This case was last updated from Los Angeles County Superior Courts on 06/17/2019 at 20:59:03 (UTC).

FOXCROFT PRODUCTIONS INC ET AL VS UNIVERSAL CITY STUDIOS LLC

Case Summary

On 11/14/2017 FOXCROFT PRODUCTIONS INC filed a Contract - Other Contract lawsuit against UNIVERSAL CITY STUDIOS LLC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is MARC MARMARO. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****3206

  • Filing Date:

    11/14/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

MARC MARMARO

 

Party Details

Plaintiffs and Petitioners

FAIRMONT PRODUCTIONS INC.

FOXCROFT PRODUCTIONS INC.

Defendants and Respondents

UNIVERSAL CITY STUDIOS LLC

DOES 1 TO 20

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

JOHNSON NEVILLE L. ESQ.

BUTLER KEITH E. ESQ.

BURKHALTER ALTON GEORGE

Defendant and Respondent Attorneys

HUESTON HENNIGAN LLP

KLIEGER ROBERT NATHAN

TREHAN RAJAN STEPHEN

 

Court Documents

SUBSTITUTION OF ATTORNEY

2/23/2018: SUBSTITUTION OF ATTORNEY

CASE MANAGEMENT ORDER

4/5/2018: CASE MANAGEMENT ORDER

PLAINTIFF FOXCROFT PRODUCTION, INC.'S SEPARATE STATEMENT IN DISPUTE OF ISSUES IN SUPPORT OF MOTION TO COMPEL FURTHER RESPONSES TO REQUESTS FOR PRODUCTION OF DOCUMENTS AND REQUEST FOR SANCTIONS IN THE

6/21/2018: PLAINTIFF FOXCROFT PRODUCTION, INC.'S SEPARATE STATEMENT IN DISPUTE OF ISSUES IN SUPPORT OF MOTION TO COMPEL FURTHER RESPONSES TO REQUESTS FOR PRODUCTION OF DOCUMENTS AND REQUEST FOR SANCTIONS IN THE

Minute Order

12/5/2018: Minute Order

Stipulation

12/19/2018: Stipulation

Proof of Service (not Summons and Complaint)

1/8/2019: Proof of Service (not Summons and Complaint)

Declaration

2/7/2019: Declaration

Opposition

2/7/2019: Opposition

Declaration

2/19/2019: Declaration

Objection

2/20/2019: Objection

Minute Order

2/21/2019: Minute Order

Declaration

2/22/2019: Declaration

Brief

2/22/2019: Brief

Unknown

2/26/2019: Unknown

Brief

3/5/2019: Brief

Notice

3/11/2019: Notice

Brief

3/12/2019: Brief

Declaration

6/17/2019: Declaration

191 More Documents Available

 

Docket Entries

  • 06/17/2019
  • Declaration (Declaration of Butler in Support of Ex Parte re Order Requesting Ruling); Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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  • 06/17/2019
  • Declaration (Declaration of Butler in Support of Ex Parte Order Supplement Court's Order); Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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  • 06/12/2019
  • Notice (OF FILING); Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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  • 06/11/2019
  • Brief (Universal's Pre-Hearing Brief); Filed by Universal City Studios, LLC (Defendant)

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  • 06/11/2019
  • Notice (Joint Submission of Letter From Accounting Referee Panel); Filed by Universal City Studios, LLC (Defendant)

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  • 05/30/2019
  • at 08:30 AM in Department 37; Hearing on Motion to Quash (Motion to Quash Civil Subpoena (Duces Tecum)) - Held

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  • 05/30/2019
  • Minute Order ( (Hearing on Motion to Quash Motion to Quash Civil Subpoena (Du...)); Filed by Clerk

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  • 05/28/2019
  • at 08:30 AM in Department 37; Hearing on Motion to Bifurcate - Not Held - Rescheduled by Court

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  • 05/24/2019
  • Notice ( of hearing); Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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  • 05/24/2019
  • Declaration (OF KEITH E. BUTLER IN SUPPORT OF PLAINTIFF FOXCROFT PRODUCTIONS?S, INC. AND PLAINTIFF FAIRMOUNT PRODUCTION?S, INC.?S REQUEST FOR SUPPLEMENTAL ORDER CONCERNING ACCOUNTING REFEREES); Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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265 More Docket Entries
  • 01/17/2018
  • DECLARATION OF RAJAN S. TREHAN RE MEET AND CONFER IN COMPLIANCE WITH CODE OF CIVIL PROCEDURE 430.41

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  • 12/18/2017
  • NOTICE OF ORDER TO EXTEND DEFENDANT UNIVERSAL CITY STUDIOS, LLC'S TIME TO RESPOND TO COMPLAINT

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  • 12/18/2017
  • Notice; Filed by Defendant/Respondent

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  • 12/11/2017
  • JOINT STIPULATION AND [PROPOSED] ORDER TO EXTEND DEFENDANT UNIVERSAL CITY STUDIOS, LLC'S TIME TO RESPOND TO COMPLAINT

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  • 12/11/2017
  • Stipulation and Order; Filed by Defendant/Respondent

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  • 11/21/2017
  • Proof-Service/Summons

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  • 11/21/2017
  • PROOF OF SERVICE SUMMONS

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  • 11/14/2017
  • Complaint; Filed by Foxcroft Productions, Inc. (Plaintiff); Fairmount Productions, Inc. (Plaintiff)

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  • 11/14/2017
  • COMPLAINT FOR: 1. BREACH OF WRITTEN CONTRACT; ETC

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  • 11/14/2017
  • SUMMONS

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Tentative Rulings

Case Number: BC683206    Hearing Date: December 02, 2019    Dept: 37

HEARING DATE: December 2, 2019

CASE NAME: Foxcroft Productions Inc., et al. v. Universal City Studios, LLC, et al.

CASE NO.: BC683206

TRIAL DATE: Judgment entered October 31, 2019, Notice of Entry of Judgment sent October 31, 2019

NOTICE: OK

SUBJECT: Motion for Judgment Notwithstanding the Verdict or For New Trial

MOVING PARTY: Defendant, Universal City Studios, LLC

OPPOSING PARTY: Plaintiffs, Foxcroft Productions, Inc. and Fairmount Productions, Inc.

SUBJECT: Motion to Vacate Judgment

MOVING PARTY: Defendant, Universal City Studios, LLC

OPPOSING PARTY: Plaintiffs, Foxcroft Productions, Inc. and Fairmount Productions, Inc.

TENTATIVE

Universal’s Motion for Judgment Notwithstanding the Verdict and Motion for a New Trial are DENIED as to the statute of limitations. Universal’s motion to vacate the court’s bench trial judgment is also DENIED. The court will entertain argument on the other issues prior to making final rulings. Plaintiffs are to give notice.

STATEMENT OF THE CASE

This action arises from allegations that Universal City Studios, LLC (“Universal”) breached a written agreement with William Link (“Link”) and Richard Levinson (“Levinson”), entitled “William Link & Richard Levinson – New Term Contract” (the “Agreement”) and dated April 29, 1971 and revised June 11, 1971. Plaintiff Foxcroft Productions, Inc. (“Foxcroft”) contends it is the owner of Link’s contractual rights at issue in this lawsuit. Plaintiff Fairmount Productions, Inc. (“Fairmount”) contends it is the owner of Levinson’s contractual rights at issue. Plaintiffs contend that Defendant Universal has continuously received revenue on the television program Columbo (the “Program”) but has not sent Plaintiffs profit participation statements from the inception of the show in 1971 until November 22, 2016 for Link and Foxcroft and until January 18, 2017 for Levinson and Fairmount. Under the agreement Universal was not required to send profit participation statements if there were noprofits. The first seven seasons of the Program were broadcast on the NBC television network from 1971 to 1978 (the “First Cycle”) and eight additional seasons of the Program were broadcast on the ABC television network from 1989 to 2003 (the “Second Cycle”). Plaintiffs contend that they are owed additional net profit compensation based on the Agreement.

In the Complaint, Plaintiffs assert five causes of action for: (1) breach of written contract; (2) accounting; (3) money due on open book account; (4) fraud; and (5) unfair business practices in violation of Business and Professions Code, § 17200, et seq. (the Unfair Competition Law, “UCL”). On October 23, 2018, Plaintiffs dismissed their second, third and fifth causes of action without prejudice. Defendant, in turn, has filed a Cross-Complaint asserting one cause of action for declaratory relief.

Defendant’s motions for summary judgment came to hearing on December 5, 2018, at which time the court granted summary adjudication on the fourth cause of action; the motions were otherwise denied.

This action came on regularly for trial beginning February 21, 2019 (“Phase I”) in Department 37 of the Los Angeles Superior Court. After hearing the evidence and arguments of counsel, the jury was duly instructed by the Court and the case was submitted to the jury with directions to return a special verdict. The jury deliberated and returned to the Court finding as follows:

  1. Universal is not permitted to deduct a distribution fee not paid to a third party when Universal acts as a distributor;

  2. Plaintiffs Foxcroft and Fairmount did not discover facts before November 14, 2013 that caused them to suspect that Universal had failed to pay them monies owed or to render accounting statements required;

This action also came on regularly for bench trial beginning March 11, 2019 (“Phase II”) in Department 37 of the Los Angeles Superior Court. Following the bench trial, the court ruled as follows:

  1. “Photoplays” in the operative agreement between Foxcroft/Fairmount and Universal is intended to apply to episodes of Columbo;

  2. The 1988 Agreement between Foxcroft/Fairmount and Universal was based on mutual mistake of fact and Plaintiffs are entitled to rescind the 1988 Agreement on that basis.

Phase III of trial in this action consisted of a three accounting referee panel, who determined each Plaintiff’s damages. On September 13, 2019, the accounting referees determined as follows:

  1. Plaintiff, Foxcroft Productions, Inc. is entitled to $35,340,906.21;

  2. Plaintiff, Fairmount Productions, Inc. is entitled to $35,340,906.21.

Universal now moves for judgment notwithstanding the jury verdict (“JNOV”) or, alternatively, a new trial. Universal also moves to vacate the court’s judgment on Phase II allowing Plaintiffs to rescind the 1988 agreement. Plaintiffs oppose Universal’s motions.

MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT, OR, ALTERNATIVELY, A NEW TRIAL

I. Legal Standard

The party against whom a verdict has been rendered may move the court for judgment notwithstanding the verdict, and the court shall grant the motion “whenever a motion for directed verdict for the aggrieved party should have been granted had a previous motion been made.” (Code Civ. Proc., § 629, subd. (a).) The purpose of such a motion is to challenge whether the opposing party’s evidence was sufficient to prove the claims or defenses asserted and now embodied by the jury’s verdict. (Hauter v. Zogarts (1975) 14 Cal.3d 104, 110.)

In ruling on a motion for judgment notwithstanding the verdict, the court does not weigh the evidence or determine the credibility of witnesses. (Hauter, supra, 14 Cal.3d at p. 110.) The party in whose favor the verdict was rendered is “entitled to the benefit of every favorable inference which may reasonably be drawn from the evidence and to have all conflicts in the evidence resolved in his favor.” (Castro v. State of California (1981) 114 Cal.App.3d 503, 507 (Castro).) “A motion for judgment notwithstanding the verdict may be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support.” (Sweatman v. Dept. of Veterans Affairs (2001) 25 Cal.4th 62, 68 (Sweatman).) The focus in determining whether substantial evidence supports the verdict “is on the quality, rather than the quantity, of the evidence. ‘Very little solid evidence may be “substantial,” while a lot of extremely weak evidence might be “insubstantial.” ’ [Citation.] Inferences may constitute substantial evidence, but they must be the product of logic and reason. Speculation or conjecture alone is not substantial evidence.” (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.)

Code of Civil Procedure section 657 provides the following grounds for granting a new trial motion:

1. Irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.

2. Misconduct of the jury; and whenever any one or more of the jurors have been induced to assent to any general or special verdict, or to a finding on any question submitted to them by the court, by a resort to the determination of chance, such misconduct may be proved by the affidavit of any one of the jurors.

3. Accident or surprise, which ordinary prudence could not have guarded against.

4. Newly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial.

5. Excessive or inadequate damages.

6. Insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law.

7. Error in law, occurring at the trial and excepted to by the party making the application.

(Code Civ. Proc., § 657.)

In ruling on a new trial motion, the Court sits as an independent trier of fact, and has the power to disbelieve witnesses, reweigh the evidence, and draw reasonable inferences therefrom contrary to those of the trier of fact, in an effort to determine whether the jury clearly should have reached a different conclusion. (Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405, 412; Barrese v. Murray (2011) 198 Cal.App.4th 494, 503). “Unless such a moving party can show that by a retrial of the action, and supporting facts therefor are contained in the affidavit, he could establish an entirely different case favorable to himself in the event that a new trial be granted, it is a thoroughly settled rule that a motion for a new trial will not be granted.” (Moore v. Franchetti (1937) 22 Cal.App.2d 75, 79 (Moore).)

II. Analysis

Universal moves for JNOV on the grounds that the verdict in this matter is not supported by any substantial evidence. Specifically, Universal argues that: (1) because “photoplays” was defined to include episodes of Columbo, no evidence supports the jury’s verdict that Universal was not permitted to deduct its distribution fees; (2) in the alternative, the jury’s verdict regarding distribution fees rests on a legally erroneous theory as the jury should not have been permitted to interpret the contract, (3) no substantial evidence supports the verdict regarding Plaintiffs’ discovery of facts supporting their action by 2013.

Plaintiffs oppose the motion and argues that the meaning of “photoplay” has no bearing on the jury’s verdict. Plaintiffs argue that because the jury was not asked to explain the reasoning behind its verdict, the jury’s verdict could have been based on one of several other reasons. Plaintiffs further argue that its breach of contract claims were timely under the “discovery rule,” and that they could not have discovered the factual basis for their allegations prior to 2013.

  1. Definition of “Photoplays”

Universal’s first argument in support of its motion for JNOV is that Rider to the 1971 Deal Memo (“1971 Rider”) between the parties, when read in conjunction with the judgment following the bench trial defining “photoplays” to include episodes of Columbo, can only be interpreted to mean that Universal may deduct distribution “fees” when calculating its net profits. (Motion, 10-15.) Universal’s motion relies on citations to testimony by plaintiff’s witness Barry Hirsch for the proposition that the 1971 Rider permits Universal to deduct “distribution fees” under the 1971 Rider. (Id.) Universal argues that Hirsch’s testimony, taken together with the bench trial judgment defining “photoplays,” means that Universal should receive judgment notwithstanding the verdict as to the jury’s determination that it could not deduct for “distribution fees.”

On April 29, 1971, Link and Levinson entered into an agreement with Universal for Universal’s distribution of various theatrical features, pilots, and or other works Link and Levinson would create. (Declaration of Timothy Heafner in support of Motion (“Heafner Decl.”) ¶ 2, Exhibit 1 (1971 Deal Memo.) The 1971 Deal Memo provided that it would run for one year, with two successive options for one year per option. (Id. at p. 1.) As part of the 1971 Deal Memo, Universal attached the 1971 Rider, which provided that Universal would pay Link and Levinson additional net profit participation equal to a percentage of its net profits from exhibition of “photoplays” and exploitation of subsidiary rights in connection with “Series.” Net profits was defined under the 1971 Rider to mean the excess of gross receipts over the total of all distribution expenses and production costs. Neither “Photoplays” nor “Series” are defined in the 1971 Rider. The Rider then describes how Universal may calculate its net profits and provides in pertinent part that Universal may deduct “Distribution Expenses.” Distribution expenses are described as follows:

“(c) “Distribution Expenses” means all costs and expenses incurred and payments made by Producer directly or indirectly for or in connection with the sale, lease, license, exhibition, distribution or other disposition of the Photoplays, or of subsidiary rights, including, but not limited to, payments for television runs, foreign telecasting and theatrical exhibition of the Photoplays, as well as any other payments for use or re-use of the Photoplays, all payments made by Producer to any distributor, exhibitor, agent or other person in the form of commissions, advertising allowances, distribution fees, expenses of distribution, or a percentage of gross receipts or net profits or the like; but no sum excluded from gross receipts under subparagraph (b) above shall be included as a distribution expense.”

(1971 Rider at ¶ A(c).) Further, “Producer companies” are define as follows:

“(c) “Producer Companies: Participant agrees that a Produce Company may act as a distributor of the Photoplays, and that a Produce Company may furnish facilities, materials, equipment and personnel of the Photoplays. All fees and charges of each Producer Company shall be distribution expenses or production costs as the case may be . . . However, such fees and charges shall not exceed those charged by Produce Company according to its then existing standard practices . . .”

(1971 Rider at p. 2, paragraph C.)

On June 9, 1988, Arthur Levine sent Arnold M. Shane of Universal a letter confirming a new agreement with respect to royalties payable to Link and Levinson in connection with Columbo. (the “1988 Agreement.”) The Agreement provides in relevant part:

2. The profit participation payable to Messrs. Levinson and Link under the old agreements with respect to future exploitations of "Columbo" would be modified to include your new home video definition (which you are going to furnish to me) in return for which profits and losses from the old shows would not be cross-collateralized with any profits from new "Columbo" programs in the above-referenced series or any other future exploitations of the underlying material.

(Omnibus Appendix, Exhibit 22 (Trial Exhibit 42 p.1.) As will be discussed below, Universal moves to vacate the court’s judgment from the March 2019 bench trial which allowed Plaintiffs to rescind the 1988 Agreement based on a mutual mistake of fact with respect to Columbo’s profitability. Plaintiffs oppose the motion to vacate.

On February 20, 2019, this action came on for an Evidence Code section 402(e) hearing (“402 Hearing”) before Department 37 of the Los Angeles Superior Court. At the hearing, Plaintiffs and Universal each discussed their positions with regard to whether the 1971 Rider permitted Universal to deduct “Distribution Fees,” along with discussion of other evidentiary matters for a determination of which matters would be submitted to the jury. (Plaintiffs’ Omnibus Appendix of Evidence, Exhibit 1.) The court ruled as follows after the 402 Hearing:

  1. The jury will hear evidence regarding whether Universal is allowed to deduct “Distribution Fees” in calculating net profits under the 1971 Rider;

  2. The jury will hear evidence regarding interpretation of “photoplays” as used in the 1971 Deal Memo;

  3. “Series” means the Columbo series;

  4. The jury will hear evidence regarding whether Plaintiff would have entered into the 1988 Agreement if they believed Columbo was profitable;

  5. The court will determine whether “New Home Video” applies to only Mystery Wheel Columbo;

  6. The jury will hear evidence regarding whether the 1988 Agreement permitted Universal to cross-collateralize alleged losses from the Mystery Wheel Columbo against profits from Columbo.

  7. The parties agreed that the 1971 Deal Memo does not allow Universal to compound interest when calculating imputed interest. The court will evaluate the parties’ experts before deciding whether Universal has compounded interest.

Thereafter, the matter came on regularly for trial beginning February 21, 2019. During the jury trial, Plaintiffs presented testimony from Barry Hirsch to support their contention that Universal could not take deduction of “Distribution Fees.” Barry Hirsch testified that the 1971 Rider permitted the “Producer” to deduct “distribution fees” for a “photoplay.” (Heafner Decl., ¶ 3, Exhibit 2 at pp. 101:21-23; 105:16-22.) Hirsch also testified that whether a studio such as Universal would be able to deduct a distribution fee is “just a negotiation” in each agreement. (Omnibus Appendix, Exhibit 2 at p. 107:18-21.) Hirsch further testified that it was his practice to negotiate fees in every agreement specifically, and that he was not provided a fee schedule for the 1971 Agreement. (Id. at p. 109:4-25.)

After hearing the evidence and arguments of counsel, the jury was duly instructed by the Court and the case was submitted to the jury with directions to return a special verdict. The special verdict form used was one proposed by Universal, which asked the jury to respond as follows:

“Question 1: Does Exhibit 10 (the 1971 Rider) allow [Universal] to deduct a distribution fee not paid to a third party when [Universal] acts as a distributor?”

(Special Verdict Form.) If the jury responded “no,” they were instructed to skip questions 2-4. Question 2 asked the jury to respond whether they agreed on the meaning of the term “Photoplay” as used in the 1971 Rider. Question 3 asked the jury whether an episode of Colombo is a “photoplay” as the term is used in the 1971 Rider. The jury unanimously responded “no” to question 1 and, accordingly, did not respond to questions 2 and 3. (Id.)

Here, the special verdict form asked the jury to answer “yes” or “no” to whether Universal was permitted to deduct distribution fees. Having answered “no,” the special verdict form asked the jury to skip the following two questions, one of which would have asked the jury to answer whether “photoplays” included episodes of Columbo. It is undisputed that Universal did not object to the jury’s verdict before the jury was discharged. Accordingly, Universal’s contention that the jury’s verdict would surely have been different had they been instructed with regards to the meaning of “Photoplay” fails. The special verdict form does not ask the jury to provide a reason, nor does it ask to the jury to respond to whether “photoplay” means and includes Columbo episodes. Accordingly, as Plaintiffs suggest, the jury could have had various other reasons for deciding that Universal may not deduct “distribution fees” under the 1971 Rider.

Universal that it is entitled to a new trial as to the “distribution fees” issue only because the jury relied on the “legally erroneous” theory that “photoplays” did not include episodes of Columbo in reaching their verdict or, alternatively, the jury should not have been allowed to interpret the meaning of the contract. (Motion, 15-18.)

Plaintiffs argue that because Universal submitted the special verdict form which allowed the jury to skip questions regarding the meaning of “Photoplay,” then Universal should not be allowed to move for JNOV or a new trial based on its assumptions behind the jury’s reasoning. (Opposition, 14-16.) Plaintiffs also contend that if Universal had an objection to the jury’s verdict, it should have objected before the jury was discharged. (Opposition, 16.) Plaintiff relies on the Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949 (Myers) to support their argument.

In Myers, a company that commissioned an office building and its general contractor brought complaints against each other for breach of contract in connection with construction of the office building. (Id., at p.955.) The matter proceeded to trial, where the jury on the first phase returned a special verdict in favor of the general contractor on its cross-complaint against the company. (Id. at p. 956) The jury also returned a punitive damages verdict in favor of the general contractor and the general contractor appealed. (Id.) In striking the punitive damages award from the judgment, the Court of Appeal found that the special verdict form did not allow the jury to make a finding on a tort cause of action and accordingly, punitive damages are improper because no breach of contract cause of action may support an award of punitive damages. (Id. at 962.)

The court is prepared to hear argument about exactly what extrinsic evidence was submitted regarding the meaning of the term “photoplays” as used in the 1971 Rider, and whether the court should decide that issue as a matter of law.

Also, it is undisputed that the special verdict form did not ask the jury to respond whether “photoplay” included episodes of Columbo. The special verdict form also did not ask the jury to respond with any reason to support their verdict, as the jury was instructed to skip questions 2-4 if they found that Universal was not entitled to deduct its “distribution fees.” It is also undisputed that Universal did not object to the verdict before the jury was discharged. Is that by itself a reason to deny the motion for JNOV, as the jury may have decided for reasons other than the definition of photoplay.

If the jury might have decided the distribution fee issue on the grounds of an incorrect interpretation of photoplay, should there be a new trial?

  1. Statute of Limitations on Plaintiffs’ Breach of Contract Claims

Universal argues that it is also entitled to JNOV as to the jury’s finding that Plaintiffs’ breach of contract claims were timely.

An action upon a contract, obligation or liability founded upon a writing is subject to a four-year statute of limitations. (Code Civ. Proc., § 337, subd. (1).) In general, a statute of limitations begins to run “when the cause of action is complete with all of its elements,” namely, wrongdoing, causation, and resulting harm. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397 (Norgart).)

“Generally, in both tort and contract actions, the statute of limitations begins to run upon the occurrence of the last element essential to the cause of action. The cause of action ordinarily accrues when, under the substantive law, the wrongful act is done and the obligation or liability arises . . . .” (Wind Dancer Production Group v. Walt Disney Pictures (2017) 10 Cal.App.5th 56, 73 (Wind Dancer), internal quotation marks and citations omitted.)

An exception to the general rule for defining the accrual of a cause of action is the discovery rule, which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. (Norgart, supra, 21 Cal.4th at p. 397.) The Supreme Court has recognized that the plaintiff discovers the cause of action when he at least suspects a factual basis, as opposed to a legal theory, for its elements. (Ibid.) “He has reason to suspect when he has ‘notice or information of circumstances to put a reasonable person on inquiry’; he need not know the ‘specific “facts” necessary to establish’ the cause of action; rather, he may seek to learn such facts through the process contemplated by pretrial discovery; but, within the applicable limitations period, he must indeed seek to learn the facts necessary to bring the cause of action in the first place--he cannot wait for them to find him and sit on his rights; he must go find them himself if he can and file suit if he does.” (Ibid., internal quotation marks and citations omitted, italics in original.)

A cause of action for breach of contract consists of the following elements: (1) the existence of a contract; (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

The first cause of action alleges that Universal breached the terms of the parties’ agreements by not paying net profit participation sums owed to Plaintiffs. (Complaint ¶ 32.) Plaintiffs specifically contend that Universal failed to provide accountings, failed to pay sums owed and failed to pay interest as appropriate on these sums. It is undisputed that the 1971 Rider requires no accounting statement for periods as to which Plaintiffs are not entitled to payments. (Heafner Decl., ¶ 2, 1971 Rider at p. 2, ¶ B(b).)

Universal contends that it is “undisputed” that Plaintiffs knew Universal had not paid them any net profits for more than 40 years and as such, the limitations period would have been triggered when Plaintiffs first came to suspect that it was not being paid as owed. (Motion, 18-19.) Plaintiffs point to the deposition testimony of William Link, who testified as follows:

“Question: When – at some point in time, did you form a suspicion that you were owed monies that weren’t being paid to you?

Answer: Yes.

Question: Was that a long time ago?

Answer: Yes.

Question: How long ago?

Answer: I don’t remember.

Question: Do you think it was at least 20 years ago?

Answer: maybe.”

(Heafner Decl., Exhibit 12 at p. 23:7-16.)

Plaintiffs contend that their claims did not accrue until at least 2013. Plaintiffs point to other portions of Link’s deposition testimony in support of this contention. Link testified that he expected Universal would pay him net profits if they were owed. (Opposition, 11-12; Omnibus Appendix, Exhibit 13 at pp. 177:5-25, 179:4-15.) Link also testified that based on his relationship with Universal, he trusted Universal to pay if he was owed. (Omnibus Appendix, Exhibit 14 at pp. 10:23-25, 12:6-13.) Link further testified that he had asked an executive at Universal many years earlier whether he was entitled to profits and recalls being told that “there wasn’t any money.” (Id. at pp. 16:19-17:12.) Link also testified that he did not receive an accounting for Columbo in 2013-2015 after he initially requested one. (Id. at p. 17:22-25; Omnibus Appendix, Exhibit 13 at p. 51:3-26.)

Plaintiffs also submit the testimony of Christine Wilson, Fairmont’s owner, who testified that Plaintiffs first discovered facts in 2016 that caused them to suspect Universal had breached its contractual obligations with respect to payment of net profits. (Opposition, 11-12.) Plaintiff also submit the testimony of their former attorney, Adam Levine, who testified that Universal represented to him in 1988 that Columbo was not profitable and that he believed this representation. (Id.; Omnibus Appendix at pp. 31:23-32:1; 73:14-74:28.)

Given the foregoing, the court finds that Universal has not demonstrated it is entitled to JNOV as to the verdict on Plaintiffs’ claims being timely.

III. Conclusion

For these reasons, the Court DENIES Plaintiff’s Motion for JNOV based on the statute of limitations. It will entertain oral argument on the other issues.

MOTION TO VACATE BENCH TRIAL JUDGMENT

I. Legal Standard

A judgment based upon a decision by the court may be set aside and vacated on a finding of “[i]ncorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts . . . .” (Code Civ. Proc., § 663.)

II. Analysis

Universal requests that the court vacate its judgment following the March 2019 bench trial with respect to allowing Plaintiffs to rescind the 1988 Agreement based on mutual mistake. (Motion, 19-22.) Universal argues that rescission is not warranted because: (1) given the definition of “Photoplay,” there was no mistake with respect to Columbo’s profitability; if Photoplay is applied to the 1971 Agreement and deduction of “distribution fees” permitted, then Columbo was not profitable, or, alternatively (2) the alleged mistake with regard to Columbo’s profitability is not a mistake of “objective fact” in that it rests on the interpretation of “photoplay.” Universal also argues that even if the mutual mistake stands, Plaintiff should bear the risk of mistake.

Plaintiffs contend on opposition that the mistake of fact with respect to Columbo’s profitability was in fact mutual and with respect to a material fact. Plaintiffs further contend that regardless, they do not bear the risk of the mistake. (see Plaintiffs’ Opposition to Motion to Vacate Judgment.) Plaintiffs point to the testimony of Arthur Levine, who attests that Universal told him that Columbo was not profitable. (Omnibus Appendix, Exhibit 12 at p. 31:12-23.) Plaintiffs also point to the fact that Universal never provided profit participation statements even when requested, which Plaintiffs interpreted to mean that Columbo was not profitable. (Omnibus Appendix, Exhibit 13 at pp. 31:23-32:1; 73:14-74:28.)

Plaintiffs also contend that Universal’s cases cited in support of its motion to vacate the bench trial judgment do not stand for the propositions Universal suggests. Universal cites Hedging Concepts, Inc. v. First Alliance Mortg. Co. (1996) 41 Cal.App.4th 1410 (Hedging) and Dowling v. Farmers Ins. Exch. (2012) 208 Cal.App.4th 685 (Dowling).

In Hedging, plaintiff financial consulting corporation brought an action against defendant corporation engaged in the business of selling second trust deed loans. (Hedging, supra, 41 Cal.App.4th 1410 at p. 1414.) Plaintiff sued for fraud and breach of contract and defendant cross-claimed for fraud and negligent misrepresentation, seeking rescission of a portion of the contract. (Id. at 1416.) Plaintiff contended that its duties were limited in a certain respect under the agreement between the parties, while defendant contended that there was no limit. (Id.) In holding that no rescission was appropriate, the Court of Appeal found that the mistake at issue in this instance was not a mistake of law because only one party to the contract misunderstood the law applicable to the contract and the other party was not aware of this mistake at the time. (Id. at pp. 1421-1422.)

In Dowling, plaintiffs sought to rescind a stipulation regarding whether the five-year window to bring their case to trial had lapsed, arguing that the court had misinterpreted the stipulation between the parties governing same. (Dawling, supra 208 Cal.App.4th 685 at p. 687.) The Court of Appeal denied rescission, holding that any alleged misinterpretation was at most a unilateral mistake of law, and that a mistake of law is grounds for rescission only if both parties shared the mistake or if one party was mistaken and the other party knew of the mistake, but failed to rectify it. (Id. at p. 699.)

In this case, the parties were not mistaken about the interpretation of the Agreement. Indeed, there was no dispute about the interpretation of the Agreement at that time. Universal stated as fact that the program did not show a profit and Plaintiffs representatives accepted that fact as true. Based on the jury verdict that fact was not true—so long as the jury verdict stands.

Accordingly, substantial evidence supports the verdict that the 1988 Agreement was based on mutual mistake of fact. Given the foregoing, the court DENIES Universal’s motion to vacate the bench trial judgment with respect to rescission of the 1988 Agreement.

III. Conclusion

Universal’s Motion for Judgment Notwithstanding the Verdict and Motion for a New Trial are DENIED as to the statute of limitations. Universal’s motion to vacate the court’s bench trial judgment is also DENIED. The court will entertain argument on the other issues prior to making final rulings. Plaintiffs are to give notice.