SAN DIEGO – A federal judge has denied consumer products company Youngevity International's motion for summary judgment in a breach of contract case against two individuals who sold their companies to it.
On March 26, Judge Barry Ted Moskowitz of the U.S. District Court of Southern District of California also partially granted the defendants' motions for summary judgment. William Andreoli's motion for summary judgment was denied while Dave Pitcock's motion was granted.
Plaintiff Youngevity and defendants Andreoli and Pitcock filed for summary judgment on Youngevity’s fourth case of action for breach of contract. Andreoli, who sold his company, FDI, to Youngevity in 2011, argued that there was never a breach of the contract he entered into with the plaintiff.
The ruling states Youngevity referenced several instances with Andreoli in which showed he “failed to devote his full working time, attention, and energy to Youngevity, engaged in other business activity for pecuniary advantage without Youngevity’s consent, and failed to disclose new ideas or improvements that he developed to Youngevity."
Andreoli argued that since he did not sign a noncompetition agreement, he was not bound to it. The ruling states he did sign an equity purchase agreement with the plaintiff.
The court disagreed regarding the noncompetition agreement and ruled that “the equity purchase agreement and the non-competition agreement should be ‘taken together’ because the equity purchase agreement makes the non-competition agreement a condition precedent of closing,” according to the ruling.
"At this stage, the court cannot say as a matter of law that a reasonable jury would not find that Youngevity suffered damages as a result of Mr. Andreoli's alleged breach," Moskowitz wrote, denying Andreoli's motion for summary judgment.
Pitcock filed his motion for summary judgment arguing that the contract that Youngevity and his company, Livinity Inc., cannot be enforced against him. Even if it could, he claims he never breached anything, according to the court ruling.
"Youngevity, however, asserts a breach of contract claim against Mr. Pitcock under a theory of alter ego liability," the ruling states. "...However, Youngevity raises several issues of material fact as to whether Mr. Pitcock is the alter ego of Livinity. Plaintiff submits evidence in support of the following: Mr. Pitcock (1) intermingled Livinity funds with his own and treated Livinity assets as his own; represented to Youngevity that he was personally bound by the consulting agreement; failed to maintain Livinity corporate minutes or records; and used his home address as the company’s official address. Thus, there is a genuine dispute as to whether Mr. Pitcock is the alter ego of Livinity."
Pitcock argued that the plaintiff had not submitted evidence to support allegations that he breached the contract, and the court agreed.
"Even when construing the facts in the light most favorable to plaintiff, the court finds as a matter of law that defendant Pitcock would prevail on Youngevity’s breach of contract claim. Therefore, the court grants defendant Pitcock’s motion for summary judgment as to plaintiff’s fourth cause of action," the ruling states.