Notice Entry of Order

Cal. Super. - 6th Dist.March 30, 2021

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21CV381517 Santa Clara - Civil Allison Lane (SBN 1523 84) Justin J. Fields (SBN 259491) DUANE MORRIS LLP Spear Tower One Market Plaza, Suite 2200 San Francisco, CA 94105-1 127 Telephone: +1 415 957 3000 Fax: +1 415 957 3001 E-mail: alane@duanemorris.com jfields@duanemorris.com Attorneys for Defendant WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA Phunware, Inc., Plaintiff, V. Wilson Sonsini Goodrich & Rosati, Professional Corporation, DOES 1-25, Defendants. TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on August 20, 2021, the Court entered the attached order granting Wilson Sonsini Goodrich & Rosati, Professional Corporation’s Motion t0 Compel Arbitration and Stay This Action. A copy 0f the order is attached as Exhibit A. Dated: Septemer 2, 2021 By: DUANE MORRIS LLP /s/ Allison Lane System Sy Electronically Filed by Superior Court of CA, County of Santa Clara, on 9/2/2021 11:37 AM Reviewed By: System System Case #21 CV381 51 7 Envelope: 7192610 Case N0. 21CV381517 NOTICE OF ENTRY OF ORDER AFTER HEARING ON DEFENDANT’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION, GRANTING WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION Dept: 2 Judge: Hon. Drew C. Takaichi Complaint Filed: March 30, 2021 Allison Lane Justin J. Fields Attorneys for Defendant WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION DM1\12367690.1 stem NOTICE OF ENTRY OF ORDER GRANTING WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION: CASE NO. 21CV3815 17 EXHIBITA KOOOQONU‘I-PUJNH NNNNNNNNNHv-tr-Ar-th-ap-Lp-Ap-ap-sp‘ oo~JONU1$UJNHO©OONONUIAUJNHO SUPERIOR COURT OF CALIFORNIA 8‘ . “M“ COUNTY 0F SANTA CLARA wswme “ewe“ Phunware, Inc. CASE N0. 21CV381517 Plaintiff, ORDER AFTER HEARING ON DEFENDANT’S VS. MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION Wilson Sonsini Goodrich & Rosati, Professional Corporation, DOES 1-25, Defendants. This matter came for hearing on August 17, 2021 at 9:00 a.m. in Department 2 on defendant Wilson Sonsini Goodrich & Rosati, Professional Corporation’s motion to compel arbitration and stay this action. James McManis and Tyler Atkinson appeared on behalf of plaintiff, Phunware, Inc. (”plaintiff”), and Allison Lane appeared on behalf of Wilson Sonsini . Goodrich & Rosati, Professional Corporation (”defendant”). After consideration of the authorities and argument of counsel in the papers filed in support, opposition and reply, and orally at hearing/the court issues the following findings and order: Background On March 30, 2021, plaintiff filed complaint in this action against defendant alleging a single cause of action for professional negligence - legal malpractice. \DOO\]O\Ul-PUJNp-a N N N N N N [\J N [\3 1-- r-i r-‘Vn-a r-a p-L H r-a y-t H OOQQUl-PWNv-‘OOOOQONUI-RUJNv-IO According to the allegations of the complaint, defendant committed negligent acts- and omissions in connection with a lawsuit that defendant brought on behalf of plaintiffin Phunware, Inc. v. Uber Technologies, Inc., San Francisco County Superior Court case no. CGC-17- 561546. (”Uber lawsuit”). On May 18, 2021, defendant filed the instant motion to compel arbitration and stay of this action. On August 4, 2021, plaintiff filed opposition and on August 10, 2021, defendant filed reply. Summary of contentions Defendant asserts that the present action is subject to binding arbitration pursuant to an attorney-client agreement entered into between the parties on March 6, 2009 (“agreement”). The agreement contains provision for binding arbitration that defendant asserts encompasses the subject ofthe instant action - legal malpractice. As a result, defendant seeks orders compelling plaintiff to arbitration and staying this action pending the outcome of arbitration. In opposition, plaintiff contends that the agreement does not contemplaté representation of plaintiff in litigation matters, including the Uber lawsuit; that the arbitration provision lacks conspicuous, plain and clear language that evidences an intent to include malpractice claims or suffices as a proper advisement of plaintiff’s related rights; and that plaintiff is not a party to the agreement and not subject to the arbitration provision since the agreement was entered into between defendant and plaintiff’s predecessor company. Judicial notice Filed with defendant’s reply is request férjudicial notice of: (1) plaintiff’s complaint dated July 30, 2021 against defendant in a separate action Phunware, Inc. v. Wilson Sonsini Goodrich & Rosati, Professional Corporation which defendant represents is filed in Santa Clara County Superior Court, case no. T21-1701; and (2) plaintiff’s S-1 filing with the Securities and Exchange Commission on February 5, 2019. \O 00 fl ON U! -b 0-) N n-t NNNNNNNNNHp-AHp-tp-dr-‘Mp-Av-Ir-a OONQUIQUJNv-‘OKDOOQQUI-RUJNHO Request for judicial notice is submitted with reply, and therefore, plaintiff’s oral objection tojudicial notice of the statements in the unverified complaint at the hearing is timely. Judicial notice ofthe existence of the complaint as a record of a court of this State is GRANTED based on the representation of counsel that the document has been filed with the court. Subdivision (d) Evidence Code section 452. The objection of hearsay to admissibility of the statements in the complaint is SUSTAINED. See Day v. Sharp (1975) 50 Cal.App.3d 904, 914 (stating that ”’a court cannot take judicial notice 0f hearsay allegations as being true, just because they are part of a court record or file... [a] court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments”). Judicial notice of the SS-1 filing is not a record proper forjudicial notice, and the request is DENIED. Analysis There is no dispute that the agreement was signed by defendant and Phunware, Inc. Instead, plaintiff asserts that the signatory party Phunware, Inc. is a different entity from plaintiff because plaintiff is a special purpose acquisition company (”SPAC”) formerly known as Stellar Acquisition Ill, Inc. (”Stellar”) and became plaintiff Phunware, Inc. in December 2018. Plaintiff therefore asserts that it is not a party to the agreement executed in 2009, and is not bound to the arbitration provision. Defendant cites subdivisions (a) and (b) of Corporation Code section 15911.09 for authority that a converted entity is vested with the same property, rights and obligations as the pre-conversion entity, and hence, plaintiff, the converted entity, is subject to the rights and obligations of the pre-conversion entity, Phunware, |nc., including the arbitration provision of the agreement. At hearing, plaintiff- argued that the section has no application because the section is a provision of the Uniform Limited Partnership Act of the Corporations Code, and the entities here in the conversion were not limited partnerships. \OOOQQU‘IAUJNv-t NNNNNNNNNHHHHHHHHHH OOQQM-PWNHOOOONQMLUJNHO Defendant contends that the term ”entities” in the applicable definition section of the Corporations Code, section 15911.01, is not limited to limited partnerships. Instead, defendant asserts that the common definition of entities includes various forms of entities, including corporations such as plaintiff. Defendant asserts that finding that the term applies only to limited partnerships is an unnecessarily narrow interpretation which is not in accord with applicable statutory law. Corporations Code section 15911.01 Definitions, under Article 11 Conversion and Merger, states, ”(F)or purposes of this article, the following definitions applyz”. The section continues and provides several definitions pertinent here to entities. For exampie, “(3) ”Converted entity” means the other business entity ...; (b) ”Converting entity" means an other business éntity ...; (e) ”Constituent corporation ” means a corpo‘ration that is merged with or into one or more limited partnerships or other business entities, and that includes a‘ surviving corporation; and (k) ”other business entity” means a corporation, general partnership, limited liability company ...” Such definitions, while not directly on point, do-evidence that Corporations Code section 15911.09 contemplates application of its provisions to entities that include a corporation as a post converted entity. The court is also persuaded that the principle in Corporations Code section 15911.09, that a conversion of theform 0f an entity under statutory procedure will not terminate or modify preexisting, substantive legal rights and obligations of a pre-conversion entity, is applicable tc; entities that include limited partnerships, limited liability companies, certain defined trusts, and corporations such as plaintiff. The court therefore finds that plaintiff is subject to the rights and obligations under the agreement, including the provision for arbitration. In response to the possibility of this finding, plaintiff asserts that the parties did not contemplate that the agreement would encompass litigation services such as the Uber lawsuit. Plaintiff points out that legal services in the agreement is defined ”to advise” plaintiff, and contains no reference to litigation, and argues that to the extent there is ambiguity in the term \OOOQONM-RUJNr-A NNNNNNNNNwt-ar-tr-Ar-It-tr-Ar-AHH OOQQM-bWNr-‘OKOOOQONUI-hwwv-‘O “legal services”, the interpretation of plaintiff-client must be adopted over the interpretation of the drafter, defendant-atforney. In matters of contract interpretation, the court first considers the language of the contract. Here, the agreement provides ”... (l)f in the future you request us to perform additional legal services on matters other than the Legal Services described above, then, unless a separate engagement has been entered into with respect to such additional services, it is understood that those future legal services or matters will be provided by us under the same terms and conditions described herein ...” The court finds this language on its face clear and unambiguous. If legal services were requested in the future which were not covered by the description of services in the agreement, the parties could either enter into a separate agreement or be bound to the terms of the agreement. This evidences the intent that the agreement encompass legal services rendered by defendant on behalf of plaintiff in other matters, whether advisory, litigation, drafting or other form, unless the parties chose to execute a separate agreement. However, even where the contract language appears clear and unambiguous on its face, the court may (and will in the instant matter) consider parol evidence to further ascertain the intent of the parties. The extrinsic evidence submitted by plaintiff includes the deciaration of Tushar Patel, vice president of plaintiff, where he states ”At the time it retained WSGR it was Phunware’s understanding that the 2009 Agreement would only apply to transactional services and not to WSGR’s representation in litigation matters.” In evaluating the weight afforded to this evidence, there is a lack of foundation evidence to support the degree of foresight inferred by the statement or for a basis of this understanding ofthe declarant when the agreement was entered in 2009. The lack of foundation, the interest of declarant in the outcome of the litigation, and contrary evidence of express terms of the arbitration provision calls into question the credibility of the declarant’s statement and weight it will be given. Plaintiff asserts as additional extrinsic evidence that conduct of the parties indicates that the parties understood the agreement to encompass advisory services only, and that litigation \OOOQONUI-hUJNH NNNNNNNNND-it-‘r-AI-dr-Ar-‘y-ar-th‘r-t OO‘QQMLWNMOQOO‘QONm-PWNHO services required a separate agreement. Plaintiff identifies defendant’s representation of plaintiff in a commercial dispute with Cailoway Golf Interactive, Inc. (”Calloway dispute”), where a separate attorney-client agreement was entered as conduct evidencingthis understanding. To the contrary, the evidence of a separate agreement in the Calloway dispute only confirms the clear language of the agreement, that in that instance, the parties opted to enter into a separate agreement. Accordingiy, the court finds that thé agreement contemplates representation of plaintiff in other matters, including litigation such as the Uber lawsuit. On the separate issue of whether the arbitration provision in the agreement encompasses claims of plaintiff against defendant for professional negligence, the arbitration provision states that where disagreements about ”... the qual‘ity, cost or appropriateness of our services ...” which the parties are unable to resolve themselves, the parties ”... agree that all disputes or claims between us as of any nature whatsoever shall be resolved by binding arbitration ...” The court finds that these phrases are also clear and unambiguous. References to ”the quality” and ”all disputes and claims between us of any nature whatsoever” are clear on their face in meaning and scope, and encompass claims of professional negligence - malpractice of defendant -- i.e. ”the quality of our services”, and are encompassed in the general description of ”ali disputes and claims between us of any nature whatsoever”. In Lawrence v. Walzer& Gabrielson ((1989) 207 Cal.App.3d 1501 ”Lawrence”), plaintiff- client sued defendant attorneys for legal malpractice, and defendant brought motion to compel arbitration pursuant to an arbitration provision in a letter attorney-client retainer agreement. In interpreting the arbitration provision, the Court of Appeal applied the doctrine of ejusdem generis to construe the provision as limited to financial disputes and not a general waiver ofthe right to a court trial for the malpractice claim. The court found that the arbitration provision was ”devoted almost exclusively to financial matters” regarding fees and costs. \OOOQONUILWNI-t NNNNNNNNNv-Ar-Ap-Ir-th-‘r-dr-tr-aww OOQQU‘I-thi-‘O\OOONO\UI-hUJNH-‘O However, here the arbitration provision is not devoted by its language to any particular subject such that the application of doctrine of ejusdem generis is needed to understand the provision in full context. This distinguishes the instant arbitration provision from the provision in Lawrence. As discussed, the provision here is clear and unambiguous. Lawrence is also distinguishable in that the party opposing arbitration provided evidence that she did not understand that signing the attorney-client letter agreement included agreeing to submit any future malpractice claim to arbitration (Le. waiver of right to a civil trial) which the trial court found credible. Here, plaintiff does not provide any evidence indicating a similar lack of understanding . Lastly, white the agreement was drafted by defendant, the evidence suggests that each party had bargaining power in negotiating its terms. The declaration of plaintiff’s vice president, Mr. Patel, identifies that the agreement permitted plaintiff to pay for services on a deferred and contingent basis, a feature not included in the attorney-client agreement in the Calloway dispute because it was an ”active dispute as opposed to ongoing transactional work.” This infers plaintiff’s preference to pay fees on a deferred basis, the arrangement under the agreement, unless the parties entered into a separate agreement. While services under the Uber lawsuit are litigation based as in the Calloway dispute, payment of fees is per the preferred deferred basis underthe agreement. The differences in payment arrangements in the three matters infers bargaining power of plaintiff in the negotiation of the agreement. No evidence is submitted showing that one party held greater bargaining power over the other or that the agreement was presented by defendant on a ”take it or leave it” basis. Certainly plaintiff desired legal services from defendant, and defendant desired obtaining a new client and the opportunity to earn legal fees. Further, the arbitration provision is mutual, and not unduly in favor of defendant. The evidence is insufficient to find that the agreement is a contract of adhesion. Disposition Based on the foregoing, defendant’s motion to compel arbitration and to stay this action pending resolution of arbitration is GRANTED. \OOOleUI-waH NNNNNNNv-IHn-Ir-In-tr-At-Ar-np-ip-A gSQU’I-PUJNfi-‘OCOOQONU‘I-bWNHO IT Is so ORDERED._ Dated: August‘ifi 2021 II [?VHVOH. Drew C. Takaichi Judge of the Superior Court SUPERIOR COURT OF CALIFORNIA COUNTY 0F SANTA CLARA (IFN ORSED DOWNTOWN COURTHOUSE ' 191 NORTH FIRST STREET SANJOSE, CALIFORNKA 95113 v- -- CIVILDMSION C'Agfi 2O 2021 . 9f. of the C Bstemr com 0‘ CA c°umy Ofoslalrfig Clara FARRIS DEPUTY RE: Phunware, Inc. vs Wilson Sonsini Goodrich & Rosati Case Number: 21 CV381517 PROOF 0F SERVICE ORDER AFTER HEARING ON DEFENDANT'S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION was delivered to the parties listed below the above entitled case as 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 Voice/TDD California Relay Service (800) 735-2922. DECLARATION OF SERVICE BY MAIL: l declare that | 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 fully prepaid, in the United States Mail at San Jose, CA on August 20, 2021. CLERK OF THE COURT, by Farris Bryant, Deputy. cc: Richard T Atkinson McManis Faulkner 50W San Fernando 10th Fl San Jose CA 951 13 Allison Lane DUANE MORRIS LLP Spear Tower One Market Plaza Suite 2200 San Francisco CA 94105 cw-9027 REV 12/08/16 PROOF 0F SERVICE SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA DOWNTOWN COURTHOUSE 191 NORTH FIRST STREET SAN JosE, CALIFORNIA 951 13 CIVIL DIVISION Allison Lane DUANE MORRIS LLP Spear Tower One Market Plaza Suite 2200 San Francisco CA 941 05 RE: Phunware, Inc. vs Wilson Sonsini Goodrich & Rosati Case Number: 21 CV381 517 PROOF OF SERVICE ORDER AFTER HEARING ON DEFENDANT'S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION was deiivered to the parties listed below the above entitled case as set forth in the sworn deciaration 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. piease contact the Court Administrator’s office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the Voice/TDD California Relay Service (800) 735-2922. DECLARATION OF SERVICE BY MAIL: I declare that i served this notice by enciosing a true copy in a sealed enveiope, addressed to each person whose name is shown below, and by depositing the envelope with postage fully prepaid, in the United States Mail at San Jose, CA on August 20, 2021. CLERK OF THE COURT, by Farris Bryant, Deputy. cc: Richard T Atkinson McManis Faulkner 50W San Fernando 10th Fl San Jose CA 95113 cw-9027 REV 12/08/16 PROOF 0F SERVICE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE Phunware, Inc. v. Wilson Sonsim‘ Goodrich & Rosati, Professional Corporation, et al. Santa Clara County Superior Court N0. 2 1CV3 8 1 5 1 7 I am a resident of the state 0f California, I am over the age of 18 years, and I am not a party t0 this lawsuit. I am an employee 0fDuane Morris LLP and my business address is Spear Tower, One Market Plaza, Suite 2200, San Francisco, California 94105. I am readily familiar with this firm’s practices for collecting and processing correspondence for mailing with the United States Postal Service and for transmitting documents by FedEx, fax, email, messenger and other modes. On the date stated below, I served the following documents: NOTICE OF ENTRY OF ORDER AFTER HEARING ON DEFENDANT’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION, GRANTING WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION X BY ELECTRONIC SERVICE: Based 0n a court order or an agreement 0f the parties to accept service by e-mail 0r electronic transmission, I caused the documents t0 be sent t0 the person(s) at the e-mail addresses listed below. I did not receive, Within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. James McManis Attorneys for Plaintiff Tyler Atkinson PHUNWARE, INC. Andrew Parkhurst McMANIS FAULKNER a Professional Corporation 50 West San Fernando Street, 10th Floor San Jose, California 951 13 Telephone: (408) 279-8700 Facsimile: (408) 279-3244 Email: tatkinson@mcmanislaw.com I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Dated: September 2,2021 AA) g /fio-~ Trina C. Morgan l DM1\12367690.1 2 NOTICE OF ENTRY OF ORDER GRANTING WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION’S MOTION TO COMPEL ARBITRATION AND STAY THIS ACTION: CASE NO. 21CV3815 17