Scott M.

Phillips [#113276]
1 PHILLIPS, DOWNS & SIMONTACCHI LLP
55 Shaver Street, Suite 330
2 San Rafael, California 94901
Telephone: (415) 453-9999
3 Facsimile: (415) 453-6999
4 Attorneys for Defendants/Cross-Complainants
NICK ZHI NI and RENEE ZHOU
5
6 SUPERIOR COURT OF CALIFORNIA
7 COUNTY OF SANTA CLARA
8
FRED BAREZ, an individual; and RANK ) Case No.: 110 CV 170304
9 )
TECHNOLOGY CORPORATION, a
) CROSS-COMPLAINT AGAINST FRED
10 California corporation ) BAREZ AND RANK TECHNOLOGY
) CORPORATION
11 Plaintiffs, )
)
12 )
vs. )
13 )
NICK ZHI NI; RENEE ZHOU; and DOES 1 )
14 through 50, Inclusive, )
)
15 )
Defendants. )
16 )
)
17
)
18 )
NICK ZHI NI and RENEE ZHOU
)
19 )
Cross-complainant, )
20 vs. )
)
21 )
FRED BAREZ, an individual; RANK )
22 TECHNOLOGY CORPORATION, a )
California corporation, and ROES 1-20, )
23 inclusive, )
)
24 )
Cross-Defendants )
25 )
)
26 )
27
28

Cross-Complaint 1
CROSS-COMPLAINT
 1 Cross-complainants Nick Zhi Ni and Renee Zhou allege as follows:
2 INTRODUCTORY ALLEGATIONS
3 1. Cross-complainants Nick Zhi Ni (“Ni”) and Renee Zhou (“Zhou”) are, and
4 at all times herein mentioned were, residents of Santa Clara County, California.
5 2. Cross-defendant Fred Barez (“Barez”) is, and at all times herein
6 mentionedwas , an individual residing in Santa Clara County. At all times relevant herein, Barez
7 held himself out as the owner of commercial real property in Santa Clara County, California,
8 including, the commercial real property commonly known as 4131 El Camino Real, Palo Alto,
9 California. Barez’s most recent representation in this regard appears in Paragraph 5 of his
10 Complaint filed against cross-complainants on April 27, 2009. Barez has since recanted his
11 representation to be the owner of 4131 El Camino Real. Palo Alto, California.
12 3. Cross-Complainants are informed and believe, and on that basis allege,
13 that cross-defendant Rank Technology Corporation is, and at all times herein mentioned was, a
14 corporation existing under the laws of the State of California. Cross-Complainants are further
15 informed and believe, and on that basis allege, that cross-defendant Rank Technology
16 Corporation is, and at all times herein mentioned was, the owner the real property known as
17 4131 El Camino Real, Palo Alto; California.
18 4. Cross-complainants are ignorant of the true names and capacities and/or
19 potential liability of the cross-defendants sued herein as Roes 1 through 20, inclusive, and has
20 therefore sued these cross-defendants by such fictitious names. Cross-complainants will seek
21 leave of court to amend this Cross-Complaint to allege their true names and capacities when the
22 same have been ascertained. Cross-complainants are informed and believes, and thereon
23 alleges, that each of the fictitiously named cross-defendants is responsible in some manner for
24 the occurrences herein alleged, and that cross-complainants’ damages as herein alleged were
25 legally caused by such cross-defendants.
26 5. Cross-complainants are informed and believe, and thereon allege, that at
27 all times mentioned herein, each of the cross-defendants sued herein, including each cross-
28 defendant sued by a fictitious name, was the agent, servant and employee of each of the

Cross-Complaint 2
CROSS-COMPLAINT
 1 remaining cross-defendants, and in doing the things hereinafter alleged, was acting in the scope
2 of its authority as such agent, servant and employee, and with the permission and consent of the
3 remaining cross-defendants.
4 FIRST CAUSE OF ACTION
5 (FRAUDULENT INDUCEMENT)
6 6. Cross-Complainants re-allege and restate Paragraphs 1 through 5 and
7 incorporate the same herein as though fully set forth.
8 7. On February 5, 2010, cross-complainants Ni and Zhou entered into a written lease
9 (“Lease”) with Barez for the commercial office space located at 4131 El Camino Real, Suite
10 103, Palo Alto, California (“Premises”). Barez held himself out as the owner of the property and
11 executed the Lease as the property owner and “Lessor.” At the time that the parties entered into
12 the Lease, Suite 103 was a vacant space. Barez represented that the square footage was
13 approximately 1,490 square feet. By the express terms of the Lease, Barez agreed to provide
14 tenant improvements referred to as a “warm shell,” and which specifically included, electrical
15 panel, lights, ceiling tiles, ADA bathroom, HVAC and demising walls. Barez also agreed to pay
16 Lessees the sum of $15,000 for further tenant improvements upon his delivery of possession of
17 the Premises to Lessees. Barez agreed that the Lessees could unilaterally cancel the Lease if he
18 (Lessor) did not complete the promised tenant improvements and deliver the improved Premises
19 to Lessees within 60 days. Barez also agreed that the Lease was conditioned upon Lessees
20 obtaining the express approval of the Lease from Lessees’ franchisor, Sylvan Learning.
21 8. Prior to the execution of the Lease, Barez made false representations to Ni and
22 Zhou regarding his ownership of the premises, the suitability of the premises for Lessees’
23 business plan and needs, and his (“Lessor’s”) willingness to make timely tenant improvements
24 to accommodate and compliment Ni and Zhou’s proposed floor plan design. Barez furnished Ni
25 and Zhou with a floor plan design for use by Ni and Zhou to assess the space for their needs and
26 from which to plan and design their use of the Premises. Barez knew that Ni and Zhou had
27 purchased an existing business, Sylvan Learning Center, located in Santa Clara, California and
28 that Ni and Zhou wanted to establish a second location sufficiently before the summer months in

Cross-Complaint 3
CROSS-COMPLAINT
 1 order to market and promote the new location before the busier summer months. Barez knew
2 that Ni and Zhou had very specific floor plan needs and criteria. Barez knew that Ni and Zhou
3 would rely upon his representations and promises, inter alia, to the effect that (a) the floor plan
4 would be delivered as represented on the floor plan document he (Barez) provided to Ni and
5 Zhou and (b) that he (Barez) would timely deliver a suitable space for Ni and Zhou to establish a
6 second Sylvan Learning Center before the summer of 2010.
7 9. Barez knew that Ni and Zhou could not discover the falsity of his representations
8 and promises. Barez intended for Ni and Zhou to rely upon the misrepresentations and false
9 promises in making their decision to enter into the Lease.
10 9. Ni and Zhou did not discover the falsity of Barez’s representations and promises
11 until after the Lease was signed and over a period of several weeks. After the Lease was signed,
12 Barez proceeded to unilaterally modify the floor plan in such a manner that it conflicted with Ni
13 and Zhou’s floor plan design and which would substantially compromise and limit Ni and
14 Zhou’s eventual use of the space. Upon discovering the discrepancy as between the represented
15 floor plan and the physical changes that were occurring as part of the “warm shell” tenant
16 improvements, Ni and Zhou voiced their concerns and objections to Barez, both verbally and in
17 writing. Barez proceeded to improve the space around his modified floor plan without regard to
18 these concerns and objections. Ni and Zhou attempted, to no avail, to reason with Barez to
19 adhere to the floor plan that was provided to them by Barez before the Lease was executed. In
20 response, Barez insisted that Ni and Zhou provide him (Barez) with their own tenant
21 improvement plans for his approval and he (Barez) began to threaten Ni and Zhou with false
22 claims that Ni and Zhou were causing delays in the completion of the “warm shell”
23 improvements and the delivery of the Premises to Ni and Zhou.
24 10.
25 11. Subsequent to NI and Zhou’s cancellation of the Lease, Barez failed and refused
26 to timely return monies paid to Barez upon execution of the Lease. Barez continues to fail and
27 refuse to return the funds he collected from Ni and Zhu as the purported owner and Lessor of the
28 premises.

Cross-Complaint 4
CROSS-COMPLAINT
 1 12. As a proximate result of Barez’s fraud, Ni and Zhou have suffered damages,
2 including, but not limited to, its lost investment in the premises, and other damages according to
3 proof.
4 13. Barez’s conduct toward Ni and Zhou was malicious, oppressive and in conscious
5 disregard of Ni and Zhou’s rights. As a result, Ni and Zhou are entitled to an award of punitive
6 damages.
7 WHEREFORE, cross-complainants pray for judgment as set forth below.
8 SECOND CAUSE OF ACTION
9 (BREACH OF CONTRACT)
10 14. Cross-Complainants re-allege and restate Paragraphs 1 through 13 and
11 incorporate the same herein as though fully set forth.
12 15.
13
14
15 PRAYER FOR RELIEF
16 WHEREFORE: cross-complainants pray for relief as follows:
17 1. For general damages in an amount according to proof;
18 2. For pre-judgment interest in accordance with California Civil Code § 3287 et
19 seq.;
20 3. For punitive damages;
21 4. For attorneys fees pursuant to Contract;
22 4. For costs of suit according to proof; and
23 5. For such other and further relief as the court may deem appropriate.
24
25 DATED: July 7, 2010 PHILLIPS, DOWNS & SIMONTACCHI LLP
26
27 By:
Scott M. Phillips
28 Attorneys for Defendant/Cross-Complainant

Cross-Complaint 5
CROSS-COMPLAINT
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Cross-Complaint 6
CROSS-COMPLAINT