Marathon Funding v. >Paramount> Pictures























Filed 3/4/13 Marathon Funding v. Paramount Pictures CA2/8













NOT TO BE PUBLISHED IN THE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opinion has not been certified for publication or ordered published for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 EIGHT




>

MARATHON FUNDING, LLC, Plaintiff and Appellant, v. PARAMOUNT PICTURES CORPORATION, a Delaware corporation, Defendant and Respondent.

B240723 (Los Angeles County Super. Ct. No. BC436412)

APPEAL
from a judgment of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County.
Mark Mooney, Judge.
Affirmed.



Hillel Chodos for
Plaintiff and Appellant.



Kendall
Brill & Kleiger, Richard B. Kendall and Nicholas F. Daum for Defendant and
Respondent.



__________________________





Plaintiff Marathon Funding, LLC,
appeals from the judgment entered for defendant Paramount Pictures Corporation
in this action for breach of fiduciary duty.
The claim arose from a contract by which Marathon
invested in several motion pictures produced by Paramount. Because the trial court correctly determined
that the parties’ agreement did not give rise to any fiduciary duties, we
affirm the judgment. We also affirm the
postjudgment order awarding Paramount attorney’s fees.



FACTS AND PROCEDURAL HISTORY



In
December 2006, Marathon Funding, LLC, agreed to invest in a slate of
14 motion pictures to be produced and distributed by Paramount Pictures Corporation,
including what would become the Oscar winner for best picture in 2007 – “No
Country For Old Men” – which starred Tommy Lee Jones and Javier Bardem. Pursuant to that agreement, Paramount
issued an accounting statement to Marathon in late 2009
that deducted a little more than $2 million from Marathon’s
account. Marathon
later determined that Paramount did
so to cover a portion of a $15 million payment Paramount
made to Jones due to a drafting error Paramount
made in its contract with Jones.

Marathon
sued Paramount for breach of
fiduciary duty, contending that Paramount
should not have charged Marathon for Paramount’s
error. The trial court granted Paramount’s
motion to hold a bench trial, not a jury trial, finding that this was the
proper course because the gist of Marathon’s action was
equitable in nature. The parties
stipulated that no extrinsic evidence would be introduced concerning the
formation or interpretation of the investment agreement, and that no extrinsic
evidence would be introduced concerning their conduct under that agreement
except as to the accounting charges that were made. In addition, Marathon
stipulated to the facts it characterized as undisputed in response to Paramount’s
earlier unsuccessful motion for summary judgment.

The
facts showed that Paramount and Marathon
signed a “Multi-Picture Investment Agreement” dated December 15, 2006, that
called for Marathon to invest in a slate of Paramount
motion pictures, including “No Country For Old Men”.href="#_ftn1" name="_ftnref1" title="">>[1] Marathon is a Delaware
limited liability corporation with its principal place of business in New
York State, and
was formed by Morgan Stanley Asset Funding, LLC, a subsidiary of the
international investment bank Morgan Stanley.
Morgan Stanley put up $150 million through a separate agency it created
to finance Marathon’s investment. Morgan Stanley also acted as the exclusive
agent for refinancing of that credit by allowing other investors, including
financial institutions and hedge funds, to invest in Marathon’s
right to receive profit payments under the investment agreement.

Under
the investment agreement, Marathon received a 50 percent
share of Paramount’s copyright
interest in each of the movies covered by the agreement (the covered
pictures). Because other financing was
obtained for No Country, Marathon and Paramount
each ended up with a 25 percent share of that film’s copyright while the
remaining 50 percent went to the new investor, Disney/Miramax. Marathon’s “Investment
Price” in each movie was based on its proportional copyright share of the
movie’s estimated production costs. In
exchange, Marathon would receive the same proportional
percentage of each movie’s net receipts.
Paramount was responsible
for all the marketing and distribution costs of the covered pictures, which,
because of their low-budget nature, greatly exceeded the actual production
costs. Paramount would advance all
direct costs for the movies and, “[a]s between Paramount and Investor,
Paramount shall control all decisions (i.e., business, creative, or otherwise)
relating to the development and production of each Covered Picture as well as
the decisions whether to pursue and consummate any Co-Financing Transaction,
and Investor shall have no consultation or approval rights thereto.”

The
term “net receipts” was contractually defined to mean the gross receipts from
the distribution and exhibition of a movie, minus deductions for certain
expenses and fees, including third party profit participation payments that
might be owed to the director, producers, or certain actors.href="#_ftn2" name="_ftnref2" title="">[2] Jones’s contract for No Country included
a type of third party profit clause known as a box office bonus which is at the
heart of the present litigation. So too
did the contracts of directors Joel and Ethan Coen and producer Scott Rudin. These talent contracts were negotiated in
early 2006, well before the investment agreement was signed. Production of No Country had also concluded
before the investment agreement was signed.

The box office
bonuses negotiated for Jones, Rudin, and the Coen Brothers provided that each
would receive fixed bonuses when either the domestic box office receipts
reached certain levels, or when worldwide box office receipts reached twice the
domestic level. Paramount
hired outside legal counsel to prepare agreements that conformed with the
negotiated terms, as reflected in deal memos provided by Paramount’s
in-house negotiator. However, the lawyer
mistakenly drafted the agreements to provide that bonuses would be paid once
worldwide box office receipts, when multiplied by two, reached the levels
prescribed for domestic box office bonuses.
As a result, the contracts between Paramount
on the one hand, and Jones, Rudin, and the Coen Brothers on the other hand,
provided for an unintended increase in their bonus compensation.href="#_ftn3" name="_ftnref3" title="">[3]

Outside counsel
discovered her mistake in June 2006 but apparently did not notify Paramount. Although drafts of the agreements were
distributed to various departments within Paramount, including to the legal
department and the contract negotiator, a highly-placed Paramount legal
executive testified that it was not Paramount’s policy to review such drafts to
be sure they were consistent with the negotiated terms. Instead, Paramount
relied on its outside counsel, whom it had used without problems before. According to Paramount,
it did not discover the errors until 2008, at about the same time as did one of
Rudin’s attorneys.

Once Paramount
learned of the error in the box office bonus provision, it contacted Rudin,
Jones, and the Coen Brothers. Rudin and
the Coen Brothers acknowledged that the provision as it appeared in the
contract did not reflect the terms they had in fact negotiated and agreed to
reform their contracts accordingly.
Jones refused to do so, and the dispute was eventually heard by a panel
of arbitrators, who ruled 2-1 in Jones’s favor.

Under the higher,
erroneous, formula, Jones was entitled to a box office bonus of $17.5
million. According to Carmen Desiderio, Paramount’s
senior vice president in charge of contract accounting, if the correct formula
had been applied, Jones would have been entitled to a box office bonus of just
under $5 million as of October 2011.
That figure would have increased over time, however, Desiderio
testified. Using Paramount’s
standard accounting methodology, Desiderio testified that Jones would most
likely have earned an additional $1.7 million in box office bonus compensation
over the movie’s 10-year life cycle.
Because Paramount had
already paid Jones $2.5 million of his box office bonus, Paramount
paid him another $15 million to make up the difference. That figure capped the total amount of such
compensation Jones could receive, however.
As a result, Jones was compensated more than $10 million above what
he would have received absent the contract drafting error.

After obtaining a
settlement of $2.75 million from its outside counsel’s law firm, Paramount
used that figure to reduce for accounting purposes to its investors the amount
of box office bonus paid to Jones, and then allocated the reduced amount among
itself and the investors according to their proportional ownership interests in
the copyright for No Country. As a
result, Marathon was charged approximately $2 million
more than it would have been had the error not occurred.href="#_ftn4" name="_ftnref4" title="">>[4] Marathon did receive
more than $12 million from Paramount
for its investment in No Country, however.

The investment
agreement contained three provisions that disclaimed the existence of either a
partnership or of any fiduciary duties by Paramount. Paragraph 8, captioned “HOLDING OF FUNDS”,
stated that “Paramount . . . shall
not be considered a trustee pledgeholder, fiduciary or agent of Investor by
reason of anything done or any money collected by it, and shall not be
obligated to segregate receipts of the Covered Pictures from its other
funds.” Paragraph 14, captioned “Tax
Matters,” states that “Paramount and Investor intend and agree that neither
this Agreement nor the transactions contemplated herein shall be treated as or
give rise to a partnership for federal income tax purposes or any other
purpose.” Exhibit B to the investment
agreement included section “III. ACCOUNTING,” which applied to
accounting statements and allocation of funds to Marathon. Under subdivision G. of this section, beneath
the caption “Creditor-Debtor”, it said that “There is a creditor-debtor
relationship between Paramount and Investor with respect to the payment of
amounts due Investor under the Agreement and nothing contained in the Agreement
shall be construed to create an agency, trust or fiduciary obligation with
respect to such amounts . . . .”

Marathon
contended that the investment agreement gave rise to a joint venture between it
and Paramount, which therefore made Paramount
its fiduciary. Marathon
also contended that a fiduciary duty arose from the fact that it entrusted its
money with Paramount and gave Paramount
full control over the use of those funds.
According to Marathon, Paramount breached its fiduciary duty in several
ways: By failing to catch the box office
bonus drafting error in Jones’s contract; by not notifying Marathon once
Paramount learned of the error, even throughout the arbitration with Jones; by
rejecting Jones’s $3 million settlement offer; by not pursuing a legal
malpractice claim against another lawyer who worked on the Jones compensation
agreement; and by not disclosing in its accounting statement why it had
deducted the sum of money that Marathon later learned was attributable to the
drafting error in the Jones contract.

The trial court
never reached those issues, however, finding instead that, under New
York law, the investment agreement’s disclaimers of
fiduciary duty were effective because the agreement did not operate to create a
joint venture. The trial court later
granted Paramount’s posttrial
motion for attorney’s fees, awarding it more than $690,000.



>DISCUSSION



1.
New York Law Applied to Interpretation of the Investment Agreement



The investment
agreement stated that “THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE WITHIN, AND TO BE PERFORMED WITHIN, SUCH STATE, EXCLUDING CHOICE
OF LAW PRINCIPLES OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN NEW YORK.”href="#_ftn5" name="_ftnref5" title="">>[5] Pursuant to this provision, the trial court
applied New York law when
construing that agreement. Marathon
contends the trial court erred by doing so.

Marathon’s primary
argument is based on the applicability of Nedlloyd
Lines B.V. v. Superior Court (1992) 3 Cal.4th 459 (>Nedlloyd). The Nedlloyd
court considered a choice of law provision in a stock purchase agreement, which
stated, “This agreement shall be governed by and construed in accordance with
Hong Kong law and each party hereby irrevocably submits to the non-exclusive
jurisdiction and service of process of the Hong Kong courts.” (Id. at
p. 463.) The Supreme Court rejected
a claim that the provision did not apply to a cause of action for breach of
fiduciary duty on the theory that such a claim was independent of the
shareholders’ agreement and outside the intended scope of the clause. The Supreme Court applied Hong Kong law. Marathon contends that Nedlloyd does not apply to its fiduciary duty claim because the
choice of law provision in the investment agreement with Paramount –stating
that “the terms of this agreement” would be construed under New York law – is
narrower than the one at issue in Nedlloyd
– which stated that “this agreement” (not “the terms of this agreement”) would
be construed under another forum’s law.
We disagree.href="#_ftn6" name="_ftnref6"
title="">[6]

>Nedlloyd held that “[w]hen two
sophisticated, commercial entities agree to a choice-of-law clause like the one
in this case, the most reasonable interpretation of their actions is that they
intended for the clause to apply to all causes of action arising from or
related to their contract.” (>Nedlloyd, supra, 3 Cal.4th at
p. 468.) In reaching this
conclusion, the Nedlloyd court
focused on the provision’s statement that the agreement would be “governed by”
Hong Kong law. That phrase “is a broad
one signifying a relationship of absolute direction, control, and
restraint. Thus, the clause reflects the
parties’ clear contemplation that ‘the agreement’ is to be completely and
absolutely controlled by Hong Kong law.
No exceptions are provided.” (>Id. at p. 469.) Because the defendant’s alleged fiduciary
duties could arise and exist only because of the parties’ agreement, Hong Kong
law must govern the legal duties “created by or emanating from” that agreement
in order to completely control the agreement of the parties. (Ibid.)

This conclusion
“comports with common sense and commercial reality,” the Nedlloyd court held, because no “rational businessperson[]
attempting to provide by contract for an efficient and business-like resolution
of possible future disputes, would intend that the laws of multiple
jurisdictions would apply to a single controversy having its origin in a
single, contract-based relationship.” (>Nedlloyd, supra, 3 Cal.4th at
p. 469.)

We see no
meaningful difference between the choice-of-law provision at issue here and the
one at issue in Nedlloyd. Construing “this agreement” necessarily
includes construing its terms. Most
important, the Nedlloyd court focused
on the phrase “governed by,” which is also present in the investment agreement
with Paramount. As in >Nedlloyd, the agreement was made by
sophisticated commercial entities. In
order to govern their agreement, New York law must apply to Marathon’s breach
of fiduciary duty claim, which is both created by and emanates from the
investment agreement.href="#_ftn7"
name="_ftnref7" title="">[7]

Marathon
challenges the choice-of-law ruling on two other grounds that appear to stem
from Nedlloyd. The Nedlloyd
court established certain guidelines for trial courts to follow when
determining whether a contractual choice of law provision is enforceable. The court must first determine whether the
chosen state has a substantial relationship to the parties or their
transaction, or whether there is any other reasonable basis for the parties’
choice of law. If neither test is met,
the court need not enforce the choice of law provision. (Nedlloyd,
supra, 3 Cal.4th at p. 466.) If
either test is met, however, the court must then determine whether the chosen
state’s law is contrary to a fundamental policy of California. If no such conflict exists, then the court
shall enforce the choice of law provision.
If there is a fundamental conflict with California law, the court must
then determine whether California has a materially greater interest than the
chosen state in the determination of the particular issue. The choice of law provision will not be
enforced if California has such an interest.
(Ibid.)

Marathon contends
that the New York choice of law provision is not enforceable because: (1)
Paramount has its principal place of business in California and the
actions giving rise to the complaint took place in California; and (2) Marathon filed suit in California and is
therefore entitled to the application of California law “as a matter of
California public policy.” Although Marathon
does not cite Nedlloyd or any other
authority to back up these contentions, we view them as an attempt to assert >Nedlloyd’s tests concerning whether
there is a substantial relationship between the parties or their transaction to
New York law and whether the choice-of-law provision is contrary to a
fundamental policy of California law.

As to the first,
Marathon’s principal place of business is in New York state, as is the parent
company of Paramount, Viacom, Inc. Thus,
there is a substantial relationship between the parties and New York. As to the second, Marathon never invokes the
term “fundamental” when mentioning California policy, and never identifies such
a policy. We therefore deem that issue
waived. (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th
691, 699-700.) Accordingly, we conclude
that the trial court did not err by applying New York law to this dispute.



2.
Paramount
Was Not a Fiduciary



Focusing primarily
on California law, Marathon contends that Paramount was its fiduciary because
the investment agreement effectively created a joint venture that overcame the
contractual disclaimers of fiduciary duty, or because Paramount’s exclusive
control over Marathon’s funds gave rise to such a duty, where Marathon reposed
trust and confidence in Paramount. As
previously noted, however, New York law applies to this dispute, making
California law inapplicable. Because the
parties agree that there was no disputed evidence concerning the proper
interpretation of the investment agreement, we exercise our independent review
when construing its provisions. (>Ditmars-31 Street Development Corp. v. Punia
(1962) 17 A.D.2d 357, 361 [235 N.Y.S.2d 796].)

The language of a
contract must be given a practical interpretation in order to meet the reasonable
expectations of the parties. (>Petracca v. Petracca (N.Y.A.D. 2003) 756
N.Y.S.2d 587 [302 A.D.2d 576, 576-577].)
The contract must be read as a whole and, if possible, interpreted to
give effect to its general purpose.
Particular words should not be isolated from the whole, but must be
considered in context. (>William C. Atwater & Co. v. Panama R.
Co. (N.Y. 1927) 264 N.Y. 519, 524 [159 N.E. 418, 419].) The court’s role is to ascertain the parties’
intent at the time they entered the contract, which, if it is not ambiguous,
may be determined from the plain language of their agreement. (Evans
v. Famous Music Corp. (Ct. App. 2004) 1 N.Y.3d 452, 458 [775 N.Y.S.2d
757].)

Under New York
law, joint venturers are fiduciaries. (>Solutia, Inc. v. FMC Corp. (S.D.N.Y.
2006) 456 F.Supp.2d 429, 442-443.)
There are five requirements to the formation of a joint venture in New
York: (1) two or more persons must enter into a
specific agreement to carry on an enterprise for profit; (2) their agreement must evidence their intent to
be joint venturers; (3) each must
contribute property, financing, skill, knowledge, or effort; (4) each must have some degree of control over
the venture; and (5) there must be a provision for the sharing of
both profits and losses. (>Id. at p. 445.)href="#_ftn8" name="_ftnref8" title="">>[8] Nothing in the investment agreement shows the
intent to create a joint venture. To the
contrary, the agreement states in several places that the parties disclaimed
any fiduciary duties or agency, trustee, and partnership relationships. The investment agreement also expressly
deprives Marathon of any control whatsoever concerning the covered
pictures. Therefore no joint venture was
created under New York law.href="#_ftn9"
name="_ftnref9" title="">[9]

Any other
potential bases for the existence of a fiduciary duty are negated by the
investment agreement’s express disclaimers that no such relationship was
created. Under New York law, explicit
and unambiguous disclaimers of a fiduciary relationship are enforceable. (BNP
Paribas Mortg. Corp. v. Bank of America (S.D.N.Y. 2012) 866 F.Supp.2d
257, 269; Valentini v. Citigroup, Inc.
(S.D.N.Y. 2011) 837 F.Supp.2d 304, 326; Levine v. Murray Hill Manor Co. (A.D. 1 Dept. 1988) 143 A.D.2d
298, 300 [532 N.Y.S.2d 130]; Cathy
Daniels, Ltd. v. Weingast (2012) 91 A.D.3d 431, 433 [936 N.Y.S.2d 44].) Parties in nonfiduciary relationships are
free to contractually waive prospective fiduciary duties to one another. (Cooper
v. Parsky (2nd Cir. 1998) 140 F.3d 433, 439 [agreement by which
shareholders gave corporate directors right to cast proxy votes of their
shares; express disclaimer of fiduciary duty and limitation of liability to
gross negligence or willful misconduct enforced]; Solutia, Inc. v. FMC Corp., supra, 456 F.Supp.2d at
pp. 446-447.)href="#_ftn10"
name="_ftnref10" title="">[10]

Marathon
relies on a pair of older New York decisions to show that Paramount was its
fiduciary – Martin v. Peyton (N.Y.
1927) 246 N.Y. 213 [158 N.E. 77] (Martin)
and Rubenstein v. Small (N.Y.A.D.
1947) 273 A.D. 102 [75 N.Y.S.2d 483] (Rubenstein).
Neither alters our conclusion.

At
issue in Martin was whether the trial
court properly sustained demurrers to a complaint on the ground that the
defendants were not partners of a brokerage firm to which they had loaned
money. In affirming that order, the >Martin court noted that the loan
agreement which was the source of the alleged partnership disclaimed any such
relationship. However, disclaimers of
that type might be a sham, the court observed, and the true nature of the
parties’ business relationship was to be determined by the terms and effect of
their agreement. (Martin, supra, 158 N.E. 77 at p. 78.) Even though the loan agreement imposed a
complex of arrangements giving the defendants substantial control over the firm
and its principals, the court concluded that no partnership had been
formed. (Id. at pp. 79-80.)

The
plaintiff in Rubenstein loaned money
to the producer of a vaudeville show, with repayment to come from unused loans,
advances, and the excess of gross receipts over production costs and operating
expenses, if any. Instead of interest,
the plaintiff would be paid 10 percent of the net receipts. The defendant was supposed to furnish regular
detailed financial statements showing costs, expenditures, and receipts. The agreement indicated that other parties
might loan money to the production on the same terms. It also stated that the parties were not
partners, joint venturers, or principal and agent. When the defendant refused to pay back any of
the loan funds or to provide an accounting, the plaintiff brought an equitable
action for an accounting. The trial
court sustained the defendant’s demurrer on the ground that the plaintiff had
an adequate remedy at law.

The >Rubenstein court reversed. First, in reliance on Martin, supra, 158 N.E. 77, it held that the disclaimer of a
partnership, joint venture, or agency relationship was not determinative,
leaving it free to examine the true nature of the parties’ relationship. (Rubenstein,
supra, 75 N.Y.S.2d at p. 485.)
Next, it held that the agreement did not create a true debtor-creditor
relationship because the possibility that the plaintiff might not be repaid
meant he had not made a true loan of money.
(Id. at
pp. 485-486.) Instead, a fiduciary
relationship respecting the use of plaintiff’s funds was created, placing on
defendant the duty to account for his use of the funds. Therefore, a cause of action for the
equitable remedy of accounting had been pled.
(Id. at p. 486.)

From >Martin, supra, 158 N.E. 77, and >Rubenstein, supra, 75 N.Y.S.2d 483, we
derive the rule that despite any contractual disclaimers to the contrary,
fiduciary relationships such as that of partners or joint venturers may be
created by the operative effect of the parties’ agreement. As we have already held, however, nothing in
the investment agreement here gave rise to a joint venture under New York law.

The
investment agreement here spelled out the nature and effect of Marathon’s
investment in the various covered pictures.
Those terms also supplied a formula by which Marathon might receive a
return on its investments, along with Paramount’s express duty to provide an
accounting. Those same terms also
clearly and explicitly stated that no fiduciary duties were created by the
investment agreement.href="#_ftn11"
name="_ftnref11" title="">[11] Based on this, we conclude that neither >Martin nor Rubenstein is applicable, and that Marathon’s express waiver of any
fiduciary duties by Paramount was effective.href="#_ftn12" name="_ftnref12" title="">>[12]



3.
Marathon
Was Not Wrongfully Deprived of Its Right to a Jury Trial



Paramount
brought a pretrial motion to have this action decided at a court trial, not by
a jury, on two grounds: (1) the breach of fiduciary duty claim was
equitable in nature, meaning no jury trial was warranted; and (2) no jury trial was required because there
would be no extrinsic, disputed evidence concerning the interpretation of the
investment agreement, making the matter one for the court, not a jury. The trial court granted the motion on the
first ground. Marathon contends the
trial court erred.href="#_ftn13"
name="_ftnref13" title="">[13]

Rather
than parse more than 100 years of jurisprudence concerning the nature of
actions in equity, law, or chancery, we choose to affirm on the alternative
ground for Paramount’s bench trial motion:
that no jury was required because at issue was the interpretation of a
contract based solely on the contract terms and certain undisputed background
facts, which are questions of law for a court to decide. In such a case, there is no right to have a
jury resolve the dispute. (>Garcia v. Truck Insurance Exchange
(1984) 36 Cal.3d 426, 439; Oceanside
84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441,
1451.) Because that was the case here,
we agree with Paramount that Marathon was not entitled to a jury trial. Furthermore, Marathon did not address this
issue in either its opening appellate brief, or, after respondent’s brief did
so, in appellant’s reply brief. As a
result, we affirm the trial court’s order on the alternative ground that the
issue has been waived. (>Landry v. Berryessa Union School Dist.,
supra, 39 Cal.App.4th at pp. 699-700.)



4.
Attorney’s
Fees



The investment
agreement provided that costs and reasonable attorney’s fees would be awarded
to the prevailing party in “any action, suit, or other proceeding [that] is
instituted concerning or arising out of this agreement.” Marathon challenges the trial court’s order
awarding Paramount attorney’s fees of more than $690,000 on two grounds: (1)
the attorney’s fee provision in the investment agreement was not broad
enough to cover the tort claim for breach of fiduciary duty; and
(2) the amount awarded was excessive. We take each in turn.

Marathon
relies on Kangarlou v. Progressive Title
Co., Inc. (2005) 128 Cal.App.4th 1174, for the proposition that tort
claims such as breach of fiduciary duty do not enforce a contract and are not
considered actions on a contract for purposes of the reciprocal attorney’s fee
provision found at Civil Code section 1717.

The plaintiff in >Kangarlou was a home buyer who sued her
real estate agent, real estate broker, and escrow company for breach of
fiduciary duty in several respects:
failing to obtain evidence that a broker was regularly licensed before
delivering compensation to him, communicating to her facts learned about the
escrow instructions or the broker’s license, exercising reasonable skill and
diligence in carrying out the escrow instructions, and strictly complying with
her written instructions concerning the delivery or money or documents at the
close of escrow. The jury found for the
plaintiff and the trial court awarded her attorney’s fees under a provision in
the escrow agreement which provided that if the plaintiff failed to pay fees or
expenses due under the escrow instructions, she agreed “to pay the attorney’s
fees and costs incurred to collect such fees or expenses.”

Under Civil Code
section 1717, that one-sided fee provision gave the plaintiff the reciprocal
right to recover fees in actions on, or to enforce, the contract. Although tort claims do not ordinarily
“enforce” contract terms, some tort claims may also constitute a breach of
contract as well. (Kangarlou, supra, 128 Cal.App.4th at p. 1178.) Because the fiduciary duties which underlay
the plaintiff’s claim arose out her contract, the court held that her tort
claim was on the contract for purposes of awarding attorney’s fees under Civil
Code section 1717. (Kangarlou, at p. 1179.)

As we read >Kangarlou, it actually undercuts
Marathon’s contention. Marathon’s
fiduciary duty claim against Paramount was based on duties that arose under the
contract: to account for and pay all sums
owed pursuant to the investment agreement’s provisions. Regardless, we are reviewing a far broader
provision than the one in Kangarlou. Here, the parties agreed to pay fees to the
party who prevailed on actions arising out of their contract. Such broadly worded provisions are construed
to encompass tort claims (Santisas v.
Goodin (1998) 17 Cal.4th 599, 607) and we therefore reject Marathon’s
contention.

As for the size of
the award, Paramount requested fees of $768,948.40, but the trial court, after
reviewing the billing records submitted in support of the fee motion,
determined that some of the time billed was duplicative and excessive. The trial court therefore reduced the award
to $690,548.80. The trial court also
found that the hourly rates being charged – ranging from $192 to $587 for
lawyers and $60 to $150 for paralegals – was reasonable. Marathon contends the fee award is still too
high because it represents 1,974 hours of lawyers’ time, an amount that
Marathon believes is excessive and unreasonable.href="#_ftn14" name="_ftnref14" title="">>[14]

We review the
trial court’s order under the abuse of discretion standard, keeping in mind
that the experienced trial judge is in the best position to determine the value
of legal services rendered in his court.
(Graciano v. Robinson Ford Sales,
Inc. (2006) 144 Cal.App.4th 140, 148-149.) We make all reasonable presumptions in favor
of the trial court’s order where the record is silent, and Marathon has the
burden of affirmatively showing error, along with a record adequate to do
so. (Ketchum
v. Moses (2001) 24 Cal.4th 1122, 1140-1141.) Marathon does not point to a single instance
where the billing records show an unreasonable, unnecessary, or duplicative
charge. As a result, it has failed to
carry its burden of affirmatively showing error and, under the applicable
standard of review, we defer to the trial court’s reasoned assessment of the
matter.











DISPOSITION



The judgment and
the postjudgment order awarding Paramount its attorney’s fees are
affirmed. Respondent Paramount shall
recover its appellate costs.











RUBIN,
J.



WE CONCUR:







BIGELOW,
P. J.







GRIMES,
J.