Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County Super. Ct. No. BC360064, Richard L. Fruin, Jr., Judge. Affirmed.
Mark Shoemaker for Defendant and Appellant.
Troy & Gould, Jeffrey W. Kramer and Arvin Tseng for Plaintiffs and Respondents.
ARMSTRONG, J.
Defendant and appellant GeneThera, Inc. appeals the judgment entered following the summary adjudication in favor of plaintiffs and appellants M.A.G. Capital, LLC, Mercator Momentum Fund III, L.P., and Monarch Pointe Fund, Ltd. (together, the "MAG Parties") on their breach of contract claim. GeneThera contends that there were triable issues of material fact regarding whether the MAG Parties "committed the 'first material breach'" such that GeneThera had cause to terminate the contract. We determine that GeneThera has failed to establish trial court error, and so affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
In January 2005, the MAG Parties agreed to invest $1,100,000 in GeneThera, a publicly-traded company, pursuant to the terms set forth in the various integrated written agreements executed by the parties (the "Transaction Documents"). Among these terms were that GeneThera would issue the MAG Parties 11,000 shares of GeneThera's Series A Convertible Preferred Stock (the "Preferred Stock"), which Preferred Stock would be convertible into shares of GeneThera common stock (the "Common Stock") in accordance with a formula set forth in the Transaction Documents. The MAG Parties paid the $1,100,000 to GeneThera in accordance with the Transaction Documents on January 18, 2005.
In June 2005, the MAG Parties elected to convert 1,400 shares of Preferred Stock into 318,182 shares of Common Stock by sending two conversion notices to GeneThera. Both conversions occurred, and the MAG Parties sold the Common Stock on the open market. On July 18, 2005, the MAG Parties elected to convert 5,000 shares of Preferred Stock into 1,086,957 shares of Common Stock by sending a conversion notice to GeneThera. This conversion occurred as well, and the MAG Parties sold the Common Stock on the open market.
On April 10, 2006, the MAG Parties elected to convert 750 shares of Preferred Stock into 937,500 shares of Common Stock by sending a conversion notice to GeneThera. GeneThera did not convert the stock. Instead, on August 23, 2006, GeneThera wrote to the MAG Parties and informed them that "the Board already rejected your request" to convert the Preferred Stock. That same day, GeneThera filed an SEC Registration Statement which stated: "We are currently contesting any further conversion of the Series A Preferred Stock by the holders and have placed an administrative hold on the remaining 4,600 shares with our transfer agent."
On October 1, 2006, the MAG Parties filed suit against GeneThera for anticipatory breach of contract. On May 17, 2007, the MAG Parties filed a motion for summary adjudication on several causes of action, including anticipatory breach of contract. The MAG Parties contended that, in April 2006, they properly exercised their right to convert 750 Preferred Shares into Common Shares, and that GeneThera unequivocally stated that it would not perform its contractual duties when it notified the MAG Parties and the SEC in August 2006 that it had rejected the April conversion request, and had instructed its transfer agent not to honor any additional conversions requests. The MAG Parties also presented evidence that its 4,600 shares of Preferred Stock were each worth $125 if converted and sold.
The MAG Parties also filed suit against other parties and alleged other causes of action. The only matter at issue on this appeal, however, concerns the cause of action against GeneThera for anticipatory breach of contract.
GeneThera based its opposition to summary adjudication of the anticipatory breach of contract claim on a single contested issue: "Defendants have presented admissible evidence in Defendants' Separate Statement ('DSS') that there is a triable issue of material fact[] that Plaintiffs[] have failed to perform a condition precedent and therefore, cannot prevail in this Motion as to the 1st . . . Cause[] of Action. [DSS 17, 21, 22, 45, 46, 49, and 50.]" In its separate statement, at the cited item numbers, GeneThera repeats its response to plaintiffs' various undisputed material facts: "Disputed: Plaintiffs failed to comply with conversion requirements. Shoemaker Decl., ¶ 3, Exh. 2; Johnston Decl., ¶ 5." GeneThera did not bother to identify for the trial court what evidence it claimed supported its assertion that "Plaintiffs failed to comply with conversion requirements." If a simple reading of a litigant's points and authorities in opposition to a motion for summary adjudication does not apprise the reader of the nature of the evidence which the litigant asserts creates a triable issue of fact, the moving party is entitled to summary adjudication of that issue.
After much digging through the record, it appears that GeneThera intended to rely on evidence that the MAG Parties did not surrender their Preferred Stock certificates to GeneThera in conjunction with their conversion request, and therefore failed to satisfy a condition precedent to GeneThera's obligation to convert the shares to Common Stock. On appeal, however, GeneThera does not claim that the trial court wrongly determined that there was no triable issue of fact regarding this condition precedent, but instead maintains that the court ignored evidence of "stock manipulation" and "short selling." However, GeneThera did not contend that the MAG Parties were not entitled to summary adjudication on this basis. And it may not advance a theory on appeal which it did not rely on in the trial court. (RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1518; In re Marriage of Moschetta (1994) 25 Cal.App.4th 1218, 1227.)
We note as well that GeneThera failed to designate the reporter's transcript as part of the record on appeal. We must therefore assume that the trial court ruled inadmissible the declarations upon which GeneThera's opposition was based. Thus, there is no admissible evidence in the record to contradict the MAG Parties' undisputed fact that plaintiffs did not engage in stock manipulation or short selling.
In any event, the cited declarations are not evidence that the MAG Parties were engaged in stock manipulation and/or short selling. For instance, Laura Bryan declared that, based on the number of shares sold in the days prior to the April 10, 2006 conversion request, "it appears that sales were made in excess of the float." Dennis Johnston declared that the number of shares of Common Stock which traded in this period of time "would further indicate market manipulation such as short-selling or other prohibited agreements with third parties." These statements, even if admissible, are not evidence that the MAG Parties engaged in these activities.
In short, we conclude that GeneThera has failed to establish that the trial court erred in summarily adjudicating the MAG Parties' first cause of action for anticipatory breach of contract against GeneThera. Because the number of shares (4,600) of Preferred Stock owned by the MAG Parties, as well as their value ($125 each) for purpose of conversion into shares of Common Stock was not disputed, the trial court properly entered judgment of $575,000 in favor of MAG Parties.
DISPOSITION
The judgment is affirmed. The MAG Parties are to recover their costs on appeal.
We concur: TURNER, P. J., MOSK, J.