Rabanne v.
Filed 9/28/10 Rabanne v. Valencia CA4/1
TO BE PUBLISHED IN 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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ROBERTO RABANNE,
Plaintiff and
Respondent,
v.
LEO VALENCIA et al.,
Defendants and
Appellants.
D056016
(Super. Ct. No. 37-2009-00085042-
CU-BC-CTL)
APPEAL from an order of the Superior Court of San Diego
County, Yuri Hoffman, Judge.
Affirmed.
I.
INTRODUCTION
Roberto Rabanne entered into an
agreement with defendant A.V.E.L.A., a company owned by defendant Leo Valencia,
for the purpose of licensing certain photographs that Rabanne had taken of the
late musician Bob Marley, and other musicians.
The agreement provided that A.V.E.L.A. would pay Rabanne an advance and
certain royalties based on merchandise sold that contained Rabanne's
images. Rabanne filed this action
alleging that the defendants failed to pay him the advance and the royalties.[1]
During the pendency of the action,
Rabanne filed a motion for a preliminary
injunction in which he claimed that he had recently learned that the
defendants were improperly using monies that were owed to Rabanne to offset
legal fees that the defendants incurred in related litigation with other
parties. The trial court granted
Rabanne's motion and enjoined the defendants from using monies that the
defendants received from sales of merchandise containing Rabanne's images. Defendants appeal the trial court's order
granting the preliminary injunction. We
affirm the order.
II.
FACTUAL AND PROCEDURAL
BACKGROUND
In May 2009, Rabanne filed a
13-count first amended complaint against defendants that included claims for
breach of contract, breach of the covenant of good faith and fair dealing,
fraud, negligent misrepresentation, conversion, and unfair business practices. Rabanne alleged that he entered into an
agreement with defendants in July 2006 to license certain photographs that
Rabanne had taken of Bob Marley and other musicians, for commercial purposes
(Licensing Agreement). Rabanne alleged
that the defendants agreed to pay him an advance as well as royalties based on
sales of merchandise derived from his photographs. Rabanne also alleged that the defendants
agreed to provide him with accounting statements showing the proceeds on which
Rabanne's royalties were to be based.
Rabanne claimed that he had provided the defendants with numerous
original photographs pursuant to the Licensing Agreement, and that he had fully
performed under the Licensing Agreement.
Rabanne alleged that the defendants had failed to pay him the required
advance, failed to provide him with timely and detail accountings, failed to
pay him any royalties due under the Licensing Agreement, and refused to return
his original photographs.
In June 2009, Rabanne filed a motion for a preliminary
injunction. In his motion, Rabanne
requested that the trial court enjoin the defendants from using any monies that
defendants received from the use of Rabanne's photographs, pending the trial of
this action. Rabanne claimed that
defendants had still not paid him any of the money owed to him under the
Licensing Agreement. Rabanne further
argued that the defendants were dissipating funds that rightfully belonged to
Rabanne. Specifically, Rabanne alleged
that defendants were using funds that were owed to Rabanne under the Licensing
Agreement to pay legal fees that defendants were incurring in other lawsuits,
including an action brought by companies representing the estate of Bob Marley
(the Marley Action). Rabanne noted that
the plaintiffs in the Marley Action claimed that A.V.E.L.A.'s licensing
activities using Rabanne's photographs violated certain of the plaintiffs'
trademarks and rights of publicity.
Rabanne also argued that the defendants had continued to refuse to
return to him original transparencies of the Marley photographs, which Rabanne
claimed were of considerable value.
Rabanne supported his motion for a
preliminary injunction with a number of exhibits, including his declaration, a
copy of the Licensing Agreement, a copy of several photographs that Rabanne had
provided to the defendants pursuant to the Licensing Agreement, a fourth
quarter 2007 royalty statement that purported to show that no royalties were
due to Rabanne, and Valencia's January 2008 declaration in the Marley Action in
which Valencia stated that approximately $500,000 worth of merchandise produced
using Rabanne's photographs was currently on sale in Target stores
nationwide. In addition, Rabanne lodged
a copy of the transcript of Valencia's March 2009 deposition in the Marley
Action, in which Valencia testified that defendants had been using royalties
that would otherwise be payable to Rabanne under the Licensing Agreement to
offset legal fees that the defendants incurred in the Marley Action.
In the defendants' opposition to Rabanne's motion, defendants
argued that there was no probability that Rabanne would prevail on the merits
of this action. Among other arguments in
support of this claim, the defendants asserted that A.V.E.L.A. had paid Rabanne
the advance required under the Licensing Agreement, and that A.V.E.L.A. had
provided Rabanne with the accounting statements required under the
agreement. The defendants also contended
that Rabanne had agreed to contribute to the defendants' defense in the Marley
Action by applying whatever royalties were owed to him under the Licensing
Agreement to the defendants' defense costs.
Defendants argued:
"Although Mr. Rabanne would have earned
approximately $23,000 in royalties from July
1, 2008 to the present, [A.V.E.L.A.'s] legal fees in defending the
Marley claims are significantly greater, resulting in no royalties that are
currently due to Mr. Rabanne."
Defendants also argued that Rabanne had failed to demonstrate
the possibility that he would suffer irreparable harm if the injunction were
not granted, because all of Rabanne's claims could be satisfied by a money
judgment. Finally, defendants argued
that any injunction that the trial court might issue should be restricted to
limiting the defendants' use of royalties owed to Rabanne under the Licensing Agreement.
Rabanne filed a reply brief and
lodged additional excerpts from Valencia's depositions that were
taken in the Marley Action.
On August
28, 2009, the trial court entered a tentative ruling granting Rabanne's motion
for a preliminary injunction. The
tentative ruling states in relevant part:
"Rabanne's
motion for a preliminary injunction enjoining Defendants Leo Wayne Valencia and
A.V.E.L.A . . . and their employees, agents, and persons
acting with them or on their behalf from utilizing, spending and/or
transferring any moneys received by Defendants from any third party retailer
(such as Target, Wal-Mart, or Wet Seal), arising out of merchandise that was
sold by these retailers containing images from [Rabanne's] photographs of Bob
Marley and/or any other musician, pending the trial of this action, is
granted . . . conditioned on [Rabanne] posting a
bond . . . in the sum of $10,000.
"[Rabanne]
has shown a reasonable probability of prevailing on the merits, that he will
suffer irreparable harm, and a balance of the equities tilts sharply in his
favor.
"[Rabanne]
has shown a clear breach of the Licensing Agreement as [Defendant's] admit by
declaration that they have made in excess of $153,000[[2]]
yet they do not contest [Rabanne] has not been paid any royalties. [Citations.]
The Licensing Agreement does not require [Rabanne] to pay [Defendants']
legal fees and any modification to the Licensing Agreement must be in writing. [Defendants] present no written evidence to
support their arguments of a 'set off for legal fee.' [Defendants'] argument that their payment of
$4,200 shows they are not in breach is a non-starter because it was a payment
to be [used] for a side-venture ─ the purchase of camera equipment to be
used for photographing archives of a European museum. [Citations.]
"The
irreparable harm [Rabanne] will suffer is the loss of his share of royalties
[Defendants] are earning as they divert [Rabanne's] royalties to pay for legal
fees incurred in other litigation.
"The
'balancing of equities' favors [Rabanne] as [Rabanne] will suffer much greater
injury if the requested injunctive relief is not granted, as monies are
admittedly continuing to be dissipated and great contradictions in revenues
have already been raised."
That same day, the trial court held
a hearing on Rabanne's motion for a preliminary injunction. During the hearing, Rabanne's counsel stated
that he had made a few revisions to the language of a proposed injunction[3] so as to make it clear that the injunction
covered monies that defendants received from licensees and distributors, as
well as from retailers. At the
conclusion of the hearing, the court stated that it would adopt its tentative
ruling, as modified by the revisions provided by Rabanne's counsel.
On the same date, the court entered
an order granting Rabanne's motion for a preliminary injunction. The preliminary injunction states in relevant
part:
"Defendants
Leo Valencia and A.V.E.L.A. ("Defendants") and their employees,
agents, and persons acting with them or on their behalf are enjoined and
restrained from utilizing, spending and/or transferring any moneys to be
received by Defendants from any third party retailer (such as Target, Wal-Mart,
or Wet Seal), distributor or licensee arising out of merchandise that was sold
by these retailers containing images from [Rabanne's] photographs of Bob Marley
and/or any other musician, pending trial of this action."
In its order granting the
preliminary injunction, the trial court required Rabanne to file an undertaking
in the amount of $10,000 pending trial of the action.
Defendants filed a timely appeal of
the trial court's August 28, 2009 order.
III.
DISCUSSION
The trial court did not abuse its discretion
in granting
the preliminary injunction
Defendants claim that the trial
court erred in granting the August 28, 2009 preliminary injunction.
A.
In People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1109,
the Supreme Court outlined the standard of review to be applied to the review
of a trial court's order granting a preliminary injunction:
"At this initial stage in the proceeding, the scope of our inquiry
is narrow. We review an order granting a
preliminary injunction under an abuse of discretion standard. [Citations.]
Review is confined, in other words, to a consideration whether the trial
court abused its discretion in '"evaluat[ing] two interrelated factors
when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the
plaintiff will prevail on the merits at trial.
The second is the interim harm that the
plaintiff is likely to sustain if the injunction were denied as compared to the
harm the defendant is likely to suffer if the preliminary injunction were
issued."' [Citation.] And although we will not ordinarily disturb
the trial court's ruling absent a showing of abuse, an order granting or
denying interlocutory relief reflects nothing more than the superior court's
evaluation of the controversy on the record before it at the time of its
ruling; it is not an adjudication of the ultimate merits of the dispute. [Citations.]"
B.
impermissibly overbroad
Defendants' first contention is that
the injunction is "fatally overbroad"
because,
according to the defendants, even if Rabanne were to prevail on his claims, he
would be entitled only to royalties equal to 15 percent of the amounts
earned by A.V.E.L.A. under the Licensing Agreement. The defendants claim that the trial court's
injunction thus "improperly restricts [Defendants'] use of
85 [percent] of the monies A.V.E.L.A. rightfully earns under the
[Licensing] Agreement and to which Mr. Rabanne has no legal claim."
In support of their contention that
the trial court's injunction is impermissibly overbroad, defendants assert,
without citation to the record, that "Mr. Rabanne concedes in his
complaint that he is only entitled to be paid the royalties which are
due." We have found no such
concession in Rabanne's complaint, nor elsewhere in the record. In his prayer for relief, Rabanne seeks,
among other forms of relief, compensatory, consequential and punitive damages,
rescission of the Licensing Agreement (in the alternative to monetary damages),
the imposition of a constructive trust, interest, attorney fees, and restitution. Further, in his motion for a
preliminary injunction, Rabanne made clear that his claims are not restricted
to breach of contract, arguing, "Besides the contractual claims, there is
also a 'reasonable probability' that [Rabanne] will prevail on his tort
claims." In addition, at the
hearing on Rabanne's motion for a preliminary injunction, Rabanne's counsel
indicated that Rabanne's claims are not restricted to recovering amounts due to
Rabanne under the Licensing Agreement, stating, "[U]ltimately we will be
seeking more than 15 percent . . . ."
Rabanne's complaint contains several
causes of action in which he seeks damages over and above the amounts due to
him under the Licensing Agreement. For
example, Rabanne's first amended complaint includes a claim for intentional
misrepresentation, for which Rabanne seeks punitive damages. (See Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1241
["Punitive damages are recoverable in those fraud actions involving
intentional . . . misrepresentations."].) Rabanne also has brought a cause of action
for conversion, which he alleges in the alternative to his breach of contract
cause of action. "Punitive
damages
may . . . be awarded, if appropriate,
on . . . causes of action for conversion." (Hassoldt
v. Patrick Media Group, Inc. (2000) 84 Cal.App.4th 153, 168, fn. 13.)
Rabanne also has brought a claim for
unfair business practices, and seeks an order of restitution pursuant to
Business and Professions Code section 17203 (section 17203). Defendants have not established on appeal
that Rabanne will not be able to recover the profits that defendants received
as a result of their alleged wrongful exploitation of Rabanne's photographs
pursuant to section 17203. (See
152 Cal.App.4th 889, 915, fn. 15 [discussing the scope of restitutionary
remedies under section 17203 and stating, "[W]here a person with knowledge
of the facts wrongfully disposes of the property of another and makes a profit
thereby, he is accountable for the profit and not merely for the value of the
property of the other with which he wrongfully dealt," quoting Restatement
on Restitution section 1, comment e,
page 14].)
Rabanne
also has brought a claim for unjust enrichment.[4] Defendants have not established that Rabanne will not be able recover the
profits that the defendants received as a result of their alleged wrongful
exploitation of Rabanne's photographs, pursuant to an unjust enrichment
theory. (See County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533,
542-543 [discussing the remedy of unjust enrichment and stating, "In
particular, a person acting in conscious disregard of the rights of another
should be required to disgorge all profit because disgorgement both benefits
the injured parties and deters the perpetrator from committing the same
unlawful actions again"].)
Accordingly,
we conclude that defendants have not established that Rabanne's potential
damages in this case are restricted to the amounts to which he was entitled
under the Licensing Agreement.[5] We therefore conclude that the defendants
have not demonstrated that the trial court granted an impermissibly broad
injunction, thereby abusing its discretion.
C.
in determining that there is a
suffer irreparable harm
The defendants contend that the trial court erred in
determining that there is a possibility
that Rabanne will suffer irreparable harm, and that this possibility supports
issuance of a preliminary injunction.
Code of Civil Procedure section 526,
subdivision (a) provides in relevant part:
"(a) An injunction may be
granted in the following cases:
[¶] . . . [¶]
"(2)
When it appears by the complaint or affidavits that the commission or
continuance of some act during the litigation would produce waste, or great or
irreparable injury, to a party to the action.
"(3)
When it appears, during the litigation, that a party to the action is
doing, or threatens, or is about to do, or is procuring or suffering to be
done, some act in violation of the rights of another party to the action
respecting the subject of the action, and tending to render the judgment
ineffectual."
In Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136 (
Code of Civil Procedure section 526, subdivision (a)(3), "[a]n injunction
against disposing of property is proper if disposal would render the final
judgment ineffectual."[6] In Heckmann,
the court concluded that a trial
court reasonably determined that injunctive relief was necessary to prevent the
dissipation of profits stemming from an allegedly improper corporate takeover
attempt. (Heckmann, supra, 168 Cal.App.3d at pp. 135-136.)
In
this case, as the trial court noted in its order granting the preliminary
injunction, it is undisputed that the defendants have been using funds payable
as royalties to Rabanne under the Licensing Agreement to pay the defendants'
legal fees in other litigation. On
appeal, the defendants have failed to demonstrate that the trial court erred in
concluding that the Licensing Agreement does not authorize the defendants to
offset their legal fees in this manner. Based on the defendants'
misuse of the royalty funds, the trial court could have reasonably concluded
that a preliminary injunction was necessary to restrain the defendants from
dissipating assets that rightfully belong to Rabanne.
In addition, in light of the fact
that the defendants continue to maintain on appeal that Rabanne has "no
legal claim" to any of the profits that the defendants have earned through
the use of Rabanne's images, the trial court may have reasonably concluded that
defendants are likely to dissipate these funds as well, notwithstanding
Rabanne's potential ability to recover such funds, or a portion thereof, in
this litigation. (See pt. III.B.,
Finally, the trial court's
conclusion that issuance of an injunction was appropriate to prevent a
dissipation of assets is strengthened by the fact that Rabanne presented evidence
that the defendants maintained questionable accounting practices throughout the
time period for which royalties were owed.
For example, Rabanne presented evidence that in a deposition taken in
the Marley Action, Valencia testified that A.V.E.L.A.'s
bookkeeper had not performed services since 2006, and that neither Valencia nor A.V.E.L.A. has filed an
income tax return for several years.
Accordingly, we conclude that the
trial court did not abuse its discretion in determining that the possibility
that Rabanne would suffer irreparable harm supported issuance of the
preliminary injunction.[7]
D.
in concluding that Rabanne
of prevailing in the action
Defendants claim that Rabanne failed to make any showing that
he is likely to prevail on the merits of his claims. Defendants offer four arguments in support of
this claim. None is persuasive.
First, without citation to the
record or to any legal authority, defendants claim that "Rabanne may be
collaterally estopped from pursuing any claims based on the enforceability of
the agreement." This argument is
apparently premised on Rabanne's affidavit in the Marley Action in which
Rabanne stated that the Licensing Agreement was "void and
unenforceable" because the defendants had never performed their
obligations under it. (See fn. 7,
Specifically, in the affidavit, Rabanne stated:
"The
Proposed Licensing Agreement with Defendants never went into effect, and was in
fact void and unenforceable upon execution, as Defendants did not pay me the
guaranteed $5,000 minimum advance, nor provide me with any of the guaranteed
royalties under Section 6 of the Proposed License Agreement, nor make any
payments whatsoever to me pursuant to the terms of the Proposed License
Agreement."
Although defendants contend that
Rabanne may be "collaterally estopped" from prevailing on his claims
in this case based on his affidavit in the other case, it appears from their
brief that they intended to refer to the doctrine of judicial estoppel, not
collateral estoppel.[8] In Silvaco
Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 231,
the court outlined the doctrine of
judicial estoppel as follows:
"'The conditions for the doctrine's operation have been described
as follows: '(1) the same party has
taken two positions; (2) the positions were taken in judicial
proceedings . . . .; (3) the party was successful in
asserting the first position (i.e., the tribunal adopted the position or
accepted it as true); (4) the two positions are totally inconsistent; and (5)
the first position was not taken as a result of ignorance, fraud, or
mistake.' [Citation.]"
"The
inconsistent position generally must be factual in nature." [Citation.]" (ABF
Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 832.) "Judicial estoppel
is an equitable doctrine, and its application is discretionary." (Jhaveri
v. Teitelbaum (2009) 176 Cal.App.4th 740, 751.) The doctrine "is intended to protect the
integrity of the judicial process by preventing litigants from playing 'fast
and loose' with the courts [citation] and, as such, it
should be invoked only in egregious cases.
[Citations.] For these reasons,
judicial estoppel is usually limited to cases where a party misrepresents or
conceals material facts.
[Citation.]" (
(2001) 94 Cal.App.4th 102, 118.)
In
this case, defendants have not established that Rabanne's position in the Marley
Action was "totally inconsistent" with his position in this case (
and we see no factual inconsistency between Rabanne's affidavit in the Marley
Action and his claims in this case. At
most, Rabanne's affidavit presents a different legal argument as to the
consequence of defendants' alleged failure to comply with the terms of the
Licensing Agreement. Rabanne's affidavit
in the Marley Action thus does provide a basis for applying the doctrine of
judicial estoppel. (See
supra, 94 Cal.App.4th at p. 118
["Appellants' changing legal arguments, which resulted from their
different positions in the two lawsuits, is a reasonable litigation tactic and
does not undermine the integrity of the judicial process"].) In addition, defendants have not established
that Rabanne was successful in the Marley Action in asserting that the
Licensing Agreement is void and unenforceable.
(Ibid.)[9] For these reasons, we reject defendants'
argument that judicial or collateral estoppel will likely bar Rabanne's claims.
Defendants
also contend that Rabanne "warranted in the [Licensing] [A]greement that
he had all the rights necessary to permit [A.V.E.L.A.] to license and exploit
the photographs," and that "[i]t is apparent that it is Mr. Rabanne
who has breached the Agreement, not [A.V.E.L.A.]." Assuming for the sake of argument that
Rabanne's alleged breach of the Licensing Agreement would provide a defense to
all of Rabanne's claims against defendants, defendants have failed to cite the
provision in the Licensing Agreement that they claim supports their assertion
that Rabanne provided such a warranty.
Thus, defendants have not established that Rabanne breached the Licensing
Agreement.
Defendants
also assert that A.V.E.L.A. paid Rabanne a $2,500 advance as required by the
Licensing Agreement. Specifically,
defendants maintain that A.V.E.L.A. paid Rabanne $4,200 in order to enable
"Mr. Rabanne to purchase camera equipment at a great discount, which could
then be sold for as much as $50,000 and a great profit for both
parties." The defendants maintain
that Rabanne and Valencia
agreed that the $4,200 "would cover the entire advance," under the
Licensing Agreement. The trial court
rejected this argument, stating "[Defendants'] argument that their payment of $4,200
shows they are not in breach is a non-starter because it was a payment to be
[used] for a side-venture . . . ." The defendants offer no reason for
overturning the trial court's factual finding.
Accordingly, we conclude that the defendants have not demonstrated that
A.V.E.L.A. paid Rabanne the advance required by the terms of the Licensing
Agreement.
Defendants
also contend that "[A.V.E.L.A.] has provided Mr. Rabanne the required
[accounting] statements, with an accounting and offset attorney
fees." The defendants did not
establish that A.V.E.L.A. provided accounting statements to Rabanne in a timely
matter. The record contains
accounting statements that date to the third quarter of 2006. However, defendants have not provided a
certified mail receipt showing that any of the statements were mailed or
otherwise provided to Rabanne earlier than February 2008. Further, the trial court could have
reasonably questioned the accuracy of the accounting statements in light of the
evidence of defendants' questionable accounting practices that Rabanne
presented in support of his motion for a preliminary injunction. (See pt. III.C., ante.)
Accordingly,
we conclude that the
trial court did not abuse its discretion in determining that Rabanne
established a reasonable probability of prevailing in the action.
IV.
DISPOSITION
The August 28, 2009 order is affirmed.
Defendants are to bear costs on appeal.
AARON, J.
I CONCUR:
McCONNELL, P. J.
I CONCUR IN THE RESULT:
O'ROURKE, J.
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[1] In
his complaint, Rabanne alleged that "any purported individuality or
separateness between Valencia
and [A.V.E.L.A.] did not and does not exist," and that "the corporate
identity of [A.V.E.L.A.] should be disregarded and defendants Valencia
and [A.V.E.L.A.] should be found jointly and severally liable to
[Rabanne]."
[2] In
his declaration offered in support of his opposition to Rabanne's motion for a
preliminary injunction, Valencia
acknowledged that Rabanne's images had earned approximately $23,000 in
royalties, prior to the defendants' offset for defense costs in other
litigation. The trial court presumably
applied the Licensing Agreement's 15 percent royalty rate and concluded
that the defendants had earned in excess of $153,000 from Rabanne's
images.
