,__ ‘ .w, _. 7.. _ . _ ..., , _ . . . v” v 'V w CASE NO.: 19CV34'7220 Akram Benmbaxek v. Quanergy Systems, Inc, et a1. DATE: 2 November 2021 TIME: 9:00 am LINE NUMBER: 3 This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 20 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 20 at 408.808.6856 and the opposing party no later than 4:00 PM on 01 November 2021. Please specify the issue to be contested when calling the Court and Counsel. ---oooOooo--- Order on Defendant Quanergy Systems, lncorporated’s Motion for Summary Judgment or, in the Alternative, Summary Adjudication.‘ l. Statement of Facts. Defendant Quanergy Systems, Inc. (“Quanergy”) hired plaintiff Akram Benmbarek (“Benmbarek”) in 0r around January 2016. (First Amended Complaint (“FAG"), 111 1 .) To incentivize plaintiff Benmbarek's acceptance of an offer of employment, defendant Quanergy and/or Doe defendants made promises about the value of the stock options granted to employees. (FAC, 1114.) Defendant Quanergy and/or Doe defendants promised that if plaintiff Benmbarek accepted their offer 0f employment, the exercise or “strike” pn'ce of his incentive stock options would be $4.00/5hare and represented that the value would be significantly higher than that in six to eight months. (FAC, 1115.) In reliance, plaintiff Benmbarek accepted defendant Quanergy‘s offer of employment. (FAC, H16.) In or after May 2017, plaintiff Benmbarek received a grant letter (backdated to June 2016) which granted him the option to purchase 12,500 shares, but discovered that the strike price for the shares was $29.70 and not the $4.00 price promised by defendants. (FAC, W18 - 19.) Defendants Quanergy and Louay Eldada (“Eideda”), Quanergy's CEOlco-founder, failed to disclose in June 201 6 that the strike price was no longer what plaintiff Benmbarek understood it t0 be. (FAC, W20 and 22.) Defendant Eldada held a conference call 0n 3O May 2017 to address plaintiff Benmbarek's and others' concerns, but did not offer any solution. (FAC, 111121 - 22.) On 1 May 20192, plaintiff Benmbarek filed a complaint against defendant Quanergy asserting causes 0f action for: (1) Promissory Estoppel; 1 As the notice of the motion indicated that it was being brought only by Quanergy Systems Inc., that is how this Court treated the motibn. - 2 This Department intends to comply with the time requirements of the Trial Court Delay Reduction Act (Government Code, §§ 68600-68620). The California Rules of Court state that the goal of each trial court should be to manage limited and unlimited civil cases from filing so that 100 percent are disposed of within 24 months. (Ca. St. Civil Rules of Court, Rule 3.714(b)(1)(C) and (b)(2)(C). 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 1 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. 2 3 4 5) Violation of California Business and Professions Code §17200 et seq.; and ) Breach of Contract; ) Breach of the Implied Covenant of Good Faith and Fair Dealing; ) ( ( ( Failure t0 Pay Wages in Violation of California Labor Code §200 et seq.; ( On 25 September 201 9. defendant Quanergy filed an answer to plaintiff Benmbarek's complaint. On 19 March 2021, the court issued an order granting plaintiff Benmbarek leave t0 file a FAC. On 23 April 2021, piaintiff filed the operative FAC against defendant Quanergy and Eldada.3 The FAC continues to assert the same five causes of action asserted against defendant Quanergy in the original complaint and adds a sixth cause 0f action entitled, “Fraudulent Concealment," directed against all defendants. On 12 May 2021, defendant Quanergy filed Its answer to plaintiff Benmbarek's FAC. On 9 July 2021, defendant Quanergy filed the motion now before the court. a motion forsummaryjudgment/ adjudication of plaintiff Benmbarek's claims asserted in the FAC. ||. Analysis. A. Defendant Quanergy’s motion for summary judgment is DENIED. Defendant Quanergy’s alternative motion for summary adjudication is GRANTED, in part, and DENIED, in part. 1. Defendant Quanergy's alternative motion for summary adjudication of the first cause of action [promissory estoppel] in plaintiff Benmbarek’s FAC is GRANTED. “The required elements for promissory estoppel in California are (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) his re1iance must be both reasonable and foreseeable; and (4) the party asserting the estoppe] must be injured by his reliance." (Laks v. CoastFed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 890; see also US Ecology, Inc. v. State of Cah‘fomia (2005) 129 Cal.App.4th 887, 901 (US Ecology).).) “The doctrine of promissory estoppel is set forth in section 90 of the Restatement of Contracts. It provides: ‘A promise which the promisorshould reasonably expectto induce action orforbearance of a definite and substantial character on the part of the promise and which does induce such action orforbearance is binding if injustice can be avoided only by enforcement of the promise.” (Signal HI'HAw'ation Co. v. Stroppe (1979) 96 Cal.App.3d 627, 637 (Signal Him.) “Catifornia recognizes the doctrine. 'Underthis doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Signal Hill, supra, 96 Cal.App.3d at p. 637.) In essence, "the estoppel is a substitute for consideration." (1 Witkin, Summary of California Law (9th ed. 1 987) Contracts, §248, p. 250.) “Cases have characterized promissory estoppel cfaims as being basically the same as contract actions, but only missing the consideration element." (US Ecology, supra, 129 Cal.App.4"1 at p. 903.) “[P]romissory estoppel claims are aimed solely at allowing recovery in equity where a contractual ciaim fails for a Iackof consideration, and in all other respects the claim is akin to one for breach of contract." (Id. at p. 904; see also Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cami“ 305, 310u“Promissory estoppel is 'a doctn‘ne which employs equitable pn'nciples to satisfy the requirement that consideration must be given in exchange forthe promise sought to be enforced.‘ [CItatIon.]") 3 The Court will note that the caption 0f the FAC does not identify Eldada as a defendant. 1t Is unciear whether p1aintiff Benmbarek has properly served defendant Eldada. As 0f 22 October 2021. defendant Eldada has not yet appeared in this action. At the hearing on this motion, Mr. Pasternak stated that this party has not yet been served. Mr. Arenada responded that based on that representation. the sixth cause of action should be dismissed. This Court will leave that issue t0 another day. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 2 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. “The California Supreme Court explained in [Raedeke v. Gibralter Sav. & Loan Assn. (1974) 10 CaI.3d 665] that the purpose of this doctrine is to make a promise binding, under certain circumstances without consideration in the usual sense 0f something bargained for and given in exchange. If the promisee's performance was requested at the time the promisor made his promise and that performance was bargained for, the doctrine is inapplicabfe." (Signal Hill, supra, 96 Cal.App.3d at p. 637 (italics original); see also Youngman v. Nevada Irrigation District (1 969) 70 Cal.2d 240, 249.) “Conceptually, promissory estoppel is distinct from contract in that the promisee‘s justifiable and detrimental retiance on the promise is regarded as a substitute for the consideration required as an element of an enforceable contract.” (Signal Hm, supra, 96 Cal.App.3d at p. 640.) Among othergrounds, defendant Quanergy move forsummary adjudication of plaintiff Benmbarek's promissory estoppel cause of action on the ground that the doctrine 0f promissory estoppel is inapplicable here where valid consideration existed. By plaintiff‘s own allegations, plaintiff Benmbarek's performance (acceptance of employmentlemployment) was requested at the time defendant Quanergy made the alleged promise to grant 12,500 stock options at the strike price of $4.00 per share. (See FAC, 1114-“T0 incentivize Plaintiff to accept the offer of employment, Defendant QUANERGY SYSTEMS made promises about the value of the stock options granted to employees; 1115- “Defendant QUANERGY SYSTEMS promised that if Plaintiff accepted their offer 0f employment, the exercise or 'stn'ke' pn'ce of his incentive stock options would be $4.00/share; fl16-“In reliance upon these representations, Plaintiff accepted Defendant's offer 0f employment in or around January 2016; 1124H“Defendant made oral andfor written representations. that if Plaintiff accepted its offer of employment, Plaintiff would be granted 12,500 stock options at the stn‘ke pn'ce of $4.00/share;” fl25-“the clear and unambiguous promise 0f 12.500 stock options at the strike price 0f $4.00/share made by Defendant reasonably induced action orforbearance on the pan of Plaintiff as referenced above") ' Even in opposition, pIaintiff Benmbarek admits there was valid consideration. (See page 9, Fines 18 - 19 of the Memorandum of Points and Authorities in Support of Plaintiff‘s Opposition, etc.-“it cannot reasonably be disputed that the stock options were intended as 'consideration‘ in exchange for Mr. Benmbarek's labors.") As plaintiff Benmbarek openly admits, he Es unclear 0f the argument being advanced. The argument being advanced is that promissory estoppel does not apply where the alleged promise is supported by vatid considerationfl An example employed in the Restatement Second 0f Contracts, section 90 is as follows: A, knowing that B is going to college, promises B that A will give him $ 5,000 0n completion of his course. B goes to college, and borrows and spends more than $ 5,000 for college expenses. When he has neady completed his course, A notifies him of an Intention to revoke the promise. A's promise is binding and B is entitled to payment on completion of the course without regard to whether his performance was "bargained for" under§ 71. ln this example. B's reliance (attendance atcollege, borrowing/spending $5,000) serves as the substitute for consideration. thereby allowing B to seek enforcement of A‘s promise. ‘ Here, plaintiff Benmbarek's performance was requested, bargained for, and given, and thus valid consideration was exchanged and the doctn'ne of promissory estoppel I's not applicable. Instead. general pn'nciples of contract apply. In opposition, plaintiff Benmbarek posits the following argument: Defendant's argument is no different than arguing that an employee who was promised a salary of $100,000.00 and a bonus of 50% of his year‘s salary but was only paid the salary - $100,000.00 instead 0f $150,000.00 - could not have a claim for promissory estoppel because his employment was “supported by consideration." 4 Civil Code, § 1605 defines “good consideration" as follows: "Any benefit conferred, 0r agreed t0 be conferred, upon lhe promisor, by any other person, to which the promisor is not lawfully entitled, 0r any prejudice suffered, or agreed lo be suffered, by such person. other than such as he is at the time of consent lawfully bound to suffer. a5 an inducement to the promisor, is a good consideration for a promise.” 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 3 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. Using plaintiff Benmbarek‘s own example to explain, the employee Is not left without a remedy. Rather, the appropriate theory forthe employee t0 pursue I's breach of contract. Plaintiff Benmbarek also relies on West v. Hunt Foods, Inc. (1 951) 101 Cal.App.2d 597, 605 (West), but West is distinguishable in that the West court did not consider or address the issue raised here, i.e., whether promissory estoppel applies where bargained for consideration exists. [|nterestingly, the Westcoun, in reversing a grant 0f nonsuit, found the evidence “sufficient t0 establish a prima facie case based on the theory of an express oral agreementto pay plaintiff a fixed pension if he would remain with the company as treasurer." (West, supra, 101 CaE.App.2d at p. 604; emphasis added.) The Westcourt‘s suggestion that the same evidence could be construed, not as a promise, but as a misrepresentation and, therefore, “might well raise a promissory estoppel“ appears to be dicta. (Id. at p. 605.]) Accordingly, defendant Quanergy‘s alternative motion for summary adjudication 0f the first cause 0f action [promissory estoppel] in plaintiff Benmbarek‘s FAC is GRANTED. [In light of this ruling, the coun declines to address defendant Quanergy‘s other arguments in support of motion for summary adjudication of the first cause of action] 2. Defendant Quanergy’s alternative motion for summary adjudication of the second cause of action [breach of contract] in plaintiff Benmbarek’s FAC is GRANTED. Plaintiff Benmbarek's second cause of action alleges, in relevant part, plaintiff Benmbarek “had a contract with Defendant and/or Does 2-20 that was oral, written, andlor implied in fact. The agreement was that Plaintiff would be granted stock options, with a strike price tied to Company valuation as of the date of his hire. The grant documents he received reflected a much later valuation and therefore a much higher strike price, thereby providing him with far less valuable options." (FAC, 1B1; see also Tl20-“the strike price utilized was based on the Company‘s valuation as of June 28, 2016 rather than the strike price which existed at the time 0f [pfaintiff Benmbarek's] hire.”) “T0 prevail on a cause of action for breach of contract, the plaintiff must prove (1 ) the contract, (2) the pIainflff's performance 0f the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff." (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186; see also CACI, N0. 303.) Defendant Quanergy moves for summary adjudication of plaintiff Benmbarek's second cause of action for breach of contract by asserting that plaintiff Benmbarek did not have a contract which set a strike price tied t0 the Company valuation as of the date 0f plaintiff Benmbarek's hire in January 2016. Instead, defendant Quanergy profiers evidence that the terms of the agreement (contained in the offer letter from Quanergy to plaintiff Benmbarek) stated “plaintiff Benmbarek would 'receive an option to purchase 12,500 shares of Common Stock of the Company (the ‘Shares‘), at a pershare price determined by the Board to be the fair market value of the Common Stock at the time ofgrant.”5 (Emphasis added.) Between 1 November 2015 and 27 June 2016, Quanergy made no stock option grants while Series B financing discussions were occurring as it would have been difficult to determine a fair matket value of stock options until the financing was completedfi The Series B financing closed 0n 10 June 2016 raising a $90 million investment and increasing Quanergy‘s value t0 over $1 billion] On 28 June 201 6, Quanergy‘s Board 0f Directors held a meeting where it approved the common stock price per share of the Company at $29143 At that meeting, Quanergy‘s Board of Directors granted Benmbarek and others a stock option to purchase cedain shares of common stock of the 5 See Separate Statement of Undisputed Material Facts in Support 0f Defendant [Quanergy‘s] Motion for Summary Judgment, etc. (“Quanergy UMF”), Fact No. 3. 5 See Quanergy UMF, Fact Nos. 6 - 7. 7 See Quanergy UMF, Fact Nos. 8 - 10. B See Quanergy UMF, Fact N0. 11. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 4 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. Company? The cover sheet to Benmbarek‘s Incentive Stock Option Agreement states a grant date of 28 June 2016 and an exercise pn‘ce per share of $2974.10 ln opposition, plaintiff Benmbarek ignores his own allegation (FAC. 1131) and attempts t0 recast his breach of contract claim. (See page 10, lines 10 - 13 of the Memorandum of Points and Authorities in Support of Plaintiff's Opposition, etc.-“Mr. Benmbarek's claim is not that he was promised options tied to the fair market value at the time of his hire, but rather that Mr. Eldada made a specific promise that he would receive options “locked in' at the $4.00 strike pn'ce." See also page 5, lines 24 - 27 of the Memorandum of Points and Authorities in Support 0f Plaintiff‘s Opposition, etc.) Plaintiff Benmbarek's breach 0f contract cause of action does incorporate all earlier allegations (FAC, 1129) and plaintiff Benmbarek focuses on his allegation at paragraph 15 0f the FAC where he alleges. "Defendant QUANERGY SYSTEMS andlor Does 2-20 promised that if Plaintiff accepted the offer of employment, the exercise 0r 'stn‘ke‘ price of his incentive stock options would be $4.00/share.“ Plaintiff Benmbarek does not dispute“ the offer letter is as stated above, but contends the language used in the offer letter (“at a per share price determined by the Board to be the fair market value of the Common Stock at the time of grant") should be interpreted to mean specifically “at a per share price of $4.00“ as Eldada promised. (See page 1 0, lines 15 - 18 of the Memorandum of Points and Authon‘ties in Support of Pfaintiffs Opposition, etc.-plaintifi Benmbarek contends “the meaning 0f the written agreement itseIf-Mr. Benmbarek's offer letter-is that he was to be granted stock options at a $4.00 stn'ke price”) On its face, the written language of the agreement is quite different from the meaning that plaintiff Benmbarek ascribes to it. Nevenheless, it would be improper for this Court t0 automaticany reject plaintiff Benmbarek's interpretation based solely on this Coufi's independent interpretation. As this Court stated at the hearing on this motion, parol evidence can be used unless it is used to vary or alter the terms 0f the contract. To this Court, it seems that plaintiff is attempting to d0 just that. “Where the meaning of the words used in a contract is disputed, the tn‘al court must provisionaHy receive any proffered extrinsic evidence which is relevant to show whether the contract is reasonably susceptible of a panicular meaning. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 39-40 [69 Cal. Rptr. 561, 442 P.2d 641]; Pacific Gas & Electric Co. v. Zuckerman (1987) 189 Cal.App.3d 1113, 1140~1 141 [234 Ca]. Rptr. 630].) Indeed, it is reversible error for a tn'al court t0 refuse to consider such extrinsic evidence on the basis 0f the triai court's own conclusion that the language of the contract appears to be clear and unambiguous on its face. Even if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language 0f the contract is yet reasonably susceptible. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. 00., supra, 69 Cal.2d at p. 40 & fn. 8; Pacific Gas & Electric Co. v. Zuckerman, supra, 189 Cal. App. 3d at pp. 1140-1 141 .)" [Footnote omitted] The interpretation of a contract involves “a two-step process: 'First the court provisionally receives (without actually admitting) all credible evidence concerning the parties' intentions t0 determine “ambiguity," i.e., whetherthe language is “reasonably susceptible” to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is “reasonably susceptible" to the interpretation urged, the extrinsic evidence is then admitted t0 aid in the second step- interpreting the contract. [CItation.]' (Wine! v. Price (1992) 4 Ca1.App.4m 1159. ‘1‘165 [6 Cal. Rptr. 2d 554].) The triaI court‘s determination of whether an ambiguity exists is a question of law, subject to independent review on appeaI. (Ibid) The tn'al court's resolution of an ambiguity is also a 9896 Quanergy UMF, Fact Nos. 12 - 14. ‘0 See Quanergy UMF, Fact Nos. 25 H 26. 11 See Plaintiff‘s Response to Defendant‘s Separate Statement of Facts in Support of Defendant [Quanergy's] Mofion for Summary Judgment ("Plaintiff‘s Response t0 Quanergy UMF”), Fact No. 3. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 5 0f 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudicafion. question of law if no parol evidence is admitted or if the parol evidence is not in conflict. However, where the parol evidence is in conflict, the trial court‘s resolution of that conflict is a question of fact and must be upheld if supported by substantial evidence. (Id. at p. 1166.) Furthermore, '[w]hen two equally plausible interpretations of the language of a contract may be made parol evidence is admissible to aid in interpreting the agreement, thereby presenting a question of fact which precludes summary judgment if the evidence is contradictory.‘ (Walter E. Heller Western, Inc. v. Tecrim Corp. (1987) 196 Cal. App. 3d 149. 158 [241 Cal. Rptr. 677])“ [Footnote omitted] The fundamental goal of contractual interpretation is to give effect to the mutual intention 0f the patties.“ [Footnote omitted] “The mutual intention to which the courts give effect is determined by objective manifestations of the parties’ intent, including the words used in the agreement, as weII as extn‘nsic evidence of such objective matters as the surrounding circumstances under which the panies negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. (Civ. Code, §§ 1635-1656; Code Civ. Proc., §§ 1859- 1861 , 1864; Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal.AppAth 1791, 1814 [34 Cal. Rptr. 2d 732]; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, §§ 688- 689, pp. 621-623.)" [Footnote omitted] (Wolf v. Superior Court (2004) 114 Cal.AppAm 1343, 1350-1351 and 1356-1357.) Still, rules regarding contract interpretation are subject to the parol evidence rule. Defendant Quanergy anticipates plaintiff Benmbarek will seek to introduce parol evidence, but contends such evidence is barred by the parol evidence rule. Quanergy proffers evidence that the offer letter contains an integration clause.” The parol evidence rule is codified in Civil Code section 1625 [footnote omitted] and Code of Civil Procedure section 1856. [Footnote omitted] (See Maram' v. Jackson (1986) 183 Cal.App.3d 695, 701 [228 Cal. Rptr. 518] (Marani).) It “generally prohibits the introduction 0f any extrinsic evidence, whether oral or written, t0 vary, alter oradd to the terms of an integrated wn'tten instrument." (Ailing v. Universal Manufacturing Corp. (1992) 5 Cal.AppA‘h 1412. 1433 U Cal. Rptr. 2d 718] (Ailing).) The rule does not. however, prohibit the introduction of extn‘nsic evidence “to explain the meaning of a written contract [if] the meaning urged is one to which the written contract terms are reasonably susceptible.“ (BMW of North America, Inc. v. New Motor Vehicle Bd. (1 984) 162 Cal.App.3d 980, 990, fn. 4 [209 Cal. Rptr. 50] (BMW).) (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343.) In opposition, plaintiff does indeed offer extrinsic evidence barred by the parol evidence rule, but under the guise that it is extrinsic evidence concerning the circumstances surrounding the offer of employment from defendant Quanergy to plaintiff Benmbarek.“ More specifically, plaintiff proffers evidence that he was told by Eldada that should he accept the Company’s offer of employment, he would receive stock options “locked In” at the stn'ke pn'ce of 12 See Quanergy UMF, Fact N0. 4. Plaintiff does not dispute the existence 0f the integration clause. See Plaintiffs Response to Quanergy UMF, Fact No. 4. Plaintiff instead argues the parol evidence rule does not apply. 13 Plaintiff Benmbarek also asserts extrinsic evidence is admissible to explain or supplement the terms of an agreement even when that agreement is integrated citing EPA Rea! Estate Partnership v. Kang (1992) 12 Cal.AppAm 171. 176-177 (EPA). However, plaintiff Benmbarek misstates EPA. The actual statement by the court in EPA is, "If, as here, a contract is integrated, extrinsic evidence is admissible only'to supplement or explain the terms of the agreement--and even then. onIy where such evidence is consistent with the terms of the integrated document, and only where the writing is not also intended as an excfusive statement regarding its subject matter.” (Italics original.) (Accord, Code Civ. Proc., §1856, subd. (b)-“The terms set forth in a writing described in subdivision (a) may be explained or supplemented by evidence 0f consistent additional terms unless the writing is intended also as a complete and exclusive statement of the terms of the aQIeement.") 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 6 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. $4.00.” Therefore, it was plaintiff Benmbarek's understanding that the “fair market value of the Common Stock at the time of grant" would be $4.00.” Although this extrinsic evidence is being offered to explain the meaning of the contract language. it is inadmissible as it is directly contrary to the express written terms. (See BMW ofNodh America, Inc. v. New Motor Vehicle Bd. (1984) 162 Cal. App. 3d 980, 990, fn. 4 (BMW); see also Wine: v. Price (1992) 4 Cal.App.4th 1159. 1167-“parol evidence is admissible only to prove a meaning to which the language is ”reasonany susceptible" [citation], not to flatly contradict the express terms of the agreement. [Citation.]" Parol evidence of the plaintiffs subjective intent as to the meaning of the words of the contract deemed inadmissible.) Plaintiff Benmbarek does, however, offer additional extrinsic evidence which does not directly contradict the express written terms of the agreement. Plaintiff Benmbarek proffers evidence that Eldada represented t0 Benmbarek that in the near future, the value of the options would be significantly higherthan $400.16 Plaintiff Benmbarek understood “the time of grant" t0 mean some time before the increase in valuation that Eldada represented would be happening in the near future.” Even if the court considers this evidence from plaintiff Benmbarek, the court reaches the conclusion, as a matter of law, thatthe express language of the offer letter is not reasonably susceptible to the meaning urged by plaintiff Benmbarek. Accepting plaintiff Benmbarek's evidence at face value, plaintiff Benmbarek offers it to show that the parties intended forthe ”time of grant“ to occur sooner ratherthan later and before the value of the options increased. However, the court is of the opinion that even if the parties had such an intent, the contract language (“at a per share pn'ce determined by the Board to be the fair market value of the Common Stock at the time of grant") is not reasonably susceptible to the interpretation urged by plaintiff, i.e.. that the per share price be set at the fixed amount of $4.00. At the hearing 0n this matter, there was other discussion concerning any discrepancy orvan‘ation between the time of higher and the time that the board acted. To this com, it seems be an admission that the time of grant couid not be at the time of hire ..... The plain language of the contract does not support the claim being advanced by plaintiff Benmbarek. Consequently, defendant Quanergy's alternative motion for summary adjudication ofthe second cause of action [breach of contract] in plaintiff Benmbarek‘s FAC is GRANTED. 3. Defendant Quanergy’s alternative motion for summary adjudication of the third cause of action [breach of implied covenant of good faith and fair dealing] in plaintiff Benmbarek's FAC is GRANTED. “Every contract imposes upon each party a duty 0f good faith and fair dealing in its performance and its enforcement." (Rest2d Contracts, § 205.) “There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which wit] injure the right of the other to receive the benefits 0f the agreement.” (Comunale v. Traders 8 Genera! Ins. Co. (1958) 50 Cal.2d 654, 658; see also CA CI No. 325.) “The covenant 0f good faith and fairdealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party‘s right to receive the benefits 0f the agreement actually made. [Citation] The covenant thus cannot 'be endowed with an existence independent of its contractual underpinnings.‘ [Citations] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms 0f their agreement." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4“‘ 317, 349 - 350 (Guz).) ‘4 See Plaintiff‘s Separate Statement of [Additional] Material Facts in Support of Opposition to Defendant Quanergy Systems, lnc.'s Motion for Summary Judgment or, in the Alternative, Summary Adjudication (“Plaintiff’s AMF"), Fact No. 2. 15 See Plaintiff’s AMF. Fact No. 5. 15 See Plaintiff’s AMF, Fact No. 3. 17 See Plaintiffs AMF. Fact No. 6. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 7 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. “The implied covenant of good faith and fair dealing rests upon the existence 0f some specific contractual obligation. [Citation] 'The covenant 0f good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose.’ [Citation] 'In essence, the covenant is implied as a supplement t0 the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party‘s rights t0 the benefits of the contract.” (Racine & Laramie, Ltd. v. Department ofParks & Recreation (1992) 11 Cal.App.4”‘ 1026, 1031 - 1032.) In Guz. supra, 24 Cal.4"‘ at p. 327, the California Supreme Court stated, "[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous." "If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages 0r other relief already claimed in a companion contract cause 0f action, they may be disregarded as superfluous as n0 additional claim is actually stated." (Careau & Co. v. Security Pacific Business Credit, Inc. (1 990) 222 Cal.App.3d 1371, 1395; see also Bionghi v. Metro. Water Dist. (1999) TO Cal.AppAm 1358, 1370.) Here, the relevant allegation in plaintiff Benmbarek's third cause of action is that, “As is set forth above, Defendant [Quanergy] did not give Plaintiff the benefit of his bargain, despite the fact that Plaintiff accepted the offer of employment in reliance on the information he received from Defendant that he would receive 12,500 stock options at the strike price 0f $4.00/share.“ (FAC, 'fl35.) Although plaintiff argues in opposition that the breach of implied covenant is not based on the same conduct which gives n‘se to plaintiff’s breach of contract cause of action, the court is not persuaded by plaintiffs position. In opposition, plaintiff Benmbarek asserts the breach 0f implied covenant is based on defendant Quanergy's “delay[ in] granting the stock options until the higher $29.74 strike price had been established." In the court's opinion, this merely paraphrases the same identical conduct which gives n'se to plaintiff Benmbarek‘s breach of contract cause of action. Plaintiff Benmbarek contends the breach of implied covenant is also premised on defendant Quanergy's concealment that a higher stn‘ke price of $29.74 had been established on 28 June 2016 and the further concealment of this fact for 11 months. Plaintiff Benmbarek is conflating his claim forfraudulent concealment with his claim for breach of implied covenant. Damages which might flow from fraudulent concealment are separate and distinct from the injury plaintiff would suffer from not receiving the benefit 0f his alleged bargain, a $4.00 per share strike pn'ce. Breach of implied covenant seeks to protect the latter, not the former. The court agrees with defendant Quanergy that plaintiff Benmbarek's third cause of action alleges the same breach alleged in plaintiff Benmbarek's claim for breach of contract and is, based on the authority cited above, superfluous. Accordingly, defendant Quanergy's alternative motion for summary adjudication of the third cause of action [breach of implied covenant of good faith and fairdealing] in plaintiff Benmbarek's FAC is GRANTED. 4. Defendant Quanergy’s alternative motion for summary adjudication of the fourth cause of action [failure to pay wages in violation of California Labor Code §200 et seq.] in plaintiff Benmbarek‘s FAC is DENIED. Plaintiff Benmbarek's fourth cause of action alleges, in relevant part, “The options which were not provided to Plaintiff and the proper stn‘ke price were ‘wages' as thatterm Is defined by California Labor Code § 200, et seq. Therefore, Defendant and/or Does 2 - 20 failed to pay Plaintiff all wages owed to him.“ (FAC, W3? - 38.) Defendant Quanergy moves for summary adjudication 0f this fourth cause of action by arguing that stock options are not “wages." Defendant Quanergy relies upon IBM V. Bajorek (9th Cir. 1999) 191 F.3d 1033, 1039 (IBM) where the court wrote, “stock options are not 'wages.‘ Wages are defined by the statute [Labor Code section 200] as 'aII amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, 0r other method of calculation.‘ Stock options are not 'amounts.‘ They are not money at all. They are contractual fights t0 buy shares of stock." In addition, defendant Quanergy proffers evidence that plaintiff Benmbarek's Incentive and Nonstatutory Option Agreements expressly provide that the options “are not intended to constitute or replace compensation and 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 8 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in n0 way represent any portion of your salary, compensation or other remuneration for any purpose...” ln opposition, plaintiff Benmbarek urges the court not to follow IBM because, among otherthings, it is a non- binding federal opinion and it is more than twenty years old and does not reflect the realities 0f compensation packages offered by start-up companies modernly. In California, "wages" are broadly defined to inctude more than just salary. (Labor Code, § 200, subd. (a); Department ofindustn’a! Relations v. UI Video Stores, Inc. (1997) 55 Cal.AppAU‘ 1084, 1091 [wages includes not just salary but also other benefits that are pan 0f an employee's compensationl.) “Aithough the Ninth Circuit has held that stock options are not wages under California law (International Business Machines Corp. v. Bajorek (9th Cir. 1999) 191 F.3d 1033, 1039), that case turned on the unpredictability of the stock price at any given time and the inability t0 determine their relationship t0 the defendant's labor." (Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 35719.) The Woods coun did not decide the issue of whether IBM was correct, but reversed a tn’al court ruling which sustained a demurrer finding allegations that plaintiffs “earned” their “compensatory" options raised factual issues. Here, the Court wiII do the same and find the existence of a triabte issue of maten’al fact as plaintiff presents some evidence that the stock options were intended t0 be compensation for labor despite the disclaimer identified by '3 See Quanergy UMF, Fact Nos. 29 - 30. 19 At the hearing on this motion, there was considerable discussion about the vesting schedule in this matter. There was discussion of the case of In re Marriage of Pearlstein (2006) 137 Cal.AppA'h 1361, 1374 and this segment: " In rejecting Irwin's position, the trial court explained its decision to treat the unrealized gain inherent in Irwin's stock as income by analogizing his shares to stock options. which have been held to constitute income for support purposes where they represent an element 0f a supporting party's compensation package for past, present, or anticipated future services. (citations omitted.) In our view, this reflects a fundamental misunderstanding of the difference between compensatory stock options and shares of stock acquired as part of the proceeds from the sale of an employee's equity interest in a business." Mr. Arenada argues that there are n0 damages because plaintiff did not purchase any of the stock options and he [et the 90 day period lapse. Mr. Pasternak replies that buying the stock options at the time of his termination was a bad deal because the price went up sevenfold. The above citation may have the overlay 0f child support in a family law matter where in ability to pay support and the nature of income were discussed. The immediater preceding paragraph states the following: “This is not to say that a child support obligor’s assets are entirely irrelevant to determining his or her income for support purposes For example. where the supporting party has chosen t0 invest his or her funds in non- income-producing assets, the tria! court has discretion to impute income to those assets based on an assumed reasonable rate of return. (citations omitted.) This is essentially the approach that Irwin's expert, Werlleib. look in his analysis, and that Irwin urged the court to adopt in determining his gross income." (In re Marriage ofPearlstein (2006) 137 CaLAppA'h 1361. 1373-1374,) Footnote 10 in the foregoing paragraph further explains that “ ..... a supporting party's possession of assets may result in the attribution of income t0 that party for child support purposes to the extent that the party actually realizes income stemming from those assets, such as through dividends. or if the party‘s use of an asset resuils in decreased living expenses (for example, by moving into an inherited mortgage-free home)." The rest of the footnote distinguishes between an imputed income stream and the entire principal value 0f a support obligor's assets. A oeuple of other things: first, the disclaimer conflicts with the existence of a vesting schedule which suggests the employee is receiving some form of compensation based on their continued employment. Hence, a triable issue 0f fact exists. Second, It appears to this Court that the damages issue was not made in connection with this fourth cause of action. The Court wonders if that would have been a better argument elsewhere.... ‘ 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 9 of 12 Motion for Summary Judgment or, in the Alternative, Summary Adjudication. defendant Quanergy. (See THIS and 7 and EXh. A to the Declaration of Akram Benmbarek in Support of Plaintiffs Opposition to Defendant Quanergy Systems, |nc.'s Motion for Summary Judgment, etc.---stock options subject to four yearvesting period and plaintiff's declaration stating options were more imponant than the monetary component of his compensation package.) Accordingly, defendant Quanergy's alternative motion for summary adjudication of the fourth cause 0f action [failure to pay wages in violation of Labor Code, § 200 et seq.] in pfaintiff Benmbarek's FAC is DENIED. 5. Defendant Quanergy’s alternative motion for'summary adjudication of the fifth cause of action [violation of Business and Professions Code §17200 et seq.] in plaintiff Benmbarek's FAC is DENIED. Plaintiff Benmbarek’s fifth cause of action is a claim for violation of Business and Professions Code section 17200, otherwise known as the Unfair Competition Law ("UCL") which “prohibits unfair competition, including unlawful, unfair, and fraudulent business acts.” (Korea Suppiy Co. v. Lockheed Martin Corp. (2003) 29 Cal.4“‘ 1 1 34, 1143 (Korea).) “The UCL covers a wide range of conduct. [t embraces anything that can propefly be called a business practice and that at the same time is forbidden by law." (Korea, supra, 29 Cal.4‘“ at p. 1143, internal quotations omitted.) ”Section 17200 ‘borrows‘ violations from other laws by making them independently actionable as unfair competitive practices. In addition, undersection 17200, a practice may be deemed unfair even if not specifically proscribed by some other law." (Id., internal quotations and citations omitted.) Defendant Quanergy moves for summary adjudication of the fifth cause 0f action by arguing that it is dependent upon the preceding statutory claim and if that claim fails, then so too does the fifth cause of action. However, in Iig ht of the court's ruling above, the fourth cause of action remains. Accordingly, defendant Quanergy's alternative motion for summary adjudication of the fifth cause of action [violation of Business and Professions Code §17200 et seq] in plaintiff Benmbarek's FAC is DENIED. 6. Defendant Quanergy's alternative motion for summary adjudication of the sixth cause of action [fraudulent concealment] in plaintiff Benmbarek’s FAC is GRANTED. Plaintiff Benmbarek's sixth cause of action alleges, in relevant part, “Defendants [Quanergy and Etdada] knew as of June 28, 2016 that Plaintiffs strike price had changed but failed to inform him until May 2017, Plaintiff therefore unknowingly worked for approximately 11 months for lesser-value stock options than what he understood he was accruing." (FAC, 1134.) "Plaintiff did not know and could not have discovered these facts at the time the stn‘ke price changed as he was not given his grant paperwork untii May 2017, approximately 11 months afierthe stn'ke price had changed." (FAC, 1135.) “Had this information been disciosed t0 Plaintiff, he reasonably would have behaved differently by resigning from his employment earlier and/or pursuing other empioyment options and/or taking other actions to address the situation." (FAC, 1137.) “Plaintiff was harmed as he unknowingly worked for lesser-value stock options for approximately 11 months than what he understood he was accruing." (FAC, fl38.) “ 'mhe elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed 0r suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed 0r suppressed the fact with the intent t0 defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and wouid not have acted as he did if he had known of the concealed 0r suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.‘ [Citation.]” (Boschma v. Home Loan Center, Inc. (201 1) 198 Cal.AppA‘h 230, 248.) In moving for summary adjudication of plaintiff Benmbarek's fraudulent conceatment cause of action, defendant Quanergy contends first that pfaintiff Benmbarek cannot establish detrimental reliance. The court better understands defendant Quanergy‘s argument to be that plaintiff Benmbarek did not suffer any damages. Defendant Quanergy relies upon Rochlis v. Walt Disney Co. (1993) 19 Cal.AppA'h 201 (Rochh’s) (disapproved on other grounds by Tumer v. Anheuser-Busch, Inc. (1994) 7 Cal.4”‘ 1238, 1251 .). In Rochh's, the plaintiff accepted a job with defendant company based on alleged misrepresentations of the company's condition. Plaintiff asserted a claim for fraud which the tn'al court rejected in granting summaryjudgment. The trial court found no detrimental reliance and no damages. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 10 of Motion for Summary Judgment 12 or, in the Alternative, Summary Adjudication. The appellate court affirmed. ”[Plaintifi] went to [defendant company] in October 1987 based 0n what he now claims were fraudulent misrepresentations concerning [defendant company's] condition and the status of its various pending projects. By January 1988, while he was stiil under his term contract, he had discovered the "truth“ and had become familiarwith alt of the problems which [defendant company] had and which he was being asked to solve. Yet, in spite of such knowledge. he stayed on for nine months beyond the expiration 0f his contractua1 commitment. Indeed, dun'ng this period he continued to press for, and ultimately obtained, the substantial bonus and salary Increase previously described. [fl] Since, by Apn’l of 1988, he had become fully aware of aII of the problems which he argues were previously not disclosed to him, but nonetheless decided t0 remain, we conclude, as did the trial court, that he did not detrimentally rely on any misrepresentations as a matter of law." (Rochh’s, supra, 19 Cal.App.4th at p. 215.) The Rochh's court‘s decision has more t0 do with the lack of damages than It does with detrimental reliance as the court wrote. “[Plaintifi] bargained for and received more money for his time at [defendant company] than he would have received had he remained at Disney (in a job he repeatedly stated he no longer wanted). Thus, t0 that extent, he was enriched, not damaged, by his move t0 [defendant company].” (Id. at pp. 21 5 - 216) Defendant Quanergy contends the same is true here. Defendant Quanergy proffers evidence that. despite plaintiffs allegation that he teamed of the previously undisclosed stn’ke pn'ce in May 2017, plaintiff Benmbarek did not submit a letter of resignation from his employment with Ouanergy until 27 February 2019 which stated his last day of employment would be 12 March 2019, which is almost two years beyond the date he learned 0f the concealed stn’ke price.” During that interim, piaintiff Benmbarek continued to benefit from his employment receiving a discretionary bonus in the amount of $30,109.58 on 31 January 2018, receiving a nondiscretionary bonus in the amount of $44,763 on 6 March 2019, and being promoted to Senior Director, Business Development in January 2019 accompanied by an increase in annual salary to $170,000.21 As pfafntiff Benmbarek himself alleges. had he known of the higherstrike price on 28 June 2016, “he reasonabiy would have behaved differently by resigning from his employment eadier and/or pursuing other emptoyment options and/or taking other actions to address the situation.“ (FAC. 1137.) "Plaintiff was harmed as he unknowingly worked for lesser-value stock options for approximately 11 months than what he understood he was accruing." (FAC, 1138.) Yet, despite Ieaming of the $29.74 stn'ke price in May 2017, the evidence presented by defendant Quanergy is that plaintiff continued to work and continued to benefit from that employment. 1n orderto establish damages. plaintiff Benmbarek would have to demonstrate that he had more lucrative employment opportunities but passed up those opportunities because, as plaintiff Benmbarek puts it, he ”unknowingly worked for Iesser-value stock options." It Es not enough for plaintiff to assert, as he does in opposition, that “had he known in June 2016 that he was not actually accruing stock options at a stn‘ke pn'oe of $4.00, he would have considered leaving the Company at that point. and more likely than not would have actualiy left?” This estabiishes only the fourth element 0f a claim for fraudulent concealment, i.e., plaintiff would not have acted as he did if he had known of the concealed 0r suppressed fact. In order to show damages, plaintiff would have to demonstrate that he fared worse by remaining in his position or that he would have fared better had he left his employment with Quanergy. Plaintiff has not proffered any admissible evidence of either or of any other damages he sustained as a result 0f the alleged concealment. Accordingly, defendant Quanergy‘s alternative motion for summary adjudication of the sixth cause 0f action [fraudulent conceafment] In plaintiff Benmbarek's FAC is GRANTED. Ill. Order. 2° See Quanergy UMF, Fact Nos. 34 - 35. 21 See Quanergy UMF, Fact Nos. 31 - 33. 22 See Plaintiffs AMF, Fact No. 21. 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 11 of Motion for Summary Judgment 12 or, in the Alternative, Summary Adjudication. Defendant Quanergy's motion for summaryjudgment is DENIED. Defendant Quanergy‘s alternative motion for summary adjudication of the first, second, third, and sixth causes of action in plaintiff Benmbarek‘s FAC is GRANTED. Defendant Quanergy’s alternative motion forsummary adjudication of the fourth and fifth causes 0f action in plaintiff Benmbarek's FAC is DENIED. Plaintiff‘s objections to defendant‘s evidence in support of defendant Quanergy Systems, |nc.'s motion for summary judgment or. in the alternative, summary adjudicatjo re OVERRULED. 09, Mch’mj DATED: s CRA PETER MANOUKIAN judge of the Superior Court County ofStmta Clara 2 November 2021 Order on Defendant Quanergy Systems, Incorporated’s Page 12 of Motion for Summary Judgment 12 or, in the Alternative, Summary Adjudication. SUPERIOR COURT OF CALIFORNIA COUNTY 0F SANTA CLARA DOWNTOWN COURTHOUSE 191 NORTH FIRSTSTREET SAN]OSE.CALIF0RN1A 95113 CIVIL DIVISION RE: Akram Benmbarek vs Quanergy Systems, Inc. Case Number: 1QCV347220 PROOF OF SERVICE ORDER 0N DEFENDANT QUANERGY SYSTEMS INC.'S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION was delivered to the parties listed below the above entitled case a_s set forth in the sworn declaration below. If you. a party represented by you, or a witness to be called on behalf of that party need an accommodation under the American with Disabilities Act, please contact the Court Administrator's office at (408) 882-2700. or use the Court's TDD line (408) 882-2690 or the VoicefTDD California Relay Service (800) 735-2922. DECLARATION OF SERVICE BY MAIL: l declare that l served this notice by enclosing a true copy in a sealed envelope, addressed to each person whose name is shown below. and by depositing the envelope with postage Iully prepaid. In the United States Mail at San Jose. CA on November 03, 2021. CLERK OF THE COURT. by Hiemrang Tranthien. Deputy. cc: Jeremy D Pasternak Law Offices of Jeremy Pasternak 354 Pine St Fl 5 SAN FRANCISCO CA 94104-3224 Alden John Parker Fisher & Phillips LLP 621 Capitol Mal] Suite 1400 Sacramento CA 95814 CW-9027 REV 12/08/16 PROOF OF SERVICE