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Long Fish v. Nanotronics Corp.6/9/2003
o be elected chairman.
The asset sale to Patriot triggered the Fish trust's right to acquire stock in Nanotronics, which the trust in fact exercised.
The following year Falk was diagnosed with cancer and decided to dissolve Nanotronics. By way of the dissolution of Nanotronics, the Fish trust received Patriot shares in exchange for the Nanotronics shares it had received the previous year. Before he died, Falk assigned the Patriot shares he was to receive in the dissolution to his own family trust. Defendant and respondent Gloria H. Felcyn is the trustee of the Falk trust.
Between 1994 and 1996 Patriot invested $2.7 million in the Sh-Boom technology and in 1996 was able to commercially market a microprocessor chip which used it.
Shortly after Patriot's apparent success with the technology, the Fish trust demanded royalties from Patriot under the terms of the 1991 Technology Transfer Agreement. Patriot refused to pay the Fish trust any royalties on the grounds that in purchasing Nanotronics's assets it had not assumed the obligations of the Technology Transfer Agreement.
PROCEDURAL HISTORY
Fish filed a complaint against Nanotronics, Patriot and Felcyn in her capacity as trustee of the Falk trust. The Fish trust's complaint alleged nine causes of action, including declaratory relief, breach of contract, rescission, constructive trust, breach of fiduciary duty, fraudulent transfer, unfair competition, unjust enrichment, and tortious interference with contractual relations. The trust asserted Nanotronics and Patriot were directly liable for royalties under the Technology Transfer Agreement or, in the alternative, Patriot was liable on theories of fraudulent transfer and unfair competition. The defendants answered the complaint and filed a cross-complaint for declaratory relief with respect to their obligations under the Technology Transfer Agreement.
Following discovery, the parties filed cross-motions for summary adjudication. The trial court denied the Fish trust's motion and granted the defendants' motion. The trial court found the Technology Transfer Agreement only required payment of royalties on products sold by Nanotronics itself and because Nanotronics had not sold any Sh-Boom products, no royalties were due. The trial court declined to imply that under the Technology Transfer Agreement Nanotronics could transfer the Sh-Boom technology to a third party only if it protected the Fish trust's right to royalties on products sold by the third party. The trial court also found Nanotronics's asset sale to Patriot was not a fraudulent transfer and did not amount to unfair competition within the meaning of Business and Professions Code section 17200. Although the trial court's ruling did not dispose of all of the Fish trust's claims, the trust stipulated to dismissal of its remaining claims with prejudice and a final judgment in favor of the defendants was entered. The trust filed a timely notice of appeal.
DISCUSSION
I.
Summary judgment may be granted only when a moving party is entitled to a judgment as a matter of law. (Code Civ. Proc., ยง 437c, subd. (c).) In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826 (Aguilar), the Supreme Court clarified the law courts must apply in California in ruling on motions for summary judgment. Where the motion is brought by a plaintiff, the plaintiff bears the burden of proving each element of the cause of action entitling him to judgment on that cause of action. (Aguilar, supra, 25 Cal.4th at p. 849.) "'Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material fac
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