Advsr, LLC v. Magistro LTD., 3:19-cv-02670

Background

Advsr, a boutique M&A advisor, entered a Transaction SOW with Magisto in May 2017: a 3.0% transaction fee for any "Covered Transaction" entered into during the SOW or within a 9‑month tail period after termination. The parties dispute whether "entered into" covers preliminary, pre‑closing steps.
Magisto terminated Advsr’s SOW in December 2017; Advsr performed work during the tail (2018) and facilitated renewed, serious engagement with IAC/Vimeo. On September 28, 2018 IAC gave a valuation range; Advsr asserts that constituted the trigger for payment under the tail.
Boiman (Magisto CEO) allegedly assured Advsr (Roizen) that Advsr would be paid if the deal with IAC closed; Magisto later retained Deutsche Bank, negotiated with IAC/Vimeo, and closed an asset purchase in April 2019.
Advsr sued Magisto (breach of express and implied contract, implied covenant, fraud, quantum meruit, promissory estoppel, unjust enrichment) and sued Yahal Zilka (board member/investor) for intentional interference with contract and prospective economic relations.
Key factual disputes: (1) meaning of "entered into" a Covered Transaction during the tail (broad "meaningful M&A discussions" v. narrower agreement-as-to-key-terms), (2) whether Boiman’s assurances (and later conduct) gave rise to extra‑contractual obligations, and (3) whether Zilka acted predominately for personal gain (to defeat manager’s privilege).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Magisto "entered into" a Covered Transaction during the tail (breach of express SOW)	"Entered into" includes serious M&A steps short of closing (e.g., NDA, due diligence, valuation guidance on Sept 28) so tail was triggered	Term was narrower: requires agreement on key terms/closer to a binding deal; Sept 28 guidance was too indefinite	Court: Denied SJ for Magisto — term ambiguous; jury could find "entered into" includes Sept 28 valuation guidance and pre‑closing steps.
Existence of an implied contract extending payment beyond the tail	Parties’ conduct (reengagement, Boiman’s statements) created an implied agreement to pay even if deal closed after tail	Express SOW governs; implied contract cannot supplant written terms for same subject before Sept 28	Court: Granted SJ as to conduct before Sept 28 (no implied contract); Denied as to conduct on/after Sept 28 (triable issue that parties agreed Advsr had earned fee after that date).
Breach of implied covenant of good faith and fair dealing	Magisto concealed facts, delayed board approval, and prevented Advsr from obtaining contract benefits	Claim duplicates contract remedies and lacks separate factual predicate	Court: Partially granted — covenant claim redundant and dismissed insofar as it duplicates contract claims, but allowed to proceed as to theory based on Boiman’s Sept 28 assurance that induced reliance.
Fraud (misrepresentation/reliance)	Boiman (and others) promised Advsr it would be paid if deal closed; Advsr relied and incurred costs	Representations were about contractual possibilities or contingent/board approvals; some statements inconsistent with reliance	Court: Mixed — grant SJ as to 2017/early statements (no actionable fraud); deny SJ as to Boiman’s Sept 28, 2018 assurance (fact issue on intent and reasonable reliance).
Quantum meruit / promissory estoppel / unjust enrichment (equitable recovery)	Alternative recovery for services performed after SOW/tail or where contract is unenforceable	Express contract governs tail work; equitable claims barred for services governed by valid contract	Court: Quantum meruit and promissory estoppel barred for work during tail; surviving as to post‑tail work (triable); unjust enrichment dismissed except to the extent it overlaps with surviving equitable claims.
Intentional interference (contract and prospective relations) against Zilka; applicability of manager’s privilege	Zilka acted with improper personal motive (preferred cash), concealed facts and caused disruption	Zilka acted as Magisto agent/manager to protect corporate interests; manager’s privilege applies (predominant‑motive test)	Court: SJ GRANTED for Zilka on both claims — Advsr failed to show Zilka acted predominately for personal gain or committed independently wrongful acts.

Key Cases Cited

Huynh v. Vu, 111 Cal. App. 4th 1183 (Cal. Ct. App. 2003) (endorses the "predominant motive" test for manager’s privilege in interference claims)
City of Hope Nat’l Med. Ctr. v. Genentech, Inc., 43 Cal. 4th 375 (Cal. 2008) (extrinsic evidence and subsequent conduct may be used to interpret ambiguous contract terms)
Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118 (Cal. 1990) (elements of intentional interference with contractual relations)
Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317 (Cal. 2000) (scope and purpose of implied covenant of good faith and fair dealing)
Kashmiri v. Regents of Univ. of Cal., 156 Cal. App. 4th 809 (Cal. Ct. App. 2007) (objective intent governs contract interpretation)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant’s initial summary judgment burden)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standard for assessing genuine factual disputes at summary judgment)
Halvorsen v. Aramark Unif. Servs., Inc., 65 Cal. App. 4th 1383 (Cal. Ct. App. 1998) (discusses formulations of manager’s privilege)
Olivet v. Frischling, 104 Cal. App. 3d 831 (Cal. Ct. App. 1980) (earlier articulation of manager’s privilege)