LBF Travel Management Corp. v. DeRosa

District Court, S.D. California·Decided April 11, 2025·No. 3:20-cv-02404·Unknown

Opinion

LBF TRAVEL MANAGEMENT CORP. Case No.: 20-cv-2404-MMA-SBC and MICHAEL THOMAS, Plaintiffs, ORDER AFFIRMING TENTATIVE RULINGS RE MOTION FOR v. CLARIFICATION & RESETTING MOTION IN LIMINE DEADLINE THOMAS DEROSA, Defendant. [Doc. No. 283] THOMAS DEROSA, Counter-Claimant, v. LBF TRAVEL MANAGEMENT CORP. and MICHAEL THOMAS,

Counter-Defendants.

Third-Party Plaintiff, v. LBF TRAVEL, INC.; LBF TRAVEL HOLDINGS, LLC; MONDEE HOLDINGS, LLC; MONDEE, INC.; and Third-Party Defendants. On April 7, 2025, counsel for the parties appeared before the Court for a hearing on Defendant Thomas DeRosa’s motion to clarify order on motions for summary judgment. Doc. No. 283. In anticipation of the hearing, the Court issued a tentative ruling on the motion. Doc. No. 288. At the conclusion of the hearing, the Court took the matter under submission. Doc. No. 290. Upon due consideration of Defendant’s motion, Plaintiff’s opposition, Third-Party Defendant’s response, the parties’ arguments at the hearing, and for the reasons set forth below, the Court AFFIRMS its tentative ruling. This action arises from the breakdown of a business relationship between Plaintiff Michael Thomas (“Thomas”) and Defendant Thomas DeRosa (“DeRosa”). A highly detailed recitation of the facts can be found in the Court’s Summary Judgment Order, Doc. No. 269, which the Court incorporates by reference. For the purpose of resolving the present motion for clarification, the Court provides the following abbreviated summary. Thomas is the co-founder, CEO, and majority shareholder of Plaintiff LBF Travel Management Corp. (“Old LBF”). Doc. No. 269 at 2–3. Thomas is also the co-founder of Third-Party Defendant LBF Travel, Inc. (“New LBF”). Id. at 3. DeRosa is a software developer who developed an e-commerce software for booking airfares online (the “Technology”), which he sold to Old LBF and thereafter continued working for Old LBF as a consultant. Id. Third-Party Defendant entities include LBF Travel, Inc., LBF Travel Holdings, LLC, Mondee, Inc., and Mondee Holdings, LLC (collectively “Third-Party Defendants”). Id.; see also Doc. No. 13. Prasad Gundumogula (“Gundumogula”) is the CEO of the Third-Party Defendant entities. Doc. No. 269 at 6. In 2019, Thomas engaged Gundumogula and the Third-Party Defendant entities to purchase Old LBF, which included the Technology. Id. at 6–7. Shortly before the sale was executed, DeRosa stopped working for Old LBF. Id. Thomas claimed that when he left, DeRosa misappropriated the source code to the Technology. Id. Thereafter, Gundumogula and the Third-Party Defendant entities purchased Old LBF’s assets, but DeRosa claimed that this did not include the Technology, which he alleged was licensed by Thomas to New LBF in order to avoid paying him royalties. Id. at 3, 7. Thomas and Old LBF first sued DeRosa, alleging that DeRosa breached contracts and misappropriated trade secrets related to the Technology. See Doc. No. 1. DeRosa then filed counterclaims and third-party claims, alleging that Thomas, Gundumogula, and the Third-Party Defendant entities collaborated to gut Old LBF of its assets in an effort to defraud and avoid paying DeRosa what he was owed. See Doc. Nos. 74, 269 at 3–4. The parties filed their summary judgment motions on April 21, 2023. See Doc. Nos. 204, 208, 210. Plaintiffs sought partial summary judgment on only their fifth cause of action for breach of contract. See Doc. No. 204, 269 at 14. DeRosa cross-moved for summary judgment, or in the alternative partial summary judgment, on all eleven of Plaintiffs’ causes of action in their Complaint: (1) misappropriation of trade secrets in violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. §§ 1831 et seq.; (2) misappropriation of trade secrets in violation of the California Uniform Trade Secrets Act (“CUTSA”), Cal. Civ. Code §§ 3426.1 et seq.; (3) violation of the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq.; (4) conversion; (5) breach of contract; (6) breach of oral contract; (7) breach of fiduciary duty; (8) tortious interference with prospective economic relations; (9) unfair competition in violation of Cal. Bus. & Prof. Code §§ 17200 et seq.; (10) unjust enrichment; and (11) preliminary injunctive relief. See generally Doc. Nos. 1, 208, 269 at 17–18. Third-Party Defendants sought summary judgment, or in the alternative partial summary judgment, on all of the remaining claims against them in DeRosa’s Second Amended Counterclaim and Third-Party Complaint (“SAP”), including: (1) aiding and abetting breach of fiduciary duties, not including DeRosa’s theory of “usurping a corporate opportunity” (“Claim 6”); (2) fraudulent conveyance (“Claim 7”); (3) unfair business practices (“Claim 11”); and (4) unjust enrichment (“Claim 14”). See Doc. Nos. 74, 117, 210, 269 at 3–4, 27. On March 26, 2024, the Court entered summary judgment as to certain claims but not others, while also denying the parties’ Daubert motions. See generally Doc. No. 269 (the “Summary Judgment Order”). Importantly, the Summary Judgment Order addressed Plaintiffs’ asserted damages for trade secret misappropriation under the DTSA and CUTSA, which allow for injunctive relief, actual loss damages, unjust enrichment damages, or reasonable royalties. Id. at 21–23. Regarding injunctive relief, the Court denied DeRosa’s summary judgment motion on that issue, recognizing that possession of confidential information can support injunctive relief. Id. at 22. As for monetary damages, the Court granted DeRosa’s motion, finding that Plaintiffs could not recover unjust enrichment damages because they failed to present evidence that DeRosa used the misappropriated trade secrets, which is required to recover such damages. Id. at 22–23. Accordingly, the Court found that Plaintiffs’ misappropriation claims could not proceed to the extent they seek unjust enrichment damages. Id. at 23. Subsequently, settlement conferences were held, and a pretrial schedule was issued. Doc. Nos. 272–73, 275–79, 281. Pursuant to the operative scheduling order, Motions in Limine are due April 11, 2025; the Final PTC is scheduled for May 7, 2025; and Trial is scheduled for June 10, 2025. Doc. No. 281. Moreover, on February 3, 2025, Third-Party Defendants filed a Notice of Automatic Stay indicating that Third-Party Defendant Mondee, Inc. filed for bankruptcy in the District of Delaware. Doc. No. 282. On February 14, 2025, DeRosa filed a motion seeking clarification of the Summary Judgment Order. Doc. No. 283. Although no specific Federal Rule of Civil Procedure explicitly governs motions for clarification, courts have recognized and granted such motions when appropriate. N. Alaska Env’t Ctr. v. Haaland, No. 3:20-CV-00187-SLG, 2023 WL 3661998, at *3 (D. Alaska May 25, 2023). “The general purpose of a motion for clarification is to explain or clarify something ambiguous or vague, not to alter or amend.” Id. (citing United States v. All Assets Held at Bank Julius, Baer & Co., 315 F. Supp. 3d 90, 99 (D.D.C. 2018)). Motions for clarification are appropriate when parties “are uncertain about the scope of a ruling” or when the ruling is “reasonably susceptible to differing interpretations.” Id. (citing All Assets Held at Bank Julius, Baer & Co., 315 F. Supp. 3d at 99–100). As indicated above, Defendant moves for clarification of the Court’s Summary Judgment Order. Doc. No. 283. While the Federal Rules of Civil Procedure do not specifically provide for such motions, courts have recognized

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