Sepe v. Wiesenfeld
Filed 5/2/13 Sepe v.
Wiesenfeld CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits
courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
THREE
WILLIAM SEPE,
Plaintiff
and Appellant,
v.
LISA SEPE-WIESENFELD, as Trustee, etc.,
et al.,
Defendants
and Respondents.
B238687
(Los Angeles County
Super. Ct. No. SC109399)
APPEAL from an judgment of the Superior Court of
County, Craig D. Karlan, Judge. Reversed.
Lowe Law Group and Steven T. Lowe
for Plaintiff and Appellant.
Crandall, Wade & Lowe and Edwin
B. Brown for Defendants and Respondents Lisa Sepe-Wiesenfeld individually and
as trustee of the Sepe Family Trust and Louis Sepe.
Matthew E. Hess for Defendants and
Respondents Parviz Omidvar and Music Royalty Consulting, Inc.
_________________________
INTRODUCTION
Plaintiff
William Sepe claims a right to 50 percent of the royalties his brother Anthony
Sepe received for the composition entitled “You’re the First, the Last, My
Everything†made famous by the late Barry White (the song). After Anthony died, plaintiff sued Anthony’s
children and the trustee of the Sepe Family Trust (the Sepe defendants) over
the publishing royalties, and Music Royalty Consulting, Inc. (MRCI) and Parviz
Omidvar (the MRCI defendants) over the songwriting royalties.
lawsuit after the trial court sustained defendants’ demurrers without leave to
amend. We hold the
Procedure section 366.2
name="_ftnref2" title="">[2]
does not apply to plaintiff’s claims against the Sepe defendants. We further hold the second amended complaint
adequately pled causes of action for intentional interference with contract
against Anthony’s children and for declaratory relief against the trustee. However, section 366.2 bars plaintiff’s
causes of action against the MRCI defendants.
Accordingly, we reverse that portion of the judgment concerning the
causes of action for intentional interference with
certain Sepe defendants and affirm the judgment in all other respects.
FACTUAL AND PROCEDURAL BACKGROUND
1.
Plaintiff’s lawsuit
For purposes of review, we assume
the truth of the following allegations.
(Zelig v.
In the 1970’s, Anthony
name="_ftnref3" title="">[3]
obtained an assignment of a 20 percent ownership interest in songwriter and
publishing royalties from the song. The
American Society of Composers, Authors & Publishers (ASCAP) and
Warner/Chappell Music, Inc. (Warner) are each responsible for collecting and
paying publishing royalties earned by the song.
royalties (i.e., 10 percent of all royalties) in perpetuity to plaintiff
in return for $10,000. Anthony acknowledged
this assignment in a written agreement dated June 9, 2004. (Together, the assignment
to plaintiff and the June 2004 acknowledgment are referred to as the Royalty
Agreement.)
title="">[5] There are no allegations that plaintiff
registered his royalty interest with ASCAP or Warner, and so plaintiff’s rights
in the royalties derive from his Royalty Agreement with Anthony.
For approximately 30 years, until
Anthony’s death in March 2009, Anthony regularly paid plaintiff his share of
the royalties. In the original complaint,
plaintiff alleged that Anthony “never paid William the full value of the
royalties to which he [was] entitled.â€
Plaintiff received the last royalty payment in February 2009, which
covered the last quarter of 2008, with the result he “received his share of
royalty payments from Warner[] (and a portion of ASCAP royalties as well)
through [Anthony’s] death.†The next
royalty period after Anthony’s death closed in March 2009 and plaintiff
expected a payment in May or June 2009.
Plaintiff received no royalty payments after Anthony’s death.
Anthony died intestate in March 2009. Anthony’s children, Lisa Sepe Wiesenfeld and
Louis Sepe, and his wife Shirley Sepe, created the Sepe Family Trust (the
Trust) approximately six months after Anthony’s death, without complying with
the Probate Code, to succeed to Anthony’s right to the royalties. Lisa as trustee refused to account for or pay
plaintiff his portion of the royalties.
Plaintiff learned after Anthony’s
death, that in January 2008, over a year before his death, Anthony “had
wrongfully†assigned to MRCI and its president, Parviz Omidvar all of Anthony’s
ownership rights in the publishing royalties paid by ASCAP (the 2008 MRCI
Assignment). Anthony and Omidvar were
close friends and business associates.
Omidvar knew that Anthony did not have the right to transfer that which
he did not own. Plaintiff received no
payments from MRCI even after contacting MRCI and Omidvar. Attached to the original complaint was a
letter dated October
20, 2009 from ASCAP to the MRCI defendants
discussing Anthony’s 2008 MRCI Assignment.
ASCAP agreed to place a hold on the disputed portion of the royalties
earned by the song until this lawsuit is resolved.
In January 2009, just months before
Anthony’s death, the Sepe defendants “induced†a declaration from Anthony that
purports to terminate the Royalty Agreement upon Anthony’s death (the 2009
Termination Declaration).
name="_ftnref6" title="">[6] Plaintiff only learned of the 2009
Termination Declaration after Anthony died.
On these facts, plaintiff asserted
three causes of action: (1) declaratory
relief, (2) intentional interference with contract, and (3) breach of
contract. He added to the first amended
complaint two other relevant causes of action seeking (4) imposition of a
constructive trust and (5) to quiet title.
2.
The demurrers
The Sepe defendants and MRCI
defendants separately demurred. They
argued that the gravamen of plaintiff’s complaint is that Anthony breached his Royalty Agreement with plaintiff and so,
because the lawsuit was filed 17 months after Anthony died, it is barred by the
one-year statute of limitations in section 366.2 for causes of action against a
decedent. They argued the original
complaint alleged that Anthony was the person who breached the Royalty
Agreement and plaintiff cannot omit that critical allegation or admission of
Anthony’s wrongdoing to avoid the bar of section 366.2. Defendants also argued that plaintiff did not
state a cause of action for interference with the Royalty Agreement because, as
Anthony had already breached the Royalty Agreement by assigning his interests
to MRCI, plaintiff could not demonstrate the Royalty Agreement would have been
performed but for the interference of Anthony’s children, Lisa and Louis. The Sepe defendants also argued that the
Trust could not have breached the Royalty Agreement as it was not a party to
it.
The trial court conceptualized the
case to two parts: those allegations involving ASCAP royalties paid to MRCI
allegedly diverted by the 2008 MRCI Assignment, and those allegations
concerning the Warner royalties paid to the Sepe defendants allegedly hijacked
by the 2009 Termination Declaration. The
court ruled that with his 2008 MRCI Assignment of the ASCAP royalties to MRCI,
with plaintiff thus triggering the statute of limitations in section
366.2.
However, the court granted leave to
amend the breach of contract and interference with contract causes of action
alleged against the Sepe defendants, and the declaratory relief cause of action
as against the trustee, all of which involved the Warner royalties and the 2009
Termination Declaration. Although the
complaint contained no allegations that the Trust was a party to plaintiff’s Royalty
Agreement with Anthony, or that it succeeded to Anthony’s obligations under
that agreement, the court granted leave to amend to allege that the Trust
accepted the benefits of the Royalty Agreement (i.e., any part of the $10,000
plaintiff paid for his 10 percent of the royalties) and hence incurred
obligations to plaintiff arising from the Royalty Agreement so as to allege the
existence of a contract between the Sepe defendants and plaintiff.
With respect to the cause of action
for intentional interference with contract, the court granted leave to amend as
to all defendants. The court rejected
defendants’ argument that no interference could be alleged because by the time
of the alleged acts of interference, Anthony had already breached the contract by
his 2008 MRCI Assignment of royalties to MRCI.
By paying plaintiff royalties until just before his death, the court
ruled, Anthony “considered the [Royalty A]greement to be in effect at the time
of his death.†The court granted
plaintiff leave to amend to allege that the 2009 Termination Declaration was
obtained by undue influence or fraud, or that Anthony lacked capacity to
execute the declaration, and that the 2008 MRCI Assignment was obtained by
conduct of a defendant designed to induce Anthony to breach the Royalty
Agreement.
Finally, the trial court denied
leave to amend the constructive trust and quiet title causes of action in their
entirety. As to the MRCI defendants, the
court ruled they were barred by section 366.2.
The court exercised its discretion to rule that constructive trust is a
remedy not an independent cause of action.
It also ruled the quiet title cause of action was duplicative of the
declaratory relief claim.
3.
The second amended complaint
This operative version of the
complaint asserts three causes of action: (1) breach of contract; (2)
declaratory relief; and (3) intentional interference with existing
contract. In the cause of action
entitled breach of contract, plaintiff amended to respond to the court’s
directive by adding that Lisa individually, Louis, and Shirley (between
Anthony’s death and formation of the Trust), and Lisa as trustee (after the
Trust’s formation), purported to succeed to ownership of the royalties. “As a result, by virtue thereof, these
Defendants assumed/succeeded to any and all obligations related to the
royalties, including any liens thereon.â€
The defendants breached this obligation by failing to pay plaintiff his
share of the royalties and denying that plaintiff owns a 50 percent share.
In his claim for intentional
interference with contract, plaintiff alleges against Lisa individually and
Louis that, by virtue of the fact they were Anthony’s children, they had full
knowledge of the 30 year old Royalty Agreement between their father and
uncle. Lisa and Louis intentionally
interfered with the Royalty Agreement by exercising undue influence on Anthony
to pressure their father, who was on medication “and likely not of sound mental
capacity,†to execute the 2009 Termination Declaration, which they drafted in
legalese, and which is not easily understood, so as to terminate royalties to
plaintiff after Anthony’s death. The
complaint notes that the 2009 Termination Declaration appears to have been
drafted by an attorney, not by Anthony himself, and both Lisa and Louis are
attorneys. The asserted interference was
the hijacking of plaintiff’s royalties after Anthony’s death.
Against the MRCI defendants, plaintiff alleges that Omidvar was a
longtime friend and business associate of Anthony’s, conducted due diligence
with respect to the song, and knew of plaintiff’s Royalty Agreement with
Anthony, but nevertheless “intentionally interfered with the [Royalty]
Agreement by obtaining an agreement from [Anthony] that transferred all of the
ASCAP royalties derived from the Composition to Omidvar/MRCI upon [Anthony’s]
death (and prior thereto, a portion of same)†“even though Omidvar/MRCI knew
that legally [Anthony] did not hold title to half of the royalties.†Anthony “continued to pay Plaintiff 50% of
what he received from ASCAP through his death†and so plaintiff did not
discover the interference until after Anthony’s death.
The declaratory relief cause of action, against Lisa as trustee
only, alleges that an actual dispute exists between the trustee and plaintiff
about whether 50 percent of the Warner royalties earned after March 30, 2009 are to be paid to plaintiff or to the Trust. It describes the positions of both parties to
the dispute. Plaintiff specifically
requests the court find, pursuant to the Royalty Agreement, that plaintiff is the
owner of 50 percent of the Warner royalties currently being collected since
Anthony’s death by Lisa as trustee of the Trust.
The Sepe defendants generally and
specially demurred raising the same statute of limitations and arguing that
plaintiff alleged no factual basis for imposing contractual liability against
the trustee or the individual defendants.
The MRCI defendants demurred on the ground that the allegations of the
second amended complaint are “functionally identical to those of the [first amended
complaint]†and hence fail to state a cause of action against them for
intentional interference with contract.
(Capitalization & bold omitted.)
The trial court sustained the
demurrers and denied leave to amend.
After the judgment of dismissal was entered, plaintiff filed this timely
appeal.
DISCUSSION
1.
Standard of review
In determining whether a plaintiff has properly stated a claim for
relief, “our standard of review is clear: ‘ “We treat the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions or
conclusions of fact or law.
[Citation.] We also consider
matters which may be judicially noticed.â€
[Citation.] Further, we give the
complaint a reasonable interpretation, reading it as a whole and its parts in
their context. [Citation.] When a demurrer is sustained, we determine
whether the complaint states facts sufficient to constitute a cause of action. [Citation.]
And when it is sustained without leave to amend, we decide whether there
is a reasonable possibility that the defect can be cured by amendment: if it
can be, the trial court has abused its discretion and we reverse; if not, there
has been no abuse of discretion and we affirm.
[Citations.] The burden of
proving such reasonable possibility is squarely on the plaintiff.’ [Citations.]â€
(Zelig v. County of Los Angeles,
supra, 27 Cal.4th at p. 1126.) Our review is de novo. (Ibid.) Toward this end, we must liberally construe
the complaint with a view to achieving substantial justice between the
parties. (§ 452.)
2.
Section 366.2 does not apply to
plaintiff’s viable causes of action against the Sepe defendants on the 2009
Termination Declaration but bars plaintiff’s causes of action against the MRCI
defendants for the 2008 MRCI Assignment.
Section 366.2 is a “general statute
of limitations for all claims against a
decedent.†(Wagner v. Wagner (2008) 162 Cal.App.4th 249, 255, italics
added.) The statute reads, “If a person
against whom an action may be brought on a liability of the person, whether
arising in contract, tort, or otherwise, and whether accrued or not accrued,
dies before the expiration of the applicable limitations period, and the cause
of action survives, an action may be commenced within one year after the date
of death, and the limitations period that would have been applicable does not
apply.†(§ 366.2, subd. (a).) When the decedent owes money at the time of
his or her death and does not pay it, or acts in some manner to repudiate a
contractual obligation during his or her lifetime, section 366.2, subdivision
(a) will apply. (Dacey v. Taraday (2011) 196 Cal.App.4th 962, 986 (
Our Supreme Court established from the legislative history of
section 366.2 that the statute of limitations was enacted “with the clear understanding
and intent that such provisions would govern and apply to ‘any action
of whom the action was brought against . . . .†(Collection
Bureau of San Jose v. Rumsey (2000) 24 Cal.4th 301, 308, italics added,
citing Recommendation: Relating to Notice to Creditors in Estate Administration
(Dec. 1989) 20 Cal. Law Revision Com. Rep. (1990) p. 515; accord,
1256, 1264 -1265.)
While section 366.2 will bar any
action on a debt of the decedent or for any wrongdoing committed by the
decedent, it will not apply when the debt was not enforceable against the
decedent during his or her life, or the wrongdoing was not committed by the
decedent. (Dacey, supra, 196
Cal.App.4th at p. 986.) In
law practice assigned certain cases to partner Burton Goldstein and specified
percentages each former partner would receive from the attorney fees recovered
by Goldstein in those cases. Goldstein
died before those cases settled.
Taraday, as administrator of Goldstein’s estate, settled the cases and
agreed to reduce the estate’s share in the fee recovery. When he received nothing from the fee
recovery, Dacey did not file a creditor’s claim in the probate court, but sued
Taraday, among others for Taraday’s breach of the dissolution agreement. (Id.
at p. 966.) The appellate court affirmed
the judgment in favor of Dacey ruling that the section 366.2 statute of
limitations did not bar Dacey’s claims against the estate because it was the
administrator, not the decedent Goldstein, who breached the
at p. 986.) The Dacey court held “section 366.2 does not apply in the present case
where the debt was not enforceable against Goldstein while he was alive and the
breach of the contract occurred after Goldstein’s death.†(Ibid.)
In explaining the scope of section 366.2, Dacey discussed Ferraro v.
Camarlinghi (2008) 161 Cal.App.4th 509, which observed that section 366.2
“ ‘applies to claims that could have been brought against the decedent had
he or she lived.’ †(
held that the statute did not preclude a cause of action for breach of an
agreement to make a specific testamentary disposition because the cause of
action “could not come into existence until the decedent died having failed to
make provision in accordance with her alleged
agreement . . . .†(
the breach or misconduct occurs prior to the decedent’s death and the claim is
not discovered while the decedent is alive.
(Dacey, supra,
196 Cal.App.4th at p. 983.) Section
366.2 “is not subject to delayed discovery or tolling due to minority or incapacity.†(Levine
v. Levine, supra, 102 Cal.App.4th at p. 1265.) Thus, claims against the decedent for damages that were not ascertainable or
suffered until after the decedent’s death have been barred by section
366.2. (Dacey, at p. 984.) In sum,
although section 366.2 applies to actions against the decedent for the
decedent’s wrongdoing, it does not bar suits alleging someone other than the
decedent committed the misconduct. (
Here, defendants argued and the
trial court agreed that the gravamen of plaintiff’s complaint is that
with plaintiff, first by his 2008 MRCI Assignment of the ASCAP royalties to
MRCI and again with his 2009 Termination Declaration terminating plaintiff’s
interest in the Warner royalties after Anthony’s death. They point to the allegations in the original
complaint that Anthony “never paid
[plaintiff] the full value of the royalties to which he is entitled.†Thus, defendants argue, the entire lawsuit is
barred by section 366.2 because the complaint seeks to recover for Anthony’s
wrongdoing and was brought more than a year after Anthony’s death.
a. The Sepe defendants
Defendants distort the sweep of plaintiff’s complaint by arguing
that all of plaintiff’s claims are
against Anthony for his conduct before death.
in recognition that section 366.2 barred his claims for damages arising from
allegations of Anthony’s misconduct
from his first and second complaint.
Consequently, the gravamen of plaintiff’s complaint with respect to the
Sepe defendants is the independent wrongdoing of Lisa, Louis, and the trustee
in disrupting plaintiff’s Royalty Agreement so as to usurp plaintiff’s royalty
rights after Anthony died. As in Ferraro,
plaintiff’s claim against defendants could not come into existence until
Anthony died and all royalty payments stopped.
Plaintiff’s complaint against the Sepe defendants thus is not an action
on Anthony’s debt as there was no money Anthony owed and did not pay during his
lifetime. (Dacey, supra, 196
Cal.App.4th at p. 986.) More important,
Anthony is not the party alleged to have committed the misconduct; Anthony
cannot have interfered with a contract to which he was a party (
Arabia Ltd. (1994) 7 Cal.4th 503, 514) and Anthony is not the party who has
a dispute with plaintiff requiring declaratory relief. Accordingly, section 366.2 does not bar any
of plaintiff’s viable causes of action alleged directly against the Sepe
defendants for those defendants’ own wrongdoing. (Dacey,
at p. 986.)
The parties dispute whether Estate
of Yool (2007) 151 Cal.App.4th 867 applies.
There, the decedent and her daughter purchased property together. After decedent died, the daughter sued and
asserted a resulting trust in her favor on the ground the decedent had not
provided consideration for the property, never intended to take beneficial
title, and accepted legal title merely as an accommodation to facilitate
financing. (Id. at p. 871.) The
not apply as the decedent never repudiated the agreement or showed resistance
to conveying the property to the plaintiff before death. (Estate
of Yool, at p. 877.) No cause
of action, accrued or not yet accrued, existed at the time of the decedent’s
death and thus no action that could have been commenced on that cause. (Id.
at pp. 876-877.) The facts established
that the decedent would have conveyed title to the daughter had the daughter
asked.
Here, plaintiff asserted against the Sepe defendants that Anthony
continued to pay plaintiff his portion of the royalties until Anthony’s
death. By pleading the Sepe defendants’
undue influence and Anthony’s lack of mental capacity, plaintiff is alleging
that Anthony did not repudiate the Royalty Agreement with plaintiff. (Estate
of Yool, supra, 151 Cal.App.4th at p. 877.)
Instead, he pleads defendants’
intentional interference with that agreement.
In short, the gravamen of plaintiff’s allegations are aimed at the Sepe
defendants’ individual wrongs and so section 366.2 does not apply to the viable
causes of action.
Citing Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, the Sepe
defendants contend that by dropping his allegations directed at Anthony’s
misconduct from the first and second amended complaints, plaintiff is merely
pleading around the bar of section 366.2.
The Sepe defendants argue that plaintiff alleged in the original
complaint that Anthony breached the Royalty Agreement because plaintiff alleged
Anthony “never paid William the full value of the royalties to which he [was]
entitled.†In the operative complaint,
the Sepe defendants argue, plaintiff is “now claiming that Anthony
explained, “[a] plaintiff may not avoid a demurrer by pleading facts or
positions in an amended complaint that contradict
the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false. [Citation.]â€
(Cantu v. Resolution Trust Corp.,
at p. 877, italics added.) Liberally
construing the complaints here (§ 452), plaintiff has not alleged
In dropping the above quoted allegation from the original complaint,
plaintiff is not alleging Anthony did not breach the Royalty Agreement. Indeed, plaintiff always alleged Anthony paid
plaintiff his royalties until his death and hence Anthony considered the
Royalty Agreement to be in effect.
Rather, with the amendments, plaintiff is simply no longer seeking to
recover for Anthony’s misconduct or on Anthony’s debt. He is seeking to recover for the Sepe
defendants’ independent wrongdoing.
Thus, plaintiff is alleging a violation of a separate primary right by a
different party than the decedent.
Plaintiff is not precluded by section 366.2 from seeking damages for the
Sepe defendants’ own acts of misconduct causing the independent invasion of
plaintiff’s right to the royalties. (
erred in ruling that any viable causes of action against the Sepe defendants
are barred by section 366.2.
name="_ftnref11" title="">[11]
b.
The MRCI defendants
Although plaintiff’s allegations
against the Sepe defendants involve the wrongful conduct of those defendants
instead of Anthony, the primary right plaintiff is seeking to assert against
the MRCI defendants is for Anthony’s wrongdoing in transferring the ASCAP
royalties to MRCI: The general
allegations in the operative complaint assert that “Tony Sepe had wrongfully assigned all of his ownership rights in
the ASCAP publishing royalties for the Composition to Omidvar/MRCI.†(Italics added.) Although the cause of action alleges Omidvar
induced Anthony to execute the 2008 MRCI Assignment, the complaint also alleges
that Anthony “wrongfully†executed
that assignment a
to receive a portion of the ASCAP royalties of which he [Anthony]
his death.†Thus, the substance of
plaintiff’s allegations against the MRCI defendants is that A
Royalty Agreement when he assigned his right to the ASCAP royalties (as
opposed to the Warner Royalties) to MRCI in 2008. Anthony was liable before he died for his
breach of a portion of the Royalty Agreement during his lifetime even if
plaintiff did not discover his damage until after Anthony’s death. (Dacey,
supra, 196 Cal.App.4th at
p. 984.) No amount of amendment can
circumvent plaintiff’s allegations that Anthony was the wrongdoer with respect
to the 2008 MRCI Assignment of part of his royalties and so section 366.2
applies to bar all of plaintiff’s allegations against the MRCI defendants
concerning the ASCAP royalties. The
trial court properly denied leave to amend.
As section 366.2 bars plaintiff’s
claims against the MRCI defendants, we need not address plaintiff’s contentions
that the trial court erred in denying him leave to amend other causes of action
against the MRCI defendants.
3.
Viable causes of action against
the Sepe defendants remain
Having concluded that section 366.2
does not bar causes of action against the Sepe defendants for their
the specific causes of action to ascertain whether plaintiff has stated or can
state a cause of action against the Sepe defendants.
a.
Plaintiff has alleged a cause of
action for intentional interference with contract against Lisa individually and Louis.
“ ‘[T]he elements which a
plaintiff must plead to state the cause of action for intentional interference
with contractual relations are (1) a valid contract between plaintiff and a
third party; (2) defendant’s knowledge of this contract; (3) defendant’s
intentional acts designed to induce a breach or disruption of the contractual
relationship; (4) actual breach or disruption of the contractual relationship;
and (5) resulting damage. [Citations.]’
(Pacific Gas & Electric Co. v.
Bear Stearns & Co. (1990) 50 Cal.3d 1118,
1126 . . . ) The
plaintiff need not allege an actual breach, but only interference with or
disruption of his or her contractual relations.
(Id. at p. 1129.)†(LiMandri
v. Judkins (1997) 52 Cal.App.4th 326, 343-344.) Moreover, “ ‘it is not necessary that
the defendant’s conduct be wrongful apart from the interference with the
contract itself. [Citation.] [¶] . . . Intentionally
inducing or causing a breach of an existing contract
is . . . a wrong in and of
itself. . . .’ †(
(2003) 29 Cal.4th 1134, 1158.)
The second amended complaint alleged
plaintiff’s Royalty Agreement with Anthony and the Sepe defendants’ awareness
of the Royalty Agreement. With respect
to Lisa and Louis, plaintiff alleged that, only two months before Anthony’s
death, while he was medicated and “not of sound mental capacity,†Lisa and
Louis, who are attorneys, intentionally interfered with the Royalty Agreement
by “exercising undue influence upon Tony Sepe†and “utilizing their fiduciary
position to pressure their father†by preparing and causing Anthony to execute
the 2009 Termination Declaration, which declaration was “drafted in ‘legalese’
and not easily understood.†Lisa and
Louis allegedly aimed to use the 2009 Termination Declaration to disrupt
plaintiff’s Royalty Agreement with Anthony.
Plaintiff also alleged that Lisa and Louis hijacked the royalties after
Anthony’s death and so plaintiff ceased receiving the royalties to which he was
due.
Plaintiff has adequately alleged this cause of action against Lisa
and Louis because he alleged their intentional acts designed to induce a breach
of plaintiff’s Royalty Agreement. (
supra, 29 Cal.4th at p. 1158.) Additionally, although a plaintiff is not
generally required to plead evidentiary as opposed to ultimate facts in this
cause of action (Doe v. City of Los
Angeles (2007) 42 Cal.4th 531, 549-550; § 425.10, subd. (a)),
plaintiff included allegations of undue influence and Anthony’s mental
incapacity at the trial court’s behest to show that the wrongful conduct was
Lisa’s and Louis’s and, pursuant to Yool,
that Anthony did not repudiate the Royalty Agreement. Thus, as against Lisa and Louis, plaintiff
sufficiently alleged all of the necessary elements of the cause of action for
intentional interference with existing contract in the first amended
complaint. The trial court erred in
sustaining the demurrer to this cause of action.
b.
Plaintiff has alleged a cause of
action for declaratory relief against the trustee.
“A complaint for declaratory relief
is legally sufficient if it sets forth facts showing the existence of an actual
controversy relating to the legal rights and duties of the parties under a
written instrument or with respect to property and requests that the rights and
duties of the parties be adjudged by the court.
(Code Civ. Proc., § 1060; Maguire
v. Hibernia Sav. and Loan Soc. (1944) 23 Cal.2d 719.)†(Wellenkamp
v. Bank of America (1978) 21 Cal.3d 943, 947.) “ ‘Before a controversy is ripe for
adjudication it “ ‘must be definite and concrete, touching the legal
relations of parties having adverse legal interests. [Citation.]
It must be a real and substantial controversy admitting of specific
relief through a decree of a conclusive character, as distinguished from an
opinion advising what the law would be upon a hypothetical state of
facts.’ †[Citations.]’ [Citation.]â€
(Otay Land Co. v. Royal Indemnity
Co. (2008) 169 Cal.App.4th 556, 562.)
Plaintiff’s complaint alleged an
actual, definite, and concrete controversy existed between him on the one hand,
and Lisa as trustee on the other, relating to the right to 10 percent of the
Warner royalty interest derived from the song after March 30, 2009. The complaint describes the controversy in
specific terms: “Plaintiff contends that
10% of all royalties earned by the [song] are to be paid to Plaintiff in
perpetuity, and he is entitled to payment thereof. [¶]
Plaintiff is informed and believes based thereon that Defendant Lisa [],
trustee of the Sepe Trust, disputes Plaintiff’s contentions, and believes that
the Sepe Family Trust holds title to the entirety of the Warner[]
royalties.†The complaint requests the
court adjudicate the controversy. The
cause of action for declaratory relief against the trustee was legally
sufficient to withstand demurrer.
In sustaining the demurrer to the
declaratory relief cause of action without leave to amend, the trial court
stated “this claim cannot stand alone without a proper breach of contract or
tort claim against the SEPE defendants.
Without a proper right to continued royalty payments, which would have
had to be established through the first cause of action [breach of contract],
there is no proper basis for declaratory relief.â€
The pertinent principles are set
forth in Lockheed
declaratory relief the party need not establish a right to a favorable
declaration. ‘A complaint for declaratory relief is legally sufficient if it
sets forth facts showing the existence of an actual controversy relating to the
legal rights and duties of the parties under a written instrument or with
respect to property and requests that the rights and duties of the parties be
adjudged by the court. [Citations.] If these requirements are met and no basis
for declining declaratory relief appears, the court should declare the rights
of the parties whether or not the facts alleged establish that the plaintiff is
entitled to favorable declaration.
[Citations.]’ (
21 Cal.3d [at p. 947].) ‘It is the
general rule that in an action for declaratory relief the complaint is
sufficient if it sets forth facts showing the existence of an actual
controversy relating to the legal rights and duties of the respective parties
under a contract and requests that the rights and duties be
adjudged. . . . If these requirements are met, the
court must declare the rights of the parties whether or not the facts alleged
establish that the plaintiff is entitled to a favorable declaration.’ (Bennett
v. Hibernia Bank (1956) 47 Cal.2d 540, 549-550 . . .)†(Lockheed,
supra, 134 Cal.App.4th at p. 221,
disapproved on other grounds by State of
California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1036, fn. 11.)
Lockheed
explains: “Strictly speaking, a demurrer is a procedurally inappropriate method
for disposing of a complaint for declaratory relief. As Witkin observes: ‘[A] demurrer would leave
the parties where they were, with no binding determination of their rights, to
await an actual breach and ensuing litigation. This would defeat a fundamental purpose of
declaratory relief, to remove uncertainties as to legal rights and duties
before breach and without the risks and delays that it involves. In brief, the object of declaratory “reliefâ€
is not necessarily a beneficial judgment; rather, it is a determination,
favorable or unfavorable, that enables the plaintiff to act with safety. This theory has prevailed, and
defendant cannot, on demurrer, attack the merits of the plaintiff's claim. The complaint is sufficient if it shows an
actual controversy; it need not show that
plaintiff is in the right.’ (5 Witkin, Cal. Procedure (4th ed. 1997)
Pleading § 831, p. 289.)†(
221, italics added.)
Based on these principles, plaintiff has adequately alleged a cause
of action for declaratory relief against the trustee irrespective of whether he
is entitled to a favorable declaration.
sustaining the demurrer to the declaratory relief cause of action against the
trustee.
4.
The trial court did not abuse its
discretion in denying leave to amend the breach of contract, quiet title, and
constructive trust causes of action against the Sepe defendants.
a. Plaintiff cannot plead a breach of contract cause of action
The elements of a cause of action for breach of contract are: (1) the contract; (2) plaintiff’s
performance or excuse for nonperformance; (3) defendant’s breach; and
(4) damage to plaintiff therefrom.
(Abdelhamid v. Fire Ins. Exchange
(2010) 182 Cal.App.4th 990, 999.)
The trial court ruled plaintiff needed to amend his complaint to allege
a contractual relationship between him and the Sepe defendants. The court instructed plaintiff to allege the
Sepe defendants accepted the benefit of plaintiff’s
Royalty Agreement with Anthony, such as by obtaining part of the $10,000
consideration plaintiff paid for that Agreement.
Plaintiff’s operative complaint does not allege that the Sepe
defendants were parties to any contract with plaintiff. As noted, the second amended complaint
alleges that the Sepe defendants ‑‑ the individual
defendants before formation of the Trust and the trustee after the Trust’s
creation ‑‑ purported to succeed to the ownership of the
royalties. Therefore, plaintiff alleges,
the Sepe defendants “assumed/succeeded to any and all obligations related to the royalties, including any liens
thereon.†(Italics added.) Such liens would presumably be plaintiff’s
right under his Royalty Agreement with Anthony.
The Sepe defendants breached this obligation, the complaint continues,
when they failed to pay plaintiff his share of the royalties and denied that
plaintiff owns a 50 percent share of those royalties. According to plaintiff’s allegations, the
contract he alleges was breached in this cause of action is not plaintiff’s
Royalty Agreement with Anthony but Anthony’s
contract with Warner for the royalties, which contract was subject to
plaintiff’s lien.
Recognizing he has no contract with the Sepe defendants, plaintiff
contends he has nonetheless pled a cause of action for breach of contract based
on Halperin v. Raville (1986) 176
Cal.App.3d 765 (Halperin). In Halperin,
the plaintiff provided the father $80,000 over a period of time to help the father’s
business and when he asked for it back, the father and son refused to repay
him. (Id. at p. 770.) Judgment was
entered against the father and son and the son appealed arguing there was no
evidence that he was involved in the transaction. (Ibid.)
The appellate court affirmed based on
the maxim in Civil Code section 3521 that “He who takes the benefit must bear
the burden.†(Halperin, at p. 772.) The
benefitted from the plaintiff’s loans because the evidence supported the
conclusion that the father and son were in the father’s business together, the
son had a direct personal stake in the company, and the son was involved in the
business. (Id. at pp. 773-774.) Thus,
the court held, “a showing that a person had the use and benefit of money
raises the obligation to pay for the value received.†(Id.
at p. 772.)
Halperin
is not analogous. Unlike
were effectively co-obligors to the plaintiff (Halperin, supra,
176 Cal.App.3d at p. 773), here two transactions are necessarily at
issue: one is Anthony’s contract with
Warner, from which contract plaintiff claims the Sepe defendants benefitted,
and the other is Anthony’s Royalty Agreement with plaintiff. To avail himself of the Halperin theory to recover his portion of royalty payments that
Warner makes to Anthony, plaintiff would have to allege that he was part of
Anthony’s contract with Warner and so when the Sepe defendants benefitted from
the Anthony-Warner contract, they incurred an obligation to pay plaintiff. (Id.
at p. 772.) Stated differently,
plaintiff did not allege he registered his royalty rights with Warner, and so
any obligation to pay plaintiff derives from his separate Royalty Agreement with
Anthony only and not with Warner. But,
he is not alleging that the Sepe defendants benefitted from that Royalty
Agreement; he is alleging they induced Anthony to repudiate it.
Plaintiff attempted to plead around
this problem by calling his right to royalties an equitable lien on Anthony’s
contract with Warner, and that the Sepe defendants took Anthony’s royalties
subject to plaintiff’s lien. (
111 Cal.App.2d 861, 873, quoting from Rest., Restitution, § 161 [“ ‘If
property which is subject to an equitable lien is transferred to a third person
who has notice of the equitable lien or
who does not give value, the equitable lien can be enforced against the
property in the hands of the third person.’ â€].) There is simply no authority for the
proposition that plaintiff’s separate Royalty
Agreement with Anthony constituted a lien, equitable or otherwise, on
Anthony’s contract with Warner. As
plaintiff cannot plead facts that fall within the rule of Halperin, and as he has not in three attempts been able to allege
the existence of any contract between him and the Sepe defendants, the trial
court did not err in denying plaintiff leave to amend this cause of action.
b. The trial court did not abuse its discretion in sustaining the
demurrers to the quiet title and constructive trust causes of action.
In the first amended complaint, plaintiff alleged he had the legal
right to 50 percent of Warner and ASCAP royalties paid to Anthony, and that
those royalties were hijacked by all defendants. Plaintiff seeks imposition of a constructive
trust on those royalties. In the quiet
title cause of action, plaintiff alleged that he desired a determination that
he is the owner of 10 percent share of the total songwriter/publishing
royalties and licensing fees derived from the song.
As another division of this District Court of Appeal stated, “[a]
constructive trust is not a substantive device but merely a
remedy . . . .†(
of Santa Barbara (2001) 88 Cal.App.4th 781, 793.) As for the quiet title cause of action, the
trial court did not abuse its discretion in denying leave to amend it because
it was “merely duplicative†of the cause of action for declaratory relief.
5. Conclusion
To summarize, all of plaintiff’s causes of action against the MRCI
defendants are barred by the statute of limitations in section 366.2 as
plaintiff has been unable to amend to allege the MRCI’s independent wrongdoing
and plaintiff filed his complaint more than a year after Anthony’s death. However, this statute of limitations does not
bar plaintiff’s viable causes of action against the Sepe defendants, as the
gravamen of plaintiff’s complaint with respect to the Sepe defendants is the
violation of a separate right by a different party than the decedent. Plaintiff has alleged two viable causes of
action against the Sepe defendants:
intentional interference with contract against Lisa individually and
Louis, and declaratory relief against Lisa as trustee of the Sepe Family Trust.
DISPOSITION
The
judgment is reversed in accordance with the views expressed herein. Appellant to recover costs on appeal.
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
ALDRICH,
J.
We concur:
KLEIN,
P. J.
KITCHING, J.
in the second amended and operative complaint are: (1) the Sepe
defendants, comprised of Lisa Sepe Wiesenfeld, individually and as trustee of
the Sepe Family Trust, and Louis Sepe, and (2) the MRCI defendants, who
are Music Royalty Consulting, Inc., and Parviz Omidvar.
further statutory references are to the Code of Civil Procedure, unless
otherwise indicated.
