1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 68530002/495332v4 20 Case No. 4:11-cv-02753-PJH NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED COMPLAINT defendants sold the securities in question (to the extent there were even securities sold)” (Order at 12), Plaintiff also fails to allege privity. Thus, Plaintiff still fails to state a claim for relief under Sections 25401 and 25501. E. Plaintiff Still Fails To State A Claim Under Section 25504 The TAC also alleges that all defendants, including the D&O Defendants, violated Section 25504.

Plaintiff does not – and cannot – allege that she purchased securities from the D&O Defendants. Accordingly, Plaintiff fails to allege a claim for relief under Sections 25401 and 25501. D. The SAC Fails To State A Claim Under Section 25504 The SAC also alleges that all defendants, including the D&O Defendants, violated Section 25504, which provides that: Every person who directly or indirectly controls a person liable under Section 25501 or 25503, every partner in a firm so liable, every principle executive officer or director of a corporation so liable, every person occupying a similar status or performing similar functions, every employee of a person so liable who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the act or transaction constituting the violation, are also liable jointly and severally with and to the same extent as such person, unless the other person who is so liable had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which liability is alleged to exist.

20(a) good faith defense and proof of the absence of scienter and (b) proof of “…a failure to directly or indirectly induce the violations at issue,” Howard, 228 F. 3rd at p. 1065, the ’34 Act claims are proven. C. The Defendants Violated Cal. Corp. Code sec. 25401 and Are Therefore Liable Under Cal Corp. Code sec. 25501 and 25504 Section 25401 of the California securities laws makes it unlawful to sell a security by means of written or oral communications that include untrue material statements or omit material facts necessary to make such facts true in the light of circumstances in which they are made.

See 15 U.S.C. § 77m. Cal. Corp. Code § 25401 2 years after inquiry notice; 5-year statute of repose. See Cal.

The defendant bears the burden of establishing each element. See DiFelice v. Aetna U.S. Healthcare, 346 F.3d 1 The Fourth Cause of Action was against the non-Partnership Defendants for violations of California Corporations Code §§25401 et seq. related to the Market Fund, see id. at ¶¶97-103, but those claims have been dismissed as a result of the Judgment.

Id. (quoting CAL. CORP. CODE § 25401). Section 25401 does not apply to cases of "simple nondisclosure."

Murray Jones was ECOtality’s COO. (¶ 20.) Plaintiffs bring claims against Mr. Brar for alleged violations of Sections 10(b) and 20(a) of the Exchange Act, and Sections 25401, 25501, 25504 of the California Corporations Code. (¶¶ 66-101.)

Section 25401 provides that: Case4:11-cv-02753-PJH Document252 Filed06/09/14 Page29 of 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 68530002/517858v5 22 Case No. 4:11-cv-02753-PJH DEFENDANTS’ CONSOLIDATED NOTICE OF MOTION AND MOTION FOR JUDGMENT ON THE PLEADINGS It is unlawful for any person to offer or sell a security in this state or buy or offer to buy a security in this state by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. Cal. Corp. C. § 25401. Section 25501 provides, in pertinent part, that: Any person who violates Section 25401 shall be liable to the person who purchases a security from him or sells a security to him . . . unless the defendant proves that the plaintiff knew the facts concerning the untruth or omission or that the defendant exercised reasonable care and did not know . . . of the untruth or omission.

6 Plaintiff’s control person claims against OAC fail for the additional reason that Tremont did not offer or sell securities to Plaintiff, as required for primary liability under the California blue sky laws. Cal. Corp. Code §§ 25401, 25501. To the extent that Plaintiff intended to assert that OAC “controlled” the Funds’ alleged securities violations, the Complaint contains no facts in support of such a woefully deficient claim.

¶¶ 69, 71, 72); (ii) As reflected in the Complaint, all of Lakeview's claims arise under state law: Lakeview's "action seeks relief exclusively under California statutory law" (Compl. ¶ 1), namely, CCP § 1060 (First Cause of Action), and California Corporations Code §§ 25401, et seq. (Second, Third and Fourth Causes of Action); (iii) The gravamen of the Complaint is that the Rye Funds purportedly made "misleading statements and omissions . . . to plaintiff and similarly situated individuals" (Compl.