Leeds
Weinstein Co.
Filed
8/23/12 Leeds
v. Weinstein Co. CA2/1
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
ONE
ARTHUR LEEDS,
Plaintiff and Appellant,
v.
THE WEINSTEIN COMPANY, LLC et
al.,
Defendants and Respondents.
B235786
(Los Angeles
County
Super. Ct.
No. SC106045)
APPEAL from
an order of the Superior Court
of
County, Lisa Hart Cole, Judge.
Affirmed.
Arthur
Leeds, in pro per, for Plaintiff and Appellant.
Leopold,
Petrich & Smith, Edward A. Ruttenberg and Elizabeth L. Schilken, for
Defendant and Respondent The Weinstein Company.
Toberoff
and Associates, Marc Toberoff and Pablo D. Arredondo for Defendants and
Respondents Marc Toberoff and IP Worldwide.
_______________________________
Arthur
Leeds appeals from the trial court’s order dismissing the case without
prejudice for failure to serve an indispensable party. We affirm.
BACKGROUND
1. The
Piranha Agreements
Chako Van Leuuwen (Chako) was a
producer of Piranha, a 1978 film (Piranha I).
Sequels followed in 1982 (Piranha II) and 1995 (Piranha III). Leeds represented
Chako on Piranha I as her attorney, but served in no other capacity and
received no credit. In 1997, Chako, the
holder of the remake and sequel rights in the Piranha films, assigned to Fox
Family Films (Fox) an option to purchase the rights in the Piranha films. She provided Fox with chain-of-title
documents proving her ownership of these rights.
On November 22, 2002, after the Fox
option expired without exercise, Chako entered into a two-year agreement with
Intellectual Properties Worldwide (IPW) through its managing member Marc
Toberoff, for IPW “to arrange for the option, sale and exploitation of theâ€
rights in the Piranha films in connection with a new Piranha project (Piranha
Project).
After the 2002 agreement expired
without exercise, Chako entered into another option agreement in 2005 with
Piranha Pictures (PP) and Exception-Wild Bunch, S.A. (WB) on all of the terms
and conditions as the Fox Family Films option except as modified by the 2005
option. On January 20, 2006, PP and WB exercised the 2005 option.
In the Fox and 2005 options, Chako
warranted that she was the exclusive holder of the sequel and remake rights in
the Piranha films, that there was no impairment of those rights, and that she
had not granted or assigned these rights to any other party. Under the option, assignee PP’s and WB’s
obligations were subject to “the clearance, in form and substance, to the
reasonable satisfaction of Assignee’s Legal Department, of the chain-of-title
to the†Piranha property. The assignees
assumed only “the executory obligations of [Chako] not heretofore performed
pursuant to the Underlying Documents.â€
No contract with Leeds was among the twenty underlying documents listed
in the Fox and 2005 options.
On December 14, 2005, The Weinstein
Company LLC (TWC) acquired distribution rights in the Piranha Project and
entered into assignment agreements on April 5, 2007 and July 31, 2007,
whereby it acquired from WB, PP, and others all of their rights in the Piranha Project
and its underlying materials. TWC agreed
to be bound by all of TWC’s assignors’ executory obligations “under and
pursuant to the Documents.†TWC’s
assignors provided TWC with 28 chain-of-title documents updating the underlying
documents provided in the Fox option.
None of the underlying documents referenced the Leeds Contract, any
other document to which Leeds was a party, or Leeds himself. Before TWC signed the July 31, 2007
assignment agreement, IPW’s Toberoff made TWC generally aware that Leeds had
threatened some sort of claim against Chako, but advised TWC that the claim did
not appear meritorious. TWC was not
aware of a contract with Leeds or its terms until Leeds served TWC with his
first amended complaint (FAC) in 2010.
2.
On December 1, 2004, Leeds faxed
Chako a proposed contract, drafted solely by Leeds, dated December 2, 2004, and
already signed by Leeds with a signature line for Chako. Chako signed the Leeds contract the next day at
Leeds’s home without making any changes to it.
The Leeds contract primarily
concerns the disclosure of confidential information. It spends just two paragraphs discussing
Leeds’s role as a producer. The only
consideration Leeds was to provide Chako under the contract was “helping to secure
financing, distribution, and talent.†In
return, Leeds was to be accorded a producer credit if the Piranha Project was
actually made. The contract further
provides that Leeds would be “paid a reasonable fee and contingent fee†to “be
mutually agreed upon between [Leeds] and the financiers and/or distributors of
Piranha.â€
Leeds ultimately did not secure
financing, distribution, or talent for the Piranha Project. Leeds could not swear that he spent more than
two hours trying to help Chako in these regards. Leeds admitted that his anticipated role in
the Piranha Project was contingent on IPW’s Toberoff failing to secure the
project’s financing. Toberoff ultimately
was able to secure the project’s financing.
Leeds also did not have any
discussions with any person regarding the “reasonable fee and contingent feeâ€
he was due under the Leeds contract.
Leeds had no contact with TWC regarding the Piranha Project and had no
business relationship with TWC regarding any matter prior to his filing of the
FAC.
On February 2, 2005, Chako, through
attorney Martin Barab, advised Leeds in writing that Chako was terminating the
Leeds contract on the ground that she had asked Leeds to represent her as her
attorney solely to help her negotiate with Toberoff and IPW, not for him to
become a producer on the project.
3. Leeds’s Lawsuit
On December 14, 2009, Leeds filed a
complaint in pro. per., alleging causes of action against Chako, Toberoff, IPW,
and Does 1-50 for (1) breach of contract; (2) intentional interference with
contract; (3) unfair business practice (under Bus. & Prof. Code, § 17200 et
seq.); and (4) negligent interference with contract. Leeds’s four causes of action rested on his
allegation that he and Chako entered into a written agreement on December 2,
2004 under which Chako agreed to provide him with compensation, including a
shared producer credit and a reasonable fee and contingent fee, for Leeds’s
services on a “Piranha movie.†Leeds
claimed that all defendants named in the complaint breached the Leeds contract
and engaged in related unfair and interfering activities allegedly supporting
his three other causes of action.
Leeds filed his FAC on May 28,
2010, adding defendant Chako Film International (CFI) as Doe 1 and adding an
aka for Chako of Toshiko Chako Van Leeuwen (collectively, the Chako
defendants). The FAC requested damages
“greater than $10,000,000,†treble damages, and punitive damages.
On July 26, 2010, Leeds filed a
case management statement requesting that the “issuance of an order for publication
of service on Defendants [CFI] and [Chako]†be considered by the court at its
management conference.
On October 6, 2010, the trial court
issued its case management order, advising Leeds: “The following parties necessary to the
disposition of this case have not been served:
[Chako and
CFI]. . . . Plaintiff . . . is
ordered to serve summons and complaint upon such parties within 30 days of this
order.†The court also set an “Order to
Show Cause re: Sanctions/Dismissal for
Failure to File Proof of Service†for December 6, 2010.
On November 11, 2010, Leeds filed
two amendments to his FAC where he claimed to have discovered that the true
name of Doe 2 was “‘Dimension Films’†and that the true name of Doe 3 was
TWC. Leeds served his FAC on TWC on November
18, 2010, naming it as Doe 3.
On November 30, 2010, Leeds filed a
sworn declaration explaining to the court that he had not complied with its
order that he serve the Chako defendants.
He explained that he had been preparing to serve the Chako defendants
under international law, believing “they were citizens and residents of Japan,â€
but had been told by Toberoff that Chako resided in Los Angeles. He stated that he intended to propound
discovery on Toberoff to determine Chako’s most recent address and to serve her
as soon as Toberoff answered. At the
December 6, 2010 case management conference on the order to show cause re: sanctions/dismissal, Leeds admitted that he
had not served Chako. Leeds advised the
court that he was waiting for Toberoff’s response to Leeds’s interrogatory
seeking Chako’s last known contact information before serving her. The court discharged the order to show cause
and set the matter for trial.
On December 22, 2010, TWC answered
Leeds’s FAC, denying the allegations within.
On April 20, 2011, Leeds admitted
to TWC’s attorney that he had still not served Chako. On May 9, 2011, TWC filed a motion to dismiss
the action under Code of Civil Procedure section 389, subdivision (b)
on the ground that Leeds had failed to join and serve the Chako defendants,
whom the court should regard as an indispensable party to the action. The motion was set for hearing on June 16,
2011.
TWC filed a notice of plaintiff’s
failure to file opposition papers on June 7, 2011, having received no timely papers
from Leeds in opposition to the motion.
Leeds filed his untimely opposition to the motion on June 10, 2011. In his accompanying declaration, Leeds
admitted that he had “decided that in light of the trial date that had already
been set that it was not worth the expenditure of the considerable time, money
and effort to continue to try and serve [the Chako defendants] under the
relevant international treaties.â€
On June 16, 2011, the trial court
heard the motion and issued its minute
order granting the motion to dismiss without prejudice. On July 8, 2011, the trial court signed and
filed the formal order submitted by TWC dismissing the action without
prejudice. On July 22, 2011, counsel for
TWC served Leeds with notice of entry of order, which was filed with the court
on July 25, 2011. Leeds timely filed his
notice of appeal on September 6, 2011.
DISCUSSION
I. The dismissal without prejudice is
appealable.
“As a general rule an
written order of the court is appealable.â€
(Topa Ins. Co. v. Fireman’s Fund
Ins. Companies (1995) 39 Cal.App.4th 1331, 1336.) Here, the trial court granted the motion to
dismiss in its minute order. The court
later signed an order granting the motion to dismiss and ordering the FAC be
dismissed without prejudice as to all defendants. This is an appealable order. (Ibid.)
II. The trial court did not
abuse its discretion in ordering the case dismissed without prejudice for
failure to serve an indispensable party under section 389, subdivision (b).
Contrary to Leeds’s
assertion that the de novo standard of review applies, we review for an abuse
of discretion the trial court’s determination of whether a party is necessary
or indispensable under section 389. (
necessary and/or indispensable is a matter of trial court discretion in which
the court weighs ‘factors of practical realities and other
considerations.’ (Citation.]†(Hayes
v. State Dept. of Developmental Services (2006) 138 Cal.App.4th 1523,
1529.)
“A party cannot be properly joined
unless served with the summons and complaint.â€
(Ruttenberg v. Ruttenberg
(1997) 53 Cal.App.4th 801, 808.) Leeds
has not served the Chako defendants; therefore, the Chako defendants have not
been joined in the action.
Chako defendants were indispensable parties.
Section 389, subdivision (a)
provides: “A person who is subject to
service of process and whose joinder will not deprive the court of jurisdiction
over the subject matter of the action shall be joined as a party in the action
if (1) in his absence complete relief cannot be accorded among those already
parties or (2) he claims an interest relating to the subject of the action and
is so situated that the disposition of the action in his absence may (i) as a
practical matter impair or impede his ability to protect that interest or (ii)
leave any of the persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of
his claimed interest. If he has not been
so joined, the court shall order that he be made a party.†(§ 389, subd. (a).)
The trial court properly determined
that the Chako defendants fell within this definition. The Chako defendants were subject to service
of process because all of the acts alleged against Chako in Leeds’s complaint occurred
in Los Angeles County. Leeds does not
appear to have disputed this; in his November 30, 2010 declaration, Leeds
stated that he was prepared to serve the Chako defendants. Nor would their joinder have deprived the
trial court of subject matter jurisdiction.
The trial court determined that
“Chako not only claims an interest relating to the subject of the action[,] her
interest is the subject of the action.â€
All Leeds’s claims relate to Chako’s interest—her rights in the Piranha
property. Leeds’ causes of action
against the other defendants are entirely contingent upon his claims against
the Chako defendants—namely that there was a valid contract between him and
Chako encumbering Chako’s rights in the Piranha films. The court recognized that the Chako
defendants were the key defendants on October 6, 2010 when it advised Leeds
that “[t]he following parties necessary to the disposition of the case have not
been served: [Chako and CFI].â€
in Chako’s absence, the Chako defendants could not “properly protect their
interests if they are not parties.†The
court reasoned that because the “other defendants are not direct parties to the
underlying contract . . . they cannot protect Chako’s
interest because they do not possess the facts necessary to protect those
interests.†Because only the Chako
defendants and Leeds were parties to the underlying contract, only they had the
necessary facts relating to its validity.
Moreover, there is reason to believe that Chako, if joined, would
contest the validity of the contract, given her attempt at rescission.
Further, an adjudication of the
action in the absence of the Chako defendants might leave defendants TWC,
Toberoff, and IPW “subject to substantial risk
of . . . otherwise inconsistent obligations†should Leeds
prevail. (§ 389, subd. (a).) To prevail in the current action, Leeds
needed to prove that his contract encumbered Chako’s rights in the Piranha
Project and that Chako had warranted to her assignees that she held all rights
therein. Were Leeds to prove this
without joining the Chako defendants, he could recover from the current
defendants without binding the Chako defendants to the result. In a later suit by TWC and Toberoff against
the Chako defendants for indemnity for breach of warranty, Chako could defend
the suit by proving Leeds’s claim meritless.
This would be an inconsistent result, especially as neither TWC nor
Toberoff was a party to the Leeds contract.
Neither TWC nor Toberoff could adequately defend against the suit
without the Chako defendants, given that they do not have the facts pertaining
to the formation of the contract.
Leeds argues that the trial court
abused its discretion in finding that TWC and Toberoff would be subject to
substantial risk of inconsistent obligations.
Leeds argues that if he were to prevail in the current action, a second
jury in a subsequent indemnity suit between the appearing defendants and Chako
could not reasonably accept Chako’s position.
Therefore, he argues, TWC has not established a substantial risk of such
an outcome.
We reject this argument. Leeds ignores the fact that this inconsistent
outcome may very well occur if this case continues. The appearing defendants do not have the
facts necessary to defend against Leeds’s suit.
Only Chako and Leeds have the facts surrounding the formation of the
Leeds contract. In a subsequent
indemnity action, Chako could defend on the basis that the Leeds contract was
invalid. In other words, without joining
the Chako defendants, the appearing defendants have conflicting interests in
the two actions. In the current action,
they would need to argue that the Leeds contract is invalid, but do not possess
the facts necessary to sustain that argument; in the subsequent indemnity
action, they would need to argue that the Leeds contract is valid.
Additionally,
Leeds argues that the court abused its discretion in dismissing the case
because section 389, subdivision (a) “requires the court to take less drastic
action than dismissal of the whole case.â€
Leeds argues that the trial court never ordered him to serve the Chako
defendants or, alternatively, never unconditionally ordered him to serve the
Chako defendants. Without citing any
authority, Leeds argues that the trial court thereby abused its discretion.
However,
the trial court did order Leeds to
serve the Chako defendants. In its
October 6, 2010 case management order, the trial court found that the Chako
defendants were necessary to the disposition of the case and had not yet been
served. Further, the court scheduled an
order to show cause regarding sanctions/dismissal for failure to file a proof
of service for serving the Chako defendants.
Leeds’s declarations establish that he knew he needed to serve the Chako
defendants. In his declaration dated
November 30, 2010, he acknowledged that he had “not yet served defendants
[Chako] and [CFI]. I was preparing to do
so in compliance with international treaties.â€
Moreover, at the hearing on the motion to dismiss, the court stated that
it “has on many occasions given Mr. Leeds an opportunity to file a declaration
or to serve the defendants Chako or to dismiss them. Up until today he still has not chosen to do
either one of those.†Contrary to Leeds’
assertions, the trial court gave Leeds ample time and opportunity to serve the
Chako defendants—time and opportunity that Leeds ignored.
B. The trial court did not abuse its discretion.
Section 389, subdivision (b) gives
a court discretion to dismiss in its entirety an action where a person
identified in section 389, subdivision (a) “cannot be made a party.†(§ 389, subd. (b).) Courts have the discretion to dismiss actions
not only where the indispensable party cannot be made a party, but also where
the plaintiff has not made the indispensable party a party. (See, e.g., Tracy Press, Inc. v. Superior Court (2008) 164 Cal.App.4th 1290,
1297–1299.)
“Ordinarily where the rights
involved in litigation arise upon a contract, courts refuse to adjudicate the
rights of some of the parties to the contract if the others are not before
it.†(Nat. Licorice Co. v. NLRB (1940) 309 U.S. 350, 363 [60 S.Ct. 569,
84 L.Ed. 799].)
In making its decision, the court
must consider four factors: “(1) to what
extent a judgment rendered in the person’s absence might be prejudicial to him
or those already parties; (2) the extent to which, by protective provisions in
the judgment, by the shaping of relief, or other measures, the prejudice can be
lessened or avoided; (3) whether a judgment rendered in the person’s absence
will be adequate; (4) whether the plaintiff or cross-complainant will have an
adequate remedy if the action is dismissed for nonjoinder.†(§ 389, subd. (b).) No factor is determinative and no factor is more important than
the others. (City of San Diego v. San Diego City Employees’ Retirement System
(2010) 186 Cal.App.4th 69, 84.)
Additionally, “the court’s consideration of these factors largely
depends on the facts and circumstances of each case.†(Ibid.)
All four factors weigh in favor of
dismissal.
1. A
judgment rendered in the Chako defendants’ absence might have been prejudicial
to both the absent and appearing parties.
The analysis of whether a judgment
rendered in the Chako defendants’ absence might be prejudicial to Chako or the
appearing defendants is “essentially the same assessment that must be made
under [section 389] subdivision (a) in determining whether a party’s absence
would impair or impede that party’s ability to protect his or her interests,
and determining whether proceeding to judgment would subject existing parties
to inconsistent obligations.†(
Redevelopment Agency (1997) 56 Cal.App.4th 868, 880.) “While it is just one of the four factors
listed in . . . section 389, subdivision
(b), . . . in determining whether an unjoined person is an
indispensable party, potential prejudice to that unjoined person is of critical
importance.†(Tracy Press, Inc. v. Superior Court, supra, 164 Cal.App.4th at p. 1298.)
As explained above, the trial court
determined that the Chako defendants could not adequately protect their
interests in the litigation because Chako was the only one with the requisite
facts relating to the Leeds contract’s validity. As the appearing defendants were not parties
to that contract, they lacked the ability to contest its enforceability. Thus, it is clear that the trial court
determined that Chako’s absence might be prejudicial to both the Chako
defendants and the appearing defendants.
Further, the Chako defendants’
absence from the litigation could subject the appearing defendants to
inconsistent obligations. If Leeds were
to prevail in the current litigation, he could collect his judgment from TWC,
Toberoff, and IPW. However, because
neither claim nor issue preclusion would bind the Chako defendants, they could
defend a subsequent indemnity suit on the grounds that Chako’s contract with
Leeds was void. If the Chako defendants
were to succeed in that subsequent suit, TWC, Toberoff, and IPW would be left
with inconsistent obligations.
This was sufficient to justify a
finding of prejudice to both the Chako defendants and the appearing defendants,
TWC, Toberoff, and IPW.
2. Leeds
did not offer protective provisions to mitigate prejudice.
This factor favors dismissal where
the trial court found potential prejudice and the opposing party offers no
possible protective provisions to eradicate prejudice to unjoined parties. (See County
of Imperial v. Superior Court (2007) 152 Cal.App.4th 13, 37.)
Leeds suggests no method by which
the court could enter an order against TWC, Toberoff, and IPW and at the same
time protect the Chako defendants’ interests.
Because any judgment against the appearing defendants would necessarily
entitle them to sue the Chako defendants in an indemnity suit for breach of
warranty, it does not appear that any protective provision could adequately
protect the Chako defendants’ and the appearing defendants’ interests.
defendants’ absence would not be adequate.
“[A] common
litigation objective is not enough to establish adequacy of representation by
the named parties.†(
While TWC, Toberoff, and IPW have
the same incentives as the Chako defendants to contest the validity of the
Leeds contract as the Chako defendants, they do not possess the same means to
contest the contract’s validity. While
Chako was a party to the contract, TWC, Toberoff, and IPW were not. Chako is the only party other than Leeds to
have any knowledge of the material facts surrounding the formation and validity
of the contract. In fact, while TWC was
generally aware that Leeds had threatened some sort of claim against Chako, it
was unaware that the Leeds contract existed prior to being served with Leeds’
FAC. Any judgment rendered in the Chako
defendants’ absence would be based on incomplete facts and would therefore be
inadequate.
action is dismissed for nonjoinder.
The court’s
dismissal of the action was without prejudice.
Such a dismissal does not prevent Leeds from bringing a new action
against the same defendants. Moreover,
Leeds could bring this new action in the same court where he filed this action
because there are no jurisdictional problems there: Chako’s relevant acts occurred in Los Angeles
County and all parties did business in Los Angeles County. Additionally, Toberoff provided Leeds with
Chako’s last known addresses and other contact information in discovery.
Leeds argues that if the action is
dismissed for nonjoinder, he would no longer have an adequate remedy because
“the additional time lag attributable to the new filing makes the statute of
limitation a much more viable defense.â€
However, Leeds provides no evidence that the statute of limitations
would apply in this action. Furthermore,
Leeds is responsible for his situation, as he failed to serve the Chako
defendants despite ample time, more time than authorized by California Rule of
Court, rule 3.110(b). “This situation,
however, is of [Leeds’s] own making and, therefore, does not weigh in [Leeds’s]
favor.†(Tracy Press, Inc. v. Superior Court, supra, 164 Cal.App.4th at p. 1302.)
The trial court did not abuse its
discretion.
DISPOSITION
The order is affirmed. Respondents are to recover their costs on
appeal.
NOT TO BE
PUBLISHED.
JOHNSON,
J.
We concur:
MALLANO,
P. J. CHANEY,
J.
Leeds signed “Individually and for Arthur Leeds Productions, Inc.†Chako signed “Individually and for Chako Film
International.â€
name="_ftn2" title="">[2]
Unless otherwise indicated, all subsequent statutory references are to the Code
of Civil Procedure.
