Worldwide Subsidy Group v. Motion
Picture Assn. of America
Filed 7/20/12 Worldwide Subsidy Group v. Motion Picture
Assn. of America CA2/4
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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 FOUR
WORLDWIDE SUBSIDY GROUP,
Plaintiff and
Appellant,
v.
MOTION PICTURE ASSOCIATION OF AMERICA, INC.,
Defendant and
Respondent.
B236717
(Los Angeles County
Super. Ct. No. BC389895)
APPEAL from a judgment of the Superior Court of
County, William F. Fahey, Judge. Affirmed.
Pick & Boydston and Brian D. Boydston for
Plaintiff and Appellant.
Mitchell, Silberberg & Knupp,
Gregory O. Olaniran, Karin G. Pagnanelli, Marc E. Mayer, and Lucy Holmes
Plovnick for Defendant and Respondent.
_________________________________________
The
following facts are undisputed. The
States Copyright Office (Copyright Office), under the supervision of the
Librarian of Congress (Librarian), controls the distribution of royalties for
the retransmission of broadcast programming by cable and satellite. (See 17 U.S.C. §§ 111, subd. (d) & 119,
subd. (b).) Appellant Independent
Producers Group (IPG)
name="_ftnref2" title="">[2] and respondent Motion Picture Association of
America (MPAA) represent the interests of owners of media content as
to such royalties.
A dispute between MPAA and IPG arose
over the distribution of cable royalties collected for the 1997 calendar
year. The parties appeared before the
Copyright Arbitration Royalty Panel (CARP), a decision-making panel within the
Library of Congress, to determine the distribution of these royalties. (See 65 Fed.Reg. 65335 (Nov. 1, 2000); see also 17 U.S.C. §§ 111, 802.) CARP’s final determination was reversed and
remanded by the Librarian. (66 Fed.Reg.
66433 (Dec. 26, 2001).) IPG and MPAA appealed the Librarian’s
determination to the United States Court of Appeals for the District of
Columbia Circuit, with the Librarian named as a respondent in both cases. The appeals were consolidated.
On March
31, 2004, while the case was in mediation, IPG and MPAA entered into a purported
two-part agreement.
The agreement was negotiated with
MPAA by Marian Oshita, a member of IPG, and attorney Jeffrey Bogert, whom she
had retained to represent IPG in the litigation regarding the royalties. While the agreement was being negotiated,
IPG’s other member, Lisa Galaz, through her attorney, advised MPAA and the
mediator that neither Oshita nor Bogert had authority to bind IPG without
Galaz’s authorization. Specifically, the
letter advised that Oshita had only a 25 percent membership interest in IPG;
any additional interest she may have had was an economic rather than membership
or voting interest.
“Settlement Agreement – Part 1” (Part I) provided for
MPAA to pay IPG $115,000 for its 1997 cable royalties and additional sums of
1997 satellite royalties and 1998-1999 cable and satellite royalties, upon a
timely claim for payment by IPG. MPAA
issued a check in this amount to Bogert’s client trust account and delivered it
to Bogert. In “Settlement Agreement –
Part 2” (Part II), IPG agreed to withdraw its notices of intent to participate
in proceedings to distribute cable and satellite royalties for years 1997-1999,
and the parties agreed to dismiss their appeals.
Librarian, the Librarian signed this part of the agreement. Each part of the agreement included a choice
of law provision to the effect that it would be governed by the law of the District of Columbia.
On December 4, 2004, the agreement was produced
to counsel for Galaz pursuant to a subpoena in the lawsuit to determine Galaz’s
membership interest in IPG.
In January 2005, after a jury trial to determine
Galaz’s membership interest in IPG, a judgment was entered rescinding the sale
of a 37.5 percent interest in IPG to Oshita.
The judgment provided that “by virtue of such rescission, from the date
of entry of this judgment, [Galaz] is the owner of a 75% economic and
membership interest in [IPG].” (Galaz
v. Oshita (Super. Ct. L.A. County,
2005, No. 297015).)
In 2008, IPG filed a notice of intent to participate
in a proceeding to distribute cable royalties for years 1998 and 1999. MPAA raised the settlement agreement as a bar
to IPG’s participation. On April 29, 2008, IPG sued MPAA, seeking a declaration that the
settlement agreement was void ab initio
and seeking its rescission for uncertainty, lack of consideration, and failure
of consideration. A first amended
complaint was filed on June 26, 2008.
the case was untimely under the District of Columbia three-year statute of
limitations and that IPG had failed to join the Librarian.
On March 11, 2010, the trial court sustained
the demurrer without leave to amend, ruling that the
run and that the issue of joinder was moot.
Specifically, the court concluded that the complaint, filed in April
2008, was barred by the three-year District of Columbia statute of limitations
because IPG knew or had reason to know of the settlement agreement in April
2004 and no later than December 2004.
The court was not persuaded by IPG’s argument that the agreement was
void or that the cause of action continued to accrue. While it accepted MPAA’s argument that the District of Columbia statute of limitations
applied under the choice of law provision, the court was under the erroneous
impression that the applicable California statute of limitations also
was three years. In fact, it is four
years. (Code Civ. Proc., § 564,
subd. (a).)
The court denied reconsideration on May 5, 2010, but
after taking the matter under submission, it clarified that “the applicable
statutes of limitations (regardless of the forum selected) commenced running no
later than March 31, 2004, the date the settlement agreement was entered into,”
a date more than four years before the commencement of the litigation.
The case was dismissed, and IPG appealed. Accepting the allegations as true, in
complaint established that the settlement agreement could be voided on the
ground that Bogert, who signed the agreement on behalf of IPG, lacked authority
to enter the agreement. We concluded
that it was premature at the demurrer stage of the litigation to enforce the
choice of law provision since that provision could fall along with the
remainder of the agreement. We reversed
the judgment of the trial court and remanded the case for further proceedings.
On remand, both parties filed cross-motions for
summary judgment and summary adjudication.
The trial court granted MPAA’s motion for summary judgment and denied
IPG’s cross-motion. It ruled: (1) IPG ratified the settlement agreement;
(2) the agreement constituted an indivisible transaction; (3) the agreement’s
choice of law provision should be enforced; and (4) IPG’s claims were barred by
the District of Columbia’s three-year statute of limitations. IPG filed this timely appeal.
DISCUSSION
We review the trial court’s grant of
summary judgment de novo, considering all the evidence set forth in the moving
and opposition papers. (
25 Cal.4th 826, 860.)
I
IPG contends there are triable
issues of material fact as to whether it ratified Part I of the settlement
agreement.
A contract that is voidable because
it was entered into by an agent without authority to do so “may be rendered
valid and binding on the principal, as of the time the unauthorized act was
done, if the principal ratifies and thus gives effect to it.” (3 Witkin, Summary of Cal. Law (10th ed.
2005) Agency, § 139, p. 184, citing Civ. Code, § 2307.) Ratification is a question of fact to be proved
by the party asserting it. (
Inc. (2002) 103 Cal.App.4th 233, 242 (StreetScenes).) Ratification may be established by the
principal’s voluntary and knowing acceptance or retention of the benefits of
the transaction by the principal. (Civ.
Code, § 2310.) Ratification may be
implied where the principal, after becoming fully informed of the unauthorized
transaction, fails to repudiate it. (
p. 242.) The principal will be
found to have ratified the transaction and be bound by it. (Ibid.)
As an initial matter, we note IPG
did not challenge MPAA’s contention in the trial court that IPG ratified the
agreement. Issues raised for the first time on appeal are
waived and will not be considered on appeal.
(Bialo v. Western Mutual Ins. Co.
(2002) 95 Cal.App.4th 68, 73.)
At the hearing on the motion, the
court issued its tentative ruling concluding that IPG ratified the agreement by
accepting and never returning the $115,000 royalty check and that the two parts
of the agreement constituted one indivisible transaction. IPG’s counsel argued “the issue does come
down to . . . [whether] this [is] one contract or two. . . . Now,
we didn’t seek a declaratory judgment on what was resolved by Part I, because
money was paid and it wasn’t returned, and there is ratification on that. We haven’t actually admitted ratification,
but we’re not challenging it.”
Moreover, IPG effectively conceded
ratification by not disputing that it accepted and retained the $115,000
payment by MPAA nor that it did not seek to void Part I. MPAA’s motion for summary judgment asserted
that IPG ratified Part I by accepting and retaining the $115,000 check tendered
by MPAA. In opposition to MPAA’s motion,
IPG argued that it “does not seek rescission, or anything else, with regard to
‘Settlement Agreement-Part I,’ upon which the subject payment of $115,000 was
made. Specifically, all IPG seeks from
this action is to free itself from the restriction in ‘Settlement
Agreement-Part II.’ . . . IPG may or may not have ratified
[Part I], but it does not seek to declare it void.”
In its separate statement of
undisputed material facts, IPG did not dispute that “MPAA made a $115,000
settlement payment to IPG on April 8, 2004 pursuant to the [settlement
agreement]” nor that “IPG has never returned any portion of the $115,000
settlement payment to MPAA.”
In its briefing on appeal, IPG
contends there is no evidence that the $115,000 check was paid to IPG since the
copy of the check that appears in the record is made out to Bogert’s client
trust account. But IPG does not explain
why it did not raise this claim in the trial court or dispute it in opposition
to summary judgment. Moreover, IPG’s
briefs do not address MPAA’s contention on appeal that IPG conceded
ratification.
We find that IPG conceded its
ratification of Part I by not disputing that MPAA paid and IPG retained
$115,000, by not seeking rescission of Part I, and through its attorney’s
admission that it was “not challenging” ratification. By failing to address these concessions, IPG
has provided us with no basis to reach a different conclusion.
II
Since we hold IPG ratified Part I of
the agreement, we next determine whether its ratification extends to Part
II. IPG contends Parts I and II are
separate, divisible agreements on the ground that each addresses distinct legal
interests.
“Ratification of part of an
indivisible transaction is a ratification of the whole.” (Civ. Code, § 2311.) Multiple writings relating to the same
subject matter, between the same parties, and made as part of substantially one
transaction, are considered a single contract.
(Civ. Code, § 1642.) Whether
multiple writings are intended to be elements of a single transaction is a
question of fact. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 534.) We use standard rules of contract
construction to make this determination.
(See Reigelsperger v. Siller
(2007) 40 Cal.4th 574, 580).
The titles and text of the two
writings expressly demonstrate that the parties intended them to constitute one
contract. First, their titles are
“Settlement Agreement-Part 1” and “Settlement Agreement-Part 2,” which indicate
they are a single agreement executed in two parts. Part I provides: “This Agreement shall take effect only upon
execution by the parties of [Part II],” and Part II in turn says: “This Agreement shall not come into effect
separately from [Part I].” Both writings
state that they represent the parties’ agreement with respect to the appeal
from the Librarian’s decision.
The subject matter of the two
agreements indicates that the two writings are interdependent. Part I purports to settle all cable and
satellite royalty claims between IPG and MPAA for the years 1997 to 1999. The parties agreed that MPAA would pay IPG
$115,000 for its share of the 1997 cable royalties. MPAA would also pay IPG its 1998-1999 cable
royalties and 1997-1999 satellite royalties so long as IPG submitted a timely
and documented claim to MPAA. Part II
requires IPG to withdraw from proceedings held by the Copyright Office to
distribute 1997-1999 cable and satellite royalties, and directs both parties to
dismiss the consolidated appeal.
Part II’s mandate that IPG not claim
royalties for 1997-1999 makes sense only in relation to Part I’s provision that
MPAA pay IPG royalties for that time period.
If Part I’s provision allowing IPG to seek royalties from MPAA were
allowed to stand without Part II’s requirement that IPG refrain from claiming
those royalties from the Copyright Office, IPG would effectively be permitted
to receive double payment for the same royalty claims. The agreements are necessarily
intertwined.
IPG contends “each agreement
contains distinct, countervailing consideration, and is capable of standing on
its own based on the corresponding obligations of the parties within each
agreement.” We disagree. As we have discussed, Part I requires MPAA to
pay IPG upon its claim for royalties due from years 1997-1999, and Part II
requires IPG to withdraw from proceedings to claim its royalties during those
years. The consideration for MPAA’s
obligations in Part I is contained in Part II, and vice versa as to IPG’s
obligations.
IPG also argues that the parties to
Parts I and II are not the same. The
only difference is that the Librarian signed Part II but not Part I. The appeals filed by IPG and MPAA were from a
ruling of the Librarian. Because the
parties agreed to dismiss their appeals in Part II, the Librarian signed this
part of the agreement. The Librarian had
no legal relationship with respect to Part I’s agreement that MPAA would pay
IPG for its royalties. Thus, the
Librarian’s signing of Part II does not support an inference that the two
writings were intended to be separate contracts, particularly since IPG and
MPAA each signed both. (See
50 Cal.App.3d 654, 659, fn. 2 [whether multiple instruments were signed by
all or only some of the parties to the transaction is not dispositive to
finding instruments constitute one contract].)
Accordingly, we construe the two
writings as a single, indivisible agreement.
Because IPG accepted the benefits under Part I, it is bound to its
obligations contained in Part II.
III
Since we conclude IPG is bound by the entire
agreement, the contract’s choice of law provision to the effect that it would
be governed by the law of the District of Columbia applies. District of Columbia Code 12-301, subdivision
(7) provides a three-year statute of limitations for claims arising out of a
contract. Because IPG’s lawsuit was
filed in April 2008, more than three years after December 2004, which is when
it claimed to have learned of the agreements, its lawsuit is time barred.
DISPOSITION
The summary judgment is
affirmed. Respondent to have its costs
on appeal.
NOT TO BE
PUBLISHED IN THE OFFICIAL REPORTS.
EPSTEIN,
P. J.
We
concur:
WILLHITE,
J. SUZUKAWA,
J.
on our previous decision in Worldwide Subsidy
Group, Inc. v. Motion Picture Assoc. of America, Inc. (Jan. 25, 2011,
B224837) [nonpub. opn.] (Worldwide
Subsidy I).
are Worldwide Subsidy Group, LLC, a Texas limited liability company, doing
business as Independent Producers Group (IPG), and Worldwide Subsidy Group,
LLC, a California limited liability company, formerly named Artist Collections
Group, LLC. Both sides refer to the two
appellants in the singular and collectively as IPG. We will follow that convention.
